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Saturday, June 30, 2007

TNK-BP, Gazprom Clinch Kovykta Deal

Kovykta Production Station06-28-2007 - MosNews Weekly by Dietwald Claus - On Friday, TNK-BP and Gazprom signed a memorandum of understanding according to which the Anglo-Russian company would sell its stake in the giant Kovykta gas condensate field to Gazprom. TNK-BP retains an option to buy back a 25 percent + 1 share by the end of the year. The two companies also agreed to form a $3 billion international investment committee. The agreement may be the successful finale to BP's 10-year struggle to become a major player in the Russian gas market. It also indicates that Gazprom is willing to seek compromises with foreign energy companies. sWhile just last week it seemed that TNK-BP would lose completely the right to exploit one of the world's largest gas condensate fields, it will now receive $700 million - $900 million for its 63-percent stake in RUSIA Petroleum, the company that holds the Kovykta license. The final sum is not yet known, but industry experts think it will be roughly equal to the total amount TNK-BP has invested into the field so far. When in November 1997 BP formed a strategic partnership with Sidanco, then one of Russia's largest oil and gas companies, the move was hailed by Prime Minister Tony Blair as demonstrating "the growing confidence of international business in Russia's economic future." The deal included a stake in one of the world's largest gas reserves, the Kovykta field, containing an estimated 2 trillion cubic meters of natural gas. For $571 million, this was one of the best deals in BP's history - or so it seemed. But no sooner had BP CEO John Browne and Onexim Bank head Vladimir Potanin signed the agreement in a 10 Downing Street ceremony, when BP found itself in the middle of a feud between Potanin and Mikhail Fridman of Alfa Bank. Eventually, BP formed a partnership with TNK in 2003 and the resulting TNK-BP gained control over 63 percent of RUSIA Petroleum, whose other shareholders include Potanin's Interros holding (26 percent) and the Irkutsk regional administration (11 percent). But by this time, the political landscape in Russia had changed. While during the 1990s the state had agreed to often very favorable terms for foreign companies, it now felt that many of these had been disadvantageous for Russia. The government began to put pressure on energy companies to revise many of these arrangements. In the case of the Sakhalin-2 project, the foreign operators were hounded by Russia's environmental protection agency until they agreed to turn over control to Gazprom. In the case of BP, the approach was more complex but equally effective. Under the licensing agreement for the Kovykta field, TNK-BP (through RUSIA Petroleum) was obligated to produce at least 9 billion cubic meters by 2005. To make the project economically viable TNK-BP requested access to Gazprom's pipelines, which the gas monopolist refused, stalling the project's further development. The Russian government has frequently stressed the importance of using Kovykta gas to supply local consumers in East Siberia, rather than exporting it to neighboring China and other Asian markets as TNK-BP had originally intended. Some small-scale deliveries to the nearby settlement of Zhigalovo began at the end of December 2006. Ultimately, TNK-BP found itself in a paradox: while the oil business was going well - 35.5 percent of BP's total 2,475 million barrels per day production in 2006 was from Russia - the gas side of the operation was floundering: only 6.4 percent of BP's 238 million cubic meter per day production in 2006 was from Russia, even though Russian reserves without Kovykta are 29 percent of BP's total gas reserves. When in 2005 the Natural Resources Ministry threatened to revoke TNK-BP's Kovykta license, BP saw the writing on the wall and suggested a compromise: Gazprom should buy out the stake owned by TNK-BP's Russian shareholders. But the shareholder agreement prohibited a buyout until 2007. The ministry agreed to a revised development plan and granted a one-year grace period. By late 2006, however, the ministry began to move in on TNK-BP again, and on June 1, 2007, threatened to pull the plug on Kovykta. Three weeks later, the company agreed to sell to Gazprom and form an international investment group. While this demonstrated that Gazprom is able to use the legal and political system to pursue its goals, the outcome is not a disaster for TNK-BP. According to Artyom Konchin of Aton Capital, Gazprom cannot be compared to the „robber barons of the 90s." This is underlined by the fact that Gazprom has been consistent in paying prices „close to market value" for those assets it wants to acquire from private companies, as „has has been the case with Sakhalin-2, and others as well," Konchin continues. By offering TNK-BP a fair compensation for its sunk costs, Gazprom has shown that it is willing to compromise and take into consideration the interests of others. BP will remain in Russia and finally take on a more significant role, while in return it will help Gazprom overcome stiff political opposition - particularly in Europe - to its plans to enter the international downstream gas market. According to Konchin, the outcome of the Kovykta saga shows that "both Gazprom and BP played their hands really well." According to analysts at Dresdner Kleinwort, "the deal indicates an encouraging attitude being adopted by the Russian authorities towards BP's position as a pre-eminent IOC [international oil company] investor into the country." Dresdner Klein­wort also has put out a ‘buy' recommendation for BP. This, too, was the gist of BP's official press release on Friday, which quoted BP CEO Tony Hayward as saying: "Our aim is to establish a venture that is strategic and long term, with mutual benefits for both companies, both inside and outside Russia." According to BP spokesman Toby Odone, the deal will have "no impact on the bottom line," as the Kovykta field has never been part of BP's assets. Odone also said that BP will exercise its option to buy the 25 percent-plus-one-share stake in the Kovykta field by the end of this year. Financial markets seem to have taken the deal in a stride. While shortly after the announcement shares for BP dropped slightly from $70.42 to $69.23, they quickly recovered and opened at $70.25 on Monday.

