Embattled oil giant BP is fighting to resolve a dispute with its Russian partners as it is expected to announce its first annual loss in nearly two decades, it has been reported.
The group is trying to head off a showdown with the owners of its Russian joint venture TNK-BP over a share swap and Arctic exploration deal it signed two weeks ago with Rosneft, Russia’s state-controlled oil firm, The Sunday Times said.
The owners of TNK-BP argue the new deal breaches its shareholder agreement that TNK is the “primary vehicle” for growth in Russia for both sides – however it is understood TNK does not want to kill the Rosneft tie-up, but look for a lump-sum free from BP.
The dispute, which will be brought to court on Tuesday in London, has emerged days before BP is expected to unveil its first annual loss since 1992 as it counts the costs of the Gulf of Mexico oil spill disaster.
The market gave a warm welcome to BP’s £10 billion deal with Rosneft when it was announced earlier this month.
The deal gave shares a boost, which after falling from a high of 655p in April to a low of 303p in June have steadily climbed back to 483.7p.
The alliance will see BP take an additional 9.5% stake in Russian government-owned Rosneft, while Rosneft will take a 5% stake in the London-based company. The companies will work together to explore the Russian Arctic continental shelf in an area of the South Kara Sea covering about 48,263 square miles – one of the world’s last remaining unexplored basins.
Analysts predict BP will report a loss of at least 4.5 billion US dollars (£2.8 billion) in its full-year results after the tens of billions that it set aside to cover costs of the oil disaster are deducted.
But there may be some good news for investors – as new chief executive Bob Dudley is expected to confirm the company will reinstate its dividend, which was frozen at the height of the crisis. This would be a key development for pension holders as well as investors given the stock previously accounted for an estimated one in every six pension pounds invested.