After Shell, Kremlin turns its sights on BP's Russian assets

Click to follow
The Independent Online

BP is to come under fresh pressure to relinquish control of one of its most valuable assets in Russia after Kremlin officials confirmed they would conduct an aggressive audit of the giant Kovykta natural gas field.

Inspectors allege that the field is under-exploited and that BP's Anglo-Russian joint venture, TNK-BP, will fail to raise production to an agreed 9 billion cubic meters of gas this year. This is not the first time TNK-BP's ownership of the asset has come under pressure; last September the Kremlin raised the possibility that it might revoke TNK-BP's licence due to alleged environmental violations.

The allegations are seen by many analysts as part of an aggressive campaign to wrest control of Kovykta from TNK-BP on behalf of the state-controlled energy giant Gazprom.

Gazprom has long coveted a stake in the project and the Kremlin has made it clear that it wants Russia's oil and gas resources to be in Russian hands with foreign partners downgraded. In December Shell fell into line with that policy, selling a controlling stake in the Sakhalin-2 offshore oil and gas project to Gazprom after months of Kremlin pressure.

Now it seems TNK-BP may be the next Western company to be "persuaded" to take more of a backseat role. The Anglo-Russian firm will be reluctant to dilute its 62.4 per cent stake in Kovykta; the field is one of the jewels in BP's Russian crown and holds enough gas reserves to meet the world's needs for about eight months. Countries such as China and South Korea are queuing up to buy its contents.

However, TNK-BP has been unable to tap its potential as it does not have the right to export the gas beyond Russia's borders; only Gazprom has that right. Gazprom is already locked in talks with TNK-BP's Russian partners (who own 50 per cent of the venture) about buying into Kovykta, a solution that would solve the export problem.

Though it has been denied, many analysts believe Gazprom may also be talking to TNK-BP's Russian partners about buying them out altogether.

Yesterday Kremlin environmental inspectors said they had already started gathering information on Kovykta. A full audit would follow in February or March, they added.

Comments