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The Screws Tighten on BP’s Investment in Kovykta

The Yukos-ification of TNK-BP seems to be intensifying – in fact BP’s Chief Executive Lord Browne has been whisked away to Moscow to play out the end game with the Kremlin in a last ditch attempt to save his corporation’s most valuable investment in Russia. Here’s what the Financial Times is reporting tonight:

Oleg Mitvol, the official who led the state campaign against Shell’s oil and gas venture in Sakhalin2, said Russia’s Natural Resources Ministry would not budge on threats to revoke TNK-BP’s licence to develop its vast east Siberian Kovykta gas field in three months time. “The conditions can be changed only one way,” said Mr Mitvol, on TNK-BP’s calls to soften licence terms that it says are impossible to meet. “You tear up the license agreement and the state sells it off at an auction anew.” Mr Mitvol’s ministry has declared TNK-BP in violation of conditions to develop the field and has given the joint venture group three months to start producing 9bn cubic meters of gas, as the license stipulates, or have its license revoked. TNK-BP produces a fraction of that amount and has said the terms are impossible to meet as there is not enough demand for that volume of gas in the local region. The attack on TNK-BP’s Kovykta licence is seen by many industry watchers as part of a wider political strategy as TNK-BP moves into a crucial phase and the state tightens its grip over the energy sector.

Complete article here, previous posts on Kovykta here and here. Derek Brower’s post on Russia’s environmental crusader Oleg Mitvol here.