Rosneft shares nosedive after BP deal blocked

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Rosneft shares opened sharply lower on Friday after an arbitration tribunal blocked British energy giant BP's Arctic oil tie-up with Russia's largest oil company.

The state-held firm's shares were down about 1.5 percent in early trading on Moscow's MICEX exchange while those of BP's Russian joint venture TNK-BP opened the day higher by 0.9 percent.

The broader market was down as traders digested the Stockholm Arbitration Tribunal's Thursday decision to block the British firm's strategic alliance with Rosneft.

BP has vowed to try to complete the deal in some form but market analysts said uncertainty will hang over Rosneft's stock in the short term.

The unprecedented 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 deal would have handed Rosneft five percent of BP's ordinary voting shares in exchange for approximately 9.5 percent of the Russian company's stock.

The two firms also agreed to jointly search for oil in Rosneft's three licensed blocks in the Arctic -- a 125,000 square kilometre (48,000 square mile) region said to contain five billion tonnes of oil and 3.0 trillion cubic metres of gas.

But the deal was strongly opposed by the small group of billionaires who make the Russian half of the TNK-BP venture.

The group -- known collectively as AAR and led by Alfa Group chief Mikhail Fridman -- argued that the tie-up broke their shareholder agreement with BP to have the right of first refusal on the British firm's Russian ventures.

BP said in a statement that it may now return to arbitration in a bid to complete the share swap portion of the Rosneft deal.

© 2011 AFP

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