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TNK-BP Sold Udmurtneft to China

TNK-BP said Friday it had closed a deal to sell a huge stake

TNK-BP said Friday it had closed a deal to sell a huge stake in Volga-region oil producer Udmurtneft.

TNK-BP, a joint Russian-British venture, said June 20 it had agreed to sell 96.7% in Udmurtneft, yielding 8% of its oil output, to China's no.2 oil company Sinopec Group, which had won a tender on the same day.

Russia's state-owned oil company Rosneft will then acquire a 51% stake in the oil producer from Sinopec. The Chinese corporation will finance the deal, which the Russian oil company will repay from the new asset's earnings. In May, Rosneft concluded an option deal with Sinopec to buy 51% in Udmurtneft if Sinopec won the tender, Rosneft said in a news release.

Udmurtneft accounts for more than 60% of the Russian republic of Udmurtia's oil output. Last year, the company produced 5.98 million metric tons (43.6 mln barrels) of crude with a daily output of 16,400 metric tons (115,000 bbl). The company's proven reserves as of December 31, 2005 were 78.4 million metric tons of oil (551 mln bbl), and forecast reserves stood at 131 million metric tons (922 mln bbl).