BP PLC, the BP Russian unit can lose its license to drill in Eastern Siberia’s largest known natural-gas field, if oil western giant will fail to get over their contractual target.
TNK-BP will be inspecting on May 23 on its production at the Kovytka field, where it has a contractual target. Rusia Petroleum, a unit that is 62 percent owned by TNK-BP, produced 1.5 billion cubic meters from the field last year compared with a target of 9 billion cubic meters.
This case is not as it only seems, but it is more than its appearance. Russian government has already declared to wrestle back nations control over its natural resources from Western-owned and this inspection could be a part of government’s plan to thwart western companies.
It is expected that TNK-BP will lose its license as Russian energy authorities has announced earlier this year that TNK-BP was in breach of its license to operate the huge Kovykta gas field in Siberia.
Kovykta field is a one of the biggest oil reservoir, if BP loses it, than is will be a big blow for the company. The loss of such a key gas field will put its share price under pressure.
TNK-BP is the second-largest privately owned oil company in Russia, and much of its market value is based on Kovytka. Energy analysts have estimated the value of the field’s gas at $18 billion and the cost of its development, and the pipeline to China, at $15 billion. Kovytka is estimated to hold two trillion cubic meters, or 71 trillion cubic feet, of gas, or enough for Russia to meet 25 years of planned exports.
The row is strikingly similar to that experienced by Shell over the $20bn Sakhalin 2-gas project, which at the time was Russia’s largest direct foreign investment.
Russia has already shown his will that nation wants to build up Gazprom and Rosneft, the state-controlled gas and oil companies, to compete with international energy companies like BP, Royal Dutch Shell and Exxon Mobil.
In a nutshell this whole drama is to tighten nations grasp on its oil reservoir.
Image: kir
Via: Bloomberg
