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. Last Updated: 07/27/2016

TNK-BP Loses Key Kovykta Court Case

An Irkutsk court on Monday threw out a case filed by embattled oil major TNK-BP, paving the way for the Russian-British firm to lose its license to develop Kovykta, its flagship field, as soon as Friday.

The Natural Resources Ministry's subsoil agency could revoke the license at its meeting Friday, agency spokesman Viktor Tsoi said, Reuters reported.

The arbitration court ruled it did not have jurisdiction over the case. License holder Rusia Petroleum, in which TNK-BP has a majority stake, filed a lawsuit earlier this month, seeking clarification of the terms of its license to develop the gas field in east Siberia.

"We regret the court's decision and pressure to withdraw the license," TNK-BP spokeswoman Marina Dracheva said. The decision would be appealed, she said. "[Rusia Petroleum] will use all their rights to hold on to the license."

TNK-BP, half owned by BP and half by billionaires Mikhail Fridman, Viktor Vekselberg and Leonard Blavatnik, has been fighting hard to keep its license for the field amid pressure from state environmental authorities.

They charge that Rusia has broken the license terms by failing to produce the required 9 billion cubic meters of gas per year. The company has been producing less than 1 bcm to supply local markets in the absence of an export pipeline to Asian markets.

Also Monday, the Natural Resources Ministry's environmental agency wrapped up an investigation of the field, which holds gas reserves of nearly 2 trillion cubic meters.

The results of the investigation will be sent to the ministry's agency on subsoil use, which would then make a decision on the license, ministry spokesman Rinat Gizatulin said.

He declined to provide further details, but added: "I think the company knows what results to expect."

Natural Resources Minister Yury Trutnev met with President Vladimir Putin on Monday, but both Gizatulin and the Kremlin press service declined to comment on the talks.

A source inside the ministry said a decision to revoke the license could be made within two weeks.

"We're hoping we can celebrate by June 5," the source said.

The increased pressure on TNK-BP's flagship project comes as negotiations on Gazprom's entry into the field appear to be drawing to a close.

TNK-BP is also believed to be in negotiations with Gazprom that would see the state-run gas giant buy out the firm's Russian shareholders when their option to sell opens up at the end of the year.

Both TNK-BP and Gazprom deny any such talks, but Gazprom officials have said they would be keen to buy the 50 percent stake held by TNK-BP's Russian shareholders.