Daily Telegraph: City comment: A slick industry struts and frets

Edited by Neil Collins (Filed: 28/04/2004)

Daily Telegraph: High oil prices 'are stalling the US economy'

28 April 04

A hot new production opened in the West End yesterday. Selected critics from leading newspapers were given a sneak preview of A Tale of Two Oil Companies, and a chance to test the latest variant of that invention of the National Theatre, two interlocking plays at adjacent venues.

The first part of the show, in a meeting room in the basement of 1 St James's Square, saw Yukos, Russia's largest oil company, trying to explain away a socking $3.5billion tax charge from the Russian government. Starring Bruce Misamore, Yukos' jolly American finance director, with full interaction from the audience, it packed in more twists than Bleak House, and threatened to go on longer than War and Peace.

Mr Misalot regaled the audience with tales of how the tax charge referred to 17 separate companies, based in special low tax zones in Russia, with which it traded but did not own. After an hour (and no interval) the plot thickened, with the admission that the company had bought three of the 17 at the end of 2000, the year of the tax liability.

Eventually, Yukos essentially admitted that it was getting more than the market rate all along for the oil it sold. It would be a shame to reveal the show's ending, but there's a fine warning from Mr Misamore to Western companies about the pitfals of investing in Russia.

For the second half of the performance, the audience shifted across the square to the altogether more agreeable HQ of BP. Starring Lord Browne of Madingley (who else?) with full supporting cast, delicious props and the cool surroundings of the custom-built interior (custom-built for Ericsson, but never mind) it took a great effort from the players to avoid looking smug.

The plot (record first-quarter profits, more cash for shareholders, plans for a $4billion float) was comfortingly familiar, especially after that one from the shower that is Shell. BP's own Russian tax tale is altogether more benign.

It is insulated from past tax problems at its new Russian TNK subsidiary, thanks to contracts signed when the deal was done.

In the great Wild East that is today's Russia, it's impossible to be sure of anything, but oil companies have no choice but to go where the oil is, and as Lord Browne once memorably remarked: We had to decide between Russia and Nigeria, so which would you choose? It was a line to bring the house down.

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