Russia’s state-owned oil producer, Rosneft’ NK OAO (MCX:ROSN), have expressed its interest in buying BP plc (LON:BP) (NYSE:BP)’s stake in TNK-BP as the U.K. oil company seeks to exit the venture jointly owned with a group of billionaires. BP’s stake in Russia’s third-largest oil producer is estimated to have a fair value of $23 billion, according to UBS AG.
TNK-BP is Russia’s third-largest oil company; it was 50:50 joint venture between BP and AAR, the consortium representing the tycoons. This investment was made to tap into the country’s vast energy reserves, a decade ago.
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According to Rosneft Chief Executive Igor Sechin, “Rosneft has an established expertise and track record in managing large assets and considers the potential acquisition of BP’s participation in TNK-BP to be an attractive commercial proposition.”
According to Chris Weafer, chief strategist at Troika Dialog in Moscow, sale of TNK-BP stake to Rosneft may open other opportunities for BP in Russia. It was due to the efforts of BP’s CEO, Bob Dudley, that the talks of sale are going through, as he was the one who tackled other shareholders, who last year blocked an alliance between the British company and Rosneft. Weafer said in an e-mail today, “Having agreed to a deal with the state, it would then get access to other major projects in Russia.” AAR, the group representing the billionaires, last year blocked a $7.8 billion share swap between Rosneft and BP, along with a deal to explore in Russia’s Arctic, citing it violated the TNK-BP shareholder agreement. Then the group also rejected a joint offer from Rosneft and BP to buy their half of TNK-BP for $32 billion.
AAR group led by banking-to-retail tycoon Mikhail Fridman, has already expressed its interest in buying half of BP’s stake in TNK-BP that would increase its holdings to 75 percent of the venture.
“My opinion is that the end deal is going to be AAR exiting, rather than BP, because I really don’t see a way for Sechin to work with AAR,” said one analyst from a Western bank in Moscow, “I think the end deal is BP and Rosneft together buying out the AAR stake, 25 percent each. That could easily be financed by Rosneft and BP.”
Rosneft shares gained 1.4 percent Moscow’s Micex exchange while TNK-BP Holding gained as much as 7 percent before it slipped 0.6 percent to 78 rubles. BP gained 1.45 percent in London.
Moving forward with the deal both parties have agreed to commence negotiations and signed a non-disclosure agreement.