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. Last Updated: 07/27/2016

TNK-BP Executive Targeted in Probe

Prosecutors on Thursday opened a criminal investigation into the head of a TNK-BP subsidiary, ratcheting up pressure on the oil major and raising the specter that a drive to increase the state's role in the energy sector is expanding.

The Prosecutor General's Office said in a statement that it was investigating the head of Rospan International, TNK-BP's west Siberian unit, for "violations of licensing requirements and reaping excessively high profits."

TNK-BP spokespeople said they could not confirm that the criminal investigation was targeting Rospan CEO Filipp Taik.

"We are still trying to figure out who the target is," spokeswoman Marina Dracheva said.

Asked whether it was normal procedure for company heads to be targeted, TNK-BP spokesman Alexander Shadrin paused and then said: "You will have to ask the prosecutors."

A spokesman for the Prosecutor General's Office declined to comment.

Several oil companies are under fire amid a campaign to tighten the state's grip on the energy industry, including Shell and its Sakhalin-2 venture, the largest foreign investment project in Russia. But with the notable exception of Yukos founder Mikhail Khodorkovsky and his former associates, authorities have largely confined their investigations to companies, not executives.

Prosecutors earlier this week called on the Natural Resources Ministry to withdraw Rospan's operating license over licensing and environmental violations. TNK-BP insists the attack is unfounded.

The investigation of Rospan -- which holds TNK-BP's largest gas license in west Siberia -- is the latest move against the embattled TNK-BP, a 50-50 joint venture between British oil major BP and Russia's Tyumen Oil. Prosecutors opened a criminal inquiry into the suspected transfer of state secrets from government officials to TNK-BP this fall, and they have warned that the company might lose its license to develop the Kovykta gas field in east Siberia over purported violations.

The increased pressure comes as the date draws near for TNK-BP's Russian shareholders possibly to sell out. Gazprom has expressed interest in acquiring the TNK stake should the shareholders sell next year, as stipulated in the joint venture agreement.

TNK-BP jointly owned Rospan with Yukos until August 2004, when it bought out Yukos' 56 percent stake after Khodorkovsky was imprisoned and his empire sold off. Since then, Rospan has limited itself to producing 1.5 billion cubic meters of gas per year amid a dispute with Gazprom over access to pipelines. The company's two gas fields -- Novo-Urengoi and Vostochno-Urengoi -- are estimated to hold 950 bcm.

Natural Resources Minister Yury Trutnev -- who is also leading the charge against Shell's $22 billion Sakhalin-2 project -- has said TNK-BP holds the worst record for license development in the country.

Trutnev spokesman Rinat Gizatulin said the ministry would look into the Rospan case by the end of next week.

TNK-BP's approach to development is different from the Russian approach, said Yelena Savchik, an oil and gas analyst at Renaissance Capital. "They seek financial efficiency rather than following the technical rules that are usually applicable to Russian fields," she said.

TNK-BP owns a disproportionately high rate of wells that contain water rather than hydrocarbons, prompting the company to let the wells sit idle, she said. "So if they don't follow the officially approved plans, they could be in violation of Russian law."

Many observers have seen the hand of Gazprom behind TNK-BP's troubles.

The development of Kovykta has also been blocked by Gazprom, which opposes TNK-BP's plans to export gas from the enormous field to China. Gazprom jealously guards its pipeline monopoly and has plans to export to energy-hungry China. TNK-BP has been selling just 2.5 bcm of gas per year to local markets from the field, instead of the 9 bcm stipulated under a 1992 license agreement, because it says a larger local market for the gas does not exist.

Gazprom has also been angling for entry into Sakhalin-2, and observers say a threat by Trutnev to revoke a key license for the project is a means of putting pressure on Shell to sweeten the terms of the deal in favor of the gas giant.

TNK-BP is due to sign an accord with Gazprom's refining subsidiary, Sibur Holding, on Nov. 15 for the processing of associate gas, which is extracted with crude oil, Bloomberg reported.