BP announced a “historic” agreement with the Russian government last night in a £10billion deal which will open up unexplored reserves in the Arctic.
The “groundbreaking” global alliance will see the UK oil giant own 9.5% of Russian government-owned Rosneft’s shares, while Rosneft will take a 5% stake in BP.
Speaking at the signing ceremony in London, BP chief executive Bob Dudley said: “I do believe this is a historic moment for BP, for our industry and I believe for Russia and the wider world of energy globally.
“We are today building a relationship between BP and Rosneft that has been forged over 12 years but going far beyond anything that has gone before.
“We are creating an entirely new strategic alliance between what I know are two great companies.
“Vladimir Putin, the Russian prime minister, told us today in our meeting in Moscow it is an alliance based on mutual advantage and recognition of the great strengths that bring each of us together in our co-operation.
“For the first time in the history of our industry there will be a significant cross-share holding between a major international oil company and a major national oil company.”
He confirmed the deal would see the Russians take a £5billion stake in BP as part of a £10billion share exchange.
The move suggests BP now intends to focus more towards interests in the east, following a torrid year in North America.
Mr Dudley denied BP was “turning to the east” in the wake of the Gulf of Mexico disaster. The oil spill which followed the explosion on the Deepwater Horizon rig killed 11 workers and cost the company tens of billions of pounds.
Energy Secretary Chris Huhne said the government welcomed the new partnership. He said after the events of last year, this showed BP was “very much open for business”.
Igor Sechin, Russia’s deputy prime minister and chairman of Rosneft, said: “Global capital and Russian companies are clearly ready to invest in world-class projects in Russia, and Russian companies are quickly emerging at the forefront of the global energy industry.”
BP chairman Carl-Henric Svanberg said: “The world’s need for energy continues to increase.
“BP is working with national oil companies using its leading exploration skills and expertise to meet this demand.
“This is a trend which will increase as access to resources becomes scarcer.”
Reacting to the news, Charlie Kronick, of Greenpeace, said: “The Arctic is the world’s most fragile environment for oil exploration, while its ice sheet is melting rapidly due to climate change.
“Any company that drills for oil there forfeits any claim to environmental responsibility.
“BP has bought its way into the Arctic by the back door. It seems the company learned nothing last year in the Gulf of Mexico.”
The exploration will take place in the Russian Arctic continental shelf in an area of the South Kara Sea covering about 125,000sqkm, one of the world’s last remaining unexplored basins.
City analysts said the tie-up would leave BP well-placed to capitalise on Russian oil interests, but might risk upsetting US investors.
Justin Urquhart Stewart, co-founder of Seven Investment Management, said: “It is a very exciting opportunity for BP, because it gives them access to the unproven but thought to be significant gas and oil reserves of the Arctic. It provides BP with an excellent opportunity to rebuild its assets, which it has been selling off after the Gulf of Mexico.
“This will replace those and give them a market without much competition.
“The downside is that some Americans may use this as an excuse to say ‘we have more reasons not to deal with BP’. But BP is changing direction, it’s saying we don’t necessarily have to go to America.”