BP to Pull 88 Foreign Staff From TNK-BP

BP has decided to withdraw 88 foreign employees assigned to its troubled joint venture TNK-BP, the company said Wednesday, in recognition that the Russian-British firm's escalating shareholder dispute shows no signs of nearing a resolution.

The employees more than half of 148 BP employees who have been barred from working at TNK-BP since early May following a lawsuit brought by a murky minority shareholder have already begun leaving Moscow for other BP projects, BP said.

"Around 60 BP employees will remain on standby, ready to go back to TNK-BP after the injunction is lifted," BP spokesman Vladimir Buyanov said.

"There's a recognition of how long this is going to take," said a source inside the company, referring to the struggle between BP and AAR, the consortium representing four Russian billionaires who own half of TNK-BP.

In a separate development involving foreigners directly employed by TNK-BP, the Federal Migration Service said Wednesday that it would grant work permits to 49 employees a move that could allow TNK-BP's American CEO Robert Dudley and a number of senior management officials to remain in the country.

The visa and work permit troubles have become the most concrete sign of the messy shareholder struggle, and the involvement of government agencies has cast a shadow over assertions by officials inside the Kremlin that the state is playing no role in the dispute.

Federal Migration Service spokesman Konstantin Poltoranin said the agency would issue work permits to six senior TNK-BP employees by Thursday, including chief financial officer James Owen and a host of vice presidents.

Dudley, chief operating officer Tim Summers and 41 other employees are due to get their permits within 10 days, Poltoranin said. "This way, the people can stay in the country," an agency spokeswoman added.

Poltoranin later told news agencies that Dudley would also receive his work permit on Thursday.

AAR, the consortium representing Mikhail Fridman and German Khan's Alfa Bank, Viktor Vekselberg's Renova and Len Blavatnik's Access Industries, continued to push for Dudley's ouster on Wednesday, arguing that he has run TNK-BP in the interests of its British shareholder.

In a statement issued hours after the news of the work permit resolution broke, AAR said Vekselberg would convene an extraordinary shareholders meeting of TNK-BP Management on July 7 to discuss replacing Dudley with an "independent director."

The state has been keen to distance itself from the dispute. President Dmitry Medvedev's chief economic aide, Arkady Dvorkovich, told a conference Wednesday that "the government doesn't need to get involved in the conflict," when asked whether Medvedev and British Prime Minister Gordon Brown would discuss TNK-BP at next week's Group of Eight meeting in Japan.

Trouble for the 148 BP employees assigned to TNK-BP began in late March, when they faced difficulties renewing their visas and work permitsthrough the Federal Migration Service.

After the issue became public, officials quickly began issuing the permits. Days after the employees received their visas in late April, an unknown firm named Tetlis, founded by former Alfa Bank employees according to its web site, brought a lawsuit against TNK-BP arguing against the hiring of the foreign employees. AAR denies any link to Tetlis.

"The Federal Migration Service is great once they know which way to jump," the company source said.

Observers and people inside TNK-BP do not believe that the dispute is being masterminded by the Kremlin, which has won control over the oil and gas sector mainly through energy giants Gazprom and Rosneft.

Both BP and AAR deny any intention to sell their stakes, either to current shareholders or to the state-run companies. They both accuse each other of seeking to wrest control in order to sell the other shareholder out to a state-run partner.

"This is clearly a conflict between two shareholders and each of those is trying to engage various parts of the government on their side," said one banker, who declined to be identified, citing the sensitivity of the case.

"It's a bad thing that we don't know what the government thinks, that noone can come out and give a response that is seen as being in the interest of the government," the banker said, noting that the centers of power have yet to be delineated following Medvedev's ascension to the presidency and Vladimir Putin's movefrom the Kremlin to the White House.

Brown, the British prime minister, hopes to see the visa dispute resolved by the time he meets Medvedev on Monday, his spokesman Michael Ellam said Wednesday, Bloomberg reported from London.

"We hope the issue relating to BP will be resolved by then," he said. "Our general position is that this is primarily a commercial matter. It does send a worrying signal to international investors about doing business in Russia."

TNK-BP, the country's third-largest oil producer, was hailed as a concrete example of Russia's openness to foreign investors and of British-Russian relations when it was founded five years ago, in August 2003.

BP welcomed the decision to grant 49 work permits on Wednesday, but Buyanov, the spokesman, warned that it was "only a first step" in resolving the issue.

Several sources inside TNK-BP and BP said they were uncertain whether the documents would come through before the employees' visas expired in July. Many employees under threat have already bought tickets to leave the country on the understanding that issuing work permits and visas can take up to six weeks.

"They may still have to leave and may not feel all that inclined to come back considering the current climate," one source said.

Both BP and TNK-BP have had their offices raided by Federal Security Service officers in recent months, and a TNK-BP employee was arrested on charges of industrial espionage in March a case that has not moved forward.

The fate of dozens of other foreign TNK-BP employees remains unclear, after shareholder infighting resulted inthe firm getting a quota for 71 employees, rather than the necessary 150.