TNK-BP Could Freeze New Projects in 2009

TNK-BP may have to freeze new refining and marketing projects next year as Russia faces its biggest financial crisis in a decade.

"Next year won't be easy, just as for any other company," Alexander Kaplan, an interim vice president for refining and marketing, said Thursday. The board will decide on the 2009 business plan on Dec. 11, he said.

Russian oil companies are already struggling with falling output at mature fields, a drop in crude prices and rising costs for starting projects in harder-to-reach regions.

TNK-BP, the country's third-largest oil producer, survived a shareholder dispute earlier this year that threatened to cut spending plans.

The company may have to trim 15 percent of managers in its refining and marketing division because of the economic slowdown, Kaplan said.

TNK-BP will spend $500 million on refining and marketing this year, he said, with $160 million dedicated to maintenance and the rest to new projects.

Currently, the company is orienting itself to an oil price of $60 to $70 a barrel, Kaplan said, adding that a scenario of $50 crude is also under consideration.

While TNK-BP has not experienced a significant drop in retail sales, commercial customers are reducing their demand, Kaplan said.