State-owned oil giant Rosneft’s acquisition of TNK-BP does not signify an increase in state control of the Russian oil sector, and no one in Russia is building state capitalism, First Deputy Prime Minister Igor Shuvalov said on Friday.
“The sale of TNK-BP to Rosneft does not represent an increase in state control of the oil sector, because the final conditions for the deal have not been announced. We have only seen the general shape of it,” Shuvalov said in Berlin during an event to mark the 60th anniversay of the Eastern committee of the German economy. “But if this general shape is realised in the concrete terms of the deal, it will mean that the consolidation of these assets under Rosneft will signify the further privatisation of the company,” he said.
TNK-BP is currently jointly owned on a 50-50 basis by Britain’s BP and AAR, a consortium of four Russian billionaires. It was announced on October 22 that BP was selling its half share in the company to Rosneft for $17.1 billion and 12.84 percent of Rosneft’s shares, and AAR was selling its half to Rosneft for $28 billion cash.
Shuvalov underlined the importance of the fact that as a result of the deal, BP would become a major investor in Rosneft, which is currently almost 75 percent state-owned. Under the deal with Rosneft, BP will also purchase another 5.66 percent, in addition to a stake it already has, taking its total holding to 19.75 percent.
“This signifies the consolidation of shares in one company, and it will become the largest oil producer, a company with huge capabilities, that is explored reserves. BP will become a shareholder and this is very significant for corporate governance and for the privatisation process,” he said. “If Rosneft had just bought these shares – then it would have been just an absorbtion of a private market player by a state company,” he said.
Russia does not intend to build state capitalism or increase state control, he said.
“We don’t intend to increase the influence of the state or boost state property. State capitalism is absolutely not our path. We moved away from this years ago. Our task is development of Russia as a modern country with state institutions and a completely differentiated economy, where large and small business can predominate,” he said.