Government unhappy over price as Gazprom signs deal to buy RUSIA Petroleum

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Russia's state-controlled gas giant Gazprom signed a contract on Wednesday to buy the property of RUSIA Petroleum, the license holder of the giant East Siberian Kovykta gas field, RUSIA Petroleum's Oleg Smetanin said.

Russia's state-controlled gas giant Gazprom signed a contract on Wednesday to buy the property of RUSIA Petroleum, the license holder of the giant East Siberian Kovykta gas field, RUSIA Petroleum's Oleg Smetanin said.

Last week Gazprom bought RUSIA Petroleum's assets for 22 billion rubles ($770 million), or about the same sum as former owner Anglo-Russian TNK-BP had invested in it.

Kommersant business daily quoted an Energy Ministry source saying that Energy Minister Sergei Shmatko has written to the government saying that the sum of the deal was too high, contradicted government interests, and was not included in Gazprom's 2011 investment plan, which had also failed to rationalize the decision to buy RUSIA Petroleum.

Gazprom bought RUSIA Petroleum without a corresponding decision by its board of directors or the agreement of the government, which is necessary under Gazprom's charter.

"This is why we can conclude that Gazprom's participation in buying RUSIA Petroleum's property on these terms is inexpedient," the source said, adding that the Economic Development Ministry supported his ministry's view.

TNK-BP joined the Kovykta project, which holds 2 trillion cubic meters of gas, hoping to get access to a pipeline to energy-hungry China, but failed. Last year the firm filed for bankruptcy of RUSIA Petroleum.

State-controlled oil company Rosneft had previously been a contender for Kovykta, with a 16 billion ruble bid. Kommersant claimed the government favored Rosneft's bid.

"Unlike Gazprom, the company has done an independent valuation of all the assets, agreed their purchase with the government providing a corresponding decision of its board of directors and definite sources of financing. All this fully corresponds to the government's interests," the paper quoted a source familiar with the Energy Ministry's position as saying.

Rosneft head and Deputy Prime Minister in charge of energy issues Igor Sechin had approved the resale of Kovykta to Gazprom by Rosneft at the purchase price, a Kommersant source said.

The acquisition price may be cut if Gazprom fails to pay the 22 billion rubles purchase price within a month, a source familiar with the situation told RIA Novosti.

MOSCOW/IRKUTSK, March 9 (RIA Novosti)

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