TNK-BP looking at BP’s Vietnam assets

Russia’s No. 3 oil company TNK-BP may try to buy Vietnamese assets from its co-owner BPas it sells down its portfolio to pay damages in the Gulf of Mexico, company executives said on Wednesday.

“It’s not a secret that TNK-BP is looking at some of BP assets,” Chief Financial Officer Jonathan Muir told the Reuters Russia Investment Summit.

TNK-BP, has already said it would be interested in buying assets in Venezuela, where it has rights to develop part of Junin-6 with a consortium of other Russian oil companies.

But company executives rejected the idea of buying BP’s share of Alaska’s Prudhoe Bay field. Newspapers have reported it may be up for sale.

“We are looking for companies where the politics and our expertise are a good fit,” chief operating officer Bill Schrader told the summit.

Russian companies regularly exploit Communist-era ties with Vietnam in business.

Russia’s Zarubezhneft, a state oil company is developing fields there and in the telecoms sector, a cellphone operator which shares a shareholder with TNK-BP, Vimpelcom, recently expanded there.

Schrader said it was firming up its production growth targets for next year, aiming for a 1-2 percent range. Production growth was running ahead of target in 2010 at about 2.8 percent, he said.

But production will start to shift more rapidly from the old fields of west Siberia, which are declining at a rate of 2-3 percent a year, toward the new oil provinces of east Siberia and the Yamal peninsula in the far north. “The low-hanging fruit has been achieved,” Muir said.

West Siberia’s share of output will decline to 75-80 percent of TNK-BP’s output over the next 3-5 years as east Siberia, whose barrels are shipped to Asian customers through a new pipeline to the Pacific region, grows.

West Siberia could come under further pressure from proposed tax changes which increase the extraction tax on oil from developed fields. Pinched by transport tariff inflation and taxes, Muir said, the company may need to cut investment in old fields.

TNK-BP, which produces 12 bcm of gas, plans to more than double gas output over the next 6-8 years, making it Russia’s third largest gas producer after Gazprom and Novatek , Schrader said.

Its gas is sold exclusively to domestic customers by virtue of state controlled Gazprom’s monopoly on the export pipeline.

“Our aim is to be number three and we have got the reserves to do it,” Muir said. – Reuters

Tags: BP's Vietnam assets, TNK-BP