BP Forecasts Production Growth in the Russian Oil Company
22 Oct 2003
BP is expected to surprise analysts tomorrow by its statement that it predicts a more successful growth rate, than forecasted for its Russian JV established earlier this year with TNK and resulting in Russia's third largest oil company. BP's CEO Lord Browne is also expected to announce TNK-BP's production growth by up to 14% this year and by up to 8% in 2004. This is higher than the previously forecasted 10% to 11% this year and 4% to 5% by the end of the decade. TNK-BP's President and CEO, Robert Dudley, said: "We want to dispel some myths on business activity in Russia. In addition, TNK-BP's assets are viewed by some market players to have depleted and we are going to present a more objective picture." Presentations for analysts - tomorrow in London and on Friday in New York, are conducted as a result of increased interest in Russian oil. Mr. Dudley said that BP was likely to boost its investment from 40% to 50% of the available cash flow, while 70% to 80% of the total amount would be channeled to oil and gas prospecting and production. He said he did not find it necessary to issue Eurobonds to raise funds. Meanwhile, the company would proceed with the restructuring of its USD 3 billion debt, considering the current opportunity of borrowing at lower interest rates. German Khan, TNK-BP's Executive Director, said that the top priority for the consolidated company was to successfully apply and adjust BP's global business experience, and first of all its labor protection, safety, and environmental policy, as well as transparency of its financial transactions into Russian conditions. The right timing for introducing two different approaches, because Russian oil companies lacked BP's "cultural legacy", was the most complex task during the merger of the companies.
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