Bloomberg News

Russian Agency to Review License at Rosneft's Largest Oil Field

January 18, 2007

Russia's Sub-Soil Use Agency will review a license at state-run oil company OAO Rosneft's giant Priobskoye field, said Oleg Mitvol, the deputy head of the Russian state environmental inspectorate.

Rosneft's OAO Yuganskneftegaz unit in western Siberia should be using 95 percent of the natural gas it extracts as an oil by- product at the Priobskoye field, Mitvol said by phone today. Instead, Rosneft uses only 1.9 percent of the so-called associated gas and burns off the rest, he said.

``Rosneft was fined 40,000 rubles ($1,500),'' Mitvol said. ``These measures are insufficient.''

Mitvol said he would forward documentation for review by the agency in the next few days. Nikolai Manvelov, a Rosneft spokesman, said he had no information about the alleged violation.

Mitvol, who led a campaign of environmental checks against Royal Dutch Shell Plc's Sakhalin-2 project last fall, has said all oil companies in Russia violate environmental standards. No major project in Russia has lost its license.

Yugansk was once the main production unit of Yukos Oil Co. After former Yukos head Mikhail Khodorkovsky ran afoul of President Vladimir Putin's government in 2003, Yukos faced a growing multi- billion dollar tax claim that finally forced it into receivership last year.

Rosneft acquired Yugansk after it was seized by the government and sold at an auction in December 2004.

To contact the reporter on this story: Lucian Kim in Moscow at lkim3@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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