Frustrated by Russia’s unwillingness to allow private exportation of natural gas to China, TNK-BP pulled the plug Thursday on the Kovykta gas field operations in Siberia by calling in the loans it made to its subsidiary – essentially initiating bankruptcy of RUSIA Petroleum. After years of patience and hundreds of millions of dollars invested, only 47 million of the 2 trillion cubic meters of natural gas in the field is being produced today. The reason for this is because Russian regulators have all but haulted the shipment of gas into China, and instead are requiring the gas to be piped to smaller areas in Russia.
“As the major shareholder and creditor of RUSIA Petroleum, TNK-BP is determined to recover its investments and minimize its financial losses,” [TNK-BP's] statement said.
TNK-BP had been attempting a sale of the gas field to Gazprom, but talks over the past 4 years remained stagnant. With this move, BP will be possibly be able to take over a larger stake than its current 63% share of RUSIA Petroleum (jointly owned by a Russia elecric company), which could make a future sale to Gazprom much more feasible – an important factor to consider for a company who may be in dire need of cash over the next 12-36 months.
Business as usual.
One place in the world where cutthroat behavior is the only way to go is Russia. If you don’t have your own army, don’t even try to open a yogurt stand there.