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. Last Updated: 07/27/2016

TNK-BP Seeks More Gas Assets Via Venture

TNK-BP is seeking access to some of state-run Gazprom's onshore gas fields and a plant to liquefy natural gas on the Baltic Sea for a $3 billion venture the companies plan to set up next year.

The British-Russian company will offer Rospan International, which will be its only natural gas project in Russia after selling the Kovykta gas field, to Gazprom, TNK-BP CEO Robert Dudley told reporters Friday in the Orenburg region.

The country's third-biggest oil company also plans to invest as much as $4.5 billion next year to maintain output and search for new reserves as production costs rise, and expects to keep its current ownership structure after next year's presidential election, Dudley said.

Gazprom, TNK-BP and BP have not yet presented their offers on asset swaps in the proposed new joint venture, Dudley said. Access to "larger gas fields that need development onshore would make the most sense for TNK-BP," he said. "Gas is the focus."

TNK-BP's stake in Kovykta is worth from $850 million to $900 million, based on an ongoing analysis of project costs over the past 14 years, Dudley said. BP said in June that it valued the stake at from $700 million to $900 million. Gazprom said it planned to pay no more than $800 million.

The sales agreement for TNK-BP's 63 percent of the Kovykta field, the biggest discovered in eastern Siberia, will probably be signed by Oct. 1, Dudley said.

TNK-BP will spend 70 percent of its $4.5 billion investment next year on exploration and maintaining output at existing fields and as much as 20 percent on refining and retail operations, Dudley said. A detailed investment plan, totaling from $4 billion to $4.5 billion, will be decided by the end of November, he said.

"Companies will be stressed to maintain facilities and keep production at the same level," Dudley said. "We're fighting to keep output at our old fields' level. I call it the flat spot."

TNK-BP plans to replace 100 percent of its reserves this year, and may increase that level by 2010, he said.

Dudley said that periodic speculation about an exit by the company's Russian partners lacked substance.

"Rumors emerge periodically. We are now in a cycle when they are strong. I see no indication [the current shareholder structure] will not survive post-March 2008," Dudley said.

Billionaires Mikhail Fridman, Viktor Vekselberg, German Khan and Len Blavatnik hold the other 50 percent in TNK-BP. A five-year lockup on their holdings is due to expire around the end of this year.

"They have an option to do something different, but I don't see them acting like they are planning anything like that," Dudley said of the possibility that the Russian partners may sellout.

TNK-BP plans to sell assets in the Orenburg region, as the company seeks to optimize its holdings, Dudley said. It wants to sell Buguruslanneft, one of its oldest assets in the region, he said.

No price has been set, TNK-BP spokeswoman Marina Dracheva said.

Bloomberg, Reuters