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Energy Blast – Sept 5, 2008

BP has finally agreed to a peace deal with its Russian partners over the future of their joint venture, TNK-BP. The oil firm announced yesterday that embattled chief executive Robert Dudley will leave TNK-BP by the end of the year, as part of an agreement hammered out with the four Russian billionaires who also own the business. Not surprisingly, the deal appeared to have been closely coordinated with the Kremlin. It follows an unprecedented campaign by state agencies against TNK-BP that left Dudley no choice but to flee Russia, citing harassment. Serbian government officials earlier today insisted that an energy deal with Russia is of the utmost national interest, but the opposition Liberals described it as humiliating. Well, it’s not humiliating yet…

The multibillion-dollar agreement envisages that part of a pan-European gas pipeline will run through Serbia, and that Russia will buy Serbia’s state oil monopoly, NIS. Serbia and Russia signed the agreement in January, but it must be approved in parliament before it can be fully executed.Russia’s stock market fell sharply today as investors sold resource stocks in response to escalating fears for global growth and the sliding price of oil. “Oil is the issue. The market has decided that global growth is rolling over and that means all cyclicals get hit from emerging markets to commodities.” said Kingsmill Bond, chief strategist at Russian investment bank Troika Dialogue.