BP deal with Russia sparks controversy

Marion Dakers
CONCERNS grew yesterday about the political implications of BP’s $16bn (£10bn) share swap with Russia’s state-owned oil firm Rosneft.

Shadow justice minister Chris Bryant said in an interview that BP needs “a strong anti-corruption” strategy to work with the company.

Labour leader Ed Miliband said he was “pretty worried” about the environmental aspect of the deal, saying in a BBC interview: “I think that the lesson of the Deepwater Horizon, the Gulf oil spill, should be that... the task for all of us, private companies, government and so on, is not to just keep digging and digging deeper and deeper for oil.”

The UK government was not involved in negotiating the deal, though energy secretary Chris Huhne spoke at BP’s announcement on Friday night.

Russian prime minister Vladimir Putin met with BP’s board and has offered tax concessions to smooth the venture’s path.

Criticism from the US, where 39 per cent of BP shareholders are based, has been particularly fierce in light of the Gulf of Mexico disaster and last year’s uncovering of suspected Russian spies across the country.

Democratic congressman Ed Markey and Republican Michael Burgess called for the US government to look into the deal amid fears of a security risk from Russian involvement in the firm.

“BP once stood for British Petroleum,” said Markey. “With this deal, it now stands for Bolshoi Petroleum.”

BGC Capital strategist David Buik sounded a more positive note. “The oil in Russia will be significantly easier to get at than in other fields as the water is much shallower. The only hurdles BP will face are political.”

18bn barrels of oil in reserve

giving away 988m shares worth $7.8bn

gaining access to 125,000km squared oil field

39% are in the US

40% are in the UK

22.9bn barrels of oil in reserve

giving away 1bn shares worth $8.2bn

75% owned by the Russian government.