BP (BP.L) has approved its share of an Arctic oil exploration pact with Rosneft (ROSN.MM) to cede half-owned affiliate of TNK-BP (TNBP.MM) in a compromise with the Russian partners who fought in one part of the action. A parallel 16 billion U.S. dollars stock swap deal between the British oil company and the Russian state-controlled oil group Rosneft (ROSN.MM) can now proceed, the TNK-BP TNKBP.UL partners said in a joint statement, citing a decision by a arbitration panel.
Both movements are subject to the approval of Rosneft itself. Rosneft declined to comment on the prospect of changing partners, but the Russian deputy prime minister Igor Sechin and Rosneft board has previously said Rosneft would not want TNK-BP to be involved in the Arctic deepwater offshore deal because they have no expertise.
The owners of the other half of TNK-BP expressed their satisfaction that muscled in on a deal that was the first major strategic move for BP’s U.S. last year after the Gulf oil spill disaster shattered its reputation, and hammered the stock.
“We welcome today’s developments,” said Stan Polo Vets, chief executive of Alfa Access Renova (AAR), the consortium that represents the quartet of billionaire shareholders.
“Today’s agreement is a good way forward for achieving these priorities and opens up valuable expertise to bring technology and BP’s offshore exploration in Russia.”
Rather unsatisfactory
TNK-BP has no Arctic offshore exploration experience of its own, but as the third largest oil company in Russia with its Russian oil fields mature owners do not want to miss the great new Arctic perspective.
BP shares rose 3.1 percent to 436.5 pence on the news, but some analysts were not convinced of the workability of the plan, even if Rosneft agree.
“The experience of exploring these areas in BP, not in TNK-BP. They could get around that by sending people in TNK-BP, but it kind of dilutes BP upside, not only in the sense you get only the half of what the reconnaissance, but even these are valuable people who can be used elsewhere, “said an analyst who will not be mentioned.
“It is all rather unsatisfactory. To continue with the same BP Rosneft share exchange you have to say, maybe what’s the point of doing all that if you only half of what they originally thought to get.”
The legal dispute dates from the time that the BP-Rosneft deal was signed in January, and is another important part of the business plan in which BP would be 5 percent of its equity in exchange for a 10 percent stake in Rosneft.
AAR had challenged the Rosneft-BP pact, saying that BP was required to all Russian companies through its TNK-BP to pursue.
Next legal steps BP has said it has offered to buy its TNK-BP partners to try to end the dispute, and sources close to AAR said in April that BP had offered 27 billion U.S. dollars for the 50 percent owned by TNK-BP of billionaires Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik.
However, sources close to them have said the oligarchs were not interested in selling out.
aource:reuters
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