TNK-BP, the venture between BP Plc and
Russian billionaires, will look to acquire the London-based company’s Algerian
fields to accelerate overseas expansion.
“As soon as BP receives
Algeria
’s
permission to transfer the assets to TNK-BP, TNK-BP will take a serious look at
these assets,” saidStan Polovets, chief executive officer of the Russian
billionaires’ holding company
AAR
. “By being an international oil company, we will be able to achieve
much higher multiples on our earnings.”
TNK-BP Chairman and
AAR
shareholderMikhail
Fridman aims to build foreign operations so that least half of the company’s
production comes from outside of
Russia
. The
company has already said it will bid for BP assets in
Vietnam
and
Venezuela
. Expanding overseas will allow TNK-BP to raise its value per barrel
of reserves to about $8 from $4 today, Polovets said.
BP is the largest foreign investor in
Algeria
,
according to the company’s website. In addition to exploration acreage, it
operates two gas fields, Salah Gas in the
Sahara
Desert
and
Amenas in the southeast of the country, and is a partner the Rhourde El Baguel
oil field. SpokesmanDavid Nicholasdeclined to comment on whether BP
will sell the assets.
Fridman is scheduled to accompany Russian
President Dmitry Medvedev on a visit to
Algeria
today. Discussions between BP and Algerian state oil company Sonatrach on the
transfer of assets are currently taking place, Polovets said in an e-mailed
response to questions.
Algerian assets would provide “a launchpad
for further expansion on the African continent, particularly in
North Africa
,” he said.
Board Approval
TNK-BP, owned 50-50 by BP and Russian
investors, last week received board approval to negotiate for the Nam Con Son
gas block, pipeline and facilities in
Vietnam
and oil assets in
Venezuela
.Tony Hayward, who stepped down as BP CEO on Oct. 1, has taken
a seat on the board of TNK-BP after pledging in July to sell as much as $30
billion of BP assets to pay for the
Gulf of
Mexico
oil spill, the worst in
U.S.
history.
“Integration of BP’s assets in
Venezuela
aligns well with strong political Venezuela-Russia ties,” Polovets said. A
final decision on the assets will likely be made “within a few weeks,” he said.
TNK-BP, Russia’s third-largest oil producer
behind state- ownedOAO Rosneftand OAO Lukoil, accounts for about a
quarter of BP’s output and a fifth of reserves. TNK-BP produces about 1.9
million barrels of oil equivalent a day.
Fridman, the interim CEO until Maxim Barsky
takes over next year, said in a Bloomberg interview last month that TNK-BP
should “expand broadly in the world.” The push will be supported by Russian
President Medvedev and Prime Minister Vladimir Putin, Polovets said.
Moscow
’s Position
“
Moscow
’s position
is simple: if Russian companies become stronger,
Russia
as
a country becomes stronger,” Polovets said. “The Russian leadership knows that
by entering new markets, TNK-BP and other Russian companies will gain new
experience and expertise that can then be applied to projects in
Russia
.”
The acquisitions may impact TNK-BPdividends,
though the total payout this year will be around $3 billion, Polovets said.
While TNK-BP has paid out as much as 60
percent of net income in dividends in the past, “this ratio could be slightly
lower in 2010 if a number of large asset transactions is completed before year
end,” Polovets said. “But nobody expects it to fall below the minimum 40
percent.”
Polovets declined to say how much BP’s
assets in
Vietnam
,
Venezuela
and
Algeria
may be worth.
“TNK-BP has sufficient cash flow and ample
debt capacity to pay for these assets. Finding the cash for these assets is not
going to be a problem,” Polovets said.