On a warm summer’s day last July, Bob Dudley took a call at BP’s London headquarters. He had just been confirmed as the next chief executive of the UK oil group, charged with re-building it after the accident in the Gulf of Mexico three months earlier. On the line to offer his congratulations was Mikhail Fridman, head of the company’s lucrative Russian joint venture TNK-BP.

It was the first time the two had spoken since Mr Dudley, a former TNK-BP chief executive, was forced to flee Moscow in 2008 after a bitter dispute between BP and its Russian billionaire partners. Mr Dudley must have seen it as a good omen.

He formally took the helm of BP in October but, fewer than six months later, he is again at loggerheads with Mr Fridman and the other partners in Alfa-Access-Renova, the vehicle through which they hold their stake in TNK-BP. Only this time, there is much more at stake than just the future of BP’s Russian venture.

The oil business is all about risk – technical, corporate and political – but Mr Dudley is involved in a high-stakes poker game with some of the world’s master players in a country where business and politics are closely intertwined, making it hard for global business to keep track of the Kremlin’s mercurial rules.

However, Russia has the oil and gas Mr Dudley badly needs if he is to restore Britain’s one-time biggest listed company to its former glory. To gain access to these riches, in the face of serious technical and environmental challenges, Mr Dudley has re­turned to the scene of earlier battles, all the time insisting the 2008 dispute was “never personal” just “business”.

The catalyst for today’s dispute is Mr Dudley’s first big strategic move as chief executive. It is a move he hopes will take BP deeper into Russia and provide a fresh source of growth: a $16bn share swap with Rosneft, the Russian state oil champion, and an alliance to explore in the Arctic, one of the last frontiers in energy exploration.

But in the run-up to next week’s anniversary of the explosion in the Gulf of Mexico – with the focus once more on BP’s safety record and the billions of dollars it has had to set aside for compensation – investors are worried. They ask whether Mr Dudley has misjudged Russia’s political landscape. The share price has dropped from more than 500p at the start of the year to 455.75p on Friday, sparking renewed speculation that the group may become a bid target.

“It is difficult to see it any other way: Mr Dudley has misplayed his hand and underestimated the ferocity of the response from AAR. That makes BP look pretty dumb,” says one top 15 institutional shareholder.

The criticism will rankle with Mr Dudley, who has often said it is necessary to play the long game in Russia. He does not have unlimited time but on Thursday won a last-minute reprieve in the form of an extension to the window for agreeing the Rosneft share swap, due to expire that day. He now has four weeks to make peace with his old sparring partners in TNK-BP, possibly by buying them out, and land his Arctic prize – or potentially lose it altogether.

Of all the global oil majors, BP has the most invested in Russia. TNK-BP, whose creation Mr Dudley oversaw in 2003, accounts for roughly a quarter of the group’s annual production, one-fifth of its reserves and 10 per cent of its profits in average years.

Mr Dudley unveiled his Arctic play in January in the presence of Igor Sechin, Russian deputy prime minister and Rosneft chairman. Asked by one astute Russian journalist what the deal meant for its existing oil venture, he was clear: Rosneft, he said, is “not detrimental” to TNK-BP. But just days later, AAR said the proposed alliance breached the shareholder agreement that both partners should pursue new opportunities in Russia primarily through the joint venture.

BP has repeatedly denied it broke the agreement but, in the weeks following the announcement of the Rosneft deal, AAR appears to have kept the UK group on the back foot at every turn. Less than a fortnight later, the Russians won an injunction in London’s High Court blocking the deal. The two sides entered arbitration in February but the tribunal in charge of the process has kept the injunction in place twice.

Mr Dudley, 55, a softly spoken man from Mississippi, is said by friends to combine first-rate engineering skills with a deft hand for corporate politics. He proved his resilience as TNK-BP chief and is today seen as a veteran of Russian power-politicking but his partners are in a class of their own. Mr Fridman and fellow shareholders Len Blavatnik, German Khan and Viktor Vekselberg are known as master litigators who take their battles to the edge – and sometimes over it. Mr Khan is the most colourful of the four, once naming the film, The Godfather, as “his manual for life”.

