BP receives $28bn offer from Rosneft for Russian venture

State-controlled oil giant makes bid to take over TNK-BP

Rosneft circled in on TNK-BP yesterday as the state-controlled oil giant tabled a bid of about $28bn (£17bn) for BP's half of the Russian joint venture – just two days after offering the same amount for the other 50 per cent.

Rosneft has offered BP a mixture of cash and shares for its stake in TNK-BP, a joint venture between the FTSE 100 company and AAR, a quartet of Russian billionaires, that has been fraught with tension since it was created nine years ago. The deal would give BP between $15bn and $20bn in cash as well as a stake of between 10 and 20 per cent in the Russian state backed oil giant, sources said.

The bid was lodged first thing yesterday after Igor Sechin, Rosneft's chief executive and a former deputy prime minister of Russia, flew to London on Wednesday for talks with BP. The offer, which BP has yet to publicly acknowledge, is the second part of a co-ordinated attempt by Rosneft to gain full control of TNK-BP.

In the first part, Rosneft has agreed to pay the AAR consortium about $28bn for its stake in TNK-BP, although details have yet to be finalised.

Rosneft is thought to be keen to pay cash for the whole stake, although some analysts have questioned whether it would be able to raise enough money to buy both halves of TNK-BP. As a result, Rosneft is also understood to be discussing the possibility of funding part of that deal by giving the four billionaires small stakes in itself. They are also thought to be discussing the possibility of deferring part of the cash payment to AAR.

If the deal Rosneft has proposed with BP is finalised, the oil giant would receive much-needed cash to help finance the tens of billions of dollars of compensation it owes as a result of the Gulf of Mexico oil spill. Meanwhile, the shares BP would receive in Rosneft would give it a stake in Russia's vast and growing hydrocarbon reserves.

However, while BP is thought to still prefer a sale of its stake in TNK-BP, analysts said it was still possible the company may decide to hold on to it. Assuming the deal Rosneft has tentatively struck with AAR goes through, the link between BP and the consortium would be severed – removing the main reason for BP deciding to sell in the first place.

Although BP needs cash, it may decide that being in a 50/50 joint venture with Rosneft – through a restructured TNK-BP – would be the best, long-term strategy, analysts said.

Dominique Patry, an analyst at Crédit Agricole's Cheuvrex research arm, said: "Either BP ends up selling its stake to Rosneft for a similar value to the rumoured $28bn offered to AAR, or BP keeps its 50 per cent stake in TNK-BP but with Rosneft as a partner."

Severing ties with AAR would come as a welcome relief to BP. Their relationship has included court cases and harassment claims by Bob Dudley, then the head of TNK-BP and now BP's chief executive, which forced his exit from Russia in 2008.

Tensions between BP and the Soviet-born quartet came to a head last year when AAR – which includes Viktor Vekselberg, Mikhail Fridman, German Khan and Len Blavatnik – blocked a proposed deal between BP and Rosneft to explore the Russian Arctic. The consortium argued that it violated the terms of the joint venture, which gave it first option on any dealings BP had in Russia.

Relations deteriorated further in May when Mr Fridman quit as TNK-BP's chief executive "for personal reasons". BP put its stake up for sale the following month, in a move that presented AAR with the unpalatable prospect of going into business with Rosneft, a company with the force and backing of the Kremlin.

Rosneft's keeness to buy up TNK-BP continues the Russian state's quest to take back control of its vast oil and gas production to ensure it gets a greater share of the profits.

BP, AAR and Rosneft declined to comment.

Shares in BP rose by 3.7p to close at 452.05p, having jumped by 3 per cent on Wednesday as news of Rosneft's impending bid leaked into the market.

Start your day with The Independent, sign up for daily news emails
News
Leah Devine is only the ninth female to have made the Young Magician of the Year final since the contest began more than 50 years
peopleMeet the 16-year-old who has set her heart on being the first female to win Young Magician of the Year
News
Jonathan Anderson was born in Northern Ireland but now based between London, where he presents a line named JW Anderson
peopleBritish designer Jonathan Anderson is putting his stamp on venerable house Loewe
News
Andy Davidhazy at the beginning (left) and end (right) of his hike
video
News
Taylor Swift is applying to trademark song lyrics from 1989
people
Voices
The popularity of TV shows such as The Liver Birds encouraged Liverpudlians to exaggerate their Scouse accent
voicesWe exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
ebooks
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
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing