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TNK BP Sells its Udmurtneft Unit to China?s Sinopec

Russian British oil major TNK BP said on Tuesday, June 20, that it will sell its Volga

Russian-British oil major TNK-BP said on Tuesday, June 20, that it will sell its Volga-region oil producer Udmurtneft to China?s Sinopec. Earlier it was announced that Sinopec made its bid for Udmurtneft in partnership with state-owned company Rosneft, but TNK-BP made no mention of this.

?The sides have exchanged letters confirming the commercial terms of the deal,? the oil major said in a press release, adding that Udmurtneft assets were being sold as a going enterprise.

The deal is expected to be clinched in the near future, after final details are ironed out and a sale contract signed. ?The Federal Antimonopoly Service has okayed the deal,? the company said.

?This is a positive development ? it brings another major international investor working with strong Russian alliances into the country?s oil and gas sector [and] reinforces Russia?s pivotal role in global energy markets,? TNK-BP President Robert Dudley was quoted as saying in the press release. ?For TNK-BP it will allow us to concentrate more resources on our core exploration and production regions in Russia.?

The Russian anti-monopoly watchdog allowed ten Russian and foreign firms to bid for a controlling interest in Udmurtneft. The list included Sibneft, which was renamed Gazpromneft in May; Russneft; and Kazakhstan?s KazMunaiGaz; along with other firms including Austria?s OMV and Hungary?s MOL. After making an offer of $2.7 billion last week, Gazpromneft said on Monday that it could make a new joint bid with Hungary?s MOL.

Udmurtneft, which has annual oil production of some 6 million metric tons, is currently developing 26 oil fields in the region. The company has charter capital of 3.56 million rubles (about $130,000), divided into 2,671,549 ordinary and 890,517 preferred shares, each with a face value of 1 ruble (about $0.03).

It was earlier rumoured that Sinopec and Rosneft made an offer of $3.5 billion rubles for Udmurtneft, but TNK-BP?s statement on Tuesday made no mention of the sum of the deal.