OREANDA-NEWS. On January 1, the future head of TNK-BP Maxim Barsky will become a deputy to the company’s current CEO Mikhail Fridman. His main objective is to turn TNK-BP into the most expensive private oil company in Russia. Barsky’s bonus is tied to the company’s value growth, reported Vedomosti.

One month ago TNK-BP shareholders announced that they have agreed on the candidacy of the company’s new head – from January 1, 2011 Maxim Barsky (currently the company’s executive vice-president) will take over this position. Until then Mikhail Fridman, one of the company’s co-owners will remain TNK-BP’s CEO. Barsky told Vedomosti that he will become Fridman’s deputy on January 1, 2010 and in summer after completing training with BP he will be authorized by Fridman to exercise all powers of CEO. The only exceptions will be both the staff and audit departments, which will remain under Fridman’s supervision until the end of the year. But according to Barsky, once he takes over the top job in 2011, he will be given free hand for staff decision-making.

According to a TNK-BP representative, Barsky’s contract, which will run until 2014 with an extension option has to be signed before the end of this year. It will include a long-term option program. The option will depend on the group’s value growth, says Barsky. He names no details and representatives of the shareholders also decline to comment.

However, a source close to one of them says that meant is the option for the shares of “TNK-BP Holding” (traded at RTS Board, unites TNK-BP’s main Russian enterprises except Slavneft, BP gas stations and the group’s main gas assets) or the part of the group that will eventually launch IPO. Last year TNK-BP shareholders agreed to place up to 20% of shares; it is expected that the IPO will be run by the company which owns all group’s assets (at the top level the holding will still be jointly controlled on 50:50 basis by AAR and BP). According to the source, the terms of the option exercise are still under discussion.

There is no option program at TNK-BP but it is quite possible that following Barsky, other managers will get option opportunities, adds the source.

Barsky has no doubts regarding the potential of TNK-BP value growth. He believes it is within the group’s powers to become Russia’s most expensive private oil company. Oil major Lukoil currently occupies that spot: its RTS capitalization was USD 45.8 bln., compared to TNK-BP USD 27 bln.

“The group’s reserves are comparable to those of Lukoil and the efficiency is even higher” – says Barsky who adds that the company’s main objectives are to maintain steady production growth and to increase refining capacities. According to Denis Borisov, analyst with Bank of Moscow, in terms of refinery right now TNK-BP is anywhere near Lukoil – the company still needs about 20 mln tons of capacity. That is the reason why Lukoil EBITDA per barrel of crude oil production is USD 20.5 compared to TNK-BP’s USD 16. But because Lukoil is less efficient in this business, TNK-BP EBITDA profitability is much higher than the opponent’s: 27% against 17% in Q3, says the analyst.

Who’s got more
At the start of 2009 the proven and probable hydrocarbon resources of the two companies were comparable – Lukoil had 31.1 bln barrels of oil equivalent compared to TNK-BP’s 30.3 bln (PRMS). But Lukoil is ahead of its opponent in proven reserves – 19.3 bln barrels of oil equivalent against 10.3 bln.