Foggy meetings

The head of Verkhovna Rada, Lord John Brown, again failed to solve key problems in Russia

The head of British BP, Lord John Brown, arrived in Moscow yesterday to once again pay visits to the head of Gazprom Alexei Miller, the president of Rosneft Sergei Bogdanchikov and the Prime Minister of Russia Mikhail Fradkov. However, the meeting with the head of government scheduled for today will not take place. As an Interfax source noted, the main reason was Mikhail Fradkov’s workload. Lord Brown had no other meetings planned with representatives of the Russian authorities, so he will bring to Foggy Albion only agreements with Rosneft on joint work within the framework of the Sakhalin-4 and Sakhalin-5 projects.

The Gazprom press service reported yesterday that at the meeting the heads of the companies discussed the prospects for implementing large joint projects, interaction in trading liquefied natural gas and agreed to meet again, but at the beginning of next year. The Russian representative office of BP also prefers not to disclose the details of the negotiations: “It was a working meeting at which cooperation in the global energy space was discussed,” commented a representative of the English company.

However, in addition to global cooperation, BP and Gazprom have other topics for discussion that require decisions at the level of company heads. First of all, this concerns the possibility of the gas monopoly participating in the Anglo-Russian consortium TNK-BP. The fact is that since 2008, TNK-BP shareholders have the right to dispose of their shares in the holding, including selling them to other companies. In September of this year, Deputy Chairman of the Board of Gazprom Alexander Ryazanov (dismissed from the monopoly a week ago) said that if part of TNK-BP were sold, Gazprom would be first in line.” In addition, the issue regarding the Kovykta gas condensate field has still not been resolved between the Russian monopoly and TNK-BP, the license for which is threatened to be taken away by the Ministry of Natural Resources next year. According to licensing agreements for this field, TNK-BP is obliged to supply 9 billion cubic meters of gas to the domestic market of the Irkutsk region this year, which the company did not do, citing a lack of demand for such volumes. Now the Ministry of Natural Resources is playing for time until the beginning of next year, when it will be possible to raise the issue of depriving the holding of a license on legal grounds. As experts note, TNK-BP can avoid this by offering Gazprom participation in the project. Previously, BP repeatedly invited Gazprom to Kovykta, but these attempts led to nothing - firstly, the monopolist did not agree to a share below the controlling one (and TNK-BP did not agree with this at first), and secondly, It is obvious that the prospect of revoking the license will significantly reduce the price of the asset. In this regard, one can only guess what Lord Browne will talk about with Alexei Miller next year.

But yesterday the head of BP signed two agreements with Rosneft on the development of the West Shmidtovsky (with reserves of 181 million tons of oil and 281 billion cubic meters of gas) and East Shmidtovsky areas (411 million tons of oil and 255 billion cubic meters of gas) as part of the projects "Sakhalin-4" and "Sakhalin-5". As the Rosneft press service reported yesterday, the British company's share in the projects will be 49%. Operational management will be carried out by the Russian-British Elvari Neftegaz, created back in 2003 to work in the Kaigansko-Vasyukansky area, part of Sakhalin-5. According to the signed documents, BP will finance geological exploration work. With the start of production, Rosneft undertakes to compensate the British company for its costs. Previously, a similar scheme was already applied when working with the Indian ONGC within the framework of the Sakhalin-1 project. As a result, Rosneft allocated $1.34 billion to pay off ONGC's debt.

So far, only seismic exploration work has been carried out in the areas. Next year the companies intend to begin exploratory drilling. The total investment in the project over five years will be approximately $500-700 million. These funds will be used to drill six geological exploration wells. As experts note, the concluded agreements carry quite large risks. As is known, in October one of the wells drilled at the Savitskaya structure, also developed as part of Sakhalin-5, did not reveal hydrocarbon deposits.

Anna GORSHKOVA