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Regulator puts off Kharyaga license review till late Feb.

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MOSCOW, December 22 (RIA Novosti) - A commission of the Russian agency for the management of mineral resources will consider revoking the license to the Kharyaga oil field, operated by French oil major Total, in late February, a commission member said Friday.

Russia's environmental watchdog said earlier it uncovered several violations of environmental laws during the development of the deposit, located in northeast Russia, under a production-sharing agreement (PSA).

"We will examine the reasons for the failure to comply with the license, since Total argues that the reasons are objective. We will consider them again in the second half of February," Oleg Mitvol said.

Total has been developing the Kharyaga deposit under a production-sharing agreement, which was signed in 1995 and came into force January 1, 1999. Total owns a 50% stake in the project, alongside Norway's Hydro (40%) and Russia's Nenets Oil Company (10%).

The Russian environmental watchdog revealed earlier that the operator failed to follow the recommendations of the central commission on the field's development, and in particular failed to observe the gas drive recovery process, burning up 60% of the natural gas produced in 2005.

Also in April, the Natural Resources Ministry accused Total of failing to meet its targets for Kharyaga under the 1995 agreement.

It said the investor failed to increase production of crude and introduce new technologies and equipment for effective production since the agreement came into force.

Russia's energy giant Gazprom [RTS: GAZP] said Friday it is not interested in participating in the Kharyaga project, since it is a PSA project.

"There is no interest, and there can be no interest," said Alexander Medvedev, head of Gazexport, a Gazprom export arm.

Gazprom purchased Thursday 50% plus one share in Sakhalin Energy, the project operator of the major Sakhalin II oil and gas project off Russia's Pacific Coast, for $7.45 billion, becoming the project's majority shareholder.

Sakhalin Energy experienced months of intense pressure from Russian authorities, who have accused it of causing serious environmental damage to Sakhalin Island, including deforestation, toxic waste dumping and soil erosion.

In September, the Russian Natural Resources Ministry canceled its 2003 environmental approval of Sakhalin II. Russia's environmental watchdog said that court proceedings on compensation for environmental damage, estimated at between $10 billion and $30 billion, would most likely begin in March 2007.

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