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Financial Times: Police search BPand TNK-BP Russian offices

By Catherine Belton and Isabel Gorst in Moscow
Published: March 20 2008 02:00 | Last updated: March 20 2008 02:00

Police yesterday searched BP’s Moscow office and those of TNK-BP, the UK oil company’s 50 per cent-owned Russian joint venture, in a move industry experts saw as a possible increase of state pressure on both companies.

TNK-BP, which is also 50 per cent owned by a group of Russian billionaires, has been the target of constant speculation that it could be the next takeover target of Gazprom, the state controlled gas group. TNK-BP’s Russian owners have denied they are seeking to sell.

Gazprom has been tightening its grip over the energy sector, winning control of Royal Dutch Shell’s Sakhalin-2 project in 2006 following state allegations the far east Russia oil and gas venture was in breach of environmental regulations.

TNK-BP last year agreed to sell its vast east Siberian Kovykta gas field to Gazprom following claims by the government it had violated licence terms.

But the deal has been delayed amid ongoing wrangling over the price of TNK-BP’s 62.9 per cent stake, and the terms of a broader deal in which TNK-BP could re-enter the project with a 25 per cent stake through assets swaps.

Russia’s Interior Ministry said police had seized documents in the morning raid on TNK-BP offices in relation to an ongoing criminal investigation into the Sidanco oil group, a predecessor company that now forms part of TNK-BP. TNK-BP declined to comment.

BP in Moscow said the police had arrived at the close of business yesterday but could not comment on the purpose of the raid.

Speaking before news of the searches broke, Alexander Medvedev, Gazprom’s deputy chief executive, said in an interview that he expected the Kovykta deal to be closed by the end of April. “With respect to Kovykta, there are still some details that should be finalised but the principal questions are solved,” he said yesterday.

“We anticipate that very soon we will finalise the deal; hopefully not later than the end of April.”

Mr Medvedev did not deny that Gazprom could seek a broader partnership with BP through a stake in TNK-BP. “We still did not hear from them whether they would like to sell.”

TNK-BP’s Russian billionaire owners issued a rare joint statement in February saying they had no plans to sell their stakes. Viktor Vekselberg, one of the owners of TNK-BP, said in January he would only his sell if his valuation of $60bn (£30bn) for the entire company was met. TNK-BP’s market capitalisation hit a low of $25bn this year.

Commenting on the price tag set by Mr Vekselberg, Mr Medvedev said: “The question of greediness should not be part of this discussion.”

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