OREANDA-NEWS. December 22, 2009. Maxim Barsky, former investment banker and TNK-BP’s future CEO, promised to turn the Russian-British venture into Russia’s largest private oil company, claiming he was not a henchman of any of the shareholder groups involved in the recent conflict, reported the press-centre of TNK-BP.  

Barsky, former CEO of West Siberian Resources (WSR), an oil company whose capitalization had increased by fifty times during his leadership, has told Reuters that it was at his employment interview that he had first met Mikhail Fridman, a key shareholder, and currently temporary CEO of TNK-BP.

"I had not been acquainted with any of the Russian shareholders, the head-hunters found me. How could I be a protege of Fridman or Vekselberg, or ВР? I have come from an absolutely different sector", — said Barsky, who used to work as a trader and investment banker for Troika Dialog investment company in late 1990-s.

Barsky, currently TNK-BP’s  EVP, is set to lead the company since 2011.

With US5.3 bln profit last year, TNK-BP was left without a CEO following the last-year’s conflict when Russian owners, Fridman and German Khan of Alfa-Group consortium, Len Blavatnik of Access and Victor Vekselberg of Renova, expressed their dissatisfaction with the way ВР had managed the company and with BP’s unwillingness to expand TNK-ВР operations to foreign countries. AAR holds 50 percent in the company, while the other half is controlled by ВР.

The English-Dutch oil major accused ААR of using administrative resource to force Robert Dudley, TNK-BP CEO, and some other expats, out of Russia.

According to analysts, the actual control of Russia’s third largest oil producer has been grasped by AAR shareholders, their total wealth was estimated by Forbes at US 12.1 billion exclusive of Blavatnik, whose wealth remained unannounced by the publishers.

Barsky is to take his training in BP and TNK-BP throughout 2010 before taking over his duties as TNK-BP’s CEO in January 2011. “As many others, I have kept an eye on the conflict by reading news”, he told Reuters.

"Why did the shareholders decide I was fit? I have achieved something in my life, I’ve got proven track record, I have built a company from scratch (WSR) currently valued at US3 billion. In general, I have solved all of my personal financial issues in this life, and my motivation completely differs from that of other candidates", 35-old Barsky said.

According to him, shareholders’ participation in the company management is a “discount for the company value ", but for the time being, independent management is only a future opportunity.

"Today (moving shareholders out of the management) is just impossible for they have developed ocean-wide networking, and failing to make use of it would be just fatal for the company", Barsky said.

Fridman will continue to perform the offices of TNK-BP’s CEO through 2011. Vekselberg and Khan are the company’s Executive Directors.

Shareholders agreed that Barsky would lead TNK-BP for 3 years.

"I want to get a priceless experience working in an entity of such scale... The second target is self-actualization. There is definitely something that I can learn from the Russian shareholders; as you understand, they are ingenious people, so I can mould my business character working side by side with them. And there is a lot that I can learn from BP. These two objectives would be unachievable if I were someone’s manager".

Development in Russia
“TNK-BP hopes it will achieve “very impressive success both in Russia and abroad” Fridman told journalists on Wednesday, however, Barsky plans so far to expand only inside Russia.

"There is no objective to be in a third country. We have 30 billion barrels (reserves).  To diversify the business, we would probably have to buy additional 15 billion barrels abroad... Just think of that! Buy 15 billion barrels for about \\$10 per barrel? It’s just an unachievable target, the more so, the cost of our capital is much higher than that available to international companies. So why expand elsewhere having such resource base of our own?", Barsky said.

According to Barsky, expansion was not the key " bone to pick " with the shareholders last year, and in addition to Russia, the company may focus on two foreign countries, i.e., — Venezuela, where it already runs two projects, and Iraq where TNK-BP is just about to step in.

In all other cases, we are non-competitive against international oil companies such as Exxon, BP or Chevron. We have different cost of capital, and on the other hand, we have different reserves, he said.

Before Barsky joined the company, TNK-BP had attempted to acquire Sibir Energy, a smaller oil producer, but it lost the chase vs. Gazpromneft.

To outdo Lukoil
Barsky seeks to turn TNK-BP into Russia’s leading private oil company and may change the dividend yield for the sake of investment accumulation.  At present, Lukoil is the leading private oil company in Russia, the second largest oil producer in the country with state-owned Rosneft ranking the first.

"We are (industry) leaders, we have very high dividend yield.  I guess, the situation will change very soon, for the company targets very ambitious projects.  Yamal is in the first place...  We are planning heavy investments in refining, we need to expand our refining capacity", Barsky said.

According to the calculations provided by the Bank of Moscow analysts, the dividend yield (i.e., the ratio between dividend per share and the market value of the paper) on TNK-BP’s preferred shares amounted to 17 percent with 14.5 percent on ordinary shares upon 9—months’ performance in 2009.