Friday 23 February 2018

BP on verge of €23bn deal with Russian energy giant Rosneft

Getty Images
Getty Images

Jamie Grierson

BP is on the verge of a deal that will see it take a significant stake in what will be the world's largest publicly listed oil producer.

State-backed Russian energy firm Rosneft is looking to acquire BP's 50pc stake in its troubled TNK-BP joint venture in a deal believed to be worth nearly $30 billion (€23 billion).



The cash-and-shares deal would see BP grab a stake of between 10pc and 20pc in Rosneft, which would become the world's biggest publicly traded oil company, with daily crude output of more than three million barrels, upon completion of the deal.



Meanwhile, Rosneft and the four Russian billionaires who own the other half of TNK-BP - known as Alfa-Access-Renova (AAR) - are understood to have signed a memorandum of understanding that would see Rosneft acquire their stake at a later date.



BP has had a fraught relationship with AAR, although the TNK-BP venture is thought to have earned the British firm $19 billion in dividends.



A dispute between BP and AAR effectively sank a proposed tie-up between the British supermajor and Rosneft last year, which included Arctic exploration plans.



Rosneft's chief executive Igor Sechin is understood to be in London to meet with BP boss Bob Dudley to finalise the deal before BP's board meets to consider its options.



Shares in BP were 1pc higher on hopes the company was finally going to pull off a successful move with the Russians.



TNK-BP has exploration and production assets as well as downstream marketing operations in Russia and Ukraine, alongside interests in Brazil, Venezuela and Vietnam.



It is the third biggest oil producer in Russia behind Rosneft, which the state controls, and second-placed Lukoil, which is owned by Russian investors. The business accounted for more than a quarter of BP's production and 90pc of its 2011 dividend.



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