BP - Rosneft deal blocked

BP boss Bob Dudley has come under fire after an Arctic exploration deal with Russian group Rosneft was blocked by the British oil company's partners in joint venture TNK-BP.

An arbitration panel ruling prevents BP and state-controlled Rosneft, Russia's largest oil company, jointly exploring for oil in the country's Arctic region and from executing a $16 billion share swap.

That potentially opened the door for a rival to step in and replace BP as Rosneft's partner.

"Given his (Dudley's) past relationship in Russia, how difficult it has been, he should have been a bit more appreciative of how tricky it can be operating in Russia," Arbuthnot Securities analyst Dougie Youngson said on Friday.

Thursday's ruling handed a major victory to BP's billionaire partners in TNK-BP. Alfa-Access-Renova (AAR), which represents their half of TNK-BP, had said the BP and Rosneft alliance violated their right of refusal on deals in Russia.

AAR said BP was now "prohibited from entering into any future share arrangement with Rosneft that has any kind of strategic component".

This raised the prospect Rosneft would look elsewhere for the expertise it needs to get oil out of Russia's Arctic region.

Rosneft head Eduard Khudaynatov said in January the group was awash with proposals from foreign companies for exploring in the Arctic, and Royal Dutch Shell, BP's arch rival, has already confirmed its interest.

"The cleanest thing for Rosneft, if it wants to start developing its offshore acreage and resource potential, is to choose a different partner," Sanford C. Bernstein analyst Oswald Clint said, adding TNK-BP lacked the necessary know-how.

TNK-BP shareholders said earlier this month it could supplant BP in the share swap with Ronseft.

This was rejected by Rosneft, which recently struck deals with U.S. oil majors Chevron and Exxon Mobil to explore in the Black Sea.