TNK-BP Billionaires Bidding to Buy Half of BP's stake

The latest developing story on the oil and gas front is that the billionaire partners holding a 50 percent share in TNK-BP  (MICEX-RTS: TNBP) are going to bid for BP plc (NYSE:BP)’s half  of the share. The entire stake amounts to a total of $32 billion, by last year’s estimates, and the strategy would be to bid rather than just simple buying.

TNK-BP  (MICEX-RTS: TNBP) is Russia’s 3rd largest crude oil producer and is ranked among the top ten of the world’s major oil producers. The ownership of the company is divided between BP and Russian business tycoons represented by AAR (Alfa-Access-Renova) consortium.

In early June of this year, BP PLC (NYSE:BP) had voiced the intention to sell its stake after it received proposals from interested buyers. The reasons behind letting go of its major share in the venture is due to the conflicts the oil giant was having with its Russian partners. TNK-BP generates a one-third to one-fourth of the company’s revenues. AAR intends to notify BP of its interest by July 19th . BP spokesperson is saying that although they have not received a formal expression of interest from AAR, they will certainly look into it thoroughly.

The reports that the soviet-born billionaires are interested in buying BP’s stake were rumbling since before BP announced its intention to sell. Last year BP and Rosneft’ NK OAO (MCX: ROSN) (LSE: ROSN) were willing to buy out AAR’s share but the offer was rejected and since then AAR has been blocking all attempts at an alliance between BP and Rosneft. It is clear that the other interested party in BP’s share would be Rosneftegaz (Rosneftegaz holds 75% share in Rosneft). If indeed BP sells its share to Rosneft, it will become a rival to Russia’s state-owned Gazprom. Gazprom OAO (PINK:OGZPY) (FRA:GAZ) (ETR:GAZ) is the largest natural gas extractor of the world, and the biggest company in Russia.

Analysts like Armstrong with Brewin Dolphin Ltd., London are looking unfavorably at BP’s plans to let go of its stake. They see it as a ‘sore’ in the business and a risk that will put, BP Chief Executive Officer Bob Dudley’s job on the line.

It is worth noting that Rosneft has already sealed a major deal with BP’s competitor, Exxon Mobil Corporation (NYSE:XOM) in mid of April. The two companies will establish a long term strategic partnership that includes oil exploration in Western Siberia,  Iraqi crude oil ventures and joint deals on North American unconventional energy resources. If BP does end up selling its share to Rosneft, a major stakeholder of in the world’s oil and gas monopoly will emerge.