BP has agreed to purchase a quarter of Russian oil producer Slavneft for $1.35 billion (€1.23 billion), bolstering its new position as the world's second-largest publicly traded oil and gas producer, ahead of rival Royal Dutch Shell.
The potential inclusion of extra assets in the venture was unveiled yesterday as BP completed its $6.15 billion merger with Russia's TNK. This is the largest foreign investment deal in Russian history.
In February, BP announced it would buy 50 per cent of TNK but, for several months, was unable to agree at what price it would acquire part of TNK's 50 per cent stake in Slavneft. Slavneft controls production from several fields contiguous to those in which TNK-BP have shares. The other half of Slavneft is owned by YukosSibneft.
BP said it would pay the Alfa Group and Access-Renova (AAR), which controls half the TNK-BP venture, $2.6 billion in cash for its stake, followed by annual instalments of $1.25 billion in BP shares.
The partnership is expected to produce 1.2 million barrels of crude oil per day, mainly from fields in western Siberia. The deal encompasses 3.2 billion barrels of reserves, although BP said that, without the Securities & Exchange Commission's strict accounting rules, the number is closer to 5.2 billion barrels.
The agreement to incorporate AAR's 50 per cent interest in Slavneft into the venture - the product of months of negotiations - would mean an additional production of some 290,000 barrels a day and 1.6 billion barrels of reserves.
Russia's anti-monopoly ministry approved the TNK-BP merger this week, following consent from the European Union and Ukrainian anti-trust bodies. The Slavneft deal - outside the original deal - is subject to approval in the EU, Russia and Belarus.
Mr Neil Perry, analyst at UBS, said: "You have to treat this as one deal done in two stages. On that basis, BP is paying full price for the Russian assets but management deserves credit for strategic positioning."
Commerzbank analyst Mr Jon Rigby said the price was broadly in line with market expectations.
