Crisis grows as Russia arrests "spy" at TNK-BP

By Dmitry Zhdannikov and Michael Stott

MOSCOW, March 20 (Reuters) - Russia's security service said on Thursday it had arrested an employee of British Petroleum's Russian joint venture for spying, deepening investor fears of a politically inspired campaign against the oil company.

The day after its agents raided the Moscow offices of TNK-BP, carrying away documents and computer information, the Federal Security Service (FSB) said it had arrested two brothers with the surname Zaslavsky, one of whom worked for TNK-BP.

It said the other detainee was connected to the British government's cultural arm, which has already been the target of Russian action. Both had Russian and U.S. passports.

"According to FSB information, the people mentioned were illegally collecting classified commercial information for a number of foreign oil and gas companies to gain advantages over Russian competitors," the FSB said in a statement.

FSB agents swooped without warning on TNK-BP and on BP's (BP.L) separate Moscow offices on Wednesday, carrying away documents and computers and questioning senior staff. Conflicting reasons were given for the raids by the authorities.

BP's London head office declined to comment. A TNK-BP staff directory from last year lists an Ilya Zaslavsky as working in the company's gas section as a commercial consultant.

The British Council's Alumni Club, which groups Russian alumni of British educational programmes, includes an Ilya Zaslavsky and his brother Alexander, a club member told Reuters.

"This is about the two Zaslavsky brothers. They are not and have never been employed by the British Council," a London-based spokeswoman for the British Council said.

FOREIGN INVESTORS

Confidence is low in Russia's ability to protect foreign investors in the oil and gas sector following high-pressure official campaigns in the past years which have forced Shell and BP to sell key assets to Kremlin-controlled players.

British companies are particularly vulnerable to political pressure because of current very poor relations between London and Moscow.

A row over Russia's refusal to extradite an ex-KGB agent suspected of murdering a vocal Kremlin critic in London has led to diplomats being expelled from both countries and two regional British Council offices in Russia being shut down.

TNK-BP is Britain's biggest foreign investment in Russia and made net profits of $6.6 billion in 2006, potentially making it a large and very lucrative target for Kremlin hardliners.

A presidential spokesman declined comment on the action against TNK-BP, saying it was a police matter. "We should not politicise the work of law enforcement bodies," he added.