BP Plc Chief Executive Officer Tony Hayward will meet with Russian Deputy Prime Minister Igor Sechin to discuss the British company’s operations in the country as it struggles to contain the largest oil spill in U.S. history.
Hayward will meet with Sechin, who is also chairman of state-run oil producer OAO Rosneft, at about 5 p.m. today in the government headquarters in Moscow, said a Russian official familiar with the matter who declined to be identified because of state policy.
BP owns about 1.3 percent of Rosneft, a stake it pledged to banks to raise funds for the costs of battling the spill in the Gulf of Mexico, the Wall Street Journal reported. Hayward will also visit Moscow-based TNK-BP, which accounts for about 25 percent of the London-based company’s output and reserves, two people familiar with the matter told Bloomberg. They declined to be identified because the visit is confidential.
“BP has a fabulous portfolio here,” Renaissance Capital Chief Executive Officer Stephen Jennings said in a Bloomberg Television interview in Moscow today. “They have paid their dues and built up credibility and experience,” Jennings said. The commitment to Russia “will hold them in good stead at a time when they have challenges in the U.S.”
BP has lost about 50 percent of its market value since the April 20 explosion aboard the Deepwater Horizon drilling rig that killed 11 crew members and triggered the spill. BP has agreed to deposit $20 billion in an independent account to pay for Gulf restoration and compensation claims. The direct costs of the cleanup have reached $2.65 billion, BP said today.
The stock rose as much as 4.3 percent and was trading at 316.55 pence as of 9:40 a.m. in London.
Hayward wants to meet Russian leaders after missing the St. Petersburg International Economic Forum earlier this month amid efforts by BP to stanch the flow of crude in the Gulf of Mexico, the people said.
“BP will need to assure the Russian side that the Gulf spill won’t affect the company’s operations in Russia,” said Andrey Kryuchenkov, a strategist at VTB Capital in London. “It’s guaranteed that there will be many questions from the Russian side about safety and BP will be trying to convince them that their operations will be maintained to the best standard.”
Sheila Williams, a spokeswoman for BP in London, declined to comment on Hayward’s travel plans. Nikolay Gorelov, a Moscow- based spokesman at TNK-BP, wouldn’t comment on whether company executives will meet Hayward.
KGB, Rosneft IPO
BP, which bought $1 billion of shares in Rosneft’s initial public offering in 2006, has a joint venture with the Moscow- based company to explore for oil and gas off Sakhalin Island, which is north of Japan, and to survey for hydrocarbons in the Arctic.
Sechin, an ex-KGB officer and an ally of Prime Minister Vladimir Putin, said on June 17 that Russia would consider buying BP’s stake in Rosneft, if offered. David Peattie, BP’s head in Russia, said a day later that the U.K. company didn’t sell any shares in Rosneft and doesn’t plan to. Rosneft CEO Sergei Bogdanchikov said this month that he doubts BP will need to sell the shares and hasn’t consulted the company about a possible sale.
BP owns half of TNK-BP, Russia’s third-biggest crude producer, with the rest owned by a group of billionaires. The shareholders last year named Maxim Barsky to take over as TNK-BP CEO from Mikhail Fridman, one of the owners, in 2011. Barsky’s nomination was part of a settlement of a shareholder battle two years ago over the company’s management and strategy.
Robert Dudley, the former TNK-BP CEO who fled Russia in 2008 amid the dispute, is now in charge of the oil spill response operations in the Gulf.
TNK-BP has generated more than $25 billion of net income and distributed more than $20 billion in dividends since it was set up in 2003, Hayward said in March 2009. The dividend policy hasn’t changed, Jonathan Muir, TNK-BP’s chief financial officer, said on March 2 of this year.