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A guard stands at a sign reading "TNK BP reception" at the office of the TNK-BP, Russia's third-largest oil producer, in Moscow, June 1, 2012. British oil giant BP said Friday it is considering selling its 50 per cent stake in its Russian joint venture TNK-BP, in a deal that could fetch at least $15-billion.

Mikhail Metzel/AP

It pays to have a plan B in Russia. But BP PLC's local partners are on shaky ground if they think that selling out of the country's third-biggest oil producer to avoid dealing with state oil giant Rosneft will help them realize the full value of their holding.

The billionaires' Alfa Access-Renova consortium intends to offload its 50 per cent stake in the TNK-BP joint venture if a bid for BP's half of the business fails. The mere fact that the oligarchs are considering such a move suggests that they fear losing out to Rosneft in an auction for the U.K. major's stake, which was put up for sale in June.

If Rosneft wins, AAR would be in a bind. The relationship with BP might have been dysfunctional, but the two sides had equal sway. Partnering with politically powerful Rosneft could be unappetizingly lopsided, even if it remained a 50-50 joint venture.

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At least AAR had the guts to make its feelings about Rosneft clear. But neither of the oligarchs' exit options are likely to realize full value for what, despite all the recent drama, remains an attractive underlying business.

Copious dividends mean the joint venture's main asset, a 95 per cent stake in Moscow-listed TNK-BP Holding, alone could be worth almost $48-billion, a Breakingviews calculation suggests. Throw in the joint venture's other assets, and $30-billion looks closer to a 'fair' price for the 50 per cent stake.

It's hard to see how AAR could crystallize that value if BP sold out to Rosneft. A flotation might bring the oligarchs sought-after liquidity, but the fact that it's a Russian company, and the history of boardroom dramatics, mean any IPO would come with a hefty governance discount. No obvious third-party bidders spring to mind apart from Rosneft, which is unlikely to want to swallow the whole of TNK-BP.

Of course, AAR's partners are no fools.

Their bid for BP's half of the business could succeed, they could convince Rosneft to buy their stake instead, or BP could also decide not to sell.

The U.K. major wants out. But chief executive Bob Dudley would be flayed by shareholders if he gave up too much value.

In the absence of a compelling offer for its half of the joint venture, BP may conclude that it wants to give its unhappy but lucrative partnership with the oligarchs another shot.

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