LONDON/MOSCOW (Reuters) - State-controlled Russian oil company Rosneft has struck a two-part deal worth about $55 billion to buy privately-owned TNK-BP and make British oil company BP a near-20 percent Rosneft shareholder with two seats on the board.
The first part of the Kremlin-backed agreement announced by Rosneft on Monday folds BP's half of TNK-BP, Russia's third-largest oil company, into Rosneft, in exchange for cash and Rosneft stock in an agreement worth about $27 billion including $12.3 billion of cash and the rest in stock.
In stage two, AAR would get $28 billion in cash, but the two deals are independent of each other and the AAR deal is still subject to negotiations, Rosneft said.
With the whole of TNK-BP on board, Rosneft, which is already Russia's top oil producer, will control nearly half of Russia's oil output and pump more oil and gas than Exxon Mobil, the world's top international oil company.
The deal gives Rosneft extra output and cash flow to finance exploration of Russia's vast reserves to replace ageing and depleting fields. It keeps BP's expertise in Russia and provides the "quality" private shareholder President Vladimir Putin wants in order to show his critics he is pursuing a real privatization agenda.
"This is a very good signal for the Russian market. It is a good, large deal. I would like to thank you for this work," Russian President Vladimir Putin told Rosneft CEO Igor Sechin.
It allows BP to end a stormy relationship with AAR, and to pursue closer ties with a Kremlin that exerts a much tighter hold on the oil industry than it did in the 1990s when BP first invested in Russia.
TNK-BP is highly profitable and provides a quarter of BP's total production, but its fields are mature, and the Soviet-born tycoons who own the other half through AAR have blocked BP's search for growth in Russia through closer ties with Rosneft.
"It's certainly a historic deal and a historic day for BP and Rosneft and TNK-BP," said Santander analyst Jason Kenney.
"I do think Rosneft is the winner in this. They get a lot of credibility by having a western investor on the board and involved in its Russian resource and operations, and it's a good partner to have. For BP, they get an early monetization of its current Russian asset base, they shake off the political troubles that it had by having that stake, but a lot of the upside for BP is probably long-dated and it's difficult to see how it's going to be valued into BP's share price on a near-term basis."
Executives at TNK-BP have in the past had run-ins with Russian law enforcement at times of friction between the shareholders, with two managers arrested in 2008 amid a dispute over strategy that forced then-CEO Bob Dudley, who now heads BP, to flee Russia.
Should the deal survive a months-long approval process, BP's exposure to Russia would be lower, but with seats on the board it has closer ties than any of its rivals to Sechin, who has a significant say in energy policy.
OLIGARCHS UNDER PRESSURE
The four tycoons of AAR, are reluctant to remain in a joint venture with the politically powerful Russian state oil company.
(Writing/reporting by Melissa Akin; Additional reporting by Douglas Busvine and Vladimir Soldatkin in Moscow; Editing by Giles Elgood)
Source: http://news.yahoo.com/bp-says-no-deal-yet-tnk-bp-stake-061008950--finance.html
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?It?s tangible if you see it happen,? explained potter/developer Michael Connelly while giving a tour of his future studio space. ?Connelly purchased a former glass factory?at 1525 N. Bailey St., between Jefferson and Oxford streets in Brewerytown,?for only $15,000 and is working with a network of other artists and contractors to turn the labyrinth of empty spaces into inspiring yet inexpensive artist studios. The area, now dubbed the Bailey Street Arts Corridor, has been seeing a slow rebirth thanks to local ceramic and pottery artisans.
Fellow developer/artist Rob Sutherland moved to the area in 2004 and began buying up some of the properties around 27th Street.? By 2006, Connelly also moved to the area and followed Sutherland?s plan by purchasing more spaces within the same area, creating a community of artist spaces.? Brewerytown?s own MMPartners has also come on board, helping continue to build upon this new niche of development in the neighborhood.
Connelly?s goal is to continue to build the artist community. He feels when one works around creativity it continues to inspire. The more people who come to the area to work on their craft want to live there; the more people who live there will invest in the area and ultimately stimulate the local economy. Connelly and other artists? approach to these rehab projects is not entirely commercial. He feels that by providing artists with good rates and working with good people they can continue to build up the area. He looks to build up a space and take the income from that property to build more affordable artists? spaces?even if it mean giving up his studio for a fellow artist.
The space on North Bailey Street is still in the beginning stages, but it does have great potential. Connelly plans to renovate the second floor to be a live-and-work studio apartment complete with a kitchen and bathroom; he?s looking to fill the space for only $800 a month. Other entire homes that have been converted into artists? spaces are going for $1200 a month.? The remainder of the factory will be divided into about five studios along with a home they hope to develop into an artists? residency.
While the homes and spaces are in need of more than just a little TLC, Connelly has found amazing details like cherry and mahogany woodwork covered by decades of dirt and debris. The apartment in Connelly?s building will feature an ?antique? winch left over from the factory. When Connelly looks at properties, he looks for spaces with great potential and good bones. He also admits the properties do have their challenges. The courtyard between the home and warehouse had a very large tree that had been growing for about 30 years; since it was pressing into the walls and hurting the structure, the tree had to go. There are also other challenges, like connecting water and sewer lines, since most of the warehouses were only used for storage.
The area continues to attract artisan communities due to the availability of affordable properties and location. A fellow artist had recently purchased a home for only $8,000; at that price, it needs a lot of help, but the network of individuals in the area have created a supportive community to make these homes and warehouses vital and usable again.? Connelly also commented on the existing community have extremely supportive of their new neighbors. Collectively, everyone is glad to see life and industry coming back to these old bones of forgotten properties.
?We don?t chase new business.?
Mr. Speaker, I would like to welcome Members back to the continuation of the Third Session of the 17th Legislative Assembly.? I hope everybody was able to enjoy some time with family and friends this summer and has come back rested and ready to continue working on behalf of the people of the Northwest Territories.? It has been almost one year since we took office.? As we get started with this Session, I would like to look back at some of the things we have accomplished together this past year.