Oil-seeking in Russia

BP’s board has approved an offer from the Russian state oil company, Rosneft, to buy most of BP’s business (TNK-BP) in Russia for cash and shares in Rosneft, further consolidating Russia’s control of its oil industry. According to this article, if Rosneft ends up buying both BP and the Russian billionaires who control the other half of TNK-BP, Rosneft will become the world's largest publicly traded oil company. And this will increase the federal government's share of the oil industry up to above 50 percent. 

John Lough, a former TNK-BP official who is a Russia specialist at Chatham House, a British research organization, said in an interview.

“At the moment, the way the Russian system works is by achieving a distribution of influence and access to rents to achieve overall equilibrium on which the state is based.We have seen this remarkable strengthening of the influence of Rosneft and Sechin (Rosneft's chief executive) personally.” 

Given the enormous "rents" for Rosneft and the milestone in the consolidation of the Russian oil industry for Mr. Putin, no wonder Sechin, a former military intelligence officer and close aide to Mr. Putin is sparing no effort on making this purchase happen. And in return, Mr. Sechin's support of greater state ownership in the oil industry is precisely what President Putin needs.