What's In It For BP

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Russia has been a pretty profitable place for BP, and while BP is tired of dealing with the drama within TNK-BP, the British firm definitely wants to stay in Russia to participate in developing the country's vast northern oil and gas potential.

A cash and shares deal gives BP a nice ownership stake in Rosneft, which is the best way to profit from Russia's immense untapped oil potential - because Putin will ensure Rosneft gets first dibs at prime opportunities. Depending on the size of BP's slice, the company would likely also get a seat or two on Rosneft's board. That is as important as anything else, because it would put BP personnel in regular, direct contact with Igor Sechin, the CEO of Rosneft, who has a significant say in Russian energy policy.

In general, a role in Rosneft would also allow BP to pursue closer ties with a Kremlin that exerts a much tighter hold on the oil industry than it did in the 1990s, when BP first invested in Russia. And anyone who wants to operate in Mother Russia has to have an inside track to the Kremlin - or you are likely to find yourself unexpectedly kicked to the curb.

Source: Casey's Daily Dispatch

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