Deals...Treaties...Jobs
Research for Online Investors

by John Dalt

5/17/11

Oil giant BP’s deal with the Russian oil company Rosneft fell apart overnight.  BP signed a contract to help Rosneft develop Arctic oil prospects in the Kara Sea.  Russia has more Arctic acreage than the U.S. and Canada combined.  The deal was announced in late January, and immediately challenged by BP’s Russian partners, TNK-BP.

TNK-BP is a partnership of Russian billionaires that have legal rights to participate in any BP operations in Russia.  BP planned to include TNK-BP in the drilling (risk part), but BP wanted to exchange shares with Rosneft to increase the company’s share of any discoveries.

The TNK-BP partners sued in Swedish courts and won in March. BP was not able to negotiate a settlement with the Russian billionaires. The New York Times reports that BP discussed buying out the Russian billionaires for up to $32 billion dollars, but could not raise that much money. BP CEO Robert Dudley was not willing to cede such a large block of shares to the Russians. You can read our article Partnership Perils from March 25th for more background on this deal gone bad.  Rosneft is now free to negotiate with other majors.  Statoil, Chevron, Exxon, Royal Dutch Shell and Total are mentioned as possible candidates.

President Obama helped stop a trade deal with Columbia and S. Korea when he was a Senator.  He negotiated a new trade deal with Korea when he toured through the area in November 2010.  We covered the contentious issues the President addressed on that trip in Empty Handed Obama.  You may recall, Obama wanted S. Korea to LOWER their mileage and emission standards so U.S. built cars could be compete in the country.  This was in deference to the UAW. We thought it was ironic that the administration’s EPA was seeking to limit greenhouse gases in the U.S. but wanted the S. Korean government to relax their standards.

CNN reports that the White House is withholding trade deals with Columbia, S. Korea and Panama unless Congress extends funding for the Trade Adjustment Assistance program.  This program provides job training for ‘displaced’ workers due to jobs moving overseas.

Stimulus money ran out for the program in February.  The trade deals could boost exports by over $10 billion and create 250,000 new jobs in the U.S. according to Sen. Orrin Hatch.  The U.S. has reached the debt ceiling, our trade deficit hit $48.2 billion last month and unemployment is once again at 9%.

Why would the White House demand more deficit spending of money we don’t have and hold these free trade pacts from consideration when the President says he is focused on jobs “like a laser beam?”

The mailbag:
Your humor cracks me up. I almost fell out of my chair (my assistant looked in my office to make sure I was OK) when I read your analogy of Strauss-Kahn’s intentions. Keep up the good work, much appreciated!!---subscriber J.M.

John’s reply: I try to be careful.  Some readers may enjoy an allusion, but not direct language.

Great summary of one man’s fall from grace.----subscriber J.R.

John’s reply: The old stopped watch syndrome at work again!

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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