15 October 2003 01:56
BP to raise growth forecast from Russian oil venture
BP is tomorrow expected to surprise analysts by saying that it foresees higher than expected growth from its recently concluded partnership with Russia's TNK, which created that country's third largest oil group. Lord Browne, chief executive, is expected to announce annual production growth for the TNK-BP venture - of up to 14 per cent this year and up to 8 per cent in 2004. This compares with expectations of 10 to 11 per cent this year and an average of 4 to 5 per cent until the end of the decade. BP has been careful not to give concrete volume growth targets after it missed its goals last year. Nevertheless, analysts said production volumes were an important method of determining the impact of the deal on BP, which will now have 13 per cent of its capital employed in Russia. The increases, to an average daily output of 1.26m barrels in 2003, come as part of BP's efforts to apply its technical expertise in raising its current proven Russian reserves of 3.2bn barrels to as much as 31bn barrels. Robert Dudley, president and chief executive of TNK-BP, said: "We are trying to dispel certain myths about doing business in Russia and provide a more accurate portrayal than much of the market believes that TNK-BP assets are somewhat old and tired." The roadshow for analysts in London tomorrow and in New York on Friday comes at a time of heightened interest in Russian oil. It follows BP's decision to create the joint venture with its Russian partners this spring and during discussions for the possible purchase of a strategic stake in YukosSibneft, the country's largest oil group, by US majors ExxonMobil and ChevronTexaco. Mr Dudley said BP was likely to increase investment as a proportion of free cashflow from 40 per cent to about 50 per cent with upstream operations taking 70-80 per cent of the total. He said he saw no need to issue new eurobonds to raise financing, but the company would continue to restructure its Dollars 3bn debt following indications that the joint venture would be able to attract lower interest rates. German Khan, TNK-BP's executive director, said the top priority for the combined company was to adapt BP's worldwide experience to Russian conditions, drawing on its health, safety and environmental policies and financial transparency. The most difficult challenge in merging the companies was "choosing the right time for the introduction of different approaches," because Russian oil groups lacked the "cultural heritage" of BP. Russian love-in, Page 25 Total seeks arbitration, Page 31
[FTI [The Financial Times]] |
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