BP's Russian joint venture faces pressure after breaching licence

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The Independent Online

BP's joint venture in Russia has been found guilty of breaking the terms of its licence to exploit one of the world's biggest natural gas fields, endangering its stake in the flagship project.

Rosprirodnadzor, Russia's environmental watchdog, is reported to have officially concluded that the Anglo-Russian joint venture TNK-BP has under-exploited the giant $2bn Kovykta gas field in Siberia.

Under the terms of a licence held by RUSIA Petroleum, which is 62.4 per cent owned by TNK-BP, 9 billion cubic metres of gas were supposed to have been extracted from Kovykta last year.

Instead, inspectors have concluded that only 33.8 million cubic metres were produced. Such a finding paves the way for the authorities to take away the company's licence and give it to someone else.

Most analysts see the findings as providing the Kremlin with a convenient stick with which to beat TNK-BP - in which BP holds a 50 per cent stake - in order to force it to sell up to its preferred bidder, Gazprom. The two companies are already in talks designed to allow Gazprom to take a stake in Kovykta. The Kremlin has made it clear it wants Gazprom to take control of the project; the only question is how much of a stake will TNK-BP be allowed to keep.

According to the daily newspaper Kommersant, the Anglo-Russian firm is pushing to hold on to a 33 per cent stake in the face of demands from Gazprom for it to scale back its holding to allow the Kremlin-backed firm to take 74.4 per cent.

Last week in Davos, TNK-BP's chief executive, Robert Dudley, conceded that Gazprom was likely to take "a majority role" in the project by the middle of this year but argued for his company to keep a hands-on role.

The Gazprom chairman Dmitri Medvedev, who is also Russia's First Deputy Prime Minister, was also in Davos last week.