BP yesterday shrugged off concerns about the wave of lawsuits and environmental criticism facing its Russian oil partners as it formally signed a $13.5bn (£8.1bn) deal to take a 50 per cent stake in the country's third biggest oil company.
The oil giant's chief executive, Lord Browne of Madingley, said he was confident BP would have "a very good business relationship and a good partnership" with Alfa Group and Access-Renova (AAR), the two Russian companies which will own the other 50 per cent share in TNK-BP.
The signing of the deal came as Tony Blair and Vladimir Putin announced a new energy pact which will involve the UK and Russia co-operating on the construction of a gas pipeline under the Baltic Sea which will connect into Europe and Britain.
Lord Browne said that TNK-BP would apply UK standards of corporate governance and any disputes which might arise between the partners would be settled under UK law. The company will be registered in the British Virgin Islands but Lord Browne said this was not for tax purposes.
The three Russian businessmen who control AAR are the same group that BP accused of trying to cheat it out of valuable assets after it took a 10 per cent stake in the Siberian oil producer Sidanco in 1997. The legal dispute was finally settled in 2001, although not before BP was forced to write off its initial investment.
AAR is also being sued for $383m in the British Virgin Islands by two minority shareholders in a Sidanco oil refinery, alleging fraud. AAR is contesting the claim brought by Astian Group and Indian Ocean Petroleum.
Alfa, which is chaired by Mikhail Fridman, reputedly Russia's wealthiest man, is also one of the companies involved in an oil disaster off Spain's Galician coast last year. The Prestige, the Liberian registered oil tanker which sank, polluting large stretches of coastline, was carrying a cargo for Crown Resources, an oil trading company owned by Alfa.
Mr Fridman, who has an estimated personal wealth of $2bn, dismissed the earlier legal wrangle with BP as "a normal commercial dispute between companies". He also pledged that AAR would conform to best corporate practice. "Our legal environment has become more stable and we have learnt how to behave in the market economy," he said.
Under the agreement between BP and AAR, BP will pay $3.75bn in shares and $2.4bn in cash for its 50 per cent stake in TNK-BP. This is $600m less cash than indicated when the deal was first announced in February. The difference is accounted for by the increased debt TNK will have following its purchase of another Russian oil company, Slavneft. The aim is to include Slavneft in the TNK-BP joint venture, although analysts said BP was likely to balk at the mooted price of $1.5bn it would have to pay.