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. Last Updated: 07/27/2016

Kalyuzhny Reviews BP-Linked Field's License




Fuel and Energy Minister Viktor Kalyuzhny has weighed in to the battle for oil holding Sidanko's assets with a bolt from the blue, announcing plans to review the licensing of a major gas field that BP Amoco has its heart set on.


In an interview published Wednesday by Izvestia, Kalyuzhny said Sidanko affiliate Rusia Petroleum's exploration and development license for the Kovykta gas field needed to be re-examined because of doubts about the transfer of the license to Rusia.


Kalyuzhny's announcement came as another blow for BP Amoco, which has been fighting to stop Tyumen Oil Co., or TNK, from stripping a bankrupt Sidanko of its most important oil production units.


TNK had suffered a rebuff Tuesday when a regional court ordered external management at Sidanko production subsidiary Chernogorneft to cancel Friday's planned liquidation sale of the firm.


Meanwhile, officials at both BP Amoco and Rusia Petroleum were taken aback at the comments from Kalyuzhny - who Kalyuzhny has already opposed BP Amoco in the Sidanko dispute.


"There are some talks over withdrawing the Kovykta license from us" a Rusia Petroleum spokesman said Wednesday. "But those talks are purely politically provoked."


"I'm frankly surprised by the ministry's comments," said BP Amoco spokesman Howard Chase on Wednesday. "Kovykta is an important project for the Russian Federation and we believe BP Amoco can play a valuable long-term role in it."


When the international oil major paid $571 million in 1997 for a 10 percent stake in Sidanko it made little secret of the fact that it was primarily interested in the Russian firm's 60 percent stake in subsidiary Rusia Petroleum. Since then BP Amoco has been trying to firm its grip on the small exploration firm, whose license for Kovykta gives it control of the field's 870 billion cubic meters of gas. BP Amoco wants to export gas from the Eastern Siberian deposit to China and possibly on to South Korea.


A Rusia Petroleum board meeting Wednesday approved a recent emission of new shares worth about $30 million. Of the firm's 11 major shareholders, only Irkutskenergo electricity utility, Burovik - fully owned by BP Amoco - and offshore firm KM Technologies bought the new shares.


Burovik now holds about 26 percent of Rusia Petroleum and controls a further 2.6 percent share bought for Irkutsk administration, according to a Rusia spokesman.


The dearth of credible alternative investors will make it hard for Kalyuzhny to put effective pressure on BP Amoco over Kovykta, analysts said.


The production sharing agreement covering the gas field is slated to go before the State Duma on Friday for a first hearing.


Declaring Kovykta to be a strategic project, Duma deputies stated in early November that Gazprom should hold a 51 percent in the $12 billion project. However, the Russian gas monopoly does not have a spare $6 billion lying around, according to United Financial Group.


"The minister tries to put pressure on BP Amoco, but it's not appropriate as in Russia only Surgutneftegaz can afford financially to develop the project," Vladimir Nosov, an analyst with Fleming UCB investment bank, said Wednesday.


Despite the injunction that Sputnik Group - which indirectly owns about 10 percent of Sidanko - won Tuesday against the Chernogorneft sale, the Sidanko subsidiary could still proceed with Friday's planned auction.


"We have not seen any injunctions from the court yet," Chernogorneft spokesman Kirill Nam said Wednesday. "If the ruling arrives in accordance with the law, the auction will be terminated."


TNK chief executive Simon Kukes expressed confidence his firm would succeed in wresting Chernogorneft away from Sidanko, possibly as early as Friday.


"I think [the sale] will go through. In the worst case it will be delayed for a few days but I doubt it," Kukes told Reuters in an interview.


"We've got over 15 injunctions from all kinds of courts. My prediction is that the sale will go through without violating any Russian laws," he added.


TNK is keen on acquiring Chernogorneft because it is the part-owner - along with TNK subsidiary Nizhnevartovskneftegaz - of the giant Samotlor oil field and Kukes wants control of the whole field.


Some of the participants in Sputnik, which unites several U.S. investors, including the Soros Foundation, have been so frustrated by the Russian court system that they filed suit against TNK in the United States on Tuesday, claiming that the oil firm is using illegal tactics to take over Chernogorneft.


In a statement issued Wednesday, Tyumen said some parties were illegally seeking to take advantage of Russia's emerging bankruptcy laws by pursuing the lawsuit in the United States.


"While we are still reviewing the lawsuit and cannot now comment on its details, we have difficulty understanding the jurisdiction of a New York court over Russian bankruptcy proceedings," the statement said.


Chernogorneft, which extracts an average of 6 million metric tons of crude a year, is expected to go for at least $200 million if the sale goes ahead.