Hope springs eternal but the oil won’t: a Russian lament

BP should have seen strife coming, but more pressing is the exhaustion of fields on which we’ve come to depend, says David Strahan

It must be lonely being Tony Hayward. As the oil price continues to soar, there is a gathering consensus that global production of the black stuff is nearing fundamental geological limits. Yet BP’s chief executive continues to argue valiantly that the causes of the current oil shock are “not so much below ground as above it, and not geological but political”.

Since his company’s Russian joint venture, TNK-BP, is under ferocious assault from both its Russian shareholders and the Russian state, Mr Hayward can be forgiven for thinking the industry’s problems are man-made rather than natural. But this is a false distinction, and closer analysis suggests BP’s predicament is itself evidence of looming geological constraints to global production, or “peak oil”.


On the face of it, BP’s problems in Russia are entirely above ground, even if the company claims its tormentors are far from above board. TNK-BP is owned 50:50 between BP and AlfaAccessRenova, a consortium of Russian billionaire tycoons led by Mikhail Fridman. The two sides are now locked in a vicious dispute. BP claims the Russians are trying to seize control; the oligarchs insist they are only defending their rights. Last week Mr Fridman said the British company’s allegations were “in the best traditions of Goebbels’ propaganda”.

Wherever the truth lies, there is not much doubt how the dispute will end. The Russian shareholders have resorted to law both in their own country and Sweden, but the real pressure on BP comes from the state. In recent months TNK-BP has been subjected to raids by the FSB security service investigating claims of industrial espionage, along with the launch of an environmental probe into its largest oil field. Meanwhile, the company’s BP-appointed chief executive has been questioned by the interior ministry over alleged corporate tax evasion, and summonsed by the Moscow prosecutor’s office over suspected labour code violations.

Independent