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№ 10 (October 2012)

Rosneft Seals TNK-BP Deal, Strengthens Tie to Exxonmobil

Rosneft is emerging as Russia’s true champion of the Arctic and it appears the Kremlin’s taste in foreign partners is uniquely Anglo-American – Exxonmobil and BP.

By Pat Davis Szymczak

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Rosneft aims to control up to 75 percent of offshore licenses issued in the Russian Arctic.  And it is moving fast. On the eve of completing negotiations to buy TNK-BP in a deal that will put BP in the center of Rosneft’s Arctic activities, Rosneft announced it had recruited a Vice President of Exxonmobil Russia Inc., to fill a newly created position of Vice President for Offshore Projects at Rosneft.

Zelijko Runje had, since 1997, held various management positions on the Sakhalin I project in his capacity as Vice President at Exxonmobil Russia. Runje knows the Arctic. He is a University of Alaska graduate who worked from 1979 to 1993 in technical and management positions on drilling and production projects in the Alaskan Arctic.

Runje’s move from Exxonmobil for Rosneft can only strengthen the partnership agreed in Spring whereby Exxon is partner of first choice to develop three Russian fields in the Kara Sea with reserves estimated at 85 billion barrels of oil equivalent. The deal gives Rosneft access to 30 percent minority stakes in three of Exxon’s North American projects.
Now, Rosneft President Igor Sechin has put together a $61 billion deal to take over 100 percent of TNK-BP. Press reports say that Sechin, in a meeting with Russian President Putin, called the deal the “third largest deal” ever made globally. If completed, it would make Rosneft the biggest publically traded oil company in the world.

The Moscow Times reported Tuesday that Rosneft will pay BP $17.1 billion in cash plus a package of its own shares amounting to 12.84 percent in exchange for BP’s 50 percent stake in TNK-BP. BP will then use $4.8 billion out of the cash it gets to acquire a further 5.66 percent of Rosneft from the government.  BP also gets two seats on Rosneft’s nine-seat board of directors.

While the deal has been negotiated and announced publically, it has yet to be signed. Once it is signed, however, Rosneft will over-take PetroChina and ExxonMobil as the world’s largest crude oil producer.


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