A January Arctic exploration and stock-swap agreement, described by parties Rosneft and BP as "historic," has encountered trouble in a Swedish arbitration panel. The panel blocked the $8 billion deal in a ruling that upheld a challenge by the Alfa-Access-Renova (AAR) consortium, BP's Russian partner in TNK-BP.
AAR said BP's agreement with Rosneft violated the TNK-BP shareholder agreement, which it said required BP to involve AAR owners in its Russian ventures.
In a statement, BP said its agreements with Rosneft "cannot for now go ahead in the form intended." It said it would seek a determination whether the share swap can proceed alone. At completion of the original deal, Rosneft was to hold 5% of BP's ordinary voting shares, and BP was to hold 9.5% of Rosneft's shares (OGJ, Jan. 24, 2011, p. 25).
The deal called for creation of a joint operating company—66.67% Rosneft and 33.33% BP—to explore blocks covering 125,000 sq km in relatively shallow water of the South Kara Sea.
BP said it "looks forward to finding a way to resolve its differences with its Russian partners to allow these important Russian Arctic developments to proceed in future."
At the time of the agreement, BP and Rosneft said their venture would be the first major equity-linked partnership between a national and international oil company.
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