Putin accuses BP of misleading him over Rosneft deal

4th March 2011, Comments 0 comments

BP's historic alliance with Russia's state oil giant Rosneft hit a rough patch on Friday when Prime Minister Vladimir Putin accused the British firm of misleading him going into the deal.

The $16 billion share-swap and Arctic exploration agreement was announced with much fanfare by the Russian government in January and was soon followed by a similar agreement between Rosneft and the US oil major Exxon Mobil.

The Kremlin has billed the tie-up as confirmation of the West's continued interest in Russia despite criticism of its investment climate and treatment of Rosneft's one-time private rival Yukos -- now disbanded and its founder jailed.

BP has persevered on the Russian market despite suffering its own series of setbacks and the deal was all set to confirm its status as Moscow's preferred Western energy partner.

But BP found a source of unlikely revolt when its Russian joint venture TNK-BP -- the country's third-largest oil firm and one of the world's top 10 private producers -- tried to put a halt to the deal in a London court.

The Russian billionaire owners of the joint venture feared that the deal could mark the end of their own company and argued that it violated the TNK-BP shareholders agreement.

A top Putin deputy said last month that Russia remained confident that the deal with BP would go through because the British firm had given Moscow "all the necessary assurances".

But Putin voiced clear frustration with BP's boardroom problems on Friday and accused its management of giving the Russian government false assurances prior to the Rosneft deal's announcement.

He said neither BP nor its Russian venture "had informed Rosneft about the fact that they might have some sort of problems."

"I, for example, had absolutely no idea," news agencies quoted Russia's former president and current de facto leader as saying.

"When I met with the management of BP, they did not say a word about it."

Putin then delivered BP another blow by noting that he was open to the idea of TNK-BP itself taking part in joint Arctic exploration projects with Russia's biggest oil firm.

"We have adopted a law that entrusts (Arctic) shelf work to Rosneft and Gazprom," news agencies quoted Putin as saying.

"If TNK offers one of these companies suitable conditions, then why not? Of course," Putin added.

Those comments came only hours after TNK-BP confirmed that it was now looking to take BP's place in the Rosneft deal.

Various Western press reports said that TNK-BP's management was willing to pay BP $7.6 billion in cash for its place in the $16 billion Rosneft share-swap and Arctic exploration agreement.

But the London Financial Times reported this week that Rosneft had a sceptical view of the joint venture's attempt to take BP's place in the deal.

TNK-BP said it will hold a board meeting in Paris on March 12 to discuss the proposal.

"We hope that the next board of directors meeting will support the management's recommendation and that TNK-BP's management will be authorised to start negotiations with BP and Rosneft to participate in the Arctic deal and share swap." Chief Executive Officer Mikhail Fridman said in a statement.

January's agreement would give Rosneft five percent of BP's ordinary voting shares in exchange for approximately 9.5 percent of Rosneft's stock.

BP and Rosneft have also agreed to explore and develop Rosneft's three licensed blocks on the Arctic continental shelf -- a 125,000 square kilometre (50 square mile) region said to contain five billion tonnes of oil and 3.0 trillion cubic metres of gas.

© 2011 AFP

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