Anger after BP announces Arctic oil drilling deal
Under-fire BP has signed a deal with Russia's state run energy giant to hunt for oil in the country's Arctic continental shelf.
Environmental groups have criticised the deal, announced this weekend, claiming BP has bought its way into the Arctic thorough the ‘back door’.
The deal, with Russia’s Rosneft, appears controversial in light of Greenland’s decision to refuse BP an Arctic drilling license and its much publicised failings in the Gulf of Mexico.
Rosneft, who were awarded the contracts in 2010, have agreed to explore and develop three license blocks on the Russian Arctic continental shelf.
These licences cover approximately 125,000 square kilometres, in what Russia believes are ‘highly prospective’ areas of the South Kara Sea, it is also an area roughly equivalent in size and prospectivity to the UK’s North Sea.
The deal is also historic as it’s the first major equity-linked partnership between a national and international oil company.
It gives Rosneft a 5% share of BP’s ordinary voting shares in exchange for approximately 9.5% of Rosneft’s shares.
The share swap component of the alliance creates strategic alignment to pursue joint projects and demonstrates mutual confidence in the growth potential of both companies.
BP’s chief executive, Bob Dudley, said: “This unique agreement underlines our long-term, strategic and deepening links with the world’s largest hydrocarbon-producing nation.
“Underpinning this alliance is a new type of relationship based on a significant cross-shareholding, and bringing together technology, exploration and safe and responsible field development skills.”
Greenpeace spokesman Charlie Kronick 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 done little to address the issues raised by the Deepwater Horizon disaster.
“While last year the Greenland government refused to grant drilling concessions to the company because it wasn’t convinced BP has rigorous enough safety protocols.
“Now 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.”
In January 2006, BP and Rosneft launched a scientific research study to evaluate the Russian Arctic.
In 1998, BP and Rosneft started an alliance that eventually led to the formation of three joint ventures to conduct exploration on the Russian continental shelf, offshore Sakhalin.