BP, Rosneft Try To Save Partnership

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A day after a Swedish arbitration tribunal blocked the partnership between BP and OAO Rosneft, the British oil giant and Russia's largest oil producer are working to save an agreement that called for the companies to exchange $16 billion in stock and team-up to explore for oil in the Russian area of the Arctic Circle.

For its part, Rosneft appears intent on getting the deal done and the company noted today that the arbitration tribunal did not block the deal entirely, but merely extended an injunction granted to TNK-BP, BP's joint Russian venture, earlier this year. TNK-BP, Russia's third-largest oil producer, has claimed the BP/Rosneft pact violates its shareholder rights accord with BP.

The legal team representing TNK-BP said BP was now ''prohibited from entering into any future share arrangement with Rosneft that has any kind of strategic component,'' Reuters reported. News of the tribunal's decision was viewed as a blow to BP (BP) because Russia's oil giants have been previously unwilling to allow Western firms access to Arctic projects.

TNK-BP is angling to gain some interest in the BP/Rosneft deal or usurp its British partner entirely, but Rosneft has said it does not want to work with its Russian rival on Arctic projects because it lacks the necessary expertise. Of course if BP and Rosneft cannot make their pact happen, Rosneft could pursue an agreement with one of BP's rivals, a move that would be a stinging blow to BP.