BP strikes deal with Russia to explore Arctic reserves

BP has unveiled an “historic” agreement with the Russian government in a £10bn (€11.85bn) deal which will open up unexplored reserves in the Arctic.

BP has unveiled an “historic” agreement with the Russian government in a £10bn (€11.85bn) deal which will open up unexplored reserves in the Arctic.

The “groundbreaking” global alliance will see the UK oil giant own 9.5% of Russian government-owned Rosneft’s shares, while Rosneft will take a 5% stake in BP.

Speaking at the signing ceremony in central London last night, BP chief executive Bob Dudley said: “I do believe this is a historic moment for BP, for our industry and I believe for Russia and the wider world of energy globally.”

He added that the relationship between BP and Rosneft had been “forged over 12 years” but now goes “far beyond anything that has gone before”.

“We are creating an entirely new strategic alliance between what I know are two great companies,” he said.

Mr Dudley continued: “Vladimir Putin, the Russian prime minister, told us in our meeting in Moscow it is an alliance based on mutual advantage and recognition of the great strengths that bring each of us together in our co-operation.

“For the first time in the history of our industry there will be a significant cross-share holding between a major international oil company and a major national oil company.”

He confirmed the deal will see the Russians take an $8bn (€5.98bn) stake in BP as part of a $16bn (€11.95bn) share exchange.

Mr Dudley continued: “This is truly the first alliance fit for the 21st century, based on the promise of the future and not the legacies of the past.”

The move suggests BP now intends to focus more towards interests in the east, following a torrid year in North America.

But Mr Dudley denied BP was “turning to the east” in the wake of the Gulf of Mexico disaster.

The oil spill which followed the explosion on the Deepwater Horizon rig killed 11 workers and cost the company tens of billions of pounds.

Energy Secretary Chris Huhne said the Government welcomed the new partnership.

He said: “It is a groundbreaking deal. It is good news for Europe, for the UK, energy security and worldwide.”

He said after the events of last year, this showed that BP was “very much open for business”.

Igor Sechin, Russia’s deputy prime minister and chairman of Rosneft, said: “Global capital and Russian companies are clearly ready to invest in world class projects in Russia; and Russian companies are quickly emerging at the forefront of the global energy industry.”

BP chairman Carl-Henric Svanberg said: “The world’s need for energy continues to increase.

“BP is working with national oil companies using its leading exploration skills and expertise to meet this demand.

“This is a trend which will increase as access to resource becomes scarcer.”

But reacting to the news, Charlie Kronick of Greenpeace said: “The Arctic is the world’s most fragile environment for oil exploration, while its ice sheet is melting rapidly due to climate change.

“Any company that drills for oil there forfeits any claim to environmental responsibility.

“BP has done little to address the issues raised by the Deepwater Horizon disaster, while last year the Greenland government refused to grant drilling concessions to the company because it wasn’t convinced BP has rigorous enough safety protocols.

“Now BP has bought its way into the Arctic by the back door. It seems the company learned nothing last year in the Gulf of Mexico.”

The exploration will take place in the Russian Arctic continental shelf in an area of the South Kara Sea covering about 125,000 square km, one of the world’s last remaining unexplored basins.

City analysts said the tie-up would leave BP well-placed to capitalise on Russian oil interests, but may risk upsetting US investors.

Justin Urquhart Stewart, co-founder of Seven Investment Management, said: “It is a very exciting opportunity for BP, because it gives them access to the unproven but thought to be significant gas and oil reserves of the Arctic.

“It provides BP with an excellent opportunity to rebuild its assets, which it has been selling off after the Gulf of Mexico.

“This will replace those and give them a market without much competition.

“The downside is that some Americans may use this as an excuse to say ’we have more reasons not to deal with BP’.

“But BP is changing direction, it’s saying we don’t necessarily have to go to America.”

more courts articles

Man (25) in court charged with murdering his father and attempted murder of mother Man (25) in court charged with murdering his father and attempted murder of mother
Man appears in court charged with false imprisonment of woman in van Man appears in court charged with false imprisonment of woman in van
Man in court over alleged false imprisonment of woman Man in court over alleged false imprisonment of woman

More in this section

FILE PHOTO The Competition and Consumer Protection Commission has cleared the purchase of Goodbody Stockbrokers by AIB END Goodbody Stockbrokers fined over €1.2m by Central Bank over rules breaches
Nottingham City Centre Stock Irish staff at the Body Shop wait for wages as retailer shuts stores in the Republic
Ryanair comments on Norwegian Ryanair boss O'Leary's spat with Transport Minister over Dublin Airport escalates
IE logo
Devices


UNLIMITED ACCESS TO THE IRISH EXAMINER FOR TEAMS AND ORGANISATIONS
FIND OUT MORE

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
ie logo
Puzzles Logo

Play digital puzzles like crosswords, sudoku and a variety of word games including the popular Word Wheel

Lunchtime News
Newsletter

Keep up with the stories of the day with our lunchtime news wrap.

Sign up
Cookie Policy Privacy Policy Brand Safety FAQ Help Contact Us Terms and Conditions

© Examiner Echo Group Limited