Friday, June 29, 2007

Kremlin meeting 'to seal Kovykta fate'

22 June 2007 - Upstream OnLine - Gazprom chairman Dmitry Medvedev will host a meeting with BP at the Kremlin today for what one executive said would be the announcement of Gazprom's purchase of the Kovykta gas field. "Do not miss this meeting," the executive, who was familiar with the negotiations between the companies, told Reuters. The 1230 GMT meeting is the culmination of years of pressure from Gazprom on BP's Russian joint venture TNK-BP, which has long wanted to develop the huge field but has seen its plans blocked by the gas monopoly, which has other plans. A source familiar with the situation told the news agency that representatives from TNK-BP and BP would be present, but not BP boss Tony Hayward. TNK-BP has said it was willing to cede control of the field to Gazprom, at a price. TNK-BP has 62.7% of Kovykta, while minority stakes are held by Russia's Interros investment company and the local government in East Siberia's Irkutsk region. "What we're talking about is a cash consideration," said the executive, who declined to be identified. "This is a bilateral thing. The other stakes have to be dealt with separately." Earlier today, the Wall Street Journal cited unnamed sources as saying Gazprom would pay close to $1 billion, but the executive familiar with negotiations told Reuters that figure "may or may not be accurate". He also declined to say whether TNK-BP might later be invited back into Kovykta as a minority shareholder, adding that there was "some nuance" over whether it would be BP or TNK-BP. Gazprom is interested in Kovykta as part of a wider deal, which the Wall Street Journal said would involve launching negotiations on a $3 billion global joint venture with BP, involving projects in Russia and elsewhere, with each side contributing assets valued at $1.5 billion. The executive familiar with the negotiations said the companies were very likely to announce broad international co-operation but very unlikely to mention any specific assets. "Assets have not been identified," he said. BP's agreement to sell its control in the field has been widely compared to Shell's decision to cede control of the Sakhalin 2 venture to Gazprom late last year. Both sets of negotiations were held behind closed doors amid threats from Russia's Natural Resources Ministry and against the background of rapidly growing state control over energy assets. The ministry's licensing agency has threatened to strip Kovykta's operating company Rusia Petroleum of its licence, although the deadline for a decision has been repeatedly pushed back as talks between the firms got closer and closer to a deal. The agency's complaint that Rusia Petroleum was not producing enough gas has been widely interpreted as the latest Kremlin tactic to regain state control over hydrocarbon assets. "Sentiment continues to be geared towards making a negative out of BP's Russian travails, and this latest item will not help that current situation," said Citigroup oil and gas analyst James Neale in written research. "However, we would argue that BP continues to look at realistic ways to convert its Russian asset base into cash, and longer term strategic options. In the realpolitik of Russian hydrocarbon extraction, it is hard to see how this would be possible without a Russian state sponsor." The executive familiar with the Kovykta negotiations said in the larger context the deal was very good for BP. "This is very much not BP being backed into the corner, forced to capitulate on something and then put on a smiley face at a press conference and say 'yes, we're happy, thankyou for screwing us'," he told Reuters. Analysts have valued TNK-BP's interest in Kovykta at $2 billion to $3.6 billion, based on the field's gas being sold on local markets. It would be worth much more if TNK-BP had the right to export the gas to higher value markets abroad.

