AAR, THE Russian partner in the TNK-BP oil venture in which BP holds a 50 per cent stake, said yesterday it is being sued for 8.5 billion rubles ($362 million) by BP.

AAR learned on July 3rd that BP submitted the claim for damages against it in the High Court in London for an alleged breach by AAR of a tax deed of covenant dated August 29th, 2003, AAR said in an e-mailed statement.

"While the full details of the legal claim have not yet been submitted by BP, AAR considers the claim unjustified and grossly inflated," AAR said. "AAR will vigorously defend against it."

BP, whose 50 per cent stake in TNK-BP accounts for a quarter of the company's total output and a fifth of proved reserves, is struggling to maintain control of the company.

Billionaires Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik, who control the other 50 per cent and collectively form AAR, say London-based BP treats TNK-BP as a subsidiary and stunts its development as an independent company.

The back-tax claim predates the formation of the TNK-BP venture. AAR said today it has to date paid close to $500 million to BP in connection with the tax deed of covenant. BP and AAR have been in discussions for the past 12 months over the exact amounts owed by each party to the other, Stan Polovets, chief executive officer of AAR, said in the statement.

"We are very surprised that instead of trying to resolve this matter through dialogue, BP has turned to British courts with a claim that is grossly inflated, he said. "AAR regards claim as another example of BP's bullying tactics and an attempt by BP to deflect the focus away from its mismanagement of TNK-BP," Mr Polovets said.

BP was unavailable for comment. - (Bloomberg)