BP out in the cold as Arctic oil deal with Russians falls apart

BP was left humiliated today when its $16 billion (£9.8 billion) Arctic tie-up with Rosneft failed, leaving the strategy new boss Bob Dudley hoped would help it recover from the Gulf of Mexico disaster in tatters.

Rosneft had already moved on this morning, talking to new drilling partners about working together on the offshore field that experts reckon could contain more than 40 billion barrels of oil.

Insiders said Shell, Chevron and Chinese firms were being considered by the Kremlin-owned firm.

That was after BP failed to seal the Rosneft deal by its deadline of midnight last night. The oil major repeatedly tried to either buy out or sweet talk AAR, the group of oligarchs who co-own its current Russian joint venture TNK-BP, into allowing the Rosneft venture to go ahead.

But the billionaire backers, led by Mikhail Fridman, turned down a stream of offers, including BP and Rosneft buying AAR's 50% stake in TNK-BP for $32 billion, which included $9 billion of BP shares.

Last night, having already extended its Arctic exploration deal deadline with BP by a month, Rosneft refused to do so again.

BP and AAR put out a statement claiming "talks [with Rosneft] will continue" but the state-owned firm didn't seem interested.

The British firm also tried to paper over the cracks in its relationship with AAR, which turned sour when the oligarch backers first took BP to court over its proposed share swap and Arctic alliance with Rosneft, claiming it breached the existing TNK-BP shareholder agreement.

BP said it would "intensify efforts to ensure TNK-BP's continued success".

Dudley added: "BP remains committed to Russia, to working constructively with AAR in TNK-BP and to our existing good relationship with Rosneft.

"All parties have worked hard to reach an acceptable resolution, as we believe it could offer significant benefits." That, said analysts, was underplaying the missed opportunity.

"This is putting a brave face on a disappointing episode," said Richard Griffith at Evolution. But he added: "We believe it is better to walk away than have a bad deal."

It's a blow for BP, which announced the deal in January with huge fanfare.

The Rosneft tie-up had been a big part of the oil major's strategy to help it rebuild in the Gulf of Mexico, which has so far cost it $41 billion. Today, it announced another asset sale - up to $610 million for Wytch Farm oil field - to help pay for it.