BP “sold” its share of a Siberian gas field to Gazprom this morning for the better part of a billion dollars, at the polite behest of Vlad Putin. BP teamed up with three Russian oligarchs to form TNK-BP, which controlled the majority stake in the Kovykta gas field. Russia has been trying to oust TNK-BP from Kovykta, which holds as much natural gas as Canada (ie – Russia is big), because the joint venture wasn’t meeting production targets. With Putinprom into the mix, all licensing and regulatory issues are resolved, according to the official KremlinKomment.
BP put $600mm into the project so far and insists that the sale was exactly how the company drew it up. In fact, BP was just warming up the gas field, awaiting Gazprom’s forced takeover. BP’s awkward compliance, from the Wall Street Journal:
BP officials have stressed that Kovykta has no value in its current state, with the prospects for export routes uncertain and little infrastructure near the field. They repeatedly have said they wanted Gazprom to have majority control of the project because it has a monopoly on exporting Russian gas and officials had hoped to sell output to markets in China.
TNK-BP still remains a significant part of BP, which poured $8bn into the venture in 2003. The partnership accounts for 1/5th of BP’s global reserves, 1/4th of its production and 1/10th of its global profit.
BP Sells Stake in Russia Gas Project [Wall Street Journal]