The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

BP’s calculated risk to get to the top


BP's $9 billion merger with TNK-Sidanco, Russia's fourth-largest oil company, is the largest one-off investment in Russia ever. With oil reserves falling and the Middle East volatile, other super-majors are considering deals with the remaining Russian oil companies. But the Russians may not want to do deals and president Putin may not let them.

Last December, in oil industry journal World Energy, a vice-president of Exxon Mobil admitted that oil discoveries since the 1960s had fallen dramatically, while demand was still rising steeply. In other words, oil reserves were declining. As Jim Meyer, director at the Oil Depletion Analysis Centre (Odac) says: "This was perhaps the first time the super-majors had publicly acknowledged that reserves were falling."

The decline in big new oil discoveries means the super-majors need to buy companies that have reserves. As Meyer says: "Russia is a great market because it has substantial reserves left in it."

BP took a calculated risk that things have changed in Russia since 1997 when its investment in a 10% stake in Sidanco was the subject of a bitter legal battle with AAR, owners of TNK-Sidanco and now its partner in the new merged entity. As one person who worked on the deal says: "The way to get over the bad feeling is not to look at it emotionally."

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree