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BP signs peace deal with Russian partners

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By Ed Crooks, Energy Editor

Published: January 9 2009 22:46 | Last updated: January 9 2009 22:46

BP and its Russian partners in the TNK-BP joint venture have signed the peace deal they agreed in principle in 2008, weakening the British group’s grip on the company.

The deal, which followed months of conflict over the venture, leaves two of the Russian shareholders in powerful executive roles.

It will also lead to the appointment of a new chief executive, who must be approved by the Russian tycoons who own 50 per cent of TNK-BP.

TNK-BP staff and former BP executives have said the influence of the Russian shareholders has been growing in recent months, with many western managers leaving the company.

The Alfa-Access-Renova group, through which the Russian tycoons Mikhail Fridman, German Khan, Len Blavatnik and Viktor Vekselberg hold their stake in TNK-BP, argues that the management changes will make the venture stronger.

AAR said on Friday: “We are pleased that the changes we have been advocating have now been agreed. As a result, the company’s management can now fully focus on the successful development of TNK-BP as a leading independent oil company in the interests of all stakeholders.”

The joint venture is a very important business for BP, accounting for a quarter of its production, although a smaller proportion of its profits because of the heavy taxes on Russian oil.

Under the deal, which was agreed after sustained legal and regulatory pressure on the venture, the board of TNK-BP Management, which provides the senior executive team for the group, will shrink from 13 members to six.

Mr Khan and Mr Vekselberg, who served on the previous team under Bob Dudley, the BP-backed chief executive who stepped down last month, are expected to retain their positions.

Denis Morozov, 35, the former chief executive of Norilsk Nickel, is expected to be confirmed as the new chief executive in the next few weeks. He was described by Mr Vekselberg as having a “very high” chance of being appointed.

The new board for the TNK-BP group is expected to be announced at the same time. Two directors are set to leave, one from the BP side and one from the AAR side, to be replaced by three “independent” directors.

EDITOR’S CHOICE

In depth: TNK-BP – Sep-04

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