Energy multinational is likely to lose out to the state in battle for control of Siberian gas field, writes Conor Sweeneyin Moscow
BP has won a reprieve in its battle to retain control of a vast Siberian gas field, valued at €16 billion, despite expectations that it would lose its licence last week.
The latest twist in the increasingly precarious control of the TNK-BP consortium over the Kovytka gas field comes just months after another oil major, Shell, reluctantly agreed to cede control of the vast Sakhalin Island energy project.
The beneficiaries of the tussles are Russian state-controlled energy giants. Questions about the future of the operating licences were raised in both cases.
There is little doubt that Gazprom will emerge as a major shareholder in the Kovytka project, although speculation remains about precisely who will be shoved aside for one of the most valuable gas fields in the world - a field which contains enough gas to supply Asia for five years.
TNK-BP has always protested that the criticism of its inability to fully exploit the field have been unfair since it does not have the right to export gas to nearby China, but must instead sell at much lower prices on the local market as Gazprom has a monopoly on Russia's gas exports.
However, this argument has garnered little sympathy from Russian state officials, particularly the deputy chief of the environmental watchdog, Oleg Mitvol, who also led the campaign against Shell.
The question which now arises is whether BP will be forced out, or whether the four oligarchs who control the TNK section of the business will be forced to make way for Gazprom, as has long been considered likely in Moscow.
The future of the gas field was discussed by BP's newly-installed chief executive, Tony Hayward, and Gazprom's Alexei Millar, who has until now resisted requests to take control of it.
The additional two weeks may allow for a broader asset swap in TNK-BP, which has a capitalisation of about €24 billion. It stands out as the last foreign-controlled energy firm in Russia and as one of the few currently without a significant state holding.
The reason for the delay in announcing the loss of the licence could simply be news management, as the authorities may wish to avoid any negative news for foreign investors just ahead of the Russian Economic Forum in St Petersburg on June 10th.
Some analysts inside Russia are becoming increasingly bullish about the country's economic future and argue that the role of western business should be curtailed, not least because western interests fail to understand that Russia is fundamentally a different place. "It has never been Russia's destiny to emulate the west. She is simply too different. Different in history, different in outlook, different in aspirations," argued Eric Kraus, of the Niktitsky Fund in Moscow.
