Azernews.Az

By Gleb Bryanski, REUTERS

Russia's Rosneft (ROSN.MM) has taken time out in talks to buy a stake in TNK-BP (TNBP.MM) to avoid falling foul of a shareholder's agreement between its current owners, Rosneft CEO Igor Sechin said on Thursday.

BP said in June it would start the process of selling its 50 percent stake in TNK-BP, which it formed nearly a decade ago with a group of Russian tycoons called AAR to tap into the country's vast energy reserves.

In July, BP entered a 90-day period to talk to potential buyers including AAR and Rosneft.

"It seems to me we need to take a break on this issue," Sechin told reporters on a trip to Russia's Pacific coast. "As far as I understand there are corporate agreements which do not allow third parties to stick their noses into the issues you are talking about. At the moment we have these limitations."

The TNK-BP venture - worth an estimated $60 billion - has proven highly lucrative but has been plagued by conflict between its owners. It is governed by a shareholder agreement drawn up at the time TNK-BP was created, which spells out the terms under which the two parties operate, but has not been made public.

Sechin, a close ally of President Vladimir Putin, was speaking after a visit to the site of a new petrochemical plant with Putin and Rex Tillerson, chief executive of Rosneft partner ExxonMobil (XOM.N).

Sechin's response was to a question asking him for an update on the TNK-BP situation and whether an acquisition was in the works.

The TNK-BP shareholder agreement is secret, but according to a source familiar with its contents, the 90-day period obliges BP to maintain good-faith negotiations with AAR while it talks to other parties, and requires AAR to not unreasonably withhold information about the business that BP wants to reveal.

"We have received multiple expressions of interest in the potential acquisition of our interest in TNK-BP and we continue to hold confidential negotiations for the potential sale of BP's shareholding in TNK-BP," a BP spokesman said by email.

"We are currently in the 90-day period during which BP is obliged to talk to its current partners as announced on July 18. We understand that Mr Sechin was simply acknowledging that."

NATURAL BUYER

State-controlled Rosneft is the natural buyer for the asset and a slowdown in progress doesn't mean that it won't prevail by eventually acquiring a stake in TNK-BP, one analyst said.

"It's not a surprise that Rosneft is taking its time," said Chris Weafer, chief strategist at brokerage Troika Dialog. "It can afford to, as it is realistically the only suitor for either BP or AAR, or both equity stakes. To that extent it is in the driver's seat."

BP and AAR have had a series of clashes over the years over corporate governance, the culmination of which came last year when BP tried to secure a $16 billion deal with Rosneft which collapsed after AAR said it violated the shareholder agreement.

The unwinding of the TNK-BP partnership could follow one of several scenarios. Analysts say it could involve either BP or the AAR quartet of billionaires selling their stake.

"Like many troubled celebrity marriages, expect to hear both sides say something like they are working out their differences and giving the marriage more time," Weafer said. "In reality negotiations with Rosneft will likely then intensify out of the public gaze, but at Rosneft's pace (and) very likely on its terms."

Sechin said TNK-BP's huge resource base made it an attractive asset to Rosneft. TNK-BP is Russia's third largest oil producer and has generated huge profits for BP.

Rosneft has hired a number of TNK-BP executives in recent months, a process Sechin said was aimed at boosting the qualifications of Rosneft's staff.