September 21, 2020

BP Gets an Extention From Rosneft to Salvage Their Oil Exploration Deal

BP said the two companies had agreed to extend by another month the deadline to complete the deal, giving BP time to try to resolve a dispute with partners in a separate Russian joint venture, TNK-BP, who have been trying for three months to block the agreement with Rosneft.

BP said it had offered its TNK-BP partners cash or a role in its deal with Rosneft, but that it would not offer a significant stake in BP as an inducement.

The BP chief executive, Robert W. Dudley, speaking to investors at BP’s annual shareholder meeting in London, played down the severity of the dispute, saying the company’s relationship with its TNK-BP partners was “noisy” but not “dysfunctional.”

“We’ve offered participation in the Arctic, we’ve offered cash, we’ve offered participation in international ventures,” Mr. Dudley said. “But we won’t offer a large amount or significant stake in BP because it’s not in the interest of shareholders.”

BP’s partners in TNK-BP rejected Mr. Dudley’s claims and said “BP has never made a constructive proposal to turn the Rosneft deal over to TNK-BP.”

The Russian partners are “not interested in the selective parts of the deal that BP feels it can give up,” Stan Polovets, a spokesman for the group, said in an e-mailed statement. “Now is the time for sensible proposals from BP to resolve the problems that have been created.”

Mr. Dudley said BP would be “working to bring about a resolution,” adding that “Russia is one of the world’s most important sources of oil and gas as well as a massive market. BP needs to be there. It is part of our strategy.”

BP now has until May 16 to persuade an arbitration tribunal to lift the block or settle with its partners in TNK-BP to allow the Rosneft deal to go ahead. The TNK-BP shareholders oppose the deal because they say it violates their shareholder agreement. BP’s shares fell 0.9 percent on Thursday in London.

BP made clear that it remained committed to TNK-BP and its business in Russia despite recent difficulties there. “Whilst life has not always been easy, TNK-BP has been a successful venture with superior returns,” BP’s chairman, Carl-Henric Svanberg, said.

Some analysts said previously that BP’s options to salvage its Rosneft deal, which is valued at about $7.8 billion, include buying the stake in TNK-BP it does not already own. It could also let TNK-BP strike the agreement with Rosneft instead or sell the stake in TNK-BP, though that is less likely because the Russian venture accounts for about a third of BP’s oil production.

Apart from questions about Russia, BP’s management also faced angry comments from shareholders about how it handled the cleanup of the oil spill in the Gulf of Mexico.

Julie Tanner, assistant director for social responsibility at Christian Brothers Investment Services, criticized BP’s board for not disclosing enough details about the spill. At one point, a handful of activists protesting BP’s tar sands activities approached the stage and were carried out of the room by security staff.

Outside the Excel convention center in the east of London, about 30 people, including fishermen from the United States, gathered to protest BP’s role in the oil spill. They banged drums and held up banners. Some shareholders were refused entry to the meeting, Mr. Svanberg said, because they appeared to have a plan to disrupt the meeting.

David Jolly contributed reporting from Paris.

Article source: http://feeds.nytimes.com/click.phdo?i=2cf0303f2ef13874aa14fedc873ce345

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