New blow for BP in Russia as office raided

MOSCOW Wed Aug 31, 2011 2:01pm EDT

1 of 3. BP Russia President Jeremy Huck (R) speaks to the media as he leaves an office building housing a trading unit of British oil company BP in Moscow August 31, 2011.

Credit: Reuters/Mikhail Voskresensky

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MOSCOW (Reuters) - Black-clad special forces raided BP's Moscow offices on Wednesday, deepening the British company's problems in Russia after its attempts to salvage an oil exploration agreement in the Russian Arctic collapsed.

The raid, a day after ExxonMobil signed a deal giving it access to fields BP had hoped to develop, was ordered to let bailiffs search for documents in a legal battle over BP's failed bid to partner Russia in the Arctic, a spokeswoman said.

But BP, which has a long history of problems in Russia, denounced the raid and said it feared the search could continue for the rest of this week.

"It is our opinion that the court order under which ... court bailiffs are now in our office has no legal grounds. The office's work has been paralyzed," BP Russia President Jeremy Huck was quoted as saying by Interfax news agency.

"We see these actions as pressure on BP's operations in Russia," he said.

Most of BP's employees in Moscow were sent home or told not to come to work because of the raid, and the offices were sealed off.

The raid highlighted BP's problems in Russia since it fell out with authorities this year over its failed Arctic exploration alliance with state-owned oil firm Rosneft.

A group of rich minority shareholders in TNK-BP, BP's Russian joint venture, have sued BP over the failed alliance with Rosneft.

They objected to the pact, saying BP was obliged to pursue all its Russian ventures through TNK-BP and that they suffered big losses when the venture collapsed shortly after it was announced in January.

The minority shareholders also prevented a parallel $16 billion share-swap deal between BP and Rosneft going ahead.

ARCTIC DREAMS SHATTERED

Tuesday's deal between Exxon and Rosneft, signed in the presence of Russian Prime Minister Vladimir Putin, gives BP's U.S. rival access to potentially substantial reserves in Russia, the world's top oil producer.

The deal was a big blow for BP, finally ending its chances of salvaging its own agreement with Rosneft.

Yevgeny Minchenko, director of Russia's International Institute for Political Expertise, said BP was now vulnerable to police raids -- which can happen frequently in Russia -- and short of allies.

"I don't think that it was the Kremlin or the government that sent the order to the bailiffs (to carry out the raid). It's just that the people who carry out the decision understand that the authorities won't stand up for BP," he said.

But political analyst Nikolai Petrov of the Moscow Carnegie Center said the raid did not mean BP would now face frequent harassment from the police or legal authorities.

"Although there is a coincidence in timings between what is happening with BP and the announcement of the Rosneft-Exxon deal, I wouldn't say the search is a sign that BP will be pressured by the law-enforcement bodies," he said.

It is not the first time BP has been subjected to such treatment in Russia.

Security forces searched BP's headquarters in Moscow in 2008 during a corporate stand-off at TNK-BP that resulted in TNK-BP boss Bob Dudley, who is now CEO of BP, being forced out of Russia.

(Additional reporting by Dmitry Zhdannikov, Maria Tsvetkova and Gleb Gorodyankin; Writing by Timothy Heritage; Editing by Greg Mahlich and Will Waterman)

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Comments (4)
Poalima wrote:
Invest in Russia = Insane.

Aug 31, 2011 9:11am EDT  --  Report as abuse
neahkahnie wrote:
What makes anyone think they can do business with Russia? Folly.

Aug 31, 2011 12:11pm EDT  --  Report as abuse
MarketForce wrote:
Well, it’s a global marketplace. If BP does not like Russian regulators, then they can always pull out of Russia and walk away from Russian oil and gas exploration altogether. But these are some of the richest hydrocarbon reserves in the world. My bet is that BP will take their spanking from Putin and ultimately request in writing: “Thank you sir, may I have another.”

Aug 31, 2011 12:45pm EDT  --  Report as abuse
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