Putin backs Rosneft deal to buy TNK-BP

Russian president Vladimir Putin has put his personal seal of approval on a huge deal for state-owned energy firm Rosneft to buy TNK-BP, in a move that will make it the biggest publicly listed oil and gas company in the world.

Rosneft, which is led by Mr Putin’s close ally Igor Sechin, agreed to buy BP’s 50 per cent share in the TNK-BP joint venture for a mixture of cash and shares, and has a preliminary agreement to buy the other half of the firm from a group of Russian oligarchs, in a deal worth at least €43 billion.

Industry experts said the deal was the third-largest oil acquisition ever, and would give Rosneft control of more than 40 per cent of Russia’s output of crude oil, enabling it to leap-frog ExxonMobil as the world’s largest listed producer of oil and gas.

“This is a good, large deal that is necessary not only for the Russian energy sector but also the entire economy,” Mr Putin said during a Kremlin meeting with Mr Sechin.

“This is a very good signal to the Russian and international energy markets. I am certain that it will be beneficial.”

The deal marks the latest phase in the extraordinary growth of Rosneft, which has been the main beneficiary of Mr Putin’s drive to create “national champions” of industry that will ensure solid state control over key sectors of the economy.

Rosneft snapped up the best assets of Yukos, formerly Russia’s biggest oil firm, following the arrest and jailing of its founder Mikhail Khodorkovsky in 2003.