Now obviously I'm supposed to know about this stuff (or else shut up), and I don't have a good record on BP-in-Russia. In 2003, BP got involved in the TNK-BP joint venture. Around 6 years ago they were considering an even bigger play in Russia at a time when others were piling in and others still (Shell and yes, even the mighty Exxon) who had already got in were getting a kicking in the usual Russian manner. On this occasion BP (wisely, in my view at the time) held back. In due course, 2008, and TNK-BP gets a kicking of its own, with Bob Dudley being sent packing in the boot of a car or some such skullduggery.But of course those endless reserves of oil and gas are forever beckoning, and Russia's need for inward investment (and technology-transfer) is likewise never-ending. In due course (early 2011) BP made another bold play, this time linked to Rosneft (a company now more in favour than Gazprom). At the time I gathered, wink wink nudge nudge, that however implausible, they knew what they were doing. It rapidly seemed I was wrong however (CU always said this) and the kicking recommenced with even greater ferocity. How many beatings can a company, already on the back foot after Deepwater Horizon, take ?
But no, they are hanging on in there with another round of Big Plans. What prize is so tantalisingly close that they can justify the effort ?
Perhaps it's as simple as this: the unchanging fundamentals of Russia's vast natural resources and its extensive needs - $1 trillion, we are told, and who's to doubt it ? If BP are wrong about this they are in very good company: the Big Oil herd stampedes resolutely eastwards, irrespective of massive periodic setbacks. Putin spent time in London with Cameron during the Olympics, and now more Russians are coming to town to display their wares.
On the other hand, I can't quite shake off the idea that BP is being badly advised ... this one will run and run.
ND
I'm guessing that Russian oil has the attraction of being relatively cheap to extract and therefore potentially a competitor to Saudi oil, especially as Saudi oil declines. This is not the case in Nigeria for instance, or the Gulf of Mexico or wherever else. The cheapest cost of extraction in volume sets the price on the world market in the end - everybody else ahs to struggle by on whatever margin is left after their costs are taken into account.
ReplyDeleteIs Goldperson Sacks their adviser? They usually seem to involved in large scale activity that costs the players lots of dosh somewhere along the line.
ReplyDeleteOil B - no, it's Rothschilds
ReplyDeleteI'll say no more ...
The chaps with snow on their boots are already here. Never mind London, in our provincial neck of the woods the town centre is becoming a booze, sex and drugs night life centre. Guess where the money is coming from?
ReplyDeleteYou would think the mildest exposure to our Slavic friends would have taught them that "win-win" is a concept for effete western poofs, not self-respecting siloviks.
ReplyDeleteDoes anyone in BP's top management play chess?
The further east you go the more the bureaucrats know what's best for you better than you do.
ReplyDeleteIt is as though BP is selling ropes to Uncle Vlad but doesn't realise what happens next.
SW exactly right, it's win-lose all the way with that lot
ReplyDeleteand pull the rug out from under, the moment an opportunity presents