BP (NYSE:BP) (LON:BP) announced Monday that it has entered in advanced talks with the Russian state oil company Rosneft’ NK OAO (MCX:ROSN) for selling its 50 percent stake in TNK-BP, the British energy giant’s Russian affiliate. Monday’s announcement was the first official announcement from the oil company, after several days of speculation of selling its stake in TNK-BP to Rosneft.

BP

As per dealbook.nytimes.com, “Under an offer proposed on Thursday, Rosneft’ NK OAO (MCX:ROSN) would pay up to $28 billion in cash and shares for the TNK-BP holding”, and “BP would gain at least one seat on Rosneft’s board”.  As per terms of the deal, BP will initially remain a minority investor in an oil company controlled by the government of Russian President Vladimir V. Putin, and later it could use its new strategic tie with the Kremlin to secure other business in the country.

Despite being marred by issues between BP and its Russian partners, TNK-BP, it has been enormously profitable, earning $19 billion in dividends for BP since 2003, as the company helped improve operations at the Russian affiliate through sharing technology and management skills. Currently, TNK-BP accounts for almost 25 percent of BP’s global production, or roughly as much oil as BP (NYSE:BP) (LON:BP) pumps in the United States, including Alaska.

Acquiring both BP’s (NYSE:BP) (LON:BP) stake, and that of the handful of Russian billionaires who control the other half of TNK-BP, Russia’s third-largest oil company after Rosneft and Lukoil, could make Rosneft the world’s largest publicly traded oil company, with production of about 4.5 million barrels a day.

 ‘‘We have seen this remarkable strengthening of the influence of Rosneft’ NK OAO (MCX:ROSN) and Sechin personally ’’ said John Lough, a former TNK-BP executive, who is a Russian specialist at Chatham House, a British research organization.

‘‘At the moment, the way the Russian system works is by achieving a distribution of influence and access to rents’’ — or windfall profits — ‘‘to achieve overall equilibrium on which the state is based,’’ he said. ‘‘Sechin’s apparent strengthening of influence could come at the cost of maintaining that balance. It could upset the apple cart’’.

The British oil company has been selling its assets in countries from Venezuela to Vietnam. Recently it sold its Texas refinery for $2.5 billion to Marathon Petroleum Corp (NYSE:MPC). The divestments since 2010 have fetched BP more than $35 billion.

The deal has been approved by BP’s (NYSE:BP) (LON:BP) board, but still ‘a few local issues’ have to settle out in Russia before an announcement could be made.