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Rosneft May Replace BP in Arctic Accord, Says Otkritie

OAO Rosneft may replace BP Plc (BP/) as its first choice to explore the Arctic given the British producer’s struggle to overcome the objections of its Russian partners, Otkritie Securities Ltd. said.

Tomorrow is the deadline for BP and Rosneft to complete their planned $7.8 billion share swap and exploration accord for the Kara Sea. BP’s billionaire partners in its TNK-BP venture have won an injunction against the deal going through.

“Rosneft can’t wait for BP to sort out its legal mess,” said Luis Saenz, the London-based director of international sales at the brokerage, citing a meeting with Rosneft officials.

Exxon Mobil Corp. and Royal Dutch Shell Plc have expressed an interest in other parts of the Arctic, though Rosneft is not in talks with either about the Kara Sea at present, said Rustam Kazharov, a spokesman for state-owned Rosneft, the country’s biggest oil producer.

BP’s partners in TNK-BP have halted the deal in a London court, claiming that the venture has exclusive rights to negotiate on behalf of BP in Russia. The injunction has been prolonged indefinitely by an arbitration panel, which gave BP the right to seek an extension of the swap deadline.

Considering Options

BP is considering its options, Vladimir Buyanov, a Moscow- based spokesman, said today. He declined to comment on any change to the deadline or on the outcome of talks.

Photographer: Andrey Rudakov/Bloomberg

The OAO Rosneft logo is displayed outside the oil company's offices in Moscow. Close

The OAO Rosneft logo is displayed outside the oil company's offices in Moscow.

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Open
Photographer: Andrey Rudakov/Bloomberg

The OAO Rosneft logo is displayed outside the oil company's offices in Moscow.

Rosneft said it has no plans to extend commitments to BP on the swap after tomorrow’s deadline, Saenz said. It sees no point in the share swap without an Arctic exploration venture. The company is largely “indifferent” to what international major it works with in the Arctic and has been in touch with other potential partners, he said.

Deputy Prime Minister Igor Sechin said last week that both sides could probably find a solution before the deadline.

Sechin stepped down as Rosneft chairman on April 11 after President Dmitry Medvedev ordered government officials to leave the boards of companies in industries that they regulate.

If the swap agreement expires, “we will work under different terms,” Sechin said April 8. In that case, the company will “take measures to protect its own interests.”

Rosneft is working under the terms of an agreement with BP that runs until tomorrow, said Rosneft’s Kazharov.

BP rose 0.6 percent today to 464.20 pence in London, valuing the proposed shares for the swap at $7.1 billion. The stake was worth about $7.8 billion when the deal was announced.

Rosneft declined 1 percent to 252.58 rubles by the 6:45 p.m. close in Moscow, valuing its stake at about $9 billion. TNK-BP shares rose 1.2 percent to 92.65 rubles.

Shell CEO Peter Voser said in January he’s interested in projects with Rosneft, and Exxon agreed to help the company explore the Black Sea in January.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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