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The Times: BP suspends 148 workers over visa dispute with Russia

March 26, 2008
Robin Pagnamenta and Tony Halpin in Moscow

BP’s problems in Russia escalated yesterday after the oil giant was forced to suspend 148 employees seconded to TNK-BP, its Moscow-based joint venture, after a dispute over visas.

Fears that BP had become the latest victim of an ongoing power struggle between the Kremlin and Western energy groups were compounded when the Russian Interior Ministry said that it had launched a criminal investigation into allegations of “large-scale tax evasion” at a former unit of TNK-BP.

BP said that the visa row affected specialist technical staff, such as oilfield engineers and reservoir managers, from countries including Britain, the United States, China and Germany. A spokesman in London said that most of the employees had chosen to remain in the country until the dispute had been resolved, although they were not permitted to work.

The suspension comes after difficulties experienced by BP in renewing visas after a recent legal change and the raid last week on TNK-BP’s Moscow headquarters, which led to a junior employee being charged with industrial espionage.

BP and Russian law enforcement agencies insisted that there was no connection between the visa dispute and the raid or the claims of tax evasion, but the timing has fuelled concerns that a political motive may be behind the dispute.

BP owns half of TNK-BP, Russia’s third-biggest oil company. The remainder belongs to a consortium of oligarchs – Mikhail Fridman, Viktor Vekselberg and Len Blavatnik. A lock-in agreement that prevented the Russians from selling expired at the end of last year and there has been speculation that Gazprom, the Kremlin-controlled gas monopoly, wants to acquire an interest in TNK-BP.

TNK-BP said that the suspension was a temporary measure taken due to “a lack of clarity over their current visa status”. Russian officials said that the problems “have existed for some time and are due to violations of Russian migration law. Some employees entered Russia with business visas, although working visas were required for permanent residence and work in the country. Also, attempts were made to obtain visas on the basis of the quotas of other, “ ‘dummy’ firms, which is against the law.” About 40 more senior TNK-BP employees, including Bob Dudley, the chief executive officer, and Tim Summers, the chief operating officer, who used to work directly for BP were not affected.

The Interior Ministry said it was investigating allegations that more than one billion roubles (£231 million) of tax was evaded by Sidanco, the former TNK-BP oil unit that was liquidated in 2005 after its assets were merged into the parent group. BP declined comment on the investigation.

The Russian environmental agency added to the pressures on BP last week when it began an inquiry into TNK-BP’s Samotlor oilfield. The investigation is being led by Oleg Mitvol, the rumbustious head of the RosPrirodNadzor state agency. Mr Mitvol also headed the inquiry into Shell’s gas development on Sakhalin Island in eastern Siberia, which carried a threat of large fines and ultimately led to Shell’s loss of control of the project and the transfer of a majority stake to Gazprom.

Other UK energy companies that have faced difficulty trying to do business in Russia include Sibir Energy, the oil firm which claimed to have been cheated out of its Russian assets, leading to a claim for damages against Roman Abramovich, who sold his majority stake in Russian energy giant Sibneft to Gazprom for $13 billion (£6.5 billion).

Relations between Britain and Russia have sunk to their lowest point in years, despite claims by president-elect Dmitri Medvedev, the chairman of Gazprom, that there was no political motivation to the disputes concerning TNK-BP.

The joint venture employs 66,000 people and is a major oil and gas company in its own right. At the end of 2006 it was producing 1.7 million barrels of oil per day and had reserves of 7.8 billion barrels, which is equivalent to a large multinational oil firm.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article3621968.ece
 

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