Russia's Bashneft Wins Titov, Trebs Licenses

MOSCOW (Dow Jones Newswires), Dec. 2, 2010

Mid-sized Russian oil producer Bashneft Thursday won the right to develop the Trebs and Titov oil fields in northwest Russia, following an earlier decision to exclude local and international energy giants from the tender.

The highly anticipated auction for the Trebs and Titov oil fields, which combined hold 1.5 billion barrels of oil, has been mired in controversy, after international majors such as India's Oil & Natural Gas Corp. (ONGC) and BP's Russian joint venture TNK-BP along with local giant Lukoil in September were told by authorities they couldn't bid because of incorrectly filing applications.

The decision left Bashneft as the only bidder, causing outrage among industry executives, who threatened to take the decision to court.

Bashneft, which in recent years has grown into Russia's eighth-largest oil producer through acquisitions, paid 18.48 billion rubles ($588.9 million) for the license.

The company is majority-owned by conglomerate AFK Sistema, which in turn is controlled by Vladimir Yevtushenkov, a billionaire with close ties to the Kremlin.

The auction for Trebs and Titov was the first major new Russian oil project offered in years and is seen as a test of the government's proclaimed push to increase transparency and fair access to fields.

Russia's government said last year it would start offering licenses for strategic fields, but little has materialized. The license for Chayandinskoye, a major gas field in East Siberia, was last year given to the country's state-controlled gas giant Gazprom without a tender.

Copyright (c) 2010 Dow Jones & Company, Inc.

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