BP said on Monday it would press ahead and sell a stake in its Russian venture, dismissing a threat by its billionaire partners to block a deal that would enable the Kremlin to tighten its grip on the country's vast energy sector.
The British oil major said on Friday it would pursue a sale after receiving expressions of interest in its one-half stake in TNK-BP, Russia's third largest oil producer. Analysts say BP's shareholding is worth $30 billion.
A successful sale of TNK-BP to the state would raise the government-controlled share of Russia's oil output to half and strengthen Vladimir Putin's grip on strategic natural resources weeks after his return to the presidency.
It would also sideline the four billionaires in the AAR shareholder consortium who thwarted an earlier tie-up between BP and state company, Rosneft, Russia's largest oil firm.
“We have a contractual right to sell,” a BP spokesman said in response to a report that AAR would seek to veto any deal.
BP's announcement triggers a clause in the TNK-BP shareholder agreement that allows it to negotiate a sale with any buyer within 135 days, say sources familiar with the matter.
During an initial period, AAR would have the right to express an interest in buying or not. That would be followed by good-faith negotiations during which BP would also be able to hold talks with other possible buyers.
A spokesman for BP dismissed a report in the Financial Times that the shareholder agreement barred BP from giving out any confidential information to a third party without its consent, effectively handing AAR a veto right over any deal.
BP also said AAR did not have a veto on a deal or a right of first refusal on its stake.
“We will meet our obligations under the shareholder agreement and expect Alfa-Access-Renova (AAR) to do the same. We look forward to hearing from AAR directly,” the spokesman said, adding that sale talks could take several months.
A source close to AAR said it was considering buying the stake. “Now that BP has sent its notice, AAR has the priority right to require BP to negotiate in good faith a purchase by AAR of TNK-BP shares from BP,” the source said.
“Effectively, this right creates a 135-day moratorium on any sale by BP of its TNK-BP shares.”
BP and AAR have been at odds for more than year, with relations dogged by failed deals and legal challenges.
In a further twist on Monday, a Russian court ordered a new hearing into a $13 billion lawsuit brought against BP by minority shareholders in TNK-BP over the failed BP-Rosneft deal, a BP lawyer said.
The Federal Arbitration Court in the Siberian city of Tyumen has sent the case to a lower court, lawyer Konstantin Lukoyanov said, adding the decision “inflicts substantial damage on Russia's investment climate”. No date was set for the hearing.
AAR has denied being a party to the minority lawsuit.
STATE APPROACH
Sources familiar with the matter said BP has been approached by state energy holding company Rosneftegaz, which controls a stake of more than 75 percent in Rosneft.
Former Deputy Prime Minister Igor Sechin, a Putin ally who has led strategy at Rosneft for the best part of a decade, was recently named CEO of Rosneft with a mandate, sources say, to build an oil major of global scale.
Analysts said that, Gazprom Neft - the oil unit of state gas export monopoly Gazprom - may also emerge as a bidder. Gazprom Neft has a joint venture with TNK-BP called Slavneft.
Gazprom CEO Alexei Miller, speaking in Malaysia, said the company had held no talks with BP but added that “everything is interesting to us”, the Interfax news agency reported.
Analysts at Renaissance Capital led by Ildar Davletshin also said an exit by BP from TNK-BP would not lead to its departure from Russia.
“If BP sells its stake to one of the Russian national oil companies, it could simultaneously strike a new deal with a buyer to create a new joint venture, and commit to reinvest part of its gains back in Russia,” the analysts wrote in a note.
BP, tied by an exclusivity clause in the TNK-BP shareholder pact, has missed out on a raft of major offshore exploration deals announced in recent weeks by Rosneft with US Exxon Mobil , Italy's Eni and Statoil of Norway.
UNDER PRESSURE
The state approach has put AAR - led by banking-to-retail tycoon Mikhail Fridman - under pressure after it took legal action last year to prevent BP from signing the offshore exploration and $16 billion share-swap deal with Rosneft.
Fridman resigned as chief executive of TNK-BP a week ago, deepening a corporate governance crisis that has deprived its board of a quorum, blocking the payment of dividends.
Industry and political sources say the oligarch shareholders last year lobbied Dmitry Medvedev, then president and now prime minister, to oust Sechin as chairman of Rosneft.
With Putin back in the Kremlin and Sechin in control of Rosneft in both an executive and advisory capacity, it appears increasingly likely that the state will assume control of TNK-BP - either by buying out BP or the oligarchs.
“The end game is that the state buys (TNK-BP),” said one veteran Moscow-based executive. “The issue is that Fridman overplayed his hand a couple of times.”
Sources close to AAR have said, meanwhile, that the consortium would be willing to buy out BP for a consideration of $25 billion.
BP paid a total of $8 billion in 2003 for one half of TNK-BP, a hugely profitable investment that has yielded $19 billion in dividends and accounts for 29 percent of its production. - Reuters