Tag: BP

Sylvia Pfeifer

It’s been a fortnight of corporate comebacks for former BP executives. First out of the blocks was Tony Hayward, the former chief executive of the UK oil group, with the launch last week of his energy fund, Vallares. And this week, Andy Inglis, his former colleague who used to run BP’s exploration and production arm, made his first public appearance in front of City investors in his new job at Petrofac, the oil and gas service provider. Both men left BP last year in the wake of the Gulf of Mexico spill.

As head of BP’s upstream business based in Houston, Texas, Mr Inglis was in charge of its exploration activities at the time of the gulf accident. He resigned from the board of BP after Bob Dudley, who took over as chief executive officer from Tony Hayward after the accident, initiated a wholesale restructuring of the upstream division.

Mr Inglis heads Petrofac’s new Integrated Energy Services division which brings together the company’s solutions, energy developments and training services businesses. The division is focused on so-called ‘resource holders’ or national oil companies that own small and medium-sized undeveloped fields. Unlike other service companies, IES will not only provide straight-forward services such as engineering and construction but, where appropriate, it will also provide capital.

Kiran Stacey

We all knew that the collapse of BP’s deal with Rosneft to drill in the Arctic was more damaging for BP than it was for its Russian prospective partners.

For BP, the deal represented the chance not only to tap the significant Arctic resources for which Rosneft holds licenses, but also a chance to diversify away from the Gulf of Mexico, and to show the world it can still drill safely in difficult places, even after last year’s spill.

But Rosneft, while preferring the technical skills BP had to offer, still has plenty of options on the table. Big oil companies are lining up to take BP’s place and exploit the Arctic’s resources themselves. And none of them bring the baggage of existing Russian partners who could get in the way.

Russian president Dmitry Medvedev at a news conference May 18They should have done their homework. That’s the view of Russian president Dmitry Medvedev on the collapse of the BP-Rosneft deal. And it’s hard to fault his conclusion, delivered at a mega press conference on Wednesday that was broadcast live.

Although he did not say so, his criticisms were aimed at both BP and Rosneft – and deputy prime minister Igor Sechin, the former Rosneft chairman, who was forced to leave the company earlier this year on Medvedev’s orders.  And the confident-looking president even allowed himself a little swipe at Russia’s most powerful man, prime minister Vladimir Putin.

The president implied that BP and Rosneft should have anticipated opposition from the Russian oligarchs who are BP’s partners in its current Russian venture, TNK-BP. “Those who prepared the deal should have paid closer attention to the nuances of the shareholder agreement,” Medvedev said.

BPBP shareholders breathed a sigh of relief on Tuesday on the collapse of the Rosneft deal talks, with the stock climbing over 1 per cent.

And quite right too. In its original form, the deal with the Russian state’s oil champion was a high-risk venture hard to sell to shareholders. But not impossible, given the potential rewards in developing the Russian Arctic.

The final version, involving a costly and awkward compromise with BP’s existing Russian partners, was fatally flawed. But BP must not give up on the Arctic. It should try again  – perhaps after Russia’s 2012 presidential election.

Sheila McNulty

Deepwater Horizon explosionThe big question for months has been what would happen if there was a significant spill in the deepwater outside the Gulf of Mexico. Following BP’s Macondo disaster, the industry worked together to build two spill response systems for this area. But nobody said what would happen if a deepwater disaster unfolded in the waters offshore Ghana or Brazil.

Now the industry has gathered together to address that question. Nine of the world’s biggest oil and gas companies – BG Group, BP, Chevron, ConocoPhillips, ExxonMobil, Petrobras, Shell, Statoil and Total have launched the Subsea Well Response Project (SWRP), an initiative designed to  enhance the industry’s capability to respond to subsea  well control incidents.

BP‘s bid for a strategic alliance with Rosneft, the Russian state oil champion, collapsed on Tuesday after the UK oil group failed to reach agreement to salvage its $16bn share swap before a midnight deadline expired.

Rosneft was not willing to extend the deadline further, a person close to the state company said, after talks failed over a deal to buy out BP’s partners in TNK-BP, its existing Russian joint venture. A person familiar with the matter said Rosneft would now seek new partners for the Arctic exploration deal it had proposed for the alliance with BP.

Bob Dudley, BP chief executive, and Vladmir Putin, Russian prime minister, when the BP-Rosneft deal was announced in January 2011BP was fighting on Monday to save its planned $16bn deal with Russian state-run oil group Rosneft before the deadline on the deals lapses at midnight.

The UK group was in talks with Rosneft and with the Russian oligarchs who have blocked the Rosneft deal to protect their interests in BP’s existing Russian joint venture, TNK-BP. As the FT has reported, a buyout of the oligarchs – possibly for around $30bn – is one of the options of the table. But, with three parties to the negotiations, and the Russian state involved, nothing will be agreed until everything is agreed.

Energy use in non-OECD Asia, led by China and India, is growing faster than anywhere else in the world – it will more than double between 1990 and 2035,  according to a report by the US Energy Information Administration published in April.

But how will India deal with escalating demand? A separate report by Bernstein Research, a US asset management company, suggests it will struggle to do so, as price-capping measures stifle private investment in natural gas.

India’s imports of natural gas are set to grow by 139 per cent in the next five years from 1.4m cubic metres per hour in 2010 to 3.4m cubic metres per hour by 2015, according to J P Morgan. The bank says Indian production will grow by 90 per cent over the same period, leaving the country with a natural gas shortage.

Bob Dudley, BP chief executive, and Vladmir Putin, Russian prime minister, when the BP-Rosneft deal was announced in January 2011BP is bending over backwards to save its controversial deal with Rosneft, the Russian state-controlled oil group, and try to square its interests with those of the Russian authorities and of the oligarch partners in its current Russian joint venture, TNK-BP.

Shareholders should be wondering whether all the contortions involved are worth the effort.

Rosneft has given the British company until May 16th to negotiate an acceptable alternative to their original January agreement, that envisaged a $16bn share swap and an ambitious exploration and development joint venture for the Russian Arctic.

Kiran Stacey

Newsflash from Reuters:

15:15 06May11 RTRS-BP PLC <BP.L> – ARBITRAL PANEL PERMITS CONDITIONAL COMPLETION OF BP-ROSNEFT SHARE SWAP
15:16 06May11 RTRS-BP PLC <BP.L> – ASSIGNMENT OF ARCTIC OPPORTUNITY TO TNK-BP
15:16 06May11 RTRS-BP PLC <BP.L> – THE ORDER ALSO PERMITS THE PROPOSED SHARE SWAP BETWEEN BP AND ROSNEFT TO PROCEED

BP shares are now on the up following early morning falls.BP share price

More on this to follow from our energy editor Sylvia Pfeifer.

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