Russia's TNK-BP profit slumps

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BPlogo REUTERS File photo.

Russia's third-largest oil producer TNK-BP International said on Friday its second-quarter net profit slumped to $808 million from $2.2 billion a year ago on the back of lower crude prices and higher taxes.

The company, half-owned by British major BP, said Russian Urals crude oil prices declined 7 percent during the period, while it had to pay a higher export tax, an extra $14 per barrel, due to a time lag in taxation.

Some market insiders see a shareholder spat between TNK-BP's owners - BP and the AAR group of Russian billionaires - as another downward factor for the company's operations. BP put its stake in TNK-BP up for sale on June 1 after a breakdown in shareholder relations.

A senior company executive said during a briefing on Friday the shareholder spat did not influence TNK-BP's results, despite the company seeing its main financial indices declining.

“From our company's point of view, everything is going as usual, we can feel no tangible pressure (from the shareholder spat),” Chief Financial Officer Jonathan Muir told a press-briefing through a translator. “We got used to it (the spat) in the company.”

He said there were certain difficulties in the corporate procedures, but the company was coping.

BP formed the 50:50 joint venture with AAR, a consortium representing a quartet of Russian tycoons, nearly a decade ago to tap into the country's vast energy reserves. The group is estimated to be worth as much as $60 billion.

TNK-BP's earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped to $2.25 billion from $3.43 billion in the year-earlier period.

Second-quarter EBITDA was hampered by the effects of foreign exchange fluctuations on mineral tax payments, the company said.

TNK-BP's revenue for the period declined to $14.26 billion from $15.38 billion a year ago, while its capital expenditure increased by 8 percent to $2.4 billion.

A Siberian court on Friday awarded over $3 billion in damages against BP in a suit brought by minority shareholders in TNK-BP, the plaintiffs' lawyer told Reuters on Friday. - Reuters


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