Rosneft gives warning over AAR block on BP deal

The conflict between the Russian owners of TNK-BP and the BP itself took a new twist on Friday, as Russian oil major Rosneft vowed it would not rule out any response if it suffered as a result of the dispute, whilst the AAR consortium insisted BP carry out its deal with Rosneft through TNK-BP.

“If we incur any damage, we are not ruling out any action,” Rosneft CEO Eduard Khudainatov said.

In January, Rosneft and BP agreed on a $16 billion share swap in which Rosneft was to exchange 9.5% of its stock for 5% in BP. The deal, masterminded by powerful Deputy Prime Minister Igor Sechin, also includes plans to jointly develop oil production in the Russian Arctic.

But both parts of the contract were blocked by a court injunction in February pending investigation following suits from AAR, representing TNK-BP’s Russian partners. They say BP violated a TNK-BP shareholder agreement when it signed the Rosneft deal. The agreement stipulated BP can only start Russian projects with the approval of TNK-BP.

The Rosneft agreement is crucial to helping BP recover from the Gulf of Mexico disaster, and giving state-run Rosneft access to the offshore technologies it lacks.

The deadline for the share swap expired on Thursday but the firms extended it to May 16.

“We expect BP to use the extension offered by Rosneft to fulfil its obligations written in the shareholder agreement with AAR and secure the Arctic project development and the share swap through TNK-BP,” AAR CEO Stan Polovets told RIA Novosti.

BP CEO Robert Dudley said his company had offered AAR $27-28 billion for its half of TNK-BP but the offer was rejected.

Vedomosti business daily quoted a Rosneft source as saying AAR wanted $40 billion for their half of the company. Dudley declined to comment on the figure but said BP had received no new proposals from AAR.

Khudainatov said Rosneft could find funds if it were to buy AAR’s share in TNK-BP.

“We have enough free cash and our EBITDA allows us to raise enough money,” he said. “We can afford any large sum for any project which is interesting to us.”

He said BP asked the Stockholm arbitration court on Friday to continue hearing the AAR case.

Vedomosti also said that BP had offered AAR participation in its Arctic and international projects, but AAR refused.

MOSCOW, April 15 (RIA Novosti) 

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