December 20, 2006
Judging by the drama unfolding at BP, the company that casts the longest shadow in Britain today is not Barclays or Tesco or Vodafone. It’s Gazprom. The Russian energy giant hovers not only over BP’s joint venture in Russia, but the succession saga at St James’s Square and even its future as a British business.
This is getting repetitive, no doubt, but Lord Browne’s departure has been appallingly handled. Peter Sutherland, the chairman, has reduced his chief executive to a lame duck president; the candidates to replace him are being exposed to the humiliations of a public talent contest; and the office politics is distracting BP at a time when it has too many external fires to put out to be able to afford a bonfire of the vanities in-house.
But the intrigue inside the executive suite needs to be put aside. The future of one of Britain’s most important companies is at stake. While this transition drags on, the company will be weakened. If mishandled, it could be wounded. A powerful multinational that 18 months ago was seriously mulling a bid for Shell could swiftly find itself a takeover target. This time, Shell might be doing the bidding. Or, quite conceivably, Gazprom. The British Government could do little to stop a Russian acquisition of BP.
The fact that Bob Dudley, who runs the TNK-BP joint venture in Russia, has risen so quickly to become one of the two front-runners for Lord Browne’s job is, itself, a reflection of how BP has come to see its future entwined in Russia. (Tony Hayward, the head of exploration, is the other leading candidate.) As BP looks to avoid Shell’s Russian nightmare and protect its assets in Russia, Mr Dudley is seen as the man to handle the Gazprom relationship — both in negotiations on TNK-BP and in potential joint ventures further afield.
As North Sea oil revenues fall, the relative importance of managing Moscow has risen. Mr Dudley is rightly seen as a man who has, so far, played a difficult hand well. But the job of BP’s chief executive is global. It needs to be decided on the basis of personal merit, not personal relationships.
http://www.timesonline.co.uk/article/0,,630-2512396.html
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