BP, Gazprom Hold Talks Over Kovykta

BP chief executive Tony Hayward flew into Moscow on Monday and held talks with Gazprom chief Alexei Miller on the companies' stalled deal over the Kovykta gas project, as well as potential international cooperation, Gazprom said in a statement.

The talks came as a source close to Gazprom warned on Monday that the Kovykta deal was at risk because the company could not agree with TNK-BP on historical costs.

"It has been a systematic problem. If it goes on like this, the deal scenario will change," the source said.

"By the way, we were supposed to sign the deal before Dec. 1, so the agreement has de facto expired. And no new deal has been reached."

Gazprom and TNK-BP, a 50-50 joint venture between BP and a trio of Russian businessmen, have twice delayed completing the sale. BP, Gazprom and TNK-BP also plan to set up a joint venture with at least $3 billion of assets.

The meeting between Hayward and Miller had been arranged at the two men's last meeting, on Nov. 29, said Vladimir Buyanov, a spokesman for BP in Moscow.

Marina Dracheva, a spokeswoman for TNK-BP, denied that the meeting -- the third between the two men in the space of one month -- implied a potential change in ownership structure at TNK-BP.

"As the three-year lock-in period is nearing completion, we're not surprised at a new round of rumors," Dracheva said. Speculation has long been rife that Gazprom is hoping to buy out TNK-BP's three Russian shareholders -- Len Blavatnik's Access Industries, Mikhail Fridman's Alfa Group and Viktor Vekselberg's Renova -- when a buyout clause opens at the end of this year.

Alexander Medvedev, Gazprom's deputy chairman and head of Gazprom Export, said last month that TNK-BP's assets would fit well with Gazprom Neft's portfolio.

"If such an opportunity presents itself in terms of a proposal by certain investors then ... we will investigate this opportunity," he said at the time, adding that no proposal had yet been received.

Under the deal, struck in May, Gazprom was to buy control of Kovykta from TNK-BP and then sell 25 percent back to the company as part of a broader strategic pact.

The two companies have given different estimates of the deal, with Gazprom expecting to pay $600 million to $800 million and TNK-BP planning to receive $700 million to $900 million. The difference in expectations stems from varying ideas on how much has been spent on developing the field.

In November, Gazprom said completion had been postponed as it was talking to TNK-BP and BP on a broader range of issues.

TNK-BP had planned to export gas from Kovykta to China, but Gazprom opposed the plan, as it wants to build a rival pipeline.

Reuters, MT, Bloomberg