** It looks as though tomorrow will see another underwhelming quarterly result from BP. The bill for the Gulf of Mexico oil disaster is still rising and profits are likely to have slumped on the back of weaker refining margins. For investors, it is hardly a jolly message in prospect from boss Bob Dudley.
But the future isn’t necessarily so bleak for the British oil major. Although everyone is looking west trying to guess how much America will wring out of BP in compensation and fines, markets appear to have forgotten that much of its fortunes are reliant on events many thousands of miles east.
When Dudley, not entirely voluntarily, cashed out of Russian joint venture TNK-BP last year, many British shareholders wanted a cleanish break — as much cash as possible to reinvest in oil prospects elsewhere in the world, and the minimum of paper.
They didn’t get that, because BP ended up with a 20% stake in Rosneft, the state-run energy giant. Critics of Dudley’s manoeuvring said he was trading a lucrative but dysfunctional partnership for a minority stake which still tied up a lot of capital, but where he had little hope of calling the shots.
Fast forward a year, though, and Russia is struggling with slower economic growth and spending cuts are on the horizon. President Putin pledged higher salaries for state workers and new investment in infrastructure when he was sworn in again last year.
With this surely in mind, ministers are reported to have alighted on the energy sector as one source of additional income, either through further privatisations, increased taxation, or higher dividends.
Observers aren’t holding their breath for more privatisations after the government missed targets. That leaves dividends and the possibility payouts from state-run enterprises could be raised to 35% of net profits from 25%. With that kind of policy, the days of BP being the biggest dividend payer in the FTSE might not be so long away from returning. **