Tag: Rosneft

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.

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.

Serious interest in buying Poland’s Lotos Group has come only from Russian companies, making the sale of the government-owned refiner politically problematic before this autumn’s parliamentary election.

Unofficially, the Russian companies who submitted bids for Lotos before the treasury ministry’s deadline at the end of last month include TNK BP, GazpromNeft and Rosneft, according to Poland’s Parkiet newspaper.

Russian companies have long been interested in Lotos, the country’s second largest refiner – which owns a modern refinery in northern Poland as well as a chain of petrol stations and some oil production on the Baltic Sea – as a way of gaining a foothold in the Polish market.

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.

Kiran Stacey

Protestors outside the BP AGMAs we near the end of BP’s AGM, one thing we can report is that Bob Dudley is still standing. Which is more than can be said of several protesters against the development of Canadian oil sands who were carted out, in some cases lifted off their feet, after shouting across Mr Dudley as he tried to defend such developments.

It has not been an easy ride for Mr Dudley in his first AGM as CEO, nor for the chairman Carl-Henric Svanberg. Several representatives of Gulf of Mexico communities were banned and if the company thought barring such people would limit criticism on this front they were wrong. One of the toughest moments for the board came when one woman read out a testimony excoriating the company from the father of Gordon Jones, one of the rig workers who was killed almost a year ago today.

Bob Dudley, BP chief executive, and Vladmir Putin, Russian prime minister, when the BP-Rosneft deal was announced in January 2011

By Stefan Wagstyl and Catherine Belton

Rosneft’s decision on Wednesday to give BP another month to try to complete their controversial cooperation plan gives everybody involved a breathing space.

But such is the acrimony between BP, its existing Russian partners led by oligarch Mikhail Fridman, and warring Kremlin clans,  that it’s unclear a deal can be done. Perhaps it can be completed only when the Moscow political temperature subsides after next year’s presidential election.

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