BP and oligarchs face off as $4.9 bln claim looms

LONDON, Sept 28 Wed Sep 28, 2011 5:35am EDT

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LONDON, Sept 28 (Reuters) - BP and its billionaire partners in TNK-BP face off in arbitration on Wednesday, as the UK oil giant refutes claims it broke a shareholder agreement and should pay $4.9 billion in damages.

BP prompted the spat with AAR, the consortium of Russian and Russia-connected oligarchs who own half of TNK-BP, by agreeing a share swap and Arctic exploration deal with state-controlled Rosneft.

AAR secured a court injunction that scuppered the tie-up.

Now AAR is asking a Stockholm-based tribunal to rule on whether the planned Rosneft deal represented a breach of the TNK-BP shareholder pact, under which BP agreed to use TNK-BP as its main investment vehicle in Russia.

AAR believes the failure to execute the Rosneft tie-up through TNK-BP cost it billions.

Minority shareholders in TNK-BP, with whom AAR denies any relationship, have filed a lawsuit in a Russian court seeking 154.3 billion roubles ($4.9 billion) in damages.

Sources close to the matter said the hearings on Wednesday were aimed at deciding whether BP had broken the agreement, and that any damage awards would be decided later.

A BP spokesman on Wednesday repeated earlier denials that AAR or minority shareholders in TNK-BP had suffered as a result of BP's decision to try and do the deal with Rosneft.

BP has argued that Rosneft would not have chosen TNK-BP as a partner since it lacked offshore drilling expertise.

AAR was not available for comment. BP declined comment on the arbitration hearing. The hearings are usually held by phone or in London legal chambers.

($1 = 31.699 Russian Roubles) (Reporting by Tom Bergin; Editing by David Hulmes)

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