MOSCOW (AP) ? Russian state-owned oil giant Rosneft strengthened its hold on the country's lucrative oil industry Monday when it sealed a $61 billion deal, buying TNK-BP, the joint venture between a group of Russian oil oligarchs, and BP, the British the energy company.
BP announced Monday that it had agreed to sell its 50 percent stake in TNK-BP to Rosneft for $17.1 billion in cash and a 12.84 percent stake in the Russian oil group.
In Moscow, Rosneft said it had also agreed to buy the other 50 percent in the joint venture from AAR for $28 billion. Rosneft said the deal with AAR is "entirely independent of the transaction with BP." The Russian oil group said it would finance the deal with its own cash as well as new borrowings.
Rosneft CEO Igor Sechin broke the news about the deal Monday afternoon to President Vladimir Putin, telling him that the deal would be worth about $61 billion.
"This is a good big deal which is important not only for Russia's energy sector but for the entire Russian economy," Putin said in remarks carried by Russian television.
Rosneft shares jumped more than 3 percent on the announcement but rolled back to its morning level of 215 rubles per share, or 1.2 percent up.
BP shares were down 0.3 percent to 449 pence following the announcement. BP said that it would use some of the money from its deal to raise its stake in Rosneft to 19.75 percent.
Russia is an important part of BP's business, accounting for a quarter of its oil production. BP Chief Executive Bob Dudley has looked to the country's vast oil resources as a key ingredient to the company's recovery from the disastrous oil spill in the Gulf of Mexico.
The TNK-BP joint venture has been troublesome ? albeit lucrative ? for BP. The UK oil group's disputes with its partner ? in 2011, it tried to strike a separate partnership with Rosneft to explore for oil beneath the Arctic Ocean, only to be sued by AAR ? have alarmed BP's investors and hit its share price.
Dudley said in the statement on Monday that "BP intends to be a long-term investor in Rosneft - an investment which I believe will deliver value for our shareholders over the next decade and beyond."
Sechin sounded optimistic about their tie-up with BP, saying that his company "would benefit from BP's experience and its track record of implementing best international practices in Russia."
Ratings agency Fitch last week warned Rosneft of a possible rating downgrade because of the TNK-BP deal. Fitch said the Russian company should have no problems raising the money to pay for 50 percent, but said the purchase of the other 50 percent could require so much borrowing that it could lead to a downgrade.
__Barr reported from London.