AAR gets Russian on BP again with $13.6bn court claim

By bne IntelliNews June 6, 2012

bne -

Things have gotten ugly quickly in the TNK-BP divorce. The love between the Anglo-Russian couple was lost very quickly following their marriage in 2003, but after BP's announcement on June 1 that it had been approached by a buyer for its stake, there were hopes it could end in an amicable separation. Yet things took a wrong turn on June 4 after a Siberian court overturned previous rulings in favour BP, a decision that could result in the British major being liable to $13.6bn in claims from its Russian partners in the Access-Alfa-Renova (AAR) consortium.

The claim was brought by AAR in the wake of BP's attempt to do a deal with state-owned oil major Rosneft last year behind its Russian partners' backs, in contravention of the TNK-BP shareholder agreement. AAR claims that they are entitled to the money as compensation for BP's failure to close the share swap deal - a breakdown that AAR played no small part in bringing about.

The current run-in started in May when the joint venture's Russian chief executive, oligarch Mikhail Fridman, resigned after saying the firm had become unmanageable because of disputes, in a move widely seen as an attempt to force BP out of the joint venture.

Russian oligarchs are past masters at churning regional court decisions and can produce them at will. This one suggests that the members of AAR are once again upset and intend to make life as difficult as possible for BP if it tries to exit.

The claim was actually brought by a group of no-name shareholders that own a fraction of 1% of TNK-BP, yet feel they have suffered so much from BP's poor deal-making ability that they are entitled to several billions of dollars in compensation. A judge in the Siberian district of Tyumen dropped the case in November and the shareholders' appeal had been turned down earlier this year - but hey presto! Here it is again at an extremely sensitive time for BP and opportune time for AAR. The billionaire tycoons behind AAR have denied any connection with these minority shareholders or their claims.

Whatever the motives of the court, this week's Siberian court decision is in effect a gun that AAR can hold to BP's head and make it impossible for the British oil major to sell to anyone other than AAR. The Russian consortium said earlier in the week that it was interested in buying BP out of its 50% share of the joint venture, while both Rosneft and Gazprom have publicly said they were not interested in the stake, despite media speculation to the contrary.

The Federal West-Siberian Commercial Court on June 4 overturned two previous court rulings that had thrown out the lawsuit. The previous rulings had rejected the claim by the minority shareholders that their interests were infringed by BP's failed Arctic shelf development deal with Rosneft, as TNK-BP could have participated in the projects.

BP has denied causing any damage to AAR and said the court decision could be the result of "corporate news", business daily Kommersant reported on June 5. BP lawyer Konstantin Lukoyanov said the court's latest decision could damage Russia's investment climate. The judgment "casts doubt on the ability of the domestic judicial system to create a predictable and effective legal environment," he said.

Dmitry Chepurenko, a lawyer representing the interests of the TNK-BP minority shareholders, said he was satisfied with the court's decision, as "the case has been sent for a new hearing."

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