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CORRECTED: Russian Rosneft completes $56 bn TNK-BP takeover

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(Globalpost/GlobalPost)

Russian state oil giant Rosneft announced Thursday the creation of the world's top listed oil firm as it sealed a $56-billion acquisition of the British and local stakes in the lucrative but strife-torn joint venture TNK-BP .

The deal creates a Russian government-run supergiant with fields and refineries stretching from Eastern Europe through Siberia to the Pacific Coast.

It also closely links BP's future with a country that is the world's top oil producer but is also criticised for the inefficiency of its state-owned energy firms.

"Congratulations on the completion of this deal," President Vladimir Putin said during a special ceremony attended by Rosneft chief executive Igor Sechin and his BP counterpart Bob Dudley.

"In my opinion, this was a very successful deal," Putin added in televised remarks.

The acquisition's terms allow BP to acquire up to 20 percent of Rosneft's shares and provide the British group with an additional $17 billion in cash -- an infusion it needs in the wake of large payouts related to the Gulf of Mexico oil spill.

Rosneft had completed the all-cash purchase of the Russian stakes held by four Soviet-born tycoons earlier in the year.

"This is an historic day for BP and Russia," Dudley said in a statement.

The deal "gives us a wonderful opportunity to forge a new partnership with a great Russian company," Dudley said.

TNK-BP -- Russia's third-largest oil firm -- was held back by years of infighting between its British and Russian owners, but still generated $19 billion in dividends since the company's creation in 2003.

Putin conceded that the venture's history had not been simple and that the deal's completion was marred by the very public squabbles between BP executives and TNK-BP's former chairman Mikhail Fridman.

That rivalry spilled over into attempts by both BP and the Russian tycoons to win full control of the venture. But Rosneft proved that it had the cash and lending power -- as well as Putin's blessing -- to buy out both sides in the end.

"Not everything went smoothly," Putin acknowledged. "But in my opinion, in the long run, it all ends well."

Dudley said for his part that he had no intention of selling Rosneft's stake despite some BP shareholders' questions about the wisdom of the British group becoming so closely involved with a Russian state firm.

"If you ever hear rumours about us intending to sell our Rosneft shares, do not believe them," Russian news agencies quoted Dudley as telling Putin in remarks translated into Russian.

Sechin said the joint company would produce 206 million tonnes of oil per year compared with 115 million by ExxonMobil.

It will pump one of every 20 barrels of oil in the world, and have Dudley representing the Russian government on the Rosneft board -- a decision that leaves the BP chief unable to defend his own firm's interests in Moscow.

Sechin added that the synergies from the tie-up would generate $10 billion over the coming years.

Yet some analysts said the company still faced challenges because it was joining outdated facilities and still lacked the technological wherewithal of its Western counterparts.

"It lacks everything -- money, oil well drills and 3D survey technology," said Sberbank Investment Research analyst Valery Nesterov.

"How quickly these issues are resolved will determine the company's market success," he said in an interview.

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http://www.globalpost.com/dispatch/news/afp/130321/corrected-russian-rosneft-completes-56-bn-tnk-bp-takeover