Thursday, June 28, 2007

Russia resists Exxon's plans to sell Sakhalin gas to China

MOSCOW, June 19 (RIA Novosti) - Russia's deputy energy minister backed energy giant Gazprom's request to prevent U.S. oil major Exxon from selling natural gas from the Sakhalin-1 project to China, saying the gas must meet domestic needs. Andrei Dementyev said at a Far East development meeting chaired by Prime Minister Mikhail Fradkov: "Sakhalin gas is meant for Russian consumers - without this gas there will be no regional balance." A senior Gazprom official had told the meeting that if Exxon's Russian arm Exxon Neftegas, which holds a stake in the Sakhalin-1 project in the country's Far East, exported the gas, Russia would be hit by a domestic shortfall. Gazprom, which already has a controlling stake in another oil and gas project off the Far East island, Sakhalin-II, has been hoping to obtain a license for a similar upcoming project, Sakhalin-III. "We will not carry out any other gas projects except Sakhalin until 2011," Dementyev said, adding that the Industry and Energy Ministry saw no alternative to Sakhalin gas for supplying the Far East. He said that under Russian laws, any operator can supply gas to any domestic consumer, but gas exports fall under strict rules. Exxon Neftegas Limited holds a 30% stake in the Sakhalin-1 production sharing agreement. The other shareholders are state-owned Russian oil company Rosneft (20%), India's ONGC (20%) and Japan's Sodeco (30%). Potential recoverable reserves at Sakhalin-I, which includes three large gas fields off northeast Sakhalin, amount to 485 billion cubic meters of gas.

BP chief says co. won't cut its share in JV in Russia

MOSCOW, June 18 (RIA Novosti) - British oil major BP does not plan to cut its share in Russia-based crude producer TNK-BP, the company's CEO said Monday. Speaking at an investment forum in the Russian capital, Tony Hayward said BP would maintain the 50-50 ownership structure in the joint venture, which has so far proved successful. He also said the company would continue investing in Russia. BP has contributed $45 billion in taxes to the Russian budget over the past four years, he said. TNK-BP, the third largest oil producer in Russia, is entangled in a protracted dispute with the authorities and state-controlled energy giant Gazprom [RTS: GAZP] over the operating license for the giant Kovykta gas field held by its subsidiary, Rusia Petroleum. The license regulator is considering revoking the license, citing the company's underproduction. Hayward said dialogue with Gazprom on Kovykta was "detailed and effective." TNK-BP reportedly offered the gas monopoly different cooperation options for the East Siberian field, including establishing a holding with a controlling stake for Gazprom. The formal status of negotiations between TNK-BP and Gazprom is unknown.

