BP Pulls Out Last Foreign Specialists

MTAlfa Group chairman Mikhail Fridman attending an RSPP meeting Tuesday.
BP said Tuesday that it was recalling the remaining 60 foreign employees assigned to its troubled TNK-BP joint venture, giving way to its Russian partners, who have demanded a stronger local presence in the firm.

"We are taking this action reluctantly," Alistair Graham, BP's chief liaison to TNK-BP, told a briefing at the BP office in Moscow. "These specialists have played a huge part in making TNK-BP one of Russia's most successful oil companies, and there will undoubtedly be a negative impact on the company's performance."

The 60 employees have been barred from working at TNK-BP since March, along with another 88 who were redeployed from Russia earlier this month as a shareholder dispute between BP and AAR, a consortium of Russian billionaires, showed no signs of ending.

"It's been felt, but it hasn't been seen in the results," said Peter Henshaw, TNK-BP's vice president for communications, referring to the absence of the 148 BP employees, mainly engineers and technical specialists.

Results for the first half of 2008 would be strong, he said, but a dip in performance would likely be seen by the end of the year or the first quarter of 2009.

BP told employees of the move Tuesday and sent TNK-BP a letter informing the company that it was giving 90 days notice to terminate their services.

The latest move in the TNK-BP saga came as American CEO Robert Dudley faced the prospect of being forced to leave Russia by next week if migration authorities refuse to renew his visa.

AAR has been calling for Dudley's ouster, arguing that he has run the firm in BP's interests. BP and AAR each own half of TNK-BP, the country's third-largest oil producer.

Boyden Gray, the U.S. special envoy for Eurasian energy, weighed into the dispute on Tuesday, expressing the U.S. government's concern, Interfax reported.

"We are concerned by the restrictions that are being imposed on [Dudley's] ability to perform his duties here in Russia," Gray told Interfax in an interview. "We are not clear what exactly is happening, but we hope that this very successful company will continue its activities."

The 148 BP employees assigned to TNK-BP first faced issues renewing their visas in late March. BP has said the employees were then barred from entering TNK-BP headquarters by the company's security staff, headed by German Khan, an executive in the firm and one of its billionaire owners.

A court injunction resulting from a lawsuit brought by little-known firm Tetlis, founded by former Alfa Bank employees, was recently lifted, but the workers remained barred by the security staff, said Graham, the BP liaison.

"We respect BP's decision and are confident it will not have an adverse impact on TNK-BP's operations," AAR chief executive Stan Polovets said in a statement.

He dismissed BP's assertion that the employees were key to boosting TNK-BP's performance.

"Most of the production growth referred to by BP came in 2003-2005, which was a result of the actions, decisions, and investments made prior to the merger or shortly thereafter," he said.

Polovets said AAR welcomed foreign employees hired directly by TNK-BP and that such a proposal had been made to BP. Several dozen foreign employees of TNK-BP have had trouble renewing their visas and may be forced to leave, however, as TNK-BP has had problems renewing its foreign employee quota.