Bloomberg News

TNK-BP Says Oil Spills ‘Inherited’; Shares Fall on Putin Rebuke

April 20, 2012

TNK-BP defended efforts to clean up “inherited” contamination at Soviet-era fields and pipelines after President-elect Vladimir Putin backed criticism of Siberian oil spills. Shares extended losses for a second day.

“Recordable incidents” dropped 21 percent last year and the volume of spilled oil fell 60 percent, while “the environmental situation, especially at old fields, is far from ideal,” Russia’s third-largest oil producer, owned by BP Plc (BP/) and a group of billionaires, said in an e-mailed statement.

TNK-BP, formed in 2003, operates some of Russia’s oldest fields, with its biggest, Samotlor, producing since the 1960s. Energy Minister Sergey Shmatko, in a meeting with Putin yesterday, criticized the company for paying high dividends at the expense of pipeline maintenance. Regulators will seek damages from TNK-BP as one of the biggest polluters of the Ob and Yenisei river basins in Siberia, said Natural Resources Minister Yuri Trutnev.

TNK-BP shares lost 1.2 percent to 89.77 rubles in Moscow, the lowest in two months. Its two-day decline extended to 5.5 percent, the most in almost seven months.

“The market is also pricing in remaining dividends for 2011, which are to be announced within a month,” Alexei Kokin, an analyst at UralSib Financial Corp., said in a note. “We estimate the risk to the dividend yield at 2 percentage points.

‘Inherited’ Pollution

The company reported 413 pipeline ruptures at Samotlor, Russia’s largest oil deposit, of a total 1,186 leaks last year. That is a decrease from 496 incidents at the field in 2010, according to the company’s statement. TNK-BP is seeking to stem production declines at the mature field.

Each year, 300,000 metric tons to 500,000 tons of oil and products are leaked into the Ob and Yenisei river basins, Trutnev told Putin yesterday, saying TNK-BP was the biggest offender. Spills as a result of pipeline incidents dropped to 75 tons of oil products last year, TNK-BP said.

TNK-BP has paid $2.1 billion for clean-up since 2003 and has established a dedicated $500 million fund ‘‘to resolve the inherited environmental problems, accumulated since 1962,” according to its statement.

Dividends paid out last year amounted to $7.9 billion, according to a company presentation.

Trutnev ordered the Natural Resources Inspectorate to prepare damage claims and recommended the company prepare a plan for replacing its pipelines, saying TNK-BP has sufficient funds to triple investments in maintenance and repairs.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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