Environmentalists and politicians are increasingly sounding off about BP and Russia’s state oil company Rosneft teaming up to drill in oil’s new frontier: the Arctic.
As announced on Friday, their multi-billion dollar share exchange will seal a partnership between the two companies that will see London-based BP helping to develop Rosneft’s licences in the south of the Kara Sea.
But as it struggles to recover its credibility after the Deepwater Horizon disaster in the Gulf of Mexico, the tie up has done nothing for BP’s reputation with environmentalists, who are virulently opposed to any oil exploration in the Arctic.
And in America Edward Markey, a Democrat member of the House Natural Resources Committee, said the deal would make it more difficult to hold BP to account for the Gulf of Mexico spill. He added that the company’s name, “now stands for Bolshoi Petroleum”. (Bolshoi is Russian for ‘big’.)
The financial side of things will see BP owning 9.5% of Rosneft’s shares and Rosneft taking 5% of BP’s ordinary voting shares in exchange. As of close of play on Friday, the BP shares were worth $7.8 billion. The deal will also establish an Arctic technology centre in Russia to develop the technologies that will be needed as oil companies increasingly start to hunt for oil and gas in the Arctic. BP says the 125,000 square kilometre area of the Kara Sea it will be exploring with Rosneft is “roughly equivalent in size and prospectivity” to the prosperous North Sea.
Image: The Novaya Zemlya archipelago, which separates the Kara Sea to the east from the Barents Sea to the west / Jeff Schmaltz, MODIS Rapid Response Team, NASA/GSFC