Russian bailiffs disrupted operations at BP Plc’s Moscow office, occupying the premises for a second day, adding to the U.K. oil producer’s woes in the country.
The bailiffs, accompanied by armed men, are searching documents containing key words as broad as “oil and gas” and preventing employees from using their desks, Vladimir Buyanov, a spokesman at BP in Moscow, said by phone today.
The raid began a day after state-run OAO Rosneft replaced BP in the arctic exploration project with Exxon Mobil Corp. (XOM) It’s linked to a $3 billion suit from minority shareholders in TNK-BP Holding (TNBP), the traded unit of BP’s eight-year-old venture with a group of Russian billionaires, who say the collapse of the BP- Rosneft alliance deprived the unit of potential profit.
The trouble echoes those BP faced when CEO Robert Dudley ran TNK-BP before a 2008 shareholder dispute. Dudley fled Russia at the end of that year, citing “sustained harassment” amid court battles and labor and tax inspections. BP and the billionaires’ settlement included Dudley’s ouster. BP relies on the venture for a quarter of its production and a fifth of its reserves.
“There has been a breach of trust between these two sides of the company,” Lilit Gevorgyan, a London-based analyst at IHS Global Insight, said by phone today. “It’s basically a crisis of the joint venture.”
Security and company lawyers have remained in the office, while most employees, including management, are staying away, Buyanov said. BP Exploration Operating Co., the raided entity, said yesterday the move was part of a “pressure campaign.”
BP’s deal for the Kara Sea project and a planned swap of $7.8 billion stakes with Rosneft collapsed in May after a challenge by the TNK-BP billionaires. BP offered $32 billion in cash and shares for their half of the venture, which was rejected, in a bid to salvage the Rosneft deal, people with knowledge of the talks said at the time.
BP and the billionaires, represented by the AAR group, pledged today to focus on developing TNK-BP, Russia’s third- biggest oil producer.
“Our company is one big family, and occasional frictions are unavoidable in any family,” TNK-BP Chief Executive Officer and billionaire shareholder Mikhail Fridman and BP’s Russia & Kazakhstan head David Peattie, said in an address on the venture’s eighth anniversary today. “We, the shareholders of TNK-BP, put our whole efforts and hearts into founding this company. We have a keen interest in its successful growth, development and bright future.”
BP expects the search to continue through the end of this week, according to Buyanov.
A Tyumen region arbitration court in Siberia on Aug. 30 gave the authorities the right to examine BP Exploration Operating’s documents, said Liniya Prava, lawyers representing the minority shareholders.
The company plans to challenge the court ruling, Buyanov said. BP spokesman David Nicholas said yesterday the exploration and operating company had no connection with the Tyumen legal process.
The bailiffs inspected documents in hard copies and on personal computers as they looked for information on the Rosneft-BP partnership, Liniya Prava partner Dmitri Chepurenko said in a statement. The documents will help assess damages and “significantly increase” the claims being sought, he said.
BP’s directors on the board voted down a proposal to allow TNK-BP, Russia’s third-biggest oil producer, to replace BP in the deal, the venture said March 12. Rosneft had said it didn’t want TNK-BP as a partner.
The Russian billionaires are “bitter” at losing the opportunity for the Arctic deal and are staging a “show of force,” said Gevorgyan.
If they were able to, the Russian shareholders of TNK-BP would like to force BP to reduce its share below 50 percent, according to the analyst.
“However, the chances of it happening are low and it appears they are aiming for less at the moment,” she said. “They also know that BP is experienced and familiar with Russia’s business culture, so will look at it as just another difficult phase and will stand its ground.”