The Anglo-Russian firm TNK-BP said Gazprom paid 22.3 billion rubles ($773 million) for one of the world's largest untapped reserves -- about one and a half times the opening price.

The Kovykta field in the Irkutsk region of southeastern Siberia was once instrumental to the British energy giant's efforts to deliver gas through pipelines to both nearby China and South Korea.

But TNK-BP was never able to secure an export license from the Russian government and was eventually forced to liquidate the RUSIA Petroleum company that controlled its stake in the field.

The vast Siberian deposit is expected to produce about as much gas per year as China currently receives from Central Asia's main energy exporter, Turkmenistan.

"We believe that the deal signals that Gazprom is to sign a contract with China in mid-2011, as the company has stated previously," Russia's VTB bank said in a research note.

Gazprom won the stake Tuesday after outbidding a subsidiary of Rosneftegaz -- a company that holds the Russian government's stake in the country's largest oil producer Rosneft with whom BP has jus signed a major Artic deal.

The field became emblematic of Western oil majors' high-stakes battles with the Russian government.

TNK-BP acquired control of the RUSIA Petroleum company that initially begun to develop the field in 2003.

It soon assumed major exploration and pilot production work that expanded Kovykta's confirmed natural gas reserves from 346 billion cubic metres to more than two trillion cubic metres.

RUSIA Petroleum said it expected to produce 30 billion cubic metres of gas per year once the field was fully operational -- the same amount energy-hungry China is due to receive from Turkmenistan.

All those plans came to a crashing halt when the Russian government refused to support TNK-BP's bid for an export license.

The company was put under further pressure when it risked losing its rights to the field outright for refusing the meet the Russian state's Kovykta production quotas.

The move was widely seen as part of the government's efforts to re-establish control over national energy resources at a time of soaring global commodity prices.

It also coincided with Royal Dutch Shell's loss of control of its Sakhalin project in the Pacific and the Russian government's dismantlement of Mikhail Khodorkovsky's Yukos oil giant.

TNK-BP eventually agreed to sell its stake in Kovykta for about $1 billion to Gazprom but the 2007 agreement was never realised after pricing and other disputes.

RUSIA Petroleum filed for bankruptcy in June 2010 in a move that analysts said represented another attempt by TNK-BP to part with its ill-fated stake.

Analysts said the acquisition helps boost Gazprom's standing at a time when its rival Rosneft is making significant inroads through joint oil exploration agreements it struck this year with both BP and the US oil major Exxon Mobil.

Rosneft's deals will see the state-held company explore the Arctic with BP and the Black Sea with Exxon Mobil.

But Rosneft has thus far been unable to tap the natural gas market and analysts interpreted Tuesday's auction as a sign that the Russian government wants to keep Gazprom in charge of that resource.

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