BP Rosneft deal collapses as agreement deadline expires

BP's landmark Arctic deal fell through late last night after it failed to strike an agreement with its various Russian partners before the deadline expired at midnight on Monday

The British oil giant, BP had signed in January, a broad alliance with Russia's state-owned oil company, Rosneft, to explore the Arctic, one of the world's last remaining unexplored basins. (See: BP signs $7.8-bn strategic alliance with Roseneft for Arctic resources)

Rosneft and BP agreed to explore and develop three license blocks - EPNZ 1,2,3 – on the Russian Arctic continental shelf. The blocks awarded to Roseneft cover approximately 125,000 square kilometres (sq km) in a highly prospective area of the South Kara Sea which is equivalent in size and prospectivity to the UK North Sea.

In February, BP's Russian partners in the 50:50 joint venture TNK-BP said they would block a $1.8-billion dividend payment in what was seen as an attempt to abort BPs tie-up bid with rival oil group Rosneft (See: BP's Russian partners say 'nyet' to $1.8-bn dividend payout).

The move to block the payout came as AAR, the consortium of Russian billionaires that own the other half of TNK-BP sought a court injunction against BP's proposed $16-billion JV with Russian rival Rosneft.

BP's deal with Rosneft had to be placed on hold following AAR  winning an injunction against the deal from an independent arbitrator (See: Tribunal nixes BP's Arctic exploration plans with Rosneft).