TNK-BP Floats Spoiler Against BP-Rosneft Pact

Management of Anglo-Russian oil firm TNK-BP has proposed buying a $7.6 billion stake in shareholder BP in a bid to join an offshore partnership with Rosneft, sources close to management said.

Whether such a deal, would work out is questionable, however, after state-controlled Rosneft, Russia's largest oil firm, said it saw no role for TNK-BP joining the Arctic exploration pact it announced in January with BP.

That deal involves a $16 billion share swap, under which BP would acquire a 10% stake in Rosneft in exchange for 5% of its own equity.

The Russian tycoons who own half of TNK-BP have objected that the deal violates the terms of their shareholder agreement with BP, and have won a London court injunction pending arbitration proceedings due to begin in Stockholm next week.

Attempts to resolve the disagreement have so far failed, with BP's representatives failing to turn up at a TNK-BP board meeting in Berlin last Friday, rendering the meeting inquorate.

The proposal for TNK-BP to buy 5% of BP and swap its stake into Rosneft, effectively supplanting BP as a partner in the deal, surfaced after the failed board meeting and has been confirmed to Reuters by sources close to management.

BP in London had no immediate comment on the deal reported in The Times on Wednesday.

German Khan, TNK-BP executive director responsible for upstream operations and one of the shareholders represented by Alfa-Access-Renova (AAR), declined to comment to reporters in Tyumen on the shareholder dispute, citing legal restrictions.


Analysts believe BP will resist any attempt by TNK-BP's top management -- in which Alfa's Mikhail Fridman currently holds the position of CEO -- to drive a wedge between BP and Rosneft.

Last Friday's failed board meeting led to a salvo of mutual recriminations, with a source close to the Russian shareholders accusing BP of trying to "sabotage" arbitration, due to begin in Stockholm in the week of March 7.

The board will attempt to reconvene in Berlin on Friday, March 4 with no sign yet of a rapprochement.

The conflict has exposed a rift between Russia's super-rich oligarchs and the Kremlin, which wants to bulk up Rosneft as a national champion and sees BP as a strategic ally that can bring offshore expertise and open the door to international expansion.

Deputy Premier Igor Sechin, who is chairman of Rosneft, fired a shot across the bows of the bickering TNK-BP shareholders last week, saying Rosneft would sue any party that inflicts damages on the offshore exploration pact with BP.