BP buyout reports add to Rosneft, TNK mix
11 Apr, 2011 14:39
Amidst reports that BP is preparing to buy out its Russian partners in TNK-BP, to try and save its share swap and exploration agreement with Rosneft, Business RT spoke with Christine Tiscareno from Standard and Poor's Equity Research.
RT:How credible do you think these reports are?CT:“I think that Bob Dudley has made it clear that he wants to try and get this deal through in a manner that is acceptable to all parties involved.Now this is a deal that will be very beneficial for Russia, it’s a deal that is beneficial for BP, and the people standing in the way are TNK-BP.On the contrary people here in London are saying wait a minute, why should they buy TNK-BP, maybe BP should sell its share of TNK-BP.The problem is, who would buy them? They have proven to be a very difficult partner so I doubt there will be many offers.Nevertheless that is still another option.It would be a harsh option for BP, and I am sure a lot of shareholders would not approve of it, but it will secure the long term future of BP and allow it to go forward with the deal and to start on a clean slate. It’s a big chunk.TNK-BP represents 36% of 2010 production, and with the Gulf of Mexico down it would be a big hit.But it’s also a new renewed BP on a smaller scale.The only problem with that is of course that you always have takeover target rumors going around, and that will make BP more attractive for a takeover.”RT:Would BP have enough money to buy out its partners in TNK-BP?CT:“But why should they buy out TNK-BP even if they had enough money? They have got their money to continue to carry out exploration, to pay the Gulf of Mexico.Maybe that’s one of the deals on the cards but why push for that option?”RT:Do you think Rosneft would have to join this buyout if it happens? CT:“I think the deal, as Dudley specified, it’s a very good deal, in which both parties win.BP gets access to the enormous resources in the Arctic, at the same time Russia gets access to the technology of a company that can produce those reserves, and having TNK-BP in the deal makes no sense.They don’t have expertise in the Arctic.They don’t have the means or the resources, and it is beginning to look as though AAR is whiplashing BP – why should they be deciding what BP should do?It’s a very difficult situation, especially because in Russia there is a lot of uncertainty with elections coming up next year.But I agree with Mr Putin, and with Egor and Dudley.This is a good deal for both parties.There are around 6 billion barrels of oil, you know, in that place which need to be brought on stream, and buying TNK-BP at prices, at current levels, would not be, in my point of view, a very smart move.”RT:Do you think there could be concerns in Russia about a foreign company having such a key role in a key resource?CT:“Well they don’t have a strong role.They are participating in the same way, for example, that Total and Statoil will participate in Shtokman.BP and Rosneft will be a new alliance which means that it sends a signal to the world that Rosneft is an international, global, oil company like the others which can work with international oil companies.They both have advantages in going forward.I mean it is not a case of BP taking over Rosneft, just a strategic alliance, like they exist everywhere else.It shows that they can work together for the benefit and advantage of both parties.It’s definitely no way a takeover attempt on either part.You could argue the same thing.You know, why would you allow Rosneft to have 5% of BP? They could take over BP, they are a much bigger company.But I think when you operate with somebody there is trust, professionalism, and, you know, there is no need to add more to the pile. It is what it is, a business deal.Nothing more.”