According to reports from TNK-BP, the Board or Directors focused on purely operational issues. At yesterday’s meeting the 2009 business plan was approved. This is based on holding oil production at this year’s level (600 million barrels of oil equivalent) and makes the following assumptions: an average Brent oil price of $60 over the year, a dollar rate of 30 roubles, a 10% increase in electricity and Transneft pumping tariffs, and zero growth in all other costs. If these conditions are not met, the company will have to adjust its business plan, according to TNK-BP. The company has announced that it will invest $3.3 bn next year ($4.4 bn this year).
TNK-BP plans to maintain production levels through “broad use of technology for efficient development of existing fields and increased output from new projects, including the Verkhnechonskoye and Kamennoye fields and the Uvat project”. But it was only in the middle of last week that TNK-BP’s Vice President for Sales and Logistic Jonathan Kollek stated that development of the Verkhnechonskoye field was not “especially profitable” because of the harsh tax and tariffs policy. Work on second-tier projects, in the meantime, could slow down. People inside TNK-BP say this will impact development work on the Russkoye acreage in the Arctic circle and fields in the Bolshekhet depression, where first oil has already been postponed from 2011 to 2012.
“TNK-BP is the first company to announce that it is cutting investment and focusing on projects with quick returns. This will enable it to hold production at the current level, Vremya Novostey was told by Troyka Dialog analyst Valeriy Nesterov. “The company’s oil price forecast of $60 looks highly optimistic. You have to assume that this is a plan of action not for the year ahead but the near future. The main issue is the uncertainty: no-one knows where the oil price will go, what the tariffs will be, or what the Government might do to help the oil industry”.
Senior managers at TNK-BP and BP stress that yesterday’s Board meeting passed off peacefully and constructively following a prolonged shareholder dispute. “It was a successful and valuable meeting”, believes acting head of the company Tim Summers. “In a more difficult business environment it’s important that we concentrate from Day 1 of the new year on clearly defined priority objectives”. BP’s Group Vice President for Russia and Kazakhstan, David Peattie, who is a member of the TNK-BP Board, stated as follows: “The Board meeting was held in a constructive atmosphere, and the participants gave unanimous support to TNK-BP’s 2009 business plan. In very difficult economic conditions we are aiming to hold production at the present level”.
TNK-BP has announced a further reduction in petrol prices — its second in the past month: from yesterday, BP-branded stations cut 80 kopeks off the price of a litre of Ai—92 (following a reduction of 1.15 roubles in late November and a further reduction of 32 kopeks on 1 December). The price of Ai—95 was also cut yesterday by 80 kopeks (following a reduction of 1.1 rouble on 1 December). According to TNK-BP, the purpose of these reductions is to narrow the differential between the cost of Ultimate 95 grade (premium fuel segment), which yesterday went down by 1.5 roubles, and standard Ai—95. One in three motorists buying BP petrol now chooses Ultimate, according to a company press release.