Russia's TNK-BP in surprise Venezuelan deal

Int’l Relations

BP's Russian oil joint venture TNK-BP will sign its first deal with Venezuela after months of dispute between BP and its Russian partners over its expansion abroad.

BP and its partners in TNK-BP, four Russian-connected billionaires, have been locked in a dispute over strategy and management tactics, with the Russian side accusing BP of limiting TNK-BP's expansion abroad, including in Venezuela.

BP argues the projects proposed by its partners were not economically attractive.

The Kremlin source said TNK-BP, alongside oil major LUKOIL and gas giant Gazprom, will sign new energy deals with Venezuela during President Hugo Chavez's visit to Moscow. He gave no details.

“In a clear sign of rising cooperation in the energy sphere Gazprom, LUKOIL and TNK-BP and Venezuela's PDVSA are planning to sign deals during the visit,” the source said ahead of Chavez's meeting with Russian President Dmitry Medvedev.

One of the top Russian co-owners, German Khan, will sign documents on behalf of TNK-BP.

One source close to TNK-BP said the signing would not have been possible without clearance from BP.

“I would definitely read it as a first step toward a compromise,” the source said.

The other source played it down, saying the deal with Venezuela was unrelated to the dispute between the shareholders and its main aim was to make Chavez's visit a success. (Reuters)

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