Tuesday, June 12, 2007

TNK-BP plans Uvat cash splash

04 June 2007 - Upstream OnLine - BP's Russian venture will double investment in its giant West Siberian Uvat oil project next year, the company said today as it faced the risk of losing its licence for the Kovykta gas field. TNK-BP will invest $1.5 billion in the Uvat project next year, up from $760 million this year, as it wants to increase production to 10 million tonnes per year by 2020 from the current 1.5 million tonnes. "We want to turn it into a new Russian oil province," said the head of TNK-BP's Tyumen unit, Viktor Blagoveshchensky, as the company took journalists to Tyumen to present its updated strategy for Uvat. The Uvat project is in the south of the Tyumen region on the border with Kazakhstan. It combines 16 deposits, most of which were discovered in the Soviet period and may contain as much as 250 million tonnes or 1.83 billion barrels of oil. By comparison, TNK-BP's total reserves are 7.81 billion barrels. "The project has been on ice for a long time because we had no technologies to make it economically viable," Blagoveshchensky said. "We had to build the project from scratch as the oil is very difficult to recover." He said that, besides new technologies, the increase in global oil prices had also helped the company embark on the project, which can break even only at more than $40 per barrel. TNK-BP is launching its Uvat strategy as Russia toughens its stance towards private oil producers and is threatening to strip licences for non-compliance, while state-controlled companies are playing a larger and larger part in the oil and gas industry. TNK-BP came under pressure last year for failing to produce the agreed volumes of gas at the East Siberian Kovykta field, and it could lose its licence there for failing to meet production targets set out in the contract terms. Uvat is unlikely to face the same problems. Tyumen region's resources head Sergei Prozorov said that the licensing agreements contained no production obligations as exploration was still continuing, Reuters reported.

BP CEO: BP Enjoyed Success in Russia and Not Going to Leave

09.06.2007 [] - Tony Hayward, the BP chief executive, will pledge the group’s commitment to Russia today in an attempt to defuse tensions over the $20 billion Kovykta gas project, The Times reported. Mr Hayward wants to use this weekend’s Economic Forum in St Petersburg, where he is making only his second significant public appearance since taking over last month, to emphasise the success that BP has enjoyed in Russia since forming a joint venture with TNK four years ago. While formal talks with Vladimir Putin are not on the agenda, the BP chief executive is one of several business leaders who will meet the Russian President tonight after appearing at an energy round table with Jeroen van der Veer, his counterpart at Shell. Mr Hayward’s comments will come despite a growing resignation within BP to the fact that its Russian business looks set to be muscled out of Kovykta, one of its biggest prospects in the country.

Shell to Increase Investments in Russia Despite Sakhalin Misfortune

09.06.2007 [] - British-Dutch oil major Shell plans to increase investments in Russia despite losing control of the giant Sakhalin-2 project earlier this year, the company's CEO said yesterday. Shell was the operator of Sakhalin-2, one of the biggest private oil and gas projects in the world, but was forced to sell to state-run gas giant Gazprom in April after coming under pressure from Russian authorities. Shell is interested in investing "as much as possible in upstream" in Russia, as well as in "profitable downstream," such as by creating a network of petrol stations in Russian cities, he said. But the CEO warned that Shell would not be ready to operate as a subcontractor in Russia and said that binding contracts were a key requirement for its investments.

Top-tier investors flock to subscribe to LUKoil notes

MOSCOW, June 4 (RIA Novosti) - One of Russia's largest oil companies, LUKoil [RTS: LKOH], issued $1 billion's worth of notes in London Monday. The 50/50 issue of 10- and 15-year notes, lead-managed by Credit Suisse and Deutsche Bank, was nearly six times oversubscribed and went primarily to portfolio investors, banks, and pension funds in the U.S. and Western Europe. "LUKoil intends to use the proceeds from the issue, notably, to refinance the current debt and increase capital expenditure", the company said. LUKoil is a vertically integrated oil company based in Moscow, with upstream operations concentrated in western Siberia. It accounts for roughly 1.3% of world oil reserves, about 2.1% of world production, and 18% of production and refining in Russia. Outside Russia, LUKoil has three refineries in Europe and runs a network of nearly 800 gas stations in the U.S., bought last year from ConocoPhillips, which holds a 20-% stake in LUKoil.

