Oil: TNK-BP’s credit rating may be cut over feud, warns Fitch

TNK-BP’s debt rating could be cut, the credit-rating agency Fitch warned yesterday, citing the ongoing feud between the oil company and its Russian partners.

The agency said it was placing the Russian oil company’s debt on “ratings watch negative” because of the possible fallout, unless the dispute was resolved “in a timely manner”.

BP and its partners, a group of four Russian billionaires, have been feuding for months over the strategy and management at TNK-BP, which accounts for a quarter of BP’s production but only 10% of profits.

Fitch said the shareholder dispute had not yet affected TNK-BP’s operational performance and might not necessarily have an impact in the longer term.

But it said it was concerned about “the impact of the dispute on TNK-BP’s ability to remain on track with the development of new fields in terms of investments and implementation, including adequate staffing.” The agency added that in its opinion “corporate governance issues of the magnitude that TNK-BP is facing are not commensurate with an investment-grade rating.”

Two other rating agencies have already downgraded their view of the Russian company’s debt-rating.

Last month TNK-BP’s chief executive, Robert Dudley, left Russia complaining of harassment but pledged to continue to manage the business from abroad.

Earlier this week, TNK-BP’s chief financial officer, James Owen, resigned, blaming his decision on the struggle between BP and the Russian oligarchs who operate as Alfa-Access-Renova (AAR).

Yesterday a Russian court fined Dudley 500 roubles (£11) for breaches of Russia’s labour laws but he escaped a possible three-year ban from holding office.

Yesterday AAR said it “does not have any major concerns at this point about the way the company will operate in the next couple of months without a CEO in Russia. Executive responsibilities are clearly defined and the operations in the field, which are the most important thing, are performing well.”

BP took a different view. “It appears that the shareholders’ dispute is now having an impact on important external perceptions of the company,” it said.

The two factions remain in contact but appear to be making little progress towards a resolution.

http://www.guardian.co.uk/business/2008/aug/09/bp.oil