AAR Proposals Fail At TNK-BP Meeting

Russian shareholders in TNK-BP said Sunday that they were "disappointed" that representatives of BP, which owns half of the venture, rejected four proposals they put forward.

The group of Russian shareholders, known as AAR, owns the other half of the joint venture and attempted to increase its influence with the resolutions, which were submitted at a Friday board meeting in Limassol, Cyprus.

"We are disappointed that BP again rejected our proposals aimed at enhancing the performance and governance of TNK-BP," TNK-BP chairman Mikhail Fridman said in an e-mailed statement. The resolutions were "fair and reasonable, and would benefit the company and all of its shareholders, including BP."

A source who attended the meeting of TNK-BP Ltd., a holding company which controls 95 percent of the listed entity TNK-BP Holding, said the dispute between the rival shareholders over the future of Russia's No. 3 oil producer would not be decided soon.

The remaining 5 percent of TNK-BP Holding is owned by minority shareholders.

"I don't think soon. Not soon," the source said on condition of anonymity, when asked whether the dispute at TNK-BP would soon be resolved.

TNK-BP Holding has been wracked by a struggle between BP and its four Russia-connected partners, Fridman, German Khan, Viktor Vekselberg and Len Blavatnik, over management control and future strategy.

The quartet of billionaires wants to fire BP-backed chief executive Robert Dudley, whom they accuse of poor performance and favoritism toward BP.

BP says Dudley is acting in the interests of both groups and has accused the Russians of an attempt to seize control.

BP spokesman David Nicholas on Friday described the board meeting as businesslike and cordial. But he declined to give details, saying the results would be made public Monday.

"The shareholders discussed the company's operations rather than focusing on differences," said a second source close to the consultations, who also asked not to be identified.

Vekselberg said earlier this week that the meeting's agenda would include a four-point proposal designed to buy time to resolve the dispute.

These points include a call for all TNK-BP management to leave at the start of the year, with BP retaining the right to nominate a chief executive.

The proposal also calls for directors of the venture's subsidiaries to be split evenly between BP and private investor nominees; calls for a status change for BP "secondee" workers in Russia; and would restore power of attorney to Russian executives at the venture.

Yet the fact that the meeting took place at all could be seen as a sign of progress. AAR boycotted a previous meeting in Cyprus in late May, shortly after the two sides publicly aired their differences over strategy.

On that occasion, some of the Russian quartet flew in the previous evening for informal discussions but then decided to stay away from the formal board meeting.

Reuters, Bloomberg