The Russian arm of British oil giant BP had considered investing in countries, including Burma, that are subject to tight international sanctions, leaked US diplomatic cables claim.
The subsidiary, TNK-BP, whose relationship with its parent company is fractious due to an ongoing legal dispute between BP and its Russian investors, had sought out projects in Kurdistan, Cuba and Burma, a cable dating from June 2008 says.
The proposal was eventually vetoed by the company’s board, a move that created huge tension between its powerful Russian investors who backed the investment, and senior-level management in BP. The current CEO of BP, Bob Dudley, who at the time was chief of TNK-BP, had warned elsewhere that it would “[pose] problems for BP given US and other Western sanctions”.
TNK-BP’s executive director, German Khan, a powerful Russian businessman with interests in oil and gas, whom Forbes magazine once ranked the 406th richest person in the world, is accused in the cable of being the leading figure behind the thwarted ventures.
“The Alfa partners [TNK-BP part-owner] and in particular German Khan had been using the company’s resources to vest projects in places BP couldn’t invest, such as Kurdistan, Cuba, Burma and the like,” the cable said.
“When the TNK-BP board rejected these proposals, Khan would then slide them to a separate company that Alfa controlled, an arrangement that suited Khan and his Alfa partners fine.”
EU sanctions block EU-based companies from doing business with state-owned enterprises in Burma. Had the move gone ahead, the backlash against BP, which has already received heavy criticism for human rights violations related to its operations in Colombia, would likely have been significant.
The June 2008 cable was sent to Washington from the US embassy in Moscow, and marked ‘classified’ by the embassy’s Chargé d’Affaires, Daniel A. Russell. In it, Russell had detailed a conversation he had with TNK-BP’s vice president for international affairs, Shawn McCormick.
It comes as part of the massive leak of US cables by whistleblowing website Wikileaks, whose head, Julian Assange, is facing extradition charges to Sweden.
BP owns half of TNK-BP, which is accountable for around 25 percent of the supermajor’s oil production. The cables also reveal how Dudley had described Khan as “mentally unstable”, just one example of a relationship that had sunk to the point where Dudley claims he was harassed and forced to flee by the Russian oligarchs involved in the company, seriously jeopardising BP’s presence in the country.
Whilst both US and EU sanctions block partnerships with named state-owned entities, EU sanctions do not stretch to enterprises, such as the Union of Myanmar Economic Holdings (UMEH), that are owned by the military.
Two of BP’s major rivals, French-owned Total and US-based Chevron, have thus been allowed to stay in Burma for more than a decade, operating the Yadana gas field and pipeline with the Myanmar Oil and Gas Enterprise (MOGE). From it they have accrued billions of dollars despite widespread criticism from rights groups.