18th May 11
BP blow as deal with Rosneft collapses
by Natasha Redman
Empty tank: BP recover plan in jeopardy
Empty tank: BP recover plan in jeopardy
BP’s hopes of ensuring the Arctic plays an influential role in its recovery plan have been dealt a major blow by the failure to come to a share swap and exploration agreement with Russian oil company Rosneft.
Discussions to agree a settlement with its existing Russian partner TNK-BP, which had been opposed to the deal, concluded without agreement, meaning that the UK company missed the midnight deadline which Rosneft set to put the deal back on course. BP said discussions would be ongoing between all the involved parties, but observers claim that failure to finalise a deal may leave the door open for competing oil companies to move in and take its place.
In addition, it leaves a potentially massive hole in chief executive Bob Dudley’s plans to turn the group around following last year’s disaster in the Gulf of Mexico. The announcement comes as the latest revelation in a protracted saga which began in January after BP and Rosneft revealed an £8bn share swap which also came with exploration rights for the Kara Sea in the Arctic Ocean.
Upon announcing the deal, Mr Dudley described it as “groundbreaking” and “historic”, with analysts also saying that the group had pulled off a significant coup following its problems in the US. There are thought to be massive oil reserves lying in the Arctic Ocean.
The deal was subsequently scrapped following successful claims by TNK-BP that it had breached a previous agreement stating that it must be included in any deal which BP undertook in Russia.
Yesterday’s talks reportedly involved a buyout of TNK-BP worth £18.5bn. The company is owned by a consortium of billionaires from Russia called Alfa Access Renova (AAR), who would have received cash as well as substancial stakes in both Rosneft and BP if a revised agreement had been concluded.
BP said today that it was still hopeful of an agreement being struck, adding that it would intensify its attempts to make sure of the continued success of TNK-BP. In a statement, the company said that over recent months it had carried out detailed negotiations with Rosneft and AAR to seek a businesslike and reasonable solution which would allow the agreements to go ahead with the satisfaction of all concerned parties. It went on to state that, at this time, such a solution has been unable to be found.
Mr Dudley added that BP is still committed to Russia, working constructively alongside AAR in TNK-BP and to their existing strong relationship with Rosneft.
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