TNK-BP Faces Tax Demand

The Federal Tax Service is claiming 6 billion rubles ($255.6 million) in back taxes on several units of BP's Russian venture TNK-BP, the firm said Wednesday.

The claim refers to the 2004-2005 tax period and includes a wide range of taxes including value-added, land and mineral extraction taxes, a TNK-BP spokesman said.

"The claim was made in the end of last year, and we are cooperating with tax authorities to settle the issue," he said.

A company source said the claim consisted of "hundreds of small demands concerning a dozen TNK-BP units. ... Some of them are as small as 50,000 rubles ($2,130) and were claimed for wrongly registered media subscription and other things like that."

He added that the claim to TNK-BP Holding, the listed part of TNK-BP International, which is half-owned by BP, amounted to 150 million rubles ($6.39 million).

Analysts said the claim should not pose a big problem for the firm, the country's third-largest oil producer.

"Given TNK-BP's estimated 2007 net income is close to $6 billion, we do not expect the claims to prove material, even if the court rules for the full amount of claims, which we believe is unlikely," analysts at UniCredit bank said in a note to investors.

TNK-BP reported $6.41 billion in net profit in 2006 and is due to report 2007 earnings within days.

In 2005, tax authorities hit the firm with $1.4 billion in back taxes for 2002-2003, which it paid in 2006.