TNK-BP pressures Gazprom over Kovykta

When Russian President Dmitry Medvedev appointed Viktor Vekselberg as a chairman of the Russian section of the coordination council to oversee the creation of Russia’s Silicon Valley the billionaire and one of TNK-BP’s Russian shareholders told the Russian President that TNK-BP planned to sell its stake in the giant Kovykta gas field to state-owned Rosneftegaz for $700 million to $900 million by the end of this year. Rosneftegaz is chaired by Russia’s powerful energy tsar and Deputy Prime Minister for Energy Igor Sechin.

Whether Vekselberg means it or not the announcement puts pressure on Russian gas monopoly Gazprom which has been seeking to acquire this gas field but does not want to pay such a high price for it.

Kovykta is one of the world’s largest undeveloped gas fields containing about 2 trillion cubic meters of gas reserves. Kovykta is an excellent asset because the price of production will be very cheap and is possible to export gas to Europe or China Konstantin Simonov director of the National Energy Security Fund in Moscow told New Europe on 24 March a day after Vekselberg’s announcement. TNK-BP has being trying to sell Kovykta since it cannot export gas from the field on its own considering that Gazprom has been Russia’s sole exporter of gas. "The question is approximately 100-150 million dollars because Gazprom agreed to pay 600-650 and now TNK-BP wants to have 800 million dollars so it is only a question of price. Gazprom can wait for this field but TNK-BP can’t wait because it wants to have this money now ” Simonov said. "TNK-BP wants to blackmail Gazprom with the help of Rosneft because Mr. Vekselberg said it is possible to sell this asset to Rosneftegaz and Rosneftegaz is a company under the control of Mr. Sechin ” Simonov said. "Kovykta is excellent asset and for Gazprom it is not good news if Mr. Vekselberg will sell this field to Rosneftegaz - to Mr Sechin - and that is why I think Gazprom will buy this field and Gazprom will pay 800 million dollars to TNK-BP and Mr. Vekselberg ” he added.

TNK-BP has come under Kremlin pressure which has said that the joint venture is not meeting production targets at the field. Natural Resources& Environment Minister Yuri Trutnev said on 18 March that TNK-BP will not be compensated for its investment at Kovykta should its license be revoked. Trutnev’s remarks contradict statements made earlier by Sechin. In February the Natural Resources& Environment Ministry said it could revoke the license held by TNK-BP’s Rusia Petroleum subsidiary for not meeting output targets.

Although the Kovykta case mirrors the way Gazprom muscled its way to the Sakhalin II project Gazprom cannot pressure TNK-BP Simonov said. "Gazprom is trying to use old-school methods but TNK-BP is very strong company. It’s very hard to press on TNK-BP because it has very serious shareholders – not only BP as a foreign company Russian shareholders. Vekselberg now is the head of very important project for President Medvedev ” Simonov said. AAR the vehicle owned by Vekselberg Mikhail Fridman German Khan and Leonard Blavatnik controls 50% of TNK-BP. But TNK-BP also has close ties with Rosneftegaz because Khan reportedly has good relations with Sechin Simonov said. Let the competition begin!

Source: New Europe, 28.03.2010