RIA Novosti: Total rectifies oil deposit breaches – Russian official

MOSCOW, April 12 (RIA Novosti) -Total has rectified numerous violations at the Kharyaga oil deposit in northern Russia that the French energy giant is developing, the Russian Audit Chamber chairman said Thursday.

In January, the Audit Chamber found the project operator had committed a number of violations, including underproduction of crude and a failure to meet the schedule and requirement for development works.

“I should say Total has corrected the numerous violations that we registered,” Sergei Stepashin said.

He said the French side had considered all the proposals that the Audit Chamber had made concerning project profits and environmental issues.

Total is developing the Kharyaga oilfield, in Russia’s Yamal-Nenets autonomy, under a 1995 production-sharing agreement (PSA) signed with the Russian government for 29 years with possible extension till 33 years.

A mineral resources regulator initiated license revocation discussions on Kharyaga at the end of last year after revealing that the operator had failed to follow the central commission’s recommendations on the field’s development, and in particular failed to observe the gas drive recovery process, burning up 60% of natural gas produced in 2005.

Also last April, the Natural Resources Ministry accused Total of failing to meet its targets for Kharyaga under the PSA. It said the investor had failed to increase production of crude and introduce new technologies and equipment for effective production since the agreement came into force in 1999.

Ministry experts warned that the situation could result in losses for Russia, as the country “would be forced to continue sending the entire deposit’s output to the investor in compensation for its expenses.”

Total holds a controlling, 50% stake in a consortium set up to run the Kharyaga project, which also includes Norway’s Hydro (40%) and the Nenets Oil Company (10%), controlled by the regional government.

The French company is not the only Western operator to have come under the scrutiny of Russian regulators in recent months.

In late March, Russia’s environmental watchdog launched a probe into alleged environmental violations at the Sakhalin I hydrocarbon project, run by U.S. giant ExxonMobil off Russia’s Pacific Coast.

Months of pressure on Royal Dutch Shell, which was in charge of the Sakhalin II gas project, culminated last year in the purchase by Russia’s state-controlled energy giant Gazprom of 50% plus one share in the project.

The Russian-British joint venture TNK-BP also received a warning about its license for the giant Kovykta natural gas deposit, in East Siberia, over an alleged failure to meet its obligations to supply nearby areas with gas.

Analysts have said the raids are part of the Kremlin’s drive to regain control of the country’s vast mineral resources.

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