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Daily Mail (UK): Russia muscles in on TNK-BP’s gas field

City & Finance
Edited By Manfreda Cavazza
Tuesday 29 May 2007

Article By Sam Fleming

BP’s fading hopes of clinging to its giant Kovykta gas field have been dealt a new blow in the Siberian courts.

A judge threw out a claim brought by a unit of its TNK-BP joint venture, which was seeking to stop the authorities removing its licence to develop the reserve.
Russian regulator Rosnedr said it will now consider stripping TNK-BP of its permit at a meeting on Friday.

Kovykta has become the latest battleground between the Kremlin and foreign oil firms seeking to maintain their rights to exploit Russian resources.

President Vladimir Putin last year launched an attack on western players including Royal Dutch Shell, but until recently BP appeared relatively untouched.

Analysts fear the recent deterioration in political relations between London and Moscow has left BP increasingly vulnerable – as highlighted by yesterday’s ruling.

TNK-BP’s Rusia Petroleum division had asked the arbitration court in Irkutsk to determine if it had breached

its licence, but the judge declared he had no jurisdiction. Rusia, which operates the gas reserve – one of the world’s largest – vowed to appeal.

A TNK-BP spokesman said: ‘They will use every legal right to retain the licence and we support their intention to proceed.’

Kovykta has huge potential but is currently of little commercial value because it can only supply local households. TNK-BP is accused by regulators of breaching its licence by producing too little gas, but without access to China it has no real market.

Gas titan Gazprom, which has a monopoly on exports from Russia, is preparing to muscle in on Kovykta. TNK-BP wanted to involve the state-controlled firm as a partner, but Gazprom will now fancy its chances of winning the entire reserve.

The ownership of TNK-BP itself is also climbing the agenda, with analysts predicting the Russian entrepreneurs who own half the venture will be forced to sell out to a Kremlin-sponsored firm.

Gazprom is usually cited as the most likely candidate, but state-controlled rival Rosneft is seen in BP as an equally plausible buyer. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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