CASPER
THE FRIENDLY GHOST
LONDON (AFP) – Shares in British energy giant BP edged higher on Monday as investors gave a very cautious welcome to its Arctic tie-up with Russian state firm Rosneft.
BP's stock gained just 0.24 percent to finish at 500.70 pence on London's FTSE 100 index of top companies, having earlier risen to 512.10 pence, as the market gave its first verdict on the deal that was unveiled late Friday.
The FTSE, meanwhile, closed 0.27 percent lower at 5,985.70 points. US financial markets were closed for a public holiday.
BP chief executive Bob Dudley and Rosneft President Eduard Khudainatov flew into London on Friday to sign the agreement, which allows them to jointly exploit the vast untouched oil and gas resources of Russia's Arctic region.
The deal comes just nine months after the Gulf of Mexico oil spill disaster which ravaged BP's finances and its international reputation and it sparked considerable critical comment in the United States.
"There has been quite a backlash in the United States to the BP/Rosneft deal," noted GFT analyst David Morrison.
"But I think investors are harking back to the TNK(-BP) deal back in 2003. That went bad and Robert Dudley was forced to flee Russia as a result.
"Exploration in the region will be high-risk and expensive, and there is a concern that if anything goes wrong, BP could be left high and dry."
Rosneft will hold five percent of BP's ordinary voting shares in exchange for about 9.5 percent of Rosneft's stock. The shares issued by BP are worth approximately $7.8 billion (5.9 billion euros) and Rosneft's will be similar.
BP already owns half of Russia's third biggest oil producer, TNK-BP, where Dudley served as chief executive for five years until he was expelled by BP's Russian partners during a shareholder dispute in 2008.
"Given last year's rather undignified political rhetoric from some US political leaders (over the oil spill disaster), it is not altogether surprising that BP have sought to look elsewhere to bolster future revenue streams," CMC Markets analyst Michael Hewson said.
BP's stock gained just 0.24 percent to finish at 500.70 pence on London's FTSE 100 index of top companies, having earlier risen to 512.10 pence, as the market gave its first verdict on the deal that was unveiled late Friday.
The FTSE, meanwhile, closed 0.27 percent lower at 5,985.70 points. US financial markets were closed for a public holiday.
BP chief executive Bob Dudley and Rosneft President Eduard Khudainatov flew into London on Friday to sign the agreement, which allows them to jointly exploit the vast untouched oil and gas resources of Russia's Arctic region.
The deal comes just nine months after the Gulf of Mexico oil spill disaster which ravaged BP's finances and its international reputation and it sparked considerable critical comment in the United States.
"There has been quite a backlash in the United States to the BP/Rosneft deal," noted GFT analyst David Morrison.
"But I think investors are harking back to the TNK(-BP) deal back in 2003. That went bad and Robert Dudley was forced to flee Russia as a result.
"Exploration in the region will be high-risk and expensive, and there is a concern that if anything goes wrong, BP could be left high and dry."
Rosneft will hold five percent of BP's ordinary voting shares in exchange for about 9.5 percent of Rosneft's stock. The shares issued by BP are worth approximately $7.8 billion (5.9 billion euros) and Rosneft's will be similar.
BP already owns half of Russia's third biggest oil producer, TNK-BP, where Dudley served as chief executive for five years until he was expelled by BP's Russian partners during a shareholder dispute in 2008.
"Given last year's rather undignified political rhetoric from some US political leaders (over the oil spill disaster), it is not altogether surprising that BP have sought to look elsewhere to bolster future revenue streams," CMC Markets analyst Michael Hewson said.
