Royal Dutch Shell Group .com Rotating Header Image

Exercise caution in Russia, Tony Hayward warns investors

Exercise caution in Russia, Tony Hayward warns investors

By Russell Hotten

Last Updated: 12:19am BST 30/07/2008

Foreign investors in Russia should tread carefully, according to Tony Hayward, the chief executive of BP, who is fighting over control of the company’s oil joint venture in the country, TNK-BP.

Mr Hayward said that BP would not be “intimidated by strong-arm tactics” allegedly being used in its dispute with Russian shareholders in the 50-50 venture.

For months BP has been engaged in a power struggle with a group of oligarchs for control of Russia’s third largest oil company. Last week, the joint venture’s chief executive, Robert Dudley, left Russia for a secret location in central Europe.

Speaking yesterday, during a press conference to announce BP’s profit figures, Mr Hayward said: “Russia is quite a challenging place to do business.” Asked what message the TNK-BP saga had for other investors, he said: “My advice would be, tread with caution.”

  • More on oil
  • BP and a group of Russian billionaires operating under a consortium called Alfa-Access-Renova are in dispute over TNK-BP’s investment and expansion strategy. BP links a series of problems to the row, including a refusal by Moscow to renew visas, legal action, police raids and the alleged harassment of Mr Dudley. AAR denies any involvement in these.

    Mr Hayward’s message for AAR was that it would “vigorously defend” its rights, including taking legal action outside Russia. “We cannot be sure how things will pan out in Russia, but I can tell you that we are committed to trying to find a solution that’s acceptable to all parties. Whether that’s possible we’ll see.”

    He added that BP had no intention of selling its stake or leaving Russia. Mr Hayward also made a strong defence of TNK-BP’s performance, which is criticised by AAR. He said the joint venture’s dividends, organic growth rate and rate at which it replaces oil reserves were all the highest in Russia.

    Mr Dudley left Russia last Thursday amid intense secrecy, and intends to run TNK-BP from outside the country. He is “taking a break” somewhere “in central Europe” and will make an appearance within the next few days, said Mr Hayward.

    Asked if BP was prepared to stop TNK-BP from paying dividends to put pressure on AAR, he said all options were on the table.

    This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

    Comments are closed.