Russian crude producer TNK-BP reported a drop by 13% in its net income for 2012 due to higher taxes following its acquisition by state-controlled oil company Rosneft.

TNK-BP is being acquired by Rosneft from British oil firm BP and the AAR consortium of Russian tycoons for $55 billion in cash and shares. This deal is set to create the largest listed oil produce in the world.

The company said that it incurred $7.58 billion drop last year because of an increase in export duty. This is despite an increase in its operating cash flow by 22% to $13.24 billion.

To fund the deal, Rosneft has to invest $40 billion in cash given that it already secured financing through bank loans and deals with trading firms.

 TNK-BP's board had already approved the management to negotiate possible integration with the oil producer, according to its chief financial officer Jonathan Muir.