TNK-BP to sell Kovytka gas field share to Gazprom

TNK-BP plans to complete the sale of its 63% stake in giant Kovytka natural gas field in Eastern Siberia to OAO Gazprom during the first quarter.

Jan 28th, 2008

Doris Leblond
OGJ Correspondent

PARIS, Jan. 28 -- TNK-BP plans to complete the sale of its 63% stake in giant Kovytka natural gas field in Eastern Siberia to OAO Gazprom during the first quarter. Price negotiations, in the $750-900 million range, are continuing. The field has never been developed because it never received approval, and Gazprom would have to invest $20 billion in development.

Later this year, negotiations taking place between TNK-BP, Gazprom, and BP International could lead to a transfer of $2 billion in assets among the three groups.

TNK-BP Pres. and Chief Executive Officer Robert Dudley said the company's production has reached a plateau of 1.8 million boe/d, of which 85% is oil and the rest gas. Production is expected to remain flat until yearend 2009 when a 100,000 b/d production increase is expected from greenfield projects Verkhnechonskoy in Eastern Siberia and UVAT in Western Siberia.

Overall reserves are estimated at about 8 billion boe, with a replacement rate of 125%, Dudley said.

TNK-BP said it plans to spend $5 billion over the next 5 years to reduce gas flaring of associated gas.

More in General Interest