UPDATE: TNK-BP Shares Slide Amid Concern On Government Criticism
(Adds comments from TNK-BP shareholders in paragraphs 3 and 4, updates share price movement in paragraph 7)
By Alexander Kolyandr
Of DOW JONES NEWSWIRES
MOSCOW (Dow Jones)--Shares in TNK-BP Holding (TNBP.RS) continue to slide Friday, amid investor concern that the Russian government's criticism of the company's ecological policy and allegedly high dividend may be a sign of a wider attack from the state.
Yury Trutnev, Russia's natural resources and environment minister, told Prime Minister Vladimir Putin at a government meeting Thursday that TNK-BP spends "practically all of its profit, almost $8 billion" on dividends, while maintaining "poor" environmental policies.
Russian partners in TNK-BP--a group of Soviet-born businessmen known as the Alfa-Access-Renova consortium, or AAR--said Friday: "AAR and TNK-BP have excellent relations with the Russian Government, and actively cooperate on different environmental projects".
BP said TNK-BP's capital investment has been among the highest of its peers, adding that in 2012 the company expects to invest nearly $6 billion.
The government of Russia, not known for its scrupulous environmental policy, has repeatedly used ecological concerns for putting pressure on private companies, forcing them to invest more or to cede their licenses.
TNK-BP, a joint venture between BP PLC (BP) and a group of Russian investors, said that despite declining number of oil spills at its sites "[the] ecological situation is far from ideal", and said it is confident that jointly with the government it would "agree on plans and rapidly achieve a qualitative breakthrough to demonstrate TNK-BP's environmental leadership and properly preserve land and water resources used by oil companies"
The market, apparently worried that the company may be under government attack, sent the company's shares down 8% immediately after Thursday's comments. The shares gained back part of this loss and closed Thursday down 4.1%, but were down 1.3% by 1300 GMT Friday in Moscow amid a higher oil price and marginally growing Micex index.
The minister's tone was relatively mild Thursday, and it got almost no reaction from Putin, who is to become president May 7. Putin called for the establishment of a dialogue with the company and its owners, to fix any problems.
"We think the market overreacted to the news yesterday, and expect an amicable solution to the problem by a higher commitment from TNK-BP to maintain high environmental standards and probably paying a fine," said Ildar Davletshin from Renaissance Capital.
The Russian government has recently intensified its pressure on many Russian resource companies to "invest in Russia", which in government speak means plants, equipment and infrastructure.
Troika Dialog noted that TNK-BP shareholders may want to continue to receive "a constant large cash flow stream from the company, so if pressed by the government to spend more money on whatever, the company may decide to borrow."
April 20, 2012 09:27 ET (13:27 GMT)
. Kirchner is going to be fuming if/when BOR release a discovery RNS!
. ZEN reports they found no major buyers just discussions, drops 50% on this AGM report, basically total reset. time is not on their side