September 18, 2020

BP Tells Shareholders of Efforts to End Rosneft Rift

BP has been in a three-month legal battle with its Russian billionaire partners in its joint venture TNK-BP, who had blocked a potentially lucrative share-swap agreement with Rosneft, the state-controlled oil giant in Russia. BP won a last-minute respite Thursday in its efforts to salvage the Rosneft agreement when the two companies agreed to extend by another month the deadline to complete the deal.

The BP chief executive, Robert W. Dudley, played down the severity of the dispute, saying the company’s relationship with its TNK-BP partners was “noisy” but not “dysfunctional.”

“It’s not personal,” he said. “It’s business.”

“We’ve offered participation in the Arctic, we’ve offered cash, we’ve offered participation in international ventures,” Mr. Dudley told investors at BP’s annual shareholder meeting in London. “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://www.nytimes.com/2011/04/15/business/global/15bp.html?partner=rss&emc=rss

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