BP's Russian joint venture TNK-BP lost the first round in its battle to hold on to its stake in giant Kovykta oil field today when a Russian court threw out its appeal against the seizure.

A judge in an arbitration court in Irkutsk, the region in East Siberia where the field is located, said he had ruled to throw out a suit by TNK-BP, which was seeking to stop the authorities from taking away the licence.

TNK-BP had claimed that two environmental agencies Rosprirodnadzor and Rosnedr had no legal right to start the process of withdrawing its licence, and that the move was politically motivated.

It is widely believed that the Russian government is using the threat of withdrawal over environmental grounds to force TNK-BP and its privately-owned partner Alfa - owned by a group of Russian billionaires - to give up a proportion of their stake in the oil field operator Rusia Petroleum.

It followed a similar strategy with Shell, forcing it to give up a majority stake in the giant Sakhalin-2 oil and gas field project

TNK-BP has a 62 per cent stake and according to the Russian press, state-controlled group Gazprom wants to obtain a near-75 per cent stake.

TNK-BP has said it is ready to let Gazprom control Kovykta if the field becomes part of a bigger development in East Siberia.

The Kovykta licence has been under threat of withdrawal because the government says, the volumes of gas produced have not met the annual target of 9 billion cubic metres by 2006, although TNK-BP says that without an export licence its output has been restricted.

Judge Valery Titov, who presided over the hearing told Reuters today: “This dispute could not be reviewed by our arbitration court. It is out of our jurisdiction to review the submitted documents.”

TNK-BP’s spokesman Alexander Shadrin said: “We are disappointed by the court’s decision. I think Rusia Petroleum will appeal.”

The court decision comes as Russia’s environmental agency is due to finish this week a final inspection of Kovykta, accusing its owners of underproduction.

The deputy head of the agency, Oleg Mitvol, said earlier this month the licence could be withdrawn before June.

The final check on Kovykta should confirm the results of a major inspection completed in January, when the agency gave Rusia Petroleum three months to rectify violations at the field or lose its licence. .

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