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World's Largest Oil Company Created as Rosneft Takes Over TNK-BP

March 21, 2013
The $56 billion deal creates a state-owned company with supergiant Roseneft operating fields and refineries stretching from Eastern Europe through Siberia to the Pacific Coast.

MOSCOW -- Russia's state oil giant Rosneft on Wednesday announced the creation of the world's largest listed oil company as it completed a $56-billion acquisition of the British and Russian stakes in the joint venture TNK-BP.

The deal -- completed in stages since October -- creates a Kremlin-owned supergiant with fields and refineries stretching from Eastern Europe through Siberia to the Pacific Coast.

"Congratulations on the completion of this deal," President Vladimir Putin told a special ceremony attended by Rosneft chief executive Igor Sechin and his BP counterpart Bob Dudley.

"In my opinion, this was a very successful deal," news agencies quoted Putin as saying.

The takeover's terms allow BP to acquire up to 20% of Rosneft's shares and provide the British group with an additional $17 billion in cash.

Rosneft completed the all-cash acquisition of the Russian stakes held by four Soviet-born tycoons earlier in the year.

TNK-BP -- Russia's third-largest oil company -- was hit by years of infighting between its British and Russian owners though it has generated around $19 billion in dividends for BP since the company's formation in 2003.

Putin conceded that the joint venture's recent history has not been simple and that the deal's completion was marred by very public squabbles between BP executives and TNK-BP's former chairman Mikhail Fridman.

"Not everything went smoothly," Putin acknowledged. "But in my opinion, in the long run, it all ends well."

Dudley for his part said he had no intention of selling Rosneft's stake despite some BP shareholders' questions about the wisdom of the British group becoming so closely involved with a Kremlin firm.

"If you ever hear rumors about us intending to sell out Rosneft shares, do not believe them," news agencies quoted Dudley as telling Putin in a Russian translation of his remarks.

Sechin said the joint company would produce 206 million tons of oil per year compared with 115 million by ExxonMobil.

Copyright Agence France-Presse, 2013

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