BP Rosneft Deal in Limbo

BP is scrambling to salvage a multi-billion-dollar deal with Russian state-run oil company Rosneft. At stake is a role in developing what may be one of the world's largest untapped offshore deposits of natural gas and oil. Andrew Schneider reports.

Kara SeaThe deal to develop the Kara Sea in Russia’s Arctic was close enough to dead yesterday that Russian President Dmitry Medvedev read its obituary at a news conference. But within a matter of hours, Rosneft announced the deal still had a pulse.

“BP is going to be sending over a new set of proposals to try to get any sort of deal it can with Rosneft, because BP is incredibly anxious to get into Russia and start diversifying its market shares away from the United States.”

Lauren Goodrich is senior Eurasia analyst with private intelligence firm Stratfor. She says neither Rosneft nor homegrown rival Gazprom has the technology to explore Kara. That’s leaving Russia little choice but to seek outside expertise.

It’s estimated at least 15 billion barrels of oil lie under the Kara Sea, not to mention 5 trillion cubic meters of natural gas. Those are tempting targets for oil majors such as Exxon Mobil, Chevron or Shell — one of which may step into the breach if BP and Rosneft can’t come to terms.

 

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...