BP, Rosneft extend share swap deadline to May 16

14th April 2011, Comments 0 comments

BP and Russian oil giant Rosneft have agreed to extend until next month a deadline to complete a $16 billion share swap that is key to a landmark Arctic exploration deal, the British group said Thursday.

"BP announced today that it has agreed with Rosneft to extend the deadline for completing the share swap agreement to 16 May 2011," a statement said.

The 11-billion-euro deal had been due to expire Thursday, coinciding with BP's annual general meeting in London, where shareholders were set to protest over high boardroom pay after last year's Gulf of Mexico oil spill disaster.

It is far from clear whether the deadline extension will actually result in a BP-Rosneft tie-up.

The share swap agreement signed earlier this year was hailed as a breakthrough for foreign investment in Russia and also a comeback for BP after the fiasco of the 2010 Gulf of Mexico oil spill.

But it ground to an almost immediate halt when it was challenged by a group of billionaires known as AAR who make up the Russian half of BP's local venture TNK-BP and are led by influential banker Mikhail Fridman.

They objected that the deal to create a joint venture for Arctic exploration between Rosneft and BP violated their shareholder pact and succeeded in having it blocked in court.

More bad news came on Monday when Russia's Deputy Prime Minister Igor Sechin -- who had championed the deal -- resigned from Rosneft in line with a Kremlin plan to remove government figures from the boards of state companies.

BP on Thursday said it "intends to continue with the arbitration process to obtain a final award on all outstanding issues, including whether or not the interim injunction should continue."

It added: "BP remains fully committed to TNK-BP as its primary business vehicle in Russia and fully supports its strategy and investment programme, which should ensure its success for decades to come."

Dow Jones Newswires on Thursday reported that BP had made an unsuccessful $27 billion buyout offer to its billionaire partners in TNK-BP, citing a person familiar with the matter.

In Moscow, Rosneft confirmed it had accepted a request by BP to prolong the deadline for the share swap agreement by one month.

"The company (Rosneft) will continue to work on the realisation of strategically important projects for the exploration of the Russian Arctic shelf," Rosneft chief executive Eduard Khudainatov said in a statement.

"We are hoping for a quick solution to the disputes between the Russian and British shareholders in international courts about projects concerning the Russian Arctic shelf," he added.

Under the agreement, Rosneft was to take a 5.0 percent stake in BP with the British company taking 9.5 percent in the Russian firm.

But a Stockholm arbitration panel last week decided to keep its injunction on the BP-Rosneft cross holding "until further notice," after issuing a similar ruling on the Arctic exploration part of the historic deal two weeks earlier.

The deal puts BP -- still recovering from the Gulf of Mexico oil spill last year, which is set to cost the firm $40 billion -- at the forefront of the race to exploit the potentially huge energy reserves in the Arctic.

BP has endured a torrid time following last year's oil spill in the Gulf of Mexico, and it is currently in the process of selling $30 billion worth of assets to cover its part of the bill for the disaster.

The spill has left its reputation in the United States in tatters.


© 2011 AFP

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