Conflict at TNK-BP May Hit Production

BloombergDudley
TNK-BP chief executive Robert Dudley has acknowledged for the first time that the company's Russian and British shareholders disagree on matters, saying it could damage oil production.

"There is of course some disagreement among TNK-BP shareholders … on the question of investment, on the question of the sale of some assets in Russia," Dudley said in an interview with Vedomosti published Monday.

TNK-BP, which is half-owned by BP and a group of Russian billionaires, has been the subject of long-running market speculation that the Kremlin wants one of the groups to sell out to a state firm, such as Gazprom.

Security services raided TNK-BP and BP offices in Moscow in March and arrested an employee on commercial espionage charges. Commenting on the Federal Security Service's return to BP's offices last week, Dudley said he thought that it was "merely a routine continuation of the earlier FSB investigation."

Industry sources have said state pressure has led to deep disagreements between the Russian and British shareholders because none of them is prepared to sell out.

Many analysts saw a sign of such rivalry when a little-known brokerage, Tetlis, claimed in a Siberian court that TNK-BP's use of BP specialist contractors was illegal because it amounted to a special dividend to BP at the expense of other shareholders.

TNK-BP and BP have so far denied any disagreement.

"The shareholders have told me that none of them has anything to do with the Tetlis claim. I have to accept that statement and admit that that is the case," Dudley said. "Regardless of who is behind Tetlis, it's important to note that the suit and the related defensive measures hurt the interests of the company and the majority of its shareholders."

But he added that, apart from the use of BP specialist contractors, TNK-BP was facing problems with the use of its own foreign specialists because of "deliberately erroneous filling out of documents in May" by one of TNK-BP's executives.

He did not elaborate.

"As an oil industry man, I can say that the input of BP's specialists has been very substantial, and their absence can affect production figures," he said.

"The firm's production could fall in the fourth quarter of 2008 and the first quarter of 2009," he added.

Dudley said TNK-BP had "some of the industry's most depleted fields, with constantly increasing water levels," which require a lot of technology. The country's oil and gas industry, he added, has a shortage of qualified workers, so finding specialists from abroad is "not unique to TNK-BP." Sakhalin Energy and Rosneft, among others, do the same, he said. (Reuters, MT)