Bloomberg News

BP, TNK Billionaires Seek to Defeat Oil-Company Theft Claims

December 15, 2011

(Updates with comments from court hearing in fourth and 13th paragraphs.)

Dec. 15 (Bloomberg) -- BP Plc and its billionaire partners in Russian oil venture TNK-BP asked a New York judge to throw out claims against them seeking more than $1 billion in damages over the alleged theft of an oil company.

The lawsuit by Norex Petroleum Ltd. stems from more than a decade of litigation in Russia and the U.S. over Yugraneft, which owns an oil field in Western Siberia. Norex claims its controlling stake in Yugraneft was stolen through corruption and armed force and that BP and its partners profited off the scheme at Norex’s expense.

BP and the other defendants in the lawsuit, including billionaires Leonard Blavatnik and Victor Vekselberg, asked New York State Supreme Court Justice Eileen Bransten in Manhattan today to dismiss the complaint. Norex has fought in Russian and U.S. courts over Yugraneft and lost, they argue.

“Norex cannot use this court as an appellate court to overturn prior litigation decisions and outcomes,” said Owen Pell, an attorney at White & Case LLP who argued for dismissal. “They litigated all these issues in Russia.”

TNK-BP, Russia’s third-largest oil producer, now controls Yugraneft. TNK-BP is half-owned by London-based BP and half- owned by Access Industries, Vekselberg’s Renova Group and Alfa Group Consortium.

AK-47s

Norex says that in 2001, militiamen wearing fatigues and armed with AK-47 assault rifles, forcibly entered Yugraneft’s corporate offices, telling employees that TNK had assumed ownership of the company, according to the Norex complaint. The men were acting at the direction of Blavatnik, Vekselberg and Alfa Group, Norex said.

Blavatnik, Vekselberg and others also bribed Russian officials to influence a lawsuit that sought to reduce Norex’s stake in Yugraneft based on the argument that its contribution to Yugraneft, for which it received a 60 percent stake, wasn’t properly valued, according to Norex.

In 2002, a Russian court reduced the stake to 20 percent, according to the lawsuit. A Russian appeals court in 2004 affirmed the ruling, and Norex actively participated in the case, Blavatnik and other defendants said in court papers.

“The assertions in Norex’s lawsuit are not only untrue, they are simply a tired rehash of the same preposterous claims they have been recycling for the past 12 years in both U.S. and Russian courts,” Mike Sitrick, a spokesman for Blavatnik said in an e-mailed statement. Previous lawsuits have been dismissed, and “we are confident plaintiff’s latest attempt will suffer the same fate,” he said.

Andrey Shtorkh, a spokesman for Renova, declined to comment on the Norex claims. Representatives of TNK-BP and Alfa Group couldn’t be reached for comment.

‘Fully Aware’

When TNK-BP was formed, BP was “fully aware” of the alleged illegal takeover of Yugraneft, according to Norex. Norex cites an internal BP e-mail and an indemnification agreement it obtained from Access, Renova and Alfa Group related to Yugraneft.

“Our case highlights BP’s tumultuous history with TNK’s principals and the shifting and self-serving alliances BP has forged as part of its Russia strategy, which put the desire for profit ahead of the all else,” Barry Ostrager, an attorney for Norex, said in an e-mailed statement.

BP attorney Daryl Libow argued in court that the U.K. company’s mere knowledge that its business partners may have engaged in improper conduct isn’t enough for the Norex claims to proceed against BP.

In court papers, the company argued that Norex “does not

-- because it cannot -- allege that BP had any involvement in the alleged illegal takeover.” Just because it received dividends from TNK-BP as a shareholder and some portion of the revenue may have come from Yugraneft doesn’t mean BP was enriched at Norex’s expense, BP said.

The case is Norex Petroleum Ltd. v. Blavatnik, 650591-2011, New York State Supreme Court (Manhattan).

--Editors: Mary Romano, Fred Strasser

To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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