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Friday, April 11, 2008

TNK-BP Woes Might Be Inside Job

April 11, 2008 - The Moscow Times by Miriam Elder - The Russian billionaires who own half of TNK-BP are locked in a fierce struggle over the fate of the embattled oil firm, prompting the flurry of negative activity that hit the company last month, sources said Thursday. Mikhail Fridman, the head of Alfa Group and the country's fourth-richest man, is urging fellow shareholder Viktor Vekselberg, head of Renova, to sell their combined share in TNK-BP at a lower valuation, sources close to the company said. Fridman and Vekselberg, along with U.S.-based Russian businessman Len Blavatnik, own 50 percent of TNK-BP, with the rest held by British oil major BP. TNK-BP again denied on Thursday that the Russian shareholders were in talks to sell their stake to state-run Gazprom. TNK-BP's latest troubles began late last month, when officers from the Federal Security Service raided their Moscow head office and that of parent company BP. The FSB raid was followed by the announcement that a TNK-BP employee had been arrested, along with his brother, on charges of industrial espionage. Just one week later, TNK-BP was forced to suspend 148 employees assigned to the firm by BP, after the Federal Migration Service deemed their visas invalid. Analysts interpreted the events as the result of rival bids for the TNK-BP stake coming from national energy champions Gazprom and Rosneft. Yet the sources, who declined to be identified or quoted because of the sensitivity of the situation, said some of the aggressive tactics were the result of oligarch infighting, and not Kremlin pressure to sell. Konstantin Poltoranin, a spokesman for the Federal Migration Service, appeared to confirm that view. "We never had any problems with them, any complaints," Poltoranin said by telephone Thursday, commenting on the visa issues. "Go to the company if you have questions. They have their own problems within the company." Poltoranin said the visa issue was close to being resolved, with the Federal Migration Service last week approving the registration of a new BP subsidiary required to handle the employees assigned to TNK-BP. A BP spokesman confirmed that the subsidiary had been registered. "They will get their visas as soon as all the documents are handed in," Poltoranin said. A clause forbidding Vekselberg, Fridman and Blavatnik to sell their stakes in TNK-BP expired late last year, fuelling speculation that a state-run firm would soon buy into the country's fourth-largest oil company. The firm agreed to sell its flagship project, the Kovykta gas field in eastern Siberia, to Gazprom last summer for between $700 and $900 million. Both TNK-BP and Gazprom have said they expect the deal to be finalized by the end of the month. The shareholders issued a statement in February confirming their commitment to the venture, but Vekselberg had said one month earlier that he would consider selling his stake if the bidder met his $60 billion valuation. The firm's market capitalization currently stands at $31 billion. Vekselberg, the country's 11-richest man with a fortune of $11.2 billion according to Forbes, is deeply involved in the firm, employees say. He heads TNK-BP's gas-business development department, and maintains a regular office at the firm's offices on Arbat. Fridman, meanwhile, has thrown himself into expanding his group's telecoms business in recent years. Ilya Zaslavsky, the TNK-BP employee arrested in March on charges of industrial espionage, worked in the firm's gas-business development department. "We never comment on shareholder issues," said TNK-BP spokeswoman Marina Dracheva, referring all questions to the shareholders. Alfa Bank spokeswoman Maria Trubnikova declined to comment and, in turn, referred all questions to TNK-BP. A Renova spokesman did not respond to requests for comment. Further news on the Russian-British venture is expected next week, when Oleg Mitvol, deputy head of the Natural Resources Ministry's environmental watchdog, releases the results of an investigation into the firm's largest oil field, Samotlor. Mitvol said by telephone Thursday that the investigation was ongoing, with results expected early next week. Mitvol led a high-profile campaign against Shell at Sakhalin-2 for purported environmental violations. The pressure was lifted after Shell and its Japanese partners sold a majority stake to state-run Gazprom in late 2006. Yet, unlike the Sakhalin-2 onslaught, Mitvol said he was not personally carrying out the investigation in western Siberia.

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