Arctic oil and gas

BP and their Russian partners Rosneft have agreed a deal to exploit Russia's Arctic shelf, each company is taking a stake in the other. Rosneft is 75% owned by the Russian state.

Environmentalists are right to be wary about these northern Arctic regions being expoited (125,000 square km in the South Kara Sea), after the Deepwater Horizon spill in 2010. None of us can know what an impact on the Arctic, any possible future accidents may have to the ecology in this unique area and the knock-on effects to fish/seals/polar bears and other creatures.

The Gulf of Mexico spill is thought to have cost circa $40 billion, so BP cannot realistically afford any horrendous disasters like this in the future.

Although BP has already had a succesful joint venture with TNK, it is worth remembering that the Russian state coerced Shell in 2006, to sell their share in the Sakhalin-2 liquefied natural gas plant to Gazprom, on-the-cheap, after Shell spent years developing it and circa $20 billion. So there can be no guarantee that Russian won't do something similar to BP, once the oil is about to flow.

To my mind Shell would be a better investment, though they have had their own problems in the Niger Delta and environmental issues, they seem to have the problems under control, also they have not just had to fork out vast amounts in 2010, so their dividends are safer.

Remember as 2008 has shown, shares and other financial assets can go up and down at frightening speed. Don't buy any, unless you know what you are doing and can afford to lose the money.