Deadline for BP-Rosneft share swap ends

LONDON, May 17 (Itar-Tass) --The deadline for a share swap between
British Petroleum (BP) and Russia's state-owned oil major Rosneft ended on
Monday's midnight May 16.
The Financial Times says purchasing the share of the Russian
stockholders (AAR) in TNK-BP could be one of the solutions. In April, BP
and Rosneft offered 27 billion U.S. dollars to AAR for a 50-percent
package in TNK-BP, but the businessmen claimed 35 billion U.S. dollars.
AAR also insists on getting Rosneft and BP shares in exchange for a part
of its package.
The Wall Street Journal Europe says that Rosneft and BP wants to avoid
a situation where AAR would own more than 10 percent of their shares. The
newspaper's sources close to the negotiations say that the current
situation allows the Russian shareholders to withdraw from TNK-BP's
capital by selling their shares at a high price.
A possible deal between Rosneft, BP and AAR should be approved by the
Russian government, which is a Rosneft shareholder.
The BP press service refused to comment on media reports.
The consortium of shareholders, AAR, which owns the Russian company
TNK-BP on a parity basis with BP, is against the swap.
Rosneft and BP have made several agreements on strategic cooperation,
on joint exploration of hydrocarbon reserves in the Russian sector of the
Arctic and on a swap of shares worth about eight billion U.S. dollars on
each side. The agreements were expected to be finalised on April 14 when
BP shareholders are to hold their annual meeting, but were extended till
May 16.
BP said it looks forward to finding a way to resolve its differences
with its Russian partners to allow these important Russian Arctic
developments to proceed in future.
BP said it was disappointed that these agreements, which are important
for Russia, for Rosneft and for BP, cannot for now go ahead in the form
intended, due to legal challenge by AAR. BP intends to continue to honour
the TNK-BP shareholders' agreement to which it is a party with AAR, and
will respect the decision of the arbitrators.
TNK-BP is BP's primary business vehicle in Russia and BP fully
supports its strategy and investment programme.
On May 6, 2011, the arbitral panel issued a consent order permitting
BP and AAR consortium to assign the Arctic opportunity to TNK-BP, subject
to Rosneft consent.
"The order also permits the proposed share swap between BP and Rosneft
to proceed subject to Rosneft having consented to assign the Arctic
opportunity to TNK-BP. For the share swap to proceed, both BP and Rosneft
would also have to agree that any shares received as a result of the share
swap would be held for investment purposes only and placed in trust, with
voting rights exercised by independent trustees, together with certain
other technical amendments. Neither company would have representatives on
the others board in respect of these holdings," BP said in a press release.
As a result of the consent order, BP can now seek agreement from
Rosneft on the assignment of the Arctic opportunity to TNK-BP and
modification of the terms of the share swap agreement. Rosneft's consent
will be required for both of these matters to proceed.
The interim injunction on both the share swap and the Arctic
opportunity remain in place, subject to obtaining Rosneft's consents as
described above, the press release said.