Sponsored by: Investment Center

Something new in your business?  Click here to submit your business press release

Chamber Corner | Main Street News | Job Hunt | Classifieds | Calendar | Illinois Lottery 

Russian gov't downplays Rosneft expansion concerns

Send a link to a friend

[October 18, 2012]  MOSCOW (AP) -- Russia on Thursday downplayed concerns that Rosneft's possible purchase of BP's stake in the joint venture TNK-BP, which analysts say would reshape the country's oil industry and create the world's biggest oil and gas company, is likely to threaten competition.

Moscow-based TNK-BP, Russia's third largest energy producer in terms of production, is jointly owned by BP and AAR, a group of Russian billionaire shareholders. The two partners have been locked in a boardroom dispute for much of the group's existence, and both have acknowledged that one of them needs to go.

BP said in June it intends to sell its 50 percent stake. State-owned Rosneft is considered the likeliest buyer although AAR once said it might buy out BP.

Rosneft's possible purchase of a half of TNK-BP would drastically change the energy sector in Russia by altering the balance of power between companies in a way not seen since 2004. The deal would also make Rosneft, already Russia's largest oil producer, the world's largest publicly traded oil company -- ahead of ExxonMobil.

A 50 percent stake in TNK-BP could fetch up to $21 billion, based on its market valuation at the MICEX stock exchange. TNK-BP's stock was up nearly 2 percent Thursday morning.

Energy Minister Alexander Novak told Russian news agencies on Thursday that the government doesn't believe Rosneft's possible purchase would hurt the sector.

"I don't think that would be a monopolist situation," he said in comments carried by Interfax, the Russian news agency. "We have rather high competition on the market already."

BP and AAR had no comment, while Rosneft's spokesperson Darya Ermolina said the company evaluates "a number of opportunities" on the market. She would not confirm an upcoming deal, however.

Novak added that Rosneft had not informed the government of its plans regarding TNK-BP.

[to top of second column]

Ratings agency Fitch warned Rosneft on Thursday that its credit rating "may be stretched" if it buys 50 percent in TNK-BP. Fitch said in a statement that Rosneft's fundamentals easily allow it to spend $15 billion for the purchase "while maintaining its current rating." But the agency warned that any debt of more than $15 billion would like result in a downgrade.

Prime Minister Dmitry Medvedev's ally Arkady Dvorkovich, who in May replaced Igor Sechin as Russia's deputy prime minister for the energy sector -- a position with traditionally more influence than the energy minister -- has spoken against the expansion of state presence in the energy sector. But Sechin, now Rosneft's chief executive, is still believed to enjoy close ties with President Vladimir Putin and hold considerable influence over the oil and gas sector.

Rosneft, 75-percent owned by the Russian government, was a mid-sized Russian oil company before becoming the country's second-largest oil producer in 2004, when it bought the most lucrative assets of Yukos, an oil company ruled bankrupt following the jailing of its billionaire owner Mikhail Khodorkovsky.

Since then, the players in Russia's oil and gas sector have largely been the same.

[Associated Press; NATALIYA VASILYEVA]

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

< Recent articles

Back to top


 

News | Sports | Business | Rural Review | Teaching & Learning | Home and Family | Tourism | Obituaries

Community | Perspectives | Law & Courts | Leisure Time | Spiritual Life | Health & Fitness | Teen Scene
Calendar | Letters to the Editor