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THE WALL STREET JOURNAL: BP Recalls Employees From Russia

Alleged Visa Problems
Follow Police Raid
On Joint Venture

Associated Press
March 25, 2008 2:24 p.m.

MOSCOW — BP PLC is pulling 148 employees out of Russia because of alleged visa problems, a company official said Tuesday, following a police raid on a Russian joint venture and the arrest of an employee on industrial espionage charges.

Industry experts say the joint venture, TNK-BP, is the latest foreign energy company to be squeezed by the Kremlin as part of a campaign to bring major oil and gas assets back under government control.

The confrontation will likely further strains between London and Moscow. The two nations have clashed repeatedly over issues ranging from extradition demands, from both sides, to the forced closure in Russia of offices belonging to a British a cultural organization.

TNK-BP spokeswoman Marina Dracheva told the AP that the employees were being recalled temporarily due to “a lack of clarity over their current visa status.” She said those being recalled were mainly engineering and technical staff; 40 top managers who are ex-BP senior managers were unaffected by the recall.

A British Embassy spokesman refused to comment.

Russian regulators threatened to withdraw TNK-BP’s license last year, saying that the company had failed to meet production targets at the giant Kovykta gas field in Siberia. The company ultimately sold its stake to state-controlled gas monopoly OAO Gazprom. Russian President-elect Dmitry Medvedev is the chairman of Gazprom.

Last week, police searched TNK-BP offices as well as those of BP; investigators gave conflicting explanations as to the purpose of the search. And on Thursday, Russia’s top security agency announced that two brothers with dual Russian-U.S. citizenship had been arrested on charges of industrial espionage; one of them was identified as a low-level employee of TNK-BP.

The Kremlin has increased pressure on foreign energy companies in recent years as it consolidates control over the country’s largest and most important hydrocarbon deposits. Royal Dutch Shell PLC was forced to cede part of its stake in a massive project on the Pacific island of Sakhalin to Gazprom.

Domestic companies have not been immune.

The oil company OAO Yukos, once Russia’s biggest producer, was dismantled following tax and regulatory investigations and most of it has been sold off to state-controlled oil concern OAO Rosneft. Yukos’s former chief, Vasily Aleksanian, is in prison and in failing health.

In recent months Britain and Russia have clashed over British demands for the extradition of a chief suspect in the fatal poisoning in London of Alexander Litvinenko, an ex-KGB agent who became a vocal Kremlin critic. Russia has demanded from Britain the extradition of billionaire Kremlin critic Boris Berezovsky, a Chechen separatist leader, and others who have sought asylum in Britain.

Russia earlier this year forced the British Council, a cultural organization, to close all its offices except its Moscow location.

Foreign investors have hoped that Mr. Medvedev’s March election as president will lead to an easing of government pressure on foreign businesses, opposition groups and the media.

In an interview published Tuesday in the Financial Times, Mr. Medvedev said he planned to bolster the independence of the courts. He said Russia could not develop economically unless judges can interpret the law without interference. He also expressed interest in improving relations with Britain, but at the same time repeated previous accusations that the British Council has been involved in spying.

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