TNK-BP official arrested on suspicion of fraud

According to reports coming from Reuters, the Russian Interior Ministry has announced that TNK-BP's government relations manager has been arrested on suspicion of fraud.

This news follows hard on the heels of reports that the Russian Government-controlled Rosneft is in talks to buy BP's 50% stake in TNK-BP for an estimated $28bn, according to reports in Bloomberg and the Financial Times.

According to those media reports Rosneft might also acquire the other 50% from the Alfa-Access-Renova (AAR) consortium, run by four Soviet-born billionaires.

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The deals, if approved, will transform Rosneft into one of the world's largest oil companies and given the Russian state control over an important strategic asset.

There would also be significant benefits for BP, while the billionaires would add a few more billions to their names.

It has been mooted by the Financial Times that the deal would give BP between $15-$20bn in cash, plus a minority stake of between 10-20% in Rosneft.

BP formed TNK-BP in 2003, investing $8bn into a vehicle that combined its Russian oil holdings with those of the AAR consortium.

AAR had initially expressed an interest in buying BP's stake but was reportedly unable to come up with the funds in time.

The stakes are high and concerns are already being expressed about whether Rosneft's possible purchase of BP's stake, and possible that of AAR, will pose a threat to competition in the company's oil market.

We will keep our readers informed as this story develops.

CM