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ENERGY TECH
BP embarks upon Russian Arctic energy exploration deal

Greenpeace slams BP over Russia deal to explore Arctic
London (AFP) Jan 15, 2011 - Environmental campaigners Greenpeace slammed BP on Saturday after the British energy firm signed a huge Arctic exploration deal with Russia, just nine months after the Gulf of Mexico oil spill disaster. BP and Russian state-run firm Rosneft unveiled an agreement late Friday to swap shares and launch a joint venture to exploit the Arctic's vast untouched energy resources. Under the terms of the deal, BP will take a 9.5-percent stake in Rosneft, which will gain a 5.0-percent stake in the British firm. The shares issued by BP are worth about 7.8 billion dollars, while Rosneft's will be similar. However, Friday's news sparked outrage from the green lobby after BP's devastating oil spill last year, which unleashed millions of barrels of oil and caused massive environmental damage in the Gulf of Mexico.

"The Arctic is the most fragile environment in the world in which to drill for oil and there can be no confirmation yet that BP has learned the lessons for the Gulf of Mexico disaster," said Greenpeace spokesman Ben Stewart. "Any company that drills for oil in the Arctic forfeits any claim to environmental responsibility. "An oil spill in the cold waters of the Arctic would be catastrophic and extremely difficult to deal with. "BP is the last company that should be operating there, that is why last year the government of Greenland refused to grant concessions to BP."

But BP Chief Executive Bob Dudley, speaking at a London press conference late Friday, said that the firm had "learned many lessons over the past year". The British and Russian firms will explore and develop Rosneft's three licensed blocks on the Russian Arctic continental shelf for what are expected to be major reserves of oil and gas. They will also set up an Arctic technology centre to focus on safety, the environment and emergency procedures. A BP company spokesman said that the group would apply all the lessons it had learned from the Gulf of Mexico disaster.

"We repeated yesterday that we will develop this in the most environmentally secure and safe manner," company spokesman Toby Odone told AFP on Saturday. "We have learned enormous lessons from last year's events and we will apply those to this, as we will to everything we do," he said, adding that the technology centre was part of those plans. BP chairman Carl-Henric Svanberg told Bloomberg Television it was a very long-term project, and it would "take I'm sure until the 2020's before we see any oil production and until things start." "This is a deal we've wanted to do for a long time," he added. "We have access to blocks in the Arctic which is basically as big as the UK part of the North Sea. This is one of the unexplored reservoirs in the world of oil and it's going to be important for the world's oil production."
by Staff Writers
London (AFP) Jan 15, 2011
British oil giant BP has agreed a huge Arctic exploration deal and share-swap with Russian state firm Rosneft, but the green lobby Saturday slammed the move so soon after the Gulf of Mexico oil spill.

BP chief executive Bob Dudley and Rosneft President Eduard Khudainatov flew into London on Friday to sign the agreement, which allows them to jointly exploit the vast untouched oil and gas resources of Russia's Arctic region.

Dudley hailed the "historic" deal, which has the backing of the Russian and British governments, telling BBC radio: "This is one of the last great unexplored hydrocarbon basins in the world.

"For BP this is an opportunity to work with Rosneft in a country that produces the most oil in the world, in an area that can bring our exploration expertise into play, in something that is the size and prospectivity of the entire UK North Sea."

The deal, which was first announced by Russian Prime Minister Vladimir Putin following a meeting with Dudley in Moscow Friday, comes just nine months after the Gulf of Mexico oil spill, which ravaged BP's finances and its reputation.

BP and Rosneft will explore and develop the latter's three licensed blocks on the Russian Arctic continental shelf -- 125,000 square kilometres, said to contain five billion tonnes of oil and 3,000 billion cubic metres of gas.

They will also set up an Arctic technology centre to focus on safety, the environment and emergency procedures.

But environmental campaigners Greenpeace condemned the deal Saturday, saying BP was "the last company" that should be operating in the region.

"The Arctic is the most fragile environment in the world in which to drill for oil and there can be no confirmation yet that BP has learned the lessons for the Gulf of Mexico disaster," said Greenpeace spokesman Ben Stewart.

"Any company that drills for oil in the Arctic forfeits any claim to environmental responsibility. An oil spill in the cold waters of the Arctic would be catastrophic and extremely difficult to deal with.

"BP is the last company that should be operating there."

The British firm stressed however that it was moving on from the oil spill catastrophe -- and was keen to put its experiences to good use elsewhere.

Dudley, whose predecessor Tony Hayward lost his job over the spill, told reporters that the firm had "learned many lessons over the past year."

Analysts said the deal gives BP a boost in the race to exploit new energy reserves while at the same time reducing its dependence on the United States, where its reputation is in tatters following the oil spill.

The Financial Times noted: "One of the unexpected consequences of last year's oil spill in the Gulf of Mexico is that it has enhanced the prospects for drilling in one of the world's most environmentally sensitive areas."

And BP does this without spending more money, as it continues its drive to sell 30 billion dollars worth of assets to cover its part of the clean-up bill.

Under the share-swap, BP will take a 9.5-percent stake in Rosneft, which will gain a 5.0-percent stake in the British firm. The shares issued by BP are worth about 7.8 billion dollars, while Rosneft's will be similar.

Russia accounts for about one quarter of BP's total production and the firm already has a small stake in Rosneft.

BP also owns half of Russia's third biggest oil producer, TNK-BP, where Dudley served as chief executive for five years until he was expelled by BP's Russian partners during a shareholder dispute in 2008.

In Washington, Democratic congressman Edward Markey, who sits on a committee on natural resources, called for the deal to be examined to see how it affects BP's US operations and if it had national security implications.

However, John Hopfmeister, formerly president of Royal Dutch Shell, downplayed fears over the deal.

"This is not Russia managing BP. It is not Russian oversight over BP's managerial decisions in the United States or anywhere else in the world," he told the BBC.

"What's important in this deal is Mr Dudley drawing a line under the Gulf of Mexico incident and moving BP on into the future... where Arctic development is a very important part of hydro carbon exploration."



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