Russian consortium AAR last night called time on its troubled relationship with BP over joint venture TNK-BP, by confirming it will not be making an offer for the British oil major’s 50 per cent stake after months of speculation.
AAR – controlled by Russian tycoons Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik – also yesterday signed a preliminary deal to sell its 50 per cent stake in troubled TNK-BP to state-controlled oil producer Rosneft for an estimated $28bn (£17bn), it is understood.
Providing the sale goes ahead, BP will have the option of remaining in the joint venture with Rosneft as its new partner, or selling its own stake – now expected to be valued on a par with AAR’s stake at $28bn – to Rosneft.
Rosneft is still understood to be considering a bid for BP’s 50 per cent stake in TNK-BP – giving it total ownership of the vehicle. Rosneft chief executive Igor Sechin yesterday flew into London for talks over the purchase of BP’s stake.
However, if Rosneft goes ahead with the purchase of AAR’s stake, analysts argue that the state-owned producer might not have sufficient funding to mount a bid for BP’s stake in TNK-BP.
Analysts at Deutsche Bank said yesterday that a potential Rosneft-BP tie-up would be a “logical one”, although it stressed that it would be difficult for Rosneft to finance the acquisition of the entirety of TNK-BP, worth around $58bn.
Additionally, the $28bn figure stamped on AAR’s 50 per cent stake could make it difficult for BP to accept lower offers for its 50 per cent stake.
Malcolm Graham Wood, oil analyst at VSA Capital, yesterday suggested that BP is targeting a low value for its stake. “The latest worry has been that BP have been talking down the possible value of their 50 per cent stake, recently to as low as $20bn, this is way below the number expected by the market and in our view unacceptable to BP,” he said.
BP first announced in June that it had received an offer of interest from AAR for its stake.
In July, AAR and BP began negotiations for the stake, kicking off a 90 day period in which BP could exclusively receive an offer for the stake from the four tycoons.
Several days later BP confirmed it would begin separate negotiations with Russia’s state firm Rosneft over the stake.
The 90-day period came to an end last night, leaving BP free to accept offers from other interested parties.
BP said last month that it would be interested in buying a stake in Rosneft – understood to be shares rather than cash – using some of the proceeds from the sale of its stake in TNK-BP, to maintain a financial footprint in the Russian energy market.
The relationship between the Russian oligarchs and BP has been a troubled one. BP previously tried to team up with Rosneft in 2011, but AAR blocked the deal.
BP shares yesterday closed up 2.99 per cent at 448p.