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BP Finds New Life in Welcoming Russian Market
Andrew Kramer | September 29, 2010

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Moscow. Though its gushing well in the Gulf of Mexico is capped, BP seems doomed to years of hostile regulation and lawsuits in the United States.

But in Russia, the second-most important country for the company’s operations, BP’s fortunes are brighter than ever.

Russian companies are talking to BP about buying billions of dollars in oil fields and other assets to help it pay its gulf cleanup and compensation costs.

Along with a partner, BP is planning to explore the rich oil fields in Russia’s Arctic waters, a region that is off limits in the United States and Canada.

And BP chief executive Tony Hayward, who is turning over the reins this Friday to Robert Dudley, is being welcomed onto the board of TNK-BP, BP’s 50-50 joint venture in Russia.

BP’s warm relationship with the Russians is a startling turnaround given how grim the situation was two years ago.

Dudley, who headed TNK-BP at that time, was forced into hiding in 2008 after worsening disputes with the government and BP’s Russian business partners led to the revocation of his work visa.

Relations were so bad that Russian security agents raided the company’s offices in Moscow and arrested an analyst on industrial espionage charges.

But by August, it was all bear hugs when Hayward and Dudley visited Moscow and met Igor I. Sechin, Russia’s deputy prime minister for energy policy and a close ally of Prime Minister Vladimir Putin.

A big reason for the thaw in relations is BP’s potential role in helping Russia further its global petroleum ambitions.

A multinational energy giant based in London, BP intends to sell up to $30 billion in assets around the world to help stabilize its finances and pay the estimated $32.2 billion in liabilities it expects to owe in connection with the gulf spill.

BP has about a third of its global business and 40 percent of its shareholders in the United States.

But Russia accounts for 840,000 barrels of oil a day, about a third of the company’s total global oil output, and more than the 665,000 barrels a day pumped in the United States.

 

The New York Times