BP confirms talks with Russia's Rosneft

14th January 2011, Comments 0 comments

Oil giant BP said Friday it was in talks with state-run Russian firm Rosneft over a "possible arrangement", amid reports of a share swap deal that could see the British company drilling in the Arctic.

"Following recent press speculation, BP confirms that it is in discussions with Rosneft relating to a possible arrangement. A further announcement is to be made later today," BP said in a statement. A spokesman would not elaborate.

The BBC, citing sources in Russia, said the share swap deal could allow BP to drill for oil and gas in untouched waters in the Russian part of the Arctic.

BP Chief Executive Bob Dudley was due to hold a press conference in London at 9:00 pm (2100 GMT), an earlier BP statement said, adding: "No information about the content of the event will be given in advance."

Dudley held talks with Russian Prime Minister Vladimir Putin in Moscow earlier Friday, a government spokesman told Dow Jones Newswires.

BP currently has a three percent stake in Rosneft, while Russia accounts for around one quarter of the British energy giant's total production.

BP also owns 50 percent of Russia's third biggest oil producer, TNK-BP, where Dudley served as chief executive for five years until he was expelled by BP's Russian partners during a shareholder dispute in 2008.

Sky News reported that Rosneft would take a "sizeable" stake in BP under the share swap deal, citing people close to BP. Dow Jones said the agreement was due to be announced at Friday's press conference.

The Russian government said in September that Russia needed technology and funds from foreign firms to explore gas and oil reserves in the country's Arctic regions.

If the deal went ahead, BP would not be the first major British company to plan to drill in the Arctic.

Cairn Energy announced last week that it would be investing 500 million dollars this year in new wells off the coast of Greenland.

BP has endured a torrid time following last year's oil spill at a the Gulf of Mexico, and it has embarked on a wide process of divestment to raise the funds to pay for the clean-up and compensation claims.

BP said in November that the disaster could cost it 40 billion dollars.

At the same time, however, it also reported a net profit of 1.785 billion dollars for the third quarter of 2010 -- a huge turnaround following a loss of 16.9 billion dollars during the second quarter.

The energy giant is currently in the process of selling 30 billion dollars worth of assets to cover its part of the bill for the oil spill disaster.

© 2011 AFP

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