Billionaire Mikhail Fridman, one of the Russian co-owners of Russian-British joint venture TNK-BP, is holding meetings with institutional investors to finance a purchase of BP’s stake in the venture, the Financial Times reported on Thursday quoting sources familiar with the matter.
BP announced on June 1 that it notified Alfa Access Renova, a consortium of the four Russian billionaires including Fridman, which owns half of the venture, of its intention to pursue a potential sale. In late May Fridman resigned as TNK-BP’s CEO saying the firm’s management had become “paralyzed” by differences over future strategy.
According to the FT’s sources, Fridman has proposed two possible routes for changing TNK-BP’s ownership structure. One of them proposes AAR selling its stake to BP for shares and cash, while another option involves AAR buying BP’s stake.
BP is unlikely to agree on these proposals as sees little value in becoming a minority shareholder in TNK-BP and there is no scope for it becoming a 100 percent shareholder in Russia’s closely protected strategic energy sector.
The sale announcement in early June brought one step closer the breakup of the 50-50 partnership between BP and Alfa Access Renova, which saw TNK-BP formed in 2003 from BP’s Russian oil and gas assets and the oil and gas assets of Alfa Access Renova.
The partnership has been beset by strategic management issues in recent years, with former TNK-BP CEO Robert Dudley forced out of Russia in 2007, before subsequently becoming CEO of BP.
The aftermath of the dispute, which involved claims that BP was running TNK-BP as a subsidiary and that it was refusing to allow TNK-BP to compete in international markets, was a revised shareholder agreement, with a commitment to an IPO over the longer term, and a greater international presence for TNK-BP.
In January 2011 a proposed joint venture between BP and Rosneft to develop Russian Arctic energy interests, and a proposed share swap between BP and Rosneft, was ultimately abandoned after AAR took BP through arbitration, claiming the TNK-BP shareholder agreement gave TNK-BP the first right of refusal on any proposed BP projects in Russia – a position which was ultimately upheld.