BP, Rosneft in share swap

Source: Global Times
[08:44 January 17 2011]
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Britain's leading oil firm, BP, is facing suspicion from the US over its alliance with Russia's state-controlled Rosneft to jointly search for offshore oil and gas in the Arctic shelf, Reuters reported over the weekend.

BP and Rosneft signed an agreement Friday for a share swap, under which BP's 5 percent stake, valued at $7.8 billion, will be exchanged for 9.5 percent of Rosneft. The deal also covers a $1.4 billion to $2 billion investment to develop three blocks in the Kara Sea, in the Arctic Circle off Russia's north coast, according to Bloomberg.

Chris Huhne, British secretary of state for energy and climate change, welcomed the "groundbreaking" deal and called it "good news for Europe, for the UK's energy security and worldwide."

BP is one of the largest suppliers to the US military. The company's move this time immediately sparked concerns from the US. "Are there national security implications to this deal?" Michael Burgess, a Republican congressman who sits on the House energy committee, said to the Guardian.

Burgess pointed out that BP runs sensitive trans-Alaskan oil pipelines and that the group's BP America subsidiary is regulated as a US company. He called for a review inquiry by the US government's committee on foreign investment.

Democratic Congressman Ed Markey claimed that the Rosneft tie-up could complicate the collection of compensation for the fishing industry hit by last year's Deep-water oil spill.

Environmental group Greenpeace also lashed out, according to Reuters.

"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," Charlie Kronick of Greenpeace said in a statement.

Russian Premier Vladimir Putin said over the weekend that he did not consider BP solely to blame for the incident. "Our experts have scrutinized the tragedy: We know that BP was the organizer of the project, but there were also eight subcontractors, including major US companies," Putin was quoted by the Guardian as saying.

Russia, the world's top oil producer with output of more than 10 million barrels of oil per day, estimates that its Arctic zone holds about 51 billion tons of oil, or enough to fully meet global oil demand for more than four years.

Agencies - Global Times