19.01.2011

Board Chairman of the Union of Oil and Gas Producers of Russia Yuri Shafranik told ITAR-TASS in an interview BP-Rosneft deal is a major strategic move

- Mr. Shafranik, how do you assess BP-Rosneft deal?

- The deal is one of the most significant agreements in the past years. It is hard to dwell on all the aspects of the deal in a brief comment, as it is really hard to overestimate not only the exchange of shares but also the strategic significance of the agreement both for British Petroleum in the United Kingdom and Rosneft in Russia.

A very important step has been made and today we have to estimate its potential.

Naturally, the scope of the alliance poses considerable risks, which experts and politicians point at. But risks exist to test our professional and moral reliability. The main thing is not to ignore them and do everything possible to minimize them.

- Why is the deal strategically important?

- It opens the door to major possibilities. I do not mean only joint development of Arctic fields although it is a huge joint project by itself. Two fuel and energy giants supported by the leaderships of their countries are capable of considering and implementing other major projects.

- Will competitors envy?

- Naturally, yes, as competition is growing in conditions of globalization. The deal will negatively affect many of those who planned or dreamt of getting such a possibility. Specifically affected will be those competitors who acquired or planned to acquire BP assets at an extremely low price due to the plight the company faced after the accident in the Gulf of Mexico. I am convinced that quite a few businessmen have already imagined BP assets in their portfolios at prices 2-3 times lower than before the accident. The deal cannot but worry and even irritate such competitors. Therefore, when today they pour negative assessments on BP-Rosneft alliance (or use politicians for the purpose) it is clear which interested party was affected most of all.

- How important is the alliance for BP in the UK?

- In contrast to Russia where oil companies are owned either by the government or a group of private individuals, British Petroleum has dozens of millions of direct and indirect stockholders (through investment funds, mostly pension ones). Therefore, a strike at its capitalization and snatch-up of its assets is not a local pain for a group of individuals, but a major problem for millions of people united by the company equity. BP management succeeded if not to resolve the problem completely, but ease it considerably by offering a key to a possibility to increase capitalization. BP CEO Bob Dudley won the support of the Russian leadership. And it is a very important step also for Russia as it allows to have the distinguished company as a partner.

A major and responsible task is to implement the potential offered by the deal. It is important not to softpedal the business under pressure from competitors and political influence, which will undoubtedly be exerted.

I would like to repeat: British Petroleum, Rosneft, and the governments of both countries supporting the alliance have to work diligently and laboriously. I am satisfied with the deal which is a step towards major economic prospects. I am only concerned by the implementation degree of the emerging possibilities.