Deal Makes Russian Oil Company Biggest Producer

Russia's Rosneft oil company inked a $55 billion deal to buy out TNK-BP. The acquisition is subject to Russian government approval. But if finalized, it could pump more oil and gas than Exxon Mobil.

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STEVE INSKEEP, HOST:

Two of the world's biggest oil companies have announced a deal that will slurp up millions of barrels of crude and billions of dollars in earnings, if it works. The move would make Russia's state-owned company Rosneft the biggest publicly traded oil producer in the world - and it would give the British energy giant BP more opportunities in Russia.

NPR's Corey Flintoff reports from Moscow.

COREY FLINTOFF, BYLINE: Here's how the deal works: BP currently owns 50 percent of a joint-venture Russian oil company called TNK-BP. Its partners in that company are four Russian billionaires, and though they've been making plenty of money, they haven't always gotten along that well. So, BP will sell its share in that partnership to Rosneft for $17 billion in cash, plus more than 12 percent of Rosneft stock.

Rosneft will make a separate deal to buy the rest of the company from the Russian billionaires - and when it's all done, Rosneft will be able to pump more oil per day than ExxonMobil.

Analysts say the bad thing about the deal is that it puts yet another privately run oil company under the control of the Russian government. But energy analyst Ildar Davletshin, of the investment bank Renaissance Capital, says BP's involvement could improve Rosneft's efficiency.

ILDAR DAVLETSHIN: There is an opportunity for Rosneft to import best practices and technologies from BP.

FLINTOFF: Analysts say the overall deal will be worth about $61 billion.

Corey Flintoff, NPR News, Moscow.

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