BP's problems in Russia have garnered as much attention as the gushing profits the company has made from an eight-year-old partnership with Russian oil firm TNK. Even as BP has raked in billions from TNK-BP -- $2 billion in dividends in the first nine months of 2011 alone – top BP employees have fled Russia, BP's Russian offices have been raided twice, and TNK has blocked BP from doing business with the Russian energy company Rosneft. BP, it seems, has been a victim of TNK, a powerful company that is usurping control of what was to be a partnership of equals.
But documents, which surfaced at the end of October as part of an ongoing legal dispute, suggest that BP executives saw TNK as a ruthless and dishonest company that would stop at nothing to seize control of lucrative energy assets, even before BP decided to partner with the Russian company.
The documents – including internal BP emails, BP reports, US Embassy cables, and even correspondence from former British Prime Minister Tony Blair – were found in discovery by an oil company based in Canada called Norex Petroleum. Norex first sued TNK's owners, AAR, in federal court a decade ago for allegedly stealing a valuable oil field. BP was eventually included in the legal dispute, since TNK-BP now owns the oil field in question. A federal judge dismissed the case, saying that it was outside her jurisdiction. Last month Norex filed a memorandum opposing a motion to dismiss a new lawsuit in New York Supreme Court. All emails, memos, and reports cited in this story were filed by Norex last month.
When asked to discuss Norex's recent filing, a BP spokesman wrote: "The allegations from Norex involve conduct that pre-dates the formation of TNK-BP and had nothing to do with BP." Scott Hershman, a lawyer for the TNK defendants, said: "The federal courts have rejected Norex's claims and their supposed evidence multiple times in a case that was finally resolved last year in TNK-BP's favor with the dismissal of Norex's claims."
No matter who wins the case, the documents found in discovery paint a picture of BP as a cynical company that put profits ahead of prudence. "BP decided to make a 'deal with the devil' in 2003… to protect its interests in Russia," Alex Rotzang, chairman of Norex, asserts in a statement. Some corporate governance groups feel that the documents found by Norex should worry investors. "This seems like the latest example of BP taking a calculated risk that goes wrong," says Kimberly Gladman, director of research at GMI, a corporate governance ratings firm. "Whether Deepwater Horizon or Russia, the company does due diligence, but gambles anyway."
A stolen oil field
BP got its first glimpse of TNK-style justice in the 1990s, when TNK and Norex fought for control of a lucrative oil field called Yugraneft. Yugraneft was owned by Norex and Chernogorneft, a subsidiary of the Russian oil company Sidanco. BP later bought 10% of Sidanco, which also gave it a stake in the oil field.
