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Daily Telegraph: BP fights to keep toehold in Siberia

By Roland Gribben

BP is attempting to hammer out a compromise with Gazprom to maintain a minority stake in a Russian gasfield regarded as a huge prize by the Russian state-owned business and an important source of future income by the British giant.

Negotiations are understood to be centring on the TNK-BP Anglo-Russian joint venture, with a 62pc stake in the project, meeting Gazprom’s demand to cede control while retaining a stake of around 25pc.

Russian interests already account for a majority stake in the strategically, as well as commercially, important Kovykta gas field, part of the massive Siberian gas province, but Gazprom has made it clear that it wants to be in the driving seat.

The TNK-BP partners have been anticipating surrendering control but indications from Moscow suggest Gazprom may use the offer as a basis to lever more concessions.

BP is confident of reaching a “sensible commercial outcome” but against the background of the Kremlin-backed battle between Gazprom and Shell over the massive offshore Sakhalin-2 development, energy politics between western oil firms and the Putin administration have become a minefield.

Russian authorities have already told TNK-BP that the partners risk losing the operating licence for the field because of the alleged failure to meet production targets. TNK-BP says local demand is not enough to justify higher output and Gazprom’s monopoly on exports means there is no foreign market.

Gazprom wants access to as much Siberian gas as possible to meet growing export contracts, particularly to China, but hanging on to assets is important for BP and its revenue stream.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/02/17/cnbp17.xml

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