Dark Money Investigations: News

Revealed: Major Tory donor is investor in Russian state-owned oil firm

Rosneft's CEO Igor Sechin was sanctioned by the UK on Thursday. Mercantile and Maritime Energy has shares in a major project by the firm

Solomon Hughes
10 March 2022, 1.12pm
Mercantile & Maritime Energy was a major Tory donor in the year of Boris Johnson's election victory
Scott Heppell/Reuters/Alamy

One of the Tory party’s biggest donors is a major investor in Russia’s state-owned oil firm, Rosneft, openDemocracy can reveal.

Energy firm Mercantile & Maritime (MME), whose UK subsidiary gave the Conservatives £500,000 during the 2019 election campaign, is a co-investor in a massive Rosneft oil project.

Rosneft is close to Vladimir Putin and has been supplying fuel to Russia’s troops in Ukraine. The business is largely state-owned and is run by Igor Sechin, a key Putin ally who was sanctioned by the UK on Thursday following accusations of foot-dragging, and previously by the EU, leading to France seizing his superyacht.

Conservative business secretary Kwasi Kwarteng pressured British energy firm BP over a similar deal with Rosneft, prompting BP to announce its exit from the partnership. However, neither Kwarteng nor any other Tory minister has criticised the MME/Rosneft deal.

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MME and a second Tory-linked company, Vitol, both bought shares in Rosneft’s giant ‘Vostok oil’ scheme in June 2021.

Both firms are energy traders, organising the buying and shipping of oil and gas, and ship Rosneft oil. The trade that has faced less immediate threats of sanctions because of a Western need for Russian fuel.

But the 2021 Vostok deal turned them from traders into investors in the Russian firm.

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The vast Vostok project is to develop new oil fields in northern Siberia. The plans include building 15 new towns for 400,000 workers. Rosneft expects Vostok oil production to be on the scale of the entire North Sea.

MME is run by veteran Pakistani oil trader Murtaza Lakhani, who lives in the UK. The firm, headquartered in Singapore, donated half a million pounds to the Tories in November 2019 through its UK subsidiary, Mercantile & Maritime UK Ltd, which Lakhani also owns and controls.

Vitol, meanwhile, recruited former Conservative minister Alan Duncan in 2020.

Rosnefts Western allies

Sources at the Department for Business, Energy & Industrial Strategy suggested Kwarteng had not spoken out on the deal because MME is not a “British” firm – despite its UK subsidiary and the Tory party donation. Companies must be registered in the UK in order to make political donations.

A spokesperson for the department dodged the question, telling openDemocracy: “While this is ultimately a commercial matter, we welcome the growing number of organisations and governments joining the whole international community in isolating Russia, both diplomatically and financially.”

Labour MP Chris Bryant told openDemocracy: “This simply doesn’t pass the sniff test. I start to wonder whether this kind of shenanigans explains the government’s appallingly slow sanctioning of Putin oligarchs.”

The Conservative Party did not respond to enquiries.

I wonder if this kind of shenanigans explains the government’s appallingly slow sanctioning of oligarchs

Chris Bryant, Labour MP

The MME/Vitol consortium investment is worth 5% of the Vostok project, which itself is estimated to be worth more than €70bn. That would give MME/Vitol’s joint share an estimated value of €3.5bn.

Energy specialist Simon Pirani, an honorary professor of Durham University, said of the MME and Vitol deal with Rosneft: “In 2014, sanctions imposed as a result of [the] annexation of Crimea made it difficult for Rosneft to raise finance, leading the company to try a succession of deals to find allies among Western firms to soften that blow. This deal appears to be on those lines.”

MME did not respond to enquiries. But the firm has previously said it made the Tory donation – one of the 20 largest given to the Tory party in the 2019 election year – because “as a global business with an office in London, we have a vested interest in the health and prosperity of the UK economy”.

Vitol said its involvement in Rosneft’s Vostok was “passive” because “Vitol does not have any directors of, or management input into, this asset”. It also said its investment was “illiquid”, meaning it could not be sold on, making it much harder to break than BP’s deal.

It added that its investment was a one-off payment in 2021 and that “no further payments are being made”, with interest flowing back to Vitol when the Vostok field produces oil.

The links between the Tory party and its dodgy Russian dealings are finally being exposed

Caroline Lucas, Green MP

Vostok’s first production may start in 2024. Some observers note Russia’s next presidential election is set for 2024, so Russian tax money flowing from Vostok might fund spending schemes Putin needs to help his re-election.

Vitol said it did not have “links” to the Conservative Party as only “one employee out of circa 1400 is a former Conservative MP. He is not a member of the Vitol board”. In the past, Vitol’s long-running chair, Ian Taylor, was also a major Tory donor, but he died in 2020.

Green Party MP Caroline Lucas told openDemocracy: “The links between the Tory party and its dodgy Russian dealings are finally being exposed.”

Lucas called for an “independent and comprehensive investigation” into Russia-related influence on UK politics.

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