BP has signed a joint venture with Russia's state-controlled energy giant Rosneft to explore for offshore oil and gas and in a deal that gives the UK company access to areas of the Arctic previously reserved for Russian companies.
The British energy giant will swap five per cent of its shares, valued at $7.8bn, for 9.5 per cent of Rosneft in an agreement that immediately raised concerns about US economic security from US politicians and criticism from environmentalists.
The deal covers huge areas of the South Kara Sea in the Arctic that BP, which is still recovering from the financial impact of the Gulf of Mexico oil spill, said could contain billions of barrels of oil and gas.
The companies will explore three areas, known as EPNZ 1, 2 and 3, located on the Russian Arctic continental shelf and covering an area of 125,000 square kilometres.
Skills gap
BP is seen as filling a skills and technology gap for Rosneft as it seeks to develop the region.
"Rosneft is well aware that its ability to do deepwater Arctic work alone is very limited," Cliff Kupchan, a director at Eurasia Group, a global political risk consultancy based in Washington, said.
"They have been looking for ways to bring in companies with the technology and especially management skills needed to pull off deepwater Arctic work."
Edward Markey, a US congressman who is the senior Democrat on the House Natural Resources Committee, immediately called for a review of the deal by US regulators to see whether it affects the national and economic security of the US.
He noted that in 2009 BP was the top petroleum supplier to the US military.
Michael Burgess, a Republican congressman who is on the House Energy and Commerce Committee, also said the deal "deserves some analysis and scrutiny" by the government's Committee on Foreign Investment in the US given BP's ownership of critical oil assets in the US.
The US Treasury said it is forbidden by law to comment on investigations, planned or under way, by the committee.
