Oil giant BP (LON:BP) confirmed this morning that its proposed share swap with Russia’s Rosneft had collapsed after the parties involved failed to resolve a dispute with BP’s existing partners in its TNK-BP venture. BP and Rosneft agreed an outline deal in January which foresaw a stock swap and the formation of a “strategic global alliance” that would begin with the exploration and development of three license blocks on the Russian Arctic continental shelf. However, the deal has been dogged by legal wrangling led by BP’s existing partners in TNK-BP, represented by Alfa- Access- Renova (AAR). Responding today, BP reiterated its commitment to TNK-BP but said that talks would continue to find a solution to the Rosneft deal. The BP share price responded with a 5p rise to 443.85p.

In a statement BP said it had conducted detailed negotiations with AAR and Rosneft to seek a reasonable and businesslike solution that would allow the agreements to proceed to the satisfaction of all parties. “Such a solution has not been found at this time, although talks will continue,” it said. “BP and AAR each acknowledge the active engagement and support provided by Rosneft throughout the recent discussions. Both BP and AAR see significant advantages in continuing to deepen this dialogue and cooperation with Rosneft.”

Bob Dudley, BP’s group chief executive, said: “BP remains committed to Russia, to working constructively with AAR in TNK-BP and to our existing good relationship with Rosneft. All parties have worked hard to reach an acceptable resolution, as we believe it could offer significant benefits to BP shareholders, to Rosneft, AAR and Russia. TNK-BP has been an excellent investment for all parties since 2003 and it is gratifying that both BP and AAR have agreed to look beyond the disagreements of the past few months and to fully focus on this important and successful business we have built together. At the same time, we look forward to continuing our work with Rosneft in our Sakhalin joint venture, running our new joint German refining business, and considering other future projects.”

Mikhail Fridman, the chairman of Alfa Group, said: “AAR remains dedicated to the success of TNK-BP, one of the most dynamic and successful oil companies in the world. As we have always stated, AAR is a long-term strategic investor, and we look forward to working with BP on delivering the next phase…

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