The collapse of BP's deal to explore the Arctic sea for oil is deeply humiliating for the giant oil corporation. It was only in January that BP, with a great fanfare, announced the deal with Rosneft, the Kremlin-backed Russian oil company. The tie-up was supposed to rebuild BP's reputation after the disaster of the Deepwater Horizon explosion in the Gulf of Mexico last year which has cost the company $41bn so far. That much-vaunted strategy is now in tatters.
To make matters worse the deal was scuppered by BP's own partner TNK-BP which objected to BP doing a deal on the side with Rosneft, bypassing TNK-BP and the oligarchs who control it. All this illustrates the dangers of doing deals in the Wild East, where the line between state and private property is hazy and the rule of law is not as clear as foreign investors might want.
But there could be a silver lining. The BP-Rosneft plan was to drill for oil in the Kara Sea, north of Siberia, one of the last virgin territories left on the planet. It is an area of a fragile ecology, relatively unexplored but a habitat for several endangered species including polar bears, beluga whales, and walruses. The plan was for large drilling rigs in a region which is not only a centre of extraordinary biodiversity but which, thanks to its perilous weather conditions, is even more susceptible to environmental disasters than was the Gulf of Mexico. Its remoteness means it would be hard to put in place infrastructure like equipment to ring-fence oil spills and ships to skim off oil on the surface of the water. A problem at the end of the drilling season – which might last just three months in Arctic conditions – might mean oil leaking for as long as eight months before it is technically possible to cap it.
Some years ago BP declared it would become the greenest of oil companies by refashioning its initials to stand for Beyond Petroleum. It should act on that now and turn the Rosneft debacle to its advantage by exploring the renewable and sustainable sources which are the real future of global energy strategy. Blundering into the planet's most pristine wilderness is not the answer.