BP courts more controversy with Russian tie-up

BP's share swap with state-owned Russian oil giant Rosneft has already provoked fierce opposition even though it was signed only two days ago.BP announced late Friday it had signed a deal that would see the UK firm issue the equivalent of a 5% stake in new shares to Rosneft in return for a 9.5% stake in the Russian oil giant. The swap is valued at about £10bn.The alliance will see the two firm focus on drilling in the, as yet, undeveloped Arctic circle. The tie-up has recieved the approval of both UK prime minister David Cameron and Russian prime minster Vladimir Putin.Environmental groups are less impressed. Friends of the Earth immediately branded BP "environmental villain number one", while Greenpeace is furious over plans to explore the Kara Sea, north of Siberia. Friends of the Earth said BP "cannot be trusted" to drill oil in difficult waters, and any oil spill would be "completely catastrophic". Greenpeace added "The most worrying aspect is that this company, which has one of the most appalling safety records in the industry, is talking about majoring on one of the most ecologically sensitive areas on the planet."Rosneft, however, said one of the reasons it decided to partner with BP was because of the experience the UK firm had built up dealing with the Deepwater Horizon rig disaster and oil spill in the Gulf of Mexico last year."They have gained a great deal of experience, including in the Gulf of Mexico clean-up operation. BP has learned from this," Rosneft chairman Igor Sechin said.Meanwhile, US politicians have also been scathing over the deal. Michael Burgess, a Republican congressman from Texas, said a national security investigation is required. "The national security implications of BP America being involved with the Russian company ? that does require scrutiny," he said. Ed Markey, a Democrat, also called for the Department of State to look into the deal. BP now stands for "Bolshoi Petroleum," he said. US firms such as ExxonMobil are also said to be disappointed that Rosneft linked with BP.Bob Dudley, BP's chief executive, described the alliance as a new model for co-operation between government-owned oil companies and private groups, though analysts suggested much caution is needed because of the fluidity of oil politics in Russia.Before he returned as chief executive last year, Dudley was ousted as head of joint venture TNK-BP in 2008 after a dispute between BP and its Russian billionaire partners. They accused him of running it as BP subsidiary.Rosneft itself is largely the former Yukos, the company built up by entrepreneur Mikhail Khodorkovsky. A political opponent of Vladimir Putin, he was recently sentenced to 14 years in jail for embezzlement. Khodorkovsky says the sentence is for his political stance. Yukos managers and shareholders, meanwhile, are continuing a legal battle for billions in compensation, claiming that Rosneft stole its assets.