TNK BP: Acquisition Integration

In February 2003, UK-based BP plc and its partners Alfa, Access Renova (AAR) announced a £16 billion, 50-50 venture. In the largest merger in the history of the Russian oil industry, this partnership combined the upstream and downstream assets of TNK, BP Russia and Sidanco, to create a new company called TNK BP.

Client Background
TNK BP greatly expands BP's stake in Russia, and provides AAR with instant access to western technology and management expertise.

The scale of the acquisition is vast. TNK BP has reserves in excess of 5.2 billion barrels and production of 1.2 million barrels a day, increasing BP's production by 13 percent and its company reserves by 30 percent. TNK BP also has 2,000 retail sites in Russia and the Ukraine, which sell more than 6.5 billion liters of fuel a year. The merger promises significant benefits, including an estimated $1.5 billion in ongoing synergies and cost savings; production capacity growth at $2 billion and future options at another $2 billion.

The immediate challenge facing BP and AAR was a rapid integration of the assets and operations of the new acquisitions.

Accenture had played various roles in a number of BP's integration projects, including Amoco, Arco, Castrol and Veba, and was asked by BP to work directly with the TNK BP Integration Directorate in four key integration areas:

• Creating the architecture for the integration program, including team structure, enabling teams and cross-cutting processes.
• Establishing and driving program-wide deliverables, milestones and direction.
• Managing and facilitating workshops with key stakeholders and work teams.
• Creating and implementing program governance structures to ensure correct decisions were made at the right time.

Accenture oversaw the creation of 20 work teams, including representation from BP, TNK and Sidanco, to carry out the project.

Accenture also created tracking mechanisms to measure synergy projects, process improvement opportunities and strategic studies and regularly met with teams to maintain a focus on key issues. In just seven months, TNK BP was transformed into a fully staffed, independent company and a major force in the global energy field.

The new TNK BP has created a new sixth profit centre for BP plc and raised the company to the No. 2 spot among private-sector energy companies.

At the same time, it vastly expands BP's interests in Russian oil and gas discoveries and guarantees its future as a dominant global producer. Thanks to the collaborative efforts of the BP and Accenture teams, the new combined operations of TNK BP offer potential savings, synergies and added growth totaling $7.5 billion. This now positions TNK BP as the dominant downstream force in Eastern Europe with 20 percent of the Moscow area fuel market.