BP board considers Rosneft bid for TNK-BP

LONDON: Rosneft is poised to secure a tighter grip on Russia’s oil industry by buying BP’s 50% stake in TNK-BP, the country’s third largest producing company. The British oil company’s board met yesterday to consider a cash and stock offer worth over US$25bil. It was not tied to asset deals or exploration tieups with Rosneft although those might come in the future, sources said.

Rosneft has already made an offer of around US$28bilto BP’s equal partners in TNK-BP, the AAR consortium owned by four Soviet-born tycoons, according to the sources in London, Moscow and elsewhere.

Other sources familiar with BP, Rosneft, their advisers and financiers said the terms of two offers might differ, but that they valued the whole of TNK-BP at over US$50bil.

Some British newspapers reported that BP’s chief executive Bob Dudley would be recommending the offer to the board.

“The offer is in. It’s a split of the two,” (cash and shares). It’s a clean offer and there’s no other plan on the table,” said one source. “If he thinks it’s the best offer Dudley will recommend it but the board may say we need to reconvene and consider this aspect or that. It’s not an automatic tick in the box.”

Over the past few days sources painted a picture of a three-way deal that could emerge over the coming weeks, with some details to be hammered out during a visit to London this week by Rosneft chief executive Igor Sechin. “BP is reviewing options (with regard to the offer),” said one source.

The sources said BP and the four tycoons could emerge with minority stakes in an enlarged Rosneft plus billions of dollars in cash in exchange for the highly profitable company.

The combined group would dominate Russia’s increasingly state-controlled oil industry.

President Vladimir Putin has been determinedly regaining state control of assets that passed cheaply to a small group of businessmen when privatised in a hurry in the 1990s.

Rosneft’s absorption of another oil firm, Yukos, and the imprisonment of its former owner Mikhail Khodorkovsky in the mid-2000s was the biggest step in this process until now.