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Moscow/London (pte023/12.02.2003/12:44) - British energy group BP http://www.bp.com is investing billions of dollars in a new Russian joint venture, which will form Russia's third largest oil and gas business.
In the deal BP has agreed to join together with Russia's Alfa Group and Access-Renova (AAR), with each partner holding a fifty per cent stake. Over the next four years, BP plans to invest a total of 6.75 billion dollars in cash and shares.
The new oil supplier will incorporate TNK and Sidanco. Together they produce approximately 1.2 million barrels of oil a day. It will also own significant exploration interests in Siberia and Sakhalin, together with a major downstream business that includes interests in five refineries and a retail network of over 2,100 sites in Russia and the Ukraine.
BP estimates that the new company will have production of some 1.2 million barrels of oil a day, and that the oil and gas resources of the new concern are at least 5.2 billion barrels.
In a BP press release Chief Executive Lord Browne called the transaction "a major strategic step into a country with massive oil and gas reserves and immense potential for future growth." He further said: "These prudent measures, combined with Russia's greatly improved economic stability, improved legal system and increasing commitment to international rules of trade and business, have convinced BP that now is the time to deepen our partnership with AAR."
The transaction, which will be effective from 1 January 2003, is scheduled for completion in the summer.
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