BP (BP.) has confirmed the details of its agreement with Rosneft for the sale of its 50 per cent stake in the troubled TNK-BP joint venture. BP and Rosneft have agreed terms which will see the Russian state owned oil giant pay $17.1bn (£10.7bn) in cash and award shares equivalent to a 12.84 per cent stake in Rosneft. BP will also use $4.8bn of the money received to buy a further 5.66 per cent stake, taking its total holding in Rosneft at 19.75 per cent, including its existing 1.25 per cent stake. This allows BP to retain a strong foothold in Russia through an alliance with the country’s leading, state-backed energy company, as well as provide a substantial cash injection to help pay off the expensive Deepwater Horizon disaster.
Still, reports from the FT suggest there is concern among some shareholders that BP’s new partner could prove just as problematic as its former partners at TNK-BP, the AAR consortium of Soviet-born oligarchs. Rosneft is closely linked with the Kremlin and President Vladimir Putin, and one wonders how much say - if any - BP will have in its corporate governance, despite talk of BP representation on the board.
Rosneft has already made a separate approach to the AAR consortium - reportedly valuing their interest at $28bn - but the final terms are still being worked out and may never be disclosed.
This latest twist in the long-running TNK-BP saga comes after Rosneft's chief executive, Igor Sechin, flew into London to make a formal approach to BP late last week. If completed, the deal would confirm Rosneft as the biggest oil producer in the world, ahead of the US’s ExxonMobil.
