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UPDATE 5-Russia summons TNK-BP CEO for questioning

Thu Jun 5, 2008 3:25pm EDT

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(Adds news of Hayward meetings with Gazprom, top officials)

Stocks  |  Mergers & Acquisitions  |  Russia

By Tanya Mosolova and Dmitry Zhdannikov

MOSCOW, June 5 (Reuters) - Russia will question the chief executive of oil major BP's (BP.L) Russian venture as part of a probe into tax evasion at a unit of the embattled company, which many analysts expect to fall under the control of a state firm.

TNK-BP said in a statement on Thursday that a local Interior Ministry department has issued a summons to TNK-BP Chief Executive Robert Dudley as part of a tax probe into OAO TNK's activities in 2001-2003.

Also on Thursday, BP's chief executive, Tony Hayward, held talks during a visit to Moscow with three key players in the intrigue surrounding TNK-BP -- Alexei Miller, the CEO of gas major Gazprom (GAZP.MM), Igor Sechin, the chairman of oil major Rosneft (ROSN.MM) and First Deputy Premier Viktor Zubkov -- a BP spokesman told Reuters.

A source familiar with the negotiations said separately that Hayward could meet on Friday with Mikail Fridman, one of the billionaire shareholders of TNK-BP who have faced off with BP in calling for Dudley's resignation.

The Wall Street Journal reported on Thursday that Hayward also met with another of the billionaire shareholders, German Khan.

People with knowledge of the situation said the authorities plan to question Dudley next week in a case seen as a test for investment in Russia under new President Dmitry Medvedev.

"This is exactly the kind of issue that is making Medvedev's life so difficult as he tries to rebrand Russia as an attractive investment location," said Chris Weafer, chief strategist at Moscow-based investment bank UralSib.

"The fate of TNK-BP is a major test for how the government views the investment climate."

Mounting pressure on TNK-BP, Russia's third-largest oil producer, points to the likelihood the firm will have to sell a stake to a state firm such as Gazprom, analysts said.

BP shares closed virtually flat in London at 582.0 pence.

Dudley's summons comes on top of other problems at the firm, including the arrest of a TNK-BP employee on an industrial espionage charge, a raid on the company's central Moscow offices and a court injunction to stop it using BP specialists.

"We confirm the information that Robert Dudley has received a summons to the Investigative division of the Main Department of the Ministry of Interior in the Central Federal Region," TNK-BP said in a statement on Thursday.

"Mr Dudley has been requested for questioning with regard to tax matters pertaining to OAO TNK activities in 2001-2003. We regard this event as a routine procedural matter which is not connected with current shareholders' discussions."

Dudley never worked at TNK, but became the head of TNK-BP in 2003, when the 50-50 joint venture between BP and a group of Russian billionaires was formed.

A source told Reuters on condition of anonymity that the questioning is likely to be next week.

"The questioning was planned for this week, but for some reason they have postponed it to early next week," the source said. A BP source said Dudley had already been quizzed over the failure of some employees to complete health and safety courses.

A source in the Interior Ministry said an investigation was under way, but declined to give details. A ministry spokesman could not be reached, and a TNK-BP spokeswoman declined comment.

HAYWARD VISIT

BP and TNK-BP's Russian shareholders last week publicly aired their long-standing differences over the company's strategy for the first time.

The Russian owners, which include Fridman, German Khan, Viktor Vekselberg and Len Blavatnik, have demanded Dudley's resignation, but he, with the backing of BP, has resisted calls to step down.

The latest twist in the story came as Hayward arrived in Moscow for what a BP spokesman called "a regular business visit." His bodyguards at a central Moscow hotel prevented Reuters reporters from asking questions earlier on Thursday.

Hayward was attending the annual shareholders' meeting of Russia's largest oil firm, Rosneft, in which BP is a minority shareholder. Sechin, who is also the influential deputy prime minister to whom Medvedev handed the brief of supervising Russia's energy sector, spoke at the event. [ID:nL05852446] [ID:nL0591639]

Addressing the Rosneft meeting, Hayward said BP was committed to Russia and that a tax system supporting investment, property rights and the rule of law were key to the country's development. He was not referring directly to the TNK-BP case.

"BP is committed to Russia. Russia, alongside the Middle East, is one of the world's greatest hydrocarbon provinces. Russia is a great nation in the process of economic transformation," Hayward told the meeting.

He added recent moves in the energy sector were encouraging in this regard, without providing specific references.

Oil producers in Russia, the world's second-largest exporter, are expected to gain more than $4 billion from 2009 after winning tax breaks for which they have long campaigned, saying it will help them to revive flagging production.

UralSib's Weafer said Medvedev, a former Gazprom chairman who was sworn in as Kremlin leader last month, would be keen to resolve the situation with TNK-BP as soon as possible.

"This move shows the Kremlin does not want it to drag on, and it confirms that the pressure on the company is not just coming from the local shareholders, but coming from a higher level." (Additional reporting by Ekaterina Golubkova, Amie Ferris-Rotman and Vera Kalian, in Moscow and Tom Bergin in London; writing by Guy Faulconbridge and Robin Paxton, editing by Matthew Lewis)



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