• 6 minutes Trump vs. MbS
  • 11 minutes Can the World Survive without Saudi Oil?
  • 15 minutes WTI @ $75.75, headed for $64 - 67
  • 14 hours Satellite Moons to Replace Streetlamps?!
  • 1 day US top CEO's are spending their own money on the midterm elections
  • 8 hours EU to Splash Billions on Battery Factories
  • 11 hours U.S. Shale Oil Debt: Deep the Denial
  • 19 hours The Balkans Are Coming Apart at the Seams Again
  • 4 hours Owning stocks long-term low risk?
  • 1 day OPEC Is Struggling To Deliver On Increased Output Pledge
  • 7 hours The Dirt on Clean Electric Cars
  • 1 day Uber IPO Proposals Value Company at $120 Billion
  • 21 hours 47 Oil & Gas Projects Expected to Start in SE Asia between 2018 & 2025
  • 1 day A $2 Trillion Saudi Aramco IPO Keeps Getting Less Realistic
  • 2 days U.N. About Climate Change: World Must Take 'Unprecedented' Steps To Avert Worst Effects
  • 2 hours The end of "King Coal" in the Wales
Will The U.S.-Saudi Spat Upend Oil Markets?

Will The U.S.-Saudi Spat Upend Oil Markets?

Saudi Arabia appeared to threaten…

BP's Deal with Rosneft Effectively Seals Russia Off from Other International Oil

BP’s decision yesterday to accept Rosneft’s offer for its shares in TNK-BP in return for $12.3 billion and a 19.75% stake in Rosneft, has cemented its position as the dominant western oil major in Russia, and effectively closed the door to other international companies such as Exxon Mobil and Royal Dutch Shell.

Robert Van Batenburg, the head of research at Louis Capital Markets LP in New York, explained to Bloomberg that “for foreign oil companies seeking to expand production and reserves, Russia is now off limits.” He said that the deal with BP “is probably scaring the others away.”

Pavel Molchanov, an analyst at Raymond James & Associates Inc., said that “by signing this deal, the highest levels of the Russian government, up to and including Vladimir Putin, are endorsing BP as the principal western partner of the Russian oil and gas industry. This is a big, big seal of approval for BP by Moscow and it means no other company is going to have access to the corridors of power like BP does.”

Related Article: Could Social Upheaval in Iran Spark an Oil Bull Market?

Around the world oil fields that were discovered decades ago are starting to go into decline, and the oil majors are looking for new sites to drill in order to replace the older wells and reverse their waning production levels. Large reserves in South America and the Middle East are generally state-controlled, or too expensive to drill. Russia offered one of the best, and largest untapped regions for oil production, however now that BP has been given such a prominent role in the country’s oil industry, other international oil majors will face very little success when attempting to gain access to Russia’s reserves.

By. James Burgess of Oilprice.com


x

Join the discussion | Back to homepage

Leave a comment
  • Bob Berke on October 24 2012 said:
    More Russian bashing by Western press, that always find something wrong with major Russian deals. Russia not only makes energy deals with companies, it also make major deals with countries. China has as much stake in Rosneft with its $28 billion loan to the company as has BP, and China's voice will certainly be heard within the Kremlin. Russia's recent deal with Japan to develop a LNG plant in Vladivostok, with most of the gas going to Japan, will easily rival the blockbuster BP/Rosneft deal, and probably go far beyond it. Remember that Exxon, Eni, and Statoil are jv partners with Rosneft in Black Sea and Arctic development, considered to be multi-billion dollar deals. The claim that the deal locks out other companies is pure nonsense. BP is much more dependent on Russia than Russia is on BP.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News