Gazprom Warned Off TNK-BP

APRobert Dudley participating in a session at the St. Petersburg forum Sunday.
ST. PETERSBURG — Gazprom should not buy into TNK-BP and the dispute between its shareholders will worsen if one side does not sell out, a senior government source said Sunday.

TNK-BP is the subject of a fierce dispute over strategy and ownership between BP, which owns 50 percent, and a group of three Russian oligarchs, which controls the other half.

A series of police and tax raids have increased pressure on the firm.

"[The Russian shareholders] are only starting the offensive. In the near future it will be worse," the source said, speaking to reporters on condition of anonymity.

Industry sources have said Gazprom is eager to buy the Russian half, a scenario that would potentially suit BP as it would get a state favorite as a partner instead of a group of powerful tycoons, who often have different interests.

But sources also said an anti-Gazprom clan in the Kremlin might be unhappy with the growing role of the gas giant in the oil industry and would prefer that a chunk of TNK-BP stock was bought by state-controlled Rosneft.

"All this talk that Gazprom would buy into TNK-BP is the worst-case scenario. Let [BP and the Russian owners] sort it out themselves," the source said.

"Either the [Russian shareholders] or [BP] will sell," he added, when asked how the conflict can be resolved.

A stake for Rosneft or Gazprom would continue the Kremlin's strategy of increasing its presence in strategic industries, but soaring oil prices have made the Russian shareholders in the highly profitable TNK-BP unwilling to sell out cheaply.

"As far as I understand, and I had several conversations with these people, the Russian owners never wanted to sell their business. For BP it is it the best scenario if Alfa sells out to Gazprom. For Russia it is the most harmful scenario," he said.

The source said such a scenario would be harmful because it would only strengthen the feeling in the West that Russia wants to renationalize all of its oil industry, which he said the Kremlin was in fact not seeking.

The Russian tycoons act via investment vehicles representing Mikhail Fridman's Alfa, Len Blavatnik's Access and Viktor Vekselberg's Renova.

TNK-BP sources say Alfa strongly opposes a sale and was insisting on BP either reducing its stake or fully selling out of the firm. Alfa, Access and Renova officially deny any plan to sell out.

Last week, the shareholders publicly aired their differences with the Russian owners, saying BP was limiting TNK-BP's expansion abroad.

They also demanded TNK-BP's chief, Robert Dudley, a former BP executive, resign, a call rejected by BP.

"It is good that they finally started arguing. [BP] probably did not understand who they created a partnership with. Alfa Group are very ambitious people in the good sense of this word, and they will not stop," the high-level source said.

"[Alfa] tell them: Lets go together to Iraq, India. [BP] say: You will stay here. Only we will go abroad. What normal businessman will agree with that?"

BP CEO Tony Hayward said Saturday that he expected to reach an agreement with the Russian shareholders.

"I'm confident we will resolve our well-publicized differences with our partners and TNK-BP will continue to prosper," Hayward said at the forum Saturday.

Hayward traveled to St. Petersburg after holding "constructive" talks with Fridman, BP spokesman Vladimir Buyanov said.

Fridman and Hayward agreed to "take time out" before continuing talks, an official for the billionaire shareholders said Friday.

Reuters, Bloomberg