BP heads for Russian exit

 
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I said on Tuesday that BP was playing a game of chicken with the Russian billionaires who co-own TNK-BP. What is slightly unclear this morning is whether BP has blinked or put its put foot down harder on the accelerator.

BP has had years of difficult and fractious relations with the troika of billionaires, who work through the AAR consortium. Following the almost total collapse of normal working relations with them, BP's board has decided to try and sell its 50% stake in TNK-BP, following receipt of what it calls "unsolicited indications of interest".

I understand that one of these approaches is from an unnamed Russian state business, which might offer cash and shares for the TNK-BP stake. The Russian billionaires, led by Mikhail Fridman, have also suggested to BP they would perhaps be prepared to buy the British company's stake.

Slightly confusingly, BP also sees the billionaires as potential sellers to BP of all or part of their shares in TNK-BP, although not on terms that BP's board regard as acceptable.

TNK-BP is thought to be worth around $50bn. Strikingly that is less than the $64bn valuation put on it last year by BP - which may cause concern to some BP investors.

But a year ago, the oil price was 25% higher, BP-TNK contained more cash, and there was the possibility of more value being extracted from it via a possible related deal with another Russian energy giant, Rosneft (at that time BP would have bought the billionaires' stake and then sold it to Rosneft).

If BP now succeed in selling its TNK-BP shares - and we probably won't know that til the last three months of the year - it would probably receive $25bn, including a stake in another Russian energy business.

But that is an if - given that BP's Russian billionaire partners have a history of throwing large and disruptive spanners into BP's works.

 
Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    +1

    Comment number 24.

    Russia is simply showing the traits of unrestrained capitalism which existed in the UK in the 18th and 19th centuries. It isn't pretty, but it did help to build the British Empire - for good or ill.

  • rate this
    0

    Comment number 23.

    16.Ap

    My, my.

    It's fine to criticise the Russian government, but not the British politicians? Not noticed the economic policies dictated by the banks and corporations? Not been following Leveson?

    You clearly make rash assessments. I lived in France for some time. I managed to cross water on many other occasions too. I'm sure that won't matter to you though when criticizing.

  • Comment number 22.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 21.

    I agree with you wholeheartedly No.9................and then there's the Russians!

  • rate this
    0

    Comment number 20.

    B.P. needs to get out before its assets are seized in an Argentine style take over. Many smaller firms have been brutally taken over by the local Dons who have, as the Russians put it, a "Roof", meaning their illegal actions have been sanctioned by their friends on high.

  • rate this
    0

    Comment number 19.

    Anglophone in a sense you are correct. I think there is a growing core of legalised corruption taking over our economy - and its nature is being increasingly exposed.

    However, as you say, we should not lose sight of the positive traits of Britain otherwise we are in danger of surrendering our control in apathy.

    In the same light we should not be quick to deride other countries out of hand.

  • rate this
    -1

    Comment number 18.

    Bottom line:

    1).Russia does'nt need BP's expertise any longer
    2).BP lacks direction
    3).The only direction it follows is driven by the parasites in the finance sector.

    They need to recognise they are not in the same league as the RUSSIAN Oligarchs

  • rate this
    0

    Comment number 17.

    Thanks for the update, for the report on all the cost variances.
    But it's all an IF - given that BP's Russian billionaire partners have a history of throwing large & disruptive spanners into BP's works, & BP's reputation leaves a lot to be desired as well.
    I think this is what the western world has come to call "normal business" negotiations/transactions. Get away with everything you can!

  • rate this
    0

    Comment number 16.

    5 Comradeoglivy

    "Yes... and the UK is different how?"

    If we could export pointless corrosive cynicism we would be the richest nation on Earth.

    Anyway...UK courts...always bow to the governments will. Happens every week!

    Organised crime...Cameron and Osborne deeply involved in mafia rings.

    UK elite...rotten too the core!

    You've clearly never left these shores! Your cynicism will devour you!

  • rate this
    -1

    Comment number 15.

    Payment in gold.

  • rate this
    +1

    Comment number 14.

    It will be whatever the Kremlin wants.

  • rate this
    0

    Comment number 13.

    Why keep 50% ??
    Bring in another Russian partner, the 50% is the problem

    Sell some of it but keep your foot in the door

  • rate this
    0

    Comment number 12.

    Do corporations like BP really operate so much different than Russia? What was BP's real intention of trying to enter the Russian market? To rape another nation of its resources for a quick buck?
    Perhaps ComradeOgilvy 5. is not too far off the mark.

  • rate this
    0

    Comment number 11.

    "unsolicited indications of interest"?

    Clearly BP needs one of those stickers on its doors along the lines of "no buying and selling here" and "appointments and invitations only"-that would scare them off.

    Seriuously, though, I think that most, when viewing the Polovtsian dances twists and turns of BPs venture in Russia, would suggest take the money and run.

  • rate this
    0

    Comment number 10.

    What BP need to do is sell their stake in TNK-BP to Gazprom Neft or Rosneft. What they also need to do is either merge with Shell or sell their US business to Exxon Mobil or Chevron

  • rate this
    +2

    Comment number 9.

    Yet another face of the cold war barons. Their greed and corruption is akin to the Mafia in its heyday.

  • rate this
    +3

    Comment number 8.

    Russian privatisation consisted of selling state assets, at knock down prices, to organised crime and former members of the KGB. Their businesses therefore are run in similar manner.

  • rate this
    +2

    Comment number 7.

    Russia is like the old wild west wildcating setup when it comes to oil.
    It is unpredictable and potentially dangerous because corporations government and organised crime to a large extent all work hand in glove. Some would say what's the difference with how it works in the west. BP have made a success of new oil fields in Russia and are now about to be forced to sell that interest on the cheap.

  • rate this
    +2

    Comment number 6.

    Russians don't follow the same business rules that guide most other countries. Force & pressure are more regularly used and state officials can be used to achieve the desired end.

    Russians don't have the right skills or attitude to develop their vast resources, their problem will be finding partners when they behave like gangsters

  • rate this
    +2

    Comment number 5.

    BP need to cut their losses. Clearly, they're not destined for business in Russia. A problem for an oil company, of course, but they've been sliding for a while.

    1.Ap

    "There is no distinction between the State, the Law, the so-called "elite" and organised crime. They're pretty indistinguishable!"

    Yes... and the UK is different how?

 

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