Russia’s Rosneft nears deal for BP’s TNK-BP stake

Russia's largest oil producer Rosneft is closing in on British oil giant BP's stake in TNK-BP, a 50:50 joint venture between BP and AAR consortium controlled by Russian oligarchs, aspiring to become the world's largest publicly-traded oil and gas company.

Rosneft CEO Igor Sechin who is in London to finalise the terms, is believed to have submitted a 28-billion offer for BP's stake, according to sources close to the deal. BP will evaluate the proposal in the coming days to arrive at a final decision.

If the transaction materialises, it will be one of the largest ever in the oil industry. The combination of Rosneft and TNK-BP would create the world's largest investor-owned oil company, surpassing US giant ExxonMobil with a production capacity of over 4 million barrels of oil equivalent per day.

The TNK-BP was formed in 2003 through the merger of BP's Russian oil and gas assets and the assets of AAR consortium consisting of Alfa Group, Access Industries and Renova controlled by Russian tycoons Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik. The shareholders of TNK-BP also own close to 50 per cent of Slavneft, a vertically integrated Russian oil company.

The joint venture is the third-largest company in Russia. It has upstream oil and gas operations primarily in west and east Siberia and Volga-Urals region, five downstream oil refineries in Russia and Ukraine and marketing infrastructure.

The company's has proven oil reserves of around 13.8 billion barrels and reported revenue of $60 billion in 2011.