Russian Agency Defers TNK-BP Kovykta License Decision

Kovykta Field and Pipeline
(Click to Enlarge)
MOSCOW, Jun 01, 2007 (Dow Jones Newswires)

Russia's Federal Agency for Natural Resources, or Rosnedra, has postponed for two weeks a decision on whether or not to revoke the license for a huge Siberian gas field controlled by BP PLC's (BP) Russian unit, the news agency Interfax reported Friday.

The agency cited an unidentified source.

As reported, a Rosnedra commission met Friday to discuss whether or not to revoke Rusia Petroleum's (PTRL.RS) license to operate the Kovykta gas field in the Irkutsk region of Russia. Rusia Petroleum is over 60% owned by TNK-BP Holding (TNBP.RS).

No-one at Rosnedra was immediately available to confirm the report, but a spokeswoman for TNK-BP said that "a meeting took place...and there was no decision with regard to development of the Kovykta deposit."

The outcome comes as something of an anti-climax after loud and repeated pronouncements by Russian officials, notably environmental regulator Oleg Mitvol, that Rosnedra could revoke Rusia Petroleum's license at the meeting.

The decision to postpone follows a visit to Moscow Thursday by BP's new chief executive, Tony Hayward, in what appeared to be last-ditch talks to save the company's project. A BP spokesman had said the visit was a routine one related to a TNK-BP board meeting.

Recent local media reports have suggested that both BP and its joint-venture partners are resigned to losing the license, and are hoping merely to have their investments reimbursed. The TNK-BP spokeswoman declined to be drawn on the issue.

An inspection last week showed a unit of TNK-BP (TNKB.RS), which is half-owned by BP and half-owned by Russian investors, had failed to reach its required gas output level.

Copyright (c) 2007 Dow Jones & Company, Inc.


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