Russia turns its sights on BP

Russia's state-controlled gas giant Gazprom

TEXT OF STORY

MARK AUSTIN THOMAS: Speaking of energy, Russian President Putin is tightening his grip on the country's energy resources. Yesterday following months of pressure, Shell Oil finally gave up. It agreed to sell its controlling stake in a major oil and gas project to the Kremlin-backed company Gazprom. Now the Kremlin is turning up the heat on BP. From London, Stephen Beard has more.


STEPHEN BEARD: A key Kremlin official has given BP a stark warning: Accede to our wishes or face big trouble.

The issue is a giant natural gas field in eastern Siberia. After investing $8 billion in a Russian energy company TNK , BP is developing the field and needs to build a pipeline to pump the gas to China. But the Kremlin controlled Gazprom is withholding permission.

A top Kremlin official now says BP must reach agreement with Gazprom or else. There's no doubt, says analyst Mike Ritchie, that the Kremlin wants Gazprom to buy a controlling stake in the BP-TNK joint venture.

MIKE RITCHIE: What the Russians are looking for is 50% + 1 share. That's a controlling stake in Russia and that is, the Russians have made it very clear over the last two or three years that that's what they're going to be looking for. So TNK-BP the writings on the wall for them.

Ritchie says that after Shell caved in to Kremlin pressure, it is almost certain that BP will do likewise.

In London, this is Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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