BP Inks Arctic Drilling Deal With Russian Company
In its first major deal since the Gulf oil spill disaster, BP has entered into a joint venture with a Russian energy firm to explore oil and gas deposits in the chilly waters of Russia’s Arctic shelf.
Following completion of this agreement, Russian-owned Rosneft will hold 5 percent of BP‘s ordinary voting shares in exchange for approximately 9.5 percent of Rosneft’s shares.
“This unique agreement underlines our long-term, strategic and deepening links with the world’s largest hydrocarbon-producing nation,” said BP’s chief executive, Bob Dudley in a press release. “We are very pleased to be joining Russia’s leading oil company to jointly explore some of the most promising parts of the Russian Arctic, one of the world’s last remaining unexplored basins.”
What Dudley failed to mention is that this lack of exploration is due to the extreme danger of drilling in arctic conditions.
“In the wake of BP’s catastrophic leak in the Gulf of Mexico this spring, Russian officials and experts warn an oil spill under the ice could turn out far worse than one in warmer deepwater climates. Arctic conditions — remoteness, fragile ecosystems, darkness, sub-zero temperatures, ice, high winds — make dealing with an oil spill a massive task” (Deccan Herald).
And there are other reasons some in the U.S. aren’t so sure that both companies are being completely transparent about this “win-win” deal.
According to Reuters, U.S. Rep. Edward Markey called for a careful U.S. government review of the share-swap between BP and state-owned oil company Rosneft to see if the deal could have an impact on U.S. national security.
“Russia is widely viewed as not a desperately stable environment for Western businesses,” wrote Robert Peston, Business editor for BBC News. Second, “Rosneft is 75 percent owned by the Russian government. So it will look to many as though the Russian government is taking a 5 percent stake in a company with strategically important oil reserves all over the world, including – of course – the US.”
Map: Location and scale of South Kara Sea licences Credit: BP Global