Investing in Russia isn’t getting an easier these days, furthering our view that the nation should be tossed from the BRICs acronym.
A investment consortium including BP could soon lose its licence for one for he world’s largest and most promising gas fields in Russia, Kovytka, in what looks to be an indirect expropriation of the $20 billion project.
Ostensibly, the argument is that BP hasn’t sped up the project as required. Yet conveniently, it was hampered from doing so by Gazprom.
Viktor Vekselberg, one of Russia’s richest men and one of the four billionaire investors, told the country’s President Dmitry Medvedev on Friday that a state inspection at Kovykta was “clearly not supportive for the investment climate in our country.” He warned that revoking its licence to develop the field, which has 2 trillion cubic metres of gas, will only damage the reputation of Russian in the eyes of foreign investors, whom the Kremlin is trying to attract.
But Russia’s Natural Resources Ministry has consistently warned TNK-BP to speed up development or lose the rights to Kovykta. The joint venture has argued that it cannot ramp up output to the required levels because Gazprom has a monopoly on exports to nearby China. It would need to build pipelines costing billions of dollars to reach its Asian markets.
An acrimonious row between the Russian investors and the former chief executive, Robert Dudley, led British management to accuse Russian authorities of harassment and flee the country.
You’d imagine that energy investors would learn to give up on a nation like Russia, especially when management is forced to flee the country.
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