Wednesday, October 24, 2012

Rosneft snaps up TNK-BP

I made plans to turn our dining hall at HQ into a romantic café for two and had the chef from the Santi come over and prepare some of his specialties. As we both sit there with nothing more than a few candle lights illuminating the room I tell her what I am able to tell her about the last 96 hours. Being a woman she is very worried about what she heard and she was never a big fan of not knowing everything while she loved the mystery and secrecy around my persona.

We do not get to spend as much time together as we would want, which makes the time we do spend together that much more enjoyable. She will be in town for a few days and I look forward to spend as much time as possible with her.We talk about random things over dinner which is very relaxing for me and allows me to clear my head. I enjoy getting lost in her beautiful eyes.

As dessert is being served she struck a topic which was very unusual for her as she asked me about Rosneft and their bit for TNK-BP. I asked her a bit surprised how she knew about it as she responded that I mentioned it over dinner the last time (Rosneft emerges as third bidder for BP-TKN). I leaned back in my chair as I finish my dessert and look at her. She returns it with her unforgettable smile which lights up the room even more than the candles and reminds me when we were first introduced.

I remember as our eyes locked for the very first time at a club we used to go to after a hard day of work. The club was crowded and as we turned the corner to head over to the VIP section it appears as the entire dance-floor created a corridor for us to see each other. She was standing just outside the VIP area with two of her friends and as I entered in this pathway she looked into my direction, swirled her her around and our eyes met immediately. As I approached her we could feel the sexual energy building up and before the night was over the energy was so thick in the air that you could have cut a piece of it with a knife and take it home into your own bedroom.

I can see how she is impatiently waiting for a response. I tell her that Rosneft has offered $55 Billion in order to purchase all of TNK-BP and also agreed to offer BP a roughly 20% stake in the company. This transaction will allow Rosneft to pump more oil than Exxon Mobil does. The Kremlin backed this transaction which was the best overall choice out there for all parties involved.

BP will own 19.75% of the state controlled company and also received $12.3 Billion in cash as well as two seats on the board. BP brings its expertise as well as technology and combines it with the financial power and resources of Rosneft in order to create one of the world's biggest and most profitable oil companies. AAR will receive $28 Billion and less negotiating power in the new company.

Rosneft has become more of a laggard in the industry while TKN-BP emerged as a leader and probably Russia's most profitable energy company. The main problem with the venture was that all its oil fields are mature and AAR has blocked BP's plans to further explore Russian assets as it sought closer ties with the Kremlin and distant itself from BP.

This deal is great news for Russia and shows the type of transaction necessary in order to modernize the Russian energy sector and drive it forward. Russia is the biggest oil producing country and possesses vast undiscovered oil as well as gas fields especially in its Arctic territories as well as Siberia.


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