TNK-BP
Of all BP’s businesses in Russia, TNK-BP is by far the most material - the 3rd largest vertically integrated oil and gas company (in terms of liquids production) with operations in both Russia and the Ukraine
BP owns 50% of TNK-BP, with the other 50% being owned by a group of prominent Russian investors: Alfa Group, Access Industries and Renova (AAR).
Most of the company’s assets are in Russia and it employs some 65,000 people, combining the best Russian and international expertise. TNK-BP also owns a 50% stake in the Slavneft Oil and Gas Company. (Unless otherwise stated, all the following figures exclude Slavneft).
TNK-BP was originally formed in August 2003 from the assets of TNK (Tyumen Oil Co), Onako, Sidanco and the majority of BP’s Russian assets. And today, TNK-BP works in nearly all of Russia's major hydrocarbon regions, including:
- West Siberia (in the Tyumen, Khanty-Mansiysk, Yamal-Nenetsk and Novosibirsk Regions).
- The Volga-Urals (in the Orenburg and Saratov Regions)
- East Siberia (in the Irkutsk Region).
In 2008 TNK-BP’s average gross daily production was 1.85 million barrels of oil equivalent a day (including Slavneft), compared to 1.82 mboe/d in 2007. And the reserves replacement ratio under SEC methodology in 2008 was 136 per cent. The five year average reserve replacement was around 200 per cent. Since 2003 proved reserves have increased from 1.8 billion barrels of oil equivalent to 3.6 billion barrels of oil equivalent. Total resources have increased from 11.6 billion barrels of oil equivalent to 18.9 billion barrels of oil equivalent, excluding the Kovykta field, bringing the resources to production ratio to 56 years.
TNK-BP has five refineries in Russia and Ukraine. It also has approximately 1,400 retail service stations, operating under the TNK and BP brands. Through this retail network, TNK-BP has become one of the market leaders in petroleum product sales in European Russia (including Moscow) and is the market leader in Ukraine.
The company is entirely self-funding. Capital expenditure grew from around $1 billion in 2003 to $3.5 billion in 2007. In 2008 the capital expenditure budget was about $4.2 billion and in 2009 TNK-BP plans to invest around $3.4 billion and maintain production broadly flat.
Since 2003 and based on BP’s latest estimate for 2008, TNK-BP has generated total income exceeding $25 billion, distributed dividends exceeding $20 billion, while investing around $14 billion into future growth and paying more than $90 billion in taxes and excise duties. The company demonstrated the highest return on capital employed in the Russian oil industry.
Internally, the company’s capabilities are becoming more and more advanced. TNK-BP is investing in technology, in HSE and integrity management, delivering improved safety and performance.
