Are the Russians Coming?

by Todd Shriber

Remember that Sarah Palin quote during the 2008 presidential campaign about Alaska’s proximity to Russia lending validity to her foreign policy prowess? Well, she was right about one thing: Alaska and Russia aren’t all that far away from each other. Fast-forward to 2010 and the Russians may be planning an Alaska invasion. Don’t worry, we’re not in for a sequel to “Red Dawn.” This potential invasion will come on the merger-and-acquisition front.

It seems as though BP (BP) is still, in stealth fashion, shopping its Alaska oil and gas assets. These include the company’s 26% stake in Prudhoe Bay, one of the crown jewels of its North American business. Russia’s TNK-BP may be a prime suitor for those assets, reported the Anchorage Daily News.

Earlier this year, BP was close to selling part of its stake in Prudhoe Bay to Apache (APA), and while Apache acquired other assets from the British oil giant, the Alaska talks hit snags, Bloomberg reported. As recently as September, a Benzinga article said Apache along with Occidental Petroleum (OXY) were rumored to still be interested in BP’s Prudhoe Bay stake.

There are several reasons why BP’s next move regarding its Alaska assets is interesting. First, including the sale of its stake in Argentina’s Pan American Energy over the weekend to Cnooc (CEO) in China for almost $7.1 billion, BP has now sold $21 billion assets, still short of the $30 billion goal, according to Bloomberg. These assets are being sold to pay for costs tied to the Gulf of Mexico spill, but those costs may be as high as $40 billion, Bloomberg reported.

That brings up the next point: How many good assets can BP sell to pay for the Gulf spill and hope to regain positive sentiment among investors? That’s a quagmire that cannot be overlooked. Finally, how keen would Uncle Sam be on letting U.S. energy assets fall into the hands of a group of Russian oligarchs, which TNK-BP is?

It might be fair to assume that if BP is so desperate for cash that selling its Alaska assets remains a viable option. The prudent move would be to dial up the guys at Apache or Occidental and get this stuff sold already.

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