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VISAS SPARK NEW BP-RUSSIAN ROW

RAGE: Venture partners' antics have angered Hayward

Wednesday July 2,2008

By Andrew Johnson, Associate City Editor

OIL giant BP’s relations with its billionaire joint-venture partners in Russia hit a new low yesterday when it emerged key foreign staff might be booted out of the country.

BP, led by chief executive Tony Hayward, said the loss of the personnel, which could include TNK-BP’s chief executive, Bob Dudley, would damage the joint venture, which is responsible for a quarter of BP’s total production.

In an email to staff, Dudley warned some of them might have to leave by this weekend, forced out by visa problems caused, BP believes, by two oligarch shareholders.

“We are both surprised and disappointed TNK-BP’s request for visas has been denied... and that the process has been interfered with by two shareholders acting without authority,” said BP.

The visa row is the latest in an ongoing battle between BP and the oligarchs for operational control of the business.

Analysts said it was sparked by BP’s decision to invest in bringing new oil on stream, cutting the cash returns the oligarchs were hoping to make.

Getting rid of foreign workers would make it easier for the Russians to gain control of TNK-BP subsidiaries. They could run these for cash or even sell them under Russian law.

“BP wants a flow of oil, the oligarchs want a flow of cash from TNK-BP,” said one observer.

There are two parts to the visa problem. The first, affecting all staff, including Dudley, is the delay inspired by the oligarchs meaning the company now has only two weeks to get visas, a process which normally takes at least six weeks.

The other is that BP has been granted only 70 of the 150 visas it needs.

The reason is down to shareholder Vicktor Vekselberg. He told a work permit hearing last week that 70 was all the company needed.

Dudley, who was attending to other company business, could not argue BP’s case.