BP's Arctic oil deal collapses
By Vladimir Soldatkin and Tom Bergin |
May 18, 2011, Wednesday
|
Print Edition
Print Edition
BP'S plan to gain a foothold in Russia's offshore Arctic oilfields through a deal with state-controlled Rosneft has collapsed, opening the way for other oil groups to try to fill its place.
The tie-up unraveled because BP failed to mollify the partners in its existing Russian venture TNK-BP who claim the British company has no right to strike a new deal in the country without them.
BP chief executive Bob Dudley had trumpeted the Arctic exploration pact and share swap with Rosneft, which was signed in January, as a signal that BP could still offer growth after its disastrous Gulf of Mexico oil spill last year.
While some said BP was better off not pursuing the deal, failure to see it through has been seen as an embarrassment for Dudley, who said yesterday that talks aimed at resolving the problem with TNK-BP partners had not reached agreement.
"This is putting a brave face on a disappointing episode. While the market may see this as disappointing we believe it is better to walk away than have a bad deal," Evolution Securities analyst Richard Griffith said in a research note.
The collapse of the deal marks a personal setback for Russia's Deputy Prime Minister Igor Sechin. He has masterminded Rosneft's growth and development since it acquired the assets of bankrupt oil firm Yukos and went on to open an eastern pipeline export route for Russian crude to the Asia-Pacific.
Sechin and his boss, Prime Minister Vladimir Putin, have become accustomed to being able to dictate terms in strategic oil deals. Sources say Sechin has a good personal relationship with Dudley and views the share swap component of the BP deal as particularly attractive, but Rosneft does have other options in the Arctic.
BP's partners in TNK-BP - four Russian billionaires represented by the Alfa-Access-Renova consortium - objected to the Rosneft tie-up, saying BP had to pursue all its Russian ventures through TNK-BP.
They successfully took court action to block it.
The tie-up unraveled because BP failed to mollify the partners in its existing Russian venture TNK-BP who claim the British company has no right to strike a new deal in the country without them.
BP chief executive Bob Dudley had trumpeted the Arctic exploration pact and share swap with Rosneft, which was signed in January, as a signal that BP could still offer growth after its disastrous Gulf of Mexico oil spill last year.
While some said BP was better off not pursuing the deal, failure to see it through has been seen as an embarrassment for Dudley, who said yesterday that talks aimed at resolving the problem with TNK-BP partners had not reached agreement.
"This is putting a brave face on a disappointing episode. While the market may see this as disappointing we believe it is better to walk away than have a bad deal," Evolution Securities analyst Richard Griffith said in a research note.
The collapse of the deal marks a personal setback for Russia's Deputy Prime Minister Igor Sechin. He has masterminded Rosneft's growth and development since it acquired the assets of bankrupt oil firm Yukos and went on to open an eastern pipeline export route for Russian crude to the Asia-Pacific.
Sechin and his boss, Prime Minister Vladimir Putin, have become accustomed to being able to dictate terms in strategic oil deals. Sources say Sechin has a good personal relationship with Dudley and views the share swap component of the BP deal as particularly attractive, but Rosneft does have other options in the Arctic.
BP's partners in TNK-BP - four Russian billionaires represented by the Alfa-Access-Renova consortium - objected to the Rosneft tie-up, saying BP had to pursue all its Russian ventures through TNK-BP.
They successfully took court action to block it.
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