BP/Russia oil deal touted by Putin, doubted by US Congress

bp russian oil deal approved by putin

A BP/Russian oil deal heartily endorsed by Vladimir Putin has raised red flags among certain member of the U.S. Congress Image: CC World Economic Forum/Flickr

A BP/Russia oil deal was announced Friday that is being billed as a “global strategic alliance.” The $ 7.8 billion Russia/BP oil deal is a stock swap between BP and Rosneft, which is owned by the Russian Government. Facing up to $21 billion in fines for causing the worst oil spill in U.S. history, BP is shifting its focus to the Russian arctic.

BP in bed with Russian oligarchs

The BP/Russia oil deal was announced in London by BP chief executive officer Bob Dudley and a brace of prominent Russian politicians. The BP/Russia oil deal with Rosneft is an arrangement between two of the largest oil companies in the world. Dudley called it  “an entirely new strategic alliance of these two great countries.” The deal was announced a day after Dudley met with Russian prime minister Vladimir Putin in Moscow. BP already owns 50 percent of an oil company venture with a group of Russia’s billionaire oligarchs called TNK-BP. The Kremlin has been looking for ways to reduce its stake in Rosneft.

BP to drill and spill in Russian arctic

The Russian arctic is estimated to hold 5 billion metric tons of crude oil and 10 trillion cubic meters of natural gas. BP and Rosneft first planned technical studies of oil deposits near Sakhalin Island in 2006. Last October, Rosneft obtained the license to drill for oil off Russia’s north coast in the Kara Sea above the Arctic Circle. The BP/Russia oil deal answers questions about whether BP would have trouble in Russia after Dudley took over the company from Tony Hayward during the Gulf oil spill. Three years ago Dudley led TNK-BP, but he was kicked out of Russia for angering the company’s Russian billionaires.

U.S. Congress questions BP/Russia oil deal

In comments about the BP/Russia oil deal Putin said it “may become large-scale and have a serious impact on the global oil and gas industry.” Last December Rosneft said it was seeking partners to become a leading energy producer “on all continents.” Statements such as those have alarmed U.S. lawmakers. Rep Edward Markey, D-Mass., has been a driving force in seeking maximum fines from BP for its role in the Gulf oil spill. He called for a government review to determine whether the BP/Russia oil deal affects U.S. national security.

Sources

Business Week

Financial Times

Associated Press

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