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Oil: BP loses grip on troubled Russian venture as head of finance quits

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Oil: BP loses grip on troubled Russian venture as head of finance quits

· Balance of power shifts to billionaire partners 
· Departure leaves last man standing for UK company

BP’s grip on its Russian joint venture was loosened significantly yesterday when one of its few remaining appointees – James Owen, the chief financial officer – resigned abruptly.

With Robert Dudley, chief executive of TNK-BP and another of BP’s men, out of Moscow, the balance of power has shifted towards BP’s partners but bitter rivals – the four Russian billionaires who own 50% of the venture.

There is now only one BP-nominated executive – chief operating officer Tim Summers – at the top of the Siberian oil and gas company, with two nominated by the rival private shareholders from the Alfa-Access-Renova (AAR) consortium.

Dudley remains chief executive but few expect him to return to Russia after fleeing what he claims was personal harassment. Many expect him to step down shortly.

BP refused to comment on the latest upheaval, but TNK-BP released a formal statement that said: “Mr Owen’s [resignation] letter states that as the current shareholder issues remain unresolved he feels it is difficult for him to continue working independently, as his role demands.”

There was an unusually upbeat comment from the Russian shareholders.

“Jim Owen has made a significant contribution to the development of TNK-BP and we regret to see him go,” said Stan Polovets, chief executive of AAR.

“During two and a half years with the company, Jim has built a strong organisation underneath him and we expect to have a smooth transition as TNK-BP considers candidates for the CFO job. We wish Jim all the best as he pursues new endeavours.”

The resignation comes days after Tony Hayward, BP’s chief executive, held talks with Mikhail Fridman, one of the venture’s four main Russian shareholders, to try to resolve the crisis.

Two of those shareholders, Viktor Vekselberg and German Kahn, hold senior management positions at TNK-BP and their umbrella group, AAR, had said that they would step down if BP agreed to withdraw Dudley.

Hayward admitted at BP’s second-quarter results conference last week that Dudley’s position – working from outside of Russia – was sustainable only for a few months.

BP has always claimed that it was Dudley’s decision to leave Russia and that his position as chief executive at TNK-BP will be supported at all costs. But many industry experts believe it is only a matter of time before Dudley agrees to leave the company, which provides BP with a quarter of its global oil and gas production but only a tenth of its profits.

BP and AAR have been fighting over control of TNK-BP for six months, amid expectations that one or both sides will eventually have to sell their stake to the Kremlin.

The company has spent the past year fighting off claims from the tax, environmental and immigration authorities in what has been seen by some industry specialists as a rerun of the kind of problems that afflicted Shell until it sold part of its shareholding in Sakhalin to state-owned Gazprom. But in recent months the Russian private shareholders have accused BP of running the joint venture for its own ends, something that the British company denies.

http://www.guardian.co.uk/business/2008/aug/05/bp.oilandgascompanies

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