BP and Russia’s Rosneft in share swap, Arctic pact.

by MisterBig

BP, Russia deal raises US concerns

In a major deal that cements energy ties between Russia and Britain, oil company BP said yesterday that Russia’s state-owned oil firm Rosneft will take 5 percent of BP’s ordinary voting shares in a major stock swap.

The companies plan to explore for oil and gas off the Russian Arctic continental shelf. The deal sparked a backlash in Washington with some politicians expressing regrets about the tight alliance forming between Russia and Britain.

While it is not clear if this Russian venture is connected, it does give BP access to cash and new areas of the world to explore for oil at a time when there are concerns about the future ability to drill offshore in US waters. It also expands BP’s longstanding ties to the Russian energy industry.

US Representative Edward J. Markey said there should be a thorough review of the pact to determine if there were any national security implications.

“If this agreement effects the national and economic security of the United States, then it should be immediately reviewed by the Committee on Foreign Investment in the United States. Additionally, the US State Department should closely monitor this transaction,’’ the Massachusetts Democrat said.

US-based analyst Fadel Gheit said the Rosneft deal means BP is “hedging its bets’’ after the disastrous Gulf oil spill. He said BP would want to find a replacement for the United States if its operations there get more complicated in the future.

More Russian plans for the Arctic…

Sovcomflot and Novoship, Russia’s largest shipping companies, have estimated their total worth at $3.37 billion.

Experts think that after the companies’ merger happening by the end of this year, the new mega-company may become the world’s third largest shipping company according to its assets and the second largest in terms of gross tonnage.

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The new company’s fleet will consist of 113 vessels. The company has plans for another 32 consisting mostly of tankers and several modern ice-class liquefied gas carriers to be added in the next three years. There is no doubt that the fleet’s main task in the next few decades will be to transport hydrocarbons from the Arctic shelf.

Oil and gas deposits in the Arctic Ocean are a major energy hope of Russia and the world, especially since the peak of yet another energy crisis is approaching, perhaps the most serious in history. UN experts estimated the shelf reserves at 140-180 billion metric tons of hydrocarbons. A group of international researchers named the much smaller figure of 30 billion metric tons in their report on the future of the Arctic. However, they referred only to proven reserves and even these will last for a long time.

According to the data of the Houston World Oil Conference, 69% of gas deposits are in the Russian Arctic zone. Russia will have to defend its rights to a considerable part of this territory but, judging by all signs, it is gathering strength for its Arctic campaign without waiting for the UN commission’s verdict on the limits of the continental shelf.

Russian natural gas monopoly Gazprom has already agreed with its foreign partners, French oil major Total and Norway’s StatoilHidro, to develop the Shtokman gas condensate deposit in the Barents Sea. They must set up a joint venture by the end of the year. Sevmash, in Severodvinsk, is already building offshore drilling rigs for Gazprom. The Murmansk Shipping Company, which has a unique icebreaker fleet given to it by the state, is expanding the network of its oil-loading terminals in Arctic ports. Transneft is laying a pipeline from East Siberia to the Pacific and is planning another one that will run along the Barents Sea coast.

The new shipping company will play a special role in this campaign because it has Russia’s largest and most modern tanker fleet at its disposal.

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