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The Times: Imperial shares dive after official threatens its Siberian oil licence

April 19, 2007
Steve Hawkes

Shares in one of the year’s best-performing small stocks plunged yesterday when a Russian regulator attacked Imperial Energy, the British oil explorer.

Oleg Mitvol, the deputy head of Rosprirodnadzor, the Russian environmental protection agency, threatened to revoke Imperial’s licence in West Siberia and questioned a huge reserve upgrade, which last month revealed that the group was sitting on three billion barrels of oil.

“The company is not interested in geological exploration, and drilling volumes are ridiculously small,” Mr Mitvol said.

Shares in the group dived 30 per cent at one stage yesterday before closing 15 per cent lower at £12.27. They have climbed from below 650p in January to as high as £15.00, largely because of the reserves figures, which were far higher than those on the Russian authorities’ own books.

Mr Mitvol is best known for orchestrating the campaign that ended with Shell ceding control of the lucrative Sakhalin II offshore project to Gazprom. The transfer was completed yesterday.

His attack came just hours after Imperial had revealed that it had completed, ahead of schedule, a 208km (129mile) pipeline from six of its projects in the Tomsk region of Siberia. Imperial, which floated at 45p on the Alternative Investment Market in 2004, was due to join the main market next week. It has been viewed as a potential takeover target for Russian companies.

Peter Levine, its chief executive, told The Times that the Russian Ministry of Natural Resources had contacted the company on Monday to say that it had met or exceeded all its licence obligations and commitments. He said he had complete faith in the reserves figures. “We have nothing to hide,” Mr Levine said. “If any attempts are made to withdraw our licence we will fight them legitimately.”

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