Bloomberg News

Dudley Says BP Is ‘Moving On’ After Failure of Rosneft Deal

June 08, 2011

June 8 (Bloomberg) -- BP Plc is “moving on” after the collapse of its proposed $7.8 billion share swap and Arctic exploration deal with OAO Rosneft, Chief Executive Officer Robert Dudley said.

“We’ve worked very hard on this with all the parties,” Dudley told reporters in London today. “From BP’s view, it’s other parties that need to reach an agreement and in the meantime we are moving on.”

The tie-up with state-run Rosneft was halted in court after BP’s billionaire partners in its existing Russian venture, known as TNK-BP, argued it would violate their shareholder agreement.

Dudley denied reports that London-based BP notified its Russian partners of a possible plan to sell its shares in TNK-BP to Rosneft.

“No notifications have been sent about the sale by any party and BP is not planning to sell shares in TNK-BP,” he said.

The January agreement would have helped BP to diversify its production profile after last year’s Gulf of Mexico oil spill. The Kara Sea, which BP would have explored with Rosneft, may hold 100 billion barrels of potential resources, the equivalent of more than three years of global production.

“The relationship remains excellent with Rosneft,” Dudley said. “There is a possibility of doing things with them somewhere around the world in the future.”

Unlikely

Rosneft has been in talks with other international oil companies, including Royal Dutch Shell Plc, since the deal broke down. Russian Energy Minister Sergei Shmatko said that the “reincarnation for that particular deal” between BP and Russia’s largest oil company is unlikely.

BP’s Chairman Carl-Henric Svanberg held out the hope that the deal could be rescued in some shape or other.

“We are obviously a favorable partner for Rosneft,” Svanberg said today. The BP venture with Rosneft “will come out in some form.”

In the meantime, the U.K. explorer would focus on TNK-BP, which accounts for about one-quarter of BP’s output and a fifth of reserves.

BP has invested about $9 billion in TNK-BP and received about $16 billion in dividends from this “great operation,” Svanberg said.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Stephen Cunningham at scunningha10@bloomberg.net


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