“Knock your Partner’s Teeth Out with the Government’s Help”

We’ve been waiting for more news to come out following the the blockbuster accusation from the Alfa-Access-Renova consortium that BP was conspiring with the Russian government to force them out of their stake in TNK-BP – the core issue of the contentious shareholder dispute. Other than the expected denial by BP of a Kremlin link and some news about an Iraq deal, the best response comes from Yulia Latynina at the Moscow Times:

When BP first entered Russia in the ’90s, it used the powerful Alfa Group to gain a foothold in the country. Now the situation has changed, with state-owned oil companies calling the shots. Shortly after the joint venture’s moratorium on the sale of shares by either side expired on Jan. 1, BP started talks with Gazprom on a number of joint projects. An AAR buyout with Gazprom’s participation would create a new, profitable configuration for BP in which the state would effectively force AAR’s private shareholders out of the oil and gas business using BP’s money. In return, BP would gain the right to represent Gazprom in foreign markets. Put more simply, Gazprom would replace Alfa as BP’s new partner. BP would have beaten AAR to the punch if it had struck a deal with the state to use government resources to trade one Russian partner for another. But AAR shareholders are getting the last laugh by showing that they are more skillful than BP at the quintessential Russian game of “knock your partner’s teeth out with the government’s help.“