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ROSNEFT IS POISED TO BUY BP'S HOLDINGS IN RUSSIA

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ROSNEFT IS POISED TO BUY BP'S HOLDINGS IN RUSSIA Powered By Docstoc
					                                ROSNEFT IS
                                POISED TO
                                  BUY BP'S



              8
                                HOLDINGS
                                 IN RUSSIA

                                by: Gerard Lincoln




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         THE long-running saga of BP's
     troubled Russian joint venture moved
      closer to a conclusion last night as it
     held talks on a deal with state-owned
                oil giant Rosneft.




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      BP HOLDINGS (HEADLINES)
     Igor Sechin, chief executive of Rosneft, flew in
       to London for discussions on buying out
       BP's 50 per cent stake in TNK-BP in a deal
       that could be worth as much as £17.5billion
       for the FTSE 100 group.




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     BP HOLDINGS (HEADLINES)
          In what insiders described as "a fast-moving
             situation" and "a game of brinkmanship"
         Rosneft also looked poised to buy the remaining
         stake held by BP's partner, the AAR consortium
           controlled by a group of Russian billionaires.




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     BP HOLDINGS (HEADLINES)
     After years of friction between the two sides,
       both BP and AAR this year signalled they
      could sell out of the partnership or seek full
                          control.




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      BP HOLDINGS (HEADLINES)
     In a dramatic move last night AAR pulled out
        of the bidding to buy BP's stake just hours
                  before today's deadline.




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     BP HOLDINGS (HEADLINES)
     That paves the way for Rosneft to buy out
      both BP and AAR to gain control of the
       highly profitable TNK-BP business and
       create the world's largest oil company.




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         BP HOLDINGS (HEADLINES)

     • BP has made it clear that it retains
       ambitions to remain in Russia and to
       expand in the Arctic
     •




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     BP HOLDINGS (HEADLINES)
     As part of the deal BP is expected to take a 10
         per cent stake in the enlarged Russian
         business, giving it access to one of the
          world's most important oil-producing
                         countries.




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      BP HOLDINGS (HEADLINES)
     AAR sources said the tycoons had decided not
      to bid because they had been unable to raise
          sufficient finance in time and BP had
      signalled it was not interested in their offer.




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     BP HOLDINGS (HEADLINES)
      Another major problem for AAR is that
     Rosneft had already secured backing from a
      number of key banks who were unable to
              work with a rival bidder.




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     BP HOLDINGS (HEADLINES)
     An alliance between the oligarchs and the
      Kremlin-backed company has always been
     seen as unlikely and AAR made it clear that
       it would seek to sell its holding if Rosneft
                    came on board.




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      BP HOLDINGS (HEADLINES)
     Although TNK-BP has been very lucrative,
      generating £23billion in dividends after an
      initial investment of £5billion each in 2003,
      the two partners have always had a stormy
      relationship.




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     BP HOLDINGS (HEADLINES)
     In 2008 Bob Dudley, the then TNK-BP boss
      and now BP's chief executive, was forced to
          leave Russia as tensions worsened.




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Description: THE long-running saga of BP's troubled Russian joint venture moved closer to a conclusion last night as it held talks on a deal with state-owned oil giant Rosneft. Igor Sechin, chief executive of Rosneft, flew in to London for discussions on buying out BP's 50 per cent stake in TNK-BP in a deal that could be worth as much as �17.5billion for the FTSE 100 group.