Saturday, June 02, 2007

Court rejects Moncrief's suit vs BASF over stake in Russian gas field

MOSCOW, May 31 (Prime-Tass)- Germany's Frankenthal district court on Thursday rejected U.S.-based Moncrief Oil International's lawsuit against German chemical company BASF and BASF subsidiary Wintershall over the ownership of Russia's Yuzhno-Russkoye gas field, Russia's natural gas monopoly Gazprom said. Gazprom holds the license to develop the field. Earlier on Thursday, Dow Jones Newswires reported, citing spokespeople for the court and for Moncrief, that the court was expected to decide on the lawsuit on July 5. It was not clear why the decision was made on Thursday. Moncrief has argued that BASF' preliminary accord last year to buy a 35% stake in the field from Gazprom was illegal because it interfered with the U.S. company's right to a stake in the Yuzhno-Russkoye field. Moncrief was seeking U.S. $8 billion in damages. Moncrief concluded an agreement to buy 20% in the field from Gazprom in 1997 and in 1999 agreed to instead acquire a 40% interest. Neither of the agreements has been fulfilled. Previously Moncrief also filed a lawsuit against Gazprom over the stake in the U.S. Last year and earlier this year two U.S. courts rejected the lawsuit, saying that they had no jurisdiction over the issue. Meanwhile, German energy company E.ON also concluded a preliminary agreement last year to buy 25% minus one share in the Yuzhno-Russkoye field. The Yuzhno-Russkoye deposit, located in the Yamalo-Nenets Autonomous District, has gas reserves of 700 billion cubic meters. It is expected to be a key source of gas for the North European gas pipeline, linking Russia and Germany under the Baltic Sea, which is planned to be launched in 2010. Gazprom holds 51% in the pipeline, while E.ON and BASF hold 24.5% each.

Court to Rule on Moncrief Suit in July

05.31.07 - Associated Press By Matt Moore - A German court will issue a decision July 5 on whether to void a joint venture between BASF AG and OAO Gazprom after a U.S. oil company pressed its claims to a stake in a vast Siberian gas field. Forth Worth, Texas-based Moncrief Oil International Inc., a privately held U.S. gas company, is suing the chemical giant. Moncrief contends that the deal between Gazprom and BASF (nyse: BF - news - people )'s Wintershall AG unit should not be permitted because the U.S. company had inked its own deal with Gazprom in the late 1990s. Manfred Nax, a judge in the District Court of Frankthal, said he would rule on the case July 5, but added during a hearing Thursday that the issue was complex. Nax said that Moncrief's claim to the gas field is not in question, adding that "they have a contract from 1999 and it is valid." Nax said, however, that it was conceivable that Moncrief's complaint could be dismissed as unfounded, given that BASF did not appear to be in violation of any German law. He said that if anyone violated the contract it was Gazprom. A spokesman for Moncrief, Stephan Holzinger, said the U.S. company and its lawyers would discuss Nax's comments and file new arguments in July. In a statement, BASF said it supported Nax's comments and added that it had "conducted itself in a correct legal manner and has not infringed competition law." BASF has steadfastly maintained that Moncrief's claims are without merit. Moncrief Chairman Richard Moncrief repeated the company's assertion that its contract remains valid. "We know that our contract is valid," Moncrief said in an interview Wednesday with The Associated Press in Frankfurt. "All things were negotiated and discussed fully." Moncrief signed deals with Gazprom for a 40 percent stake of the Yuzhno Russkoye gas field, the value of which is estimated to be around $8.5 billion. Gazprom, which is not named in the lawsuit, has not commented on the case. Russia's Gazprom state-controlled natural gas monopoly and Germany's BASF struck an asset-swap deal in April 2006 that raised Gazprom's stake in BASF marketing subsidiaries in exchange for increasing the German company's share in a giant Siberian gas field. Klaus Nieding, a lawyer for Moncrief, said that BASF had been aware of Moncrief's own deal with Gazprom. Letters were sent by Moncrief to Wintershall CEO Reinier Zwitserloot and to Gazprom, he said. It is not the first time that Moncrief has gone to court to seek redress. A similar case was brought in the United States but was dismissed by a federal court, which said it did not have jurisdiction over the issue. That dismissal was upheld by an appeals court in March. Nieding, however, said the company hopes to have that case reheard.

