Fridman On PR Blitz for TNK

MTAlfa Group chief Mikhail Fridman listening to AAR chief executive Stan Polovets at a news conference on Monday.
Mikhail Fridman, the billionaire chairman of TNK-BP's board, strolled into a room packed full with reporters on Monday and flashed a large smile.

As the country's third-largest oil company stands mired in a fierce public dispute over its future ownership structure, Fridman, the world's 20th-richest man with a reported fortune of nearly $21 billion, appears to be enjoying himself.

Pressed by a reporter to provide a timeline on a lawsuit threatened by Fridman and his Russian shareholder partners in TNK-BP against 50 percent shareholder BP, the rotund oligarch answered with a Russian saying: "Whether there's a war on or not, always make time for lunch."

Fridman and his Russian partners, fellow billionaires German Khan, Viktor Vekselberg and Len Blavatnik, have gone on a massive PR offensive as they seek to establish a greater say in the running of the company, which they now argue has functioned mainly as BP's Russia subsidiary.

"We cannot treat this company as just an asset into which we have invested our money," Fridman said.

"This is a normal dispute between shareholders," he said, speaking on behalf of the Russian shareholders' consortium AAR, named for the billionaires' investment vehicles Alfa, Access and Renova.

The dispute, which observers say likely centers on whether BP, AAR or a state company will gain control over the firm, erupted after BP and TNK-BP saw their Moscow offices raided by the Federal Security Service, a TNK-BP employee arrested on charges of industrial espionage, and a series of back tax claims brought against TNK-BP.

Investors are closely watching the conflict, seen as a key test of the country's approach to foreign investment as rival factions within the Kremlin and Prime Minister Vladimir Putin's White House stake out a role following the inauguration of President Dmitry Medvedev last month. "The fundamental question is — what kind of foreign investors does Russia need?" Fridman said. "We don't need investors that … try to spoil the image of Russia."

TNK-BP, formed five years ago this August, was heralded at the time as a symbol of Russia's openness to foreign investors. That was well before the days of $140-per-barrel oil and the rise of state oil champion Rosneft, alongside gas giant Gazprom. It was also before relations with Britain spiraled to a post-Cold War low following the 2006 poisoning of Alexander Litvinenko in London.

Fridman accused BP of operating TNK-BP in the British firm's interest, favoring their own employees and thwarting TNK-BP's international ambitions to avoid creating a global competitor.

"There's a good word in English — arrogance," Fridman said.

He reiterated that AAR would bring a lawsuit against BP in a Stockholm court to force the British oil major into withdrawing some 150 foreign employees contracted to TNK-BP.

He also demanded that the company's board of directors reflect both sides' interests equally, and insisted upon the firing of TNK-BP's American CEO, Robert Dudley, who is backed by BP. The lawsuit would be brought ahead of a June 26 annual shareholder meeting, which AAR has deemed illegal, he said.

"In so far as [BP] is an international company, an English-American one, it doesn't want us to go into markets where [BP also has interests]," Fridman said. "For the governments of the United States and Britain, BP plays a big role."

He pointed to TNK-BP's unsuccessful efforts in gaining a foothold in Iraqi Kurdistan as an example.

He denied press reports that said AAR had offered to swap TNK-BP shares for a direct stake in BP, but acknowledged that the consortium was looking for an option to do so.

"We never offered to exchange shares of TNK-BP for shares in BP — we sought an option to [do so]," he said, adding that if an offer of an option was made, "we wouldn't say no."

Yet he said the Russian shareholders had no plans to sell their stake in TNK-BP, whose 5 percent free-float shares value the company at about $38 billion.

"In the near future, we have no plans to sell," he said.

As AAR continues its publicity drive — Fridman's comments came the same day as Vedomosti published a question-and-answer interview with him, and Kommersant a similarly large interview with Vekselberg — BP and its representatives inside TNK-BP appear in retreat, following comments last week by BP chairman Peter Sutherland that likened the Russian shareholders to "corporate raiders."

Dudley, TNK-BP's embattled CEO, canceled a planned appearance at a Renaissance Capital investment conference Tuesday, and was to be replaced by chief operating officer Tim Summers. Dudley has also stopped granting interviews.

"All disputes like this can be solved only through negotiations," BP spokesman Vladimir Buyanov said.

Clemens Grafe, chief economist at UBS, warned that the dispute, which has dragged on for months and appears no closer to conclusion, could harm the country's investment climate, particularly in oil stocks. "The outcome does not really matter that much for the market, but the way we are going to get there does," Grafe said. "If BP loses control, there will always be a doubt if that was voluntary, even if they are perceived to have been paid a fair price.

"We, just like everybody else, are careful in trying to fully second-guess if this is purely a shareholder dispute or if there is more to it," he said.