BP in bid to salvage Russian deal
16 May 2011
According to the Wall Street Journal BP Plc is making a last-ditch effort to buy out the Russian partners in its joint venture TNK-BP Ltd in a deal potentially worth $30 billion or more.
The deal would help salvage the British oil giant's efforts to enter into a landmark Arctic alliance with Russian state oil company Rosneft, according to the Journal, which cited people familiar with the situation.
Through a series of transactions with BP, Rosneft would get the 50 per cent stake in TNK-BP presently owned by the billionaire partners, according to the report. The report adds that the partners would in return get cash and substantial stakes in both BP and Rosneft.
This would clear the decks for BP and Rosneft to go ahead with a multibillion-dollar exploration plan for oil in the Arctic Sea north of Russia, a deal that ran into opposition of the from BP's existing Russian partners in the TNK venture.
According to the Journal, a preliminary agreement could be announced as early as today, as BP faces a deadline to complete the arctic alliance with Rosneft, including a $16 billion exchange of shares between the two companies.
Even as the talks continue, they could break down, the report says and a failure would possible spell the end of the road for BP on closing the Arctic deal because Rosneft has so far opposed a compromise plan that would allow TNK-BP take the British giant's place in the project.