Company news in 2009

The Russian-British company TNK-BP will send its first tanker with oil of the ESPO (East Siberia–Pacific Ocean) grade from the new seaport Kozmino, the terminal point of the East Siberia–Pacific Ocean oil pipeline, on January 1–2, 2010, the press service of the company informed.

Maxim Barskiy was on his way from a three-week holiday in Australia flying via Tokyo with his family last autumn. Newspapers were offered to passengers aboard the plane. Barskiy took Vedomosti. He read that TNK-BP shareholders had decided not to appoint Denis Morozov, former Finance Director of Norilsk Nickel, to the position of Company President, and said to his wife: ‘You know, actually, I am well suited. I am their ideal candidate!’ On the following day, Maxim got a phone call from Ward Howell with an invitation to come for an interview about his potential employment with TNK-BP.

Maxim Barsky, former investment banker and TNK-BP’s future CEO, promised to turn the Russian-British venture into Russia’s largest private oil company, claiming he was not a henchman of any of the shareholder groups involved in the recent conflict.

TNK-BP Ltd. plans to keep expanding oil output even as the rest of the industry stagnates, thanks to a fat portfolio of new fields, said Maxim Barsky, who will run the venture.

The United Kingdom’s special representative for international trade and investment, Prince Andrew the Duke of York, voiced hope during a meeting in TNK-BP’s offices that relations between the oil company’s Russian and British shareholders, like those between Russia and the UK, will in time become global.

On January 1, the future head of TNK-BP Maxim Barsky will become a deputy to the company’s current CEO Mikhail Fridman. His main objective is to turn TNK-BP into the most expensive private oil company in Russia. Barsky’s bonus is tied to the company’s value growth.

OJSC “Sovcomflot” and TNK-BP created a joint working group in order to explore possibility of building self-propelled tankers and tug & barge trains in Russian shipyards to create an integrated system for transportation of oil products on the Volga river.

The Association for Protection of the Rights of Investors named the winners of the contest “Corporate Governance Leaders 2009.” TNK-BP Holding and Surgutneftegaz came out the best in the nomination “Company with the Best Dividend Policy” among companies of the fuel and energy sector.

The investment program of TNK-BP will be increased up to $4 billion in 2010, Viktor Vekselberg, Executive Director of TNK-BP, said to journalists.

The international rating agency Standard & Poor’s (S&P) raised the long- and short-term corporate credit ratings of TNK-BP International Ltd. (TNK-BP) to ВВВ-/А-3 from ВВ+/В with a stable outlook. “The upgrade reflects our perception of material improvements in governance and shareholder alignment,” said Standard & Poor’s primary credit analyst Karl Nietvelt. The upgraded ratings reflect the high efficiency of the new agreement among the shareholders signed in January 2009 and the better alignment of shareholder interests. The ratings were raised after recent meetings between the TNK-BP management and shareholder representatives from Alpha/Access/Renova (AAR) and BP Plc.

The Arbitration Court of the Tyumen Region rescinded the claim of the Federal Antimonopoly Service about alleged violation of the antitrust legislation by TNK-BP and cancelled the penalty of 4.2 billion rubles imposed by the Federal Antimonopoly Service on the company, Interfax’s correspondent reported from the court session on Friday.

The lower price of jet fuel at the Sheremetyevo Airport in Moscow than at other Russian and foreign airports incited the air company Aeroflot sharply increase its purchase of fuel in Moscow. The saving desire has resulted in serious problems – for the second time this week the air company is facing the risk of being left without fuel as the fuel suppliers could not cope with the growing demand. TNK-BP reported that the demand for jet fuel in November at the Sheremetyevo Airport went up substantially and the entire contracted monthly volume of jet fuel was supplied ahead of the schedule.

The government’s decision to set the export duties for East-Siberian oil to zero is coming into force today. However, oil companies already know the potential boons and effects of this decision. Jonathan Kollek, Vice President, Sales, Trading and Logistics, TNK-BP, said yesterday that, with the beginning of oil transportation from the Verkhnechonskoe field through the East Siberia–Pacific Ocean oil pipeline, the company will increase its export by 6% up to 38 million tons.

TNK-BP held a November series of auctions selling large volumes of oil products at the Saint Petersburg International Commodity Exchange.

According to the joint statement by the shareholders of Russian-British oil company TNK-BP, Russian consortium Alfa Access Renova (AAR) and British BP, released on Thursday, Maxim Barsky was appointed Chief Executive of the company effective January 2011.

Sovcomflot plans to place an order for building of 2 tankers to transport TNK-BP oil products, as reported to the Agency of Oil Information a TNK-BP representative.

TNK-BP continues capital investments into construction of facilities and development of fields of the Uvat project, which was started in February 2009. To ensure the planned production growth, the company has upgraded its custody transfer unit in the Kalchinskoe field, tripling its capacity, and is now launching a second line of the central gathering facility in the Ust-Tegusskoe field and a new oil pumping station in Kalcha.

During the trading session in October TNK-BP sold 91’74 000 tons of oil products, stated the company’s press secretary Nikolai Gorelov in an interview to the Oil Information Agency (ANI). During the three auctions held respectively on 15, 29 and 30 October the total volume sold was 63’18 000 tons.

