BULA Resources could face a writeoff of up to £8 million against its investment in the Russian oil industry if discussions on the restructuring of its involvement in Russia are not successful.

Bula has convened an extraordinary general meeting where it will be seeking to remove two of its directors, Mr Alexander Manchev and Ms Tatyana Kirilova, who have already declined to resign. Mr Manchev and Ms Kirilova are directors of the Russian Corporation, to whom Bula has already paid $5.557 million in cash and issued 90.3 million shares.

Bula invested the funds for an option to acquire 51 per cent of the capital of Aki Otyr, a company whose main assets are licences to produce oil from a number of fields in western Siberia.

According to Bula, it subsequently emerged there were legal uncertainties over the Russian Corporation's ownership of 51 per cent of the Aki Otyr shares. At that stage Bula decided to withhold the deterred consideration of 71.9 million of its own shares until the uncertainties were resolved.

The Russian Corporation, for its part, has indicated it believes there are no problems concerned with its titles to the 51 per cent of Aki Otyr.

Bula has now taken legal action against the Russian Corporation to allow the sale of the 71.9 million shares it has already allotted to the Russians and is examining other legal options to recover outstanding sums.

Bula is also in direct discussions with Aki Otyr with the aim of entering into a new agreement which would give Bula the option to acquire half of a new company that would be established to develop the oilfields in Siberia.

Mr Marichev and Ms Kirilova own 48.9 per cent of the Russian Corporation, which itself has taken action against Bula for the payment of the deferred consideration of 71.9 million Bula shares.