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BP agrees deal with Rosneft

Oilfield Technology,

BP has agreed a deal with Rosneft whereby it will sell its 50% stake in TNK-BP to the Russian oil and gas giant for US$ 17.1 billion in cash and shares in Rosneft representing 12.84% stake in the company.

BP also intends to use US$ 4.8 billion of the cash consideration to acquire a further 5.66% stake in Rosneft from the Russian government. On completion of the proposed transaction, BP expects to hold 19.75% of Rosneft shares, including BP’s existing holding of 1.25%, and to have received US$ 12.3 billion in cash. At this level of ownership, BP expects to be able to account for its share of Rosneft’s earnings, production and reserves on an equity basis. In addition BP expects to have two seats on Rosneft’s nine person main board.

Signing of the definitive agreements is conditional on the Russian government agreeing to the sale of the 5.66% stake in Rosneft and it is intended that the TNK-BP sale and this further investment in Rosneft would complete on the same day.

BP’s chairman Carl-Henric Svanberg said, “This is an important day for BP. Russia is vital to world energy security and will be increasingly significant in years to come. Russia has also been an important country for us over the past 20 years. Our involvement has moved with the times. TNK-BP has been a good investment and we are now laying a new foundation for our work in Russia.”

Adapted from press release by Peter Farrell.

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