Foreign Staff Cut by 148 at TNK-BP

APTNK-BP's headquarters in central Moscow. Analysts believe that a state-run company is trying to muscle into TNK-BP.
TNK-BP said Tuesday that all foreign employees assigned to the firm by British energy major BP had been suspended because of newly arisen visa problems, in the latest sign of pressure against the company.

The 148 BP employees "have been temporarily withdrawn from TNK-BP," TNK-BP spokeswoman Marina Dracheva said. "The reason is lack of clarity over their current visa status."

The latest blow to TNK-BP comes hard on the heels of the arrest of a Russian-U.S. employee by the Federal Security Service on charges of industrial espionage, and a subsequent search of the company's Moscow head office.

Analysts interpreted the quickly mounting pressure against the firm as a sign that state-run energy giants Rosneft and Gazprom, represented by competing Kremlin clans, could be fighting over a stake in the company, the country's third-largest oil producer.

The BP employees were temporarily withdrawn from the TNK-BP head office on Monday, but no top managers were among them, Dracheva said. About 3,000 people work at the office.

"Several violations of Russian migration law were committed by the company," Interfax said Tuesday, citing "a well-informed source in Russian power structures." Several employees had business visas, rather than work visas, the source said.

The case is the latest high-profile example of foreigners falling afoul of the country's notoriously complicated visa regulations.

The executive director of Human Rights Watch, Kenneth Roth, last month accused the government of using the regulations for political ends, after being denied entry to the country.

Interfax's law enforcement source denied that the TNK-BP visa affair was connected to pressure against the company or worsening relations with Britain.

"There is no allusion to politics or any sort of 'spy affair' in this whole story, it's purely about following Russian migration law," the source said, Interfax reported.

The FSB last week brought charges of industrial espionage against TNK-BP employee Ilya Zaslavsky and his brother Alexander, an independent energy consultant who heads the British Council's Alumni Club.

President-elect Dmitry Medvedev, who chairs Gazprom's board of directors, reiterated claims that the British Council worked as a cover for British agents in an interview published Tuesday.

"There is a problem with this," he told the Financial Times when asked if he thought the council engaged in spying activities. "These types of organizations are traditionally used for the collection of information."

Analysts believe that a state-run company is hoping to muscle into TNK-BP, a 50-50 joint venture between BP and three Russian billionaires, before Medvedev's inauguration on May 7. A clause forbidding the Russian shareholders -- Viktor Vekselberg, Mikhail Fridman and Lev Blavatnik -- from selling expired late last year.

TNK-BP agreed to sell its 63 percent stake in its flagship Kovykta gas field to Gazprom last summer, but the deal, set for between $700 million and $900 million, has yet to be finalized.

"I am virtually sure that Gazprom has hardly anything to do with it," said Konstantin Simonov, director of the National Energy Security Fund, a Moscow-based think tank.

"Not once over the years has Gazprom used security agencies to achieve its goals," he said. "Security agencies have helped other companies ... first of all Rosneft," he said, pointing to the case of Yukos. Former Yukos CEO Mikhail Khodorkovsky accused Igor Sechin, the chairman of Rosneft's board and President Vladimir Putin's deputy chief of staff, of being behind the attack on the company.

Gazprom spokesman Sergei Kupriyanov denied any links to TNK-BP's troubles with the FSB, or the visa regime.

"We have an agreement on strategic cooperation with BP and TNK-BP, and we hold talks to develop this cooperation," he said, when asked if Gazprom was negotiating with the firm to buy out its Russian shareholders. "But these talks have no relation to recent events."

Rosneft spokesman Nikolai Manvelov also denied that his company had hopes to buy into TNK-BP.

"We have a committee that looks at all assets up for sale, but, as far as I've heard, this company is not up for sale," he said. "We have our hands busy with business, we don't need to get involved in politics."

The Russian shareholders issued a statement in February saying they had no intention to sell, and Vekselberg has said he would only consider giving up his stake if his $60 billion valuation of the firm were met.

TNK-BP's market capitalization currently stands at $27 billion.

In the FT interview, Medvedev denied any economic infighting among Kremlin clans.

"The security services in every country compete for influence. But they don't compete for wealth," he said.

Simonov, of the National Energy Security Fund, said the arrest of the Zaslavskys could have been an attempt to knock down any potential sale price.

Rosneft could be interested in further expansion, and buying existing assets is easier than investing in greenfield projects, Simonov said.

George Lilis, an oil and gas analyst at MDM Bank, said Rosneft's $23 billion net debt, which is close to 50 percent of its total capital, could prevent it from financing further acquisitions.

"Any company that works under Western standards and is focused on adding value to its shareholders would not add more debt and acquire more assets," he said. "They already have a tough time refinancing their debt in international markets due to global credit turmoil, and adding another huge amount would be detrimental to both debt and equity holders," he said.

Elena Herold, an analyst at Washington-based consultancy PFC Energy, said that, as well as Gazprom and Rosneft, Oleg Deripaska's Basic Element could also be behind the pressure on TNK-BP in an effort to gain control over the company.

Metals magnate Deripaska is looking to diversify into energy and is awaiting regulatory approval from monopoly authorities to buy Russneft, a midsized oil producer, from fugitive businessman Mikhail Gutseriyev. Gutseriyev fled the country last summer after accusing the state of orchestrating a criminal case against him in order to wrest control of his company.

"The twisting of arms could continue," Herold said about the future of TNK-BP. "Nobody will want to buy at the real market price."