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BP under pressure on Kovykta

TNK-BP, the Anglo-Russian oil joint venture, is bracing itself for a full investigation within weeks into its licence agreement for a giant Siberian gasfield as the Kremlin tightens its grip on the country's energy resources.

Russia has used environmental audits and regulatory threats to restore state dominance over oil and gas supplies. This week saw Gazprom take a controlling stake in Royal Dutch Shell's Sakhalin-2 project after months of pressure.

People familiar with the situation said Gazprom's negotiations with TNK-BP were likely to follow a similar pattern to Shell's prolonged battle with state officials and the Russian gas monopoly.

TNK-BP has already offered Gazprom majority control over the Kovykta gasfield, but has insisted that Gazprom should pay for its stake with cash or assets.

Russian authorities have already stepped up pressure on TNK-BP, accusing it of breaking a licence agreement on production levels. The prospect of losing the licence for Kovykta is likely to soften TNK-BP's negotiating position.

Gazprom and TNK-BP have been talking about the joint development of the project for years but have not reached an agreement. Although TNK-BP has a licence to develop the field, expected to supply gas to Asian countries, it cannot do so without Gazprom agreeing to build an export pipeline for the field.

Gazprom, which has a mono-poly over the pipeline network and gas exports, has been stalling negotiations for months. It says it has other priorities.

A deal with Gazprom was required from the start, so BP's position is quite weak in any case, and now they are stuck because, as time has passed, the lack of agreement is making them breach their license.

So I think that this article is actually an attempt to pain the Russians as bullies in the Sakhalin context and try to give BP a bit more leverage. I doubt it'll work, though.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sat Dec 23rd, 2006 at 04:36:34 AM EST
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