BP, Europe's second-largest oil company, is reportedly preparing to sell its 50% stake in TNK-BP, its joint Russian venture with oligarch investors, to OAO Rosneft, Russia's largest oil company. High-ranking BP executives notified TNK-BP today that the British oil giant would soon send them a letter announcing its intent to sell its interest in the venture, the Wall Street Journal reported, citing sources familiar with the matter.
As recently as last month, BP (BP) was considering acquiring TNK-BP so that it could proceed with a planned $16 billion share swap with Rosneft, but TNK-BP rejected BP's acquisition overtures, which led to the collapse of BP's deal with Rosneft. BP had reportedly offered $32 billion in cash and shares for the 50% of TNK-BP it does not already own.
While BP and Rosneft reportedly remain in talks, it appears unlikely the two sides will be able to reach an agreement that would see the two companies partner to explore for oil in Russia's oil-rich Kara Sea.
A source close to TNK-BP, Russia's third-largest oil company, said the company would be happy with Rosneft owning the other half of the company, the Journal reported. TNK-BP accounts for a quarter of BP's output, 20% of its reserves and 10% of its profits.
The sale of its TNK-BP stake would put BP well above the $30 billion in asset sales it pledged to make following the Gulf of Mexico oil spill last year, but it would also be damaging to the company's output and reserves, at least in the near- to medium-term.