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The Times: Siberian discovery could affect BP’s plans

February 16, 2007
Carl Mortished

An obscure Russian company with links to Anatoly Karpov, the former chess champion, has made a gas find in eastern Siberia that could have a dramatic impact on BP’s efforts to develop Kovykta, a giant gasfield that is the jewel in the crown of BP’s Russian joint venture, TNK-BP.

Petromir, a company founded by Mr Karpov in 1999, has registered a 1.2 trillion cubic metre gas find at Angaro-Lenskoye in the Irkutsk region only 100 kilometres from Kovykta. It is estimated to contain 1.9 trillion cubic metres of gas.

TNK-BP is anxious to sell Kovykta gas to China where it would fetch a high price but it has so far failed to agree a deal with Gazprom which has a monopoly on gas exports. Gazprom said that Kovykta gas was for the lower-priced domestic market and was believed to have demanded a majority share of the gasfield in return for its cooperation in an export deal.

Valery Nesterov, oil analyst at Troika Dialog, said that BP can draw little comfort from Shell’s Sakhalin-2, where Gazprom paid $3.8 billion (£1.95 billion) for a half-share of the gas project: “Gazprom wants Kovykta cheap. In the case of Sakhalin-2, Shell had already invested a large part of the capital cost but in Kovykta, there is a very small investment.”

Gas from Angaro-Lenskoye would leave room for Kovykta exports, but Petromir’s find is disputed by Oleg Mitvol, the deputy head of Russia’s Natural Resources environmental agency, who suspects the figures to be inflated. Petromir has only drilled one well, not enough to confirm such a large resource, said Mr Mitvol.

Mr Mitvol conducted a lengthy investigation of alleged environmental damage at Shell’s Sakhalin-2 gas project and is now investigating TNK-BP for breaches of its licence at Kovykta.

TNK-BP’s licence obliges the company to produce 9 billion cubic metres of gas but it has been producing just 2.5 billion per year for local markets. TNK-BP said that there was not enough demand for more gas without an export pipeline.

 

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