Building a world of
resilient communities.

MAIN LIST

 

Russia warns BP it can revoke oil licences

MOSCOW (Reuters) - Russia has warned that production licences of foreign and domestic oil companies can be torn up at will if the nation's fabulous natural wealth is not exploited on Moscow's terms.

Natural Resources Minister Yuri Trutnev said on Wednesday Russia was prepared to withdraw the production licence for one of BP's biggest projects in the country, the Kovytka gas field, within a month.

"The Resources Ministry will review the possibility of withdrawing the Kovytka licence within a month," Trutnev told Reuters in Irkutsk.

Although analysts believed it was highly unlikely the authorities would carry out the threat, they said it was a sign Moscow is prepared to lean on even the most favoured foreign investors if it feels it can extract better conditions.

BP last year acquired a 49 percent stake in Russia's fourth largest oil company, TNK, with the personal blessing of President Vladimir Putin. It established a joint venture, now called TNK-BNP.

Trutnev said the ministry was unhappy BP-TNK had failed to invest in infrastructure in the Kovytka field. Analysts say the real reason for the spat is that state gas concern Gazprom wants a bigger role for itself in the venture.

Trutnev also turned up the heat on beleaguered Russian oil major YUKOS, saying it could be stripped of a licence held by its West Siberian unit Yuganskneftegaz, which alone produces one million barrels of crude a day, or 60 percent of YUKOS' output.

The muscle-flexing appeared to reflect a more uncompromisingly strident mood in the Russian leadership.

Earlier Foreign Minister Sergei Lavrov curtly told the United States to mind its own business after U.S. Secretary of State Colin Powell criticised Putin's plans to strengthen Kremlin power after a string of terror attacks in Russia.

"Russia is increasingly confident they can do what they want with their natural resources and will develop them on their terms," said Al Breach, an economist at UBS in Moscow.

SUKHOI LOG TENDER POSTPONED

Trutnev also said it would postpone a tender for rights to mine Siberia's vast Sukhoi Log gold deposit until next year and may bar foreigners from bidding.

"The new natural resources law .., will include an option to limit foreign participation in tenders for unique deposits -- such as Sukhoi Log and Ukokan (a copper deposit)," said Trutnev.

Trutnev's remarks followed Tuesday's announcement by state gas monopoly Gazprom that it is to merge with a smaller state oil company, Rosneft, to create a government-run energy champion to vie with private firms which dominate Russia's oil industry.

"This could create a perception that the government is trying to increase its control over the (oil) sector," said Elena Anankina, an analyst at Standard & Poor's in Moscow, referring to Trutnev's remarks and the Gazprom-Rosneft merger.

Anankina said she doubted whether YUKOS, which has been ordered to pay nearly $7 billion in back taxes, would lose its Yugansk licence because of the technical difficulties in carrying through such an order without disrupting production.

"There is equipment on an oilfield and this belongs to someone. You can't just close down operators over night. It's tricky," she said.

Trutnev appeared determined to make clear that he was not making a hollow threat.

"Any decision to revoke the licence will cause no harm to the Russian economy, nor will there be any negative consequences in terms of lost oil production," he said. "For example there could be a transfer of management."

Wednesday's move appeared to be a final warning to a group of core shareholders in YUKOS, including its jailed former chief executive Mikhail Khodorkovsky, to surrender control or face the complete dismemberment of the company he created.

Bailiffs want to sell Yugansk to recover YUKOS's tax arrears and have hired investment bank Dresdner Kleinwort Wasserstein to put a value on the assets.

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Make connections via our GROUPS page.
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.


UN Panel Looks to Renewables As the Key to Stabilizing Climate

In its latest report, the IPCC makes a strong case for a sharp increase in …

The EIA is seriously exaggerating shale gas production in its drilling productivity report

The EIA is the elephant in the room when it comes to energy statistics. Its …

Peak Oil Review - Apr 21

A weekly review including: Oil and the Global Economy, The Middle East & …

Those Fracking Lies

A review of Snake Oil: How Fracking’s False Promise of Plenty …

Perverse outcomes: Lifting U.S. oil export ban would mean greater dependence on foreign oil

There is a case regarding market efficiency for overturning America's oil …

Is This The End Of China’s Coal Boom?

“The End Of China’s Coal Boom,” is a new, must-read …

The Age of Diminishing Returns

A Q&A with Ugo Bardi, author of Extracted: How the Quest for Mineral …