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The Guardian: New fears of state takeover of BP gas field

Terry Macalister
Tuesday June 5, 2007

Vladimir Putin turned up the pressure on Britain’s biggest company yesterday saying it was intolerable that BP and its local partners were “doing nothing” to meet their obligations by fully developing Kovykta, a huge gas field in Siberia.

The president’s words will increase fears within BP that the state could try to effectively take over its Russian business by buying up a half share in the TNK-BP joint venture.

“I would like to stress that the [Kovykta] field has reserves of three trillion cubic metres. To understand its importance for our country, it is equal to almost all reserves of Canada,” said Mr Putin in an interview posted on his website, www.kremlin.ru. “But if members of the consortium are doing nothing to meet licence obligations, how much longer do we have to tolerate this?”

BP has come under increasing pressure over Kovykta with allegations that the operating company it controls is not meeting the levels of gas supplies it promised. There had been speculation that the state was about to take the operating licence away from BP but last Friday Russia’s resources ministry said it was putting off a decision for at least for two weeks.

Many analysts saw this as a measure to reduce the potential for western leaders to criticise the Kremlin during the G8 summit over its energy policies and treatment of foreign investors. Yesterday a spokesman for Tony Blair said the government was watching developments surrounding BP. “Does (Russia) want a climate in which people feel it is secure to invest? The sort of investment climate in a country depends on the way it treats companies.”

BP’s rival Shell came in for similar criticism in Russia last year over the way it was said to have failed to deal with environmental issues on the Sakhalin-2 gas scheme in the east of the country. The criticism stopped once Shell handed over a controlling interest in the project to state-owned Gazprom.

Industry experts in Moscow have warned that the 50/50 split inside TNK-BP might be changed in any Kremlin-inspired takeover to 49/51 in favour of the Russian state. In the interview, Mr Putin declined to comment on that but said his experience suggested that a 50/50 split was not ideal to take the business forward.

http://environment.guardian.co.uk/energy/story/0,,2095612,00.html

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