Russia 111005 Basic Political Developments

Rosneft Hires BP Man for Strategic Development, Kommersant Says

http://www.bloomberg.com/news/2011-10-05/rosneft-hires-bp-man-for-strategic-development-kommersant-says.html
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By Yuliya Fedorinova - Oct 5, 2011 7:21 AM GMT+0200

OAO Rosneft may hire Larry Bates from BP Plc’s Moscow office to help to oversee strategic development of the company, Kommersant said today, citing people familiar with the plan.

Bates was involved in talks between BP and Rossneft to form a partnership to drill in the Russian Arctic, which was blocked by BP’s billionaire partners in the TNK-BP Holding venture, newspaper said.

Rosneft also wants to hire a BP manager from Germany to oversee a refinery, newspaper said.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at [e-mail]

To contact the editor responsible for this story: John Viljoen at [e-mail]

Tatneft and Bashneft will be 100% compensated for 60-66 losses; POSITIVE

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Alfa Bank

October 5, 2011

The Finance Ministry yesterday announced a proposal to compensate 100% of the losses incurred by Tatneft and Bashneft from the 60-66 reform through special MET exemptions in the amount of the calculated losses through 2015. Tatneft may see compensation in the form of MET exemptions for the company's Romashkinskoe field between RUB38bn and RUB56bn pa, while Bashneft may get compensation of around $130m pa for producing fields in Bashkiria, according to Deputy Finance Minister Sergey Shatalov.

The final compensation for both companies will be derived through a special formula for each company to determine the theoretical losses from 60-66 and thus the required level of compensation. It's unclear whether the compensation will come in addition to the previously announced tax breaks for high-sulfur oil or are simply a clarification of the previous announcement. Regardless, we see this as a POSITIVE announcement, particularly for Tatneft, as it removes any negative effect the company had from engaging in the refinery project ahead of the reform. Not only that, but our calculated 60-66 effect for Tatneft is actually positive, if we model in the full reform including the crude oil export duty reduction, while the effect on Tatneft's downstream business standalone is significantly less than the RUB38-56bn range voiced by the government. The subsidy, if it does indeed last until 2015, could virtually pay back the company for the Taneco refinery, even if the refinery does not begin operating. This makes Tatneft the clear winner from the announced tax breaks, in our view.

TNK-BP R&D for 2011 at $320M

05 October 2011

By Howard Amos

TNK-BP is emphasizing innovation as a way to maintain production levels and has quadrupled its year-on-year budget for the development of new technologies to $320 million in 2011.

Current funding for research and development is 8 percent of the $4 billion that Russia’s third-largest oil producer allocates as capital expenditure annually. About 80 percent of this figure goes toward exploration and production. 

Deputy chairman of the management board, Maxim Barsky, who is effectively responsible for day-to-day operational control of the company, told delegates Tuesday at TNK-BP’s Second Annual Corporate Technology Forum at Skolkovo — Russia’s answer to Silicon Valley — that over 1,000 wells had been drilled since January, of which 10 percent involved highly complex technologies.

“The effective application of technology ensures a slowing of the tempo of decline for mature fields,” Barsky said. “Low-cost access to reserves allows us to exploit those reserves that were formerly considered unprofitable.” 

Mainstays of TNK-BP’s portfolio, like the aging but enormous Samotlor field in western Siberia, are a particular focus of this drive. Barsky singled out the BP-developed bright water technology, which harnesses the power of water to flush out oil from reservoirs, as a key development of recent years. 

Emerson Milenski, adviser to TNK-BP’s upstream executive vice president, said $85 million was spent on technological innovation last year, the majority of which went to pilot projects. In contrast, $120 million of this year’s $320 million budget had been devoted to developing successful pilots, or “scale-ups,” he said.

The world’s 10th-largest oil producer has also initiated an energy efficiency program to maximize profits. Mikhail Slobodin, executive vice president of gas and power, said the program had saved the company $60 million this year.

The “60/66” tax changes introduced Saturday, after two years of discussion, will free up more funds for TNK-BP to invest in upstream development, senior vice president Francis Somer said. 

