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Daily Telegraph: BP’s Russian venture makes £3.3bn profit

By Russell Hotten
Last Updated: 1:02am BST 06/06/2007

Profits at BP’s joint venture company in Russia surged 40pc, underlining why Moscow seems intent on seeing the country’s energy assets return to state control. TNK-BP, owned 50-50 by the UK oil giant and three Russian billionaires, made $6.3bn (£3.3bn) last year on the back of the strong oil price and tighter cost control, the company announced yesterday.

The rise in profits was all the more impressive because TNK-BP faced a sharp rise in its tax burden, up 35pc to $10.1bn for export duties and up 58pc to $756m for excise taxes. The company’s total sales rose 18pc to $35.5bn.

The announcement came as regulators in Moscow consider severing TNK-BP’s role in the massive Kovykta gas field, where the company is involved through its 62pc stake in Rusia Petroleum. Regulators may decide within the next week whether to revoke Rusia’s operating licence, opening the door for Gazprom, the state gas monopoly, to take control of the project.

TNK-BP said yesterday that it could lose around $405m if it was stripped of the Kovykta licence. However, the company said it still hoped to resolve the dispute over claims it has breached the licence by under-producing gas from the field.

Shares in TNK-BP Holding have fallen 30pc this year because of the row and on reports that the billionaire partners may sell their stake in the joint venture. Last year, Royal Dutch Shell lost control of the Sakhalin-2 gas project after months of claims that the company breached its licence.

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