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27

Russia’s”Tax Clutch” To Grab $256 Mln From BP’s “Pocket”

Russia's taxation authorities demand 6 billion rubles, $255.6 million, in back taxes on several units of BP's Russian venture TNK-BP, the company spokesman said Wednesday

Russia’s taxation authorities demand 6 billion rubles ($255.6 million) in back taxes on several units of BP’s Russian venture TNK-BP, the company spokesman said Wednesday .

The claim refers to the 2004-2005 tax period and includes a wide range of taxes including value-added, land and mineral extraction taxes.

Analysts said the claim should not pose a big problem for the firm, Russia’s third-largest oil producer. “Given TNK-BP’s estimated 2007 net income is close to $6 billion we do not expect the claims to prove material, even if the court rules for the full amount of claims, which we believe is unlikely,” analysts at UniCredit said in a note.

TNK-BP reported $6.41 billion in net profit in 2006 and is due to report 2007 earnings within days. In 2005, tax authorities hit the firm with $1.4 billion in back taxes for 2002-2003, which it paid in 2006. TNK-BP, which is half owned by a group of Russian billionaires, has been under pressure from Russian authorities since last year, when it agreed to sell its major Siberian gas field to the state-controlled Gazprom.

Last month, the firm’s offices were raided by the Federal Security Service (FSB), the successor to the Soviet KGB, and an employee was arrested on an industrial espionage charge. Analysts have said the state is putting pressure on TNK-BP’s Russian shareholders to sell out to a large state company such as Gazprom or oil major Rosneft, though the owners and BP have repeatedly denied this. TNK-BP is the largest single British investment in Russia and BP relies on TNK-BP, which produces 1.4 million barrels per day, for a quarter of its worldwide production.