BP wins $15 billion court reprieve in Russia

11th November 2011, Comments 0 comments

BP salvaged a rare victory in Russia on Friday over its failed Arctic tie-up with Rosneft when a court rejected a $15-billion claim that threatened its ties with the country, the world's biggest energy producer.

The Siberian court ruling does not immediately end all threats hanging over the British major because the Russian side of its TNK-BP local partnership is still pursuing action in Stockholm.

But the decision was hailed by BP as an important signal to foreign investors who will rely on Russia's court system to ensure fair access once the country is formally accepted into the World Trade Organization next month.

"We are pleased with the court's decision to reject the groundless claims against BP and two TNK-BP Holding board members," BP Russia chief Jeremy Huck said in a statement.

"I also believe that today's decision is a positive contribution to the investment climate in Russia," Huck said.

The firm also reaffirmed its long-term commitment to Russia despite recent court problems and uneasy relations with its local billionaire partners.

The messy court case revolves around a $16-billion share swap and joint northern sea oil exploration alliance that initially made BP the first major through the door to Russia's vast riches of Arctic oil.

The alliance was blessed personally by Russia's current premier and likely future president Vladimir Putin in January and appeared to make BP the Kremlin's preferred partner in future projects.

Its dramatic reversal came when the four Soviet-born tycoons who partner with BP in Russia claimed that TNK-BP had the right of first refusal on the deal and sued.

Rosneft eventually awarded the development contract to the US supermajor ExxonMobil while BP became the subject of repeated raids by bailiffs who were pressing two claims from an unheralded group of Russian shareholders in TNK-BP.

The group always denied acting on behalf of the venture's powerful Russian co-owners. Such suspicions however made BP the subject of private talks in Moscow between Putin and visiting British Prime Minister David Cameron.

TNK-BP issued no immediate comment while the shareholder's lawyer vowed to appeal to a higher Russian court in Omsk -- a Siberian appeals body that deals with decisions issued by the regional arbitration court in oil-rich Tyumen.

"We will appeal the Tyumen region arbitration court ruling in accordance with the procedure established by law," lead attorney Dmitry Chepurenko said in a statement.

He added that the ruling "demonstrates that Russia still has a long way to go before it meets international standards of corporate law."

The Tyumen case revolved around two actions launched by TNK-BP shareholders who argued that they suffered damages from their firm's failure to strike the Rosneft deal first.

The first Tyumen claim of 87 billion rubles ($2.8 billion) was filed by several small stakeholders against BP executives Peter Charow and Richard Scott Sloan.

A separate claim against the BP subsidiaries was filed by the shareholder Andrei Prokhorov and was eventually raised to 409 billion rubles ($13.4 billion).

TNK-BP itself has asked an arbitration panel in Stockholm to rule whether BP had broken its shareholder agreement by holding negotiations with Rosneft without its local venture's knowledge.

No damages sum has yet been assigned to that potential claim.

© 2011 AFP

0 Comments To This Article