A possible deal by state-controlled oil giant Rosneft to buy half or all of the TNK-BP joint venture between British oil giant BP and four Russian billionaire shareholders poses no threat to market competition, Energy Minister Alexander Novak said on Thursday.
Asked if a possible purchase of TNK-BP by Rosneft could monopolize the domestic oil market, Novak replied: “I don’t think so. There is still BP, other shareholders and quite a normal market structure. There will be no monopoly position as there is quite tight competition in a large market.”
TNK-BP is owned on a parity basis by British oil giant BP and the Alfa Access Renova (AAR) consortium of four Russian oligarchs.
The Russian oligarchs whose joint venture with BP has been plagued by years of in-fighting had reached preliminary agreement on a deal to sell their stake to Rosneft for about $28 billion, Sky News reported on Wednesday, citing sources.
“They are understood to have signed an outline agreement with Rosneft in Moscow last night,” the channel said.
Meanwhile, The Wall Street Journal reported on Wednesday, citing its sources, BP was also close to a deal to sell its 50 percent stake in TNK-BP to Rosneft for about $25 billion in cash and shares, in a deal the British oil giant hopes will secure its position in a vital energy market.
“A deal for all of TNK-BP, Russia's No. 3 oil company by output, would reshape the oil industry in the world's largest energy producer, shifting ownership further into Kremlin hands,” the paper said.
A source familiar with the matter told Prime news agency AAR had no plans to make an offer to BP to repurchase its stake in TNK-BP.
In the meantime, Rosneft said it was still considering various options for purchasing stakes in TNK-BP.
“The company continues to examine various action options and will inform the market as and when necessary in an established procedure,” a company spokesman told Prime news agency.
Rosneft’s plan to buy BP’s 50 percent stake in TNK-BP was reportedly backed by President Vladimir Putin and may be part of a larger compromise with Putin’s key ally Igor Sechin who oversaw Russia’s energy sector in the previous government and was recently appointed as Rosneft head, analysts said.
Putin backed the deal in September during a meeting with Sechin and BP executives, Sechin told The Financial Times last Wednesday .
Putin’s backing was revealed just days after Prime Minister Dmitry Medvedev signed a government directive on October 4, stripping Rosneftegaz, the holding company for Rosneft and Gazprom, of $1.6 billion in dividends. The directive was prepared by Deputy Prime Minister Arkady Dvorkovich, a Sechin rival and a key advocate of a government plan to privatize assets in the energy sector.
Sechin, who chairs the Rosneftegaz board of directors, had wanted to use Rosneftegaz’s dividends to consolidate state energy assets, including the RusHydro hydropower holding company and electric power trader RAO UES.
“There is a major confrontation, or debate, going on between the deputy prime minister [Dvorkovich] and Sechin, and TNK-BP is part of this,” the Moscow News English-language newspaper quoted Dmitry Abzalov, a senior analyst at the Center for Political Trends, as saying.
“The deal with TNK-BP would be one in Sechin’s favor, while the dividends directive clearly boosts the position of [Medvedev’s] government,” Abzalov said. The dividends could be used to finance several of Putin’s campaign promises in the social sphere, such as pension reform.