Processing Magazine

Siberian court throws out BP lawsuit

May 28, 2007

The Associated Press reports that a Siberian court recently threw out a lawsuit filed by the BP PLC''s local subsidiary over the amount of gas it produces, opening the way for regulators to pull the license to the company''s giant Kovykta gas field. Analysts have called the case symptomatic of a broader drive by the Russian state to expand its influence in the oil and gas industry, predicting that the regulatory pressure will disperse as soon as a deal is sealed to allow state-controlled gas monopoly OAO Gazprom to take control of the project. That would mirror Gazprom''s entry to the giant Sakhalin-2 liquefied natural gas development off Russia''s Pacific coast, where Royal Dutch Shell PLC was elbowed into a minority position. Observers suggest a deal will also depend on BP''s Russian partners selling their stakes in TNK-BP to a state-controlled energy company such as Gazprom or oil company OAO Rosneft.