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bp holdings, business news - BP Sells TNK-BP Joint Venture Stake to Rosneft

Posted Oct 26 2012 8:20am

BP PLC (BP.LN) said Monday it has agreed to sell its 50% stake in Russian oil company TNK-BP Ltd.  ( >> TNK-BP Holding OAO )  to state-backed giant OAO Rosneft  ( >> Rosneft' NK OAO )  for $17.1 billion in cash plus shares representing 12.84% of the Russian company.

 Under the terms of the transaction, BP will use $4.8 billion of the cash it receives for its TNK-BP stake to purchase an additional 5.66% of shares in Rosneft, to take its total stake up to 19.75%, it said in a statement. After acquiring those shares, BP will have gained $12.3 billion in cash from the transaction, it said.

 The deal marks a historic shift in BP's presence in the key Russian oil market, freeing it from a turbulent joint venture with a group of Soviet-born billionaires and potentially giving it access to Arctic oil exploration rights that are widely coveted by companies seeking to replace dwindling oil resources elsewhere.

BP will get two seats on Rosneft's nine-person board as part of the deal and expects to be able to account for its share of Rosneft's earnings, production and reserves on an equity basis.

The signing of the definitive agreements is conditional on the Russian government agreeing to the sale of the 5.66% stake in Rosneft and it is intended that the TNK-BP sale

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