BP Thwarts Ouster of Oil Ventures Chief
MOSCOW The Russian partners in BPs joint venture tried to fire the chief executive at a board meeting on Monday, but they were outvoted by directors nominated from the British side.
Beyond proving an adage in Russian investing do not turn your back on your Russian partner the vote highlighted the continuing struggle of BP to maintain control over a pumping asset that is exceptionally important for its global business.
Once held up as a model of foreign investment in Russia, the TNK-BP venture is unraveling amid a broad trend of Kremlin assertiveness over the countrys oil resources. The governments control serves a blend of commercial and geopolitical aims. At stake is a company operating fields in Siberia that pump about 25 percent of BPs global output. BP bought 50 percent of TNK-BP in 2003 for about $8 billion.
With BPs position in Russia growing more tenuous, the prime minister of Britain, Gordon Brown, raised the ventures troubles at a meeting with President Dmitri A. Medvedev of Russia on the sidelines of a Group of 8 summit on Monday.
Mr. Medvedev, as he has before, responded by asserting that the dispute between the Russian partners and BP is a private matter and that the state will not intervene.
BP is conducting three formally separate but intertwined negotiations with the Russians. The talks draw in Gazprom, the Russian natural gas giant, and touch on Russian ambitions to use the countrys oil windfall profits to expand Russian business empires abroad.
In one line of talks, BP is trying to settle the dispute with its TNK-BP billionaire partners. Separately, BP is negotiating together with these partners to conclude the sale of a large Siberian gas field to Gazprom that the company was pressed to sell last year. Finally, BP is negotiating directly with Gazprom to realize an international cooperation agreement signed last year as a condition of retaining some stake in the Siberian gas field.
In this agreement, BP undertook to assist Gazprom in acquiring $3 billion worth of assets outside of Russia, furthering Gazproms international expansion plans.
Gazprom has expressed interest in several projects, including buying into a proposed natural gas pipeline from Alaska to the lower 48 states. BP executives have declined to comment on what role they were playing in furthering Gazproms goals, with the Alaska venture or elsewhere.
The talks between BP and Gazprom on international cooperation had continued for nine months, without a resolution, before the pressure began on TNK-BP; no evidence has emerged to date that the issues are related. Gazprom has denied any hand in the TNK-BP dispute.
While unsuccessful, the latest maneuver by the Russian shareholders on Monday lays the groundwork for lawsuits against the British-nominated board members in Russian courts, an official close to the Russian partners said in a telephone interview.
The Russian partners had called the board meeting Monday of a subsidiary, TNK-BP Management, to contend that TNK-BPs chief executive, Robert Dudley, had violated Russian labor, migration and tax laws. But three of five board members at TNK-BP Management are appointed by Mr. Dudley himself; they voted to retain him.
This vote exposed the board members to potential lawsuits for voting in violation of the company charter, which requires that board members ensure the chief executive upholds Russian law.
BPs spokesman in Russia, Vladimir B. Buyanov, said the Russian partners allegations against Mr. Dudley lack substance and are misleading. BP officials have, in turn, accused the Russian partners of pulling strings in the Russian bureaucracy to prompt inspections and citations for regulatory violations.