Oil giant BP and Russian state-backed oil
company Rosneft agreed a multibillion-dollar deal Monday that will
make Rosneft the world's largest publicly listed oil producer, while
giving BP strategic access to Russia's vast energy resources.
The mega deal, worth a total 61 billion dollars, is said to be the biggest in the industry since the 1999 ExxonMobil merger.
It will increase Rosneft's oil production to an estimated 4.5 million barrels a day, almost double that of its main competitors on the world market.
Russian President Vladimir Putin said he hoped the "important" deal would "create a good partnership" in the future.
BP's chairman, Carl-Henric Svanberg, said: "This is an important day for BP. Russia is vital to world energy security and will be increasing significantly in years to come."
Under the cash-and-share deal, Rosneft will pay BP 17.1 billion dollars in cash, and give the British company shares representing 12.84 per cent of Rosneft, at a price of eight dollars per share.
BP is set to acquire further shares which will take its stake in the Kremlin-backed firm to 19.75 per cent.
Simultaneously, Rosneft acquired the 50-per-cent stake held in TNK-BP by Russia's AAR consortium, for 28 billion dollars. BP's relations with the consortium in the joint venture set up in 2003, have been turbulent over the years.
In 2008, Bob Dudley, now BP's chief executive, was forced to leave Russia as tensions flared over the joint venture, which he led. Last year, a dispute between BP and AAR effectively scuppered a proposed deal between BP and Rosneft on Arctic exploration - something that is
expected to be revived under the new arrangements.
"This investment builds on BP's track record of value creation in Russia. It is consistent with our strategy of deepening our positions in the world's most prolific oil and gas regions," Dudley said Monday.
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