BP misses key deal deadline

TALKS to rescue BP’s $16bn (£9.9bn) share swap with Kremlin-controlled oil group Rosneft appeared close to collapse last night as the midnight deadline passed without any deal being announced.

The deal, which would give BP an interest in offshore Arctic exploration venture leases that could contain over 40bn barrels of oil, has previously been blocked in the courts by BP’s tycoon co-owners of its Russian venture TNK-BP, prompting BP to try and buy them out. Alfa-Access-Renova (AAR), the consortium that represents the oligarchs, rejected BP’s first advance of $27-$28bn for their half share. BP upped its offer to around $30bn in cash and stock but AAR was still believed to be unhappy with the price. Any agreement would ultimately have to be agreed by the Russian government – Rosneft’s owner.

But a source familiar with the billionaires’ thinking said price was not a major issue, but rather that BP and Rosneft had not been able to meet AAR’s demand for big equity stakes in each company. The sources said that talks could continue beyond the deadline, although the expiry of the original deal raises the possibility that Rosneft could seek to redraft the terms. Since the agreement was penned, Rosneft’s shares have risen and BP’s fallen.

BP declined to comment last night.