BP on cusp of $25bn deal to secure stake in Rosneft
OIL giants Rosneft and BP are preparing to announce a deal worth over $25bn (€19.1bn) that could give the British oil company a stake of between 16 and 20pc in the state-controlled Russian energy firm.
The agreement, which has yet to be finalised but which could be made public today or tomorrow, 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 it did in the 1990s when BP first invested there.
TNK-BP is highly profitable and provides a quarter of BP's total production, but its fields are mature, and the Soviet-born business tycoons who own the other half through AAR were in the way of BP's search for growth in oil-rich Russia through closer ties with Rosneft and its powerful boss.
Should the deal be finalised and survive a months-long Russian government approval process, BP's overall exposure to Russian oil would be lower, but the holding could secure it seats on the Rosneft board and closer ties than any of its rivals to Igor Sechin, the chief executive of Rosneft.
The deal gives Rosneft extra output and cash flow to finance exploration of Russia's vast reserves to replace ageing and depleting fields.