Rosneft keen to reward BP with more Russian deals

Rosneft, the state-owned Russian oil giant that listed on the London market yesterday, is keen to do further deals in Russia with BP.

The two companies are already partners in the Sakhalin field off the Siberian coast and BP is one of a number of companies which Rosneft is talking to about other opportunities in the region. The prospect of BP gaining further access to the Russian oil market will be seen as a reward for its decision to back the controversial Rosneft flotation by taking a $1bn (£540m) shareholding in the company.

BP has an existing joint venture in Russia called TNK-BP - the country's third biggest oil company producing about 2 million barrels a day. BP paid $8bn for its 50 per cent stake in 2003. But the opportunity to work more closely with Russia's biggest oil company would dramatically reinforce BP's standing in the country.

The start of trading in Rosneft shares coincided with an announcement from the stricken oil firm Yukos that it would appeal against a High Court judge's decision to allow the listing to proceed. Yukos, which alleges that its main asset Yugansk was stolen from it and handed to Rosneft, wanted the flotation stopped on the grounds that it constitutes money-laundering under the UK's Proceeds of Crime Act.

But Mr Justice Charles refused to permit a judicial review of the Financial Services Authority's decision to allow the listing to proceed on the grounds that the seizure of Yugansk was an "act of state" by the Russian government which took precedence over UK law.

Rosneft shares began trading at around the float price of $7.55 after their debut on the London Stock Exchange. They closed at $7.52 after 4.5 million shares changed hands. The issue was priced at close to the top of the indicative price range, enabling Rosneft to raise $10.4bn and valuing the company at $80bn. BP is one of three strategic investors - with Malaysia's Petronas and the China National Petroleum Company - to take a stake in Rosneft.

Although about a quarter of the shares were taken up by UK institutional investors, Rosneft has no direct presence in London, nor does it plan one. Yukos has promised a "lifetime of litigation" for anyone buying Rosneft shares and has taken its case to the European Court of Human Rights.

But Rosneft executives, including its chief executive Sergei Bogdanchikov who invested $1m of his own money in the shares, remain confident of seeing off any legal challenges.