TNK-BP partners eye BP's entire stake BP's Russian billionaire partners in TNK-BP are preparing an all-cash offer for the UK oil company's 50 per cent holding in the Russian oil venture, raising the stakes in an emerging bidding war against Rosneft, the Russian state oil champion. The billionaire partners had previously indicated that they were interested in buying only half of BP's stake in the 50:50 Russian oil venture. But one week after Rosneft approached more than a dozen lenders for proposals for $15bn to finance a potential cash and shares deal for the BP stake, the consortium known as AAR indicated that it was ready to raise its offer. "It's clear by now that BP isn't going to consider a bid for 25 per cent," a person close to the Russian shareholders said. We plan to make a bid for the entire 50 per cent stake. We are just in the beginning of the process. The move pits the billionaire shareholders led by Mikhail Fridman, the Russian tycoon, against the state oil champion, headed by Igor Sechin, the energy tsar, in a race to raise financing - and the backing of the Russian government - for a potential deal. Rosneft could make an offer worth more than $20bn for the stake in a possible deal that would leave BP with a sizeable stake in Rosneft, a person familiar with the situation has said. Such a deal could also revive hopes for a wide-ranging exploration deal with the state oil champion, an alliance that AAR had blocked last year. AAR could make a comparable offer in cash, a person close to the Russian shareholders said. TNK-BP, rather than the Russian shareholders, would "most likely" be the borrower in the buyout deal, the person said. The company's strong cash flow, with earnings before interest, tax, depreciation and amortisation at about $13bn, would mean raising funds should not be a serious problem, the person added. However, another person close to the situation said: "Borrowing against future cash flows? That sounds like Glasgow Rangers to me," in a reference to the Scottish football club that went into administration earlier this year. Bankers said both groups should be able to raise financing for a deal, but the eventual outcome would more likely be determined by political considerations. "This is going to be much more a political decision than a financial capacity decision," said one western banker. A top-10 BP shareholder said that for BP, a deal with Rosneft would make more sense than one with AAR, even if the latter was all cash. In the very long run, arguably a tie-up with Rosneft would make more economic sense. As an integrated oil company, you want access to oil provinces, and an alliance with Rosneft provides that. Under the shareholder agreement, BP must conduct good-faith negotiations with AAR for a 90-day period that expires in mid-October. Any deal with AAR could lift the web of multibillion-dollar lawsuits filed by the Russian shareholders - and potentially by TNK-BP itself - over AAR's claims that BP breached the shareholder agreement by seeking to pursue the strategic alliance with Rosneft last year, the person close to AAR said. A deal with AAR could mean an end to all arbitration and potential lawsuits from TNK.