October 13, 2008

Gazprom set to buy TNK-BP by year end - Report

Business daily Vedomosti said that Gazprom is willing to buy a controlling stake in the Russian-British joint oil venture TNK-BP by the end of the year for USD 20 billion.

A source close to the management of the Russian energy giant told Vedomosti that "The issue of TNK-BP's sale to Gazprom for USD 20 billion is a decided matter. The deal will be closed by the end of the year."

The paper said a source close to one of the co owners of TNK-BP a joint venture established on a parity basis in August 2003 between Britain's BP and Russia's AAR consortium of Alfa-Group, Access Industries and Renova, confirmed Gazprom's willingness to acquire a controlling stake by the end of the year.

According to the source, the energy giant approached Russian shareholders at TNK-BP, Russia's third largest company in terms of crude oil output, early in 2008 with a proposal to buy out their entire stake in the joint venture and told them that it had agreed on purchasing another 1% from BP.

Vedomosti said however under the existing TNK-BP shareholder agreement each party has a priority right to buy out the stock of its partners.

Gazprom manager told Vedomosti that Gazprom has long been seeking to buy a controlling stake in TNK-BP. However until late last year a moratorium on the sale of stock by the Russian-British joint venture was in effect.