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. Last Updated: 07/27/2016

Agency Sets Deadline for Kovykta Deal

TNK-BP must quickly reach a deal with Russia over its giant Kovykta gas field or face the inevitable withdrawal of its operating license as early as May, an official said Tuesday.

Anatoly Ledovskikh, head of the Federal Subsoil Resource Use Agency, said TNK-BP unit Rusia Petroleum, which holds the license for Kovykta, would not be given more time beyond the May deadline to put right licensing violations.

"In theory [the license withdrawal] can happen in May," Ledovskikh told a news conference. "But I hope that the issue will be settled, and it will not happen," he added. When asked what options TNK-BP has to prevent this from happening, he said: "You know better than I do."

Ledovskikh's agency is part of the Natural Resources Ministry, which in February gave TNK-BP, which is half owned by oil major BP, three months to increase production at Kovykta more than five-fold to meet the targets set in the licensing agreement.

The firm says it cannot do so by the May 25 deadline because local customers do not need that much gas, while its plans to export gas to China are on hold due to the opposition of gas export monopoly Gazprom.

State officials have said TNK-BP's arguments were a poor excuse for not meeting licensing terms and Ledovskikh said he fully agreed with this view.

"It is 100 percent certain that Rusia Petroleum will fail to meet our conditions. They were supposed to produce a certain amount of gas last year and they didn't. Why is a different question," he said.

TNK-BP declined to comment on Ledovskikh's remarks.