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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 and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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