British–Russian oil firm TNK BP, half owned by BP, said on Thursday that there was no sign of any threat to its licence for the Kovykta gas field, dismissing a newspaper report that it might lose the project.

We have no documents and no indications to the effect that the Kovykta licence can be suspended, TNK BP spokeswoman Marina Dracheva told Reuters.

On Wednesday the Financial Times newspaper quoted an unnamed source familiar with the situation as saying prosecutors in the Siberian town of Irkutsk had demanded a local natural resources agency suspend TNK BP's licence on environmental grounds.

With respect to any environmental issues there have been numerous checks. All have proved that Kovykta is being developed in line with Russia's environmental requirements, Dracheva said.

The report comes in the wake of environmental checks on at least two other Russian oil projects with foreign shareholders, the production sharing agreements on Sakhalin Island led by Royal Dutch/Shell and ExxonMobil.

Russia's Natural Resources Minister Yuri Trutnev has said his ministry's environmental agency investigated the Shell project because the firm doubled the project budget to $20 billion, a massive over run that angered the Kremlin.

The ministry cancelled its ecological approval for the project on Monday, clouding its outlook.

Russia's Foreign Minister Sergei Lavrov discussed the situation around the project with his British counterpart Margaret Beckett in New York on Wednesday, the Russian Foreign Ministry said in a statement, without elaborating.

Shell's ballooning costs have infuriated Gazprom, the Russian gas monopoly, which plans to take a 25 percent stake in the project via a swap deal with Shell. Those plans are on hold until Shell can agree a new budget with Russia.

Gazprom's monopoly on gas transport also gives it power over Kovykta. TNK BP wants to use the vast field to export gas to China, but Gazprom has so far only allowed it a licence to supply gas to the local Irkutsk region.

TNK BP launched construction of a pipeline from Kovykta on Monday, which Dracheva said showed the project was on track.

Russia Energy