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Financial Times: BP under pressure over Kovykta field

By Catherine Belton in Moscow
Published: February 28 2007 02:00 | Last updated: February 28 2007 02:00

Russia stepped up pressure on a key asset held by TNK-BP, BP’s Russia venture, yesterday as Lord Browne, BP chief executive, arrived in Moscow for talks and the end-game neared for a possible transfer of part of a key asset to the state.

Oleg Mitvol, the official who led the state campaign against Shell’s oil and gas venture in Sakhalin2, said yesterday that Russia’s Natural Resources Ministry would not budge on threats to revoke TNK-BP’s licence to develop its vast east Siberian Kovykta gas field in three months time.

“The conditions can be changed only one way,” said Mr Mitvol of TNK-BP’s calls to soften licence terms that it says are impossible to meet. “You tear up the license agreement and the state sells it off at an auction anew.”

Mr Mitvol’s ministry has declared TNK-BP in violation of conditions to develop the field and has given the joint venture group three months to start producing 9bn cubic meters of gas, as the license stipulates, or have its license revoked.

TNK-BP produces a fraction of that amount and has said the terms are impossible to meet as there is not enough demand for that volume of gas in the local region.

The attack on TNK-BP’s Kovykta licence is seen by many industry watchers as part of a wider political strategy as TNK-BP moves into a crucial phase and the state tightens its grip over the energy sector.

TNK-BP’s Russian billionaire shareholders are believed by many analysts to be readying to sell their stakes in the venture to a state-controlled company such as Gazprom. A moratorium on any change of ownership at TNK-BP is due to expire this year. TNK-BP’s Russian shareholders have repeatedly denied that any such sales are contemplated.

But Vladimir Milov, the former deputy energy minister in the Putin government, said Gazprom was stepping up the pressure on TNK-BP.

Sergei Kupriyanov, Gazprom spokesman, declined to comment on whether talks were ongoing about Gazprom becoming BP’s new partner in Russia.

But he said Gazprom was not interested in Kovykta by itself. “TNK-BP is more interested in bringing us into this project than we are,” he said.

TNK-BP declined to comment on Mr Mitvol’s remarks yesterday.

Copyright The Financial Times Limited 2007 and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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