TNK-BP's Kovykta Declared Insolvent by Russian Court

TNK-BP, the joint venture between BP (NYSE:BP) and a group of Russian billionaires, has its Kovykta gas field declared insolvent by a Russian court.

The license holder of the Kovykta project is RUSIA Petroleum, which is majority-owned by TNK-BP. BP and the Russians are 50-50 partners in the TNK-BP venture.

Bankruptcy proceedings concerning the property have been initiated and are expected to continue on through April 19, 2011, according to the court.

Much of this centers around supply from the asset wasn't able to be directed toward China, so the production targets imposed by the Russian government weren't able to be met because of low domestic demand.

So far the joint venture has invested about $1 billion in Kovykta, which one of the major shareholders, German Khan, said they're attempting to recoup via the bankruptcy.