Sunday 17 November 2019

Joint venture in Russia pays BP $610m dividend

Jonathan Russell

BP is set for a $610m windfall after directors at its troubled Russian joint venture TNK-BP agreed a $1bn special dividend.

The payout comes six months after BP claimed the oligarchs behind TNK-BP blocked a similar payment.

The oil giant had been expecting a special dividend to be paid in the first quarter. It was ditched at the height of BP’s legal battle with Mikhail Fridman, Len Blavatnik, German Khan and Viktor Vekselberg – the billionaire investors in TNK-BP – over BP’s proposed tie-up with another Russian oil company, Rosneft.

BP was eventually forced to walk away from the deal with Rosneft. The current payment, expected to be formally announced today, was agreed at a board meeting held in Cyprus on Friday.

TNK-BP non-executive director and former BP chief executive Tony Hayward resigned from the board at the same meeting. He is understood to be concentrating on his new venture, the investment vehicle Vallares.

His resignation marks the end of Mr Hayward’s involvement with BP. He resigned as chief executive following the Gulf of Mexico oil spill to be replaced by Bob Dudley.

Last night it was reported BP had already identified several internal candidates to replace Mr Hayward.

The $1.25bn special dividend comes on top of regular dividends BP and its Russian partners receive from the joint venture – 40pc of net income.

A spokesman for TNK-BP said: “The TNK-BP board approved payment of an additional dividend for the first half of 2011 in the amount of $1.25bn.”

The dividend comes after a successful six months for TNK-BP. Operational performance is understood to be up. At Friday’s board meeting, directors also agreed to take a 45pc stake in Brazilian oil exploration outfit Petra Energia.

The dividend, which is for performance in the first half of the year won’t be paid until the fourth quarter.

The payment comes against a backdrop of ongoing disputes between BP and its Russian partners. The UK oil giant’s failed tie-up with Rosneft has led to office raids and lawsuits against BP.

The company is being sued by minority owners of TNK-BP for damages of $4.9bn. The case centres on alleged damages the shareholders suffered through BP’s aborted attempt to link-up with Rosneft.

BP has dismissed the claims as absurd. It claims there were no damages that flowed from the attempted deal. Since BP was forced to ditch the share-swap, Rosneft has joined up with BP’s US rival ExxonMobil.

On top of the shareholders’ case, BP is facing a court of arbitration hearing brought by the oligarchs’ investment vehicle AAR. The court will rule whether BP broke the TNK-BP shareholder’s agreement when it tried to link up with Rosneft.

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