Russia Gazprom Neft wins approval for carbon project

* Project is organised with Mitsubishi Corp and Nippon Oil

* It requires Gazprom to utilise gas previously flared

MOSCOW, Aug 4 (Reuters) - Russia's Gazprom Neft (SIBN.MM: Quote), an oil arm of energy giant Gazprom (GAZP.MM: Quote), said on Wednesday it received approval for an emissions reduction project worth 3.1 million ERUs it is implementing with Japanese firms.

Russia last month gave the green light for 15 clean energy projects to earn carbon credits under the Kyoto Protocol, a long-awaited move that could unlock around 2.7 billion euros ($3.6 billion) in carbon finance for over 100 projects held up by bureaucratic red tape. [ID:nLDE66P15S]

The joint implementation project, approved by Japan, Russia and carbon credit coordinator Sberbank SBER03.MM, requires Gazprom Neft to utilise associated gas at the Ety-Purovskoye field previously burned off via gas flaring.

The project, organised together with Mitsubishi Corp (8058.T: Quote) and Nippon Oil, was launched in August, 2009 and Gazprom Neft said all parties interested in purchasing the Emissions Reduction Units (ERUs) will be considered.

Reducing gas flaring has become a key issue for Russian oil producers after Prime Minister Vladimir Putin last year warned domestic energy majors they will face heavy fines if they fail to curb the practice.

Oil firms, including market leaders Rosneft (ROSN.MM: Quote), LUKOIL (LKOH.MM: Quote) and TNK-BP TNBPI.RTS, are investing hundreds of millions of dollars to meet the government's target of increasing associated gas utilisation to 95 percent by 2012. [ID:nLA517526] (Reporting by Alfred Kueppers; Editing by Dmitry Sergeyev)