Business

BP shares up after deal with Russia's Rosneft

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Image caption BP announced its joint venture with Rosneft after the UK market closed on Friday

Investors welcomed news of BP's joint venture with Russian energy firm Rosneft, sending the shares higher.

Trading for the first time since Friday's announcement, BP's shares jumped 2% before closing up 1.2p, or 0.24%, despite the FTSE 100 falling.

The two firms will exchange expertise in exploring Russia's Arctic shelf. Rosneft will take a stake in BP, while BP will hold a 9.5% stake in Rosneft.

Separately, BP has been awarded its first exploration permits in Australia.

BP's deal with Rosneft is the UK oil company's first new venture signed since the Deepwater Horizon spill last year, which is set to cost it at least $40bn (£25bn).

Rosneft is Russia's biggest oil company and is 75%-owned by the Russian government.

BP chief executive Bob Dudley has called the deal "historic", saying it would "meet the world's demand for energy".

But it has drawn criticism from environmental campaigners who say the company has learnt nothing from the Gulf of Mexico disaster.

And Labour leader Ed Miliband also voiced concerns, saying that companies should not focus solely on "digging and digging deeper and deeper for oil" but to find alternative forms of energy.

Safety requirements

Meanwhile, the Australian government warned that BP would have to demonstrate higher safety standards than it did in the Gulf of Mexico before it will be allowed to drill offshore.

BP won four permits to explore for oil and gas in the Ceduna Sub Basin, off the coast of South Australia. The company expects drilling to start in 2013 or 2014.

"The permits awarded to BP follow an extensive assessment and due diligence process that examined the technical and financial competence of BP to undertake the proposed work programme in accordance with the stringent requirements of Australian legislation," Resources and Energy Minister Martin Ferguson said in a statement.

"Additional conditions have also been attached to these permits, emphasising the need for oil field best practice behaviour by the operator," he added.

"This reinforces BP's undertaking, given as part of the assessment process, to fully integrate lessons learned from the Deepwater Horizon incident into its systems and processes."

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