Promise of BP payouts to investors undermined by threat from Russian partner in TNK-BP
BP hopes to woo the City on Tuesday by promising to restore its dividend and increase oil production, but its plans are based on future activities in sensitive areas such as Iraq, the Russian Arctic and deep waters.
Its strategy in Moscow could face disruption tomorrow, with the board of AAR ? its Russian partner in TNK-BP ? meeting to discuss withholding a $1.8bn (�1.1bn) dividend following BP's deal with rival Rosneft. If AAR, which owns 50% of TNK-BP with BP holding the remainder, votes against the payment, it will not be made and BP will lose out on $900m.
AAR fears BP's deal with Rosneft would undermine TNK-BP's ability to compete for projects in Russia and abroad, and would tilt BP's commitment toward Rosneft. The oligarchs are believed to want any deal with Rosneft to be undertaken by TNK-BP, not BP alone.
A London court is due to decide on tuesday whether to grant an injunction to TNK-BP to block the deal. On the same day BP is expected to report a huge surge in fourth quarter net income to $5bn from $2.8bn for the same period last year, though its shares continue to trade at a discount following the Gulf of Mexico accident.
The new chief executive, Bob Dudley, will try to reignite investor confidence by presenting a positive shrink-to-grow strategy despite the fact that more than $20bn of assets have recently been sold off.
He will announce plans for a first dividend payment since the last three were halted in June. He will also explain how he plans to increase oil output which is expected to drop from 4m barrels a day to 3.5m in the short term.
The BP boss will point to current successes such as Iraq's biggest oil field, Rumaila, where BP and its Chinese partner have boosted output by 15% despite having taken over operations barely a year ago.
The production sharing agreement brings relatively small profits from Rumaila at $2 a barrel but BP sees output success there as building a bridgehead to a much larger involvement in a country which holds some of the biggest reserves in the world.
BP will point out that the global increased oil demand expected by 2030 will largely be provided by huge increases in output from Saudi Arabia and Iraq, the latter having opened to foreign oil companies only since the toppling of Saddam Hussein.
Dudley will also use Tuesday's briefing to give more details on how BP will use its share swap and exploration joint venture with Rosneft to open up reserves in the Russian Arctic.
The American chief executive, who took over from Tony Hayward in the autumn, will reiterate his determination to form more joint ventures in other parts of the world with mainly state-owned national oil companies such as Rosneft.
He will explain his view that BP still has the confidence of the wider world in its deep water capabilities despite the blowout at the Macondo well in the Gulf of Mexico.
BP will point to its large stakes in important deepwater provinces such as Angola and its continuing role in the major hydrocarbon province of Azerbaijan.
Source: http://www.guardian.co.uk/business/2011/jan/30/bp-dividend-oil-exploration-arctic-iraq
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