TNK-BP Billionaires File to Halt BP, Rosneft Alliance

Russian billionaire owners in TNK-BP asked a London court to halt a share swap and Arctic exploration deal between BP Plc and OAO Rosneft, claiming exclusive rights to pursue business in Russia with the U.K. producer.

The shareholders, represented by a group called AAR, are demanding BP present the deal to TNK-BP because the 50-50 venture has exclusive rights to pursue opportunities on behalf of the London-based company, according to a copy of the filing.

The move may raise concern over a renewed dispute between TNK-BP’s shareholders. In 2008, current BP Chief Executive Officer Robert Dudley was ousted as head of TNK-BP as the billionaires and BP argued over strategy. Russia’s third-largest oil producer accounts for about a quarter of BP’s output and a fifth of reserves. Dudley met with TNK-BP shareholder and interim CEO Mikhail Fridman on Jan. 13, the day before signing the Rosneft deal.

“BP appears to have closed its eyes to its obligations to TNK-BP,” according to a 28-page witness statement in the filing in a commercial court. The billionaires are seeking to keep BP from “taking any steps to negotiate, agree, conclude, implement or perform any agreement” on the deals with Rosneft.

A hearing is set for Feb. 1, according to the filing.

Eroding Advantage

Vladimir Buyanov, a BP Russia spokesman, said by telephone from Moscow that the company had received a filing in a London court. He declined to give details and said BP is acting within the bounds of its shareholder agreement with TNK-BP.

Stan Polovets, chief executive officer of AAR, declined to comment today on the filing.

Damages aren’t enough for the shareholders, according to the filing. They see BP’s alliance with Rosneft, Russia’s biggest oil producer, as eroding TNK-BP’s competitive advantage and its value. TNK-BP will face more competition for projects and may lose BP expertise and managers, the filing said.

BP shares were down 1.1 percent at the 4:30 p.m. close in London. Rosneft shares rose 2.2 percent to 252.74 rubles, the highest since April 12.

The shareholders may seek a role in the Arctic venture. The BP, Rosneft deal could be good for TNK-BP, as well as BP, Rosneft, and Russia, Polovets said on Jan. 17.

Arctic Exploration

BP agreed on Jan. 14 to swap a $7.8 billion stake in the company for 9.5 percent of Rosneft. The two also agreed to explore an area of Russia’s Arctic waters about the size of the U.K. North Sea. The swap will give BP, which bought about 1.3 percent of Rosneft in an initial public offering in 2006, a large enough stake to gain the right to a board seat and call meetings, according to the filing.

BP agreed to invest about $7.7 billion in TNK-BP when it was formed in 2003, according to its website.

“There may have been a gentlemen’s agreement that TNK wouldn’t go international and BP wouldn’t do anything else in Russia,” said Dougie Youngson, an analyst at Arbuthnot Securities Ltd. “The Rosneft deal has clearly upset TNK’s Russian partners. With all things oil in Russia, there is a political element. It’s too early to say what the potential outcome is.”

BP is acting within the law in terms of its share swap and Arctic deal with Rosneft, Russian Deputy Prime Minister and Rosneft Chairman Igor Sechin said today in Davos, Switzerland.

“I don’t think we’re talking about some kind of crude blackmail,” Sechin said. “These are unrelated projects.”

‘Surprise Announcement’

BP hasn’t responded to repeated requests for information, the shareholders said, while Dudley said BP kept its partners informed the talks with Rosneft. According to the filing, the partners first found out at the Jan. 13 meeting between Fridman and Dudley and asked for more information.

In the days after “surprise announcement” on Jan. 14, the AAR partners that also include German Khan, a TNK-BP executive, and Viktor Vekselberg, a board member at the venture, asked for more information from BP executives, according to the filing.

A further accord signed in Davos yesterday, building on the Jan. 14 agreement, allows BP to provide information to TNK-BP, Dudley said yesterday.

The government will agree with BP before selling part of the state stake in Rosneft shares to a strategic investor, Ria Novosti reported today, citing First Deputy Prime Minister Igor Shuvalov in Davos. Russia may sell 15 percent of Rosneft in the open market and use almost 10 percent for share swaps, the Economy Ministry said on its website on Nov. 23.

To contact the reporters on this story: Torrey Clark in Moscow at tclark8@bloomberg.net; Brian Swint in London at bswint@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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