26.06.2003 – 12:26

BP plc

euro adhoc: BP PLC
Joint Ventures
BP AND AAR SIGN RUSSIAN PARTNERSHIP AGREEMENT (E)

Disclosure announcement transmitted by euro adhoc. The issuer is
responsible for the content of this announcement.

June 26, 2003

BP AND AAR SIGN RUSSIAN PARTNERSHIP AGREEMENT

BP, and the Alfa Group and Access-Renova (AAR) today announced that
they have signed a sale and purchase agreement - a significant step
towards formal completion of the proposed combination of the
companies' Russian businesses.

The transaction, which was first announced in February, creates a new
joint venture company, TNK-BP, with BP and AAR each holding 50 per
cent stakes. When the transaction is completed, BP will become the
world's second largest private sector producer of oil and gas, and
TNK-BP itself will be the tenth largest.

Closing adjustments reflecting increased debt levels in TNK-BP,
partly due to TNK's financing of the Slavneft acquisition, mean BP
now expects to pay around $2.4bn for its equity interest in TNK-BP,
less than the $3 billion anticipated at the time of the announcement
in February. In addition there will be three annual tranches of $1.25
billion, payable in BP ordinary shares valued at market
prices prior to each annual payment.

BP's Chief Executive Lord Browne expressed satisfaction at the pace
of progress made since February and noted the increase in production
from the assets of the new joint venture company, which is up so far
this year by around 10 per cent year on year, as well as in the level
of exports. "This is one important element in the process of
strategic renewal within BP. On the basis of the progress made
to date I believe we can complete the transaction over the summer and
then begin to deliver the tremendous value potential which we see."
More than 70 members of the management team for the new joint venture
company have already been appointed.

The agreement signed today finalizes all the commercial arrangements
for the formation of the TNK-BP joint venture company, which will be
effective from January 1, 2003, subject to the approval of regulatory
authorities including those at the European Union, in Ukraine and in
Russia.

Discussions continue between BP and AAR on whether the interest,
which TNK has taken in the Russian company Slavneft, should be
included in TNK-BP. Any such inclusion will result in additional
consideration being paid to AAR.

Notes to editors:

· As at December 31, 2002 the total net assets and profits after tax
of the combination of businesses, which are the subject of this
transaction, were $5,100 million and $1,551 million respectively.

· BP was advised in this transaction by Merrill Lynch International,
Morgan Stanley and Co. Limited and United Financial Group.

· The BP shares to be issued to AAR will not be registered under the
US Securities Act of 1933 and may not be offered or sold in the
United States absent registration or an applicable exemption from the
registration requirements.

- ENDS -

This information is provided by RNS
        The company news service from the London Stock Exchange

end of announcement        euro adhoc 26.06.2003

Further inquiry note:

Further information: BP Press Office, London, tel: +44(0)20 7496 5256/ 4708/ 4358

Branche: Energy
ISIN: GB0007980591
WKN: 850517
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