Ed Miliband, leader of Britain’s Labour Party, has joined a growing chorus of critics expressing reservations over BP plc’s (NYSE: BP) joint venture with Russian energy giant Rosneft to explore potentially massive oil and gas deposits on the Arctic shelf – BP’s first major deal since last year’s Deepwater Horizon catastrophe.
I'd be pretty worried about this,Miliband told a BBC TV station, echoing concerns by U.S. environmentalists who say the BP has failed to learn any lessons for last year’s disastrous oil spill in the Gulf of Mexico.
I think that the lesson of the Deepwater Horizon… should be that... the task for all of us, private companies, government and so on, is not to just keep digging and digging deeper and deeper for oil. It is actually to find those alternative forms of energy that can help us move forward in a clean way.
BP and Rosneft will explore for oil and gas across 125,000 square kilometers on Russia’s Arctic continent shelf. Under terms of the strategic alliance, Rosneft will acquire 5 percent of BP shares in exchange for about 9.5 percent of Rosneft shares. Since Rosneft is majority-owned by the Russian government, this means that a part of BOP is now owned by the Kremlin.
The environmental group Greenpeace has already criticized BP’s arrangement with the Russians.
BP has done little to address the issues raised by the Deepwater Horizon disaster, while last year the Greenland government refused to grant drilling concessions to the company because it wasn't convinced BP has rigorous enough safety protocols. Now BP has bought its way into the Arctic by the back door. It seems the company learned nothing last year in the Gulf of Mexico.
Oil is already being drilled in the Arctic, in Alaska – but this is now going into pristine wilderness areas, Greenpeace added.
As a society, we either deal with the demand and the efficiency of our transportation system, or we will go to more extremes to get supplies, in places such as the Arctic.
BP has also come under fire for establishing such a close working relations with Russia, a country that is neither democratic nor stable nor committed to environmental protection.
U.S. Congressman Edward Markey, who is leading Democrat on the House Natural Resources Committee, has requested a review of the deal by American regulators.
National security issues for the U.S. have also been raised.
There are various different levels where this deserves some analysis and some scrutiny, said Republican Congressman Michael Burgess, a member of House energy and commerce committee. BP is one of the biggest suppliers to our military. Are there national security implications to this deal?
However, certain other parties are hailing BP’s relationship with Rosneft. Britain’s energy secretary Chris Huhne called it a “groundbreaking deal.”
The respective leaders of Russia and UK, Vladimir Putin and David Cameron, have also endorsed the venture.
Some energy analysts are also bullish on the BP-Rosneft marriage.
From what we know, it sounds like it's potentially good for BP, said Phil Weiss, analyst at New York equities firm Argus Research. BP gets access to resources, Rosneft gets access to expertise and knowledge.