TNK-BP profit down as Rosneft prospers

City A.M. Reporter
Russian oil company TNK-BP, a joint venture that makes up more than a quarter of BP’s reserves, said yesterday its third-quarter net profit fell as transportation and other costs rose.

The company generated net profit of $1.45bn (£913m) on revenues of $11.4bn. A year earlier TNK-BP earned $1.68bn on revenues of $10.26bn.

Meanwhile, its largest rival, Rosneft, yesterday reported third-quarter earnings that had more than doubled year-on-year, from $2.57bn from $1.16bn last year. That was above the $2.46bn analysts had predicted. The government is looking to privatise 15 per cent in coming years. Crude output rose 5.3 per cent to 2.33m barrels per day (bpd) from 2.214m bpd in the same period last year.

In dollar terms, costs at TNK-BP, Russia’s third-biggest oil company, half owned by the British-based major, rose 18 per cent, it said yesterday. Transportation tariffs – mainly the cost of shipping oil through the Transneft state pipeline system – rose 19 per cent.

Forex effects amounted to $200m, TNK-BP said.

TNK-BP, which agreed to buy BP’s Venezuelan and Vietnamese assets for $1.8bn as the British major raises funds to pay for the Gulf of Mexico oil spill, is also at an “initial point” in talks for its Algerian assets, said chief financial officer Jonathan Muir.

Muir also said Indian oil company ONGC had right of first refusal on BP’s Vietnam assets and had about six weeks to exercise them.

Aside from acquisitions, Muir said, TNK-BP cut its plans for capital expenditure to $4bn from a planned $4.4bn. It plans to keep capex steady around $4bn in coming years.