Russia’s Rosneft, BP seal huge deal on Arctic push

LONDON - Russian oil giant Rosneft and BP Plc have agreed to a stock swap as part of a deal to push joint exploration and drilling on the Russian Arctic continental shelf, the companies said Friday in London.

Under the deal valued at $7.8 billion by BP, Rosneft will receive a 5-percent stake in the British energy firm. In exchange, BP will take 9.5-percent ownership of Rosneft shares.

The companies plan to explore and develop three license blocks in a “highly prospective area of the South Kara Sea”, the BP statement said. Rosneft acquired the rights late in 2010 for $103 million, according to a report quoted by Bloomberg financial news agency.

The area was described by BP’s Chief Executive Bob Dudley as “one of the worlds last remaining unexplored basins”.

“We are very pleased to welcome Rosneft as a strategic partner and major shareholder in the BP Group,” Dudley said.

The agreement was signed by Dudley and Rosneft’s Igor Sechin, who serves the dual roles of deputy prime minister of the Russian Federation and chairman of the board of directors of Rosneft, which is owned by the government.

“Global capital and Russian companies are clearly ready to invest in world class projects in Russia, and Russian companies are quickly emerging at the forefront of the global energy industry,” Sechin said.

BP and Rosneft also agreed to set up an Arctic technology centre in Russia to develop “safe extraction” technologies and engineering practices, with strong emphasis on “emergency spill response capability”.

BP was recently rapped on the knuckles for “significant errors and misjudgement” by an official US commission that investigated the mammoth oil spill in the Gulf of Mexico. Crude oil bled for months into fragile coastal waters after a drill rig exploded.

BP and Rosneft are already cooperating in Ruhr Oel GmbH, a German refining joint venture with BP. Rosneft is in the process of purchasing 50 percent of the joint venture from PdVSA, the Venezuelan state-owned oil company.

Cooperation between the two companies dates as far back as 1998, when they formed ventures to explore the Russian continental shelf offshore Sakhalin.