BP-Rosneft deal sparks protests from different quarters

BP - In the eye of a storm again

BP – In the eye of a storm again

Billionaire investors of TNK-BP – the existing joint venture of British Petroleum in Russia, are up in arms against the recent deal between state owned Rosneft and BP.

The previous agreement specifies that BP can pursue opportunities in Russia only through TNK-BP.  Alfa-Access-Renova (AAR) – the shareholders consortium through which the Russian investors hold their stakes, are said to be examining if any breach of clause has taken place.

However, BP claims that it had informed the AAR consortium well in advance about the impending deal with Rosneft and said it hopes to solve the issue in a “business-like way”.

BP’s $16 billion deal with Rosneft will ensure that Russia becomes BP’s single largest shareholder by default. This has already created a furore in the US as BP is a major fuel supplier to the military.

Michael Burgess, the Republican Congressman who is a member of the Energy and Commerce Committee said the deal “deserves some analysis and scrutiny”, indicating it poses national security threat to the country.

Republican Edward Markey said “BP once stood for British Petroleum” and added that “With this deal, it now stands for Bolshoi Petroleum”.

Energy expert Amy Myers Jaffe of Rice University; however does not agree that the deal poses any national security threat. “BP is doing what it needs to survive. It might make it harder to build back its image in the US … but there is nothing the US could do if it was a US company, and it is a British company”.

“All I can say is we heard no objections” said Bob Dudley – Chief Executive of BP, referring to objections raised by US Congressmen now and clarifying that it had contacted all countries where it operates, before signing the deal.

The deal has the support of the UK government and Energy Secretary Chris Huhne called Russia as “a valuable energy partner for the UK”.

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