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Rosneft raises $67bn to buy out TNK-BP

Published time: December 25, 2012 08:51
Edited time: December 25, 2012 13:24
Reuters / Alexander Demianchuk

Reuters / Alexander Demianchuk

Rosneft has secured an estimated $50bn in advance payment from trading companies Vitol and Glencore, as well as another $16.8bn bank loan to pay for its acquisition of TNK-BP.

Under the agreement with Glencore and Vitol Rosneft agrees to ship up to 67 million tonnes of oil over 5 years, with supplies scheduled to start in 2013. As part of the deal crude could be replaced by petroleum products.

The exact price of the deal wasn’t revealed by Igor Sechin, Rosneft President, but he did say “the price formula is in line with the prices that Rosneft receives for crude at medium-term tenders." Given an oil price of $100/bb, 67 million tonnes would be worth $50 billion.

On top of that, Russia’s oil giant agreed to borrow a total of $16.8 billion from a group of international banks. That will be more than enough to buy out BP’s 50% stake of what used to be a Russian-British consortium TNK-BP. Under the credit agreements, one of the loans to Rosneft worth $ 4.1 billion will last 5 years, while the other of 12.7 billion will be for 2 years.

The group of international banks that’ll make the loans and act as organizers are the Bank of America Merrill Lynch, Barclays Bank, BNP Paribas, BTMU, Citibank, Credit Agricole, ING Bank, Intesa Sanpaolo Banking Group, J.P. Morgan, Mizuho Corporate Bank, Natixis, Nordea Bank, SMBC, Societe Generale and Unicredit Bank.

The total cost of the acquisition of TNK-BP by Rosneft is estimated at $55 billion, with $45 billion needed to be raised in cash, and the remainder coming in form of 12.84% of Rosneft treasury notes.

Market participants have often named Gunvor as the main trader with Rosneft, but Glencore, Vitol and Shell won a half-yearly tender to for the sale of export crude in September.

In October 2012 Rosneft agreed with BP and a quartet of Soviet-born billionaires who make up the Alfa Access Renova (AAR) consortium- the two major shareholders of what used to be the Russian – British oil venture TNK-BP – to buy 100% of the company. After the deal is completed Rosneft will become the world’s largest energy company in terms of liquid hydrocarbons extraction, as well as the third largest by estimated net profit of $21.46bn, lagging behind $41.06bn of Exxon Mobil and $26.9 of Chevron, as calculated by RBC.

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