MOSCOW (AP) -- Russian oil company Rosneft said it could make up to $5 billion in savings when it combines its operations with those of its takeover target TNK-BP, the chief executive said Tuesday.
The state-owned company on Monday unveiled a deal to buy TNK-BP, Russia's third-largest oil producer. It is buying the 50 percent stake of British oil company BP for $17.1 billion in cash and a 12.84 percent share of Rosneft. It is buying the other half, owned by a group of Russian billionaires, for $28 billion.
The deal will allow Rosneft, already the country's top oil producer, to increase its global profile. The new combined company will leapfrog ExxonMobil Corp. to become the world's largest publicly traded producer of oil and gas, in terms of output. ExxonMobil's latest earnings show its daily output at 4.2 million barrels of oil, below the expanded Rosneft's projected 4.6 million.
Rosneft's CEO Igor Sechin told investors in a conference call on Tuesday the company could gain between $3 billion and $5 billion by combining its resources with TNK-BP's. Sechin said that, among other things, the takeover would give Rosneft access to sizeable oil fields that are much closer to a key China-bound pipeline than its own sites.
TNK-BP has so far been a considerable source of revenue for its owners. It has for years transferred 40 percent of its net profits towards dividend payments.
Sechin, however, said on Tuesday that Rosneft has no plans of reviewing its current policy of using 25 percent of net profits to pay dividends. The statement sent TNK-BP's stock into a tailspin. Less than hour after the announcement, the shares had lost 11 percent of their value.
Sechin also said Rosneft and BP did not discuss buying out TNK-BP's minority shareholders, who own 3.5 percent, but may consider it in the future. Russia's former deputy prime minister also invited TNK-BP's minority shareholders to buy Rosneft's stock, saying that the company "will lean over backwards to make you happy."
Igor Artemyev, chief of the Russian Anti-Monopoly Agency, told reporters on Tuesday that Rosneft's takeover doesn't violate Russian anti-trust laws which do not allow one company to own more than a half of the market. But the deal, which could leave the Russian firm in control of up to 50 percent of the Russian oil industry, is likely to prevent Rosneft from taking over any other sizeable assets, Artemyev told Russian news agencies
Rosneft's shares rolled back 0.2 percent up late Tuesday afternoon at Moscow's MICEX exchange.
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- Igor Sechin