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Is BP’s latest fiasco evidence of Russian law or Russian chess?

Foreign Policy

Are we to believe President Dmitry Medvedev, who says that the collapse of BP’s blockbuster oil deal in Russia is all a simple matter of the rule of law — that CEO Bob Dudley was violating a contract, and that isn’t done in Russia? One might reply, Since when? But this is what is baffling about the latest turn in BP’s long saga of suffering — one does not know whether Russia has suddenly gone legal, or whether we are watching a dimension of the run-up to the country’s 2012 presidential election.

For BP, this was all about recovering its mettle from last year’s disastrous Gulf of Mexico oil spill. Earning street cred in Big Oil isn’t the same as a lot of other businesses — there is comparatively little in the way of razzamatazz, branding or product breakthroughs. Instead, it’s all about being quick off the mark in acquiring property and finding hydrocarbons. Yet even there, as BP has learned, the going isn’t what it used to be: Dudley was plenty fast pivoting off the spill, and obtaining a superlatively rich new deal to help develop Russia’s Arctic. The details were tantalizing — already the most active Big Oil company on the Russia patch, BP would double-down by forming a marriage-type arrangement with state-owned Rosneft. The two companies would swap a significant number of shares, and then explore the extravagantly rich oil fields of the Arctic. Tens of billions of barrels of oil were at stake, and at once BP seemed to be back in the game.