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The Independent (UK): Prosecutors seek to strip BP of Russian licence

EXTRACT: BP is not the only British firm facing political turbulence in Russia; Shell’s involvement in the offshore Sakhalin-2 gas project is attracting its fair share of political interference too. Prosecutors have accused the Shell-led consortium of numerous environmental violations and have raised the spectre of significant financial damages as well as the possible withdrawal of key licences. There too it has been suggested that politics are at work; Gazprom is negotiating to take a 25 per cent stake in Sakhalin-2 from a reluctant Shell.

THE ARTICLE

By Andrew Osborn in Moscow
Published: 09 November 2006

Russian prosecutors have launched a fresh attack on the Anglo-Russian energy giant TNK-BP demanding it be stripped of a key gas field development licence. It is the third time in as many months that the firm, which is 50 per cent owned by BP and 50 per cent by a group of Russian oligarchs, has incurred the Kremlin’s wrath.

In September it was warned that it would have its licence to develop the giant Kovykta gas field in Siberia taken away unless it corrected numerous breaches of environmental legislation.

And last month prosecutors opened a criminal investigation into claims that government officials had been leaking confidential information to TNK-BP that could give the firm an unfair advantage over competitors.

This time TNK-BP was accused of violating the terms of licence agreements relating to two gas fields in western Siberia and of damaging the surrounding environment.

The overall development licence it risks losing is held by Rospan International, a wholly owned TNK-BP subsidiary. In a statement posted on the Prosecutor General’s website, officials said they had applied to the government agency responsible for licensing, Rosnedra, to have it revoked. “In the course of an investigation it has been established that the company … did not fulfil all of the conditions of its licensing agreements, and systematically failed to observe legal requirements concerning environmental protections and industrial safeguards.”

TNK-BP is expected to be given six months to put the alleged violations right though it has insisted it is following the letter of the law and has done nothing wrong. The dispute was triggered when a Russian MP from the governing United Russia Party filed a complaint with prosecutors.

Western energy analysts have suggested that the Kremlin is deliberately piling pressure on TNK-BP on behalf of the state-controlled energy behemoth Gaz-prom that covets control of some of its assets. Gazprom is keen to buy a 50 per cent stake in TNK-BP held by a group of Russian oligarchs who are reportedly willing to sell for the right price. Any regulatory problems are likely to drive that price down, clinching a better deal for Gazprom. In particular Gazprom is known to want control of TNK-BP’s Kovykta gas field so that it can export gas to China and South Korea.

BP is not the only British firm facing political turbulence in Russia; Shell’s involvement in the offshore Sakhalin-2 gas project is attracting its fair share of political interference too. Prosecutors have accused the Shell-led consortium of numerous environmental violations and have raised the spectre of significant financial damages as well as the possible withdrawal of key licences.

There too it has been suggested that politics are at work; Gazprom is negotiating to take a 25 per cent stake in Sakhalin-2 from a reluctant Shell.

Russian prosecutors have launched a fresh attack on the Anglo-Russian energy giant TNK-BP demanding it be stripped of a key gas field development licence. It is the third time in as many months that the firm, which is 50 per cent owned by BP and 50 per cent by a group of Russian oligarchs, has incurred the Kremlin’s wrath.

In September it was warned that it would have its licence to develop the giant Kovykta gas field in Siberia taken away unless it corrected numerous breaches of environmental legislation.

And last month prosecutors opened a criminal investigation into claims that government officials had been leaking confidential information to TNK-BP that could give the firm an unfair advantage over competitors.

This time TNK-BP was accused of violating the terms of licence agreements relating to two gas fields in western Siberia and of damaging the surrounding environment.

The overall development licence it risks losing is held by Rospan International, a wholly owned TNK-BP subsidiary. In a statement posted on the Prose-cutor General’s website, officials said they had applied to the government agency responsible for licensing, Rosnedra, to have it revoked. “In the course of an investigation it has been established that the company … did not fulfil all of the conditions of its licensing agreements, and systematically failed to observe legal requirements concerning environmental protections and industrial safeguards.”

TNK-BP is expected to be given six months to put the alleged violations right though it has insisted it is following the letter of the law and has done nothing wrong. The dispute was triggered when a Russian MP from the governing United Russia Party filed a complaint with prosecutors.

Western energy analysts have suggested that the Kremlin is deliberately piling pressure on TNK-BP on behalf of the state-controlled energy behemoth Gazprom that covets control of some of its assets. Gazprom is keen to buy a 50 per cent stake in TNK-BP held by a group of Russian oligarchs who are reportedly willing to sell for the right price. Any regulatory problems are likely to drive that price down, clinching a better deal for Gazprom. In particular Gazprom is known to want control of TNK-BP’s Kovykta gas field so that it can export gas to China and South Korea.

BP is not the only British firm facing political turbulence in Russia; Shell’s involvement in the offshore Sakhalin-2 gas project is attracting its fair share of political interference too. Prosecutors have accused the Shell-led consortium of numerous environmental violations and have raised the spectre of significant financial damages as well as the possible withdrawal of key licences.

There too it has been suggested that politics are at work; Gazprom is negotiating to take a 25 per cent stake in Sakhalin-2 from a reluctant Shell.

http://news.independent.co.uk/business/news/article1962733.ece

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