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. Last Updated: 07/27/2016

Violations Found at Total Field

bloombergA Total service station in France. A decision on Total's Kharyaga license will be made after completion of an audit.
Natural Resource Ministry officials have found widespread violations at Total's main oil field in Russia and may call for the French company's license to be revoked, a ministry spokesman said Thursday.

"There are many significant geological violations, including production violations," spokesman Rinat Gizatulin said.

Vladimir Smolin, one of four deputy heads of the ministry's environmental watchdog, is due to wrap up a two week long audit of the Kharyaga oil field on Friday, he said.

Renewed pressure on the Total-led Kharyaga field comes as the government seeks to ensure that state-linked firms gain majority control over all large natural resource projects.

Total, which runs the field under a production sharing agreement, or PSA, with the government, owns 50 percent of the project. Norway's Norsk Hydro holds 40 percent and an oil company owned by the Yamal Nenets regional government owns the remaining 10 percent. The project sits on 97 million tons of oil.

A decision on Total's operating license will be made after officials submit a report on the audit, Gizatulin said. Spokespeople at Total declined to comment on the audit.

Moscow has been pushing to exercise an option in the Kharyaga PSA that allows a Russian company to buy 10 percent from both foreign participants.

Both Rosneft and LUKoil are said to be interested. State-run Rosneft drew a $22 billion loan on Tuesday, and while the bulk is earmarked for upcoming Yukos auctions, a portion will remain for other acquisitions.

Total has come under fire for failing to produce the 3 million tons per year stipulated in the PSA, as well as gas flaring and other alleged environmental violations.

The company maintains that it must limit itself to producing just 1 million tons per year because it lacks access to Transneft's pipelines.

The company submitted a new technical development plan Wednesday and the government has 45 days to examine it, spokeswoman Maria Zubova said.

Also Thursday, President Vladimir Putin held telephone talks with French President Jacques Chirac.

"No specific projects were discussed," Kremlin spokesman Dmitry Peskov said. "General bilateral relations were touched upon."