BP bids to avoid being frozen out of Arctic deal

BP was last night locked in last-ditch talks over a plan to rescue a multi-billion pound Arctic exploration and share-swap deal.
By The Newsroom
Published 17th May 2011, 10:14 BST

The British oil giant has tabled an £18.5bn buyout of its existing Russian partners in 50/50 joint venture TNK-BP, in a move to salvage a tie-up with Russian government-owned Rosneft, according to reports.

The deal would give Rosneft the 50 per cent stake in TNK-BP now owned by the billionaire partners – a consortium called Alfa Access Renova (AAR) – who in turn would get cash and substantial stakes in both BP and Rosneft.

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BP had until midnight to secure the deal with Rosneft, which includes exploration rights for the Kara Sea and an £8bn share swap between the two firms.

The latest speculation follows a fierce arbitration process between BP and AAR, who accused the embattled supermajor of breaching its obligations with TNK-BP.

The buyout proposal represents the latest attempt by BP to appease AAR.

Earlier this month, BP proposed the hand-over of the Arctic exploration rights to TNK-BP to secure the share-swap side of the deal. But it is understood Rosneft, which had to approve the handover, was opposed to such a move as TNK-BP has insufficient experience in offshore drilling.

BP and AAR declined to comment.