Canadian Manufacturing

BP mulling sale of Russian JV that could fetch $15 billion

The company has been mired in a dispute after Russian partners blocked BP's deal with Russian oil company Rosneft.



MOSCOW—British oil giant BP may sell its 50 per cent stake in Russian joint venture TNK-BP, a move that could fetch $15 billion.

TNK-BP, Russia’s third-largest oil producer, is a joint venture between BP and AAR, a consortium of Russian billionaire shareholders. The company has been mired in a dispute after AAR blocked BP’s deal with Russian oil company Rosneft.

TNK-BP represents 27 per cent of BP’s reserves and 29 per cent of its production, according to the British company’s latest annual report.

In an interview with The Associated Press, BP’s spokesman in Russia, Vladimir Buyanov, declined to specify whether the offer might have come from the Russian shareholders. that the information about the potential buyer is confidential. He said the shareholders’ agreement between BP and AAR requires both parties to notify the other of offers to acquire their holdings.

BP’s 50 per cent stake in the Russian oil producer could fetch more than $15 billion as TNK-BP’s market capitalization, based on its share prices at the Russian MICEX stock exchange, hovered around $31.5 billion Friday afternoon.

BP stressed that”there can be no guarantee that any transaction will take place.”

AAR has previously indicated that it could be interested in raising its stake in TNK-BP. AAR’s spokesman in Moscow declined to comment any aspect of BP’s announcement.

TNK-BP’s CEO Mikhail Fridman, one of the members of AAR, unexpectedly stepped down last Monday, citing tensions between the shareholders as a reason for his departure and said the parity ownership of TNK-BP no longer works.

Although one of Russia’s most lucrative oil assets, TNK-BP has been mired in boardroom dispute since it was founded in 2003. At the height of the previous shareholder conflict in 2008, TNK-BP’s CEO Robert Dudley was virtually forced out of Russia. Dudley, a BP nominee, described as a campaign of “harassment.”
But tensions resurfaced last year when a potentially huge deal that BP was hoping to sign with Russian state-owned oil company Rosneft broke down after AAR blocked it, claiming any such deal should be pursued through TNK-BP.

The venture has provided lofty dividends for both parties—TNK-BP’s output has accounted for more than a quarter of BP’s total global production and the British oil company drew some $3.7 billion in dividends from the venture last year alone.

BP has received a total of $19 billion since the company’s formation in 2003.

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