TNK-BP has said the new 60 percent export duty on crude will boost profits by up to $600 million. The company aims to spend $45 billion on exploration and production over the next decade. 

But the focus Tuesday on strategic development at TNK-BP is a respite from speculation about its long-term future.

Recent attention has been concentrated on shareholders — oil major BP and oligarch consortium Alfa, Access and Renova Group, or AAR — since BP tried to complete a $16 billion Arctic deal with Rosneft, angering AAR and initiating ongoing litigation.

As a possible side effect of the conflict, BP recently announced a suspension of its activities with the Skolkovo Foundation, which is chaired by Renova head Viktor Vekselberg.

There is also a question mark over Barsky’s position and how it fits with Alfa oligarch Mikhail Fridman’s formal title of chief executive. Barsky said in July that he would leave the company if he is not officially made chief executive by the warring shareholders by the end of the year.

Read more: http://www.themoscowtimes.com/business/article/tnk-bp-rd-for-2011-at-320m/444832.html#ixzz1Zsp57ry0

The Moscow Times

TNK-BP Holding: Potential 50% stake in Itera acquisition

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UralSib
October 5, 2011

Negotiations on price and authorities' approval. TNK-BP Holding (TNBP - Buy) is in negotiations with Itera, an independent Russian gas producer, and the authorities on a possible acquisition of around a 50% stake in Itera. If the commission on foreign investments approves the deal, the parties will continue negotiations to reach an agreement on the price of the deal.

ITERA effectively owns gas reserves of about 350 bcm. Itera is a private company, with approximate gas reserves of 350 bcm. It has a 49% stake in Purneftegaz, which has gas reserves of 399 bcm, and 49% in Sibneftegaz, which has reserves of 325 bcm. Igor Makarov, who owns a stake of 30%, is the main shareholder in Itera.

The potential deal may add to 7-9% to current reserves. Acquisi- tion of a 50% stake in Itera may add 7-9% to TNK-BP Holding's cur- rent proved hydrocarbon reserves and may cost around $1.0-2.0 bln. While the company does not have such an amount of cash available, it does have a strong debt position, with a debt/EBITDA ratio close to 0.6, and a 91% share of long-term debt. How- ever, our view on the deal depends on the price, which has still not been agreed. We therefore reiterate our Buy recommendation on TNK-BP Holding with target price of $4/share.

Alexei Kokin

Lukoil Neftochim Burgas amongst SEE companies suffering greatest losses

http://www.focus-fen.net/index.php?id=n260903

05 October 2011 | 00:51 | FOCUS News Agency

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Sofia. Bulgaria is represented by 14 non-financial companies in the annual ranking SEE TOP 100 by SeeNews.com. Every year, the SEE TOP 100 rankings show the performance of non-financial companies, banks, and insurers. Lukoil Neftochim Burgas occupies the prestigious third position in the ranking as the largest non-financial company in Southeastern Europe with EUR 2.794 billion total revenue and EUR 61.6 million loss for 2010. The Russian company was ranked seventh amongst the companies in the region suffering the greatest losses.
As for banks Romanian Banca Comerciala Romana SA topped the ranking with total assets of EUR 16.324 billion and a net profit of EUR 170.8 million. The largest bank in Bulgaria is Italian UniCredit Bulbank with assets of EUR 5.765 billion and a net profit of EUR 81.2 million for 2010. It is ranked seventh in the bank ranking, occupying the same position it did last year, the Duma daily learned.

Mikhailov, a member of LUKOIL's Board of Directors, continues to buy shares of the company

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VTB Capital

October 5, 2011

News: According to LUKOIL, Sergei Mikhailov, a member of the Board of Directors, acquired 6,200 ordinary shares in the company on 3 October, thereby increasing his share from 0.056% to 0.057%. On 28 September, he bought 6,500 ordinary shares. The shares that he acquired were worth about USD 311,000 and USD 324,000, respectively.

Our View: According to the company, in September alone Mikhailov purchased some 18,000 ordinary shares (USD 0.9mn). And earlier this year he had already bought 84,000 shares for more than USD 5mn. We believe that although the amount is relatively small, this is a positive sign showing that management also considers LUKOIL's shares to be attractive at their current market valuation.