TNK-BP

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TNK-BP Ltd. (RTS:TNBP) is a major vertically integrated Russian oil company, registered in the British Virgin Islands in September 2003 as a result of the merger of British Petroleum's Russia and Ukraine oil and gas interests with assets of Alfa Group and Access/Renova Group - a group of stakeholders called AAR.^[1] TNK-BP controlled 96 percent of the stock of TNK and 98 percent of the stock of ONAKO and SIDANKO through British Virgin Island and Cypriot subsidiary companies. TNK, ONAKO and SIDANKO in turn held controlling packages in all TNK-BP's main affiliates. From the company's foundation until a second round of reorganization in August 2006, the company's assets were held by the TNK-BP Holding group, registered in Uvat in Russia's Tyumen Oblast.

The first stage of the restructuring was completed in September 2005, when minority shareholders' stock in 14 key TNK-BP subsidiaries was traded for 2.5 percent of stock in TNK-BP Holding. About 70 percent of minority shareholders traded their stock. The rest remained shareholders in the subsidiaries. The second stage of restructuring was the exchange of TNK, ONAKO and SIDANKO stock.

TNK-BP's Ukrainian enterprises; Kovykta gas condensate deposit developer RUSIA Petroleum; Slavneft (half owned by the Russian state-comtrolled Gazprom Neft); STBP Holdings, BP's Moscow filling station chain, and a blocking package belonging to Shalva Chigirinsky were all not included in TNK-BP Holding. After the second stage of restructuring, TNK-BP announced that it would continue to consolidate its production assets, although it had no immediate plans for that.

TNK-BP became Russia's third largest oil company, employing almost 100,000 people and operating in nearly all of Russia's major hydrocarbon regions.

TNK-BP 2009 first quarter net profits fell 58% due to oil price decline to $747 million from $1.77 billion a year ago ^[2]

[edit] Obstacles and conflicts

For a summary of the pre-2003 battle of control between TNK and BP, see: Alfa Group.

After TNK and BP merged their Russian oil and gas businesses in 2003, within relatively short time there was new legal strife between BP and the Alfa Group over TNK-BP.^[3] Prior to the partial TNK acquisition by BP, TNK had aggressively seized several assets from another BP joint venture, wrote The Economist in May 2007, speculating that greater pressure might be applied by government-owned entities, such as the Gazprom Neft.^[4] The legal battle was ignited after a clause against trade in the TNK-BP share expired in 2008. Western BP executives have been denied visa to Russia, employees have been accused of espionage in March 2008, and there is total dieagreement between BP and Alfa over the executive management of TNK-BP, including suspision that the Alfa Group seeks to weaken BP's powers through a strategic alliance with Gazprom.^[5][6] Furter, Alfa Group has accused TNK-BP CEO Robert Dudley of having violated Russian laws.^[7]

On 12 June 2008, in Stockholm, Peter Sutherland, the BP chairman, lamented Russia's prime minister Vladimir Putin's lack of action to prevent the AAR group of Russian shareholders, who he viewed as oligarchs, from using strong-arm tactics to try to take control of TNK-BP, saying: "This is just a return to the corporate raiding activities that were prevalent in Russia in the 1990s. Prime minister Putin has referred to these tactics as relics of the 1990s, but unfortunately our partners continue to use them."^[8][9]

On 6 July 2008, The Sunday Times reported^[10] that BP was suing its Russian partners - Mikhail Fridman, Viktor Vekselberg, Leonard Blavatnik (who is, in fact, a US passport holder) and German Khan - in the High Court in London over a $360m (£180m) tax claim lodged on 30 June; the latter alleged that BP was owed the sum under the terms of an agreement that had been struck at the creation of the TNK-BP joint venture in 2003. The four billionaires were reported to be planning to fight the claim with the spokesman for their holding company, AAR, describing the figure quoted in the writ as "inflated”".^[10]

On 4 September 2008, the parties to the corporate conflict signed a five-page memorandum of understanding, which Tony Hayward, BP's chief executive, described as "a very sensible and pragmatic way of looking forward."^[11] BP managed to retain the 50-50% split.^[11]

TNK-BP is of enormous importance to BP, representing 24% of production and 19% og total reserves in 2007. In 2008, TNK-BP chief executive in Russia, Robert Dudley, was expelled from the country, as part of the power-broking between the two owners.^[12] BP in vain proposed previous Russian diplomat Pavel Skitovitsj as new CEO of TNK-BP, nut in May 2009 Alfa Group achieved to have their own President Mikhail Fridman installed as CEO of the company. Analyst Lev Snykov of VTB Group in Moscow commented this to be a new shift in power to the benefit of Alfa Group, preparing their full take-over of TNK-BP.^[13] In 2009 TNK-BP sold the company's oil field services division to Weatherford International for US $450-$490 million in stock.

[edit] References

[edit] External links

• (English) TNK-BP official website
• (Russian) TNK-BP official website