Russia's Rosneft vows to complete BP tie-up

11th March 2011, Comments 0 comments

Russia's state oil giant Rosneft vowed on Friday to complete its strategic alliance with BP despite repeated efforts by the British firm's Russian venture to either block or join the deal.

The statement from the country's largest oil company came after TNK-BP announced plans to try to break up Rosneft's $16 billion share-swap and joint exploration agreement with BP and strike its own pact with the Russian firm.

Rosneft's comments were echoed by top Russian government officials amid growing signs that Moscow wanted to brush past BP's politically-sensitive boardroom dispute.

The Russian firm ridiculed the British-Russian venture's bid to become its partner on the Arctic shelf.

"TNK-BP has never been considered a potential participant in the alliance due to its lack of required competence," Rosneft said.

Deputy Prime Minister Igor Sechin -- who serves as Russia's effective energy tsar -- also played down TNK-BP's interest.

"Russia has the right to choose its own partner," Interfax quoted Sechin as saying.

He called Rosneft's unprecedented plans to explore the Arctic jointly with BP "a matter of Russian energy security and a contribution to the energy security of Europe and the world."

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

But its implementation has been blocked by a London court after TNK-BP argued that the deal violated the venture's shareholders agreement.

The BP alliance was blessed personally by Prime Minister Vladimir Putin and hailed by the government as confirmation of the West's continued interest in Russia despite criticism of its investment climate.

But Putin last week voiced frustration over the delay and accused the British firm of misleading him going into the deal.

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.

Putin's comments provide an unlikely opening for TNK-BP -- with Russia's de facto leader stressing that the joint venture had a right to voice an interest in Arctic projects.

The TNK-BP board is due to consider its management's proposal at a Paris board meeting scheduled for Saturday.

But Rosneft noted that it was already cooperating with BP in two new Sakhalin Island projects and that TNK-BP had on those occasions allowed for the deals to go through.

"Any actions aimed at undermining this deal that damage Rosneft will be analysed and followed by exhaustive measures aimed at defending the rights of our investors, with all the ensuing consequences," Rosneft said.

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.

Most analysts agreed that the Russian billionaires were waging a losing battle.

"We very much doubt that TNK-BP will become a third party to the agreement or that it will replace BP in the alliance ... because TNK-BP can add very little to the JV," the Renaissance Capital investment firm said in a note.

© 2011 AFP

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