Chechnya angry at Rosneft, woos Azerbaijan with oil

BAKU, April 4 Wed Apr 4, 2012 5:08pm EDT

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BAKU, April 4 (Reuters) - Russia's republic of Chechnya has invited Azerbaijan to tap its oil deposits, saying a production license held by Russian state-owned oil company Rosneft has expired.

"Rosneft's license to produce oil in Chechnya has expired. In this connection, we invite Azerbaijan to explore new deposits," Chechnya Finance Minister Ali Isayev told reporters on the sidelines of a conference in the Azeri capital of Baku.

According to media reports, Chechen leader Ramzan Kadyrov has been annoyed by Rosneft's slow response to a request to build a refinery with an annual capacity of 1 million tonnes, which would give him more independence from Moscow.

A Rosneft spokesman declined to comment.

According to Russia's Energy Ministry, Rosneft's Chechnya subsidiary, Grozneftegaz, produced over 800,000 tonnes of oil last year, accounting for around 7 percent of the parent company's total output.

Grozneftegaz'a proven reserves stand at 60 million tonnes of oil and 3 billion cubic metres of gas under Petroleum Resources Management System classification.

The company was created in 2000 from the remnants of the Chechen oil industry, which suffered badly from two wars between Islamist separatists and the Russian federal government.

It is not immediately clear why the Chechen authorities targeted Rosneft, which became the top Russian producer after it acquired the bulk of bankrupt company YUKOS' assets.

The national oil company lost some of its clout after Deputy Prime Minister Igor Sechin resigned as chairman last year following an order from President Dmitry Medvedev.

The invitation for Azerbaijan to tap Chechnya's oil reserves comes a month before Prime Minister Vladimir Putin is scheduled to return to the presidency after winning a March 4 election.

Putin installed Kadyrov as the republic's president following his father assassination in 2004, but many in Moscow view his growing ambitions with suspicion.

Some Chechens fear Putin's return as president could mean a turn for the worse in the small republic, saying his personal ties to Kadyrov will further foster the Chechen leader's personality cult and a clamp down on freedom. (Reporting by Lada Yevgrashina; writing by Vladimir Soldatkin; editing by Andre Grenon)

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