BP-Rosneft deal collapses

Huge Arctic exploration agreement is called off after the companies failed to finalise a deal to buy out BP’s current Russian partners in TNK-BP BP’s transformational deal in the Arctic has collapsed after it failed to reach agreement with its various Russian partners before a key deadline expired at midnight on Monday. The deal under which the British oil company and Russia’s Rosneft would jointly explore for oil in the Arctic will not now proceed, after the two parties could not reach a deal with BP’s existing partners in Russia, the oligarchs of Alfa Access Renova (AAR). BP sought to put a brave face on the situation, telling the City that “talks will continue”, which suggests that the deal could be revived in a new form. Rosneft, though, can now look for a new partner to explore and develop the South Kara Sea, where up to 40bn barrels of oil may be trapped below the surface. BP has been locked in three-way talks with Rosneft and AAR – the consortium of Russian billionaires controlling half of TNK-BP, BP’s Russian 50/50 venture – trying to hammer out a deal that would satisfy AAR while allowing BP to pursue the Rosneft alliance. The oligarchs, led by Mikhail Fridman, had blocked the alliance in the courts on the basis it breached an agreement BP had struck with TNK-BP giving the joint venture exclusive rights to pursue opportunities for BP in Russia. AAR’s refusal to back down left BP and Rosneft with little option but to try to buy AAR’s 50% stake in the joint venture, but the midnight deadline passed without the three parties being able to agree on price and the structure of the deal. Having tried to buy AAR out of TNK-BP, BP chief executive Bob Dudley now says that the two companies will “intensify their efforts” to ensure the joint venture’s success. “BP remains committed to Russia, to working constructively with AAR in TNK-BP and to our existing good relationship with Rosneft,” said Dudley. “All parties have worked hard to reach an acceptable resolution, as we believe it could offer significant benefits to BP shareholders, to Rosneft, AAR and Russia. “TNK-BP has been an excellent investment for all parties since 2003 and it is gratifying that both BP and AAR have agreed to look beyond the disagreements of the past few months and to fully focus on this important and successful business we have built together. At the same time, we look forward to continuing our work with Rosneft in our Sakhalin joint venture, running our new joint German refining business, and considering other future projects.” Fridman, chairman of Alfa Group, said: “AAR remains dedicated to the success of TNK-BP, one of the most dynamic and successful oil companies in the world. As we have always stated, AAR is a long-term strategic investor, and we look forward to working with BP on delivering the next phase of TNK-BP’s growth, both in Russia and internationally. AAR also sees significant benefit to developing co-operation with Rosneft within the framework of the TNK-BP shareholder agreement, and we plan to continue discussions about potential collaboration among BP, Rosneft and AAR.” BP Oil Oil and gas companies Energy industry Russia Julia Kollewe Tom Bawden guardian.co.uk

Posted by on May 17, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.