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. Last Updated: 07/27/2016

Minority Shareholders of TNK Kept in Dark

BOSTON -- TNK-BP, the country's third-largest oil producer, hopes to reach a settlement with TNK minority shareholders early next year, a top company official said Friday.

Speaking on the margins of the seventh annual U.S.-Russia Investment Symposium, the company's CEO and president Robert Dudley told reporters that TNK-BP's board of directors will decide during the first quarter of 2004 whether to buy out TNK minority shareholders or to offer them shares in TNK-BP.

The contentious issue regarding the company's minority shareholders has been left unresolved since BP and TNK merged earlier this year. The deal, worth more than $7 billion, is the largest single foreign investment in Russia to date.

Dudley did not disclose the number of minority shareholders nor how much stock they own. According to earlier estimates by TNK-BP's chief operating officer Viktor Vekselberg, some 400 TNK subsidiaries have minority shareholders.

Another question left open by the merger is the fate of Slavneft, of which TNK-BP and the new YukosSibneft each owns 50 percent. Dudley said that Slavneft would continue to operate as a separate company for at least a year.

Once TNK-BP and Yukos reach an agreement, Dudley said, Slavneft's assets will be quickly divided up in a "big bang." He stressed, however, that TNK-BP has no plans "to have all of Slavneft."

Instead, TNK-BP management will be focusing on streamlining the company with such measures as merging regional accounting offices and service facilities. Dudley said that there are no plans to spin off the company's subsidiaries en masse.

TNK-BP, which employs some 115,000 people, plans "no big expansion," he said, although it may consider buying "nearby occurring assets." Decisions on what assets to buy or sell are to be made after a "top to bottom review" of TNK-BP is completed in the first quarter of 2004.

Dudley said TNK-BP is currently producing an average of 1.3 million barrels per day and that he expects production to grow by 7 percent next year and another 5 percent in 2005.

In addition to exploring new oil fields, Dudley said TNK-BP also hopes to boost production of gas in western Siberia and at the giant Kovytka field in Irkutsk region. However, he added that TNK-BP's volume of gas production will depend on whether Gazprom opens its pipelines to other gas producers.