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Sat, Jun 16, 2007 - Page 10 News List

Meeting delayed in TNK-BP gas license wrangle


British-Russian joint venture TNK-BP yesterday won at least a temporary reprieve after threats by Russian officials to strip the company of its license to operate the vast Siberian gas field of Kovykta.

Interfax news agency and the Vedomosti business daily reported that a meeting scheduled for yesterday at which the Russina regulator on sub-soil use, Rosnedra, was due to consider the issue had been postponed.

It was the second such delay in two weeks.

Vedomosti, citing officials at TNK-BP and Rosnedra, said the delay was for a further two-week period and would allow negotiations on the possible entry to the project of gas giant Gazprom.

Interfax meanwhile reported that the delay was indefinite.

"The commission will not hold a repeat meeting and now a protocol needs to be drafted on the Kovykta issue. The decision was postponed because of the holidays," Interfax quoted an unnamed Rosnedra official as saying.

Rosnedra's press office declined to comment when contacted.

flagship project

The Kovykta field in the Siberian province of Irkutsk is a flagship project for TNK-BP, which is 50 percent owned by Britain's BP and 50 percent owned by Russian consortium Alfa Access Renova.

Russia has repeatedly criticized the project's failure to fulfil production targets on time and last Saturday influential First Deputy Prime Minister Sergei Ivanov hinted at a likely license withdrawal.

Under the license, Kovykta was due to produce 9 billion cubic meters of gas last year but only managed 33.8 million cubic meters.

pipeline blocked

TNK-BP says that it could not produce as much as required because Gazprom blocked its attempt to build a pipeline to ship the gas to China.

Yesterday Vedomosti quoted an unnamed official with Alfa Group, part of the Russian side of the consortium, as saying the license was not to be withdrawn after all. An analyst at the Uralsib financial corporation, Yevgeniya Dyshlyuk, echoed that view.

Dyshlyuk said the dispute could be resolved with the entry of Gazprom to the project and added that the Russian company could not manage it alone.

"It would be hard for Gazprom to develop such a capital-intensive project on its own," Vedomosti quoted Dyshlyuk as saying.

Russia would instead be able to use Kovykta as a bargaining chip to gain access to Western consumer markets where BP has a strong presence, she said.

The license to Kovykta is held by Russia Petroleum, in which TNK-BP holds a 62.7 percent stake, the Interros company holds a 25.8 percent stake and Irkutsk Province owns the remaining 10.8 percent stake.

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