Armed forces raid BP’s Moscow offices

BP defended itself against a raid by bailiffs and armed special forces troopers on its Moscow office on Wednesday, describing it as “part of a pressure campaign against BP’s business in Russia”.

Speaking in Moscow, Jeremy Huck, President of BP Russia, added that the company believed the actions were “without merit”. The raid, ordered Tuesday by a court in west Siberia, compounded the UK oil major’s woes in Russia a day after ExxonMobil stole a march on it by signing a historic Arctic exploration deal with Russian oil major Rosneft.

BP faces a lawsuit by minority shareholders in TNK-BP, its existing Russian joint venture, who are suing for Rs87bn ($3bn) over the collapse of a similar proposed tie-up between BP and Rosneft which fell apart this year.

Andrei Prokhorov, a Russian businessman who filed the suit in July, alleged that two BP executives who sit on the board of TNK-BP must have known about the UK group’s negotiations with Rosneft, and their failure to inform TNK-BP caused damage to the company. The lawsuit was upheld by a court in Siberia’s Tyumen region in July.

Vladimir Buyanov, BP’s first secretary in Russia, said the court’s decision “had no legal basis” and that BP would vigorously contest.

On Wednesday morning, at least 15 men appeared at the offices of BP Exploration Operating Company. They were bailiffs accompanied, according to Mr Buyanov, by special forces soldiers with machine guns, police, and representatives of Mr Prokhorov. BP EOC is a subsidiary which “has no connection with the process in Tyumen and is not engaged in any shareholder dispute” according to BP.

Guzel Galieva of law firm Liniya Prava, which represents five minority shareholders in the lawsuit against BP, said that the search order was issued after BP ignored an earlier order by the same court to turn over documents relating to the BP-Rosneft negotiations in July. Ms Galieva insisted the timing of the court order, coming the same day as the Rosneft deal was announced, was a coincidence.

Mr Prokhorov owns a tiny stake in TNK-BP and is widely believed to be representing the interests of AAR, the Russian shareholders in TNK-BP. However, Ms Galieva said the lawsuit was in no way related to AAR. AAR also denied any relationship with the lawsuit. An AAR representative said: “We regret that this raid happened as it was disruptive and unnecessary for a company of BP’s stature.”

For many experts the raid was a reminder of the perils of doing business in Russia, even in the afterglow of the ExxonMobil deal, which was praised as a vote of confidence in Russia’s shaky business environment.

“The ExxonMobil deal was a big step forward” said Cliff Kupchan, a Russia specialist at Eurasian Group consultancy in Washington. But the BP raid, he said “reminds us of the continuing, often capricious, non rule of law based business environment that frequently impairs business in Russia.”

News of the raid had little impact on BP’s shares which closed up 0.2 per cent to 398.39p in London.

The Russian stock market on Wednesday also largely shrugged off the news and rose, with the Micex index closing up 2.4 per cent.

“It’s a sign that people are getting used to these sorts of events and take the view that its an isolated instance, and is not supported from a higher political level, that were not going back to the events of 2008,” said Chris Weafer, chief strategist at Troika Dialog, the Russian investment bank. He was referring to the protracted struggle between BP and the Russian shareholders in TNK-BP which ultimately saw Bob Dudley, TNK BPs chairman who now heads BP, flee the country citing official harassment.

Separately, BP said it had another incident at its Valhall platform in the Norwegian part of the North Sea on August 19 following a mid-July fire that prompted the site to be shut down.

ft.com