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Financial Times: Moscow ready to revoke licence for BP Russian venture ‘in days’

By Catherine Belton in Moscow
Published: May 22 2007 03:00 | Last updated: May 22 2007 03:00

Moscow ratcheted up pressure on BP’s Russian venture yesterday, warning that TNK-BP could see the licence for its vast Kovykta gas field revoked within “amatter of days”.

Oleg Mitvol, head of Russia’s environmental watchdog, said his agency would open a probe tomorrow into whether TNK-BP was meeting licence terms to develop the east Siberian field – as a three-month deadline passed for production there to be boosted to 9bn cubic metres in line with requirements.

TNK-BP has said this target would be impossible to meet.

“If everything goes according to the law, then [TNK-BP] should lose the licence,” Mr Mitvol said, adding that a special commission would meet in “the next few days” to decide whether to revoke it.

Mr Mitvol’s comments came as talks intensified over state-controlled Gazprom taking a stake in the operation.

Industry observers have seen the stand-off over Kovykta as part of a broader gambit to put pressure on TNK-BP’s Russian shareholders to sell their stake to a state-controlled company as Moscow seeks to tighten its grip on the energy sector.

Mr Mitvol led an earlier campaign alleging environmental violations by Royal Dutch Shell’s $22bn (£11.2bn) Sakhalin-2 venture that ended in Gazprom buying control.

However, he denies any such link in the case of TNK-BP.

Analysts nevertheless said the tactics on Kovykta appeared to echo the Sakhalin-2 stand-off. “This is almost a repeat of what we saw with Sakhalin-2, with the licensing agencies taking on the role of the big stick issuing very clear and visible threats,” said Chris Weafer, chief strategist at Alfa Bank.

TNK-BP has filed a suit to seek legal clarification of the licence terms. A court in the east Siberian city of Irkutsk is due to begin hearing the case tomorrow.

BP said: “We have gone to the courts seeking a clarification on what exactly should be the right interpretation of our licensing requirements.”

The 50:50 TNK-BP venture is believed to be seeking clarification on whether the licence says it must produce 9bn cu m by 2007 or whether it must simply meet local demand, which TNK-BP says is a fraction of 9bn cu m.

One person close to TNK-BP said the company was now in talks “every other day” with Gazprom over Kovykta.

Copyright The Financial Times Limited 2007

 

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