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Rosneft can become the largest world oil producing company

October 18, 2012, 12:22 UTC+3

The Russian oil company agreed with both stockholders of TNK-BP to buy out their stakes

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Rosneft can become the only owner of TNK-BP. The Russian oil company agreed with both stockholders of TNK-BP to buy out their stakes. The Russian state-run oil company can buy out a stake in TNK-BP not only form its British owner BP, but also Russian shareholders – the investment consortium AAR. If this happens, Rosneft can become the largest world company for the reserves and production of oil.

The deadline for bids to buy out a 50% stake in TNK-BP Limited, which BP owns, expires on Thursday, the Vedomosti daily cited a spokesperson of the British oil company as saying. On Wednesday, a 90-day deadline expired, during which BP was to hold decent negotiations on a deal with its current partner AAR (Alfa Group – Access Industries – Renova, which owns the remaining 50%). Now BP is free of liabilities and can sell its stake in the company to anyone.

AAR decided not to buy out the BP stake in the joint venture, a source close to the Russian stockholders of the consortium told the Vedomosti daily. Initially the consortium was planning to swap its stake in TNK-BP partially for the BP shares and the cash, then stated that it is ready to buy a half of its stake in TNK-BP (25% that AAR co-owner Mikhail Fridman estimated at 7-10 billion dollars). When it became clear that the second candidate – Rosneft intends to buy the whole BP stake, the consortium AAR took the same decision, the source said. Rosneft is negotiating with the bank to attract up to 15 billion dollars, the business news agency Bloomberg reported a month ago. According to Loan Radar, 14 banks are involved in the negotiations. A top manager in a major bank confirmed that the state-run company asked about an exclusive deal and Rosneft President Igor Sechin is participating personally in the negotiations with the banks.

It was reported on Wednesday that Rosneft is negotiating the buyout of a stake from the second TNK-BP co-owner as well. The consortium AAR can receive for its stake 28 billion dollars (17.3 billion pounds), the British television channel Sky News reported on Wednesday. According to Sky News, the negotiators signed a framework agreement to this effect in Moscow on Tuesday night, a source close to TNK-BP confirmed to the Vedomosti daily. According to the source, this is a little larger sum – 18 billion pounds (29 billion dollars).

If Rosneft buys the TNK-BP full stock, it will become the largest oil company for the level of oil production – 4.5 million barrels daily, and its closest rival will have the daily oil production level of 2.43 million barrels.

In case of buying the TNK-BP full stock Rosneft will get a chance to become unattainable in terms of the oil reserves and production, the Moskovsky Komsomolets daily cited head of the analytical department of the investment company Zerich Capital Management Nikolai Podlevskikh as saying. “According to the oil production level Rosneft will have no equals in the world,” he believes.

The Rosneft deal is to be coordinated with the Russian government, the newspaper reported. Meanwhile, Rosneft has already received the preliminary approval from President Vladimir Putin to buy a 50% stake in TNK-BP, Igor Sechin said recently.


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