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BP Earns $218 Million From Rosneft Stake, Less Than TNK-BP

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July 30 (Bloomberg) -- BP Plc, the U.K. oil producer that sold its stake in Russia’s TNK-BP in March for cash and shares in OAO Rosneft, earned $218 million from its new shareholding, less than half the amount it received a year ago from TNK-BP.

The Rosneft holding made up about 8 percent of second-quarter profit adjusted for one-time items and inventory changes of $2.7 billion that BP posted today. Its share of the Russian state company’s output was 945,000 barrels of oil equivalent a day, or almost 30 percent of the total, BP said in a statement.

BP received 19.75 percent of Rosneft, the largest publicly traded oil producer by output, and $12.5 billion after exiting its TNK-BP venture with a group of billionaires.

Russian earnings were “impacted by the weakening of the ruble over the period and the lagging effect of Russian export duty as Urals oil prices declined,” London-based BP said.

TNK-BP contributed $452 million, or about 12 percent of BP earnings, in the second quarter of last year. BP’s share of TNK-BP output was 1.016 million barrels of oil equivalent a day, or 31 percent of its total including Russia in the period.

“BP is trading current cash for future exploration potential,” said Ildar Davletshin, an oil and gas analyst at Renaissance Capital in Moscow. “As a Rosneft minority they will have exposure to the Arctic and tight oil in” Siberia.

BP will get smaller dividends from Rosneft compared with TNK-BP because it was partly paid in cash, Davletshin said.

“We do look at this as at a multi-decade investment,” BP Chief Executive Bob Dudley said in an interview in London. “I am sure things will come out of it both in Russia and internationally.”

BP will receive $460 million in dividends from Rosneft next month, he said.

Rosneft is exploring in the Russian Arctic and plans to tap Bazhenov province. TNK-BP on average accounted for about a quarter of BP’s output and a fifth of its reserves. The Russian venture paid the company $19 billion in dividends since it was formed in 2003. BP’s initial investment was $8 billion.

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net