As the acrimony between partners in the British-Russian joint venture TNK-BP grows, the British head of the project, Robert Dudley, has suddenly left Russia, claiming harassment from Russian shareholders.
The dispute threatens to slow or even halt production at Russia's third-largest oil company. It's also being watched closely by investors around the world who will read its outcome as a strong indicator of Russia's investment climate.
Dudley says he will continue to run the oil company from abroad but Russian shareholders say his decision to leave and manage the company from abroad shows that BP considers TNK-BP to be its subsidiary. BP and Alfa Access Renova (AAR), an umbrella group for four Russian billionaire partners, are equal half-owners of TNK-BP.
Problems at TNK-BP have been brewing for some time, with Russian shareholders keen to oust Dudley. But after a board meeting earlier this month in Cyprus, the dispute intensified.
At the meeting, TNK-BP proposed an investment plan of some $4.4 billion for the company. But Russian shareholders called for that plan to be reduced by $900 million and that money paid out as dividends. Dudley refused that offer, and TNK-BP's chief operating officer Tim Summers said that the $900 million loss would translate to the loss of 1million to 5 million tons of oil production in the next 12 months.
Following the Cyprus meeting, Russian shareholders stepped up their calls for Dudley to resign, accusing him of poor performance and acting in the interests of BP. Dudley responded on July 17 that such accusations were not in the company's best interests:
"These claims are very disappointing and will, if they continue, tear apart the successful company we have built over five years," he said.
Russian shareholders also criticized the number of expensive foreign employees at TNK-BP -- and BP said this week it would withdraw 148 of its foreign employees.
Also after the Cyprus meeting, Russia declined to renew Dudley's one-year visa, instead giving him a 10-day visa that expires on July 29. BP Chief Executive Tony Hayward said Dudley was subjected to repeated attacks.
"We've reached a new low in the tactics being applied in the shareholder dispute, polarizing the organization in a cynical and destructive way," Hayward said.
Dudley has said his departure is only temporary and claimed he is fully capable of running the company from abroad.
BP says the Russian partners are using raider tactics to wrest away BP's shares. TNK-BP's deputy chairman, Lord Robertson, has vowed "to fight in all the legitimate courts in the world" to retain shares in the company.
TNK-BP posted record profits of $4.7 billion in the first half of 2008, more than double the figure from the same period last year.
Potential investors will be watching the events surrounding the company and the outcome is expected to have a big influence on the way foreign companies perceive the investment climate in energy-rich Russia.
with agency reports