MOSCOW (THE WALL STREET JOURNAL via Dow Jones), Dec. 17, 2009
TNK-BP plans to keep expanding oil output even as the rest of the industry stagnates, thanks to a fat portfolio of new fields, said Maxim Barsky, who will run the venture.
In his first interview with Western media since he was selected as chief executive, Mr. Barsky said TNK-BP has moved on since a bitter conflict between BP PLC and its Russian partners racked the company last year.
A planned public offering of shares isn't likely to happen for at least another two years, he said, though TNK-BP aims ultimately to be Russia's largest private oil company by market capitalization, up from its current third-place ranking.
Mr. Barsky, 35 years old, will fill the role of Robert Dudley, the BP veteran who ran TNK-BP from its founding in 2003, but was forced to leave Russia amid the shareholder conflict last year.
As part of a deal to settle the dispute, BP and its Russian partners--a group of Soviet-born billionaires including Mikhail Fridman, Viktor Vekselberg and Len Blavatnik--agreed to appoint an independent CEO.
Mr. Barsky was named last month, winning the slot ahead of a BP-nominated candidate. Mr. Barsky will spend the first half of next year working at BP's operations in the U.K. and U.S., returning to TNK-BP as deputy CEO and taking over the top job Jan. 1, 2011, when Mr. Fridman, currently executive chairman, gives up the CEO duties.
Before he joined TNK-BP this year as executive vice president, Mr. Barsky ran a midsize Russian oil company, West Siberian Resources.
Mr. Barsky said he welcomed the presence in top management jobs of two of the Russian shareholders, Mr. Vekselberg and German Khan, an issue that had been a flash point in the conflict with BP last year.
"It's a perfectly natural role," Mr. Barsky said, saying that in Russia it is an advantage to have powerful shareholders in management to handle relations with the government.
Although the Kremlin grants a raft of special privileges to state companies like OAO Rosneft, Mr. Barsky said there's still plenty of room for privately-owned companies, even those, like TNK-BP, with foreign partners.
He said TNK-BP has a substantial portfolio of fields in the pipeline, with total resources of about 30 billion barrels of oil, of which only a third are being developed. That will allow it to offset declining output at its older fields.
Production is up about 2.5% this year, he said. "If we keep this pace up, that would be a good trend" over the next few years, he said. New fields in areas like Yamal will require heavy capital investment to start up, but then will be more profitable to operate than existing fields, thanks to tax breaks and lower production costs, he said.
Where TNK-BP needs to expand is in refining, which benefits from favorable tax treatment in Russia, he said. TNK-BP would consider acquisitions, asset exchanges or other deals to increase its refining capacity, he said.
Internationally, he said, TNK-BP will target countries where its Russian pedigree conveys an advantage, such as Venezuela and the former Soviet Union.
TNK-BP also has been approved by Baghdad to bid for fields in Iraq and intends to participate in the round of tenders next year.
Natural gas is also a major opportunity for TNK-BP, he said, noting that the market has been transformed by falling demand.
Copyright (c) 2009 Dow Jones & Company, Inc.
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