29.08.2003 – 10:54

BP plc

euro adhoc: BP PLC
BP AND AAR CLOSE RUSSIAN TRANSACTION, AND AGREE TO INCLUDE SLAVNEFT IN NEW COMPANY (E)

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

August 29, 2003

BP AND AAR CLOSE RUSSIAN TRANSACTION, AND
              AGREE TO INCLUDE SLAVNEFT IN NEW COMPANY

BP and the Alfa Group and Access-Renova (AAR) today announced that
they have completed the deal to combine their Russian and Ukrainian
oil and gas businesses. The completion is the final step in the
creation of TNK-BP, a new company owned and managed 50:50 by BP and
AAR.

BP said it would pay AAR an immediate $2.6 billion in cash for its
stake in the new company, together with three annual tranches of
$1.25 billion in BP shares payable on the anniversaries of today's
closing.

In addition, BP said it had reached agreement with AAR to incorporate
AAR's 50 per cent interest in Slavneft into TNK-BP in return for a
cash payment by BP of $1.35 billion, subject to adjustments.

BP said the main transaction did not for the moment include its share
of the Sakhalin interest, which it originally intended to contribute
to TNK-BP. The formation of a Sakhalin joint venture with licence
partner Rosneft was still under negotiation and the Sakhalin interest
could be contributed to TNK-BP at a later date.

BP said the exclusion of Sakhalin, together with interest and other
minor adjustments, accounted for the slight rise in its initial cash
payment to AAR to $2.6 billion, up from the $2.4 billion estimate
announced in June.

Completion of the Slavneft deal, which is subject to the approval of
the regulatory authorities of the EU, Russia and Belarus, is expected
before the end of the year. The deal will be effective from May 1,
2003.

Commenting on the new company, BP chief executive Lord Browne said:
"The creation of TNK-BP represents great progress towards meeting
BP's long-term commitment to Russia. In just seven months, a truly
major oil and gas company has emerged as an operating and competitive
reality. The addition of the Slavneft interest into TNK-BP represents
an important step in the building of the future of the company."

TNK-BP is Russia's third largest oil and gas company, producing some
1.2 million barrels a day from its main oil fields in West Siberia
and the Volga Urals. Completion of the Slavneft acquisition will
increase TNK-BP's production by some 160,000 barrels a day.

Notes to Editors:

· The completion of the transaction makes BP the world's second
largest private-sector producer of oil and gas, with TNK-BP alone the
tenth largest.

Slavneft:

· As of December 31, 2002, under Russian accounting standards, the
Slavneft group reported total net assets of $890 million, and 2002
profit after tax (before exceptional items and minority interest) of
$430m.

· TNK/AAR holds an approximately 50 per cent interest in the Slavneft
group. The Slavneft interest is held jointly with Sibneft and was
acquired through a number of transactions, including the Slavneft
privatisation in December 2002.

ADDITIONAL DATA

TRANSACTION CONTEXT

· The largest transaction in Russian corporate history

· The largest foreign direct investment in Russia.

ASSETS:

TNK-BP (excluding Slavneft)

· Workforce of approximately 113,000 people

· Proven resources of 5.2 billion barrels of oil equivalent (710
million tonnes) of which 3.2 billion barrels are expected to be
recovered prior to lease renewal

· Production of 1.2 million barrels of oil a day (60 million onnes  
a year)

· Rising output - up 8 per cent in 2002, up 11 per cent in 2003 
(quarter-on-quarter basis)

· Main fields output: West Siberia (Samotlor, Nizhnevartovskoye
Nefedobyvaushee Predpriyatie, Nyagan), about 800,000 barrels a day
(40 million tonnes a year); Volga Urals (Orenburgneft), about 400,000
barrels a day (20 million tonnes a year)

· Strong export base - this year more than 50 per cent of total
production has been exported as crude and 15 per cent as refined
product

· Five refineries in Russia and Ukraine (including Ryazan and
Lisichansk), with throughput of 500,000 barrels a day (25 million
tonnes a year)

· More than 2,100 retail filling stations in Russia and Ukraine

· More than 20 per cent share of the Moscow retail market.

Slavneft (100 per cent - owned 50/50 with Sibneft)

· Proven resources of some 1.6 billion barrels of oil of which some 1
billion barrels are expected to be recovered prior to lease renewal

· Production of 294,000 barrels of oil a day in 2002

· Rising output - up 17 per cent in 1Q 2003 over 1Q 2002

· Two refineries in Russia (Yaroslavl) and interest in Mozyr refinery
(Belarus) with total throughput of 384,000 barrels a day

· More than 570 retail filling stations in Russia.

STRUCTURE

· TNK-BP is a single new holding and operating company, registered in
the British Virgin Islands

· President and chief executive officer, Robert Dudley; executive
director, German Khan; chief operating officers, Victor Vekselberg
and Larry McVay (deputy); chief financial officer, Kent Potter

· TNK-BP has a ten-member board of directors - with five members
appointed by AAR and five by BP. TNK-BP chairman is Mikhail Fridman
and Rodney Chase is deputy chairman.

- ENDS -

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

end of announcement        euro adhoc 29.08.2003

Further inquiry note:

Further enquiries:

Peter Henshaw, BP Russia, Moscow: + 7095 787 6009

BP press office, London, tel: +44 (0)20 7496 5256/4708/4324/4827/4358

Branche: Energy
ISIN: GB0007980591
WKN: 850517
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