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BP muscled out of Siberian gas field

Stephen Beard Jun 1, 2007
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BP muscled out of Siberian gas field

Stephen Beard Jun 1, 2007
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MARK AUSTIN THOMAS: The British oil giant BP is bracing itself for bad news from Russia. An energy licensing committee is meeting in Moscow today. The group is expected to revoke BP’s license to develop a huge natural gas field in eastern Siberia. From the European Desk in London, Stephen Beard reports:


STEPHEN BEARD: BP’s been accused of failing to meet the production targets laid down in the license to develop the Kovytka field — but the company has been physically unable to meet those targets. The Kremlin-controlled energy giant Gazprom refused to build the necessary pipelines. Analysts say Gazprom is trying to muscle in.

Something similar happened last year when Shell was forced to sell its majority stake in another Russian project. Russia expert Nick Redman says the Kremlin is clawing back control of licenses handed out on favorable terms during the 1990s:

NICK REDMAN: Today, the Russians are trying to revise those license terms. They can’t do it by ripping up the contract — but they can do it by these regulatory mechanisms you see.

But he says he doesn’t expect the moves against Shell and now BP to deter other foreign oil companies. With their diminishing reserves, they have little choice but to seek exploration deals in Russia.

In London, this is Stephen Beard for Marketplace.

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