Rosneft could not refuse BP's request to cooperate - Putin
NOVO-OGARYOVO. Oct 25 (Interfax) - Even though the Russian government's decision to let Rosneft buy out TNK-BP goes against its plans to reduce its participation in the Russian economy, it felt compelled to give the green light for the sake of cooperation with BP, Russian President Vladimir Putin said.
"When BP's management came to me and said that we would like to cooperate with the company Rosneft, we couldn't say no, because otherwise it would have looked like we were shoving them under TNK, with which they have an eternal conflict," Putin said during a meeting with participants in the Valday international discussion club.
The sale of Alfa-Access-Renova (AAR) consortium's stake in TNK-BP to Rosneft was the exclusive initiative of the Russian shareholders. "They expressed the desire to also sell their part," Putin said.
When BP and the AAR were creating the joint company, Putin warned them that the 50/50 ownership structure would hinder efficient company management. "There was absolutely no unity between the company participants in TNK-BP; there was a constant struggle over the course of many years, which turned into melee from time to time. At one point I warned them, when [then British Prime Minister Tony] Blair and I were present at the document signing to create this joint venture (50/50), that this is an inoperative structure. And at that time I said that neither I nor the Russian government would object if the foreign partner were to receive a controlling stake, as well as that we would be glad if the Russians received control. But somebody has to manage," Putin said.
Commenting on Rosneft's deal with BP, Putin said that he and the government originally had mixed feelings when this project, "and more precisely Rosneft's purchase of BP's stake," emerged.
"Why did such mixed feelings emerge? I will tell you very frankly. One minus was that a company with predominantly government participation is increasing its presence on the market via a foreign partner. A concern emerged that the second part might also be absorbed by the state-owned company, and that as a whole does not correspond to our trend on containing the growth of the state sector," Putin said.
That said, by buying part of Rosneft's capital, BP is acting out a trend of reduced state participation in the Russian economy. "This isn't just a major sale, this is also a shares swap - shares such as those that belonged to Rosneft itself, and 5.7% of Rosneft stock that belonged to the government. And that is already in the stream of our strategic plans. This is, to some extent, privatization," Putin said.