Russian owners and BP confirm differences over TNK-BP

Russian owners and BP confirm differences over TNK-BP
By Amie Ferris-Rotman and Tanya Mosolova Reuters - Tuesday, May 27 04:15 pm

MOSCOW/LONDON (Reuters) - Oil major BP and a group of Russian billionaires publicly aired their differences on Tuesday over their TNK-BP venture, which analysts expect to be pushed into a takeover by a Russian state firm.

Both the Russian and British shareholders of TNK-BP, Russia's No. 3 oil firm, confirmed they had differences over strategy, after media reports that its long-serving CEO could resign.

The Russians said in a joint statement they wanted to expand abroad even if foreign acquisitions competed with existing BP businesses, and said they wanted a better balance between Russian and foreign staff at its Russian oil arm.

The statement echoed comments by TNK-BP Chief Executive Robert Dudley, who recently acknowledged for the first time that the Russian and British shareholders had disagreements over the company's strategy.

The differences between the two groups come on top of other major problems faced since last year by the joint venture, around which there has long been suspicion that the Kremlin wants it to sell out to a large state firm like gas giant Gazprom.

Mounting state pressure over recent months on the firm, including the arrest of an employee on an industrial espionage charge, a raid on its Moscow offices and a court injunction to stop it using BP specialists, are signs that the time to sell is approaching, analysts say.

Last year TNK-BP was forced to cede control of a major Siberian gas project to Gazprom following months of pressure.

Dudley said in a Russian newspaper interview published on Monday that the disagreements concerned investments and the sale of some assets in Russia.

The Russian shareholders, who later said they considered Dudley's comments as "deeply inappropriate", said they wanted TNK-BP to actively develop as an independent oil producer and refiner in both domestic and foreign markets.

"We believe that the company's development abroad should be considered from the point of view of its efficiency, even if such development poses competition to BP's business," the Russian shareholders said in the joint statement.

BP said it was in talks with its Russian partners, which include shareholders Viktor Vekselberg, Mikhail Fridman and Len Blavatnik, to resolve the differences.

Both BP and the shareholders have repeatedly denied any plans to sell their stake.

Public admissions of disagreement over TNK-BP could be a strategy to avoid a takeover, analysts say.

"Obviously neither side would like to sell at a forced sale," said analyst Konstantin Reznikov at Dresdner Kleinwort.

"Therefore they're trying to push at something else, to get some kind of short-term or long-term benefits, such as better dividends, and to resolve their differences."

SECHIN SAYS STATE WON'T INTERFERE

Analysts and industry sources say Gazprom is the best placed firm to buy a big chunk of shares or control of TNK-BP, though some say it could still face rivalry from state-controlled oil major Rosneft.

On Tuesday, Rosneft's chairman and deputy prime minister Igor Sechin, seen as one of Russia's most influential officials, said TNK-BP's shareholders should solve their problems internally and said the state would not interfere.

The Russian statement did not mention that the disagreements could lead to Dudley's resignation, as the Russian business daily Kommersant reported on Tuesday.

The newspaper quoted a source close to TNK-BP as saying that Vekselberg and Fridman had complained about Dudley at a meeting with BP's chief executive Tony Hayward in mid-May.

They suggested that Dudley, who has been the head of TNK-BP since its creation in 2003, should resign and Vekselberg should take up his post, the source said, adding that Hayward had rejected the suggestion.

BP said it backed Dudley to stay.

"Mr Dudley is a highly experienced and outstanding industry executive who has consistently managed the business in the interests of all its shareholders, and BP has absolute confidence in him," a spokesman for the oil major said.

The BP spokesman declined to confirm whether Dudley's position was mentioned at the meeting.