TPT September 2007

Oil & Gas News

eastern Siberia, near China, to Gazprom. The British company and its partners had invested hundreds of millions of dollars in Kovykta, whose estimated two trillion cubic metres of natural gas is sufficient to meet total world demand for one year. Gazprom agreed to pay $700 million to $900 million for BP’s holding in the field and for the 50 per cent stake of the local joint venture TNK-BP in East Siberian Gas Co, a smaller company that is developing a gas distribution network in Siberia. BP’s compensation will include a position in a new joint venture with Gazprom to invest more than $3 billion in Russia and elsewhere, although few details were disclosed. TNK-BP was also given options to buy back 25 per cent of the Kovykta field – the largest foreign investment in Russia when it was set up in 2004 – if and when the venture is deemed successful. This would be consistent with a Russian strategy of leveraging access to the country’s domestic energy reserves toward the goal of making Gazprom into a global energy player. ■ In other news of Gazprom, Russia’s natural gas export monopoly said on June 29 that its profit doubled in 2006, to a record $22.6 billion, beating previous estimates. The profit totaled $22.6 billion at the average ruble rate for the period and is 8.2 per cent higher than the median estimate of six analysts in a survey conducted by Bloomberg News . Rising prices in Europe, where Gazprom has a quarter of the market, and increased shipments to former Soviet nations drove the gain in earnings, the highest ever reported by a Russian company. Gazprom relies entirely on exports for profit; it loses money on sales within Russia, where prices are capped. Elsewhere in oil and gas . . . ■ BP Plc has signed an agreement with the state-owned National Oil Corp (NOC) of Libya to explore for natural gas in that North African country. The announcement, in late May, of the $900 million deal coincided with the arrival in Libya of outgoing British Prime Minister Tony Blair at the start of a tour of Africa. Mr. Blair’s office had earlier said that BP’s return to Libya reflected the company’s recognition of a warming in relations between London and Tripoli. Certainly the agreement – which arose from negotiations, not a bidding round – is the most significant BP initiative in Libya since the British oil and gas company’s assets there were nationalized by Libyan leader Muammar Gaddafi in the early 1970’s. Libya has increasingly drawn the interest of international oil companies since 2004, when the European Union and the US eased sanctions in return for Mr Gaddafi’s pledge not to pursue the development of advanced weapons. ■ Lawmakers in Iraq acknowledged on July 22 that there were still many difficulties in the way of proposed legislation for managing oil revenue, the country’s most lucrative resource, making its passage unlikely before the autumn. The oil law, which would set up a system for developing and administering Iraq’s oil resources and would have a companion revenue-sharing law that would apportion oil income among various groups, had been considered the most likely to be passed before the Iraqi Parliament broke at the beginning of August for its month-long summer recess.

99

S eptember /O ctober 2007