New Oil Company Will Be BP's Main Investment Channel into Russia

Russian companies Alfa Group and Access-Renova and BP, one of the world's leading oil corporations, have announced their intention to create a new oil company from TNK and Sidanko. According to BP vice-president Robert Dudley, who spoke at a press conference yesterday, the new company, which has so far not been given a name, will be the third largest in Russia in terms of size, reserves and extraction volume. He also said that it would become 'BP's main channel of investment into the Russian economy.'

Materials presented at the press conference indicate that 50% of the shares in the new company will belong to BP and 50% to its Russian partners. BP will pay the other participants in the consortium USD 3 billion in cash once the deal is completed, and then a further USD 1.25 billion a year in its own shares for the next three years. The deal came into force on January 1, 2003 and is planned to be completed in the summer.

The new oil company will have proven reserves of 9.488 billion barrels, and will extract 1.2 million barrels of oil a day. The company will have 5 oil refineries with a joint capacity of 1 million barrels a day. It will also have a network of filling stations across Russia and Ukraine.

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