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Oil in Russia: Picnic time for teddy bears

April 4, 2013

Pass the honey, Igor
?WE LOVE our teddy bear. We will clean it and take care of it.? This is how Igor Sechin, Russia?s energy tsar, described his attachment to Rosneft, the country?s largest state oil company, of which he is also the chief executive. The occasion was a pow-wow with investors in London six months ago. Mr Sechin (pictured, right) was trying to soften Rosneft?s image as it prepared to take over TNK-BP, a joint venture between BP, a British oil firm, and a group of Russian oligarchs.Six months on, the teddy bear has shown its claws. Last week Rosneft?s board voted to take up to $10 billion in cash from the accounts of TNK-BP?s subsidiaries to help pay for the $55 billion acquisition. The snag is that 5% of the shares in those subsidiaries are owned by minority shareholders. By sucking the cash from TNK-BP, Rosneft is ignoring their interests. This is the ?worst scenario we could imagine?, says Gennady Sukhanov of TKB BNP Paribas Investment Partners, a minority investor in TNK-BP. The price of the publicly traded TNK-BP?s shares fell by nearly 40% at the end of March.Formally, Rosneft said it would borrow this money and pay...

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