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№ 4 (April 2007)
TNK-BP’s attempts to prevent Russian authorities from revoking its license to Kovykta gas field delivered a major setback when judge threw out BP’s Russian JV’s suit out of the Irkutsk Arbitration Court claiming the claims did not fall under the court’s jurisdiction. TNK-BP which is owned by BP Plc is due to lose Kovykta field by June under accusations of not meeting the production requirements set at the level of 9 billion cubic meters of gas per year.
TNK-BP was warned of a possible license revocation earlier this year and given until May to raise its production to the required minimum, yet the company stated it would be impossible as the Irkutsk region did not consume that much energy and state owned gas monopoly Gazprom prevented TNK-BP from exporting natural gas to China which lowered the demand and justified the company’s production level of 2.5 billion cubic meters per year.
In May, deputy head of the environmental agency of the Natural Resource Ministry of Russia Oleg Mitvol called for revocation of the license held by TNK-BP’s subsidiary RUSIA Petroleum.
“A promise is a guarantee in any country,” Mitvol told the St. Petersburg Times. “If you don’t fulfill your license, then the license must be taken away.”
RUSIA Petroleum later filed a lawsuit seeking to void the Natural Resource Ministry’s order to revoke the license if the license terms are not met in time.
Judge Valery Titov who presided over the hearings was quoted by Reuters saying that the dispute “could not be reviewed by the arbitration court as it is out of our jurisdiction to review the submitted documents.”
The Kovykta gas condensate field, discovered in 1987, is situated 450 km from Irkutsk, in the northern part of the Irkutsk Region, in the Zhigalovo and Kazachinsko-Lensk Districts. The reserves of this field amount to 2 trillion cubic meters of gas and more than 83 million tons of gas condensate. The project is operated by RUSIA Petroleum, 62.7% owned by TNK-BP.
The field is being explored by drilling both vertical and horizontal wells. Extended-reach drilling and other advanced technologies used in this field increase the well stream, decrease the number of required wells, and considerably reduce the cost of gas production.