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Kovykta Could Be Off-Limits to Foreign Investors

Looks like Lord Browne’s efforts to placate the Russians over his company’s investment in a Siberian gas field aren’t working. Trutnev’s comments today constitute the one the clearest threats yet to force BP to hand over majority control to Gazprom – lest we forget that TNK-BP hasn’t been able to fulfill the license requirements precisely because of the Russian monopoly on the distribution infrastructure.

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Yuri Trutnev, national resources minister, provides a veil of legitimacy for state theft

Despite the attack on Kovykta, multinational energy firms still want to throw their money into Russia? Unbelievable. From RIA:

The Kovykta gas field in East Siberia operated by TNK-BP [RTS: TNBP] could be put up for auction excluding foreign companies if the operator is stripped of the license, Russia’s natural resources minister said Friday. “If the license is revoked, it [the Kovykta deposit] will be put up for auction as a strategic deposit, where foreign investment is not permitted,” Yury Trutnev said, referring to the bill prohibiting foreign investors’ control of major deposits, which is expected to be adopted this year. … Kovykta is important to the Russian government, which is pursuing an ambitious project to build a gas pipeline network to meet Asian nations’ energy needs and to diversify its export destinations. State-controlled Gazprom [RTS: GAZP] is interested in joining the Kovykta gas project. The Russian energy giant and TNK-BP are discussing a joint project to build a unified network for upstream and downstream operations, and gas transportation in East Siberia and the Far East. Late last year, Gazprom acquired 50% plus one share in Sakhalin II, the vast hydrocarbon project in the Far East, from Shell and other companies involved. The deal came following months of pressure on the operator over environmental violations and financial issues, but was seen by many as part of the Kremlin’s drive to regain control of mineral resources. Another U.S. oil giant, ExxonMobil, and France’s Total are also experiencing difficulties in Russia, with their projects – Sakhalin I off the Pacific coast and Kharyaga oil field in northern Russia respectively – being under scrutiny.