To Russia, With Little Love From BP

BP’s (NYSE:BP) view on Russia can be summed up in two words: corrupt and inefficient. The oil and gas producer is not too fond of President Vladimir Putin’s “security friends” either.

A 2012 security assessment of the company’s top threats, seen by The Wall Street Journal, painted a far less rosy picture of the country than the London-based company usually espouses. While BP exited its Russian joint-venture TNK-BP under somewhat hostile conditions, the company typically keeps its public comments about Moscow positive, often focusing on its oil riches.

But as the internal memorandum revealed, BP’s business operations and investment in Russia are plagued by “problems of corruption, resource misallocation and ineffective courts and civil remedies.” In particular, the document rather bluntly points out problems with how the country is run. Putin “retains the support of the power elites in the Security Services, Military and Law Enforcement, members of which have seeded throughout critical sectors of the Russian government and economy.”
The document was penned before the company decided to sell its 50 percent stake in TNK-BP last October after a dispute over Russian exploration rights caused a rift between the two companies. Yet, BP will continue its operations in the country; it has increased its stake in the state-owned oil company Rosneft (RNFTF.PK) to 19.8 percent and will explore additional acreage.

“In Russia, we have an exciting and promising future,” Chief Executive Bob Dudley said in the company’s earnings presentation.

BP declined to give comment on documents for the publication.

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