A London tribunal has extended the injunction on BP and Rosneft’s proposed joint venture in the South Kara Sea in the Arctic. The injunction was sought by AAR, a group of Russian oligarchs which own half of TNK-BP, BP’s primary partner for development in the Arctic. All of BP’s projects in Russia and the Ukraine are supposed to be offered to TNK-BP first, but this relationship does not always make the most business sense. The Guardian reported stockbroker Iain Armstrong of Brewin Dolphin as remarking, “TNK-BP has no experience of operating offshore, in the Arctic or anywhere. To come back and say to BP, ‘you must involve us’, it’s a bit of a farce. It sounds like someone’s nose has been put out of joint.”

However, Stan Polovets, AAR’s CEO, scathingly criticized BP’s attempted deal with Rosneft. He declared, “Willfully ignoring the provisions of the shareholder agreement was a serious misjudgment by BP that has severely damaged the relationship between the TNK-BP shareholders; it has also harmed BP’s reputation in Russia…”We expect Bob Dudley (BP’s new CEO) to make every effort to rectify the situation and rebuild the trust that has been lost between BP, AAR and the management of TNK-BP.”

In a press release, BP said that “it was disappointed that these agreements, which are important for Russia, for Rosneft and for BP, cannot for now go ahead in the form intended.” The company will still try to pursue the share swap with Rosneft, in which BP and Rosneft would obtain 9.5% and 5% of each other’s shares, respectively, while temporarily foregoing joint exploration and development of the Arctic in the dim hopes that the injunction will be lifted.

News Links

“BP’s Russian deal with Rosneft blocked by court,” The Guardian

“BP’s move to join Rosneft in the Arctic is set back,” New York Times

Categories: Oil & Gas Russia

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