Russia's third-largest oil producer TNK-BP said it has prepared a plan to increase power generation to cover the bulk of what it needs, partly to limit the single largest cost on its books as state electricity tariffs rise.

The government has increased electricity tariffs by around 127% from 2007 to 2011 - more than any other tariff, including transportation - to raise funds to modernise its creaking power grid and draw more revenues to the state budget.

TNK-BP, in which BP and the AAR consortium of four Soviet-born billionaires share equal control, said on Wednesday it was in talks with a number of companies to set up its own power generation.

Mikhail Slobodin, its executive vice-president of gas and power, said a contingency plans calls for a gas-fired power plant that would help increase generation to 85% of the electricity needed for its upstream business by 2020 from around 8% now.

But he added that TNK-BP also hoped the authorities would put the brakes on tariff growth.

"We believe in our government, that they will find a balance," he said.

Konstantin Konstantinov, TNK-BP's energy development department director, told reporters the company had been discussing a pilot project with state power group InterRao , Russian electricity export company Technopromexport (TPE) and investment group Summa.

"The meaning of the project is that our partners, not us, will construct a power station. We would create a joint venture, and we are ready to pass to our partners 75, maybe 100% of shares. We, on our part, would guarantee to purchase power and provide natural gas."

"They don't hear us"

TNK-BP is poised to launch new fields in the Yamal region within a few years and needs to slash costs amid rising tariffs and investments.

Last year, TNK-BP's bills for the power to pump oil and gas out of the ground totalled $960 million, 27% of total costs on average. It consumed 14 billion kilowatt-hours, enough to provide power for a year to a country with a population of 2 million, such as Slovenia, Macedonia or Latvia.

TNK-BP's core, much-depleted deposits located in West Siberia and their development require especially high volumes of power to pump water in and out of the fields in the production of oil.

Russia's Economy Ministry plans to increase electricity tariffs for industrial consumers by 6.5 to 7.5 % - in line with inflation - this year and by a further 9 to 11% in 2013 and 2014 each.

"They don't hear us," Konstantinov said about the authorities' unwillingness to rein in tariff growth.