Russia has BP in its sights.
This week has been a tough one for BP (NYSE:BP) in Russia. Earlier this week, BP's Russian venture TNK-BP, was raided by Russian security forces. Why? One of the TNK-BP employees is being accused of espionage (he is an alumni member of the British Council). And now an environmental inspection has been called, looking into BP's practices in the country. The New York Times reports on the latest troubled for BP in Russia:
The environmental inspection will be led by Oleg Mitvol, who two years ago led a campaign against Royal Dutch/Shell on the Pacific island of Sakhalin, effectively forcing the firm to sell out to state gas export monopoly Gazprom. ...
The Kremlin has been consolidating its presence in the oil sector. There has been market speculation state corporations were eyeing TNK-BP, one of the biggest foreign investments in Russia which in 2006 had profits of $6.6 billion.
The fact that Russia is concerned about environmental ethics at this point is almost laughable. While BP's environmental record isn't exactly spotless (remember the 2006 Prudhoe Bay shutdown due to a leak), it seems a little suspect that Russia is going after BP at this time. What it really looks like is a move to muscle in and get a bigger piece of the oil pie.
In any case, none of this is really good for BP. BP is generally the odd one out in Big Oil, struggling to make profits as large as the other companies, and struggling more to keep its stock prices higher. And, even though BP plans to increase its Prudhoe Bay operations, it is doubtful whether this will be enough to overcome the trouble that continually seems to plague the company.
Disclosure: I do not own BP.