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BP, Rosneft formalise terms for tie-up
November 22, 2012 / 5:05 PM / 5 years ago

BP, Rosneft formalise terms for tie-up

LONDON (Reuters) - Oil companies BP and Rosneft came closer to sealing their tie-up deal on Thursday, winning Russian government approval for a key part of it and signing a sale and purchase agreement for scrutiny by regulators around the world.

A view shows the fuel price board of a Rosneft petrol station in St.Petersburg October 23, 2012. REUTERS/Alexander Demianchuk

The deal, announced in October, involves BP selling its 50 percent interest in Russia’s third largest oil firm TNK-BP to Rosneft. In exchange, BP gets $12.3 billion of cash and an 18.5 percent stake in an enlarged state-backed Rosneft which exerts increasing control over production in the world’s biggest producing country.

The SPA signing was made possible by Russian government approval for the sale of part of that stake - a 5.66 percent holding that sat with state holding company Rosneftegaz, BP said.

The pair still expect to complete the deal in the first half of 2013, BP said.

News of government approval and the signing of the SPA came hard on the heels of Rosneft board approval earlier on Thursday.

It brings closer the creation of a Russian energy national champion increasing the state’s returning grip on an industry it largely privatised in the 1990s, while extricating BP from a thorny relationship with its former partners in TNK-BP, AAR.

Regulatory approvals are likely to be required in Russia, Ukraine and the European Union and may also be needed in the countries where TNK-BP does business such as Vietnam, Venezuela and Brazil, but these are seen by analysts as a formality compared with the Russian government approval and the end of hostilities between AAR and BP.

For BP, the SPA signing comes just days after it took a step towards finalising its multi-billion dollar liabilities over the 2010 U.S. Gulf Oil spill, agreeing to settle all criminal liabilities for a payment of $4.5 billion. Its civil trial goes to court in February.

Reporting by Andrew Callus, Editing by Sarah Young

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