BP and Rosneft: The sale of TNK-BP
Published: November 2012 · Publisher: MarketLine
BP has been actively involved in the Russian energy market via its joint venture TNK-BP since 2003. The company sold its 50% stake to Rosneft in exchange for $17.1bn and 12.84% equity in the buyer. Additionally, BP plans to use the cash to ...
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Introduction
BP has been actively involved in the Russian energy market via its joint venture TNK-BP since 2003. The company sold its 50% stake to Rosneft in exchange for $17.1bn and 12.84% equity in the buyer. Additionally, BP plans to use the cash to buy a further 5.7% in Rosneft, bringing BP’s stake to 19.75%. Rosneft has also bid for the Alfa-Access-Renova consortium’s stake in TNK-BP, offering $28bn.
Features and benefits
* The publisher's Case Studies describe topics such as innovative products, business models, and significant company acquisitions.
* Fact-based and presented in an accessible style, they explain the rationale of commercial decisions and illustrate wider market and economic trends.
Highlights
TNK-BP was created in 2003, when BP and AAR merged their oil assets in Russia and Ukraine, with a 50% share each. The initial investment cost BP approximately $8bn. Since then, TNK-BP has paid out $19bn in dividends, worth approximately $2bn a year to BP. Furthermore, TNK provided 27% of BP's reserves and 29% of BP’s production in 2011.
The Russian oil and gas market accounted for 25.6% of the European market’s value in 2011, worth $208.9bn.
Your key questions answered
* Why has BP agreed to sell TNK-BP?
* What will BP and Rosneft gain from the acquisition?
* What are the risks of the acquisition?
BP has been actively involved in the Russian energy market via its joint venture TNK-BP since 2003. The company sold its 50% stake to Rosneft in exchange for $17.1bn and 12.84% equity in the buyer. Additionally, BP plans to use the cash to buy a further 5.7% in Rosneft, bringing BP’s stake to 19.75%. Rosneft has also bid for the Alfa-Access-Renova consortium’s stake in TNK-BP, offering $28bn.
Features and benefits
* The publisher's Case Studies describe topics such as innovative products, business models, and significant company acquisitions.
* Fact-based and presented in an accessible style, they explain the rationale of commercial decisions and illustrate wider market and economic trends.
Highlights
TNK-BP was created in 2003, when BP and AAR merged their oil assets in Russia and Ukraine, with a 50% share each. The initial investment cost BP approximately $8bn. Since then, TNK-BP has paid out $19bn in dividends, worth approximately $2bn a year to BP. Furthermore, TNK provided 27% of BP's reserves and 29% of BP’s production in 2011.
The Russian oil and gas market accounted for 25.6% of the European market’s value in 2011, worth $208.9bn.
Your key questions answered
* Why has BP agreed to sell TNK-BP?
* What will BP and Rosneft gain from the acquisition?
* What are the risks of the acquisition?
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OVERVIEW
Catalyst
Summary
WHY BP IS LOOKING TO SELL TNK
TNK has served BP well
The venture has provided abundant returns
TNK provided access to one of the largest energy markets
TNK helped BP to divest following the Gulf of Mexico oil spill
AAR and BP had different visions for TNK
BP and AAR clashed repeatedly
BP tried to replace AAR with Gazprom
Disagreements over corporate structure
AAR blocked an Arctic exploration venture with Rosneft
WHAT BP AND ROSNEFT GAIN FROM THE MERGER
Clear exit from AAR partnership and disruption to business
Clear exit from AAR
The deal solves one major business disruption
BP gains a stake in Rosneft
BP will benefit from Rosneft’s premier position in Russia
Rosneft gains from BP’s experience
Rosneft should be a more accommodating partner
Rosneft gains synergies from merging TNK assets
THE RISKS OF THE MERGER
Russian state intervention
Resource nationalism is not practical
Yukos
Shell in Sakhalin
Foreign ventures remain
BP as a minority stakeholder of Rosneft
The loss of TNK profits
Rosneft heavily leveraged to fund the acquisition
CONCLUSIONS
BP moves to settle uncertainty in a key market
APPENDIX
Definitions
Sources
Further reading
Ask the analyst
About the publisher
Disclaimer
Catalyst
Summary
WHY BP IS LOOKING TO SELL TNK
TNK has served BP well
The venture has provided abundant returns
TNK provided access to one of the largest energy markets
TNK helped BP to divest following the Gulf of Mexico oil spill
AAR and BP had different visions for TNK
BP and AAR clashed repeatedly
BP tried to replace AAR with Gazprom
Disagreements over corporate structure
AAR blocked an Arctic exploration venture with Rosneft
WHAT BP AND ROSNEFT GAIN FROM THE MERGER
Clear exit from AAR partnership and disruption to business
Clear exit from AAR
The deal solves one major business disruption
BP gains a stake in Rosneft
BP will benefit from Rosneft’s premier position in Russia
Rosneft gains from BP’s experience
Rosneft should be a more accommodating partner
Rosneft gains synergies from merging TNK assets
THE RISKS OF THE MERGER
Russian state intervention
Resource nationalism is not practical
Yukos
Shell in Sakhalin
Foreign ventures remain
BP as a minority stakeholder of Rosneft
The loss of TNK profits
Rosneft heavily leveraged to fund the acquisition
CONCLUSIONS
BP moves to settle uncertainty in a key market
APPENDIX
Definitions
Sources
Further reading
Ask the analyst
About the publisher
Disclaimer
Copyright © FriedlNet. You may share using our tools Please don't cut content from FriedlNet and redistribute by email or post to the web.