Russia-US Civilian Nuclear Deal comes into force; Rosneft and British Petroleum sign a strategic deal for exploration of oil and gas in the Arctic Sea
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  • In a major milestone in the ‘reset’ of relations between Russia and the US, a long stalled civilian nuclear cooperation agreement has now come into force. The agreement, signed in 2008 but shelved by the White House amid acrimony over Russia's war with Georgia, was revived by President Barack Obama as part of his campaign to improve ties and bolster trade and security cooperation. The agreement creates a legal framework for closer cooperation between the United States and Russia on civilian nuclear research, production and trade, and prevention of proliferation of nuclear weapons. It will also help the two nations to implement a deal signed last month calling for conversion of Russian research reactors to use low-enriched uranium fuel instead of high-enriched fuel. High enriched fuel can be processed to make nuclear weapons. The deal will allow joint nuclear energy ventures between Russian and U.S. companies and could potentially give Russia the right to reprocess spent nuclear fuel that originated in the United States.1

    Russia's state-owned oil powerhouse, Rosneft, has formed a strategic alliance with British Petroleum (BP) to develop Russia's energy-rich continental shelf in the Arctic Sea.2 Under a share swap partnership agreement signed in London, Rosneft will hold a 5 per cent stake in BP while BP’s share of Rosneft will be 9.5 percent. The deal is worth about $7.8 billion. The deal gives the British company access to regions which had been previously reserved for exploration for Russian oil companies.

    BP and Rosneft plan to explore the Kara Sea in the Arctic Circle off Russia’s North Coast. The two companies will develop the three blocks Rosneft had received as ‘rights’ to drill in the oil wells known as East Prinovozemelsk-1, 2 and 3. The companies will also establish an Arctic technology centre in Russia. It is estimated that the region could hold 5 billion metric tons of oil resources and 10 trillion cubic meters of natural gas.

    It would be worth noting that BP and Rosneft are already partners in Sakhalin-5 project, where they are carrying out seismic exploration at the Kaigansko-Vasyukansky block. Some American legislators, on the ground that BP supplies oil to the US military and the Russian government owns 75% of Rosneft, and also environmentalists like Greenpeace have criticised the agreement. It is a win-win situation for both the parties. It allows BP to cover the US$40 billion in damage claims arising from the massive oil spill in the Gulf of Mexico. Russia, on the other hand, will gain access to advanced Western technologies for deepwater Arctic drilling. Between them, BP and Rosneft account for 8 per cent of the daily global oil output.3

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