Advancing a Free Society

BP, Putin, and Russian Oil: Will They Never Learn?

Tuesday, January 18, 2011

Robert Dudley, CEO of British Petroleum, and Igor Sechin, Russian Deputy Prime Minister and board chairman of Rosneft, announced a new mega-deal between BP and the state owned Russian oil company. Through a stock swap, BP acquires 10 percent of Rosneft in exchange for giving Rosneft 5 percent of BP. Together, the two companies will explore offshore tracts in Russia’s South Kara Sea. As a ten percent owner of Rosneft, BP, in theory, acquires over two billion barrels of oil reserves – enough to replace the reserves BP sold to help pay for its Gulf oil spill. The deal makes the Russian “national champion” oil company BP’s largest single shareholder. BP becomes one of Rosneft’s largest private shareholders (the state owns three quarters) along with Oligarchs Roman Abramovich and Oleg Deripaska. Deripaska, a survivor of Russian gang warfare over aluminum and nickel, has been banned from travel to the US due to his suspected ties with organized crime – an unlikely partner for the staid British company.

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(photo credit: alexpgp)