UPDATE 4-BP says oligarchs can't block Russian stake sale

Mon Jun 4, 2012 11:52am EDT

* State holding Rosneftegaz likely buyer - sources

* BP seeks to exit profitable but troubled investment

* Oligarchs have 45 days to express interest - sources

* Court orders new hearing on $13 bln minority suit - BP

By Douglas Busvine

MOSCOW, June 4 (Reuters) - BP said on Monday it would press ahead and sell a stake in its Russian venture, dismissing a threat by its billionaire partners to block a deal that would help the Kremlin tighten its grip on the country's vast energy sector.

The British oil major said last Friday it would pursue a sale after receiving expressions of interest in its one-half stake in TNK-BP, Russia's third-largest oil producer. Analysts say BP's shareholding is worth $30 billion.

Sources familiar with the matter said BP has been approached by state energy holding company Rosneftegaz, which controls a stake of more than 75 percent in Rosneft, Russia's largest oil firm.

A successful sale of TNK-BP to the state would raise the government-controlled share of Russia's oil output to half and strengthen Vladimir Putin's grip on strategic natural resources weeks after his return to the presidency.

It would also sideline the four billionaires in the AAR shareholder consortium who own the other half of TNK-BP and thwarted an earlier tie-up between BP and Rosneft.

"We have a contractual right to sell," a BP spokesman said on Monday in response to a media report that AAR would seek to veto any deal.

BP's announcement of its sale plans triggers a clause in the TNK-BP shareholder agreement that allows it to negotiate with any buyer within 135 days - nearly five months - sources familiar with the matter said.

During an initial period of up to 45 days, AAR would have the right to express an interest in buying BP's stake. That would be followed by good-faith negotiations over 90 days, during which time BP would also be able to hold talks with other possible buyers.

The sequencing puts the ball in the oligarchs' court for six weeks before BP can start talks with any other suitor.

The BP spokesman dismissed a report in the Financial Times that the shareholder agreement barred BP from giving out any confidential information to a third party without AAR's consent, effectively handing the co-owners a veto right over any deal.

"We will meet our obligations under the shareholder agreement and expect Alfa-Access-Renova (AAR) to do the same. We look forward to hearing from AAR directly," the spokesman said, adding that sale talks could take several months.

A source close to AAR said it was considering buying BP's stake. "Now that BP has sent its notice, AAR has the priority right to require BP to negotiate in good faith a purchase by AAR of TNK-BP shares from BP," the source said.

"Effectively, this right creates a 135-day moratorium on any sale by BP of its TNK-BP shares."

BP and AAR have been at odds for years, with relations dogged by failed deals and legal challenges.

In a further twist on Monday, a Russian court ordered a new hearing into a $13 billion lawsuit brought against BP by minority shareholders in TNK-BP over the failed BP-Rosneft deal, a BP lawyer said.

The Federal Arbitration Court in the Siberian city of Tyumen has sent the case to a lower court, lawyer Konstantin Lukoyanov said, adding the decision "inflicts substantial damage on Russia's investment climate". No date was set for the hearing.

AAR has denied being a party to the minority lawsuit.

STATE APPROACH

Former deputy premier Igor Sechin, a Putin ally who has led strategy at Rosneft for the best part of a decade, was recently named CEO of Rosneft and nominated to the Rosneftegaz board with a mandate, sources say, to build an oil major of global scale.

Gazprom Neft - an oil unit of state gas export monopoly Gazprom that has a joint venture with TNK-BP - may also emerge as a bidder for BP's stake, analysts said.

Gazprom CEO Alexei Miller, speaking in Malaysia, said the company had held no talks with BP but added that "everything is interesting to us", the Interfax news agency reported.

Analysts at Renaissance Capital led by Ildar Davletshin also said an exit by BP from TNK-BP may not lead to its departure from Russia.

"If BP sells its stake to one of the Russian national oil companies, it could simultaneously strike a new deal with a buyer to create a new joint venture, and commit to reinvest part of its gains back in Russia," the analysts wrote in a note.

BP, tied by an exclusivity clause in the TNK-BP shareholder pact, has missed out on a raft of offshore exploration deals announced in recent weeks by Rosneft with U.S. Exxon Mobil , Italy's Eni and Statoil of Norway.

UNDER PRESSURE

The state approach has put AAR - led by banking-to-retail tycoon Mikhail Fridman - under pressure after it took legal action last year to prevent BP from signing the offshore exploration and $16 billion share-swap deal with Rosneft.

Fridman resigned as chief executive of TNK-BP a week ago, deepening a corporate governance crisis that has deprived its board of a quorum and blocked the payment of dividends.

Industry and political sources say the oligarch shareholders last year lobbied Dmitry Medvedev, then president and now prime minister, to oust Sechin as chairman of Rosneft.

With Putin back in the Kremlin and Sechin in control of Rosneft in both an executive and advisory capacity, it appears increasingly likely that the state will assume control of TNK-BP - either by buying out BP or the oligarchs.

"The end game is that the state buys (TNK-BP)," said one veteran Moscow-based executive. "The issue is that Fridman overplayed his hand a couple of times."

Sources close to AAR have said, meanwhile, that the consortium would be willing to buy out BP for a consideration of $25 billion.

BP paid a total of $8 billion in 2003 for one half of TNK-BP, a hugely profitable, if troubled, investment that has paid $19 billion in dividends and accounts for 29 percent of its output.

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