Joint BP-Rosneft Arctic venture “positive” for Russia’s investment climate

BP CEO Robert Dudley hopes that joint development of Russia’s Arctic offshore hydrocarbon fields by BP and Russian oil company Rosneft will have a positive impact on the investment climate in Russia.

Rosneft and BP have reached an agreement on the joint development of offshore fields in Russia and in third-party countries. The deposits to be jointly developed by the companies hold five billion tonnes of oil and ten trillion cubic meters of gas in reserves. Dudley met Prime Minster Vladimir Putin on Friday. Putin has pledged the support of the Russian government to the venture. “The government of the Russian Federation plans to create a tax and administrative regime that will be the most conducive [to this project]," Putin said.Under the agreement, BP gets 9.5 per cent of Rosneft shares, while the largest Russian oil company becomes owner of five per cent of BP. “For the first time in history we’ve seen such a significant exchange of stakes between two oil companies – the largest international and the major national ones. This shows that BP is sure of Russia’s investment climate,” Dudley commented. Prime Minister Putin pointed out that problems BP ran into the Gulf of Mexico have not obstructed the plans of joint work with Rosneft. He noted that British Petroleum has now gained a unique experience in securing oil transportation. Deputy Prime Minister and Rosneft Chairman Igor Sechin, who also attended the meeting, added:“BP has learned from this experience, and our joint venture will be carried out with the greatest level of measures aimed at protecting the environment. We've been working with BP for many years. They're competent and have strong experience with Russian companies.”He also said that Rosneft is working on a new strategy, aimed at transforming the company into an international energy holding. “Our deal with BP is, of course, part of this strategy,” he pointed out.Robert Dudley said that the exploration of the Arctic region requires development of new technology. He specifically suggested the creation of shelf-exploration centers in St. Petersburg and Murmansk, which would also bring its co-operation with Russia to a new level. The BP head recalled that his company has been working with Russia for a long time and that BP-Rosneft partnership has proved efficient over the years. BP and Rosneft signed a protocol on joint exploration efforts in the Arctic back in 2006.Ben Aris, editor-in-chief of the Business New Europe magazine, says this joint venture is in everybody’s interest and both sides are happy to participate in this deal.“On one hand, Rosneft needs help, they are not very good at deep water exploration and BP has the expertise, and on the other hand, Russia is already the most important source of oil – a quarter of BP’s total reserves are in Russia,” he said. “And securing oil supplies going forward is key for the company. I think both of them are very happy to tie upon this one.”