Posts Tagged ‘BP’

Russia threatens to sue BP over Arctic deal

March 26, 2011

The Kremlin wall is reflected in a plaque at the entrance of the headquarters of the state-owned oil company Rosneft in Moscow. Russia's largest oil firm Rosneft threatened to seek compensation from the British energy giant BP over a blocked deal to jointly dig for oil in the Arctic.

March 26, 2011 Terranet/AFP – Original article here

Russia’s largest oil firm Rosneft threatened on Friday to seek compensation from the British energy giant BP over a blocked deal to jointly dig for oil in the Arctic.

Deputy Prime Minister Igor Sechin — chairman of the Rosneft board and a close ally of Vladimir Putin — said Rosneft would not be deterred from its plans to explore the untapped northern sea riches whoever its partner might be.

Sechin’s comments suggested that Rosneft was willing to move on if its $16 billion tie-up with BP failed to go though because of the Stockholm arbitration panel ruling.

The Stockholm panel said the deal violated BP executive’s shareholder agreement with the Russian partners in their local TNK-BP joint venture.

TNK-BP had a right of first refusal on all BP deals in Russia and wanted to take its parent company’s place in the Rosneft alliance.

The Russian energy czar had previously warned that Rosneft would seek compensation from either BP or TNK-BP if their internal boardroom struggle ultimately scuppered the deal.

And he repeated on Friday that Rosneft planned to “respond in an adequate manner” to the Stockholm panel decision.

“Why only BP?” Sechin told Russian news agencies when asked if Rosneft might now seek damages from the British firm.

“The company will weigh who is at fault for the break-up. There are certain losses there (at Rosneft) already,” he added.

“In either case, Rosneft intends to defend its position.”

Analysts said the billionaires who represent the Russian half of TNK-BP may now either seek tens of billions of dollars as a buyout from BP or otherwise leverage their position as a vital player in the politically-sensitive tie-up.

The unprecedented Rosneft-BP share-swap and Arctic exploration agreement was announced with great fanfare by Putin on January 15.

The deal would have handed Rosneft five percent of BP’s ordinary voting shares in exchange for approximately 9.5 percent of the Russian company’s stock.

The two firms also agreed to jointly search for oil in Rosneft’s three licensed blocks in the Arctic — a 125,000 square kilometre (48,000 square mile) region said to contain five billion tonnes of oil and 3.0 trillion cubic metres of gas.

BP said in a statement that it may now return to arbitration in a bid to complete the share swap portion of the Rosneft agreement.

Sechin said he was willing to wait for BP executives and their Russian partner to come to some sort of agreement before deciding how to proceeded.

But he stressed that the setback would not alter Rosneft’s plans to explore the Arctic no matter whom its partner might be.

“Arctic exploration will continue in any event,” Sechin was quoted as saying by Russian news agencies.

“BP suits us as a partner, but the current complications should in no way affect our overall plans on Arctic exploration,” he said.

News of the decision sent Rosneft shares down one percent in later afternoon trading on Moscow’s MICEX exchange while those of TNK-BP were up two percent.

TNK-BP moves closer to Russian arctic

March 8, 2011

MOSCOW, March 7 (UPI) – original article here
Anglo-Russian energy venture TNK-BP could join Rosneft and Gazprom in developing the Russian arctic shelf if terms are good, the Russian prime minister said.

Russian Prime Minister Vladimir Putin said TNK-BP might be able to persuade its oil and natural gas colleagues to tap into more domestic natural resources if the terms are favorable to all parties involved.

“There is a law, under which we have entrusted Rosneft and Gazprom with work on the shelf,” Putin was quoted by Russia’s official RIA-Novosti news agency as saying. “If TNK-BP offers suitable terms of joint work to one of the companies it can (join the project). Why not?”

TNK-BP, a joint venture between a group of Russian billionaires and BP, is at odds with the British supermajor and Rosneft over an asset swap that included exploration deals in the Russian arctic.

BP in January agreed to pay Rosneft more than $8 billion in shares for a 9.5 percent stake in the Russian energy company in addition to a development agreement for the Kara Sea on Russian’s northern continental shelf.

Putin brushed off the historic rival between TNK-BP and its London counterpart by noting any rivalry is an internal matter for each company to address.

“These are their problems, they must solve them between themselves,” he said.

Putin says BP can help develop arctic oil

March 5, 2011

Russian Prime Minister Vladimir Putin greets the audience at the United Russia party's congress in St. Petersburg on November 21, 2009.UPI/Anatoli Zhdanov

MOSCOW, March 5 (UPI) -Original article here
Russian Prime Minister Vladimir Putin said an oil partnership TNK-BP may help develop Kara Sea oil fields if agreeable terms are offered to Russian companies. 

