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. Last Updated: 07/27/2016

Gas Find Could Threaten Kovykta

A little-known company has registered a natural gas field in east Siberia that could threaten TNK-BP's neighboring Kovykta flagship project, which already faces accusations of environmental damage and failure to fulfill production licenses.

The company, Petromir, estimates that the Angaro-Lunskoye field holds 1.2 trillion cubic meters of gas, a spokeswoman for the Natural Resources Ministry's subsoil use agency said Wednesday. Proven reserves stand at just 1.5 billion cubic meters, the subsoil agency said in a statement.

If the estimated reserves were confirmed, the find would prove to be one of the largest since the Soviet era.

The field's borders are located just 100 kilometers from the Kovykta project run by TNK-BP, also in the Irkutsk region.

State-run Gazprom is in negotiations to take a stake in Kovykta, and analysts said it would likely seek ownership of the Angaro-Lunskoye field if the size of the find were to be confirmed.

Petromir is a private Moscow-registered company in which Stroitransgaz -- a construction unit in which Gazprom owns a 25 percent stake -- holds a minority share, Interfax reported earlier this week. The company does not list its number publicly or maintain a web site.

Petromir has held an exploration license for the Angaro-Lenskoye area since 2000, the subsoil agency spokeswoman said.

Petromir is also the name of a St. Petersburg holding with interests in casinos and hotels headed by one Mikhail Mirilashvili, who in 2001 was jailed for 12 years on kidnapping charges.

The Kovykta field, run by TNK-BP subsidiary Rusia Petroleum, is estimated to hold reserves of 1.9 trillion cubic meters. A 1992 license agreement obliges the company to produce 9 billion cubic meters of gas per year, but it has been producing just 2.5 bcm per year to supply local markets since Gazprom has blocked the construction of a pipeline to larger markets in China.

"It will be important to see which of the two fields will be developed first -- there is not enough demand out there for that much gas," said Alexander Burgansky, oil and gas analyst at Renaissance Capital.

TNK-BP has said it hopes to reach a deal with Gazprom on entry into Kovykta within six months, which analysts say could ease pressure on the project, and clear the way for pipeline construction to begin.

Petromir only holds an exploration license for Angaro-Lenskoye, and an auction for a production license will be organized, the agency spokeswoman said. She declined to provide a timeline, saying only that it would "not happen soon."

The company holds exploration and production licenses for two other blocks in the region -- Levoberezhnoye and Pravoberezhnoye.

Gazprom declined to comment on whether it was interested in the field.

"One way or the other, if this field is developed, it will be developed with Gazprom participation," said Kaha Kiknavelidze, an analyst with UBS. If the reserves are proven, the field could fall under a proposed bill limiting foreign investment in strategic sectors, he said.