June 6, 2012 / 8:31 PM / 7 years ago

Russia's watchdog targets TNK-BP shareholder pact

MOSCOW (Reuters) - A confidential document at the heart of BP Plc’s (BP.L) disputes with its partners in Russian oil company TNK-BP TNBP.MM may become public under legal amendments agreed by Russia’s competition watchdog, its deputy director said on Wednesday.

A police officer walks past a plaque of the oil firm TNK-BP at its headquarters in Moscow June 11, 2008. REUTERS/Sergei Karpukhin

BP and the Alfa-Access-Renova consortium of four Soviet-born tycoons, who share control of the No. 3 Russian oil producer, have traded accusations of breaching their shareholder agreement in a dispute that has pushed their partnership to the brink, and the British oil major has put the asset up for sale.

The struggle over strategy and control at TNK-BP culminated in the failure of BP’s attempt to tie up with Rosneft last year because of restrictions spelt out in the pact on BP’s right to do business in Russia independently from TNK-BP.

Rosneft Chief Executive Igor Sechin, a powerful ally of President Vladimir Putin then serving as energy tsar in his government, came in for public criticism by then-President Dmitry Medvedev for failing to extract a disclosure of BP’s limitations under the shareholder pact before agreeing the doomed deal.

Now the competition watchdog has proposed that shareholder agreements such as the pact between BP and its Russian partners in TNK-BP, struck in 2003, must be made public under legislative amendments agreed by Russia’s Federal Anti-Monopoly Service, the agency’s deputy head, Anatoly Golomolzin said.

He said amendments had been agreed following a complaint by Rosneft (ROSN.MM), after the Russian state oil company’s share swap and Arctic exploration deal with BP collapsed last year in the face of opposition from its Russian partners.

Rosneft appealed to the competition watchdog after the failure of the deal, he said.

“Last year there was a situation linked to the fact that a deal could not take place, BP’s deal with Rosneft, and it became clear that it was linked to the shareholder agreement,” Golomolzin told Reuters by telephone.

“Since last year we have been analysing the agreement and have agreed amendments to the law requiring the publication of such agreements.”

Spokesmen for Rosneft and TNK-BP declined to comment. A spokesman for AAR was not immediately available.

The still-confidential shareholder agreement, which, in part, regulates the rights and duties of each partner in TNK-BP, remains a minefield in the relationship between BP and the four Soviet-born tycoons who share control of the joint venture.

Despite its confidentiality, conflicting interpretations of the shareholder agreement have emerged during skirmishes between the two partners to bolster their arguments.

BP announced last week it had multiple offers to sell its stake in TNK-BP, of which Rosneft’s parent company, state energy holding Rosneftegaz, is seen as the likely buyer, but the tycoons responded that BP was required to consider their counter-offer.

A spokesman for Alfa-Access-Renova was quoted as saying BP did not have the right to disclose confidential information to a third party without its consent, which would block progress on a deal with a potential buyer.

BP responded that AAR did not have veto power on a sale.

Sources close to AAR have said the consortium would be willing to buy out BP for a consideration of $25 billion (16.13 billion pounds).

BP paid a total of $8 billion in 2003 for one half of TNK-BP, a hugely profitable investment that has yielded $19 billion in dividends and accounts for 29 percent of its production.

Additional reporting by Vladimir Soldatkin; Writing by Melissa Akin; Editing by Tim Dobbyn

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