Russia Must Move Fast on Kovytka Gas Deal
Posted: 13 October 2004
Officials at TNK-BP chiefs say the Russian government's failure to move quickly to develop the Kovytka gas field in eastern Siberia puts a potentially lucrative supply deal with South Korea and Japan under threat.
TNK-BP Chief Operating Officer Viktor Vekselberg told news agency Dow Jones that the Anglo-Russian company hoped to strike a deal with Russia by the end of 2004 for Russian gas monopoly Gazprom to participate in the development of the 1.9 trillion cubic metre field, one of the main Russian assets of BP, which bought Russian concern TNK last year.
"We do not have a lot of time to keep negotiating," Vekselberg told a group of reporters. We can lose the market we have with the South Korea and the Chinese."
TNK-BP had hoped to begin production at Kovytka in 2006 but needs the cooperation of the Russian government to get a pipeline constructed to take the gas to China and Korea.
TNK-BP Chief Executive Officer Bob Dudley said the development of Kovytka, one of the world's largest gas fields, is vital for the development of Russia's eastern Siberian region.
"This is in Russia's national interest. It should not be thought of as simply a single project," Dudley said. "Demand growth in South Korea and China is very, very strong. Kovytka and the eastern Siberian gas reserves is the natural place to go."
Russia's natural resources ministry said this summer that it was reviewing TNK-BP's license, accusing it of delaying field development.
Gazprom's Chief Finance Officer Andrey Kruglov said in September that his company would "maybe not pay so much attention to Kovytka" after its recent merger with fellow Russian state-owned company Rosneft which gave it further access to the massive gas reserves on the Russian Far East island of Sakhalin.
Vekselberg and Dudley also said TNK-BP was considering participating in BP ventures outside of Russia.
"The cooperation between the two boards is excellent," Dudley said. The shareholders meet once a month. The discussions are very strategic and review options constantly."
Posted by Alexander Lindsay, Editor Pipeline Magazine
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