19 Apr 2010 17:10

Kovykta issue to be settled only after extraction begins

MOSCOW. April 19 (Interfax) - The question of licensing the Kovykta gas condensate deposits will be resolved only after extraction begins, Natural Resources and Ecology Minister Yury Trutnev told the press.

"I don't think that [license] revocation would be a gift to Russia's investment climate, although the law calls for it," Trutnev said. "A lengthy process of seeking a civilized way out of the situation" is underway now, he said.

RUSIA Petroleum holds the license to Kovykta, with its C1+ C2 gas reserves of 2 trillion cubic meters. RUSIA Petroleum's main shareholders are TNK-BP (62.89%), the Irkutsk regional administration (10.78%), and OJSC OGK-3 (25% minus one share).

In 2007, the Subsurface Resources Agency (Rosnedra) considered revoking RUSIA Petroleum's license to Kovykta over non-compliance with timing requirements for developing the deposits and insufficient extraction volume. RUSIA Petroleum was obligated in 2006 to supply 9 billion cubic meters of gas to the Irkutsk region. The company argued that the region did not consume that amount, although it stood ready to start extracting and supplying gas.

TNK-BP was negotiating the sale of Kovykta to Gazprom, but details of the deal ran the talks into a blind alley. They were further complicated by conflict between TNK-BP shareholders, and the developing financial crisis finally killed Gazprom's interest in the asset.

On February 5, 2010, the Natural Resources Ministry announced a spot check at Kovykta. Gazprom announced the day before, citing company CEO Alexei Miller, that the gas monopoly did not need TNK-BP's Kovykta resources for organizing large-scale gas exports to Pacific Rim countries.

Another check, by Rosprirodnadzor, turned up the same violations as earlier of not meeting extraction targets, and recommended that Rosnedra revoke RUSIA Petroleum's license to the Kovykta deposits.

Later came reports that TNK-BP might be looking to sell its Kovykta stake to Rosneftegas.