Tycoons Offer to Buy BP out of Russia Joint Venture

The four Soviet-born billionaires who co-own BP's lucrative but troublesome Russian joint venture notified the British giant on Wednesday of plans to raise their stake in the 50:50 holding.

The decision follows a July 1 announcement by BP (IW 1000/3) that chronic boardroom disputes had forced it to seek a buyer for its stake in TNK-BP despite the firm producing nearly a third of the British group's entire oil output.

"AAR and BP both realize that a fundamental realignment in the ownership of TNK-BP is necessary," said Stan Polovets of the Alfa Access Renova consortium that represents the tycoons.

"We hope that BP will now engage with us constructively, particularly given the importance of TNK-BP to BP's overall position," the AAR chief executive said.

BP confirmed having entered "the next stage in the TNK-BP sales process" by receiving an offer from the Russian billionaires that will keep it from striking any outside deal for three months.

The group stressed that it "will [also] enter into negotiations with other interested parties," while cautioning that the latest developments did not necessarily mean a deal will be done.

BP has reaped nearly $20 billion in dividend payments since forming the TNK-BP venture in 2003 at the start of what promised to be a new era of Russian openness to investment from the world's biggest energy firms.

The venture has developed into one of the top 10 private oil producers in the world and is currently one of Russia's largest owners of so-called greenfield projects that focus on the development of new reserves.