BP Executives Meet With Putin in Russia
Friday March 23, 11:46 am ET
By Alex Nicholson, AP Business Writer
BP Executives Meet With Vladimir Putin As Company Prepares to Take Part in Yukos Asset Auction
MOSCOW (AP) -- Executives from BP PLC met with President Vladimir Putin on Friday as the company prepared to take part in the auction of assets from the bankrupt Yukos oil producer and tried to end a deadlock over the future of its giant Siberian gas field.
Putin, BP's outgoing Chief Executive John Browne and his successor Tony Hayward discussed the possibility of Russian energy companies cooperating with BP in countries outside Russia, as well as "various questions connected with the company's activities in Russia," Kremlin spokesman Dmitry Peskov said. He gave no precise details.
Putin noted the successes of BP's Russian joint venture, TNK-BP, Peskov said.
"The company is developing actively in Russia, where its reserves, production levels and profit are growing," Peskov quoted him as saying.
Market watchers are focused on TNK-BP's projects in Russia, as the Kremlin moves to take a dominant role in the country's oil and gas industry -- a campaign that included the partial nationalization of Yukos after a politically charged back tax campaign.
TNK-BP spokeswoman Peter Henshaw said the company would be bidding in Tuesday's bankruptcy auction of Yukos' 9.44 percent stake in state controlled oil company OAO Rosneft. Yukos is due to be liquidated in a series of auctions starting with Tuesday's sale.
The possible acquisition would "enhance our existing strategic relations and progress our joint projects," with Rosneft, he said.
Rosneft, which until TNK-BP's announcement had been the only company so far to have confirmed that it will bid, is widely expected to win Tuesday's sale and dominate subsequent auctions. The company is already the owner of Yukos' biggest production unit, purchased after a disputed auction in 2004 that was the climax of the back tax investigation.
Analysts said it was unclear what TNK-BP might hope to achieve by competing against Rosneft for the shares. The two companies are cooperating in projects off Russia's Pacific coast and BP spent US$1 billion (euro750 million) at Rosneft's summer IPO to become the owner of 1.4 percent of the company -- an investment analysts said was a show of support and aimed at securing future joint projects.
Some analysts have suggested that by applying to bid, BP is simply ensuring that the auction has sufficient participants to go ahead. Others speculated that, were TNK-BP to win the bidding, the acquisition would be part of a complex deal that would see Rosneft replace BP's partners at TNK-BP -- a group of Russian and U.S. billionaires who hold 50 percent in the company.
All that was certain about TNK-BP's role in the auction was that it had been cleared at the highest level, UBS analyst Kakha Kiknevalidze said.
Browne and Hayward met with Rosneft President Sergei Bogdanchikov before seeing Putin and discussed mutual action between shareholders, the Interfax news agency said.
TNK-BP is also seeking to reach a deal with state-controlled gas giant OAO Gazprom to export gas to China from its giant Kovykta field in Siberia, where it is under pressure from prosecutors and environmental agencies. Officials charge TNK-BP is underproducing and warn its license could be revoked.
Analysts expect exports from Kovykta to go ahead only when Gazprom takes a controlling interest in that project.
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