Last week, I read and reread a Forbes article looking for all the facts of how BP (NYSE: BP) may effectively usher Russian energy behemoth Gazprom (OTC BB: OGZPY) into doing business in the U.S. I never found -- pardon me, Paul Harvey -- the rest of the story.
According to the magazine, Gazprom may be granted a stake in BP's liquefied natural gas (LNG) project in Trinidad and Tobago, which supplies LNG only to the United States. And as the story goes, "After the Kremlin allowed BP the option of acquiring a minority stake in the coveted Kovykta gas fields, the two companies announced a $3 billion global venture, though they did not provide specifics." The possible stake in BP's project, called Atlantic LNG, which supplies about 65% of the 16.56 billion cubic meters consumed in the U.S. annually, apparently could constitute the "specifics."
Gazprom controls some of the world's biggest gas fields and supplies natural gas to Europe as far west as France. But BP's help could allow it to gain a foothold in the United States, where heretofore it hasn't done business.
But as Forbes also gushes, "... BP's Kovykta deal is quite an achievement and one it will have to repay in kind. And what could be better than giving Gazprom access to the lucrative U.S. market"?
Huh? Is the all-important rest of the story not worth reporting here? The crucial item that's absent from Forbes' rendition is that until this summer, BP was part of a TNK-BP partnership, which had invested heavily in Kovykta, a massive 2.1 trillion-cubic-meter natural gas field in central Russia. However, following obviously trumped-up charges by Russian authorities that the partnership had fallen short of the stipulated annual production rate from the field, BP was forced to sell out to Gazprom.
And so BP's opportunity for a new minority stake in Kovykta hardly seems like an example of Russian largesse. In fact, Forbes notes that, "... the Russian Dumas is expected to pass a bill that will put a formal limit on what role western companies can have in energy projects."
That, however, would only formalize what's actually been occurring anyway. BP's forced surrender of its earlier position in Kovykta followed an eviction of Royal Dutch Shell (NYSE: RDSb) (NYSE: RDSa) as operator of Russia's Sakhalin-2 project last year. And last spring, ExxonMobil (NYSE: XOM) -- which has made a smashing success of Sakhalin-1 -- announced that it won't start new projects in Russia until the likely treatment of western companies there becomes clearer.
All this means that Russia is likely to use its newfound energy muscle to boost its status and power in the world community. For Foolish investors, it likely means that BP becomes slightly less compelling as an energy investment. A company willing to bed down with a bear, once it has already been mauled, could get ripped again.
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Fool contributor David Lee Smith doesn't own a share in any of the companies mentioned. The Motley Fool has a disclosure policy.
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