15:36 ET<\/span>
\n<\/span><\/p>\nTalks between BP and AAR about the British oil firm buying out its Russian partner in joint venture TNK-BP “have now more-or-less collapsed”, says BBC business editor Robert Peston.<\/p>\n
It comes as a deadline for BP to complete a $16bn (\u00a310bn) share swap with Russian oil giant Rosneft looms.<\/p>\n
The Russian billionaire shareholders of TNK-BP have argued that the Rosneft tie-up breaks promises BP made to them.<\/p>\n
In a bid to placate AAR, BP offered to purchase its 50% holding in TNK-BP.<\/p>\n
‘Stumbling block’<\/span><\/p>\nHowever our correspondent says “a BP source said AAR put an impossibly high valuation on TNK-BP of around $70bn, which would value the oligarchs’ stake at more than $35bn”. <\/p>\n
He added that “BP was prepared, jointly with Rosneft, to pay something over $25bn for their stake, on the basis that TNK-BP is worth more than $50bn”.<\/p>\n
“Another stumbling block was that AAR wanted payment to be in BP and Rosneft shares – and both companies decided that they did not want the AAR oligarchs to become substantial shareholders in their companies,” Mr Peston added.<\/p>\n
The controversial deal with its Russian state-owned Rosneft was signed in January, in order to exploit potentially huge deposits of oil and gas in Russia’s Arctic shelf.<\/p>\n
As part of the deal, the pair had agreed that Rosneft would take 5% of BP’s shares in exchange for approximately 9.5% of Rosneft’s shares.<\/p>\n
It is this share exchange that is said to have particularly upset TNK-BP’s Russian shareholders.<\/p>\n
The AAR consortium won a High Court injunction in London in February that put the BP-Rosneft deal on hold until the dispute could be resolved by arbitration.<\/p>\n
In March an arbitration panel upheld AAR’s complaint. <\/p>\n
A later arbitration hearing this month gave BP time to try to extend the 14 April deadline for the Rosneft pact to be sealed.<\/p>\n
‘Long-term investor’<\/span><\/p>\nHowever that Thursday deadline, which coincides with BP’s annual shareholder meeting, has not yet been extended by Rosneft.<\/p>\n
An executive close to the billionaires who make up AAR pointed out to our business editor that the proposed deal with Rosneft – which initially included an agreement to explore for oil in the Russian Arctic – was blocked by rulings given in the High Court in London and by the independent Stockholm tribunal, on the grounds that BP had violated its shareholder agreement with AAR.\u00a0 <\/p>\n
An AAR source said: “It is up to BP to make a sensible proposal to get out of the mess it has created. One has not been forthcoming.”<\/p>\n
He added: “AAR’s position has always been clear – AAR wanted the entire Rosneft deal turned over to TNK, not some selected parts\u2026 They now face the consequences of their actions.”<\/p>\n
Our correspondent says AAR is now preparing legal action against BP, two BP appointees to the TNK-BP board and the BP chief executive, Bob Dudley, alleging they had damaged the interests of TNK-BP.<\/p>\n
However, Stan Polovets, chief executive of AAR, told the BBC that “AAR is a long-term strategic investor in TNK-BP and has no plans to exit”.<\/p>\n<\/p><\/div>\n<\/p>\n
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