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BP strikes landmark Kremlin deal

October 22 2012, 12:00

BP's Bob Dudley proposed sale of his company's stake in TNK-BP to Rosneft. Photo: AFPDIRECTORS at BP have approved a radical $27 billion (£17 billion) plan to sell its troublesome Russian operation and forge a deep new alliance with the Kremlin, reports on Sunday.

The British oil major will off-load its lucrative but problematic TNK-BP operation in return for cash and shares in Rosneft, the state oil giant run by Igor Sechin, Vladimir Putin’s right-hand man.

The board approved the deal on Friday afternoon at BP’s St James’s Square headquarters in central London.

Subject to final negotiations, the FTSE 100 company will receive $11 billion to $13 billion in cash, a 16%-20% stake in Rosneft and two board seats at the Kremlin-controlled group. The details could be announced as early as today, but sources cautioned that negotiations might take several days.

It will be the most significant Anglo-Russian buiness transaction of recent years and firmly tie BP’s future to that of Rosneft.

WKT citing

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