CoD: Gazprom pushes TNK-BP out of Kovykta

Russia's environmental watchdog has found violations by a subsidiary of oil major TNK-BP that controls the licence for the massive Kovykta gas field in Siberia, the Kommersant daily reported. Last year, TNK-BP subsidiary RUSIA Petroleum extracted only 33.8 mln cubic metres of the nine bln cubic metres of annual gas extraction required by its licence, Kommersant said. TNK-BP is 50-pct owned by British oil major BP and 50-pct owned by Russia's Alfa Access Renova. The paper cited a source close to the deal as saying that Gazprom wants to acquire a 74.4 pct stake in RUSIA Petroleum. Currently RUSIA Petroleum is 62.4 pct owned by TNK-BP, 25.8 pct owned by the Russian group Interros, and 11.2 pct by the administration of Irkutsk province, where the field is located, the paper said. Kommersant said TNK-BP wanted to retain 33 pct of RUSIA Petroleum.

Environmental allegations have become a powerful tool for Russian authorities, used as a leverage when ownership is renegotiated. The recent acquisition of control stake in Sakhalin-2 from Shell and Japanese companies was one example when this tool was applied succesfully.

There are several issues which I would say are is problematic in this respect.

First, real concerns for environment are undermined by this practice. Technologies, whether in energy, mining, or processing industries, were always environment-unfriendly in Russia. By closing eyes on most environment damaging cases such as in plants across Ural, and applying environmental laws selectively whenever the government wants to get its share in energy-related projects, the Russian government shows that environmental problems are interesting only whenever they can be used as casus belli, as a reason to wage war. Any actions of environmentally concerned activitists will be seen in this frame.

Second, just because 'everyone is guilty' in terms of environmental violations, the government shows that it can find its reasons to renationalize any asset it finds interesting. Practices applied selectively, such as with Yukos blamed for tax payment violations, or with Shell and TNK-BP blamed as environment law violators, will act to the further detriment of trust in Russian business environment. It appears that robber entrepreneurs of 90s had the most appropriate strategy for Russia, stripping assets of anything valuable and rarely investing.

Finally, as I already have suggested, this is just another evidence that Gazprom becomes more powerful than the government itself. Acts pushing foreign investors so violently out of most profitable projects may be to the company's current interest, but obviously against the interest of the country. That Russian authorities are not concerned with country's reputation and perception of such deals inside the country itself is to me a sign that the state is getting run in the interest of Russian energy giant, not vice versa.