OREANDA-NEWS. August 03, 2010. Rosneft is considered among potential buyers of BP's retail network in Germany operating under the Aral brand name, according to a Vedomosti report citing the German magazine WirtschaftsWoche, reported the press-centre of OTKRITIE Financial Corporation.

The Aral network comprises around 2,400 retail sites. In addition, BP owns 50% in Ruhr Oel, which has stakes in five German refineries with a total capacity of 23.5MMt (470MBD). According to Vedomosti, BP plans to sell the Aral network for EUR2bn (about USD2.6bn). Other potential buyers include Total and the European motor fuel retail association Avia International.

View: We believe the acquisition of BP's retail business in Germany without access to oil refining capacities would not make much sense for Rosneft, as a 'retail-only' business does not seem to be an appropriate vehicle of international diversification for Russia's largest oil company.

Therefore, we believe the acquisition of the Aral network only makes sense in combination with a 50% stake in Ruhr Oel and the corresponding processing rights. In addition, the EUR2bn price appear a bit excessive to us, given the generally low profitability margins in European fuel retail. At this juncture, it is premature to draw conclusions with respect to Rosneft's potential acquisition in Germany. We expect management to comment on this during its conference call on 2Q10 US GAAP results.

Valuation and Action: We maintain our positive view and our BUY rating on Rosneft shares.