BP, Rosneft, TNK-BP and the road ahead

With a decision deferred on whether BP can proceed on its share swap with Rosneft Business RT spoke with Vadim Mitroshin, oil and gas analyst at Otkritie Bank, about the implications.

RT:What do you make of this decision? Did you expect a different outcome?

VM:“No actually I didn’t expect any different outcomes.At this stage what I think we currently have is a more or less predictable result and I think the situation is not over yet and I think what we should be focusing on is the Board of Directors meeting which will be held upon British Petroleum’s request next week.I think that this Board meeting may produce some results or some clarification on the current shareholder standoff.”

RT:Apparently there is a possibility that the two sides Rosneft and BP may prolong their deadline on the 14th of April for their share exchange, their share swap.Do you think that will happen?

VM:“I think it’s a logical decision given the current situation.Apparently both shareholders, BP and AAR, expressed satisfaction with this decision.I think it opens room for potentially finding a compromise solution for the current shareholder deadlock.It essentially gives more time for AAR and BP to find some sort of a solution which would be satisfactory for all parties involved, including AAR, BP and Rosneft.”

RT:What do you think AAR and TNK-BP would see as victory in this case?

VM:“I think for AAR, they are fighting for some justification of their situation.They believe that BP, to some extent, violated exclusivity provisions of their shareholder agreement.So I think that they are looking to get something and certain compensation from British Petroleum, before they clear the deal with Rosneft.”

RT:What kind of compensation are we talking about?

VM:“I don’t know, I think we should rather ask AAR, but I think this can take many forms.For instance direct financial contribution from BP to AAR, or maybe in the form of a special dividend which can be only paid to AAR but not BP.”

RT: Do you think that there is any risk that the deal between BP and Rosneft may be cancelled altogether?

VM:“Well of course this is Russia, and we know that everything is possible here.I think it is highly unlikely given the political support to the situation at the top of the Russian government.But I think in the worst case, if no chances are left for BP to actually complete this transaction with Rosneft then potentially the Russian government may be looking for another partner.”

RT:What's BP's next move?

VM:“I think, that the next move is for AAR and BP to find some sort of solution which will be acceptable for them.”