Margareta Pagano: TNK sale will leave BP free for more Russian quests

The fragile relationship with its oligarch partners has enriched investors, but a divorce will not see the end of the British oil giant's affairs in the country

Investors must be wondering why on earth BP wants to sell its half-stake in its joint venture with the Russian TNK if it is as successful as the oil giant claims. And there's no question that it's been a stunning one: for an original investment of $8bn (£5bn), BP has earned $19bn in dividends over the past decade and the dividend to shareholders last year was largely covered by the $3.7bn TNK cash dividend.

Here's a clue: President Vladimir Putin is back in the hot seat and his new government was unveiled last Monday. After weeks of secretive negotiations, Putin has managed to bring many of his loyalists back to the Kremlin and reforming the economy is at the top of his agenda. If his allies are not there in person, holding direct ministerial positions, then they are there in the shadows – what one Kremlinologist describes as "man-marking".

That's why the timing of BP's out-of-the-blue news on Friday morning that an "unsolicited" offer had been received is so fascinating, and maybe gives us a guide as to the identity of the potential buyer.

Earlier this week TNK-BP was rocked by the resignation of chairman Mikhail Fridman, one of the three Russian oligarchs who own Alfa Access Renova (AAR) – BP's partners in the venture – supposedly because of squabbling over the appointment of new independent directors. New ones were being brought on board following the legal action brought by the oligarchs over BP's failed deal with Rosneft, Russia's biggest crude producer.

Fridman has always been the most forceful of the oligarchs, and some believe his decision to quit was because AAR wanted BP out of the deal. Now he is saying AAR wants to swap its joint venture holdings for BP shares.

The oligarchs will not have liked seeing Igor Sechin back in charge as president of Rosneft and de facto Russian energy tzar. While Sechin is not officially minister for energy, he's close to Putin and has been given the brief to oversee the country's enormous energy resources, still its main source of revenue.

Sechin was the one who put together, with Putin's backing, the share-swap deal with BP when the oil giant tried to buy out AAR last year in a $32bn deal that would have meant Rosneft taking over AAR's stake, giving them a small BP stake. But the TNK partners objected that BP had broken its shareholders' agreement and the deal collapsed. This failure was a huge embarrassment to Sechin, and he's said to be still smarting.

This is why all eyes are on Rosneft as the most likely bidder for BP's stake. However, there are other Russian oil companies such as Lukoil and Surgutneftegas that may be interested in buying a half-share in Russia's third biggest oil producer. Norway's Statoil and Exxon Mobile may also be sniffing. Who knows, AAR may well try to make a rival offer now that another bidder has been flushed out. Indeed, AAR is thought to be furious that BP might be selling the stake, taking the view that the devil you know is preferable to the one you don't, and more so if it's a Russian one.

If BP's Bob Dudley pulls off the sale, the cash raised will help cover the $20bn set aside to cover costs and claims following the Deepwater Horizon disaster in 2010. To outsiders, BP's fraught relationship with the AAR trio has always appeared dangerous, if not foolhardy. Yet for BP, it was the way you do business in Russia, par for the course.

Even allowing for the time and money spent on the legal spat, TNK is still the deal of a century. Investors, who have been frustrated with Dudley's management style, will like this clarity so expect BP's shares to motor.

But it's not the end of BP's Russian dalliance: there's much more oil to be pumped out in the Arctic, particularly the Barents Sea. Putin and Sechin need BP's expertise. As John Paul Getty once said: "Oil is like a wild animal: whoever captures it, has it."

Important voices are telling ministers: give us a growth strategy

To have three of the country's top businessmen criticising the Government's lack of a growth plan is careless, but to have six doing it is uncomfortable. That several of them are important donors to the Tory party must be painful.

Sir Richard Branson and Sir Martin Sorrell started the ball rolling last week when they rebuked the Coalition for its lack of a credible strategy – specifically for SMEs. Ex-Pizza Express boss Luke Johnson called for more consistency and rational thinking. Then the venture capitalist Jon Moulton withdrew his financial backing from the Tories after disagreeing with the charity tax changes – overturned a day after his criticism – and economic strategy.

To the growing list, you can add two more businessmen who told me they too are deeply concerned at the Government's casual attitude. One is also a big Tory donor who has told the Prime Minister his chequebook has closed.

Have they all gone soft in the head? Or, as William Hague implied recently, have businessmen become lazy moaners? Not a bit if it; what they report is that the business community is paralysed. Many CEOs are terrified of making new investments because they fear for the future – the reason why £750bn net cash is hiding away on the UK's balance sheet. New figures from Ernst & Young add to that sum another £60bn of working capital that could be released for spending.

But businesses won't start investing until they see a change in mood. They want government to be bold, to take an active lead in certain industrial sectors, do more sponsorship, small but cost-effective measures like cutting NI for employing youngsters, switching welfare payments from claimants to companies so they can employ more, and so on. Many talk about the experiences of their own children, either going through university or looking for work, and they see first hand the impact of the recession.

It boils down to imagination. That doesn't cost. Who's bright enough in the Coalition to provide it?

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
filmPoldark production team claims innocence of viewers' ab frenzy
Life and Style
Google marks the 81st anniversary of the Loch Ness Monster's most famous photograph
techIt's the 81st anniversary of THAT iconic photograph
Katie Hopkins makes a living out of courting controversy
General Election
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Sales Team Leader - Wakefield, West Yorkshire

£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...

Ashdown Group: Head of Client Services - City of London, Old Street

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders