BP Russia arm explored deals in sanctioned states: documents

1st February 2011, Comments 0 comments

BP's Russian arm sought new operations in states subject to western sanctions in an ongoing power struggle which clouds the subsidiary's future, memos seen by Tuesday's Telegraph newspaper showed.

US diplomatic cables leaked by the WikiLeaks website revealed that BP Chief Executive Bob Dudley was the subject of raids and forced out of Russia after the board of TNK-BP vetoed the exceptional proposals.

In 2008, then TNK-BP CEO Dudley told US officials that one of the company's Russian directors pushed for exploration in states including Myanmar, Cuba, and Sudan.

TNK-BP accounts for around 25 percent of BP's global production and was formed in 2003 when a group of Russian oligarchs, the Alfa-Access-Renova (AAR) consortium, entered a deal with the British company.

The memo, sent from the US embassy in Moscow on June 20 2008, revealed Dudley's beliefs.

"Dudley said AAR and, in particular, German Khan, had been systematically using TNK-BP resources to vet these projects," it said.

A separate memo dated June 16 2008, which detailed a meeting between TNK-BP's vice president for international relations, Shawn McCormick, and US officials went even further.

"The Alfa partners and in particular German Khan had been using the company's resources to vest projects in places BP couldn't invest, such as Kurdistan, Cuba, Burma and the like," the cable claimed.

"When the TNK-BP board rejected these proposals, Khan would then slide them to a separate company that Alfa controlled, an arrangement that suited Khan and his Alfa partners fine."

Dudley claimed that oligarch Khan, described as "mentally unstable" in another memo, "led the charge against TNK-BP's foreign executives."

Dudley also said that Kremlin agents had subjected him to "sustained harassment" before he was forced out of the country on a labour-law ruling.

The leaked cables said that Dudley "expected the attacks on him to continue in the form of law suits and the like but... believed his profile was too great for there to be any physical threat against him."

The memos also revealed that Dudley believed the Kremlin wanted the company's two factions to "fight each other to exhaustion, like 'Siberian tigers,' and then capture the survivor to create a third Russian major oil company."

In another leaked memo, former Russian deputy energy minister Vladimir Milov said that there was also a power battle going on between Dudley and then global CEO Tony Hayward, who stepped down after the Deepwater Horizon oil leak.

Hayward is now CEO of TNK-BP in Russia.

BP recently entered an alliance with state-run energy company Rosneft for Arctic oil exploration.

In the memos, Dudley accused Rosneft chairman Igor Sechin of backing the oligarchs' "war" against him.

A BP spokesman Monday played down the comment, saying the pair had "a strong relationship and mutual respect."

The leak comes as BP prepared Tuesday to announce its end of year results, with the company's first loss for two decades expected.

© 2011 AFP

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