BP advances planned sale of TNK-BP stake

BP announced Nov. 22 it had signed “definitive and binding sale and purchase agreements” for its 50 percent stake in the Russian oil and gas company TNK-BP.

The buyer is the state-owned Russian oil giant Rosneft.

BP will sell its interest in TNK-BP to Rosneft for $17.1 billion in cash plus shares representing a 12.84 percent stake in Rosneft. BP will then use $4.8 billion of the cash proceeds to buy an additional 5.66 percent stake in Rosneft from the Russian government.

“On completion, the net result of the overall transaction will be that BP will receive $12.3 billion in cash and acquire an 18.5 percent stake in Rosneft for its stake in TNK-BP,” BP said in a press release. “When combined with BP’s current 1.25 percent shareholding, this will result in BP owning 19.75 percent of Rosneft.”

BP added: “Completion of the transaction is subject to certain customary closing conditions, including governmental, regulatory and antitrust approvals. The two companies still anticipate completion in the first half of 2013.”

BP will have two seats on Rosneft’s nine-person main board.

Moscow-based TNK-BP was formed in 2003 as a result of the merger of BP’s Russian oil and gas assets and the oil and gas assets of AAR, a consortium of Russian investors Alfa Group, Access Industries and Renova.

TNK-BP is the third-largest oil producer in Russia, with a diversified upstream and downstream portfolio in Russia and Ukraine. TNK-BP’s average daily production in 2011 was 1.987 million barrels of oil equivalent per day, BP said.

Rosneft, a fully integrated national oil and gas company, produced 2.45 million barrels of oil per day in 2011. Rosneftegaz is the state-owned parent company of Rosneft.

BP had reached a preliminary deal with Rosneft on Oct. 22, saying then it would negotiate toward a definitive agreement.

In a separate transaction, Rosneft also is buying AAR’s half of TNK-BP.

—Wesley Loy