“These guys have balls of steel,” says a senior banker in Moscow.

What has complicated Mr Dudley’s gamble is that his apparent trump card – the blessing by Vladimir Putin, prime minister, and Mr Sechin – has so far failed to deliver. Mr Dudley, believes one senior western banker in Moscow, based his “entire analysis on his belief that Sechin was invincible because Sechin battered BP in the last conflict [with AAR in 2008]. He thought, if he wanted to do something, AAR would have to fall in line but this is just not how Russia works”. In an ominous warning, even as he gave his blessing to the deal, Mr Putin told Mr Dudley in January that the Kremlin could not control everything, according to people familiar with the meeting.

Making matters worse, the political climate in Russia is starting to shift unpredictably ahead of 2012 presidential elections. Mr Sechin’s position is under fire as President Dmitry Medvedev ramps up a bid for a second term and casts himself as a more liberal candidate. His biggest target so far has been Mr Sechin, the Putin ally and leading member of the Siloviki group of former and current security service officials. He stepped down from Rosneft’s board this week after Mr Medvedev ordered ministers to give up positions at state companies. Russia, apparently seeking to improve the investment climate, is suddenly insisting on playing by the book.

“Fridman has won rulings in an international court, not in a Russian one that is under his control,” says Igor Yurgens, head of a think-tank advising Mr Medvedev. “BP took the risk that political influence and national interest had power over the rule of law. Now they need to look for way out. If we are speaking of having rule of law in the country, let’s begin with this.”

But other insiders believe those sentiments may be somewhat disingenuous. Mr Fridman and his friends are a powerful clan who have built close ties to Mr Putin. They have battled people close to the prime minister before – and won. Unlike jailed oil tycoon Mikhail Khodorkovsky, however, they have never challenged Mr Putin’s rule.

For Mr Dudley, one obvious exit from the impasse is the prospect of buying out his partners, despite public insistence from AAR that it wanted only to defend the shareholder agreement. With oil prices hovering around $120 a barrel, the highest for more than two years, many analysts believe now would be an ideal time to sell.

With the clock ticking fast towards the April 14 expiry date for the Rosneft deal, the Russian partners entered into negotiations this week on selling their 50 per cent stake. Right up to the eve of the deadline, no one was sure whether a deal would come off. “They could play this all the way up to the end and drive it into a brick wall,” says one person close to this week’s negotiations.

On Wednesday, talks foundered. People close to BP say AAR named too high a price – putting a value of more than $70bn on the joint venture – as well as asking for a significant stake in the UK oil group. People close to AAR says BP offered $27bn for the stake. Facing a stormy AGM in London the following day, Mr Dudley made his last move and asked Rosneft for an extension.

At 7.06am on Thursday, he won his reprieve: Rosneft sent a letter granting BP one more month.

The UK group says it will now focus on arbitration and getting the injunction lifted on the swap. To win, the company needs to argue that the swap is for investment purposes only. Could BP and AAR return to the table? “It does keep a window open to see where we can go, if there still is a commercial resolution,” says one person familiar with the situation.

Stan Polovets, AAR chief executive, insisted on Thursday the billionaires had no interest to sell. But others believe a deal could still be struck. “The negotiations haven’t even really begun yet,” said one of the senior western bankers in Moscow. “This will be a long and protracted negotiation. They are applying the maximum legal pressure. But I don’t see anyone walking away from this. The stakes are too high for all sides.”

Chris Weafer, chief strategist at Uralsib Capital, the Moscow investment bank, says the Kremlin could become involved in the negotiations. “Everyone now has a breather. They have stepped back from the brink.”

On Friday, Mr Dudley was made an honorary member of the famous Russian Geographical Society in front of Mr Putin. The quiet American has won himself a reprieve this weekend and there is still all to play for. “All the plates are still spinning,” says one person close to BP.

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