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Mr Sechin briefed the President on the signing of an agreement on purchase by Rosneft of BP’s stake in TNK-BP.

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President of Russia Vladimir Putin: Good afternoon, Mr Sechin.

I know that you have been in talks with one of Rosneft’s potential strategic partners. How is the work going and what are the results?

Rosneft CEO and chairman of the Management Board Igor Sechin: Mr President, following on from your instructions on making Rosneft more effective, and from our recent meeting in Sochi at which we and BP briefed you on our plans, I want to inform you that we have just concluded the main talks on our cooperation with BP.

I can inform you now that we have signed an agreement on the terms and conditions of Rosneft’s acquisition of BP’s stake in Tyumen Oil Company (TNK).

Vladimir Putin: What will happen with the Russian participant in the TNK-BP joint venture?

Igor Sechin: We support the idea of consolidating this asset under one single management, and BP takes the same position. It is very important that this asset work according to a common plan with Rosneft, because only in this way can we achieve the level of synergy that will dramatically raise the performance of a number of both Rosneft’s and TNK’s deposits and refineries. I am talking about fields such as Suzun-Tagul and Verkhnechonsk, and the refinery group.

In this respect we have been working closely with TNK’s private shareholders, the AAR Consortium, and have concluded a similar agreement on the acquisition with them too.

Vladimir Putin: On the terms and conditions for acquisition of their stake?

Igor Sechin: On the principles for acquisition of their stake on arm’s length terms similar to those we agreed on with BP.

Mr President, let me add that we just received the news that this plan has just got official approval from BP, which had the right to either support the deal with AAR, or to refuse its support and turn to other procedures. 

”This is a good deal [between Rosneft and BP], a major deal of importance not just for the country’s energy sector but for the entire Russian economy.This sends an excellent signal to the Russian market and to the global energy market too, and is further evidence of the confidence our partners have in working on the Russian market. ”

Just an hour ago, BP officially approved the deal with AAR, and so we can now begin the relevant procedures with this consortium.

In the aim of optimising the financing structure of the deal with BP, we proposed that the settlement also takes into account the approximately 12.85-percent stake in Rosneft that will go to BP as part of the deal.

Vladimir Putin: In other words, the Russian Federation Government’s plans on reducing state interest in companies in which the Russian Federation holds a controlling stake will be taken into account.

Igor Sechin: Exactly, Mr President.

We undertook this work in general upon your instruction, with the aim of obtaining a comprehensive result that would fulfil your objective of reducing the state’s interest and finding a strategic investor with the needed technology.

One of the main elements of this deal was the offer we received from BP to buy a 5.66-percent stake in Rosneft from the state. This will thus give BP a consolidated stake of more than 19 percent of shares in Rosneft.

Vladimir Putin: This sends an excellent signal to the Russian market and to the global energy market too, and is further evidence of the confidence our partners have in working on the Russian market. This is a good deal, a major deal of importance not just for the country’s energy sector but for the entire Russian economy.

I want to thank you for your work. I hope that you will succeed in building a good partnership with this foreign company, British Petroleum, which I hope will very soon become one of your biggest shareholders.

BP has been working in Russia for a long time now and with positive results, and I am sure that this deal will benefit our partners and benefit Rosneft, one of our sector leaders. I wish you success. 

Igor Sechin: Thank you very much.

Mr President, if you permit, I would like to address my thanks to everyone who worked on this deal, and to our partners from BP. This truly is a historic deal and we are grateful for your support. Without the support and attention you gave it, it would have been difficult to get everything done in such a short time.

Let me assure you that the effort was worth it. This deal will make Rosneft the world’s biggest company in terms of liquid hydrocarbon production and in terms of reserves. Taking into account Rosneftegaz shares, the deal will be the third-biggest in the oil and gas sector to date, after the mergers of Exxon Mobil and Total–Elf.

Counting Rosneftegaz shares, the deal is worth around $61 billion and is an acquisition of great significance, a complex deal, of course. We will complete the work on it.

Vladimir Putin: I know that you have reached an agreement with our partners on the Rosneft share price. The price is good and even gives a small bonus. This sends out a good signal. I congratulate you and wish you success.

Igor Sechin: Mr President, one of the biggest achievements to come out of this deal is that we succeeded in reaching an agreement that has obtained the support of appraisers, leading financial consultants, major global banks, and legal advisers. The Rosneft share price as approved for this deal under our agreement has been set at $8 per share. 

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