Rosneft to push ahead with BP pact

City A.M. Reporter
Russia's Rosneft has vowed to push ahead with a strategic alliance with BP, despite a block on the deal by the British oil company's partners in joint venture TNK-BP.

Rosneft Chairman Igor Sechin said an arbitration panel ruling preventing BP and the state-controlled energy giant from jointly exploring Russia's Arctic region and from executing a $16bn (£9.9bn) share swap did not void the deal.

"The court didn't block (the deal), it extended the injunction until April 7. We must await the court's verdict," Sechin, also Deputy Prime Minister, told reporters.

He said Rosneft had already suffered losses as a result of the actions by BP's TNK-BP partners Access-Renova (AAR), which pursued court action against the BP-Rosneft tie-up, arguing the alliance violated their right of refusal.

Russia's largest oil company was "satisfied" with BP as its partner and would defend its interests, Sechin said on Friday.

AAR, which represents BP's billionaire partners in TNK-BP, had hailed Thursday's arbitration ruling as a victory in their bid to prevent BP hooking up with Rosneft.

AAR said BP was now "prohibited from entering into any future share arrangement with Rosneft that has any kind of strategic component", potentially opening the door for a rival to step in and replace BP as Rosneft's partner.

The ruling raised immediate questions about BP chief executive Bob Dudley's tactics in Russia and raised the prospect Rosneft could look elsewhere for the expertise it needs to get oil out of Russia's Arctic region.

"Given his (Dudley's) past relationship in Russia, how difficult it has been, he should have been a bit more appreciative of how tricky it can be operating in Russia," Arbuthnot Securities analyst Dougie Youngson said.

Rosneft head Eduard Khudaynatov said in January the group was awash with proposals from foreign companies for exploring in the Arctic, and Royal Dutch Shell, BP's arch rival, has already confirmed its interest.