Rosneft yesterday played down prospects of the imminent announcement of a mega-deal to acquire BP’s half of the TNK-BP joint venture, making Rosneft the world’s biggest public trader of oil.
State-owned Rosneft needed to wait until a 8am GMT deadline before making a formal proposal for BP’s stake in London during talks between company chief Igor Sechin and the British group’s executives.
The deal would bring the Russian state its greatest control of the oil sector since the Soviet era and re-define how the market operates under Russian President Vladimir Putin.
The Financial Times reported that the cash-and-shares deal would be worth US$28 billion, with BP receiving a stake of between 10 and 20 percent in Rosneft — up significantly on its current 1.4 percent holding.
The Financial Times said the BP board would consider Rosneft’s offer today.
However, Rosneft stressed that both deals were still only at the draft stage and did not imply necessary agreement.
“We continue to evaluate a number of opportunities and will update the market as and when appropriate,” a Rosneft spokesperson said in an e-mailed statement.
Rosneft and the four Russian billionaires who own the other half of TNK-BP had signed a memorandum of understanding on Tuesday that would result in Rosneft acquiring the Russian tycoons’ stake at a later date.
The billionaires have experienced strained ties with the Russian government and were forced to concede that a company run by them and Rosneft jointly would most likely fail to function and require them eventually to sell their stake.
Various reports put the value of the deal with the tycoons — to be most likely completed after the BP swap is set in place — at US$28 billion to US$29 billion.
The expected arrangement would make Rosneft the world’s biggest publicly traded oil producer with daily crude output of more than 3 million barrels a day — far more than current leader ExxonMobil’s 2.3 million barrel figure.
It should also relieve tensions at one of Russia’s most profitable oil companies — a venture BP launched in 2003 in order to expand its presence in a country with the world’s biggest oil and natural gas output.
TNK-BP has generated tens of billions of dollars, but tensions reached breaking point last year over BP’s efforts to strike a separate Arctic oil tie-up with Rosneft.
That Arctic deal collapsed after being blocked by the tycoons in a shock move that only deteriorated their relations with both Rosneft and BP still further.
Meanwhile, BP chief Bob Dudley has insisted that he still sees a future in Russia and has been willing to cede shares in TNK-BP in favor of a profitable long-term arrangement with Rosneft.
The deal should also see the state assert its greatest control of Russian oil sector since the Soviet era and work toward Russian President Vladimir Putin’s dream of national giants effectively running sectors of the economy for the Kremlin.
Finances still stand in the way of the arrangement because they would require Rosneft to go into heavy debt.