Azernews.Az

MOSCOW – In a coup for the Kremlin, Russian oil major OAO Rosneft is close to acquiring stakes in four German refineries, marking one of the largest purchases of assets in western Europe by a state-controlled Russian energy company.

The deal would have positive implications for BP PLC, the U.K. oil major that has been badly hit by the Gulf of Mexico oil spill.

Rosneft is in "advanced negotiations" to buy a 50% stake in Ruhr Oel GmbH from the Venezuelan state oil company Petroleos de Venezuela SA for between $1 billion and $2 billion, according to people familiar with the matter. These people said it could be several weeks before a deal is concluded.

Ruhr Oel is a 50-50 joint venture between PdVSA and BP. Formed in 1983, it has stakes in a number of German refineries – Bayern Oil, Gelsenkirchen, MiRO Karlsruhe and PCK Schwedt –
which together account for around a quarter of all German oil-refining capacity.

The deal would be a boon for BP, the embattled U.K. oil major that has a right of first refusal on PdVSA's stake. In exchange for waiving that right, BP has been offered a lucrative deal by Rosneft to explore for oil in the Arctic Ocean, according to people familiar with the matter.

Such an agreement would be a big vote of confidence in BP, whose reputation has been battered by the Gulf of Mexico oil spill. Industry observers have speculated that the Deepwater Horizon disaster could deter state-controlled oil companies in Russia, Africa and the Middle East from wanting to work with BP, badly crimping its growth prospects.

Rosneft and BP already have close ties. The U.K. major bought around $1 billion worth of Rosneft shares when the company listed in London in 2006. The two are partners in a clutch of oil exploration projects off Russia's far eastern island of Sakhalin. And in 2006, they signed an agreement to jointly bid for and develop oil and gas fields in the Russian Arctic.

The Ruhr Oel deal will build on that arrangement, "taking it to a new level," a person familiar with the matter said. The person said it would relate to a specific area of the Arctic, and might involve BP and Rosneft being given a license to jointly explore for oil there.

Russia's Arctic seas are thought to contain billions of barrels of oil and gas. But the hurdles to actually producing hydrocarbons in this harsh, remote environment are huge. The most advanced project – the vast Shtokman gas field in the Barents Sea, which OAO Gazprom is developing with Statoil ASA of Norway and France's Total SA – has faced repeated delays. Also, BP and Rosneft have had little success in their exploration campaign off Sakhalin.

Russian oil companies have long been on a mission to expand beyond Russia's borders, and have shown particular interest in refineries in western Europe, many of which are heavily dependent on Russian crude. OAO Lukoil, one of Russia's largest oil producers, has been more successful than its peers, buying a stake in a Dutch refinery from Total last year and a stake in Italian refiner ERG's Isab di Priolo refinery in 2008.

TNK-BP, BP's 50-50 Russian joint venture, eyed Ruhr Oel in 2003, but at the time BP opposed the deal.

The 50% stake was originally thought to be worth at least $2 billion. But low profit margins, over-capacity in the industry and falling demand for petroleum products in Europe have severely depressed refinery valuations.