Rosneft inks deal to buy Russian oligarchs 50% stake in TNK-BP for $28 billion

Rosneft, Russia's biggest oil producer, yesterday signed a binding deal with AAR consortium controlled by Russian oligarchs to buy their 50-per cent stake in oil joint venture TNK-BP for $28 billion, a month after it agreed to buy the other 50 per cent from British oil giant BP, for $17 billion in cash and 12.8 per cent of its own stock.

The deal, the biggest in Russian history and the largest ever in the oil industry, will make the state-run Moscow-based company into the largest listed oil company, surpassing US giant ExxonMobil with a production capacity of nearly 4.5 million barrels of oil equivalent per day.

The AAR consortium consisting of Alfa Group, Access Industries and Renova controlled by Russian tycoons Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik, will get the entire $28 billion when the deal closes, which is expected in the first half of 2013 after receiving approval from Russian and European regulators.

The deal, valued at nearly $60 billion, ends a nine-year old troubled partnership between BP and the Russian oligarchs in Russia's third-largest oil producer.

TNK-BP was formed in 2003 through the merger of BP's Russian oil and gas assets and the assets of AAR consortium.

The shareholders of TNK-BP also own close to 50 per cent of Slavneft, a vertically integrated Russian oil company.