BP venture to pay highest ever dividend

Marion Dakers
TNK-BP HOLDING, the publicly traded part of BP’s joint venture in Russia, said yesterday it has recommended a record-high interim dividend of 124bn roubles (£2.6bn).

Russia’s third-biggest oil company, which elected former BP chief executive Tony Hayward to its board last month, has recommended the payout in what several analysts said is a move to feed cash back to parent company BP.

Meanwhile, BP finalised its $3.25bn (£2.1bn) deal with American oil group Apache to sell its natural gas assets in Western Canada. The oil major is attempting to raise up to $30bn to cover costs stemming from the Deepwater Horizon oil spill in April.

TNK-BP’s 8.04 roubles per share payment could provide other shareholders with funds to buy BP’s assets, helping it raise further cash. “Basically, the main shareholders are receiving cash that they can then use to buy assets from the parent company, and BP is in need of high dividend payouts now more than ever,” said Denis Borisov, an oil analyst at the Bank of Moscow.

TNK-BP, half-owned by four Russia-connected billionaires, has its eye on BP assets in Vietnam, Venezuela and Algeria.

Earlier this month, BP’s new chief executive Robert Dudley said it may sell its main Vietnam assets, worth around $1bn, to TNK-BP without inviting other parties to bid.

Analysts also said TNK-BP’s large dividends will help one of its shareholders, the oligarch Mikhail Fridman’s Alfa Group, pay down debt related to its main assets, Russian telecoms operator Vimpelcom and the retailer X5. “It is possible that Alfa needs the money to pay debt secured against a range of its assets,” said Evgeny Golosnoi, an oil analyst at Troika Dialog.

TNK-BP shareholders must approve the 8.77 per cent dividend hike at a meeting on 18 November.

TNK-BP declined to comment on the reason behind the rise in the proposed dividend payments this year.

London-listed shares of BP fell 0.74 per cent to 429.15p yesterday, faring slightly worse than the FTSE 100 index, which fell 0.19 per cent.