Monday, January 17, 2005
Russian oil giant TNK-BP tries to pull itself together
By Erin E. Arvedlund The New York Times
Saturday, January 15, 2005
MOSCOW Russia's No. 3 oil company, TNK-BP, on Friday gave shareholders details of a long-awaited corporate restructuring, which it said brought together more than a dozen subsidiaries, moves the company's operations onshore in Russia and sets TNK-BP's preliminary value at $18.5 billion.
Shareholders in TNK-BP, the British-Russian joint venture that is powering the energy giant BP's growth, have been eagerly awaiting details of the reorganization.
"We're offering shareholders a fair deal, something they don't get very often in Russia," TNK-BP's chief financial officer, Kent Potter, said at a news conference.
TNK-BP's structure - a collection of more than a dozen subsidiaries and roughly 600 other entities like trading companies - was a legacy of Russia's 1990s privatizations. The company's founders - the Russian billionaires Mikhail Fridman and Viktor Vekselberg and Russian-American emigre Len Blavatnik - bought assets around the country to create the third-largest oil producer. Then in 2003, BP purchased half of TNK in a deal blessed by both Prime Minister Tony Blair of Britain and Russia's president, Vladimir Putin.
In an effort to inculcate Western-style management, TNK-BP said it would create a new, streamlined holding company and swap minority shareholders into it, or buy them out in some cases. It also reincorporated in Russia from Cyprus and the British Virgin Islands, amid increasing Kremlin scrutiny of the energy sector and massive tax claims against the embattled Russian oil company Yukos. The registration in offshore tax havens was a sore point for Russia's government, which is eager to collect more budget revenue from its oil and gas companies.
Production at TNK-BP should to grow 7 percent this year, Robert Dudley, the company's chief, said at the news conference. TNK-BP's output grew 15.6 percent in 2004 to 1.4 million barrels, making it one of the fastest-growing energy companies in Russia last year. It has also bolstered BP's fortunes, pumping roughly a third of the British giant's oil.
The restructuring does not include some valuable assets like Slavneft, which is jointly owned with Sibneft, a Russian oil rival, some retail gas stations, and operations in Ukraine. Dudley said that going ahead without them was necessary to stay on schedule. He did not rule out the possibility that they could be added back sometime in the future, and he also said that he expected the company to list on a Russian exchange.
Deloitte & Touche, which was hired to do an independent valuation, said the entire new holding company was worth $18.5 billion.
"The consolidation terms are very fair," said Steven Dashevsky, an oil analyst at Aton Capital. Based on reserves, the company is offering the top of the range for publicly traded Russian oil and peer group deals, he said.
He said Deloitte & Touche's valuation was "roughly in line" with his firm's $20 billion to $25 billion estimate, "which assumes TNK-BP becomes a normal publicly traded company."
Russia seeks cheap loans
Russia is urging Japan to grant the country cheap loans to build a $15.5 billion oil pipeline to the Pacific coast, and will allow Japanese companies to bid for east Siberian oil fields that would help fill the link, Victor Khristenko, the Russian industry and energy minister, said Friday, Bloomberg News reported from Moscow.
"Russia counts on getting loans that won't be linked to the purchase of Japanese equipment or technology," Khristenko said at a news conference. "The participation of the development of oil fields will be decided by companies."
Russia will build the pipeline to the Pacific coast to supply Siberian crude to Asian states and to accelerate the exploration of fields in the eastern part of the country, the government has said on its Web site.
Japan expects east Siberia's reserves to total around 18.9 billion barrels of oil, according to a June 2004 report from the Institute of Energy Economics.
Saturday, January 15, 2005
MOSCOW Russia's No. 3 oil company, TNK-BP, on Friday gave shareholders details of a long-awaited corporate restructuring, which it said brought together more than a dozen subsidiaries, moves the company's operations onshore in Russia and sets TNK-BP's preliminary value at $18.5 billion.
Shareholders in TNK-BP, the British-Russian joint venture that is powering the energy giant BP's growth, have been eagerly awaiting details of the reorganization.
"We're offering shareholders a fair deal, something they don't get very often in Russia," TNK-BP's chief financial officer, Kent Potter, said at a news conference.
TNK-BP's structure - a collection of more than a dozen subsidiaries and roughly 600 other entities like trading companies - was a legacy of Russia's 1990s privatizations. The company's founders - the Russian billionaires Mikhail Fridman and Viktor Vekselberg and Russian-American emigre Len Blavatnik - bought assets around the country to create the third-largest oil producer. Then in 2003, BP purchased half of TNK in a deal blessed by both Prime Minister Tony Blair of Britain and Russia's president, Vladimir Putin.
In an effort to inculcate Western-style management, TNK-BP said it would create a new, streamlined holding company and swap minority shareholders into it, or buy them out in some cases. It also reincorporated in Russia from Cyprus and the British Virgin Islands, amid increasing Kremlin scrutiny of the energy sector and massive tax claims against the embattled Russian oil company Yukos. The registration in offshore tax havens was a sore point for Russia's government, which is eager to collect more budget revenue from its oil and gas companies.
Production at TNK-BP should to grow 7 percent this year, Robert Dudley, the company's chief, said at the news conference. TNK-BP's output grew 15.6 percent in 2004 to 1.4 million barrels, making it one of the fastest-growing energy companies in Russia last year. It has also bolstered BP's fortunes, pumping roughly a third of the British giant's oil.
The restructuring does not include some valuable assets like Slavneft, which is jointly owned with Sibneft, a Russian oil rival, some retail gas stations, and operations in Ukraine. Dudley said that going ahead without them was necessary to stay on schedule. He did not rule out the possibility that they could be added back sometime in the future, and he also said that he expected the company to list on a Russian exchange.
Deloitte & Touche, which was hired to do an independent valuation, said the entire new holding company was worth $18.5 billion.
"The consolidation terms are very fair," said Steven Dashevsky, an oil analyst at Aton Capital. Based on reserves, the company is offering the top of the range for publicly traded Russian oil and peer group deals, he said.
He said Deloitte & Touche's valuation was "roughly in line" with his firm's $20 billion to $25 billion estimate, "which assumes TNK-BP becomes a normal publicly traded company."
Russia seeks cheap loans
Russia is urging Japan to grant the country cheap loans to build a $15.5 billion oil pipeline to the Pacific coast, and will allow Japanese companies to bid for east Siberian oil fields that would help fill the link, Victor Khristenko, the Russian industry and energy minister, said Friday, Bloomberg News reported from Moscow.
"Russia counts on getting loans that won't be linked to the purchase of Japanese equipment or technology," Khristenko said at a news conference. "The participation of the development of oil fields will be decided by companies."
Russia will build the pipeline to the Pacific coast to supply Siberian crude to Asian states and to accelerate the exploration of fields in the eastern part of the country, the government has said on its Web site.
Japan expects east Siberia's reserves to total around 18.9 billion barrels of oil, according to a June 2004 report from the Institute of Energy Economics.
# posted by Deval : 1:50 AM
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