MOSCOW, March 23: The head of oil giant BP discussed the group's future operations in Russia with President Vladimir Putin on Friday as BP joint venture TNK-BP said it would participate in a sale of assets of the stricken company Yukos.

Putin hosted BP chief executive John Browne and his designated successor Tony Howard at his residence outside Moscow.

BP “is actively developing in Russia and there has been a growth of its reserves, production volume and profit,” Putin was quoted by RIA Novosti as telling the executives.

Earlier a TNK-BP spokesman, Peter Henshaw, told AFP the company would participate in an auction next week of a 9.44-per cent stake in state-controlled Rosneft owned by stricken giant Yukos.

BP owns 50 per cent of TNK-BP, with the other half owned by Russia's Alfa Group.

Henshaw said TNK-BP had lodged a deposit to participate in Tuesday's auction of the Rosneft stake, part of a sell-off of assets of Yukos, whose former head Mikhail Khodorkovsky is in jail on embezzlement charges.

“We're interested in the asset and we intend to participate in the auction,” Henshaw told AFP, adding that he was unaware of the agenda of Friday's meeting.

At the auction TNK-BP will come up against Rosneft itself, which is also bidding for the stake.

An analyst at Moscow-based Alfa-Bank, Konstantin Batunin, said that TNK-BP was unlikely to win the Rosneft stake up for auction and that its participation was more intended to dignify the process.

The sell-off of Yukos assets has been controversial as the West heavily criticised the break-up of the company and Khodorkovsky's jailing in what were seen as heavily politicise inquiries.

Yukos' former management, a number of whom have fled the country, has denied that the company was bankrupt and needed breaking up and has rejected the charges against it.

BP has been cooperating closely with Rosneft on a number of projects around Sakhalin Island in the Russian Far East and last year spent $1 billion on Rosneft shares in a public flotation.

Batunin said it was the future composition of TNK-BP that would be the subject of Friday's talks with Putin and in particular the possibility of Gazprom taking over Alfa Group's stake.

Russian media have said that Gazprom is seeking a stake in TNK-BP after the Russian gas giant recently obtained a controlling interest in the Sakhalin-2 energy project.

Gazprom has not publicly stated such an intention.

But Batunin insisted the most important issue in Friday's talks is the “likely entrance of Gazprom into TNK-BP by replacing Alfa” and probably taking majority control with an additional share.

“By assisting Rosneft ... the company raises its prestige in the eyes of the Russian authorities,” Batunin said.

Rosneft said earlier it had borrowed $22bn (16.5 billion euros) mainly to invest in Yukos assets.

The starting price for the Rosneft stake at next week's auction is 195.5bn rubles ($7.5bn).

Potential bidders at the auction of Yukos assets had until the end of Friday to register their interest. —AFP