Robert W Dudley, left, BP’s chief executive, Prime Minister Vladimir V Putin of Russia, third from right, and Igor I Sechin, right, head of Rosneft, at the signing of a deal for BP and Rosneft to invest in each other through a stock swap.
For major oil companies these days, geopolitical acumen is as essential as deepwater engineering. Just ask the British oil giant BP. The company’s ambitions in Russia were dealt another setback Friday when an arbitration tribunal upheld an injunction that indefinitely blocks its share-swap agreement with the state-owned oil company Rosneft.
BP’s chief executive, Robert W Dudley, might still be able to salvage the approximately $7.8 billion Rosneft deal. But Friday’s ruling may indicate how seriously Dudley misread Russian politics in striking that agreement — or was overtaken by developments that even the most expert Kremlinologist might not have been able to anticipate.
Either way, the ruling puts new pressure on BP to appease its partners in a separate and private joint venture in Russia, a group of billionaires who opposed the Rosneft deal. That group won the injunction two weeks ago from an arbitration tribunal in Sweden, arguing that the deal with the state-owned oil giant had breached their own shareholder agreement with BP in their partnership, called TNK-BP.
BP said in a statement on Friday that the ruling was simply a deferral and that the company would continue with arbitration hoping for a favorable final ruling. But the statement also said, “we will now also be exploring possibilities for a reasonable commercial solution with all parties.”
The Russian billionaires in TNK-BP, who do business as a group known as AAR, issued a statement on Friday calling the tribunal’s ruling “fair, balanced and thoughtful.” “We will be pleased to continue to cooperate with the tribunal and will provide any additional information and evidence it requires during the next stage of the hearings,” Stan Polovets, AAR’s chief executive, said in the statement.
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Prospects looked decidedly better for BP back in mid-January, when Prime Minister Vladimir V Putin of Russia presided over the signing ceremony for the Rosneft agreement. The deal called for the companies to invest in each other through a stock swap representing about 5 per cent of BP and 9.8 per cent of Rosneft, and to jointly explore new oil fields in the Russian Arctic.
©2011 The New YorkTimes News Service