Rosneft beefs up with TNK-BP purchase
By Darya Korsunskaya and Andrew Callus
MOSCOW/LONDON (Reuters) - Rosneft tightened its grip on Russia's oil industry on Monday with a $55 billion deal to buy TNK-BP that also makes Britain's BP a one-fifth shareholder in the state-controlled company.
Rosneft, already the top oil company in the world's biggest producing country, will be pumping more oil and gas than Exxon Mobil with TNK-BP under its wing.
With BP's as a partner with two seats on Rosneft's board, powerful chief executive Igor Sechin can also pursue his dream of rivaling the U.S.-based industry number one on the world stage.
The acquisition, subject to Russian government approvals, will give Rosneft extra output and cash flow to finance exploration of Russia's vast reserves to replace ageing and depleting fields.
It keeps BP's technical expertise and international clout in Russia and provides the "quality" private shareholder President Vladimir Putin needs to show critics he is pursuing privatization and modernization.
"This is a very good signal for the Russian market. It is a good, large deal. I would like to thank you for this work," Putin told Sechin at a meeting on Monday.
Part one of the Kremlin-backed deal folds BP's half of TNK-BP, Russia's third-largest oil firm, into Rosneft. In exchange, BP gets $12.3 billion of cash and 18.5 percent of Rosneft, raising its holding to 19.75 percent.
In stage two, BP's 50-50 partner in the TNK-BP venture, AAR, would get $28 billion, but the two deals are independent of each other. It leaves the businessmen behind AAR with weakened negotiating power and Rosneft firmly in the driving seat, analysts said. Continued...