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Forbes/AFX News: Russian ambassador to UK refuses to rule out reduction of BP’s TNK-BP stake

02.16.07, 11:18 AM ET

LONDON (AFX) – Russia’s ambassador to the UK has refused to rule out the possibility that energy giant BP PLC could have its stake in the major TNK-BP joint venture reduced to make way for Russian gas monopoly OAO Gazprom.

Russian ambassador Yuri Fedatov told reporters today that BP and Gazprom were in the process of striking a deal, but would not rule out BP’s 50 pct stake being reduced.

‘I know that they’re in the process of finding a deal that would be suitable to BP and Gazprom,’ Fedatov said. ‘They’re discussing different options and figures and I would not want to pre-empt that. It’s a commercial matter between two companies which I hope will be resolved in a satisfactory manner.’

UK analysts have been speculating since the new year that BP, which stands to make huge gains from the JV’s Kovykta gas fields, could suffer the same fate as Royal Dutch Shell PLC on the Sakhalin-2 project in the Far East of Russia.

Shell was accused of environmental flaws as a prelude to ceding majority control of the Sakhalin in December. Gazprom then paid nearly 7.5 bln usd to acquire 50 pct plus one share in the giant 20 bln usd project. As part of the deal, Shell’s 55 pct stake was reduced to 27.5 pct. Japan’s Mitsui & Co and Mitsubishi Corp also saw their interests halved to 12.5 pct and 10 pct, respectively, under the deal.

Last week Interfax quoted Oleg Mitvol, deputy head of the ecological monitoring agency Rosprirodnadzor, as saying that TNK:BP had broken the terms of its licence in Kovykta and now had three months to remedy the violations.

But Fedatov hinted that the threat of prosecution hanging over BP from Rosprirodnadzor could well not emerge.

‘There is some kind of prosecution but I don’t think it was final and I don’t think it’s something which should be over-dramatised,’ he said. ‘A solution will be found.’

Rosprirodnadzor also said this week that Russia would hold its investigation into the Exxon Mobil Corp-led Sakhalin-1 project around April, bringing the date forward from the autumn.

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