Lundin loses Caspian licence

01 June 2007 - Upstream OnLine - Russia's licensing agency today ruled to revoke a licence for a Caspian Sea field from Sweden's Lundin Petroleum, while Imperial Energy escaped relatively unhurt. The Natural Resources Ministry said the agency's committee ordered the withdrawal of licensing rights from Lundin Petroleum's PetroResource unit and took milder decisions over Imperial Energy's three units - Alliance, Nord and Sibinterneft. "The commission has decided to give Alliance three months to put the violations right. Information on Nord Imperial and Sibinterneft was reviewed, but it was decided to take no immediate action," a ministry spokesman said. Lundin said in a statement that it had not received written confirmation of any decision from the agency. "Lundin Petroleum strongly refutes any suggestion that the Lagansky licence be revoked and will take all necessary action to protect its interests in this respect," the company said. Lundin's stock fell by more than 6% after the announcement, while Imperial Energy was up as much as 7.5%, Reuters reported.

US urges Turkmen pipeline talks

usaturkmenistan01 June 2007 - Upstream OnLine - The US renewed its call to Turkmenistan today to revive talks on a new Caspian Sea gas pipeline that would link Central Asian deposits with Western markets, bypassing Russia. Russia, Kazakhstan and Turkmenistan agreed on 12 May to build a pipeline around the Caspian Sea, a move that boosted Moscow's dominance in the region but irritated Washington. Steven Mann, a senior US State Department official, said during a visit to the Central Asian state that Washington's position on the Trans-Caspian deal had not changed. "We believe it is enough to supply gas into Russia and to do the Trans-Caspian pipeline as well," he said. The pipeline deal with Russia hushed speculation that after the death in December of long-serving president Saparmurat Niyazov, Turkmenistan might open up to foreign trade with new gas export routes such as the US proposal or a Chinese deal. Under Niyazov, Turkmenistan, which is Central Asia's largest gas producer, pursued an increasingly isolationist policy and cut its contacts with other nations to a minimum, exporting almost all its gas via Russia's pipeline system. Despite the continued reliance on Russia, the new president, Kurbanguly Berdymukhamedov, is seeking to play a more active role in the region. "We look forward to the international private sector coming to Turkmenistan," said Mann, who served as US ambassador to Turkmenistan in 1998-2001. "Investment conditions in Turkmenistan have not been attractive for the private sector over previous years, so I am hopeful that President Berdymukhamedov and his administration are going to change these conditions," Reuters quoted him as saying. He said delegations from US corporations had recently visited the nation and a number of others planned to visit soon to discuss various projects, but gave no details.

BP and Gazprom bosses meet

31 May 2007 - Upstream OnLine - The heads of UK supermajor BP and Russia's gas export monopoly Gazprom met in Moscow today, a day before Russian officials meet to decide the fate of the Kovykta gas field in Siberia. Gazprom said in a statement that BP chief executive Tony Hayward had held talks with Gazprom's Alexei Miller, but gave little information other than to say they discussed working together in the European, US and Russian energy markets. BP will find out tomorrow whether Russia's oilfield licensing agency Rosnedra will strip the licence from Kovykta, a huge gas field close to China, which is operated by a subsidiary of its Russian joint venture TNK-BP. "I would say the chances of the Kovykta licence being withdrawn are 96 percent. I can't see how BP's visit can stop this from happening," Oleg Mitvol, deputy head of Russia's environmental agency, which led the investigation, told Reuters. Russia's licensing commission is due to meet around midday today. Russian officials have accused TNK-BP of breaching the Kovykta licence by underproducing at the field, although TNK-BP says it would produce far more if Gazprom had allowed it to build an export pipeline to China. The two companies are in talks about jointly developing Kovykta, although Gazprom has resolutely said it has no interest in the field and will not need it to supply China until 2015. Analysts told Reuters Gazprom is trying to drive a hard bargain to gain control of Kovykta's reserves of about 2 trillion cubic metres of gas, enough to supply the entire world for almost a year. Gazprom has rapidly expanded its control over Russian and Central Asian gas reserves over the last year, and Kovykta is one of the biggest fields outside its control.

