BP says Russians cannot cash in early

BP insisted yesterday that there was no prospect of changing the terms of its oil joint venture in Russia to allow its partners to cash in early.

The three Russian businessmen involved in the 50:50 venture TNK-BP received $3bn in cash when the deal was signed last August. They are due to receive a further $3.75bn in BP shares over the next three years. However, they are now trying to persuade BP to pay them the remaining money upfront and in cash so that they can invest it in other ventures.

A BP spokesman said that under the terms of the deal signed last year with the Russian companies Alfa and Access/Renova (AAR), it was agreed that they would remain shareholders in TNK-BP until at least 2007 and receive the balance of what they were owed in three annual instalments of BP shares. The first instalment worth $1.25bn is due at the end of August. "We have an excellent set of agreements," said a BP spokesman. "We expect all partners to stick to those agreements."

One of the three Russian partners, Viktor Vekselberg, the chairman of Alfa, has said on a number of occasions that he would prefer to receive cash from BP rather than shares so he can invest the money in new ventures.

However, oil industry sources say they are puzzled as to why Mr Vekselberg and his two other Russian partners, Mikhail Fridman and Len Blavatnik, do not simply use the BP shares they are about to receive as collateral against which to raise bank loans. The eagerness of BP's Russian partners to cash in early has caused unease in some quarters about the commitment of the three men to the joint venture. When the joint venture agreement was finally signed last August, the chief executive of BP, Lord Browne of Madingley, commented: "In business, trust is never 100 per cent."

BP was burnt once before in Russia when a joint venture with a company called Sidanco, also owned by the same three men behind AAR, went sour.