BP plc (ADR) (NYSE:BP) shares jumped as much as 4.3 percent, to 452.70 pence, after Sky News reported that Russia’s biggest oil producer, Rosneft, has negotiated a deal with the billionaire partners to acquire their 50 percent stake in TNK-BP. According to the sources, the agreement was reached between Rosneft and AAR, the consortium that owns 50 percent stake in TNK-BP, on behalf of Russian billionaires. The other 50 percent stake is owned by British Petroleum.
In fact, BP plc (ADR) (NYSE:BP) was planning to sell its own stake in the troubled Russian oil producer, after its relationship soured with AAR. In June, British Petroleum announced that it may sell off its stake in TNK-BP, after several clashes with its partner AAR. The dispute grew so much, that in the summer of 2008, Bob Dudley, the then chief executive of TNK-BP and now CEO of BP, was forced by AAR to resign from his job and leave Russia.
TNK-BP has not had a full board since December last year, so the company hasn’t paid any dividends in 2012. Last year, BP and Rosneft made a combined offer of $32 billion for AAR’s half of TNK-BP, but the Russian billionaires rejected the offer. The billionaires had also blocked BP plc (ADR) (NYSE:BP)’s exploration agreement and a $7.8 billion share swap with Rosneft. They argued that the British oil company was required to explore any opportunity in Russia exclusively through TNK-BP. At one point, AAR also placed a bid to acquire BP’s stake in TNK-BP, but the deal didn’t work out.
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The acquisition of AAR’s stake by ROSNEFT OIL CO (PINK:RNFTF) increases the possibility of Rosneft ending up owning the whole of TNK-BP, because BP had already announced plans to exit. But the British company may now want to stay in a joint venture with Rosneft, as its enemy, AAR, will be gone. According to Bloomberg, Rosneft is working with some non-Russian banks to raise $15 billion in loans. If Rosneft acquires the whole venture, it will become the world’s biggest oil company, with daily production of 4.5 million barrels of crude oil. Even if it gets only half of TNK-BP, Rosneft will produce 3.29 million barrels of crude oil every day. That still puts it on the top spot, because PetroChina Company Limited (SHA:601857) produces only 2.43 million barrels a day.
The Russian government owns 75 percent of Rosneft.