BP loses Arctic deal to its Russia subsidiary

British energy giant BP said Friday that an arbitration panel has forced it to hand the Arctic exploration part of its tie-up with Rosneft to its Russian subsidiary TNK-BP. The British giant said the London panel has also ruled that the share swap portion of its agreement with Rosneft may proceed only under the condition that the Russian state-held company agrees to work with TNK-BP.
Rosneft has previously ruled out joining forces with BP's Russian venture and the London panel's ruling appears to represent a serious setback for the British firm. "The arbitral panel has today issued a consent order permitting BP and the Alfa-Access-Renova (AAR) consortium to assign the Arctic opportunity to TNK-BP, subject to Rosneft consent," BP said in a statement.
"The order also permits the proposed share swap between BP and Rosneft to proceed subject to Rosneft having consented to assign the Arctic opportunity to TNK-BP," the British firm said. But the share swap also comes with conditions: neither Rosneft nor BP will be allowed to hold seats on each other's boards and all voting right will be held by independent trustees. "Rosneft's consent will be required for both of these matters to proceed," BP said.