RusEnergy

19.05.2006 Aton Capital – TNK-BP has revealed that it received a $1.3 billion preliminary back tax claim from Russian authorities for 2002 and 2003, writes Vladimir Afanasiev. The company said it held this amount in reserve when it filed its results for this year's first quarter under local accounting standards this week. A company spokesman said TNK-BP has yet to receive the final claim from tax authorities. The current amount of back tax is the result of last year's audit of Russian companies TNK and Sidanko, which became part of the joint venture between UK supermajor BP, TNK and Sidanko's shareholders Alfa Group, and Access/Renova Industries at the end of 2003. The TNK-BP spokesman said the company wrote to the tax authorities immediatly, saying it did not agree with the amount of back tax being claimed. Aton Brokerage in Moscow said that, while the news is “obviously negative, investors are likely to remember that back tax claims against the company of $1.2 billion for 2001 later resulted in a reduced payment of $247 million” following an appeal. The claim also was expected, as BP chief executive John Browne said late last year that TNK-BP would face “further large claims for 2002 and so on”. He also said that such claims “are not unusual” and that BP's experience in other markets suggests that agreements are usually reached on the amount to be paid. Analysts in Moscow do not expect the final amount will undermine the company's financial stability this year. However, TNK-BP said in its report that its net income for the first quarter fell by 28% to $430 million, compared with the first quarter of 2005, most likely because of the rising tax burden and production costs.