OAO Rosneft’s $55 billion takeover of TNK-BP creates an empire stretching from Russia’s Far East to Venezuela that pumps almost 5 percent of the world’s crude.
As Chief Executive Officer Igor Sechin integrates Russia’s largest and No. 3 oil companies, he will steer an upgrade of Soviet-era refineries, a drilling program in uncharted Arctic waters, the creation of a natural gas business and a global alliance with Exxon Mobil Corp.
The new company, created yesterday, will be about 70 percent-owned by the Russian state and will employ 218,000 people, more than Exxon and Royal Dutch Shell Plc combined. Rosneft sales per employee will be $729,000 this year, compared with more than $5 million at Shell, representing the scale of potential cost savings. Sechin plans to find $10 billion of efficiencies through the TNK-BP deal.
“This is the biggest acquisition in history in terms of production and reserves,” said Daniel Yergin, author of The Prize, a history of the oil industry, who will sit on an integration committee overseeing the takeover. The companies “recognize the scale and complexity, but they also see the scale of opportunity.”By the way, I first read The Prize some years ago; the Pulitzer-Prize-winning best seller came out in 1990; the current edition, paperback is dated 2008. I've read it a second time, and bits and pieces since then. It
The good news: Rosneft, now in financial whitewater, won't have the flexibility to buy into the Bakken.