Moody’s international ratings agency has changed its rating for TNK-BP International Ltd., which is at Baa2 level, from “developing’ to “stable”, according to an announcement from the agency.

There isn’t that much information on the Russian oil products market today about companies that actually hedge their sales, especially amongst the vertically integrated oil companies. Aleksey Golubev, head of the Light Products Sales Section at TNK-BP, spoke to us about the company’s strategy in this area and about exchange trading of oil products.

Q3 proved to be successful for TNK-BP: the company’s revenue and profits were going up faster than oil prices.

The government is going to build up exchange trade of oil products, to which oil companies show no great interest so far. A meeting was held late last week dedicated to exchange trade development, which was headed by Vice President Igor Sechin and participated by representatives of Russian oil companies and oil authorities. A source familiar with the results of this meeting said to Vremya Novostei that oil companies are ready to substantially increase the volume of their sales at alternative trading marketplaces if the government manages to attract major customers there.

The Ryazan Oil Refinery owned by TNK-BP is going to switch completely to production of diesel fuel of the Euro-5 standard by 2015. Dmitry Bedarev, General Director of the Ryazan Oil Refinery, told Argus about the development plans of the refinery and the current situation in the oil refining industry.

TNK-BP will host its Global Investor Conference call to present its 9 months results for 2009 and update investors on recent developments. The call is scheduled for Tuesday 27^th October, at 16:00 MSC / 13:00 LDN / 09:00 NY.

Last year, when the oil barrel cost approximately $40, TNK-BP was the most circumspect company that based its investment program on an average price of $35 per barrel. The whole year of growing oil prices imbued optimism into the management of the Russian-British consortium. Jonathan Muir, Chief Financial Officer of TNK-BP, said that the company worked out a business plan for 2010 based on an oil price of $60 per barrel and an exchange rate of 33 rubles per dollar. Accordingly, TNK-BP is going to increase the volume of its investment program.

TNK-BP is going to invest $180 million into development of the Russkoe field, Sergey Biryukov, head of the Russkoe project, said to the press. Mr. Biryukov reminded that on October 8, the Board of Directors of TNK-BP approved investment of $400 million into exploration and development of fields in the Yamalo-Nenets Autonomous District and north Krasnoyarsk Krai, of which $180 million intended for the Russkoe field will be used up in 2010 and early 2011.

The closed joint-stock company Rospan International, a subsidiary of TNK-BP producing gas in two areas in the Yamalo-Nenets Autonomous District, may invest $5 billion into the region for increasing its gas production up to 15 billion cubic meters a year, Dmitry Orlov, General Director of Rospan International, said to the press on Monday.

TNK-BP completed implementation of stage 1 of an investment project for reconstruction of treatment facilities at the Uvek Oil Depot of Saratovnefteproduct, informed the press service of the company. The total budget of this project is over $3 million. Two large buried sewage pumping stations are so far replaced by three compact modules with control and regulation of parameters from the control panel.

Orenburgneft, a subsidiary of TNK-BP, was granted the right to use the Kemeliksky area for prospecting, exploration, and production of hydrocarbons.

The Saint Petersburg International Commodity Exchange is about to start conducting ascending-price auctions (English auctions) for the first time in its practice. The first ascending-price auction is requested by TNK-BP and scheduled for October 15. The auction will offer 10,080 tons of light diesel fuel L—0.2—62 from the Ryazan Oil Refinery at a reserve price of 13,000 rubles per ton, 1,980 tons of Normal—80 gasoline from the Ryazan Oil Refinery at a reserve price of 20,000 rubles per ton, and 4,320 tons of Normal—80 gasoline from Yaroslavnefteorgsintez (YaNOS) at a reserve price of 20,000 rubles per ton.

TNK-BP suggested that the Federal Customs Service may pay back the sums adjudged by the court to the oil company or set these sums off the future payments of the company, said Igor Maydannik, Vice President of TNK-BP, to the Petroleum Information Agency (ANI).

The net income and revenues of the sales division of TNK-BP Holding, a Russian-British company, nearly halved from January through June. At the same time, analysts point out that the income growth of the company is quite stable owing to the improvement of its operating parameters. Moreover, $1 billion of cash accumulated in the accounting period will help the company pay hefty dividends as earlier.

Angara river area is turning into an oil and gas region. This year will be memorable for Irkutsk Oblast economy, particularly for its oil and gas industry. While they never produced more than 200 thousand tons of oil per annum in Angara region some time ago, this year’s ‘black gold’ production will be in excess of 1 million tons. The hero of the day is Verkhnechonskoe Oil and Gas Condensate Field (OGCF) commissioned by Verkhnechonskneftegaz (VCNG). The oilmen plan to increase production to 7 million tons within the nearest five years.

Approximately 1.56 billion cubic meters of gas and 350 tons of gas condensate was produced by Rospan International in the first eight months of 2009. By the end of the year, the production volumes are expected to amount to 2.5 billion cubic meters of gas and 550 tons of gas condensate.

Three Russian oil fields are listed among the world twenty biggest fields by IHS CERA, an international research company.