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THE NEW YORK TIMES: BP Faces Environment Inquiry in Russia

Published: March 22, 2008
MOSCOW — BP’s problems in Russia continued Friday.

A Russian environmental agency announced that it would inspect a large oil field in Siberia, the Samotlor, which is controlled by BP’s joint venture, TNK-BP. The announcement came a day after Russian security authorities arrested an TNK-BP employee for industrial espionage.

Notice of the inspection appeared Friday morning on the Web site of the ministry of natural resources, the Rosprirodnadzor.

Already this week, Russian security forces raided the Arbat Street headquarters of TNK-BP, as well as the offices of BP, carting away documents and computer hard drives in what oil analysts say appears to be a campaign of mounting pressure on BP.

On Thursday, the F.S.B., the main successor agency to the Soviet-era K.G.B., announced the arrest of an employee who had duel Russian and American citizenship, and the man’s brother, on charges of spying for Western oil companies.

TNK-BP denied that the company had engaged in industrial espionage.

The joint venture is the third-largest oil company in Russia and is BP’s main business here. Its fate is crucial to BP because it accounts for about a quarter of the company’s total worldwide oil production.

BP is partner in the venture with a trio of Russian billionaires.

On Friday, the Russian foreign ministry issued a statement saying the spy charges were not related to a diplomatic dispute between Russia and Britain that has been simmering since the radiation poisoning of a F.S.B. defector in London in 2006. The ministry characterized the arrests as purely a law enforcement matter.

In another bad sign for BP in Russia, the Parliament on Friday passed in a preliminary reading a bill restricting foreign investment in assets deemed strategic for the country’s economy or national security; most large oil fields fall into this category.

A spokeswoman for the ministry of natural resources characterized the inspection announced on Friday as routine, and noted that it will cover other fields and other companies as well.

Still, the same Russian environmental agency in 2006 threatened Royal Dutch Shell with multi-billion dollar fines in a months-long campaign that led to Shell selling a controlling stake of its Sakhalin Island oil and gas development to Gazprom.

After Gazprom bought the share, the agency dropped its environmental complaints and work continue.

The same inspector in the Shell situation, Oleg L. Mitvol, the agency’s deputy director, was appointed to lead the investigation at TNK-BP’s Samotlor field, according to the statement.

As with other Soviet legacy oil developments, the Samotlor field has been plagued by environmental troubles.

Part of the rationale for forming TNK-BP, in 2003, was the environmental protection technology that BP promised to bring to the Samotlor field, which is among the worst environmental disasters in Siberia’s oil region.

Oil leaks from hundreds of holes in corroded pipes. It has pooled in large slicks in the groundwater. And the field straddles the Ob River flood plain.

TNK-BP has been in a dispute with Gazprom over the terms of sale of another large Siberian petroleum resource, a natural gas field within pipeline range of the Chinese border in Irkutsk region.

BP was seen as prescient for having invested in the remote field in the early 1990s in anticipation of a boom in Chinese energy demand that materialized a decade later.

In spite of the pressure on foreign investors, Russia’s booming economy is luring companies here. Just this week, PepsiCo and the soda maker’s main bottler paid $1.4 billion for Russia’s biggest juice company, Lebedyansky, in Pepsi’s biggest acquisition since the purchase of Quaker Oats in 2001. and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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