UPDATE: Russia's Rosneftegaz Has No Plans To Buy TNK-BP Kovykta

11th Jun 2010 14:36

(Adds background, analyst comment.) By Jacob Gronholt-Pedersen Of DOW JONES NEWSWIRES MOSCOW (Dow Jones)--A Russian state holding company has no plans to buy the huge Kovykta gas field from BP PLC (BP)'s Russian joint venture TNK-BP, a senior government official said Friday, dealing another blow to the company's effort to sell the disputed Siberian field. Under pressure from regulators, TNK-BP agreed to sell its controlling stake in Kovykta--one of the biggest undeveloped gas fields in the world--to state gas giant OAO Gazprom back in 2007. But while that deal never materialized, TNK-BP said in March it was in talks with state holding company Rosneftegaz and that a deal would be closed by the end of the year. "Nothing is being planned with Rosneftegaz," Igor Sechin, Russia's Deputy Prime Minister, said according to the Interfax news agency. In an attempt speed up the government's takeover of the project, TNK-BP--Russia's third biggest oil producer owned on a parity basis by BP and a group of Russian businessmen--said last week that Rusia Petroleum, the license holder for Kovykta, had filed for bankruptcy. "Why buy something that is in bankruptcy," Sechin said. TNK-BP says it is still in talks with Gazprom, but Monday the gas giant said it has no immediate plans to develop the field. Kovykta has strategic importance to Russia, as it plans to export gas from the field to China and other Southeast Asian countries. The Russian government has repeatedly threatened TNK-BP that it could withdraw the license without compensation, as regulators said it wasn't meeting production targets. The Anglo-Russian oil producer claims it has invested $664 million developing Kovykta, which contains approximately 2 trillion cubic meters of gas reserves. Analysts say TNK-BP could be running out of options. "It is very likely that they'll end up getting nothing for the field," said Viktor Mishnyakov, an analyst at UralSib investment bank in Moscow. TNK-BP originally planned to send Kovykta's gas to Asia, but those plans were hampered when Gazprom became Russia's monopolist gas exporter. Gazprom's decade-long plan to build a gas pipeline to China has yet to materialize, due to disagreements over pricing. "The fact is that the government doesn't really need the field at this point," said Mishnyakov. -By Jacob Gronholt-Pedersen, Dow Jones Newswires; +7 495 232 9197; [email protected] (END) Dow Jones Newswires June 11, 2010 09:36 ET (13:36 GMT)