BP Sells Vast Russian Gas Field To Gazprom

June 22, 2007
Sale viewed as Russia's desire to edge out foreign energy firms and take control of its own resources.

BP said June 22 that it had agreed to sell its stakes in a Siberian gas field and company to Russian gas giant Gazprom for up to $900 million. "BP and TNK-BP today announced that they have signed a memorandum of understanding to create a strategic alliance with the Russian gas giant, Gazprom, to invest jointly in major long-term energy projects or swap assets around the world," BP said.

Under the terms of the agreement, BP's Russian joint venture TNK-BP has agreed to sell to state-owned Gazprom its 62.89% stake in Russia Petroleum, the company which holds the license for the vast Kovykta gas field in East Siberia. TNK-BP has also agreed to sell its 50% interest in East Siberian Gas Company (ESGCo). It added that TNK-BP and Gazprom would immediately establish a joint team to identify investment opportunities in and outside of Russia.

The Kovykta gas field is about 280 miles from the city of Irkutsk in the north of the Irkutsk region of Eastern Siberia. It is estimated that the field has resources totaling about 2.0 trillion cubic meters of gas, BP said.

Gazprom's involvement had already been mooted as a possible solution to a dispute between BP and Russian authorities over licensing the British firm to exploit the huge Siberian gas field. Russian officials have repeatedly threatened to remove the license as the project has failed to meet production targets. But following the announcement, the deputy head of Russia's environmental monitoring agency said: "Considering the change of circumstances, extra time could be given for fulfilling the conditions on the license.

The announcement would appear to be the latest of several moves by Russia, the world's biggest exporter of gas and a leading oil producer, to edge out foreign energy firms and take control of its own precious resources. British-Dutch oil group Shell has been forced to sell Sakhalin-2 in far eastern Russia, one of the biggest private oil and gas projects in the world, to Gazprom after pressure from Russian authorities over alleged environmental violations.

Copyright Agence France-Presse, 2007

Popular Sponsored Recommendations

Process Mining For Dummies

Nov. 19, 2023
Here it is. Everything you need to know about process mining in a single book, written in the easy-to-understand, hard-to-forget style that ‘For Dummies’ manages so effortlessly...

The Executive Guide to Best Practices for Ecommerce Integration

Oct. 2, 2023
Get ready to elevate your post-checkout experiences and thrive in today's unpredictable market. Learn why integration and automation are crucial to run operations more smoothly...

Discover How an Eye Tracking Study Improves Training Procedures

Oct. 29, 2023
Did you know that your training processes can be streamlined by visualizing and analyzing key skills within your employee base? Find out how we use eye tracking to capture advanced...

Beware Extreme Software

Sept. 24, 2023
As a manufacturer, you understand the importance of staying ahead of the curve and being proactive in your approach to technology. With the rapid pace of change in the industry...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!