“There is a law, under which we have entrusted Rosneft and Gazprom with work on the (Arctic) shelf. If TNK-BP offers suitable terms of joint work to one of the companies, it can (participate), why not?” Putin said, RIA Novosti reported Saturday.

Three reserve fields in the Kara Sea, East Prinovozemelsk 1, 2 and 3, are estimated to hold 5 billion tons of oil and 10 trillion cubic meters of natural gas.

British petroleum giant BP agreed in January to a deal valued at more than $8 billion to buy 9.5 percent of Rosneft and participate in Kara Sea development. But TNK-BP shareholders said the deal violated a previous agreement with BP to have all deals in Russia funneled through them.

Putin said BP claimed the agreement was “not absolute and universal, saying they work, for instance, on Sakhalin without TNK, and they hope to solve the conflict amicably or find a compromise.”

Putin said if they did not reach an agreement, it would be up to the courts to sort through the disagreement.

 

Russia Embraces Offshore Arctic Drilling

February 26, 2011

By ANDREW E. KRAMER and CLIFFORD KRAUSS Published: February 15, 2011 in the New York Times – Original article here

The Prirazlomnaya oil platform was brought to the Arctic seaport of Murmansk, 906 miles north of Moscow, to be adjusted.

MOSCOW — The Arctic Ocean is a forbidding place for oil drillers. But that is not stopping Russia from jumping in — or Western oil companies from eagerly following.

Russia, where onshore oil reserves are slowly dwindling, last month signed an Arctic exploration deal with the British petroleum giant BP, whose offshore drilling prospects in the United States were dimmed by the Gulf of Mexico disaster last year. Other Western oil companies, recognizing Moscow’s openness to new ocean drilling, are now having similar discussions with Russia.

New oil from Russia could prove vital to world supplies in coming decades, now that it has surpassed Saudi Arabia as the world’s biggest oil producer, and as long as global demand for oil continues to rise.

But as the offshore Russian efforts proceed, the oil companies will be venturing where other big countries ringing the Arctic Ocean — most notably the United States and Canada — have been wary of letting oil field development proceed, for both safety and environmental reasons.

After the BP accident in the gulf last year highlighted the consequences of a catastrophic ocean spill, American and Canadian regulators focused on the special challenges in the Arctic.

The ice pack and icebergs pose various threats to drilling rigs and crews. And if oil were spilled in the winter, cleanup would take place in the total darkness that engulfs the region during those months.

Earlier this month, Royal Dutch Shell postponed plans for drilling off Alaska’s Arctic coast, as the company continued to face hurdles from wary Washington regulators.

The Russians, who control far more prospective drilling area in the Arctic Ocean than the United States and Canada combined, take a far different view.

As its Siberian oil fields mature, daily output in Russia, without new development, could be reduced by nearly a million barrels by the year 2035, according to the International Energy Agency. With its economy dependent on oil and gas, which make up about 60 percent of all exports, Russia sees little choice but to go offshore — using foreign partners to provide expertise and share the billions of dollars in development costs.

And if anything, the gulf disaster encouraged Russia to push ahead with BP as its first partner. In the view of Russia’s prime minister, Vladimir V. Putin, BP is the safest company to hire for offshore work today, having learned its lesson in the gulf.

“One beaten man is worth two unbeaten men,” Mr. Putin said, citing a Russian proverb, after BP signed its Arctic deal with Rosneft, the Russian state-owned oil company. The joint venture calls for the companies to explore three sections in the Kara Sea, an icebound coastal backwater north of central Russia.

The BP agreement touched off little public reaction in Russia, in part because the environmental movement is weak but also because opposition politicians have no way to block or hinder the process.

The Arctic holds one-fifth of the world’s undiscovered, recoverable oil and natural gas, the United States Geological Survey estimates. According to a 2009 report by the Energy Department, 43 of the 61 significant Arctic oil and gas fields are in Russia. The Russian side of the Arctic is particularly rich in natural gas, while the North American side is richer in oil.

While the United States and Canada balk, other countries are clearing Arctic space for the industry. Norway, which last year settled a territorial dispute with Russia, is preparing to open new Arctic areas for drilling.

Last year Greenland, which became semi-autonomous from Denmark in 2009, allowed Cairn Energy to do some preliminary drilling. Cairn, a Scottish company, is planning four more wells this year, while Exxon MobilChevron and Shell are also expected to drill in the area over the next few years.

But of the five countries with Arctic Ocean coastline, Russia has the most at stake in exploring and developing the region.

“Russia is one of the fundamental building blocks in world oil supply,” said Daniel Yergin, the oil historian and chairman of IHS Cambridge Energy Research Associates. “It has a critical role in the global energy balance. The Arctic will be one of the critical factors in determining how much oil Russia is producing in 15 years and exporting to the rest of the world.”

