Strategic partnership between Russian investors and BP
11 Feb 2003
The new company will have 9,488 mm boe of proved reserves (according to the 2002 independent reserve audit) and 1.21 mm boe of daily production. The new company will own five refineries with the 1,000 mbd of total installed capacity and operate a retail network with over 2,100 outlets in Russia and Ukraine. BP and AAR each will own 50% of the new holding company. AAR will contribute its holdings in Tyumen International (TNK) and Sidanco, the stakes in Rusia Petroleum and Rospan gas field in Western Siberia and its interests in Sakhalin IV and V exploration licenses. ÂÐ will contribute its holdings in Sidanco, share in the Rusia Petroleum and Sakhalin V exploration license and its holding in the BP Moscow retail network. AAR interests in Slavneft and BP’s interest in LukArco and the Russian elements of BP’s trading, marine, lubricants and aviation international businesses will not be part of the current transaction. For the 50 per cent stake in the new company, BP will also make a series of payments to the AAR shareholders in form of cash and BP shares in addition to the assets transferred into the new holding company.
The new company will have exclusive rights for all new projects carried out by AAR and BP in Russia and Ukraine. The new company may seek opportunities where appropriate to expand its activities to other CIS countries and Central and Eastern Europe.
The ten-strong Board of Directors of the new company will have equal AAR and BP representation reflecting the shareholding in the new company. AAR will nominate the Chairman of the Board, BÐ will nominate the Chief Executive Officer. Senior management team will be jointly selected and unanimously approved by the Board (including the CEO).
“This transaction is a major breakthrough in integrating Russia into the global economy, — said Michael Fridman, the Chairman of the Board of Alfa Group. “We hope that this project will only be the first among a number of large international projects with the joint participation of the Russian and foreign companies. Certainly, this transaction reflects the recognition by the international community of the growing political stability and success of the economic development in Russia. This transaction would have been impossible without active support of the Russian political leadership”.
“This agreement demonstrates the result of hard work which was carried out by the management and the Board of Directors of TNK, — emphasized the Chairman of the Board of Directors of TNK, Chairman of the Board of Directors of Renova Victor VekselÒberg. “We have successfully created the effective and transparent organization managed by a very professional team”.
“The ultimate success of this deal was determined by the years of intensive interaction between the ÂÐ management and both the shareholders and the management of TNK, — said Len Blavatnik, the Chairman of the Board of Access Industries. — “In the end we are extremely satisfied with our relationship with BP and hope that our new partnership will become stronger as the new company starts to grow”.
Notes to Editors:
AAR was advised in this transaction by Goldman Sachs International and Alfa Bank. Legal advice was provided by Jones Day.
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