BP Plc has considered selling its stake in a joint venture in Russia to OAO Rosneft after its billionaire partners blocked a $7.8 billion share swap and Arctic exploration deal with the state-run company, said two people with knowledge of the matter.
By reducing its stake even by one share, BP may be able to remove an exclusivity agreement that gives TNK-BP the right to pursue new opportunities in Russia on behalf of the UK explorer, the people said, declining to be identified because of the sensitivity of the matter.
The share swap, announced in January, collapsed last month after BP’s partners won a legal challenge, claiming the deal violated their shareholder agreement. London-based BP has made no decision about selling any of its TNK-BP shares, said one of the people.
BP’s Russian partners in the 50-50 venture, represented by AAR, would be opposed to Rosneft becoming a shareholder, said Artem Konchin, an analyst at UniCredit SpA in Moscow.
“Rosneft is a partner they would rather not have in the current TNK-BP venture — a major competitor with powerful lobbying resources and very opinionated, someone who AAR would have no ability to influence,” Konchin said.
Rosneft had the biggest intraday gain in more than a week in Moscow, advancing 1.7 roubles to 241.78 roubles as of 11.38 am local time. TNK-BP added 0.2 per cent to 85.61 roubles. BP was down 0.2 per cent in London.
Formal Notice
BP advised its partners, before a May 16 deadline on the proposed share swap expired, that it may seek to sell shares in TNK-BP, the people said. Formal notice wasn’t given, one of them said.
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Rosneft, Russia’s largest oil company, hasn’t discussed buying shares in TNK-BP from BP, said Rustam Kazharov, a spokesman for the company. Toby Odone, a London-based spokesman for BP, declined to comment. The Financial Times reported earlier that a potential sale of BP’s holding in the joint venture is still under consideration.
The previous deal between BP and Rosneft to swap shares and explore the Kara Sea can’t be resurrected, the people said. Any alliance would have to take on a new form, they said.
BP could split its TNK-BP stake with Rosneft and the two companies could then seek to buy out AAR’s stake, said Alexei Kokin, an analyst at UralSib Financial Corp.
Before BP and Rosneft’s deal collapsed, the two companies had agreed to buy out AAR’s half of TNK-BP for $32 billion in cash and BP stock, according to people familiar with the negotiations.
Talks failed after Russian Deputy Prime Minister Igor Sechin, a Rosneft board member, insisted that AAR lift the injunction against the BP-Rosneft deal before a binding agreement on the buyout.
BP and AAR haven’t held talks about a buyout since the deal collapsed before the May 16 deadline, one of the people said.