Following the template of the BP deal, Rosneft is negotiating joint venture agreements with other major oil companies shut out of North America and intent on exploring the Arctic continental shelf off Russia’s northern coast. That includes Shell, its chief executive said last month. Rosneft’s chief executive, Eduard Y. Khudainatov, said other foreign oil company representatives were lining up outside his office these days.

Artur N. Chilingarov, a polar explorer, has embodied Moscow’s sweeping Arctic ambitions ever since he rode in a minisubmarine and placed a Russian flag on the bottom of the ocean under the North Pole, claiming it for Russia, in a 2007 expedition.

“The future is on the shelf,” Mr. Chilingarov, a member of Russia’s Parliament, the Duma, said in an interview. “We already pumped the land dry.”

Russia has been a dominant Arctic oil power since the Soviet Union began making important discoveries in the land-based Tazovskoye field on the shore of the Ob Bay in Siberia in 1962. The United States was not far behind with the discovery of the shallow-water Prudhoe Bay field in Alaska five years later.

What is new is the move offshore.

The waters of the Arctic are particularly perilous for drilling because of the extreme cold, long periods of darkness, dense fogs and hurricane-strength winds. Pervasive ice cover for eight to nine months out of the year can block relief ships in case of a blowout. And, as environmentalists note, whales, polar bears and other species depend on the region’s fragile habitats.

Such concerns have blocked new drilling in Alaska’s Arctic waters since 2003, despite a steep decline in oil production in the state and intensive lobbying by oil companies.

In Canada, Arctic offshore drilling is delayed as the National Energy Board is reviewing its regulations after the gulf spill.

Mr. Chilingarov placed a Russian flag on the bottom of the ocean under the North Pole, claiming the area for Russia, in a 2007 polar expedition.

But Russia is pressing ahead. The central decision opening the Russian Arctic easily passed Parliament in 2008, as an amendment to a law on subsoil resources. It allowed the ministry of natural resources to transfer offshore blocks to state-controlled oil companies in a no-bid process that does not involve detailed environmental reviews.

Until recently Russia regarded the Kara Sea, where BP and Rosneft intend to drill, as primarily an icy dump. For years, the Soviet navy released nuclear waste into the sea, including several spent submarine reactors that were dropped overboard at undisclosed locations.

Rosneft executives say their exploration drilling will not stir up radiation.

But in any case, Mr. Chilingarov, the advocate for Russian polar claims, said a little radiation was nothing to worry about. He said that his son was born on Novaya Zemlya, an Arctic testing site for nuclear weapons during the cold war, and is now “a bit taller than me.”

“In small doses,” Mr. Chilingarov said, “radiation is good for growth.”

Andrew E. Kramer reported from Moscow and Clifford Krauss from Houston.

This article has been revised to reflect the following correction:

Correction: February 19, 2011
A chart on Wednesday with an article about Russia’s eagerness to drill for oil in the Arctic Ocean gave an incorrect unit of measurement for estimates of natural gas reserves in the region. The shaded areas in the chart are believed to hold more than 100 trillion cubic feet of natural gas, not cubic tons. The unit of measurement was correct in an online version of the chart, available at nytimes.com/business.

Total want to drill Barents with Rosnef

February 20, 2011
Barents Observer 2011-02-16 – original article here
Total in the Barents SeaCooperates with Gazprom on Shtokman gas – wants cooperation with Rosneft on Barents oil.

French petroleum major Total is in talks with Russia’s oil major Rosneft on joint projects in the Barents Sea, General Director of Total in Russia Pierre Nergararyan told reports in Moscow on Wednesday.

Nergararyan told RIA Novosti that Total want partnership with Rosneft on both the continental shelf in the Barents- and Black Seas.

Total and Norway’s Statoil are partners with Gazprom in Shtokman Development AG, supposed to announce a decision on possible investments for the huge gas field in the Barents Sea next month.

Last October, the Russian Government granted Rosneft and Gazprom five new licenses to oil and gas fields in the Kara Sea and Barents Sea.

In December, BP and Rosneft said they had formed a strategic partnership for development of offshore oilfields in the Kara Sea, east of Novaya Zemlya in the Russian Arctic.

Text: Thomas Nilsen

 

BP Hopes For Alaska Arctic Oil Production In Beaufort Sea In 2013

February 12, 2011

BECKY BOHRER   02/ 1/11 Huffington Post, original article here

JUNEAU, Alaska — BP PLC estimates that it could begin producing oil off Alaska’s coast in 2013, despite the fact that construction of the massive Liberty rig has been suspended indefinitely.

BP said last fall that it was suspending construction of the rig to review its engineering and design plans, and ensure the Liberty project can be done safely.

The unusual project calls for using a manmade gravel island in the Beaufort Sea as a drilling base. A rig would drill horizontally for six to eight miles to tap what BP estimates is a 100-million-barrel reserve of recoverable oil.

BP Alaska spokesman Steve Rinehart says the project review is progressing but he couldn’t say when it would be complete or when construction would resume.