ExxonMobil’s Russian Arctic deal another blow to BP

Marketplace Staff Aug 31, 2011
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ExxonMobil’s Russian Arctic deal another blow to BP

Marketplace Staff Aug 31, 2011
HTML EMBED:
COPY

Jeremy Hobson: Now to Russia, where the Moscow offices of the British oil company BP were raided today by court officials. This follows yesterday’s news that BP lost out to ExxonMobil on a deal to explore for oil in the lucrative Russian arctic.

Let’s bring in Marketplace’s Stephen Beard for more on this story. He’s with us live. Stephen, first of all, why were BP’s offices in Moscow raided?

Stephen Beard: It seems to be related to that failed deal by BP to explore Russia’s Arctic. BP upset its existing partners in Russia when it struck that deal last year. The partners went to court and blocked it, and they’re now suing BP for damages. This raid, it’s believed, is part of that lawsuit. It seems court officials acting at the instigation of those partners were looking for evidence against BP.

Hobson: And I assume that BP is more concerned this morning not with the raid, but with the fact that it just lost this deal to ExxonMobil?

Beard: Yes. It’s a joint venture deal between Exxon and Rosneft, the Russian oil giant, to explore the potentially vast oil and gas reserves in the Arctic. Russian president Vladimir Putin gave his blessing to the Exxon deal yesterday, and said it could ultimately be worth half a trillion dollars — so BP’s lost out commercially.

And Nick MacGregor of brokers Redmayne-Bentley says the company’s lost out politically, too.

Nick MacGregor: BP is looking increasingly marginalized in Russia now that it no longer has the implied support of the Kremlin that would have come with the Rosneft deal that failed.

And he says that the raid on BP’s offices could be an ominous sign of the company’s declining political influence in Russia.

Hobson: Marketplace’s Stephen Beard in London. Stephen, thanks.

Beard: OK, Jeremy.

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