BP to deepen cooperation with Russian state energy firms

The head of BP said that his company planned to expand its operations in Russia and deepen cooperation with state energy firms following a crunch meeting in the Kremlin with Vladimir Putin.

BP's chief executive Lord Browne emerged from his encounter with Russia's president declaring that he wanted to work together with Russia's leading energy producers. His statement appeared to win Mr Putin's cautious endorsement.

"This private company has been vigorously developing in Russia, where its reserves and production volumes have been growing," President Putin said, after the meeting with Lord Browne and his designated successor, Tony Hayward.

The meeting came after TNK-BP, which is half-owned by BP, said it would bid at an auction next week for 9.44% of the Russian state-controlled oil firm Rosneft. The auction on Tuesday will be part of the liquidation of assets from the bankrupt Russian oil firm Yukos.

The move took analysts by surprise. Many wondered whether the bid was merely an attempt to curry favour with the Kremlin. Lord Browne's visit to Moscow took place at a time of great uncertainty for foreign and private firms in the Russian energy sector.

Gazprom, the state-controlled energy producer, is already negotiating to buy its way into TNK-BP's Kovykta gas export project, having earlier forcibly acquired a stake in Shell's Sakhalin-2 oil and gas scheme in Russia's far east, the Guardian reports.

Rosneft this week agreed to borrow $22 billion, the largest ever credit for a Russian company, to buy its own shares and other Yukos assets at auction. The company has said it wants to swap its shares for domestic and foreign assets and may sell some on the market.

If TNK-BP were to win the Yukos auction next week, then Rosneft may seek to buy out the three Russian shareholders who own half of TNK-BP, said Vladimir Matias, managing director of Asset Capital Partners in Moscow.

Billionaires Mikhail Fridman, who attended the meeting with Browne and Putin today, and Viktor Vekselberg have denied plans to sell their TNK-BP stakes to Rosneft or Gazprom. They will be free to sell after a shareholders agreement ends this year. Len Blavatnik is the third Russian stakeholder in TNK-BP, Bloomberg reports.

TNK-BP's bid at the March 27 sale “will help us develop our strategic relationship with Rosneft and accelerate progress on major projects,” Shadrin said today. TNK-BP's OAO Samotlorneftegaz unit will bid for the stake, he said.

Source: agencies

Prepared by Alexander Timoshik

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Author`s name Alex Naumov