BP faces legal action over merger with Russians

The oil giant BP is facing possible legal action over its $6.75bn (£4.3bn) joint venture with Russian rival TNK.

Minority shareholders in TNK and Sidanco, the Russian oil company part-owned by BP, are considering the action over concerns that they are not being treated fairly by the UK group. They also fear that they could suffer severe losses on their investments.

TNK is controlled by the investment group Alpha/ Access-Renova, but the concerned investors own around half of TNK's free float, believed to be between 3 and 4 per cent of the outstanding shares. They have written several times to BP, asking for clarification over what will happen to their holdings, but Ian Hague, co-founder of the New York-based investment fund Firebird and one of the minority shareholders, said the letters have so far been unanswered.

He added: "Everybody who is not in Alfa/Access-Renova is concerned about the lack of clarity in the deal, and our question is whether our interests are being considered as they move forward."

The proposed joint venture between BP and TNK is currently being considered by the Russian authorities, which are expected to announce their findings later this week. Their approval, which is widely anticipated, would pave the way for TNK-BP to be created. The new company will be the nation's third-largest oil producer, and will significantly increase BP's exposure to the lucrative Russian oil market.

However, Mr Hague warned: "BP owes its shareholders in the UK and US a proper approach consistent with best practices, not practices that exist in Russia, but in the UK and US.

"If we suffer damage we have avenues to address our concerns. We have never sued anyone. It's not fun and it's the last thing anyone would want to do, but BP needs to be held to account. It's always an option."

He added that the minority shareholders would consider launching action against BP, TNK or both, but wanted any case to be heard in a Western court.

However, BP remained unfazed by the prospect of legal action. A spokesman said that as the shareholders were not currently direct investors in BP, their concerns were "not really an issue for us".

Earlier this year, BP and TNK agreed to pool their Russian operations to form TNK-BP. BP is investing $6.75bn in the complex deal, which will see it increase its stake in the Russian oil company Sidanco from 25 per cent to 50 per cent, before Sidanco is then merged with TNK. It will then own half of TNK-BP, with AAR owning the other half.

Under the terms of the deal, BP is paying $3bn up-front and will then pay annual payments of $1.25bn over the next three years.