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Gloves come off in BP’s Russian row

telegraph.co.uk

Gloves come off in BP’s Russian row 

By Russell Hotten, Industry Editor

Last Updated: 1:28am BST 17/06/2008

A dispute between BP and its Russian partners over the future of their TNK-BP joint venture has escalated into open warfare, with the UK oil giant threatened with a legal showdown and the company’s chairman, Peter Sutherland, accused of using Nazi propaganda tactics.

  Mikhail Fridman, head of British-Russian oil venture TNK-BP
Mikhail Fridman, head of the British-Russian oil venture TNK-BP

In an extraordinary series of attacks on BP yesterday, Mikhail Fridman, billionaire chairman of TNK-BP, said he would ask the courts to remove the venture’s chief executive, Bob Dudley, and halt an “illegal” shareholder meeting next week.

Meanwhile, Mr Fridman’s co-investor, Viktor Vekselberg, likened the situation inside TNK-BP to a “madhouse”.

TNK-BP, which is Russia’s third largest oil producer and accounts for 25pc of BP’s output, has been in a state of unrest for weeks as both sides fight for control of the 50-50 joint venture.

A police raid on BP’s Moscow office, problems with visa applications and threats to revoke oilfield operating licences have all been interpreted as part of the ongoing row.

Last week, Mr Sutherland raised the temperature when he accused the Russian shareholders of a return to 1990s-style “corporate raiding”, and said that the dispute was an “early test” of the government of newly-installed President Dimitry Medvedev.

Mr Fridman hit back yesterday, first in an interview with Russian daily Vedomosti.

He said Mr Sutherland’s remarks were “Goebbels propaganda”, adding that the Russian shareholders had “moral support” from the Kremlin.

“The attempt to portray this conflict as a dispute between a respectable Western company and some Russian oligarchs who are trying to take control using dirty methods is completely cynical,” Mr Fridman said.

Later, at a press conference in Moscow, Mr Fridman said he would go to court to seek the removal of Mr Dudley, whom he blames for acting in the interests of BP rather than the joint venture. BP has refused to sanction Mr Dudley’s removal.

“We will file appeals in the appropriate jurisdictions. We’re sure we will win,” Mr Fridman said.

He accused BP of limiting TNK-BP’s expansion abroad to avoid competition. “The main question is what foreign investors Russia needs. We don’t need foreign investors who limit the work of the company,” Mr Fridman said.

He suggested that the Russian investors, who go under the name Alfa-Access-Renova (AAR), could swap their stake for a direct investment in BP. “This conflict would not exist if

AAR shares in TNK-BP became BP shares,” he said. Analysts said 50pc of TNK-BP could be worth about 7.6pc of BP.

BP has told AAR that it would consider buying its 50pc stake, but only if the move gets Kremlin agreement and the shareholding can be sold on to another buyer for the same price.

Russian energy giants Gazprom and Rosneft have been reported as wanting to buy a stake in TNK-BP. But Mr Fridman said that he, Mr Vekselberg, and the remaining AAR partner, Leonid Blavatnik had no intention of selling.

In an interview with the Kommersant daily newspaper yesterday, Mr Vekselberg said: “There is a conflict going on. There are basically military actions going on here. What’s happening is a madhouse.”

Yesterday, BP defended the operational performance of TNK-BP, saying that it had paid $70bn (£35.7bn) in taxes and excise duties to the Russian treasury since 2003.

BP said that the joint venture was actively considering investments abroad.

More on oil

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/17/cnbp117.xml

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