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BP hit with $3.1bn Russian court bill - Daily News Egypt

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BP hit with $3.1bn Russian court bill

Moscow (AFP) — A Siberian court on Friday piled more legal pressure on BP by ordering the British group to pay $3.1 billion in damages for its attempted Arctic oil exploration tie-up with the state giant Rosneft. A BP attorney immediately denounced the decision as a “corporate attack” that demonstrated the court’s subservience to the …


Moscow (AFP) — A Siberian court on Friday piled more legal pressure on BP by ordering the British group to pay $3.1 billion in damages for its attempted Arctic oil exploration tie-up with the state giant Rosneft.

A BP attorney immediately denounced the decision as a “corporate attack” that demonstrated the court’s subservience to the Russian government’s wishes.

The ruling came just days after BP entered direct talks with Rosneft over a buy-out by Russia’s largest oil company of the British firm’s stake in the troubled TNK-BP joint venture it co-owns with four local tycoons.

A lawyer for minority TNK-BP shareholder Andrei Prokhorov — the unheralded plaintiff at the heart of Russia’s biggest business court case — said the 100-billion-ruble ruling was issued against London-based BP plc and its BP Russia Investment Limited venture.

“We are fully satisfied,” attorney Dmitry Chepurenko said by telephone from the oil-producing region of Tyumen.

Prokhorov — owner of just 0.0000106 percent of a venture responsible for nearly a third of BP’s oil — denies acting on behalf of the powerful oligarchs who operate their half through the Alfa Access Renova (AAR) consortium.

AAR successfully blocked the Arctic deal in a European court of arbitration by arguing that BP had an obligation to offer TNK-BP priority rights to any operations it would like to conduct across the country and Ukraine.

Prokhorov said TNK-BP Holding suffered from unrealised gains by being shut out of the $16 billion share-swap and joint exploration venture.

The Arctic venture eventually went to the US super-major ExxonMobil. TNK-BP for its part reported a slump in second quarter profits Friday to $808 million from $2.2 billion last year due to lower prices and higher export taxes on old fields.

The Siberian ruling will make no immediate financial impact on BP because it can still fight it in higher courts — a process that Prokhorov’s attorney said could take “at least” six months.

But it will also remind BP of the other court battles it has waged — and often lost — in Russia when facing complications with either its tycoon partners or the state.

“This court ruling seriously damages the Russian court system’s reputation and proves its inability to defend honest investors against illegal corporate attacks,” BP lawyer Konstantin Lukoyanov told RIA Novosti.

“All of the plaintiff’s claim are based on absurd assumptions that have nothing in common with the interests of TNK-BP or its shareholders,” the BP lawyer said.

Most economists agree that Prokhorov’s case would have never survived either the European or US court systems.

The controversial claim had already been rejected once in November — a move that came just two months after British Prime Minister David Cameron addressed the issue with Russia’s ruling tandem of Vladimir Putin and Dmitry Medvedev.

But it was picked up again this year just as BP was entering another war of words with the AAR billionaires over future TNK-BP strategy and dividend payments.

BP eventually put up its half of Russia’s third-largest oil company for sale in July 1 and received a quick bid from the tycoon’s themselves.

Rosneft entered the fray as expected this week and has three months to negotiate an agreement that could see BP lose an instant cash source that has provided $19 billion in dividend payment’s since TNK-BP’s creation in 2003.

Analysts believe BP views a deal with Rosneft as a way of improving its relations with the Russian state and potentially regaining access to lucrative unexplored reserves.

 

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https://www.dailynewsegypt.com/2012/07/30/bp-hit-with-3-1bn-russian-court-bill/
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