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...companies yearning to cash in on Russia's immensely lucrative energy boom, there's an obvious business lesson: choose your partners carefully. The moment a lock-in agreement blocking either side from selling out expired in December, the competing interests of BP and AAR looked set for a collision. Oil giants like BP are used to investing for the long term, knowing that patience is key in this capital-intensive business. AAR would like a faster return. Both sides might have done better, in fact, if one had taken overall control. Indeed, Putin recently recalled warning BP...
...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...
What could end all this bad blood? One possibility is that Gazprom might buy out the Russian billionaires, then take control of TNK-BP. Given the acrimony between BP and its partners, it's not hard to see why the Brits might welcome Gazprom. Likewise, Gazprom may be more attuned to the benefits of having a foreign partner with deep pockets and a long-term outlook. To help develop a vast gas field in the Barents Sea, Gazprom teamed up with Norwegian oil firm StatoilHydro and French giant Total last year, indicating there's still an openness to such partnerships...