BP Plc will boost its holdings in the former assets of Yukos Oil Co. through its share exchange with state-run oil producer in Russia, two weeks after the former chief of Yukos, Mikhail Khodorkovsky’s sentence was extended by six years.
BP agreed on 14 January to $ 7.8 billion of stock exchange for 9.5 percent of OAO Rosneft, the largest Russian oil producer, after the acquisition of Yukos assets in 2007. The deal will provide access to untapped Arctic offshore oil and gas reserves as London-based BP sells assets to pay for oil spill last year in the Gulf of Mexico.
Khodorkovsky, once Russia’s richest man, calls the charges against him retribution for political opposition to the then President Vladimir Putin. Putin, now prime minister, has denied involvement, said it was a matter for the courts and that “a thief should sit in jail. The U.S. and European governments said last month’s conviction raised concerns about Russia’s commitment to the rule of law.
“This is BP’s offshore ticket to the Russian Arctic,” Yuri Kogtev, head of the Moscow-based oil and gas research and consulting RusEnergy, said by telephone. The share swap is a condition imposed by the Russian government, he said. “I would not say BP was hunting Yukos assets.”
Yukos Assets
Rosneft tripled production at night in 2004, one year after Khodorkovsky was arrested while refueling his plane in Siberia, with 9.4 billion U.S. dollars acquisition of largest unit Yukos’s sold by the state to a portion of a tax bill that ultimately more than 30 billion U.S. dollars to recover. Rosneft acquired most of the remaining assets of Yukos on bankruptcy auctions in 2007.
BP chairman Carl-Henric Svanberg declined to comment on the purchase of Yukos assets, Rosneft in an interview on January 14.
Khodorkovsky was convicted of money laundering and embezzlement of oil, extending its previous eight years in prison for tax evasion and fraud crimes by about six years. In the longer term, will stay in prison after the 2012 presidential elections, which Putin could return to office.
Yukos lawyers and former executives have said that the State expropriated assets of the company, once Russia’s largest oil exporter, the struggle for the sale of assets to undo and Rosneft’s 2006 listing of the shares in London to halt. BP bought a 1.3 percent stake in the initial public offering.
TNK-BP Russian joint venture owned by BP and one group of billionaires bid for a 9.4 per cent stake in Rosneft held by Yukos in the first in a series of liquidation sales in 2007, saying it was a strategic attempt to to build ties with the state oil company. Rosneft outbid TNK-BP shares.
Yukos Risk
Former Yukos managers and shareholders continue to fight for compensation, filing a suit 98 billion U.S. dollars in the European Court of Human Rights, and a $ 100 billion case in Permanent Court of Arbitration in The Hague. The case of the human rights court hearings finalized in March 2010 and is a decision problem this year.
BP shareholders should be concerned that once again the company invested in a deal with Rosneft on the assets that have a significant demand for protecting property Rosneft’s, “said Claire Davidson, an outside spokeswoman for Yukos Capital, run by former Yukos managers said in an e-mail.
Rosneft and BP’s lawyers studied possible risks, Rustam Kazharov Rosneft spokesman said by telephone. “Our attorneys monitor everything,” said Kazharov. “If there was even a threat of BP investors, they would never agree.”
BP and Rosneft worked together for over 12 years, forming an alliance to explore from Sakhalin Island in Russia Far East in 1998, when the state produced about 250,000 barrels per day. Last year, Rosneft produced 2.3 million barrels per day, according to the Department of Energy statistics CDU TEK unit.
“Rosneft was a mess, became attractive when the best-run Russian firm, Yukos acquired, ‘said Christine Tiscareno, private analyst at Standard & Poor’s in London.
source:bloomberg
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