BP embarks upon Russian Arctic energy exploration deal

British energy giant BP is embarking upon a huge Russian Arctic exploration deal with Rosneft, as it seeks to move on from the Gulf of Mexico oil disaster, but was slammed Saturday by the green lobby.

The bosses of BP and Russian state firm Rosneft flew into London on Friday to announce a share swap and joint venture agreement, in order to exploit the vast untouched oil and gas resources of Russia's Arctic region.

BP Chief Executive Bob Dudley hailed the "historic" deal which he said would allow the firm to tap into resources estimated to be equivalent of the entire UK North Sea.

"This is one of the last great unexplored hydrocarbon basins in the world," Dudley told BBC Radio after announcement of the deal, which comes nine months after his group was ravaged by the costly Gulf of Mexico oil spill.

"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."

Dudley and Rosneft President Eduard Khudainatov signed the deal at a London press conference on Friday, shortly after Russian Prime Minister Vladimir Putin announced the tie-up in Moscow.

The two companies will explore and develop Rosneft's three licensed blocks on the Russian Arctic continental shelf.

As BP attempts to learn from its experiences after a disaster-hit 2010, the two groups will also set up an Arctic technology centre to focus on safety, the environment and emergency procedures.

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.

Environmental campaigners Greenpeace lashed out at BP over the latest news on Saturday.

"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."

However, the company stressed that it was moving on from the oil spill catastrophe -- and was keen to put its experiences to good use elsewhere.

The BP boss, whose predecessor Tony Hayward lost his job for his handling of the oil spill, told reporters that the firm had "learned many lessons over the past year."

Khudainatov said the areas that BP and Rosneft would be working in, which cover 125,000 square kilometres in an area of the South Kara Sea, contained five billion tonnes of oil and 3,000 billion cubic metres of gas.

BP currently has a three percent stake in Rosneft, and Russia accounts for around one quarter of the British energy giant's total production.

BP also owns 50 percent 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.

Putin had met Dudley in Moscow on Friday, telling him that his government would support the joint work, according to Russian news agencies.

BP is currently seeking to sell 30 billion dollars worth of assets to cover its part of the bill for the disaster, which has left its reputation in tatters.

In Washington, Democratic congressman Edward Markey, who sits on a committee on natural resources, has 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 worries that it would harm operations.

"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."

He added: "If the US was really concerned over its energy security it would be straight away developing its own Arctic, off of the coast of Alaska (where) there are huge assets."

Source - Yahoo.