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BP considers selling its stake in TNK-BP—Quora, bp holdings barcelona


MOSCOW – British oil giant BP said Friday it is considering selling its 50 percent stake in its Russian joint venture TNK-BP, in a deal that could fetch at least $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 corporate dispute after AAR blocked BP’s deal with another Russian oil company, Rosneft.

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  • 1. BP considers selling its stake in TNK-BP—Quora, bp holdings barcelonaMOSCOW – British oil giant BP said Friday it isconsidering selling its 50 percent stake in itsRussian joint venture TNK-BP, in a deal thatcould fetch at least $15 billion.TNK-BP, Russia’s third-largest oil producer, is ajoint venture between BP and AAR, aconsortium of Russian billionaire shareholders.The company has been mired in a corporatedispute after AAR blocked BP’s deal withanother Russian oil company, Rosneft.
  • 2. BP said in a statement Friday that it has received―unsolicited indications of interest‖ for its share inTNK-BP and is looking to pursue a potential salewhich is ―consistent with BP’s commitment tomaximizing shareholder value.‖TNK-BP represents 27 of BP’s reserves and 29percent of its production, according to the Britishcompany’s latest annual report.BP’s spokesman in Russia, Vladimir Buyanov, toldThe Associated Press that the information about thepotential buyer is confidential. He declined tospecify whether the offer might have come from theRussian shareholders. Buyanov said theshareholders’ agreement between BP and AARrequires both parties to notify the other of offers toacquire their holdings.
  • 3. BP’s 50 percent stake in the Russian oil producercould fetch more than $15 billion as TNK-BP’smarket capitalization, based on its share prices atthe Russian MICEX stock exchange, hoveredaround $31.5 billion Friday afternoon. But inMoscow TNK-BP’s shares at the MICEX slumpedby 6 percent in afternoon trading.BP, however, stressed that ―there can be noguarantee that any transaction will take place.‖BP’s announcement was welcomed by investors inLondon, who bid up the shares in the company by1.57 percent to 401.1 pence in morning trading.AAR has previously indicated that it could beinterested in raising its stake in TNK-BP. AAR’sspokesman in Moscow declined to comment anyaspect of BP’s announcement.
  • 4. TNK-BP’s CEO Mikhail Fridman, one of the members ofAAR, unexpectedly stepped down on Monday.In an interview with the Russian daily Kommersant hecited tensions between the shareholders as a reason forhis departure and said the parity ownership of TNK-BP nolonger works.Fridman said in the interview that AAR could beinterested in increasing its stake, but it would alsoconsider selling some of its stake in exchange for BPshares.Although one of Russia’s most lucrative oil assets, TNK-BP has been mired in boardroom disputes for most of itsnine-year history.. At the height of the previousshareholder conflict in 2008, TNK-BP’s CEO RobertDudley left Russia complaining of what he described as acampaign of ―harassment.‖ Fridman’s appointment asinterim CEO in 2009 and a new shareholder agreementhelped reconcile the two rival groups of shareholders.
  • 5. But tensions resurfaced last year when AAR blocked apotentially huge agreement between BP and Russianstate-owned oil company Rosneft. TNK-BP’s Russianshareholders claimed that such a deal should be pursuedthrough the joint venture. Jonathan Jackson, head ofequities at London-based Killik & Co., said it was difficultto put a price on BP’s stake.―At the time of the Rosneft/Arctic deal, BP is believed tohave made a cash and joint offer (with Rosneft) of $27billion for its 50 percent stake. However, AAR appears tohave demanded $35 billion, and also asked for a 10percent stake in BP and Rosneft, as well as cash,‖ hesaid. ―As for potential buyers, clearly Rosneft standsout, although Gazprom, Russia’s largest gasproducer, may also have an interest.‖
  • 6. Rosneft’s chairman, and Russia’s former deputy primeminister, Igor Sechin said on Friday that the state-ownedcompany hasn’t considered this investment.―We have never thought about it,‖ he said in commentscarried by Russian news agencies on the sidelines of asummit in Berlin.The venture has provided lofty dividends for both parties.Over the past years, TNK-BP’s output has accounted formore than a quarter of BP’s total global production. TheBritish oil company drew some $3.7 billion in dividendsfrom the venture last year alone, receiving a total of $19billion since the company’s formation in 2003.In thecompany’s annual report filed in March, BP chairman Carl-Henric Svanberg was bullish about Russian and the TNK-BP partnership.
  • 7. ―Russia is particularly important for BP,‖Svanberg wrote in the report. ―This region stillhas excellent potential for BP and we remaincommitted to it.‖When a shareholder questioned the Russianinvestment at BP’s annual general meeting inApril, BP CEO Bob Dudley said that thethwarted Rosneft deal had created ―a lot ofnoise.‖ But he contended that the Russian linkswere good business and urged shareholders to―look through the noise and look at thenumbers.