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By Cyrus Sanati

BP/Russia:  BP may not be able to escape the Russian political curse. Although the oil major gave up control of the big Kovykta natural gas field to state-owned Gazprom last year, it has so far navigated the treacherous waters of Russian politics better than rivals Shell and Exxon. That could be changing.

Last week, the headquarters of BP’s 50-50 joint venture, TNK-BP, was raided by Russia’s secret service. Then one of its employees was arrested, charged with industrial espionage. Now the country’s chief environmental cop, Oleg Mitvol, appears to be turning up the heat on BP – just as he did to Shell before the state moved in and grabbed control of its major fields in Sakhalin.

These signs are ominous, but – as so often in Russia – still ambiguous. The election of a new president may be creating internal tensions within the government. BP could be a temporary victim. Or the target may not be at BP, but the three Russian oligarchs who own its partner TNK.

Even if the goal is the assets rather than the oligarchs, it’s not clear exactly what the Russian state has in mind. The main target may not be the oil fields, but simply to force a final and more government-friendly settlement for Kovykta. Even if the idea is to get BP out eventually, the government might hesitate at the prospect of an acquisition valued, admittedly by shareholder Viktor Vekselberg, at $60bn.

Still, BP could do without this renewed harassment. Its home fields in the North Sea are drying up. Like all the non-state oil companies, it won’t be able to replace its reserves without friends in oil-rich countries. It has placed a big bet on its oligarch pals in Russia. Nearly a quarter of BP’s current oil production comes from there, accounting for 8% of 2007 profits. A big setback in Russia would be a major blow to the company’s prospects.

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Last week, plain-clothed agents of Russia’s secret service, the FSB, raided the headquarters of TNK-BP. The company is a 50-50 joint venture between BP and three Russian Oligarchs – Viktor Vekselberg, Len Blavatnik, and Mikhail Fridman.

Two brothers with joint US and Russian citizenship were subsequently arrested. One was an employee of TNK-BP and the other was an employee of the British Council. They were both charged with industrial espionage and were released on bail.

Later, the natural resource ministry of Russia, Rosprirodnadzor, led by Deputy Minister Oleg Mitvo, announced that it would begin an investigation into possible environmental violations at TNK-BP’s largest oil field, Samotlor. and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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