US censures BP-Rosneft share swap

The United States has strongly criticized the $16 billion share swap deal between Russian state-owned company Rosneft and British oil giant BP, a major supplier to the US military.

Washington says the agreement has potential implications for US national security, The Wall Street Journal reported on Monday.

Politicians have voiced fears over Alaska pipelines, BP payouts for the disaster in the Gulf of Mexico and a risk of Kremlin influence on the major supplier to the US military.

Republican Congressman Michael Burgess, who sits on the House energy and commerce committee, has called on the Committee on Foreign Investment in the United States (CFIUS) to investigate the deal more deeply.

"There are various different levels where this deserves some analysis and some scrutiny," Burgess asserted.

"BP is one of the biggest suppliers to our military. Are there national security implications to this deal?" he added.

Burgess also pointed out that BP runs sensitive trans-Alaskan oil pipelines and that the group's BP America subsidiary operates under US law.

Democratic lawmaker Edward Markey has also urged intense scrutiny of the deal. He highlighted that BP was the top supplier of petroleum to the US military in 2009.

"If this agreement affects the national and economic security of the United States, then it should be immediately reviewed by the Committee on Foreign Investment in the United States," said Rep. Edward Markey, the top Democrat on the House Natural Resources Committee.

The CFIUS reviews the national security implications of foreign investments.

Under the $16 billion share swap deal, the two oil companies will jointly explore crude and gas reserves in the Russian Arctic.

Environmental campaigners have attacked the deal, arguing that it will step up drilling in the fragile region.

Earlier, US Geological Survey found that the area north of the Arctic Circle contains just over a fifth of the world's recoverable oil and gas resources. It said the Arctic has an estimated 1,670 trillion cubic feet of gas, nearly two-thirds the proved gas reserves of the entire Middle East, and 90 billion barrels of oil.

The tie-up gives Rosneft a 5 percent stake in BP, the second-largest stake in the British based company, after Blackrock Incorporation, with 5.93 percent.

According to the agreement, BP will increase its stake in the Russian firm from 1.3 percent to 10.8 percent.

The agreement will give the Kremlin a slice of ownership of BP's global operations, which stretch from Alaska to the Gulf of Mexico, north Africa, Azerbaijan and the North Sea.