Tag: Rosneft

Kiran Stacey

Thursday morning sees Bob Dudley’s first AGM as BP chief executive, and it is not the one he would have planned.

After taking charge last year in the wake of the Gulf of Mexico spill, the new BP CEO initially won plaudits for his plan to overhaul the company’s safety procedures.

Then came his big eye-catching move, the deal that could seal his reputation as CEO. His plan for a $16bn share swap with Rosneft would open up the Russian arctic for exploration and provide an source of revenues that could rival the North Sea.

President Dmitry Medvedev speaks with Vice Premier Igor SechinBy Catherine Belton and Stefan Wagstyl

At first glance, Igor Sechin’s abrupt departure as Rosneft chairman appears to bode badly for BP’s last-ditch bid to salvage its alliance with the Russian state controlled company.

But, it could turn out to be a clever tactical move that might yet save the deal. So complex are the political tensions surrounding the deal that the outcome remains impossible to predict. In other words, BP is still in with a chance.

FT Energy Source

Bob Dudley, BP chief executive, and Vladmir Putin, Russian prime minister, when the BP-Rosneft deal was announced in January 2011BP is running out of options. Its plans for a cooperation pact with Russia’s Rosneft was on Friday blocked for a second time by a legal challenge from its Russian partners in its existing Russian joint venture, TNK-BP.

While the international tribunal has still to give a definitive ruling on a key element of the accord – a $16bn share swap – its temporary injunctions could now have a permanent effect on BP’s ability to close the deal. The Russian TNK-BP partners headed by oligarch Mikhail Fridman are winning in their effort to block the ambitious venture.

As beyondbrics has reported, the Stockholm tribunal – which is actually three Brits meeting in London – ruled on Friday that a temporary injunction blocking the share swap should remain in place.

BP failed on Friday to secure legal permission to go ahead with its proposed share deal with Rosneft, the Russian state-controlled oil group, after the Russian partners in its existing Russian venture TNK-BP opposed the plan.

The arbitration court, which had earlier blocked a proposed BP-Rosneft venture for Arctic exploration, on Friday ruled that the second element in the overall agreement – the share swap – could not go ahead on its own for now, under the terms of a temporary unjuction.

Dmitry Medvedev, Russian president, touring Mognitogorsk metal works March 2011President Dmitry Medvedev has grumbled more than once about ministers holding top jobs at state-controlled companies – and to little effect. But this time it seems to be for real.

After Medvedev late on Wednesday ordered the removal of ministers from state enterprise boards by mid-year, Arkady Dvorkovich, his economic aide, followed up on Thursday and named names, starting with Igor Sechin, deputy prime minister, and Alexei Kudrin, finance minister. This is serious – and Moscow is rife with speculation about what it all means.

BP is rightly coming under growing shareholder pressure to explain what it is doing with its stalled Rosneft deal – or get out of the increasingly controversial $16bn-plus project.

Amid much anonymous grumbling, one big shareholder – Standard Life – went on record on Tuesday questioning BP’s proposals. With the deal deeply entwined in the complexities of the Kremlin and its relations with Russian big business, it is impossible to say how the dice will fall. But the whole affair has done nothing to enhance investor confidence in either BP or Russia.

The British company knew when it announced the deal with Rosneft, with much fanfare and prime minister Vladimir Putin’s public blessing, that it would run into trouble from the Russian billionaire partners in its existing joint venture, TNK-BP.

BP will find out on Thursday whether its proposed alliance and share swap with Russia’s state-oil champion Rosneft broke the UK oil group’s shareholder agreement with its other Russian venture TNK-BP.

The Stockholm tribunal panel hearing the case is expected to issue its ruling to the two parties on Thursday afternoon and both sides are likely to issue an announcement sometime after that.

All four BP-nominated directors failed to turn up for an extraordinary meeting of TNK-BP’s board on Friday, torpedoing a crucial vote on whether the Russian oil venture should participate in the UK oil group’s alliance with Rosneft.

“The board was not able to vote because the BP directors did not show up,” said Stan Polovets, chief executive of AAR, BP’s Russian partners in TNK-BP. “There was no quorum.”

The no-show by BP raises the stake in a stand-off between BP and the Russian billionaire partners in TNK-BP who claim BP’s alliance with Rosneft, the state-controlled oil company, is a breach of their shareholder agreement with BP.

Kiran Stacey

BP’s partnership with Rosneft was remarkable for a number of reasons, not least that it was done against the wishes of BP’s partners in TNK-BP and was the first equity partnership between a private international and a public national oil company. It is also a partnership not limited to developing Russian assets only: the two parties have a 50/50 ownership of Ruhr Oel, a German refining joint venture.

Ian Smale, BP’s group head of strategy and policy, told an audience in London on Monday that the two companies would be looking at further JVs outside Russia, and described the arrangement as an example of how IOCs and NOCs could form closer partnerships in future.

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