U.S. Congressman Edward Markey – of (failed) Waxman-Markey Climate Bill fame – hailed it a threat to “national security”. But if last month’s historic tie-up between BP and Russia’s Rosneft revealed that national as well as business interests were at the heart of what amounts to a coup for BP; and America only has itself to blame if Exxon-Mobil et al have been left out in the Arctic cold.

While Rosneft and BP were busy making a quantum leap forward to finally begin exploiting the world’s latest hydrocarbon frontier, President Obama was selling cloud-cuckoo-land ‘clean energy’ policies in his State of the Union address.

The Deal

At time of writing, the landmark $16 billion share swap deal between Rosneft and BP – the first between a national and an international oil company – is under scrutiny in Russia. The Alfa-Access-Renova consortium, which holds shares in TNK-BP, claims the deal breaches their agreement which only allows BP to pursue new energy opportunities through its TNK-BP venture. Something tells me, however, that the deal is unlikely to be derailed – because it has the personal blessing of Vladimir Putin and that’s how things work in Russia. And the more astute CEO of BP, (American by the way) Bob Dudley, not only knew it but, unlike Tony Hayward, possessed the personal negotiation skills to secure a deal-clinching promise of tax breaks for BP from Putin – an old friend – within the walls of the Kremlin.

Even if the deal were to breakdown, what it shows is how Putin is able to run geopolitical rings around President Obama’s White House, having a greater grasp of how critical a serious hydrocarbon energy policy is when it comes to impacting them.

Gal Luft, director of the Institute of Global Analysis, says “it is not the deal itself, but its purpose” that’s key. Luft says, “The U.S. does not have a fully crafted policy in the Arctic. Russia seems to be moving ahead of everyone.” He adds, “The real story here is that the U.S. is asleep at the wheel when it comes to furthering its interests in a place that could hold 25 percent of the world’s oil and gas reserves.” But Luft really hits the hammer to the anvil when he notes, “The U.S. does not see energy as its main tool of national power. Russia does, which is why they are so much more aggressive.”

John Hofmeister, the former CEO of Shell Oil, concurs. “This tells the world how important the Arctic is to the future of natural resource production, and while the U.S. dilly-dallies and resists efforts by U.S. companies to push forward into the Arctic,” says Hofmeister, “others are moving on, leaving the U.S. behind.”

Back in London city analysts were also impressed. “It’s a very clever thing to do the cross-shareholding”, one top 15 shareholding fund manager explained. “It will make the Russians think twice before misbehaving,” given that, “access to the Arctic opportunities are unparalleled.” Other city analysts noted how surprised they were that other market observers had failed to seize on the “potential” offered by BP’s low share price in the wake of the Gulf debacle. The directors at Rosneft were not so slow, however.

A tale of two cities (Moscow and Washington)

So now we know. The first strike into the Arctic’s energy riches is likely to come from Sakhalin not Alaska. Meanwhile, President Obama was busy telling America a bed-time story about how a roofing company had “reinvented” itself and now sells solar shingles. What he didn’t mention, however, is that where the roofing company had previously made its own way in business, the move to solar shingle almost certainly came about when the President’s massive taxpayer investment scheme for renewable energy made it too good an opportunity to miss. Obama also spoke about a university that was developing a way to “turn sunlight and water into fuel for our cars” and predicted having 1 million electric vehicles on the road in just four years. Also, that 80 percent of America’s electricity would come from clean energy – by which he means non-fossil fuels – by 2035.

In short, Obama’s focus is the lottery of future clean energy developments. Russian and British national companies remain focused on the fuels that will continue to drive the U.S. economy well into the 21st century, no matter what the White House spends public money on.

Prior to the world’s first Arctic Forum Energy Conference held in Moscow last year at which I heard him speak extremely realistically about the global energy realities, Putin had already delivered his verdict on Western political claims for a green energy agenda. “Claptrap” was Putin’s wonderfully succinct (and accurate) assessment; a trait from which the prolix Obama could learn.

A combination of the experience gained from the clean-up and the out of control anti-BP hysteria has effectively sent BP, with its vast deepwater experience, into the arms of the Russians – and what looks to be a, prospectively, highly lucrative future Arctic partnership.

Oh sure, BP has had its fingers burnt in Russia before, when the Kremlin-backed Russian national energy giants successfully muscled out TNK/BP back in 2004. TNK-BP’s then head, one Bob Dudley, was effectively run out of Russia in 2007. Forced to sell off BP’s massive Kovykta field, Dudley did however possess the hard-headed nous to remain on good terms with the key players, especially Putin himself. At the hastily arranged press conference announcing the deal in London, it was plain that both parties had learned from past experience, as the unexpected and spontaneous, almost joyful, outburst of applause at the end made abundantly clear.

Across the Atlantic, the Obama White House continues to play to the ‘green’ gallery, further hyping alternative energy expectations, BP-bashing and confused as to whether deepwater and shale gas drilling moratoriums are the way to go. Meanwhile, the Rosneft-BP deal has officially kick-started the process to exploit the 25 percent of the world’s oil and gas riches that remain untapped; leaving America’s Arctic policy drifting aimlessly.

Whatever we may think of Vladimir Putin, we might think twice before betting against him in the energy geopolitical stakes. Barack Obama, on the other hand, as his State of the Union made patently clear, is no energy strategist. If it came to a strategic head-to-head I know who I’d put my money on.