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TNK-BP acquisition will yield up to $5bln – Rosneft CEO

The takeover of TNK-BP, Russia’s third largest oil producer will bring between $3 billion to $5 billion in synergies for Russia’s crude major Rosneft, according to the company’s CEO Igor Sechin.

­"We think the overall synergetic effect from the extraction, refining, and sales projects, which we will develop together, will be $3-$5 billion," Sechin said during a conference call on Tuesday.

Rosneft revealed plans to spend $61blb to acquire 100% of TNK-BP. This would make the Russian state-owned enterprise the world’s biggest listed oil company,

Sechin explained that TNK-BP has a number of new deposits in East Siberia that would benefit from joint development. “The deposits such as Tagul, Suzun and Russkoye could be developed using the Vankor deposit infrastructure", Sechin said.

Rosneft is already negotiating with TNK-BP on the joint use of infrastructure, which has been built for the development of Vankor, for transporting oil produced at TNK-BP’s Suzun and Tagul fields.  "This will allow us to bring an additional 6 million metric tonnes (6.61 million tons) of oil to market (per year) without addition transport costs," Sechin said.

Rosneft’s chief has also revealed plans for the joint development of the Yurbcheno-Tokhom and Kuyumbin deposits in East Siberia. “Rosneft recently acquired one of the largest independent producers of gas in Russia – the company Itera.  So we have a marvellous opportunity to get synergy in the gas block of our companies’ work," Sechin said.

State-owned Rosneft would control about 50% of Russia’s oil exports after acquiring TNK-BP, it doesn’t reverse the government’s privatization plans, says Russia’s Minister of Economic Development Andrey Belousov. He stressed that the deal is in line with the “policy of building-up capitalization and capacities of Russian companies”. Belousov pointed out that he doesn’t see any threats to the competition of the global oil market as wellю

“The government has committed and reconfirmed recently its plan for privatizations in the economy, including the oil and gas sector,” Ildar Davletshin from Renaissance Capital told RT. “I think this is an intermediate step aimed to add value to the assets that will be potentially sold off”.

On Monday BP said it agreed to sell its 50% stake in TNK-BP to Rosneft for a mix of $17.1 billion in cash and 12.84 % of Rosneft. The British company is also planning to use some of the money it's reaped from the sale to raise its stake in Rosneft to 19.75%. Such a stake gives BP the right to claim a share of Rosneft's earnings, as well as production and reserves. “Following the deal BP is likely to see its assets increased,” Sechin said.

Also, BP expects to get two seats on Rosneft's nine person board. The deal is due to be completed by the first half of 2013.