David Prosser: BP in Russia: oil barons succeed in blocking $16bn tie-up with Rosneft
Wednesday 02 February 2011
Outlook The twists and turns of the BP story should have stopped surprising us long ago, so numerous and remarkable have they been, but there was an obvious irony in yesterday's successful application by a set of Russian oil barons to delay BP's deal with their biggest domestic rival.
The ruling in the High Court in London that effectively freezes BP's $16bn (£9.9bn) arrangement with Rosneft was made following an application from AAR, the vehicle through which a trio of Russianbillionaires hold their half of BP's TNK-BP, its existing joint venture in the country.
A few hours previously, Wikileaks had released diplomatic cables shedding new light on the row BP had over TNK-BP in Russia two years ago, when Bob Dudley, who ran that operation and is now chief executive of the whole of BP, was effectively thrown out of the country. The cables provide a colourful account of a world in which one of AAR's owners carried a gun and talked about his love of The Godfather films.
The implication was that BP believed it was dealing with a situation where it could not be assumed that the rule of law would always prevail. Yesterday, AAR used the rule of law in BP's home country to block the Rosneft deal.
Despite Mr Dudley's claim that the ruling was not a big blow to BP, because the company had already agreed to arbitration talks in Sweden with AAR, the court's decision must have been a disappointment. At the least, it must strengthen the hand of AAR, which appears to have a point in complaining BP had promised that TNK-BP would get first refusal on any further ventures in Russia that either side wished to pursue.
BP's tie-up with Rosneft is a smart one in the context of its difficult relationships in the US, where the fall-out from the Deepwater Horizon disaster continues. Yet the deal carries plenty of its own difficulties. The potential for problems with Rosneft itself was obvious, but the argument with AAR had not been foreseen. Keeping its partners onside may yet require BP to write them a very sizeable cheque. It certainly cannot afford to return to the disputes of 2008 – for all the long-term value the Rosneft arrangement may deliver, TNK-BP is the British company's bird-in-the-hand.
- 1 Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
- 2 Rarest Beanie Baby of them all could be sold for £62,500 on eBay
- 3 Professional big game hunter Ian Gibson crushed to death by elephant during hunt
- 4 Farmer told to tear down mock-Tudor castle after hiding construction behind hay bales
- 5 Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
Migrants crossing the Mediterranean: Pope Francis joins calls for EU action on boat refugees
Yemen crisis: Meet the child soldiers recruited by the Shia Houthi rebels who have forsaken books for Kalashnikovs
Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
Rarest Beanie Baby of them all could be sold for £62,500 on eBay
Isis in Afghanistan: Group claims responsibility for Jalalabad suicide bombing that killed 35
The only black face in the Ukip manifesto is on the page about overseas aid
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...