Russian oil giant Rosneft is to finalize the purchase of TNK-BP Thursday to become the biggest oil company in the world. The deal has already been approved by the Russian and Ukrainian antimonopoly watchdogs, and the European Commission.

Rosneft acquires 100% of the company currently joint-owned by BP and the AAR consortium (Alfa Group, Access Industries and Renova) on a pari passu basis.

British Petroleum is expected to earn $17.1 billion and will become the second major shareholder of Rosneft after the Russian state, with a 12.84% stake. AAR gets $28 billion. The two previous owners will also get $1 billion each as a bonus interest fee.

The deal is to be formalized in London at the BP headquarters with the Russian delegation expected to be headed by Rosneft President Igor Sechin.

The new Rosneft will produce 200 million barrels of crude oil per day and become the largest producer in the world, with 28 billion barrels of oil reserves.

The company will be headed by the current Rosneft vice-president, Eduard Khudainatov, while the TNK-BP senior managers, including executive director German Khan, will leave their posts.

Given the TNK-BP’s oil fields are more depleted than the Rosneft ones, the company’s efficiency will be adversely affected. Its operating expenses are expected to rise from $2.9 to $3.7 per barrel produced, and from $3.04 to $3.17 per barrel refined. The refining throughput will drop from 48.5% to 45%.

• A Permanent Economic Emergency