LONDON (dpa-AFX) - British energy giant BP plc (BP, BP_UN.TO, BP.L) is looking to sell down about half of its 50 percent stake in its Russian joint venture TNK-BP Ltd. to Russian state-run oil company OAO Rosneft, according to reports on Monday. The threatened move is seen as a negotiating tactic by BP in order to bring back AAR consortium to the discussion table to salvage BP's deal with Rosneft to explore for oil in the Russian Arctic.
Alfa-Access-Renova or AAR consortium is a group of Russian billionaires who are the co-owners of BP's Russian joint venture TNK-BP, the third largest oil company in Russia.
According to the BP-Rosneft deal announced in mid-January, a $16 billion share swap would give Rosneft a 5 percent stake in BP and allow BP to jointly explore and develop parts of the Russian Arctic with Rosneft. In turn, BP would get 9.5 percent of Rosneft's shares in the deal.
The arctic development project comprises three license blocks that were awarded to Rosneft in 2010 and covers about 125,000 square kilometers in a highly prospective area of the South Kara Sea.
AAR has always contended that BP's deal with Rosneft is a violation of its shareholder agreement with BP for the Russian joint venture. AAR had proposed that both the share swap and the Arctic development project with Rosneft should be transferred from BP to the TNK-BP joint venture.
However, BP was prepared to explore the possibility that it be replaced by TNK-BP in the Arctic development project, but was not ready to change the terms of its share swap.
An arbitration tribunal was convened to resolve the issues raised by AAR relating to the share swap agreement and Arctic exploration arrangements agreed between BP and Rosneft and the parties' obligations under the TNK-BP shareholders' agreement.
The tribunal blocked BP's proposed $16 billion share swap deal in late March, ruling that the Arctic alliance could proceed if TNK-BP took BP's place in the project, and the extended deadline for reaching a deal was May 16. However, Rosneft was not interested in joining with TNK-BP, as it lacks experience in offshore drilling.
BP and Rosneft then reportedly offered to buy out AAR's 50 percent interest in TNK-BP in return for cash and stock in both companies, but failed to reach an agreement. The deal was valued at $32 billion.
BP has reportedly now orally informed AAR on its intention to sell its 50 percent stake in the TNK-BP joint venture over the phone and in a meeting in London earlier in the day. BP is now expected to soon send a formal letter to announce its intention to ARR, being the initial step for such a sale to happen.
Meanwhile, the report said that the action could only be a tactic by BP to bring back the Russian billionaires to the negotiating table. BP could still decide not to follow through on its plans to sell its stake. Exactly a month back, BP had used the same tactic to bring ARR to the negotiating table.
BP closed Monday's regular trading session at $43.94, down $0.69 or 1.55 percent on a volume of 6.77 million shares. BP.L closed on the LSE at 450.90 pence, down 3.45 pence or 0.76 percent on a volume of 22.60 million shares.
Copyright RTT News/dpa-AFX
© 2011 AFX News
