With the proposed purchase of a 50 percent stake in TNK-BP, Rosneft, the Russian state-owned petroleum giant, will become the largest oil company in the world. TNK represented a Russian oil venture that BP had pioneered with a group of Russian oligarchs. It provided BP with 29 percent of its oil and gas production last year and produced enough cash to nearly cover BP’s dividend payout for 2011. The Russians didn’t much like a British company developing their oil, however, at one point chasing CEO Bob Dudley out of the country and revoking his visa. Finally BP gave in last week and agreed to swap a 50 percent stake in TNK for $12.3 billion plus an 18.5 percent interest in Rosneft.
If the sale is completed, which seems more than likely, it will just allow Rosneft to pass ExxonMobil as the world’s leading oil producer. The graph above ranks the top seven in millions of barrels produced per day. The new Rosneft will be producing the equivalent of 4.6 million bbd while ExxonMobil is at 4.5. China’s Petrochina ranks third and BP sinks to fourth place. Dutch-owned Shell, Chevron and Brazil’s semi-privately owned Petrobas (not to be confused with Malaysia's Petronas) round out the top rankings.
BP will lose very little oil production in the exchange and will actually gain some reserves. The problem will be wringing out a dividend from Rosneft, which is kept on short leash by the Kremlin. BP will gain two seats on Rosneft’s board, but that may not help in raising BP stockholders’ payout much above$500 million. Its payout from TNK last year was $2.2 billion.