Investments

Bank Of America Investment BP Plc is likely to insist on a controlling stake in Russian oil firm TNK as a condition of the multi-billion-dollar investment it plans to make in the oil-rich nation's booming energy sector, analysts said on Monday.

In principle, Russia’ it has the world’ biggest oil reserves, at 80 billion barrels, according to BP, a British oil firm. And oilmen reckon there are 100 billion more barrels to findthe biggest exploration prize in the world, in the words of Robert Dudley, BP, BP’s Russian joint venture. But Russia has regulated the industry so poorly that production is falling despite the soaring oil price.

Investment Opportunity Reuters broke news on Saturday that BP planned a Russian investment that was much larger than previously expected. The move would put the UK company at the helm of a firm worth $12 billion, adding a million barrels of oil and gas a day to its current two million output and making BP the world's top western producer.

It recently signed a $4 billion deal with TNK, the Russian oil giant, but the arrest on Sunday of Mikhail Khodorkovsky, the head of rival oil gain YUKOS, highlights the risk involved. Protesters have also delighted in contrasting the Baku proposals with BP' brand itself as "beyond petroleum" with more focus on hydrogen and renewable energy. Scheduled to begin working in 2005, the pipeline is expected to bring in more than 65m annually to the regions through which it passes.

Banc Of America Investment The deal could end up as the largest single foreign investment in Russia's post-Soviet business history.

In bidding in Moscow Wednesday, the U.S. oil firm paid nearly $2 billion ($1.988 billion) for a 7.6 percent stake in Russia' largest oil company. It was the single largest transaction in Russian privatization history.

Banking Investment Industry sources said at the weekend that an announcement could come this week. Russia is already the world's second biggest oil exporter, and is pursuing aggressive growth, but it has a century-old history of being a risky investment for western companies.

Venezuela is currently the world's number five crude oil exporter. The government has been tightening its grip on the oil sector to raise additional funds to fight poverty in the country. As well as demanding firms give up majority control of their Venezuelan oil ventures, the government is also demanding firms pay more taxes. Last month, BP was slapped with a back tax bill of $61.4m (35m) covering 2001 to 2004.

Investment Solution Strategic As part of the plan BP, currently the world's third-largest oil firm, would swap its existing 25 percent stake in Russian oil firm Sidanco against a significant stake in TNK International. TNK is Sidanco's much larger affiliate, owned by the same group of shareholders.

by Dave Porter A syndicate of seven private equity investment banking firms have agreed to buy SunGard Data Systems for $11.3 billion, the largest buyout of a public company since 1989. If you would like to receive late breaking business news covered by AXcess News then you need to subscribe. Membership is free. Print This Page March 28, 2005 (AXcess News) A syndicate of seven private equity investment banking firms have agreed to buy SunGard Data Systems ( SDS) for $11.3 billion, the largest buyout of a public company since 1989.

Investment Banking Services "Whatever scheme is chosen we can already be pretty sure that BP is going to insist on having at least operating control in TNK," said Paul Collison from Brunswick UBS Warburg.

Bank Investment BP is scheduled to report its annual results and deliver a strategy statement on Tuesday.

Alternative Investment BP's public relations agents in Russia, PBN, distributed a press release on Monday among international and local media with details of a conference call by BP Chief Executive John Browne, something PBN has never done before. In London on Monday, BP said, "We will not comment on this speculation."

Online Investment Services Listed Russian oil stocks climbed by up to three percent on Monday morning, and Russia's benchmark 2030 Eurobond reached a year high up 1/2 at 82-5/8, its year high, on hopes the move would encourage a wave of new western investment.

Accompany Essential Investment By 1346 GMT BP shares were up 1.4 percent at 385 pence.

Investment Company FIRM GRIP

Investment Management Solution Other analysts agreed that BP would insist on having a firm grip on the running of its acquisition if the deal goes ahead. "We believe that if the deal is to go through, it would most likely entail acquisition of a majority stake in TNK and not a blocking minority," said Aton brokerage.

Investment Management Services BP bought a 10 percent stake in Sidanco in 1997 for $571 million, but the investment quickly became a major headache for the oil giant as TNK launched a hostile takeover bid against the firm, at the time controlled by the Interros financial group.

Guide Investment Stock The British oil company was forced to partially write down its investment in Sidanco, but the row was settled when TNK finally bought Sidanko from Interros and agreed to extend BP's ownership to 25 percent and give it management control.

Investment Manual Solution Those management rights over Sidanco expire this year.

Investment Stock IMPROVED IMVESTMENT CLIMATE

Essential Investment Solution Analysts say BP believes Russia's investment climate has dramatically improved under President Vladimir Putin and it now considers Russia a key growth area.

Citicorp Investment Services BP's shares have underperformed its peers in recent months as it struggles to keep production growth going in Alaska, the North Sea and the U.S. Gulf, where many of its fields are running out. Russia could be the answer to these problems.

Fool Guide Investment Motley But BP still remembers its previous painful experience.

Fidelity Investment Services "BP's Sidanco experience has demonstrated all the potential pitfalls of minority ownership (in Russia), and we believe this time BP would seek a majority stake," said Aton.

Investment Management Aton added that securing a majority stake in TNK was also very important from the financial reporting standpoint, because that would allow BP to fully consolidate the Russsian company on its own balance sheet.

Francisco Investment San Russia's fourth largest oil firm TNK International, which produces around 800,000 barrels per day excluding 350,000-bpd Sidanco, has a complicated shareholding structure.

Mellon Investment Services The holding, which is controlled 50/50 by Alfa, one of Russia's largest financial groups, and Russian-U.S. industrial group Access-Renova, controls two Siberian oil firms - Tyumen oil and Onako - as well as two medium-sized refineries.

Finance Investment Alfa and Access-Renova also control 75 percent in Sidanco as well as 50 percent in the 320,000-bpd oil firm Slavneft, which the Russian government sold last December at a privatisation auction for $1.86 billion.

Investment Manual Science The remaining 50 percent in Slavneft is controlled by Russia's fifth largest oil firm Sibneft.

Investment Advisory Services "The deal (between BP and TNK) may be complicated as TNK and Sibneft have not yet made a decision on the future of the Slavneft assets," said UFG brokerage.

Advice Investment Aton said if BP agreed to consolidate TNK International only with Sidanco, the enlarged firm would reach 1.1 million bpd and reserves of 10.6 billion barrels, making it Russia's third largest producer and one of the world's top 10 oil companies.

Guide Investment It said the enlarged firm could be valued at as much as $11.8 billion.

Chase Investment Services Reuters - 2/10/2003

Topic: Petroleum Industry

[ Comment, Edit or Article Submission ]