After Royal Dutch Shell, BP seems to be next in line to be forced to sale its majority stakes in Russian projects to state owned companies of Russia. BP has reportedly invested $6.15 billion in the joint venture known as TNK-BP. The joint venture has already suffered many setbacks and is prohibited by the national security rules to develop large new fields. As the Russian government has intensified its effort for greater control over energy resources speculations are strong that BP may be forced to relinquish some control over the venture.
According to reports the state controlled energy companies Gazprom and Rosneft are trying for the rights to buy out BP’s Russian investors partners. If the move succeeds, BP will be eventually left with a minority stake in the joint venture. TNK-BP is the second largest private oil company in Russia after Lukoil and the only company with fractional foreign control and some argue this is the prominent reason to come on takeover target.
The prospective takeover would definitely inflict unimaginable damage on BP as it has 10.5 billion barrels of reserve in the joint venture constituting a quarter of BP’s total production. Further, the joint venture contributes 15 percent in BP’s net income and BP has no major project at present that can replace TNK-BP in case of a takeover.
The joint venture has helped BP to earn rich dividends enough to cover initial investment in cash and shares in TNK-BP. BP had earned a total $6.9 billion by the third quarter of 2006.
In the meanwhile, Rosprirodnadzor, Russian environmental regulator has accused TNK-BP of illegal logging and drilling at a huge Siberian gas field Kovykta. However, TNK-BP is negotiating the issue with the concerned authorities to resolve the dispute. Moreover, any change in the structure of TNK-BP will have serious implications on BP.
Furthermore, the allegation was made by the same agency that accused Shell of breaking environmental law and threatened the company to halt their $22 billion project that eventually led to selling its majority stake to Gazprom.
