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. Last Updated: 07/27/2016

Sibneft Wants a Piece of BP Action

No. 5 oil major Sibneft said Wednesday it wants to parlay its leverage over TNK asset Onako into a stake in TNK's new $6.75 billion mega-merger with BP, despite the architects of that deal having ruled out sharing their new baby with anyone.

Analysts, however, say it is unlikely that complications untangling the web of Sibneft's and TNK's cross-holdings will derail the record-breaking deal.

Sibneft was on track to gain an 8.6 percent stake in TNK International -- a holding company that owns 97 percent of TNK, 25 percent of Rusia Petroleum and 44 percent of Rospan -- under a planned share swap for its 30 percent stake in key Onako subsidiary Orenburgneft, which it now jointly owns with TNK.

But that deal was thrown into doubt after the TNK shareholders agreed with BP on Tuesday to create a new company that will pool TNK International's assets in TNK, Sidanco, Rospan and Rusia Petroleum with BP's existing holdings in Russia.

"We wouldn't rule out taking an equity stake in NewCo. [the temporary name for the BP-TNK tie-up] for the Orenburgneft stake," a Sibneft spokesman said Wednesday. He added, however, that it was possible Sibneft may just end up keeping its stake in Orenburgneft.

He would not comment on whether Sibneft might seek to enforce its share swap through the courts. He would say only that the two sides had so far clinched only a preliminary agreement on that deal.

Major TNK shareholders Mikhail Fridman and Viktor Vekselberg told reporters Tuesday that Sibneft would not be a stakeholder in the new company, set to become Russia's third-largest oil company, either now or in the near future.

Analysts said it was most likely that Sibneft's and TNK's cross-holdings in Onako would end up being part of a swap under a deal to split Slavneft, the company both firms won with a joint bid of $1.86 billion in a privatization auction in December. BP and TNK have both said Slavneft is not part of the merger.

TNK and Sibneft's shareholders are still negotiating over how to divide up the Slavneft spoils.

Options under consideration include folding Slavneft into Sibneft with TNK or its shareholders receiving an equity stake in Sibneft, or splitting Slavneft's assets equally between Sibneft and TNK.

TNK has also suggested Slavneft could be folded into TNK with Sibneft receiving an equity stake in TNK in return.

TNK would not comment Wednesday on whether that option, or any other options, were still under consideration.

Sibneft has said it wants to reach a deal on Slavneft by mid-February, leaving just days for the two sides to come to an agreement.

Peter Henshaw, BP's head of external relations in Moscow, said he did not expect Sibneft's cross-holdings to cause problems for its new Russia deal.

"In the overall scheme of things [Sibneft's cross-holdings] are not going to be an obstacle to getting BP's merger completed," said Paul Collison, energy analyst at Brunswick UBS Warburg. "When BP merged with Amoco, it had far greater complications to deal with than that."

He added, however, there could also be problems dealing with the debt TNK had accrued for its Slavneft bid. Even though Slavneft is not part of the BP tie-up, TNK's debt for that deal has moved to the balance sheet of the new company, he said.