An agreement putting to rest a bitter fight between Britain’s BP and Russian investors over a joint venture shows that foreign companies can invest with confidence in Russia’s energy sector, a top official with Russia’s biggest independent oil producer said on Friday.
“The BP situation is moving toward an agreement, which is obviously a positive sign for the Russian investment climate,” OAO Lukoil deputy vice president Andrei Gaidamaka told reporters in an interview in New York.
Under the deal, embattled TNK-BP CEO Robert Dudley, a US citizen, must step down by the end of the year, a condition demanded by BP’s billionaire Russian partners, who own 50 percent of the oil company. BP keeps its 50 percent stake and will nominate a new, independent CEO to replace Dudley, which must be approved by TNK-BP’s board.
Investors from abroad watched as the TNK-BP imbroglio made newspaper headlines from Asia to the US, threatening to melt confidence about Russia’s investment climate.
Following the five-day war with Georgia, Russia’s stock market sank to a two-year low and forced the government to prop up the ruble. Analysts say there may be more pain to come as the global economy stumbles.
While stock markets are posting losses globally, Russian stocks have been particularly volatile, battered by the TNK-BP power struggle and Prime Minister Vladimir Putin’s public assault on mining company Mechel, which has lost half its market value.
No one can say how close BP PLC was to losing control of the venture and possibly ceding part of its stake to a Russian state-controlled company. That prospect has already contributed to a downgrade of BP’s credit rating.
Gaidamaka, whose company is partly owned by US energy giant ConocoPhillips, said the TNK-BP standoff should not scare off foreign investors.
“I think a lot of these politicized claims about threats to foreign investors in Russia do not have foundation in real action,” said Gaidamaka, who heads Lukoil’s strategic planning and investment analysis units.
Lukoil and ConocoPhillips last week launched the jointly owned Yuzhno Khylchuyu field in the north of Russia’s Timan Pechora oil and gas province. Oil production is expected to reach more than 150,000 barrels per day next year. The oil will be transported to a terminal along the Barents Sea coast for eventual sale in Europe and North America.
“We have a very good and stable partner with one of the largest US corporations, and that’s something we’re willing to build on,” Gaidamaka said.
ConocoPhillips owns a 20 percent stake in Lukoil.
Regarding the recent fighting between Russia and Georgia, Gaidamaka said the conflict has raised the cost of capital in the region, but said there were no signs it had affected Lukoil’s business operations. He rejected suggestions that Moscow would use oil supply as a political tool against the West.
“This is completely false,” he said. “We do not take orders from the government to cut off one client or another.”
Gaidamaka said Lukoil had cut exports by 12 percent over the past year but stressed the reduction was “economic” in motive, not political.