ADVERTISEMENT

MOSCOW (AP) The chief executive of Russian state-owned oil giant Rosneft pledged on Friday to offer to buy out minority shareholders in oil firm TNK-BP.

TNK-BP, Russia's third-largest oil company, was taken over by Rosneft last year. Since the deal, international minority investors holding some 5 percent in TNK-BP have been left in limbo and unable to find other buyers for their stakes.

The value of the investors' shares have halved since Rosneft agreed to buy the company from a group of Russian billionaires and British company BP. Foreign investors have been citing the case of the TNK-BP investors as an example of bad corporate governance in Russia.

Speaking at an investment conference in Sochi on Friday, Prime Minister Dmitry Medvedev floated the idea of a buy-out, saying in televised remarks that it "would improve the investment climate in the case of this company."

Rosneft CEO Igor Sechin, who was on stage one seat away from Medvedev, agreed with the suggestion, although he noted that Rosneft "had no legal obligations" to buy out the minority shareholders.

"Have you got enough money for that?" Medvedev asked Sechin, who assured the premier: "The company does have the money."

Shares in TNK-BP soared 12 percent on the comments.

It is not uncommon in Russia for top officials including President Vladimir Putin to make "suggestions" to state-controlled and private companies on key investment decisions.

Sechin told Russian news agencies that Rosneft's board of directors will convene later on Friday to approve the buy-out. The company is planning to buy the shares at the 18-month average price, he was quoted as saying.

Rosneft previously approved plans to pull out billions of dollars from TNK-BP subsidiaries as loans and indicated that it would not be paying a dividend for the previous fiscal year to TNK-BP shareholders.