12 Feb 2010 16:11

Kovykta probe won't help project, investment climate

OMSK. Feb 12 (Interfax) - The spot check that natural resources watchdog Rosprirodnadzor is carrying out at the giant Kovykta gas condensate field in Russia's Irkutsk region will not solve the project's problems or support the investment climate in Russia, Viktor Vekselberg, co-owner of TNK-BP , said at an energy conference in Omsk.

Russia has a lot of potential to develop the gas industry in East Siberia, Vekselberg said. "I'd like to take the opportunity and remind you about the Kovykta project, which still can't be resolved once and for all. The Resources Ministry's spot check has now resumed, and it seems to me that this is doing nothing to support the investment climate in the country or resolve the problem as a whole," Vekselberg said.

The Natural Resources Ministry will complete its inspection at the Kovykta this week and could strip RUSIA Petroleum of its license as a result, Yury Trutnev, the resources minister, told reporters on Thursday. "The inspection will end this week," Trutnev said. "Of course [the license] might be revoked. It is known that its terms have not been fulfilled and are still not being fulfilled, and [the field] is not being developed," he said.

The license will be returned to the state's unallocated subsurface resource fund it if is pulled, Trutnev said.

Kovykta contains C1+C2 gas reserves of 2 trillion cubic meters. TNK-BP owns 62.89% of RUSIA Petroleum, the Irkutsk regional administration owns 10.78% and the OGK-3 generating company owns 25% minus one share. Two years ago, the Subsurface Resources Agency (Rosnedra) considered revoking RUSIA Petroleum's license to Kovykta over non-compliance with timeframe for developing the deposit 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. Citing its CEO Alexei Miller, Gazprom announced on February 5 that it did not need the resources of TNK-BP's Kovykta gas condensate deposit for organizing large-scale gas exports to Pacific Rim countries.