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Last Updated: Thursday, 7 April, 2005, 15:42 GMT 16:42 UK
BP 'barred from Siberia auctions'
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BP recently delivered bumper profits
Russia has cancelled three auctions for rights to develop Siberian oil fields to stop BP's Russian joint venture from competing, the Izvestia reported.

TNK-BP had already put in bids for two of the three oil fields that were due to be auctioned.

A BP spokesman in London declined to comment on the Izvestia report.

Earlier this year, Russia's state natural resources ministry proposed barring foreign firms from auctions of Russia's natural resources.

State control

BP chief executive Lord Browne
Russia is important for BP's pipeline of future oil supplies

The Siberian oil-field auctions that have reportedly been cancelled were for the Trebs and Titov fields, for which TNK-BP had already put in bids, and for Lodochnoye field.

"Perhaps the country did not want foreigners to take part in the Lodochnoye auction," Anatoly Ledovskik, head of Russia's state natural resources agency, was reported as saying to the Izvestia newspaper.

Of the other two auctions he said: "In the Trebs and Titov deposits we had an excuse (to cancel the auctions) because we had received applications from TNK-BP."

Bidding by TNK-BP, which is 50% owned by BP, could raise the price state-backed firms would have to pay to win the auctions, or it could mean that the sites would leave national ownership.

The Russian state controls a big share of the country's oil supply since state oil company Rosneft acquired Yuganskneftegaz, the main oil unit of Russian oil company Yukos.

The government auctioned Yuganskneftegaz after a court ruled Yukos owed substantial back taxes. It was first bought by a little-known company, then quickly passed into the hands of a Rosneft-affiliated business.

Oil politics

International investors have become more jittery about Russia's business climate in the wake of the Kremlin break up of oil giant Yukos.

But at a rare meeting with industrialists at the Kremlin in March, Russian president Vladimir Putin vowed to "help the business community" by guaranteeing property rights.

BP's chief executive, Lord Browne, has always maintained that TNK-BP has good relations with the Russian government.

Almost a quarter of BP's four million barrels a day of oil and oil-equivalent production comes from TNK-BP, contributing to bumper annual profits for the firm in 2004.

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