OREANDA-NEWS. March 25, 2009. TNK-BP is to increase its exploration funding. Despite substantial cuts in its business plan, Russo-British TNK-BP has no intention of saving on exploration investment, reported the press-centre of TNK-BP.

Tim Summers, the Chairman of its Management Board, announced hat the company will additionally invest around 1 billion roubles into the company’s exploration activities. No information is available on TNK-BP’s total exploration spend. In addition, Mr. Summers believes that TNK-BP will be back in profit as early as the first quarter of 2009.

TNK-BP’s press office yesterday quoted the Chairman of the company’s Management Board, Tim Summers, as saying that the Management Board had last week endorsed additional exploration funding for 2009 of 1 billion roubles (US29 million).

He said TNK-BP is maintaining its spending on safety, environment and new projects such as the Uvat and Kamennoye fields. But the crisis has forced the company to revise its investment in refining and a number of marketing projects and to “cut its long-term exploration investment”. Summers explained that TNK-BP attaches such great importance to exploration with a view to holding production levels steady in the future, adding that “production growth so far is even greater than planned”.

The company’s current business plan envisages investment of around US 3 billion, which is 32% down on 2008. How much of this is earmarked for exploration is not yet known, however, and TNK-BP’s press office had no comment on the subject.

Mr. Summers also said he was confident that the company would make a profit in the first quarter of the year, repeating something stated earlier by the head of BP, Tony Hayward. At that time the British company had estimated the 4th-quarter losses on its share of the JV (50%) at US 700 million. Somewhat later, one of TNK-BP’s co-owners, German Khan, spoke about losses of US 1.2 billion. TNK-BP plans to publish its full-year US GAAP results in the first half of April.

“Thanks to the improved situation in the industry, Russian oil companies can expect to make a profit on their operations in the first quarter”, thinks IFD Kapital analyst Vitaliy Kryukov. “In the fourth quarter, export tax, MET and transportation costs amounted to around 99% of the Urals price (even without taking into account lifting costs, commercial, administrative and overhead expenses, interest payments and other costs), but in the current quarter this has dropped to 59% of the Urals price”, he explained.

“In addition, the companies have earned a lot on the weakening of the rouble.” According to Natalya Milchakova, an analyst at FK Otkrytiye, TNK-BP and other oil exporters have every chance of making a net profit in the first quarter.

This is because export duties have fallen in this period by 3.4% for crude, 3% for light products, and 2% for fuel oil, while the price of Urals is up more than 34%.

In addition, Milchakova believes TNK-BP could allocate around 1% of its investment plan to exploration work. According to the company’s latest reporting, this amounted to US 37 million in the first half of last year.