Mitvol Says Imperial May Lose License

Environmental official Oleg Mitvol on Wednesday warned London-listed oil firm Imperial Energy that it stands to lose its sole Russian oil production license over purported violations.

"The company is not interested in geological exploration and drilling volumes are ridiculously small," Mitvol, deputy head of the Natural Resources Ministry's environmental agency, said at a news conference.

He said his agency had completed a check at the firm's Maiskoye field in the Tomsk region. The company has a number of exploration licenses in the same region. Imperial Energy said it was not aware of any grounds for statements being made against it.

"The group's recent reserve report was produced in accordance with international standards by [oil industry consultant] DeGolyer & MacNaughton," Imperial Energy said.

Imperial Energy's stock plunged by almost 30 percent before partially recovering to 1,178 pence, 18.5 percent down on the day.

Mitvol said he had questioned the way Imperial Energy and other producers had booked reserves at its meeting with representatives of DeGolyer & MacNaughton.

In March, the company said its proved and probable reserves had increased 150 percent since 2005 to 803 million barrels of oil across its 15 fields in the Tomsk region, following an audit by DeGolyer & MacNaughton.

Mitvol said, citing the federal reserves commission, that Imperial Energy's reserves in Russia rose only 14 percent to 119 million barrels for the same period. Russia does not disclose official information on reserves.

"Thus, in Russia this company looked modest and small, while the London [Stock] Exchange and foreign investors had absolutely different information on it," Mitvol said.

He also said other firms in question were another London-listed oil company, Victoria Oil and Gas, and gas producer Novatek.

Mitvol said his agency was ready to provide the London Stock Exchange with information on reserves.

"[The agency] is ready to answer all the inquiries of the safety commission of the London Stock Exchange and provide all the necessary information on the companies being checked and the reserves that they have been booked," Mitvol said.

He also said his agency would investigate how Imperial Energy obtained environmental licenses to build a pipeline in western Siberia.

The firm said Wednesday that it had completed laying a 208 kilometer pipeline in the Tomsk region and was on track to start producing 6,000 barrels of oil per day by the start of the third quarter and 25,000 bpd by the end of 2008.

In a statement from the Natural Resources Ministry, Mitvol criticized his own subordinates for failing to spot Imperial Energy's purported breaches of rules. "Even a preliminary analysis of the results of checks on the Imperial Energy company ... showed that some colleagues in our Tomsk department don't understand that they should protect the interests of the state ... and not give out awards to companies," he said.