Rosneft Refuses to Allow TNK-BP to Join £10bn Arctic Deal with BP

After creating a share-swap deal, Rosneft and BP were set to drill in the Arctic waters of Kara Sea, but there were some complications in the swap part of the deal that got in the way. Alfa Access Renova are the existing BP partners in Russia that have created TNK-BP as a partnership and thereby placed a court order that halted the swapping of shares with Rosneft due to a breach of an earlier agreement, the company claims. Apparently, BP made a suggestion that TNK-BP would be able to join the deal with Rosneft in Russia, and they weren’t too fond of being excluded after that statement.

Rosneft Oil Terminal

The agreement was put into place to ensure that TNK-BP could get involved on the action going on in Russia and there have been many talks about joining the deal, but the company still feels that it is not an acceptable solution. They don’t have the experience, personnel, or technology according to the CFO of Rosneft, which is why it doesn’t seem like it will be successful. The oligarchs (as TNK-BP is known) and BP will now begin arbitrations in the United Nations Court in Sweden to determine the next steps.

The settlement to TNK-BP is only going to be financial, in most cases, because the company seems to only want money from the deal. However, the arbitration process is set to begin and no one sees it likely that things will be settled before the proceedings are completed. Everyone is trying to be done by February 25th, but that may not be possible depending on the circumstances and the events that take place. Rosneft is the world’s largest producer of oil, and chose BP to drill in the Kara Sea as part of the share/swap deal that they had made.

TNK-BP Logo

Since this cannot go on currently, Rosneft will have to wait until the arbitration is completed and then see about carrying out their deal or striking a new one to get back to work. Rosneft doesn’t see the need or ability for TNK-BP to join the deal in the Arctic, but the company is fighting back and will likely get something for their struggle. In the world of oil, it’s a constant competition to get the best and most proficient people involved in deals, and to Rosneft, TNK-BP is not one of those types of companies.

Photo by itar-tass.com

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