Re Joint Venture

BP PLC
11 February 2003


February 11, 2003

                   BP CREATES STRATEGIC PARTNERSHIP IN RUSSIA


BP and the Alfa Group and Access-Renova (AAR) said today that they have agreed
in principle to combine their interests in Russia to create the country's third
biggest oil and gas business, in which they will each have a 50 per cent stake.


The new company will incorporate TNK and Sidanco which, between them, produce
approximately 1.2 million barrels of oil a day.


It will also own significant exploration interests in Siberia and Sakhalin,
together with a major downstream business that includes interests in five
refineries and a retail network of more than 2,100 sites in Russia and the
Ukraine.


For its 50 per cent stake in the new company BP will pay AAR $3 billion in cash
on completion of the deal and three subsequent annual tranches of $1.25 billion
in BP shares, valued at market prices prior to each annual payment.


The transaction, which will be effective from January 1, 2003, is scheduled for
completion in the summer.


BP said the deal would be immediately accretive to cashflow, earnings per share
and return on capital employed, and it expected to improve performance
significantly over the next four years through synergies, cost reductions and
output growth.


Chief executive Lord Browne described the transaction as 'a major strategic step
into a country with massive oil and gas reserves and immense potential for
future growth.'


He said: 'BP entered Russia five years ago when we bought ten per cent of
Sidanco. We had a tough time initially, but after the present management and
ownership structure was established early in 2001 we have gradually built an
important, mutually beneficial relationship with the owners of AAR and learned a
great deal about doing business in Russia.


'Over the past year we have conducted a very thorough examination of the assets
involved in this deal, including rigorous and extensive physical inspections. We
have also taken great care to put in place a system of governance that
safeguards the interests of all parties.


'These prudent measures, combined with Russia's greatly improved economic
stability, improved legal system and increasing commitment to international
rules of trade and business, have convinced BP that now is the time to deepen
our partnership with AAR.


'We believe this to be a great moment in the history of BP and of TNK/Sidanco
and, indeed, an important milestone in the history of the industry. It marks a
step change for both companies and establishes a business which will be able to
meet the competitive challenge ahead,' Browne said.


The new company will be governed by a ten-strong board, with members nominated
equally by BP and AAR and decisions taken unanimously.  AAR will nominate the
chairman of the Board, and BP will nominate the chief executive and provide
significant management and technical resources to the new company.  BP and AAR
intend to apply western principles of corporate governance.


The new combined company will have production of some 1.2 million barrels of oil
a day. BP estimates that the oil and gas resources of the new concern are at
least 5.2 billion barrels.


BP's share of resources will be in line with its 50 per cent interest in the
company. Its share of oil production will total more than 500,000 barrels a day.
Over 40 per cent of the output is exported as crude and 15 per cent as refined
product, both at international prices. The remainder is sold domestically at
lower prices.


The transaction is subject to regulatory and other approvals, including the
consent of the EU and Russian Ministry of Anti-Monopoly Activities.


The assets being contributed by BP to the new company include its holding in
Sidanco, its stake in Rusia Petroleum, its interest in the Sakhalin V
exploration licence and its holding in the BP Moscow retail network.


AAR is contributing its holdings in TNK and Sidanco, its share of Rusia
Petroleum, its stake in the Rospan gasfield in West Siberia and its interest in
the Sakhalin IV & V exploration licence.  Neither AAR's association with
Slavneft, nor BP's interest in LukArco or the Russian elements of BP's
international businesses such as lubricants, marine and aviation, are included
in the transaction.


Notes to Editors:


•  As at December 31, 2001 the total net assets and profits after tax of
the combination of companies which are the subject of this transaction were US
$3,635 million and US $1,435 million respectively.


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


Further information:


BP Press Office London, tel: [phone]/4851



- ENDS -


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