BP is looking to sell its stake in the TNK-BP joint venture – valued at up to $30bn – in a move that would end its tumultuous but highly profitable nine-year investment in Russia and lead to a radical reshaping of the British oil major.
The group said it had received “unsolicited approaches” for its 50 per cent shareholding in TNK-BP but did not specify who had made them. However, a person familiar with the situation said it was from “one of the Russian state companies”, suggesting it was either Rosneft, the national oil champion, or Gazprom, the gas export monopoly.
TNK-BP accounts for almost a third of BP’s total oil production and has provided it with $19bn in dividends since its creation in 2003.
However, the investment has been clouded by a succession of acrimonious disputes between BP and its Russian partners in the company, a group of billionaires known as Alfa-Access-Renova or AAR.
BP’s investors welcomed the news that the group was planning to exit TNK-BP, with the group’s shares closing up 1.8 per cent at 402p. Though financially lucrative, the Russian venture had been a “drag” on BP, said Jon Rigby, an oil analyst at UBS.
Some analysts speculated that a sale could leave the 104-year-old British group vulnerable to a takeover bid.
“This cleans up BP’s structure, with the result that it becomes more attractive as an M&A target,” said Chris Wheaton, an energy fund manager at RCM/Allianz, which owns BP stock.
Tensions over the future of TNK-BP broke out anew this week when Mikhail Fridman, the de facto head of AAR, resigned as chief executive of TNK-BP, saying the partnership with BP had run its course.
BP’s announcement also comes just over a week after Vladimir Putin gave his hawkish energy tsar, Igor Sechin, a broad mandate to consolidate state stakes in the energy sector via an investment vehicle, Rosneftegaz.
Mr Sechin told reporters on Friday neither Rosneft nor Rosneftegaz had “ever thought” about acquiring a TNK-BP stake, but did not rule out doing so in future.
Any sale to a Russian state energy company could only come after BP has conducted 135 days of talks with AAR under a shareholder agreement that requires the UK oil group to first negotiate a sale of the stake to its local partners. But BP is not confined to exclusive negotiations with AAR in that period.
“AAR has a right to require BP to negotiate in good faith a purchase by AAR of TNK-BP shares from BP,” a person close to AAR said.
AAR confirmed it had received notice that BP was willing to sell and said it was ready to increase its stake.
Selling its Russian venture would fit BP’s ambition to turn itself into a more streamlined company, focused on high-margin areas – a strategy known as “value not volume”. “We see a smaller, more nimble, low-geared company as attractive,” Mr Rigby of UBS said.