Exxon: To Russia, with Love?
Exxon Mobil, take note. A day after the largest U.S. oil company signed a multi-billion dollar exploration pact with Rosneft, Russia’s largest oil company, masked police officers armed with assault rifles raided the Moscow office of competitor BP.
Call it coincidence, call it rubbing salt in BP’s wounds, but whatever your pleasure, the timing of the raid is odd considering that it was BP, Europe’s second-largest oil company, that was originally supposed to partner with Rosneft.
Only the folks at Exxon can say for sure whether they are smart enough to realize what they’re getting into. But raids in Russia on the offices of western companies doing business there aren’t uncommon. BP has had its share, and Germany’s Deutsche Bank was on the receiving end of a raid in February, The New York Times reported.
Wednesday’s raid on BP’s Moscow office was authorized by a Siberian court that is scheduled to hear a case involving the British oil company and private investors in TNK-BP, BP’s Russian joint venture according to the Times. The case stems from the TNK-BP investors being irked by BP pursuing a relationship with Rosneft. The Siberian lawsuit was based on the allegation that BP executives serving on the board of directors of TNK-BP violated their fiduciary obligation,
BP Russia President Jeremy Huck told the newspaper that the company believes “these legal actions are without merit and appear to be part of a pressure campaign against BP’s business in Russia.”
Potentially worse for Exxon is that its accord with Rosneft, which will see the two companies tap the oil-rich Kara Sea, is that the American company will now be firmly ensconced in the politics of Russia’s oil business, and those can be choppy waters. Eurasia Group said the “politics of the Russian energy sector remain treacherous,” the Times reported. The raid on BP’s Moscow’s office underscores that point.
To be sure, doing business anywhere in Russia is no picnic. Moscow has been condemned by some of its own media outlets for not doing enough to fight corruption. And Russia’s reputation as one of the most corrupt countries in the world is well-documented.
In 2010, NGO Transparency International ranked Russia 146th out of 180 countries in the world, with 180 being the worst, when it comes to corruption. The organization said that bribe-taking was a $300 billion annual enterprise in the “R” in BRIC, according to Reuters.
Russia’s corruption score is so bad that it ranks behind most of Africa and a fair amount of the former Soviet republics, according to the Guardian.
Exxon, you’ve been warned.
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