BP's $25bn (£16bn) stake in its Russian joint venture TNK-BP could be snapped up by the Kremlin after state-owned oil company Rosneft yesterday said it was starting talks with the British oil major.
Last month BP hoisted a for sale sign over its 50 per cent stake in TNK-BP after the collapse of its relationship with AAR, the quartet of Soviet billionaires led by tycoon Mikhail Fridman which owns the other half of Russia's third-biggest oil producer.
Yesterday Igor Sechin, president of state-owned Rosneft, swooped, saying: "Rosneft has an established expertise and track record in managing large assets and considers the potential acquisition of BP's participation in TNK-BP to be an attractive commercial proposition. Whilst these are early days in the process, Rosneft has the track record and ability to create value for all stakeholders."
BP responded that it "welcomed" Rosneft's interest. The oil major may see a deal with Rosneft as an opportunity to resume its relationship with the Kremlin, one year after its $16bn Arctic exploration alliance with Rosneft was blocked by protests from AAR's four billionaires. BP wants to exit its strained but very profitable investment in TNK-BP, and find a new route into Russia's vast energy reserves.
Since the Arctic deal eventually went to American oil giant ExxonMobil, Rosneft has struck two more Arctic agreements with explorers, and BP was excluded from both. The Russian firm hinted that BP could enjoy long-term benefits from selling its stake to the Russian state-owned business. It said: "Rosneft believes that an acquisition of BP's interest in TNK-BP would be in the best interest of both Rosneft's and BP's shareholders and would lead to further development of TNK-BP."
AAR is also interested in buying half of BP's stake. Although the TNK-BP shareholders' agreement gives the oligarchs three months to negotiate a deal with BP first, it does not prevent the British major from holding talks with other parties.
Analysts said competition would push up the price. "The emergence of Rosneft as a potential bidder is good news as it provides some competitive tension in the sale process that should lead to a stronger price realisation for BP's stake in TNK-BP," said Richard Griffith, an analyst at Oriel Securities.
TNK-BP has paid BP $19bn in dividends since 2003, but the business has been strained since the blocked Arctic deal.