| JRL Home | JRL Simple/Mobile | RSS | Newswire | Archives | JRL Newsletter | Support | About
Old Saint Basil's Cathedral in MoscowJohnson's Russia List title and scenes of Saint Petersburg
Excerpts from the JRL E-Mail Community :: Founded and Edited by David Johnson

BP's Russian Stake May Avoid U.S. Review, Industry Group Says

U.S. CapitolJan. 18 (Bloomberg) -- BP Plc, which gave Russia's state- controlled OAO Rosneft a 5 percent stake, may not have to face a U.S. review that lawmakers are demanding, according to the head of a group representing U.S. subsidiaries of overseas companies.

"I do not expect the deal will trigger" a foreign- investment review, Nancy McLernon, president of the Organization for International Investment, a trade association in Washington, said yesterday in a phone interview. "BP either has or will speak to all those in the government, either on the Hill or otherwise, that have questions about the deal to ensure a smooth transaction."

On Capitol Hill, lawmakers including Representative Michael Burgess, a Texas Republican, are urging that the stock swap, announced on Jan. 14, be reviewed by the Committee on Foreign Investment in the U.S. to determine possible effects on BP America Inc., the London-based oil company's U.S. subsidiary. It was the Pentagon's biggest fuel supplier in fiscal 2009.

"There are various different levels where this deserves some analysis," Burgess, a member of the House Energy and Commerce Committee, said on CNBC hours after the transaction was disclosed. "The national security implications of BP America now being involved with the Russian company, that does require scrutiny" by the foreign-investment panel.

The inter-agency committee led by the U.S. Treasury Department reviews transactions that alter control of a U.S. company and raise national-security issues. The panel cleared a 2006 deal by a company controlled by Dubai's government to operate a number of U.S. ports. The decision was faulted by lawmakers, and the Dubai company later sold control of the ports.

A BP spokesman in London said the company couldn't immediately comment. The U.S. Treasury has a policy of not commenting on matters that may come before the foreign- investment committee.

Kara Sea Exploration

The share swap gives Rosneft 5 percent of BP and the London-based oil company 9.5 percent of Russia's largest oil producer. Rosneft and BP agreed to explore in 125,000 square miles (48,000 square kilometers) of the Kara Sea off Russia's north coast, an area that may hold 100 billion cubic meters of oil and gas resources, company officials said.

Representative Edward Markey of Massachusetts, the top Democrat on the House Natural Resources Committee, said in a statement on Jan. 14 that a review is needed and that the deal may "complicate the politics" of BP's liability for its Gulf of Mexico oil spill last year.

'Bolshoi Petroleum'

Markey, who said BP now stands for "Bolshoi Petroleum," called for an immediate review by the Committee on Foreign Investment "if this agreement affects the national and economic security of the United States." He said the State Department should also "closely monitor" the transaction.

"It's not a majority stake, but 5 percent is still billions of dollars in shares in a company," Eben Burnham- Snyder, a spokesman for Markey, said in a telephone interview yesterday.

The Committee on Foreign Investment reviewed 65 transactions in 2009, according to an administration report to Congress last year. Seven were withdrawn by the companies, with three deals abandoned and three resubmitted after executives resolved questions raised by the U.S. One deal may be resubmitted this year, according to the U.S. report.

McLernon's group represents U.S. subsidiaries of companies based outside the U.S., including BP, drugmaker Bayer AG and mobile-phone manufacturer Nokia Oyj. She said she hasn't discussed the deal with BP executives.

Keyword Tags:

Russia, Oil, Energy - Russia News - Russia - Johnson's Russia List

Bookmark and Share - Back to the Top -        

-

Bookmark and Share

- Back to the Top -        


 
 
---->
  Follow Johnson's Russia List on Twitter Tweet