BP Digs Further In

It is possible that BP will obtain 20% of its global oil and gas production this year from Russia as it pushes ahead with a heavier than expected capital expenditure.

About $ 1.3bn has been set aside for investment by the 50%-owned TNK-BP venture, which is hoping to ramp up output by 12%.

TNK-BP is considering establishing a new company in Moscow that would sit between its holding group registered in the British Virgin Islands and its 400 operating subsidiaries.

A spokesman for BP said this would be an attempt to simplify the structure of its opera tions in Russia and had "nothing to do with taxes" which were - he confirmed - expected to rise.

TNK-BP is primed to produce 1.5m barrels of oil equivalents a day in 2004 giving the British side of the business 750,000 barrels - about 20% of BP's total global output if the non-Russian contribution remains flat, as is likely.

The oil company had previously talked of investing more than $ 1bn but now plans to spend about $ 700m on production upgrades and a further $ 600m on exploration and marketing.

The latest figures are the results of BP's $7.7bn investments in TNK and Sibneft last year. The company also signed final financing for a controversial pipeline project in another part of the former Soviet Union.
The $ 3bn Baku-Tbilisi to Ceyhan pipeline will bring oil from new fields in the Caspian Sea to tankers on the Black Sea but has attracted a welter of criticism.