business‎ > ‎

BP's Arctic oil deal with Rosneft off

posted 17 May 2011, 08:02 by Sam Mbale   [ updated 17 May 2011, 08:04 ]
BP's plan to gain a foothold in Russia's offshore Arctic off fields through a deal with state-controlled Rosneflt has collapsed, opening the way for other oil groups to fill its place.
UK/RUSSIA-BP/ROSNEFT - It was all smiles in January when BP announced plans to work with Russia's state-owned oil group Rosneft

Now it seems the deal is off.

Talks collapsed at midnight on Monday after BP said it failed to resolve a dispute with its other Russian partners TNK-BP.

Its billionaire oligarchs, operating under a consortium known as AAR, said the deal violated BP's agreement with them.

They took court action to block the Rosneft tie-up.

Manoj Ladwa from ETX Capital says the collapse of the deal is another blow to BP .

 Manoj Ladwa, senior trader, ETX Capital, saying:

"I wouldn't be surprised that at the next AGM, for the management of BP, to be dragged over the coals by investors. It's been one disaster over another over the last year or so for BP. First you had the Gulf of Mexico and now you've got the whole issue with TNK and Rosneft as well. And the key thing is here that the guys that own TNK or the 50% stake in TNK have the upper hand and Rosneft are quite easily able to go to another oil company."

Rosneft was to get a 5 percent stake in BP in return for 9.5 percent of its shares.

The deal was worth $16 billion and was intended to give BP a foothold in Russia's offshore Arctic oil fields.

It was also a chance for BP's chief Bob Dudley to rebuild the company's battered reputation.

He's now run into trouble in Russia twice.

In 2008 when he was head of TNK-BP he was forced to leave Russia after what BP calls 'a campaign of harassment' by AAR which they say was trying to gain control of the company.

BP says it hasn't given up on the Rosneft deal altogether and remains committed to Russia.

But it hasn't given any details of what its next move will be.

Hayley Platt, Reuters.

Comments