Russian oligarchs, collectively known as AAR, holds majority stake in BP"s Russian joint venture named TNK-BP and they used their first right to refusal power to stop the deal to pass through without incidence. They were not contacted before the joint venture is announced, this violated the shareholder rights and they rejected the bill out rightly.
Russian Arctic region holds a very large volume of unexplored oil and gas reserve. But, Rosneft lacks the technical expertise and the equipments to explore in those inhabitable regions.
Rosneft has already been approached by US multinationals like ExxonMobil and Anglo- Dutch firm Royal Dutch Shell for the exploration related contracts. Companies like Chevron are also in the run to explore this part of the world.
Rosneft and BP tried to buy out the majority shareholders of TNK-BP by upping the initial offer of $27 billion by $5 billion.
This is a big blow for BP after the Gulf of Mexico crisis where the company had to pay billions of dollars in compensation toward economic and environmental damage. But still the share prices moved upward as shareholders felt uncertainty in the future prospects of the profits from such deals and the high premium announced for it.
BP already gets a third of its oil from the TNK-BP joint venture. But taking on the extra stake would have mean an estimated half of its oil production - 1.3m barrels per day out of 2.5m barrels per day - would be coming out of the country.
This deal was close to $32 billion for AAP"s stake in TNK-BP, which is much more than the stake holding of the Russian oligarchs in the company estimated at $ 15-18 billion at current price.
Rosneft is primarily engaged in exploration and production of hydrocarbons, production of petroleum products and petrochemicals and marketing of outputs and has been included in the Russian Government"s List of Strategic Enterprises and Organizations.