BP has buckled to pressure from the Russian Government to hand over its stakes in two of the country's most lucrative energy projects for up to $900 million.

Gazprom, the Russian state-owned gas monopoly will buy BP's 62.89 per cent ownership of the license to extract gas through the vast Kovykta project and BP's 50 per cent holding in the East Siberian Gas Company.

While the deal is agreed "in principle", according to a spokeswoman at BP, the British company and Gazprom have still not agreed a price. BP said today the price will be between $700 million and $900 million.

The price would include the $500 million it has already invested in Kovykta through its Russian joint venture, TNK-BP.

BACKGROUND

• Opec on alert as oil price hits $82 a barrel

• Former BP chief returns to energy industry

• Activists fight BP's US refinery plans

• Gazprom could be key US supplier in deal with BP

• BP faces fresh criticism of Alaska safety systems

Riverstone's gain will remind BP of its loss

The buyout industry has trouble enough these days without one of Britain’s most prominent executives jumping ship

• Humiliated former BP chief returns to energy industry with private equity job

Related Internet Links

• Guess where the oil price was...

Related Internet Links

• BP company information

• BP share price chart

• BP forecast

Related Links

• BP chief insists future is bright in Russia

BP has been given a call option on 25 per cent of the Kovykta project which will only be awarded once the UK giant has agreed to a new $3 billion joint venture with Gazprom. Shares in BP rose from 579.5p to 586p.

Bob Dudley, president and chief executive at TNK-BP said today: ""We look forward to broadening our working relationships with Gazprom and BP and to further developing our Russian asset base as well as securing access to material additional opportunities for TNK-BP."

The move is just the latest in the Russian Government's attempts to wrest control of its valuable energy resources from foreign ownership.

Last year, Shell, the Anglo-Dutch oil giant, was forced to give up control in Sakhalin-2, the world's largest oil and gas development project, selling its stake to Gazprom for $7.45 billion.

Vladimir Putin, the Russian President, has criticised BP for the lack of activity in producing gas from the Kovykta project, recently lambasting the group for "doing nothing" at the field. According to The Wall Street Journal, after selling out to Gazprom, TNK-BP may then be offered a minority stake in the Kovykta project.

Times Recommends

• ‘Lame duck’ fear for FSA as chief quits
• Storm over bailout of EU's most ailing economy
• Northern Rock to drop 100% savings guarantee