A MASSIVE BP pipeline project that would link a Siberian gasfield to China has been vetoed by Gazprom as the Russian utility seeks to strengthen its grip over Russia’s energy resources.

The giant utility’s decision that BP’s plans make “no economic sense” will cast further doubts on the Kremlin’s willingness to tolerate foreign control of strategic energy assets.

Gazprom, which has a monopoly on Russian gas exports, is refusing to allow a direct link between BP’s Kovykta gasfield and the booming industrial and commercial markets of northern China.

Alexander Medvedev, deputy chairman of Gazprom, said that he expected to agree a gas deal with China by the first half of next year. But in an interview with the Chinese magazine Caijing the Gazprom executive indicated that TNK-BP, the British oil company’s Russian venture, would play a subsidiary role.

He said: “We told (TNK-BP) that we could consider Kovykta as a part of the export base, but in no way we would discuss supplies form Kovykta to China. That makes no economic sense.”

According to Mr Medvedev, Kovykta’s reserves would simply feed into Gazprom’s network, allowing the Russian utility to supply China from its own reserves.

Without Gazprom’s approval, BP cannot build a China link and the utility’s refusal to countenance a direct export route for Kovykta is further evidence that Gazprom is seeking to weaken and isolate BP from its position in Kovykta.

Government control over Russia’s strategic resources has recently been enhanced by the state’s acquisition of majority control of Gazprom followed by the acquisition of Sibneft, the oil company controlled by Roman Abramovich. Meanwhile, Rosneft, the state oil company, has acquired control over oil exports to China with the expropriation of the main Yukos production company.

The Kovykta gasfield, located north of the Siberian city of Irkutsk, contains up to 1.9 trillion cubic metres of gas, enough to supply Britain for almost two decades.

The prize asset of TNK-BP has been unable to realise its potential without Gazprom. The Russian company is believed to want a majority stake in Kovytka.

Moreover, the Kremlin has previously shown unwillingness to allow a foreign energy customer, such as China, to capture a strategic asset. “All history of our exports shows that we never sell gas from any particular field; we are always selling gas from our transportation system,” he said.

Mr Medvedev sees a new urgency in securing a gas deal and expects to complete a deal in the first half of next year at the latest. “I believe the time of talks is over,” he said. “It is time to do business.”

Mr Medvedev said that Gazprom was keen to build a presence in China and as an incentive to sign up Chinese partners to a deal, he held out the carrot of asset swaps, such as the utility’s recent deal with BASF where the German company acquired a share in a gasfield in exchange for Gazprom taking a stake in a German pipeline company.

Timing could be critical for the Russians because rival gas exporters are knocking on doors in Beijing with proposals, notably for liquefied natural gas shipments from Australia, Indonesia and Qatar.

Most worrying for Gazprom is Kazakhstan, which is keen to build a pipeline east from its Karachaganak gasfield.

Gazprom’s rejection of BP’s China move emerges as Sinopec distanced itself from reports it was in talks with BP over a new joint venture and investment. Sources in China said that the Chinese Government was unwilling to accept a large BP stake in Sinopec.

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