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GRANT ROBERTSON AND CHRIS VARCOE
CALGARY HERALD
One of Russia's biggest petroleum producers has told the Canadian government to stay out of an escalating diplomatic dispute over the ownership of a Calgary-based company pumping oil in Siberia.
On the eve of Prime Minister Jean Chretien's visit to Moscow, Russian oil firm TNK said its armed takeover of the offices of a small Canadian-owned oil and gas company two weeks ago is an internal matter.
"This is a legal dispute in Russia involving two private companies," TNK spokesman Andy Kattel said Tuesday from New York.
"The only governmental realm that is legitimate to be involved here is the court in Russia".
The well-publicized fight is expected to be a focal point when Chretien meets with Russian President Vladimir Putin on Thursday. Chretien is travelling to Russia to support Toronto's bid for the 2008 Olympics and a winner will be announced in Moscow Friday.
The Canadian government has raised alarms over the seizure of Yugraneft — a Western Siberian oil and gas company that is 60 per cent owned by Norex Petroleum Ltd., a Cyprus-registered company with its head office in Calgary.
Norex: Dispute leads to guns
Norex began operating in the area 10 years ago sad has been embroiled in an ongoing battle with TNK over claims chat it is owed $50 million for oil.
Norex officials say TNK sent two-dozen gun-wielding security men on June 28 to take control of Yugraneft's operations in western Siberia after a bitter dispute over ownership In the
TNK a subsidiary of Russian oil-patch giant Tyumen Oil Co., took control of Yugraneft after a complex legal battle that saw the Russian courts freeze Norex't shares in the company.
TNK then held a shareholders meeting In June to replace Yugraneft's board of directors and assume control of the company.
Responding to pleas for help from Norex, the Canadian government has called the TNK move "predatory" and vows to fight the takeover on a diplomatic level.
"We cannot condone this kind of behaviour by the Russian company (TNK)," said Foreign Affairs Spokesman Andre Lemay in an interview from Ottawa.
"We recognize there are continuing problems with corporate governance in the Russian system, particularly in the area of natural resources."
The Putin government has already thrown its support behind the Russian court decision meaning the fight could be headed for a deadlock Another court hearing into the matter is slated for July 31.
Alex Rotzang chairman of Norex said he fears he will lose the company entirely if the Canadian government does not step in.
"We are hot dealing with a commercial dispute". Rotzang said in an interview from Moscow.
"My options are very limited. They want me to go to the courts, but that could take years to resolve."
But TNK maintains it has followed Russian law at ail times, including IKE attempts to secure the company's facilities with armed security guards.
"We approached Norex, they didn't want to work with. We took action,'" a company official told Russian newspapers last week.
The Russian oil giant also disputes Norex's claim that the matter could - jeopardize foreign investment in the country.
Tyumen already has relations with Western energy companies such as U.S. oilfield services giant Halliburton Co. and Texaco lnc.
"Foreign investment is extremely important to Tyumen oil," Kattel added.
TNK has pledged the safety of seven Canadian employees held at the company's camp last week is not in jeopardy.
Though the issue threatens to boil over on the diplomatic stage tensions have eased at Yugraneft's drilling sites and offices as TNK solidifies its control. On Monday, Russian officials gave TNK Yugraneft's corporate seal, which is needed to do business in Russia.
Yugraneft produces about 10,000 barrels of oil per year.
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