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Anglo-Russian oil venture TNKBP found itself wrenched back to the center of Russian politics last week when the Natural Resources Ministry ordered charges to be brought against it over oil leaks in its Siberian pipeline system.

file photoThe charges, made in the presence of President-elect Vladimir Putin, of nearly 800 oil spills that have caused pollution in western Siberia, quickly sounded alarm bells among investors, ever wary of attempts by the Russian government to intervene in the running of big private firms.

The oil major's share price underperformed late last week, dropping some 4.5 percent Thursday on the Micex trading index. Concerns were heightened by the fact that Energy Minister Sergei Shmatko pointed to TNK-BP's high dividend payments as evidence that it could afford to overhaul its pipeline system.

Analysts told The Moscow News that while the motives behind the accusations remain hazy, many indicators point to political motivation.

The main one, they said, is the fact that the accusations against the oil firm simply do not add up. The 784 accidents that are alleged to have taken place in TNK-BP's pipeline system in 2011 compares to just 20 to 30 in the pipelines of the company's peers. But TNK-BP's pipeline system differs little from those used by other oil companies.

"TNK-BP certainly doesn't have a worse track record than other oil companies ­ they all inherited the same infrastructure in the 1990s from the Soviet period," Alexei Kokin, oil and gas analyst at Uralsib investment bank, told The Moscow News. "If you look at the reinvestment rate, all companies have reinvested similar amounts into the existing infrastructure."

TNK-BP denied the allegations, saying that the real number of leaks was only around 400. In a statement issued Friday, the company said it "shared the concern voiced by the Natural Resources minister" about environmental conditions in Siberia.

Yevgeny Shvarts, an activist at the Moscow branch of the World Wildlife Fund, told The Moscow News that TNK-BP was the most active Russian oil company in terms of open dialogue with NGOs.

Many observers were quick to link the accusations to a failed deal last year between British oil firm BP, which operates in Russia through TNK-BP, and state-controlled Russian oil major Rosneft.

TNK-BP's billionaire shareholders blocked the multi-billion dollar deal to develop Russia's Arctic shelf using legal claims that the joint venture should be able to participate in place of BP.

Analysts, however, said the claims were over-hyped, noting that Rosneft has since successfully replaced TNK-BP in the deal with American firm ExxonMobil, and has little reason to retain a grudge against the Anglo-British venture.

"At this stage it would be pure speculation to link this with last year's Rosneft deal ­ there's no direct link," Alexander Kirevnin, oil and gas analyst at VTB Capital investment bank, said.

Many pointed instead to the political motivations of Natural Resources Minister Yury Trutnev, who reported the environmental claims to the Cabinet meeting last week.

Sources told Kommersant that the allegations against TNK-BP are just the latest in a string of charges leveled by Trutnev against oil firms as he seeks to mass support to back his ambition to head the government of west Siberia's Khanty-Mansiisk autonomous district. A charge that he made against Bashneft last month was recently scrapped by the Natural Resources Ministry.

"The government's latest moves look populist in our view, and we believe that TNK-BP - one of the most eco-friendly companies in Russia - will be able to defend itself," Aton analysts said in a note to investors Friday.

Other analysts echoed the view that the accusations would likely have little impact on TNK-BP's investment value.

"The costs the government is asking the company to spend on repairs are not significantly higher than what it is spending currently. It's more or less in line with their current budget," said Kirevnin, of VTB Capital. "There will only be problems if they force the company to spend it in one year ­ however, we don't expect this to be the case."

Keywords: Russia, Oil, Energy - Russia, Environment - Russia, NATO - Russian News - Russia

 

Anglo-Russian oil venture TNKBP found itself wrenched back to the center of Russian politics last week when the Natural Resources Ministry ordered charges to be brought against it over oil leaks in its Siberian pipeline system.

file photoThe charges, made in the presence of President-elect Vladimir Putin, of nearly 800 oil spills that have caused pollution in western Siberia, quickly sounded alarm bells among investors, ever wary of attempts by the Russian government to intervene in the running of big private firms.

The oil major's share price underperformed late last week, dropping some 4.5 percent Thursday on the Micex trading index. Concerns were heightened by the fact that Energy Minister Sergei Shmatko pointed to TNK-BP's high dividend payments as evidence that it could afford to overhaul its pipeline system.

Analysts told The Moscow News that while the motives behind the accusations remain hazy, many indicators point to political motivation.

The main one, they said, is the fact that the accusations against the oil firm simply do not add up. The 784 accidents that are alleged to have taken place in TNK-BP's pipeline system in 2011 compares to just 20 to 30 in the pipelines of the company's peers. But TNK-BP's pipeline system differs little from those used by other oil companies.

"TNK-BP certainly doesn't have a worse track record than other oil companies ­ they all inherited the same infrastructure in the 1990s from the Soviet period," Alexei Kokin, oil and gas analyst at Uralsib investment bank, told The Moscow News. "If you look at the reinvestment rate, all companies have reinvested similar amounts into the existing infrastructure."

TNK-BP denied the allegations, saying that the real number of leaks was only around 400. In a statement issued Friday, the company said it "shared the concern voiced by the Natural Resources minister" about environmental conditions in Siberia.

Yevgeny Shvarts, an activist at the Moscow branch of the World Wildlife Fund, told The Moscow News that TNK-BP was the most active Russian oil company in terms of open dialogue with NGOs.

Many observers were quick to link the accusations to a failed deal last year between British oil firm BP, which operates in Russia through TNK-BP, and state-controlled Russian oil major Rosneft.

TNK-BP's billionaire shareholders blocked the multi-billion dollar deal to develop Russia's Arctic shelf using legal claims that the joint venture should be able to participate in place of BP.

Analysts, however, said the claims were over-hyped, noting that Rosneft has since successfully replaced TNK-BP in the deal with American firm ExxonMobil, and has little reason to retain a grudge against the Anglo-British venture.

"At this stage it would be pure speculation to link this with last year's Rosneft deal ­ there's no direct link," Alexander Kirevnin, oil and gas analyst at VTB Capital investment bank, said.

Many pointed instead to the political motivations of Natural Resources Minister Yury Trutnev, who reported the environmental claims to the Cabinet meeting last week.

Sources told Kommersant that the allegations against TNK-BP are just the latest in a string of charges leveled by Trutnev against oil firms as he seeks to mass support to back his ambition to head the government of west Siberia's Khanty-Mansiisk autonomous district. A charge that he made against Bashneft last month was recently scrapped by the Natural Resources Ministry.

"The government's latest moves look populist in our view, and we believe that TNK-BP - one of the most eco-friendly companies in Russia - will be able to defend itself," Aton analysts said in a note to investors Friday.

Other analysts echoed the view that the accusations would likely have little impact on TNK-BP's investment value.

"The costs the government is asking the company to spend on repairs are not significantly higher than what it is spending currently. It's more or less in line with their current budget," said Kirevnin, of VTB Capital. "There will only be problems if they force the company to spend it in one year ­ however, we don't expect this to be the case."

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