Medvedev raps Sechin over BP-Rosneft deal failure

By @ibtimes on

Russian President Dmitry Medvedev rapped Premier Vladimir Putin's top deal maker on Wednesday for lapses that contributed to the collapse of a major oil deal between Rosneft and BP.

The $16 billion share swap and Arctic exploration pact, masterminded by Putin's deputy Igor Sechin, fell apart on Monday when BP and Rosneft failed to agree on a $32 billion buyout of the partners in BP's Russian venture TNK-BP.

The four tycoons -- Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik -- had blocked the deal in court, arguing it violated exclusivity terms in the shareholder agreement governing their 50-50 joint venture, TNK-BP.

Medvedev, speaking at a major set-piece news conference, appeared to agree.

Those who prepared the deal should have paid closer attention to the nuances of the shareholder agreement, said Medvedev, a lawyer by training.

It would have been necessary to conduct more careful due diligence inside the government.

Medvedev's comments amounted to an indirect jab at Sechin, who recently stepped down as Rosneft chairman after the president ordered ministers to give up top jobs on the boards of large state-controlled companies.

The failure to close the BP transaction marked an unaccustomed setback for Sechin, who has become used to calling the shots since he oversaw state-controlled Rosneft's acquisition of the prime assets of bankrupted oil major Yukos.

Under his oversight, Rosneft's oil output has grown to 2.4 million barrels per day -- on a par with OPEC member Kuwait.

Speaking on a trip to Siberia to open a new oil pipeline link, Sechin conceded that conflicting interests had wrecked the BP-Rosneft deal but put a brave face on the setback.

I don't consider it to be a personal defeat, he said. No mistakes were made. Work is work.

RULES OF ENGAGEMENT

Sources close to TNK-BP have said its Russian co-owners, who are represented by the Alfa-Access-Renova consortium, had sought and received cover from Medvedev for the robust legal defense of their interests.

One of the four, Vekselberg, chairs the Skolkovo innovation hub near Moscow. The policy initiative has been championed by Medvedev, who held his press conference at a new business school on the site.

During Putin's 2000-08 presidency, such resistance from any business oligarch could have landed them in jail, as was the case with Yukos founder Mikhail Khodorkovsky, or in exile.

Sechin reiterated an earlier threat of unspecified legal action over the collapse of the deal. The lawyers are working on it and will say what's possible, he told reporters.

COOPERATION POSSIBLE

Sechin said cooperation with BP was still possible, but suggested that the British oil major's role could be downgraded to that of a contractor in the Arctic offshore, or it could be brought into other projects.

Rosneft said earlier that proposals brought to the most recent round of talks by the British oil major and its partners in TNK-BP could still form the basis for further cooperation.

These proposals make it possible to discuss our further cooperation outside the agreements which have already expired, Rosneft said in a statement.

Sources close to the talks said the proposal on the table was not new, but was the one that resulted from a compromise reached in arbitration proceedings after AAR won injunctions to stop the original BP-Rosneft from happening.

The offer is still there, said one source. There was huge momentum, and I don't think that's gone away.

Sechin, however, reeled off a list of candidates that could replace BP in the Arctic: oil majors Exxon, Chevron and Royal Dutch Shell, China's CNPC, Malaysia's Petronas and Brazil's Petrobras.

(Additional reporting by Melissa Akin in Moscow and Tom Bergin in London, Writing by Douglas Busvine; Editing by Will Waterman and David Cowell)

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