Russia Natural Resource Min Starts Kovykta License Check

MOSCOW, Jan 18, 2007 (Dow Jones Commodities News)

Russia's Natural Resources Ministry said Thursday its environmental protection service Rosprirodnadzor has begun a check of Rusia Petroleum's (PTRL.RS) compliance with the conditions of the license to develop the Kovykta gas field in eastern Siberia.

Rusia, majority-owned by BP PLC (BP), was due to produce some 9 billion cubic meters of gas last year but didn't owing to the lack of any framework for exporting the gas.

Domestic demand alone isn't enough to justify the necessary investments, says TNK-BP, which incorporates BP's operations in Russia.

For the moment, Rosprirodnadzor is only checking the company's documentation. An onsite inspection is scheduled for later in the year.

All mineral extraction projects in Russia are subject to routine and sometimes extraordinary inspections by Rosprirodnadzor.

The agency was one of the single largest sources of administrative pressure on the Royal Dutch Shell Group-led (RDSA) consortium Sakhalin Energy last year, alleging billions of dollars in environmental damage at the Sakhalin-2 project.

Sakhalin Energy's shareholders subsequently decided to sell a controlling stake in the project to OAO Gazprom (GSPBEX.RS).

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