BP Rosneft share deal in further set-back
BP chief executive Bob Dudley with his Rosneft counterpart Eduard Khudainatov in happier days A $16bn (£10bn) share exchange between BP and state-owned Russian counterpart Rosneft has been blocked, once again.
An arbitration panel in London upheld an injunction on the deal, but gave BP more time to find a solution.Russian shareholders of TNK-BP - an earlier joint venture of the UK firm - have argued that the Rosneft tie-up breaks promises BP made to them.
The injunction against the share swap and a related Arctic exploration deal was already confirmed once last month.
Following that earlier ruling - which blocked the entire package of agreements with Rosneft - BP asked the arbitration panel to reconsider the share swap as a separate stand-alone deal.
Under the deal, Rosneft would take 5% of BP in exchange for about 9.5% of Rosneft, according to a BP press release.
The UK oil firm had been up against a tight deadline, with its agreements with Rosneft needing to be consummated by 14 April, or else they would expire.
The arbitration panel has now extended this cut-off date, meaning that BP can ask for Rosneft's consent to keep the agreement alive.
Rosneft chairman Igor Sechin has previously said that he was "satisfied" with BP as a partner, despite the ongoing dispute with TNK-BP.
'Strategic alliance' BP signed the controversial deal with Russian state-owned Rosneft in January, in order to exploit potentially huge deposits of oil and gas in Russia's Arctic shelf.
But TNK-BP's Russian shareholders claimed BP had broken an agreement covering any other Russian oil business deals.
The "strategic global alliance" with Rosneft would have seen the UK and Russian firms exchange expertise in exploring the region.
As part of the deal, the pair had agreed that Rosneft would take 5% of BP's shares in exchange for approximately 9.5% of Rosneft's shares.
The share exchange is said to have particularly upset TNK-BP's Russian shareholders.
"Wilfully ignoring the provisions of the shareholder agreement was a serious misjudgement by BP that has severely damaged the relationship between the TNK-BP shareholders," said Stan Polovets, chief executive of AAR at the time of the earlier ruling.
"It has also harmed BP's reputation in Russia," he added.
"We expect [BP chief executive] Bob Dudley to make every effort to rectify the situation and rebuild the trust that has been lost between BP, AAR and the management of TNK-BP."
On Thursday, it emerged that BP had asked for a board meeting of TNK-BP to be convened next week to discuss the deal with Rosneft.
BP has previously said it still hoped to find a way to resolve its differences with its Russian partners "to allow these important Arctic developments to proceed in future".
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