Word: bp
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Dates: during 2000-2009
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This deal, which created Russia's third-largest oil firm, still has the leaders of both countries talking. But their tone has changed. When current U.K. Prime Minister Gordon Brown brought up TNK-BP with Dmitri Medvedev, Putin's successor, on the sidelines of the G-8 summit on July 7, the uneasy discussion was of a breakdown in relations between the British and Russian partners. Meanwhile, Dudley, the company's BP-appointed boss, is battling to keep his job. In Moscow that same day, AAR, the Russian consortium that controls 50% of TNK-BP, called for his dismissal, claiming...
Publicly, AAR's list of grievances is long. It claims, among other things, that TNK-BP operates too much like a BP subsidiary, resisting expansion beyond Russia to avoid stepping on the British firm's toes. Instead, the Russians want an independent CEO, and a culling of BP staff seconded to the Russian venture. AAR, led by Mikhail Fridman, TNK-BP's chairman, has even threatened legal action after its calls for more influence came to nothing...
...their part, TNK-BP's British executives defend the company's performance and mutter darkly that their Russian partners are maneuvering to take control of the venture. This dispute isn't TNK-BP's only headache, either. In recent months, Russian security services have raided the firm's premises as part of an industrial espionage probe, detaining a low-level employee (though TNK-BP itself was not involved in the investigation); officers at Russia's Interior Ministry have questioned Dudley as a witness in connection with another probe into tax evasion at a firm later absorbed into TNK-BP...
Nonetheless, sweeping changes inside Russia's oil and gas sectors in recent years have dented Western investors' faith in the country's rule of law. Caught up in a state effort to claw back control of lucrative assets, some were left badly scarred. In 2006 BP rival Royal Dutch Shell was forced to give up control of the Sakhalin-2 oil and gas project off Russia's eastern coast after the country's environmental regulators threatened to shut it down. Gazprom, Russia's state-owned energy company, duly took over the operation...
Suspicions of a state raid on BP's Russian assets aren't surprising. Relations between the countries, already chilled by Britain's refusal to expel various critics of Russia's government, have been in a deep freeze since the murder of former Russian spy Alexander Litvinenko in London in 2006. Still, in the case of TNK-BP, it's hard to make out a government agenda. The squabble over work permits was at least partially resolved once it became public, and suspicions of tax evasion stem from the years prior to BP's involvement. Resolving the conflict, Medvedev has said...