29 October 2003 01:48
UK: BP confident over Dollars 7bn Russian investment OIL & GAS:
BP remained confident about its Dollars 7bn (Pounds 4.1bn) investment in
Russia despite the recent arrest of MikhailKhodorkovsky, head of Yukos, which
has renewed fears of investing in a country some seeas politically risky.
Lord Browne, BP's chief executive, said yesterday that the incarceration
of the chief of Russia's largest company - which sent Moscow's
stock market tumbling more than 10 per cent - did not affect BP's
attitude about doing business in Russia.
"We are in Russia for the long term. I don't think it's
relevant at all to what we are doing," he said. "We still have
confidence in the government of Russia."
The statements came as BP reported quarterly profits. BP said its pro-forma
profits for the three months to September 30 were Dollars 2.87bn, up 25 per
cent from the same time last year. Pro-forma profits at the nine- months
stage were Dollars 9.71bn (Dollars 6.08bn), while pre-tax profits rose from
Dollars 9.48bn to Dollars 13.4bn. Turnover for the first nine months rose to
Dollars 203.3bn (Dollars 146.4bn).
The profits advance was lower than many analysts had forecast but the
undershoot was not of the scale reported by Royal Dutch/ Shell last week.
The rise in profits was driven largely by high oil prices and improved
refining margins. The return on average capital employed rose to 15 per cent
from 13 per cent.
In spite of the increase, the company's dollar policy on dividends meant
UK shareholders saw a cut in their quarterly dividend payment to 3.857p from
3.897p a year earlier, while foreign shareholders had a rise to 6.5c from 6c.
BP said its Dollars 6.75bn joint venture with Russia's TNK made a
"strong contribution" to the results. Total production rose 1.5 per
cent to 3.5m barrels of oil equivalent a day, largely from TNK-BP, which
offset reductions elsewhere.
Neil Perry, analyst at UBS, said: "It looks like a very strong
contribution, but the only way we are going to judge that acquisition is in a
longer term and in a period of lower oil prices."
Lord Browne emphasised that the Russian deal, completed in late August,
amounted to only 3 per cent of BP's capital employed. "We are in
lots of other places and we are big in these other places."
JJ Traynor, analyst at Deutsche, said the market was reluctant to price in
the Russian exposure to BP's stock, which was trading at a 13 per cent
premium on cash flow to rival Shell.
The group which is planning to inject up to Dollars 2bn into its pension fund
this year - it contributed Dollars 650m in the third quarter - decided not to
pursue share buy-backs.
BP said it expected to complete its Dollars 1.35bn investment to include some
Slavneft assets in the TNK-BP venture by the end of the year.
The shares fell 4p to close at 408 1/2p. Lex, Page 24
[FTI [The Financial Times]] |
RUSSIA IN FACTS