KNOC eyes 10 billion barrel bonanza

south korea31 May 2007 - Upstream OnLine - South Korea's state-run producer Korea National Oil Corporation (KNOC) claimed today that the West Kamchatka Offshore block, which lies in the Sea of Okhotsk, could hold 10 billion barrels of oil - almost treble initial estimates. However, the South Korean government warned that it was too early to make any firm estimates. "The drilling hasn't started yet, but the estimated oil reserves are up to 10.3 billion barrels," a spokesman for KNOC told Reuters. With appraisal drilling due to begin only next year, the estimate appeared to be based on seismic surveys and initial studies conducted in 2005 and 2006. The standard Western practice is to put a figure on oil reserves only after appraisal drilling. The field is jointly controlled by South Korean players and Russian state-run oil company Rosneft. In December 2005, when South Korea sealed its investment, it said that the Russian government had estimated reserves there at about 3.7 billion barrels. The KNOC spokesman said the reserves estimate had been revised higher last November after another round of studies. An official with Seoul's Energy Ministry told Reuters it was premature to give any estimate. "It is highly risky to say 10 billion barrels as there is another stage of exploration still to come," said Kim Jae-Jun, who runs the country's overseas investment programmes at the South Korean Ministry of Commerce, Industry & Energy. Other shareholderes in the block are SK Corporation, Daewoo Inernational and Hyundai Corporation. Previously Rosneft had estimated reserves on the West Kamchatka shelf at around 6 billion barrels.

Russia Hikes Crude Oil/Petroleum Export Duties

June 01, 2007 - Russia has hiked today the duty on crude oil exports to $200.6/ton from $156.4/ton. Prime Minister Mikhail Fradkov sealed the respective ruling in mid.-May. In addition to crude oil, the duty on refined oil exports reached $147.5/ton, and the duty on dark oil product exports grew to $79.4/ton; previous indicators were $117.7/ton and $63.4/ton respectively. Of interest is that Belarus has also stepped up crude oil duties today, making them equal to Russia’s duties. This unification was specified in the intergovernmental agreement that Russia and Belarus concluded January 12, 2007. Russia revises the duties on crude oil exports each two months, after monitoring prices of world markets. The duties go down following the global drop in prices.

Russian regulator puts off TNK-BP gas license decision

MOSCOW, June 1 (RIA Novosti) - Russia's license watchdog said Thursday it had postponed for two weeks a decision on revoking a license of the Russian-British joint venture TNK-BP [RTS: TNBP] over underproduction at an Eastern Siberian gas field. The natural resources minister, Yury Trutnev, said last week his ministry had started a repeat check into the Kovykta field after Rusia Petroleum, a subsidiary of TNK-BP, failed to correct previous violations. He said the license might be put up for auction or competitive bidding at the government's discretion. Industry analysts said the fate of the license hinged on negotiations between TNK-BP and state-run energy giant Gazprom [RTS: GAZP], ongoing since last year. "Should Gazprom become a Rusia Petroleum shareholder, the licensing problem will be fixed," MDM Bank analyst Nadezhda Kazakova said. The status of negotiations between TNK-BP and Gazprom is unknown. The Federal Agency for Subsoil Use said in early February that Rusia Petroleum could be stripped of its license for failing to meet production targets at Kovykta, which holds proven reserves of two trillion cubic meters of natural gas, and set a deadline of May 23 for the company to rectify the situation. Rusia Petroleum challenged the regulator's decision at the arbitration tribunal in Irkutsk in Eastern Siberia, which ruled to suspend the regulator's measures against the project operator pending a court hearing. Rusia Petroleum is owned by TNK-BP (64.4%), the holding company for nickel giant Norilsk Nickel, Interros (25.82%), and the Irkutsk regional administration (11.24%).

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