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Kovykta deal 'in early 2008'



By Upstream staff 

Russia's Gazprom and BP's Russian oil venture TNK-BP will finalise a deal for the giant Kovykta gas field in Siberia in early 2008, a TNK-BP shareholder said today.

"The Kovykta deal will close no later than in the first quarter. This is a technical issue, which does not depend on TNK-BP," said Victor Vekselberg, one of the Russian shareholders of the company.

Under the deal, Gazprom, Russia's gas export monopoly, would buy TNK-BP's Kovykta field in eastern Siberia for $700 million to $900 million, while the companies also plan a broader international venture.

TNK-BP, in which BP holds 50%, agreed last year to sell the field, which has enough reserves to supply the world with gas for almost a year, after Gazprom blocked the oil company's plans to use the field for gas exports to China.

Analysts have interpreted the agreement as another milestone in the Kremlin's drive to regain control over Russia's strategic energy sector. Gazprom has also said the Kovykta deal would be closed early next year.

Industry sources have said the Kovykta agreement might be a part of a broader deal between the two companies, which might include the gas giant buying into TNK-BP, Russia's third-largest oil producer in terms of production.

Gazprom has said it would consider the option after a five-year lock-up agreement, signed by shareholders when BP bought its stake in TNK-BP in 2003, expires in the end of this year, Reuters reported.

Apart from Vekselberg, TNK-BP Russian shareholders include billionaires Len Blavatnik, Mikhail Fridman and German Khan.

Vekselberg and Fridman have both denied they have plans to sell, but that has not quelled speculation of a deal before voters elect a successor to President Vladimir Putin next March.

Wednesday, 12 December, 2007, 12:42 GMT  | last updated: Wednesday, 12 December, 2007, 12:42 GMT

Forecast: Victor Vekselberg
 

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