GAZPROM yesterday said that it was losing interest in Kovykta, a huge Siberian gasfield controlled by BP, delivering a second blow to the British company, after the Russian Government this week threatened to cancel BP’s licence for the project.
The Russian state-owned utility piled on the pressure by indicating that it had other more attractive opportunities to build a 3,000 mile pipeline from Eastern Siberia to China. However, Gazprom insisted it would retain its monopoly on the export of gas from Russia.
Sergei Kupriyanov, a spokesman for Gazprom, said that its forthcoming merger with Rosneft, the state oil company, would bring with it bigger exposure to gas projects on Sakhalin island, as well as at Shtokman, a huge gasfield in the Arctic Sea. He said: “After we join Sakhalin projects via the acquisition of Rosneft, the potential attractiveness of Kovykta will dramatically decrease for us.”
BP would not comment on the Gazprom statement, but insisted that negotiations with the Russian utility were continuing.
Analysts in Moscow believe the pressure on BP and its Russian venture, TNK-BP, is part of a campaign by Gazprom to secure a majority stake in Kovykta and the pipeline project without any investment by the Russian group. Gazprom has an export monopoly and is believed to be jealous of TNK-BP’s 60 per cent holding in Rusia, the company that owns the licence to Kovytka, which is capable of supplying a third of the British market.
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Stephen O’Sullivan, an analyst with United Financial Group, a Moscow brokerage, said that Gazprom’s stance was a negotiating tactic. He said: “The question is how much equity will BP have to give up. It is all aimed at lowering the price.”
However, brokers give warning that BP cannot wait too long before it must strike a deal with the potential buyers of gas in China and Korea. Both countries are in talks to buy liquefied natural gas, and Kovykta needs to compete with this product.
Meanwhile, Gazprom is stymied by a wealth of projects and limited resources. In addition to the Shtokman project, a 3.2 trillion cubic metre gasfield in the Barents Sea, Gazprom plans to build a 750-mile pipeline beneath the Baltic, linking pipelines from western Siberia to Germany.
Gazprom’s role in development of Russia’s energy market was reinforced this week when President Putin blessed the proposed merger with Rosneft, creating an energy giant with involvement in almost every major Russian energy project and with the power to block export projects.
OIL PRICES STORM AHEAD
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Oil prices moved higher again yesterday as Hurricane Ivan continued to disrupt operations in the Gulf of Mexico and a new storm gained momentum in its wake. Brent crude rose by $1.10 to $41.85 a barrel in London after the shutdown of 78 per cent of daily crude production in the US offshore fields.