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Rosneft, BP Said to Still Be in Talks on $28 Billion TNK-BP Sale

OAO Rosneft (ROSN) and BP (BP/) Plc are still working out the details of an agreement for Russia’s biggest producer to buy half of TNK-BP for as much as $28 billion, a person with knowledge of the talks said.

The final terms haven’t been set and the offer discussed by BP’s board yesterday dealt in ranges for how much would be paid in cash and in shares. An accord could see BP take 10 to 20 percent of Rosneft as part of deal worth $25 billion to $28 billion, according to the person, who asked not to be identified because the talks are confidential. An announcement could come as early tomorrow, though the negotiations may take longer, the person said.

A deal may see Rosneft pay $11 billion to $13 billion in cash as well as offering a 16 to 20 percent stake in the company, Sky News reported. BP is also seeking a legal indemnity to protect it from claims by its billionaire partners in the venture, represented by AAR, Sky said. BP spokesman Vladimir Buyanov and a Rosneft official, who asked not to be identified citing company policy, declined yesterday to comment.

Rosneft also has preliminary accord to acquire the other half of the venture from AAR who are seeking $28 billion, people with knowledge of the plans said Oct. 17. A stake in Rosneft would allow BP to maintain a presence in Russia, while exiting the 50-50 venture that brought billions in profits and years of conflict with its fellow investors.

For Rosneft Chief Executive Officer Igor Sechin, who met his BP counterpart Bob Dudley in London this week, absorbing TNK-BP would raise oil and gas production to about 4.5 million barrels a day, matching Exxon Mobil Corp.

Nine-Year Partnership

BP offered to sell its half of Russia’s third-largest oil producer in June after relations broke down with AAR. The nine- year partnership has paid BP $19 billion in dividends and accounts for a quarter of its global production.

Dudley wants to maintain a position in Russia as he revamps the global business after the 2010 Gulf of Mexico oil spill that threatened to ruin the company. He’s already sold $33 billion of assets to help meet the cost of the disaster.

Russia’s sale of Rosneft shares will counter the producer’s potential “multilayered” acquisition of BP’s Russian venture, according to First Deputy Prime Minister Igor Shuvalov.

The nation plans to reduce its 75 percent stake in Rosneft selling shares in 2013 and 2014, Shuvalov told reporters yesterday in Moscow. Russia will move “very cautiously, taking care about the quality of the investor and of course seeking the highest proceeds from the sale,” he said.

BP’s Dudley proposed using some proceeds, if the sale of its TNK-BP stake to Rosneft is successful, to buy state-held shares in the oil company and develop projects in Russia at a September meeting with President Vladimir Putin and Rosneft’s Sechin in Sochi, on the Black Sea.

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net; Dick Schumacher at dschumacher@bloomberg.net

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