BP has paid its Russian oligarch partners $325m to drop all outstanding litigation against it, allowing the British oil company to strike new deals and exploration agreements with state-owned Rosneft.
The payout comes one month after Rosneft agreed to buy both BP and its tycoon partners, known as the Alfa-Access-Renova consortium, out of joint venture TNK-BP, and brings an end to one of Russia’s longest and most colourful corporate conflicts.
BP executives said the deal with AAR substantially reduced the execution risk that was hanging over Rosneft’s acquisition of TNK-BP. Many in the company feared AAR could have mounted legal action to obstruct the transaction, perhaps to win new concessions.
The agreement with AAR also waives a provision in the TNK-BP shareholder agreement that required both partners to pursue new business opportunities in Russia exclusively through the vehicle of TNK-BP. It was this condition that tripped BP up last year when it tried to sign a broad Arctic exploration deal with Rosneft. AAR successfully blocked the deal in the courts.
As a result of the payout, BP will no longer face billions of dollars in litigation claims over the failed Arctic deal, which AAR alleges broke the TNK-BP shareholder agreement.
A Stockholm arbitrational tribunal was due to decide on AAR’s claims in a matter of days.
BP’s shares rose 0.35 per cent to close at 428.8p in London on Tuesday.