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The Times: Siberian oil probe piles pressure on TNK-BP

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Servicemen of the TNK-BP Orenburg are on guard 24 hours a day patrolling the oil pipe-line

Carl Mortished, World Business Editor
March 22, 2008

A vast oilfield operated by a BP affiliate in Siberia will be investigated by Russia’s state environmental agency, adding further pressure to TNK-BP, which was raided this week by the Russian state security service.

The environmental inquiry into the Samotlor field will be led by Oleg Mitvol, head of RosPrirodNadzor, the environmental agency.

Although the investigation was described as routine Mr Mitvol led the inquiry into Shell’s gas development on Sakhalin Island in Eastern Siberia.

The agency’s relentless pursuit of the Shell venture for environmental infractions and its threat of huge fines ultimately led to Shell’s loss of control of the project and the transfer of a majority shareholding to Gazprom.

Mr Mitvol’s attacks on the Sakhalin project ceased abruptly after its transfer to the state-controlled gas company.

The inquiry follows a raid on BP and TNK-BP offices in Moscow this week by the Federal Security Service (FSB) and the earlier arrest of a TNK-BP employee and his brother, both accused by the FSB of seeking to obtain classified information from Russian oil companies for the benefit of foreign rivals.

The employee, Ilya Zaslavsky, and his brother Alexander, were both members of the British Council’s Alumni Club in Moscow. The raid on the BP affiliate and arrest of the two men was interpreted by some Moscow analysts as linked to Kremlin accusations that the British Council was operating as a front for espionage.

British diplomats were expelled and regional British Council offices in Russia closed in the diplomatic row that followed Britain’s request for the extradition of a former KGB agent accused of the murder in London of Alexander Litvinienko, a KGB dissident.

The Russian Foreign Ministry said yesterday that the arrests were not connected to the work of the Foreign Ministry. “It is not linked to the current condition of Russian-British relations.”

TNK-BP said yesterday that it had been expecting an investigation of Samotlor as RosPrirodNadzor conducts such investigations every two years and Samotlor had not been visited since 2005.

Discovered in 1965, Samotlor is one of the world’s largest oilfields and during its peak output in the 1980s produced a quarter of Russia’s oil. Its productivity then declined and TNK-BP has, since 2005, been able to increase output using modern drilling technology.

Moscow analysts have suggested that the pressure on TNK-BP may be connected with the desire among some Kremlin officials to replace BP’s Russian partners with a state entity, such as Gazprom or Rosneft.

BP owns half of the TNK-BP venture and the other half is shared by a consortium of oligarchs, comprising Mikhail Fridman, Viktor Vekselberg and Len Blavatnik. A lock-in agreement that prevented the Russian partners from selling expired at the end of last year.

The BP affiliate is a major oil and gas company in its own right. At the end of 2006 BP’s Russian venture produced 1.7 million barrels of oil per day and had reserves of 7.8 billion barrels, equivalent to a large multinational oil firm.

The raids on the TNK-BP offices unearthed evidence of industrial espionage, the FSB said, including “business cards of representatives of foreign defence departments and the Central Intelligence Agency”. BP declined to comment on the raids.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article3599387.ece

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