Russia's biggest oil producer Rosneft said Tuesday it had agreed with BP to start negotiations on a potential purchase of the UK company's stake in Anglo-Russian venture TNK-BP.
BP owns a 50% stake in TNK-BP, which is Russia's third biggest oil producer, with the remaining 50% being held by Russia's Alfa-Access-Renova, a group of billionaire investors.
"Rosneft announces that, in connection with BP's recent statements regarding its intention to pursue a potential sale of its participation in TNK-BP, Rosneft has informed BP of Rosneft's interest in a potential acquisition of such participation," the Russian company said in a statement.
"As a result, the parties agreed to commence negotiations on this matter and signed a non-disclosure agreement," state-owned Rosneft said.
Rosneft said it had been informed that the other TNK-BP shareholders have also indicated their interest in acquiring part or all of BP's participation and that BP has an obligation under the shareholders' agreement to negotiate in good faith with the other shareholders.
"Rosneft believes that an acquisition of BP's interest in TNK-BP would be in the best interest of both Rosneft's and BP's shareholders and would lead to further development of TNK-BP," Rosneft said.
There can be no assurance that Rosneft and BP will enter into any transaction involving TNK-BP, it added.
A further announcement will be made when and if appropriate, Rosneft said in a statement.
Rosneft's press office said the companies are at an initial stage of the talks and the concrete details will be clear only after "good faith" negotiations between BP and AAR are completed.
In a separate statement, BP confirmed it would begin negotiations with Rosneft for the potential purchase of BP's shares in TNK-BP.
"BP welcomed today's announcement by Rosneft of its interest in commencing negotiations," BP said.
"While conducting parallel discussions with Rosneft and any other interested parties, it will negotiate in good faith with Alfa-Access-Renova in accordance with its legal obligations," it added.
Last Wednesday, AAR and BP said they were entering into a 90-day period of "good faith" negotiations starting Thursday to exercise AAR's right to boost its stake in TNK-BP by buying part or all of BP's 50% interest.
Although the talks are non-exclusive, BP cannot finalize a deal with third parties until the negotiations with AAR are completed, a spokesman for BP Russia said Tuesday.
The ownership of TNK-BP has been up in the air since June 1, when BP announced plans to sell its stake in the joint venture, which has been a vital contributor to BP's oil production and profits since it was formed in 2003.
ATTRACTIVE PROPOSITION
Rosneft considers "the potential acquisition of BP's participation in TNK-BP to be an attractive commercial proposition that would complement Rosneft's existing portfolio and create value for all stakeholders," the company's press office said.
Rosneft believes there are considerable synergies to be gained in Eastern Siberian upstream, gas development, crude and product logistics optimization and other areas, the press office said.
Alexander Kurevnin, an analyst with VTB bank, said he doubted that the acquisition plans would materialize any time soon.
Based on the scarce information available on the talks, BP and AAR are too far apart on their evaluation of the 50% stake in TNK-BP, he said.
While analysts estimate the sale of BP's stake in TNK-BP could raise more than $30 billion, AAR has said its evaluation of the asset includes a potential legal risk of a $10 billion lawsuit of TNK-BP minorities against BP over a failed strategic deal between BP and Rosneft in early 2011.
"This is obviously non-acceptable for BP, and AAR is unlikely to agree to raise the price," Kurevnin said.
Valery Nesterov, an analyst at Troika-Dialog, said the prospect of Rosneft becoming a partner in TNK-BP was probably the worst possible scenario for AAR as most likely the state-owned company would like ultimately to get control of the venture.
"Private-state partnership represented by AAR-Rosneft may last for some time to continue receiving high dividends but it is unlikely to survive long term," he said.
"For AAR it might be a better outcome to preserve its partnership with BP," he said, adding that despite shareholders' long-running conflicts over the venture's management and control, TNK-BP remains a very effective company paying high dividends.
Tensions between the shareholders over control of the company prompted the dramatic departure in 2008 of TNK-BP CEO Robert Dudley, now the CEO of BP.
In 2011, AAR blocked a $16 billion deal between BP and Rosneft to explore for oil and gas jointly in the Russian Arctic.
BP paid $8 billion for its 50% stake in TNK-BP, and has since then taken around $19 billion in dividends alone from the venture.
In production terms, BP's 50% share in TNK-BP contributed around 994,000 b/d of oil equivalent last year, or 29% of BP's total oil and gas output of 3.45 million boe/d.
