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BP will close Sakhalin office, scraps drilling

Oil major BP will close its office in Russia's Pacific Sakhalin island after the company decided to scrap further drilling at its two offshore projects in the region in 2008, BP's Moscow office said on Tuesday.

BP said its joint venture with Russia's largest oil firm Rosneft, Elvari NefteGaz, will only do geological exploration at Sakhalin-4 and Sakhalin-5 projects, where drilling has so far not been seen as successful.

"Elvari shareholders have approved this year's budget, provided that geological exploration will continue, but there will be no drilling this year," Vladimir Buyanov, BP's spokesman in Moscow, told Reuters.

He said that closure of BP's Sakhalin office was a part of reorganisation to optimise operations in new working conditions and would not mean the end of BP's presence on the energy-rich island.

"BP will continue actively working there through Elvary, supporting it BP's Moscow office rather than locally," Buyanov said.

Elvari, in which Rosneft owns 51 percent while BP holds the rest, has said it would invest around $700 million in the projects to 2011. It has drilled six exploration wells at the project including two last year.

It has yet to announce the results of the last year's drilling season, which prompted analysts to speculate that they might have been disappointing.

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