BP, Billionaires Review TNK-BP Investment After End of Dispute

By Eduard Gismatullin

Sept. 25 (Bloomberg) -- BP Plc, Europe's second-largest oil company, will discuss future investment in TNK-BP today with its billionaire partners, in their first meeting since a dispute over the running of the Russian joint venture was resolved.

Directors at TNK-BP Ltd. will review earnings and dividends for Russia's third-largest oil producer at a meeting in southern France. The appointment of a new chief executive officer to replace Robert Dudley, due to step down by the end of the year, or the nomination of new directors, won't be on the agenda.

``We are going to review the company's results in the last six months'' as well as capital spending plans, Stan Polovets, a director at TNK-BP, said in an interview from Moscow yesterday. ``We will also discuss the status of major projects.''

London-based BP and Russian investors Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik, collectively known as AAR, settled a long-running dispute over control of the joint venture earlier this month. They have to agree on a budget this year to boost production, which accounts for about a quarter of BP's global output.

BP agreed to demands made by its Russian partners to remove Dudley, expand the board to add independent directors and consider listing internationally as much as 20 percent of a unit on an international exchange.

Spending Demand

The Russian investors demanded in July that the company trim $900 million of planned capital spending to $3.5 billion to cut costs this year. A reduction on that scale would cut output by 6 percent, according to TNK-BP Chief Operating Officer Tim Summers at the time.

``We expect the board to review several performance and operational issues, which will allow us to advance our big projects and underpin production in the coming years,'' Marina Dracheva, a Moscow-based spokeswoman for TNK-BP, said yesterday.

TNK-BP crude oil production was little changed at 1.4 million barrels a day in August from the same month a year ago, according to the Russian Energy Ministry.

``It's going to be a routine, business-as-usual board meeting, so they will discuss performance, capital expenditure plans, dividends,'' Toby Odone, a London-based spokesman at BP, said by phone on Sept. 23.

The U.K. oil producer has ``half a dozen'' candidates in mind to take from Dudley when he stands down, CEO Tony Hayward said Sept. 4.

Selection Process

``Once the selection process has been completed, shareholders will have to meet to approve'' the chosen candidate, Odone said.

TNK-BP directors will also have to review and possibly approve dividends. Shareholders in July agreed to delay payouts of $1.8 billion from this year's dividend because of the global credit crisis.

Profit at the joint venture may have soared to a record $4.7 billion in the first half, on sales of $28.3 billion, Summers said July 24, citing preliminary results.

``The company's operations weren't stopped, the projects continue, and we are investing,'' said Polovets, who also heads AAR.

To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net