BP's Arctic deal lapses without announcement

17th May 2011, Comments 0 comments

The deadline for BP to complete its Rosneft alliance lapsed Tuesday without an announced agreement amid reports that it was tantalisingly close to a deal that could see it tap Russia's Arctic oil wealth.

The deal hinges on BP's ability to buy out the Russian partners in its TNK-BP joint venture and furious negotiations between all three sides were reported late into Monday night.

The Vedomosti business daily said the British firm was offering its local partners a deal worth more than 30 billion dollars comprised of cash and a 6.7 percent stake in BP for their half of TNK-BP.

Russia's state-held Rosneft was also reportedly ready to contribute cash to the offer and then have a buyout option that would leave the Russian firm holding 75 percent of TNK-BP.

Vedomosti said BP's Russian partners were ready to accept those terms but had also demanded "an entire slate of written guarantees" stipulating that all the conditions would be met.

Another source told the daily that Rosneft -- which would become the world's biggest publicly traded oil producer if it won control of TNK-BP -- was ready to abandon its proposed partnership with BP if the buyout fails.

Vedomosti said BP was expected to issue a statement in London later Tuesday. The sides had failed to announce any breakthrough on finding an agreement by the 2300 GMT Monday deadline.

The prospects of being the first through the door to the vast Kara Sea oil fields provided BP with the hope of reviving a company whose stock had been underperforming the market for months.

© 2011 AFP

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