The second Russian private oil company TNK-BP will be bought by the Russian state-run oil giant Rosneft, which will consolidate its full stock within six months. The deal will be the largest in the history of Russian business, Rosneft will pay 55 billion dollars, including 45 billion dollars in cash for the status of the largest world oil company. The British oil corporation British Petroleum (BP) will receive 17 billion dollars from the sum, and BP will spend partially the foresaid funds for the Rosneft shares becoming its largest private stockholder and 28 billion dollars to the AAR consortium.
On Tuesday, Rosneft CEO Igor Sechin met with Russian President Vladimir Putin to tell him about one of the largest deals in the history of Russian business. The Russian state-run oil company is planning to take over fully the private company TNK-BP, which is ranked third among the Russian oil companies (after Rosneft and LUKOIL) for the oil production level, the Kommersant daily reported.
Rosneft will buy a 50% stake in TNK-BP from BP for 17.1 billion dollars in cash and a 12.84% Rosneft state-owned stake. Meanwhile, BP proposed to the state-run company Rosneftegaz (about 75% of Rosneft stock) to buy a 5.66% Rosneft stake. The proposal should be considered before December 3. Both deals are planned to effectuate in the first quarter of 2013. So, with due account of a 1.25% BP stake in Rosneft the British company will receive a 19.75% stake in Rosneft. Rosneft is planning to fund the deal from its own and borrowed funds. The Russian state-run oil company did not note who will be the creditors.
Rosneft also confirmed the reports that the company is planning to buy a remaining 50% stake in TNK-BP from Russian stockholders – the consortium AAR (Alfa Group, Access and Renova) for 28 billion dollars with “the fulfilment of several conditions.”
“With due account of the Rosneftegaz shares the deal will reach 61 billion dollars,” Igor Sechin said. “This deal will be the third largest world deal,” Sechin stated without commenting on the first two deals. Vladimir Putin called the deal good and major.
The deal with BP has two stages, the Vedomosti daily noted. The British oil company will receive 17.1 billion dollars and a 12.84% Rosneft state-owned stake for a 50% stake in TNK-BP, both companies said in their statements. Then BP will buy out another 600 million Rosneft shares (5.66%) from the state-run company Rosneftegaz for 4.8 billion dollars. The British company has already made a relevant proposal, and Rosneftegaz can accept it before December 3. It is expected that both plans will be finalized simultaneously in the first half of 2013. After that the BP share in Rosneft will grow from a current 1.25% stake to 19.75% and will receive 12.3 billion dollars from the deal. The British oil company will become the second largest Rosneft stockholder after the Russian government and will be granted two from nine seats in the Rosneft board of directors.
Rosneft will produce about 200 million tonnes of oil annually in Russia after the TNK-BP purchase, the RBC daily reported. Igor Sechin noted that the explored reserves will reach 38.3 billion barrels, the production of liquid hydrocarbons will reach 4.1 billion barrels daily. He finds the concerns that Rosneft will monopolize the market groundless.
After the effectuating of the deal the state stake in Rosneft will reach about 69%, the newspaper reported.