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FT REPORT – SIBERIA: Foreign investors

Financial Times
Published: May 18, 2007

BP

The UK-listed company’s flagship Russia oil venture TNK-BP, founded in 2003, has significant holdings throughout Siberia. The main oil operations of Russia’s number three oil producer are located in the biggest oil producing region in Russia, the west Siberian region of Khanty-Mansiisk. It has one gas unit, Rospan, in the west Siberian Yamal Nenets autonomous district, but its chief prize is the vast Kovykta gas field in the east Siberian region of Irkutsk. The field holds more than 1,000bn cubic metres of gas reserves, which TNK-BP hopes to ship to lucrative Asian markets.

Problems: the Russian government is threatening to withdraw TNK-BP’s licence to develop Kovykta, claiming it is in breach of production pledges in its licence agreement. Analysts see the issue as part of a wider gambit by state-controlled Gazprom to gain control of Kovykta, and possibly TNK-BP too by buying out its Russian shareholders.

Peter Hambro Mining

Listed on Aim, the UK’s junior market, the gold producer with output of 261,000 ounces a year has its main base of operations in the east Siberian Amur region and in the far east region of Magadan.

Problems: the company was a target of efforts by Oleg Mitvol, Russia’s rumbustious environmental watchdog chief, to have its licence revoked over alleged licence violations last year. The inquiry was swiftly overturned.

Imperial Energy

An Aim-listed independent oil company with licences to develop 15 fields in Tomsk, the second- largest oil producing region in western Siberia. The company, chaired by Peter Levine, who is also chairman of the steel group Severfeld-Rowen, was created as recently as 2003. It announced in March its probable reserves had more than doubled to 803m barrels.

Problems: Imperial is being probed by Mr Mitvol, who claims the company misreported the increase in its reserves and is threatening to withdraw its licence.

Sibir Energy

An Aim-listed independent oil company with holdings in the Yuzhnoye oil field in the west Siberian region of Khanty-Mansiisk where it produces 7,500 barrels a day. It also has a 50:50 joint venture with Royal Dutch Shell to run the Salym field, also in Khanty-Mansiisk, in which both partners are to invest $1bn.

BASF

The German energy group holds

a 35 per cent stake in the vast Yuzhno-Russkoye gas field run by Gazprom in Tomsk, which is predicted to have an annual output of 25bn cubic metres and fill the north European gas pipeline under the Baltic Sea from Russia to Germany. It received the stake in return for allowing Gazprom to boost its stake in its German gas distributor Wingas from 35 per cent to 50 per cent minus one share.

International Paper

The second-largest pulp and paper company in the world is closing a deal to buy 50 per cent of the Russian timber company Ilim Pulp for $400m, in a deal that would give it joint control of four pulp and paper mills including the Bratsk and Ust-Ilimsk paper mills in Irkutsk, east Siberia.

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