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Category : Business

Company has hinted that half the proceeds from the sale of its Russian joint venture could be returned to shareholders

BP’s beleaguered shareholders have been told they may get a £10bn windfall from the sale of its Russian joint venture.

The oil major is understood to have told its biggest institutional investors that half of the proceeds from the sale of its 50% stake in TNK-BP will be given back to shareholders.

A special dividend or share buyback following the sale, which is expected to achieve 30bn (£13bn-£19bn), would be welcomed by shareholders after dividends were suspended in the wake of the Gulf of Mexico oil spill disaster.

The Moscow oligarchs who own the other half of the joint venture are thought to be the frontrunners to buy BP’s stake, but other interested parties include Russian state-owned groups Rosneft and Gazprom, and China’s two biggest oil companies, Sinopec and CNOOC.

Stan Polovets, chief executive of the oligarchs’ consortium, Alfa Access Renova (AAR), said the billionaires have submitted a bid. “We made an offer about a month ago. It was a cash bid,” he said.

Igor Sechin, the chief executive of Rosneft and one of President Vladimir Putin’s most trusted lieutenants, said: “We have a new situation developing in the market. We will need to study all the information and decide after that.”

The sale marks a significant shift in strategy for BP, which under its former chief executive, Lord Browne, had forged $100bn of deals that made it Europe’s largest oil company.

Now the company is shrinking. It has been forced to sell off more than $20bn of assets to pay the costs of the Deepwater Horizon disaster. If it sells out of TNK-BP, BP’s oil and gas production will drop to less than 3m barrels a day for the first time since 1997. TNK-BP accounts for a third of BP’s annual production.

“This is hopefully the start of a new strategy that sees a smaller BP,” said Stuart Joyner, an analyst at Investec. “The super-major model is broken. Who wouldn’t want to be a smaller, nimbler company that grows faster?”

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