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Gazprom ‘in Kovykta bid’

February 25, 2011 by  
Filed under Oil News

Russian gas giant Gazprom and state holding company Rosneftegaz have bid for the huge Kovykta gas field, majority-owned by Russia’s TNK-BP , a source close to the bidding process was reported as saying.

News wires 24 February 2011 15:26 GMT

The move would be a sharp turnaround in Gazprom’s attitude towards the field, located near the Chinese border in East Siberia, which the company had previously said it did not envisage in its strategy.

Rusia Petroleum, the Kovykta licence holder, was declared insolvent by a regional court in October after TNK-BP filed a petition to initiate bankruptcy proceedings.

“It is Gazprom and Rosneftegaz,” the source told Reuters today, speaking about the participants of the auction mooted for 1 March. Today is the deadline for the submission of bids.

Gazprom and Rosneftegaz, which controls more than 75% of Russian state-owned oil company Rosneft and holds more than 10% in Gazprom, declined to comment.

Russian media has speculated that the country’s second-largest gas producer, Novatek, in which influential trader Gennady Timchenko holds a stake of more than 20%, might emerge as the eventual owner of the field. However, it has so far denied interest.

A decade-old dispute over Kovykta, a lucrative eastern Siberian field holding enough gas to meet world demand for eight months, has spooked investors wary of the Kremlin’s track record of expropriating assets from private business.

TNK-BP agreed in 2007 to sell Kovykta to Gazprom for about $1 billion, but the deal collapsed due to disagreements over the price.

The starting price for Rusia Petroleum was set at 15.083 billion roubles ($517 million).

Rosneft has expressed its desire to pump natural gas to China, its strategic partner. Gazprom also has a deal to sell gas to China at a rate of 30 billion cubic metres a year from end-2015, but price talks have been bogged down for years. Gazprom expects to strike a pricing deal this summer.

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