President of Russia Vladimir Putin: Colleagues, I am very glad to welcome you here and congratulate you on the completion of the deal. It was a major, complex, multifaceted, and a very large deal. As far as I understand, it is the largest direct deal in the global economy today, and amounts to $61 billion dollars.
In my view, it is a very successful transaction. Rosneft acquired TNK-BP, both BP’s stake and that of the Russian party, TNK. In turn, BP became the second largest shareholder of our largest oil company, Rosneft, with a 19.5 percent stake. I believe that this is, first of all, a very important step in the privatisation of Russian public assets, and secondly, a sign that we have become strategic partners of a new kind. Hopefully this will lead to new technologies and new joint projects.
And markets have already responded positively to this deal. Despite the fact that the government sold some of its shares, the price of its remaining shares increased. This implies that the markets have assessed the situation correctly. So I congratulate you and wish you every success.
We have been in contact for a long time now, already with regards to BP’s previous plans. It has not been easy, but I think that the outcome is very positive.
BP Chief Executive Officer Robert Dudley: Thank you Mr President. It’s been an adventurous process, working with Igor Ivanovich [Sechin, President of Rosneft and Chairman of Rosneft’s Management Board] and the team at Rosneft has been very satisfying. It’s a complex deal, like you said.
And I remember when we spoke about it in St Petersburg, at the Geographical Society, and then again at your dacha in Sochi, where we spent time and we had a very fruitful meeting. It was very important to us. And we’re grateful for your support throughout this long process.
I could not be more happy that BP is a shareholder in Rosneft. It’s about to become the largest oil-producing private company in the world. We take the position as the second-largest shareholder of Rosneft very seriously. We are rock-solid supporters of Rosneft, and if you hear any word about our intention to sell these shares that’s not our intention whatsoever.
Vladimir Putin: I think that as a new member on the board of directors, you will bring your managerial experience with you to Rosneft.
Robert Dudley: I’ll try, Mr President, and do my best. And I also look forward to working with Rosneft around the world as well as here in Russia on many things. New technology, different geographies; I think there’s lots of potential.
”It was a major, complex, multifaceted, and a very large deal. It is the largest direct deal in the global economy today. In my view, it is a very successful transaction.“
And I don’t know if Mr Sechin told you about his visit to Houston, USA, last week, to one of the largest energy conferences in the world. But he gave a very powerful speech about Rosneft and its future to industry executives from all over.
Vladimir Putin: You see how you are treated in Russia and how you are treated in other countries, so I think that BP’s activities will gradually shift here.
Robert Dudley: You kind of read my mind, Mr President. We have our difficulties but we’re working through them. But they’re turning out to be quite challenging because it’s like working with – we say this expression – a herd of cats. We’re not quite sure who’s in charge, and we’re not quite sure what they want to do.
But I think we’re through most of the process now, and it’s a complicated legal process, but I’m confident we’ll get through it. We just have to stand firm, actually.
Vladimir Putin: As in all things, if one wants to succeed.
Robert Dudley: Oh, we have to stand firm – absolutely, absolutely. Although this particular place is not quite like everywhere else in the world over there. But we’ll do fine, we’ll do fine.
Vladimir Putin: Every place on earth is different; there are pros and cons everywhere.
Do you want to add something?
Rosneft CEO and Chairman of The Management Board Igor Sechin: I would first like to thank you, Mr President, for supporting this complex deal. I would also like to thank our partners, BP, and Mr Dudley personally, as well as our consultants without whom it would not have been possible to complete this difficult journey.
I would like to specially note the personal contribution of several people present here: Mr Russell Pollack and Mr Murat Akuyev, partners at Moscow-based Cleary Gottlieb, Merrill Lynch and Craig Kennedy, and my partner from Citigroup Alberto Verme, who is responsible for the transaction in the eastern hemisphere. Without the help of these people, without their personal contributions, without constant information exchanges, it would have been very difficult to conclude what you rightly called a complex deal.
This deal really is unique in terms of its scale. As you said, it is the biggest transaction ever regarding the acquisition of shares in exchange for cash, and this required us to take special care when drafting all the documents and following all the steps. Dozens, if not hundreds, of people were working simultaneously on these issues.
I would like to add that the result we achieved convincingly demonstrates that our proposals were the very best on offer and took into account the different interests of all parties.
The Russian government received a second shareholder, a high-tech company with significant competence in the oil and gas sector. Rosneft acquired TNK-BP’s shares, and AAR Consortium received a cash payout. I think that this absolutely conforms to market principles, and the deal was effected according to the highest international standards.
What benefits do we expect for Rosneft already this year? According to our data, in 2013 the united company will produce more than 206 million tonnes of oil, gas production will amount to 47 billion cubic metres, and 95 million tonnes will be processed. Revenues will be 4.9 trillion rubles [$158.5 billion].
We will work hard and we have corresponding plans to benefit from synergies resulting from the merger of our assets. First of all with regards to our production facilities. We will try to optimise our expenses when we work in fields such as Suzun, Tagul and Lodochnoye, as well as optimise management costs. We will also increase our processing efficiency. The company will operate 2,500 service stations across the country. We believe that the company and its shareholders may subsequently gain up to $10 billion from synergies. We will try to raise the equity value for the benefit of our shareholders.
Vladimir Putin: Including the Russian government.
Igor Sechin: Including the Russian government.
Vladimir Putin: I would like to wish you every success. Is there anything you would like to ask me?
Robert Dudley: I’d just like to add, I think this transaction will go down in the history of the oil and gas business as a very historic transaction. And I’d also like to observe the sort of tireless effort by Mr Sechin to drive this, organise the complex financing for it, and raise the profile of Rosneft in a very short period of time.
Vladimir Putin: I think you have all done great work and I am sure it will have a positive outcome.
Thank you very much. I wish you success.