BP Intends to Improve Growth Forecast for TNK-BP
27 Oct 2003
On October 16, the UK-based BP Plc is expected to announce increase in forecasted growth rate for its Russian joint venture set up with Tyumen Oil Company this year, according to The Financial Times. BP's CEO, Lord Brown, is going to announce that production in TNK-BP will rise by 14% this year and by 8% in 2004, the newspaper informs without disclosing the source of information. This is higher that previous forecasts, which indicated 10% for this year and 4% for the subsequent period. In recent months, BP itself failed to meet production targets announced as blueprints several times, so it evades from citing the exact anticipated production figures. Meanwhile, the company would like to convince investors that its Russian joint venture is more promising than they suppose. Analysts consider the figures of production in Russia a significant factor that enables to estimate consequences of the transaction with TNK for the entire BP, 13% of capital spending and 15% of production of which are now focused in Russia, the newspaper highlights. Concurrently with scaling production in Russia up to 1.26 mln barrels a day this year, BP, using its technical appraisal options, is going to push up evaluation of proven reserves for its Russian joint venture from the current 3.2 billion barrels to 31 billion barrels, according to the newspaper. Reserve evaluation turned out to be a painful issue, because TNK-BP, in line with SEC's tight regulations, managed to incorporate 3.2 billion barrels of Russian reserves only in its reports after the transaction versus the initially anticipated 5.2 billion barrels. TNK-BP's President Robert Dudley said that the company was seeking to dispel myths related to doing business in Russia and to give a more precise picture that does fit the opinion of most market players that consider TNK-BP's assets obsolete and depreciated. BP and TNK's stockholders (Alfa Group and Access/Renova, AAR) holding 97% in the company finalized the transaction to set up TNK-BP, which became Russia's third largest oil company, in August
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