TNK-BP Commences Operations
29 Aug 2003
TNK-BP announced today that it had commenced operations, assuming full financial and operational control over the oil and gas assets in Russia and Ukraine contributed to the joint company by BP and the consortium of Alfa Group, Access Industries, and Renova (AAR). TNK-BP operations commence following the approval of the merger by the Ministry for Anti-Monopoly Policy of the Russian Federation, formally granted on August 25, 2003. The new company is owned by BP and AAR on parity terms. TNK-BP becomes Russia's third largest oil and gas company, and the 10th largest private-sector oil company in the world in terms of oil production. It controls daily output in excess of 1.2 million barrels of oil (60 million tons per year). TNK-BP operates five refineries in Russia and Ukraine with installed capacity over 1 million barrels per day (50 million tons per year) and more than 2,100 filling stations across the two countries. The creation of TNK-BP represents the culmination of seven months of intensive work to integrate the operations of TNK, Sidanco and BP under joint ownership and management. The Sale and Purchase Agreement between BP and AAR was signed during President Putin's State visit to the UK in June 2003. The BP-AAR transaction represents the largest foreign investment in a Russian company to date, and is the largest corporate transaction in Russia's history. President and Chief Executive Officer Robert Dudley said: "The launch of TNK-BP is a momentous and exciting event. To have achieved so much since the transaction was first announced endorses Russia's improving investment climate and confirms the investment potential of Russian companies. For us at TNK-BP, today marks the start of our commitment to harness the best Russian and international skills and experience. We have created and inaugurated something new and powerful today. I believe it will prove to be not only competitive but progressive. In time, it will set new benchmarks in the Russian oil and gas industry." Since February 2003, when BP and AAR signed the memorandum of understanding on the establishment of TNK-BP, teams of professionals from TNK, BP and Sidanco have integrated the assets of these companies into a single operating entity, developed a new corporate structure, appointed a world-class management team, and obtained regulatory approvals from the anti-monopoly authorities in the European Union, Ukraine and the Russian Federation. "I believe today is a special day not only for the Russian oil industry, but for the Russian economy as a whole," said Mikhail Fridman, Chairman of the TNK-BP Board of Directors. "Following months of hard work, we achieved something that was unimaginable even a few years ago by establishing a $16 billion company equally owned by Russian investors and one of the largest multinational companies in the world. This marks a new step in Russia's integration into the global economy, which will facilitate an infusion of knowledge, technology and capital into Russia's energy sector. All of this makes TNK-BP a unique company. Armed with world-class technology, management and financial muscle, the new company has all the prerequisites to become the industry leader in Russia, and a successful competitor globally." Viktor Vekselberg, Chief Operating Officer and member of the Board of TNK-BP said: "TNK-BP will build on a very strong foundation inherited from the merging companies. We have an outstanding portfolio of producing, refining and marketing assets, and some excellent long term growth options, both in oil and particularly in gas. We have a highly skilled and internationally experienced management team committed to achieving aggressive business goals." Len Blavatnik, Chairman of Access Industries and a Board Member of TNK-BP, said: " The successful closure of this transaction is a concrete example of Russia's commercial engagement internationally. It will bring many benefits to Russia in terms of technology, expertise and international prestige. Inclusion of the Slavneft interest will provide further strength to the new company, which in time will be able to compete with the best in the world." In accordance with agreements reached recently by the shareholders of TNK-BP, AAR will also contribute to TNK-BP its 50% interest in Slavneft, a vertically integrated Russian oil company, which currently produces in excess of 339,000 bpd (8.44 million tons in the first six months of 2003). Slavneft also controls three refineries in Russia and Belarus, with total installed capacity of 450,000 bpd (22.5 million tons per year) and a retail network of 570 owned and franchised stations. Sibneft owns the remaining 50% of Slavneft. Completion of the Slavneft transaction is expected by end 2003 and is subject to regulatory approvals from relevant anti-monopoly authorities. "TNK-BP is now uniquely positioned as a Russian company possessing a fully integrated mix of Russian and international skills, technology and experience," said German Khan, Executive Director of TNK-BP. "The addition of TNK's interest in Slavneft will create additional synergies and bring immediate benefits to the new company."
For further information contact: Russian media - Dmitri Ivanov +7095 745 7846
International media - Peter Henshaw +7095 787 6009
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