BP to sell TNK-BP stake to Rosneft
Rosneft and BP are preparing to announce a deal that could give the British oil company a stake of between 16 and 20 percent in the state-controlled Russian energy firm, sources familiar with the situation said.
The agreement, which has yet to be finalized but which could be made public on Monday or Tuesday, folds BP's half of TNK-BP, Russia's third-largest oil company, into Rosneft, in exchange for cash and Rosneft stock.
It allows BP to end a stormy relationship with its partners in the venture, AAR, and to pursue closer ties to a Russian government that exerts a much
tighter hold on the oil industry than in it did in the 1990s when BP first invested there.
BP board has approved a bid to sell their 50% stake in TNK-BP oil company to Russia’s Rosneft oil giant. Some sources claim that the deal was worth $18-20bn and, at the same time, BP is expected to get a 13% stake in Rosneft.
The mega-deal, as some call it, is almost sealed. Now, the parties are said to be negotiating the details while some sources claim that the major provisions have already been agreed.
TNK-BP was estimated to be worth $56 billion and BP will get $28 billion for its 50% stake. The offer is a split of cash and shares and BP also plans to increase its stake in the future when part of Rosneft state-owned shares is privatized.
Moscow is also negotiating a deal to buy AAR's (Alfa Access Renova) stake in TNK-BP for $28 billion. It is expected to get capital to buy out both AAR and BP's stakes from a bank pool.
The deal will be beneficial for Rosneft, even despite debt burden, says analyst of Investcafe company Grigory Birg.
"Rosneft can now sign a partnership deal with BP and complete the share swap which AAR blocked last year. TNK-BP joint venture also has vast resources and many greenfield projects which can boost oil output. TNK BP also has plenty of gas projects and Rosneft will benefit new gas assets."
Experts say that TNK-BP is a treasure trove of professional top managers. It is Russia’s third largest and most efficient company with modern management. Its CEOs are oriented to Western standards and can adjust the company’s policy even amid the bickering of its shareholders. Such an experience will strengthen Rosneft. TNK BP is also famous for its cutting-edge exploration technologies.
Analyst Mikhail Subbotin from SRP-Expertise comments:
"A business merger always means a merger of experience. In a long-term prospect, Rosneft-TNK would be a powerful company, highly competitive in terms of exploration and market expansion. TNK-BP always had effective management and showed great profits."
The Rosneft-BP and Rosneft-AAR deals are unofficially to be announced within the next week.