BP Agrees Terms for Sale of TNK-BP to Rosneft
BP confirmed Monday in a statement to the London Stock Exchange that it has agreed 'heads of terms' to sell its 50-percent stake in Russian subsidiary TNK-BP to Rosneft for $28 billion. The announcement came after BP stated earlier Monday that it was "in advanced discussions" with the Russian state oil company.
The payment - a mixture of $17.1 billion cash and shares representing 12.84 percent of Rosneft - is in line with what oil sector analysts were expecting. BP said that it intends to use $4.8 billion of the cash payment to purchase a further 5.66 percent of Rosneft from the Russian government.
BP's statement quoted its Chairman Carl-Henric Svanberg as commenting:
"This is an important day for BP. Russia is vital to world energy security and will be increasingly significant in years to come. Russia has also been an important country for us over the past 20 years. Our involvement has moved with the times. TNK-BP has been a good investment and we are now laying a new foundation for our work in Russia.
"Rosneft is set to be a major player in the global oil industry. This material holding in Rosneft will, we believe, give BP solid returns. We consider that this is a deal which will deliver both cash and long term value for BP and its shareholders. It provides us with a sustainable stake in Russia's energy future and is consistent with our group strategy."
TNK-BP currently contributes almost 30 percent of BP's total production while also making up around 30 percent of the company's reserves.
There is the possibility that a bidding war could emerge for TNK-BP. The Russian joint venture's other shareholder – a consortium of investors called Alfa Access Renova – announced at the start of October that it was seeking to raise at least $20 billion to buy out BP's share.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Operates 33 Offshore Rigs
- Aker BP Buys Hess' Norway Unit For $2B (Oct 24)
- BP Chairman Svanberg to Retire; Search Starts for Successor (Oct 19)
- BP Midstream Partners Seeks To Raise Up To $893MM In IPO (Oct 16)
Company: Rosneft more info
- Eni Looks To Strengthen Ties With Rosneft, Maybe In LNG (Oct 19)
- Kremlin Oil Major Piles Up Investments In Iraq's Kurdistan Amid Crisis (Oct 18)
- China's CEFC Eyes Big League With Rosneft Oil Offtake Deal (Oct 17)
Company: TNK-BP more info
- Rosneft Board Member Rejects Criticism of TNK-BP Buyout (Oct 04)
- Rosneft: TNK-BP Integration 'Mostly Complete' (Jun 20)
- TNK-BP Acquisition Boosts Rosneft's 1Q Production (Apr 30)