Financial Times FT.com

Visa reprieve for TNK-BP chief

By Catherine Belton in Moscow

Published: July 18 2008 11:57 | Last updated: July 18 2008 19:09

Robert Dudley, the embattled chief executive of TNK-BP, on Friday won a temporary reprieve from Russian immigration officials who granted him a 10-day visa, one day before he would have been forced to leave the country amid an escalating row between BP and its Russian partners in the 50:50 oil joint venture.

Mr Dudley had packed a bag ready to leave Russia on Saturday, when his current visa expires, one person familiar with the situation said. Immigration officials had said they could not issue him with a fresh one without a new employment contract.

“They gave me a 10-day visa,” Mr Dudley told reporters after meeting with immigration officials on Friday. “In this time I should provide them with confirmation that my employment contract is valid.”

But state labour inspectors kept up the pressure yesterday, transferring a case against him for alleged labour infractions to court, which could lead to Mr Dudley’s suspension.

BP is locked in a battle with Russian billionaire shareholders for control of TNK-BP, with the Russian partners engaged in a concerted drive to remove Mr Dudley.

Sixteen of TNK-BP’s senior Russian managers this week sued for his dismissal, claiming he discriminated against them in favour of foreign staff.

BP’s shares have under-performed its peers by 4 per cent since the dispute with the Alfa-Access-Renova group of Russian tycoons flared up in March.

Stan Polovets, AAR’s chief executive, said he believed BP’s shareholders could be persuaded that it was in their interests for BP to accept the changes to TNK-BP proposed by the Russian side, including the removal of Mr Dudley.

“Like any private equity investor that is not happy with a company’s performance and strategy, we want to make changes,” he said. “If our recommendations are accepted, they could lead to the creation of value for all shareholders.”

So far, there is little sign that the dispute has damaged TNK-BP’s performance. Indeed Alistair Graham, BP’s chief liaison with TNK-BP, said that 2008 had so far been the venture’s best year yet. Production rose in the three months to June for the third successive quarter, at a time when output in Russia’s oil industry as a whole has been falling.

However, BP argues that if the dispute drags on, TNK-BP’s performance is bound to be affected, and the effects will show clearly next year. This is an important period for TNK-BP, with several big projects due to come on stream next year and in 2010.

Mr Graham said that the absence of some project managers who had already been forced out as a result of the dispute could have an impact on the efficiency of drilling projects and production growth.

AAR has also challenged TNK-BP’s capital spending programme, challenging its plan to invest about $4.4bn this year, and calling for a cut to $3.5bn.

Mr Graham said: “We want to increase capex to bring on new fields, but AAR have rejected that.”

Another person close to TNK-BP said the decision-making on future projects “had ground to a halt”.

Many industry experts believe BP has been out-fought by the sharper and more aggressive AAR tycoons.

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