Urals Energy joins Russian targets - 16 May

Urals Energy has become the latest oil company to face accusations of environmental offences by a Russian government watchdog.

Shares in the Aim-listed company fell 12½p to 397½p.

Oleg Mitvol, deputy head of Rosprirodnadzor, Russia's environmental watchdog, said he was investigating Urals Energy's operations after environmental organisations accused it of dumping oil in the Barents Sea and illegal logging in the Irkutsk region of Siberia.

Mr Mitvol said his agency had initially planned to scrutinise Urals Energy's licence and environmental compliance later this year. "Now we have grounds to carry it out very soon. If information about an oil discharge into the Barents Sea is confirmed, the company will face the toughest sanctions," he said.

The company said it had not received any official warning from the ministry of energy or notification of an investigation.

Leonid Dyachenko, Urals Energy chief executive and a former son-in-law of the late Russian president Boris Yeltsin, said: "These allegations are without foundation. Urals Energy has an excellent track record of compliance within all of its operating subsidiaries. We have offered our full co-operation to the Ministry today to clear these misunderstandings and look forward to working with them. I am confident that this issue will be quickly resolved."

Mr Mitvol has waged several high profile campaigns against natural resources companies in Russia, including Royal Dutch Shell and TNK-BP, BP's Russian joint venture. At the smaller end of the market, Mr Mitvol last year publicly attacked Aim-listed Peter Hambro Mining and last month said Aim-listed Imperial Energy was misreporting its oil reserves.

Few of Mr Mitvol's threats lead to action, however. In the case of Peter Hambro Mining, Mr Mitvol said the group was in the clear two weeks after claiming it had breached its licence requirements.

A person close to Urals Energy said yesterday that Mr Mitvol's public comments did not reflect the views of more senior figures in Russia's ministry of energy.

Urals Energy floated on Aim in August 2005. Earlier this month, the group said it was confident that its Russian oil and gas reserves figures would stand up to government scrutiny.