By Steven Mufson, Published: October 20 | Updated: Sunday, October 21, 11:40 AM
The oil giant BP is staring at two giant decisions.
First, this weekend its board is weighing an offer to sell one of its crown jewels — a 50 percent stake in a lucrative Russian oil joint venture — to Rosneft, the Russian oil company that is mostly state-owned. The structure of the roughly $26 billion deal, however, could leave BP and Rosneft closely entwined.
Second, the company has been in intense negotiations with the Justice Department over how big a fine it will have to pay to settle charges, possibly including criminal negligence, that have flowed from the blowout at BP’s Macondo well in 2010 that caused a massive spill in the Gulf of Mexico.
It is a pivotal moment for BP. In just two years, it has sold about $35 billion worth of assets ranging from a pair of U.S. refineries, gulf oil wells and some Kansas gas fields to exploration tracts in Egypt, Venezuela and Vietnam.
Tens of billions of dollars more are at stake now. If Rosneft buys BP’s half of TNK-BP, the Russian venture, analysts expect it to make a large cash payment, perhaps $17 billion, and give BP about a 15 percent stake in Rosneft. The settlement with the Justice Department hinges on the department’s threat to bring criminal negligence charges against BP that would raise fines from $1,100 a barrel to $4,300 a barrel. The latter fine could bring the cost to $19 billion.
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