Dudley Says Board To Review Spending

The board of TNK-BP will review the firm's investment plan for 2008, one of the points of contention in a fierce shareholders' dispute, CEO Robert Dudley said Wednesday.

Dudley, who is managing TNK-BP from abroad after he left Russia last week amid the conflict, said the board had agreed to review the budget, approved in November 2007, following a request by some directors that it be cut by some $900 million.

"I continue to believe that the level of capital investment proposed to and approved by the board last November is the appropriate level for the company, underpinning our production, the continued safe operation of our facilities, and our continued investment in attractive options for future growth," Dudley said in an e-mailed statement.

The board meeting is due to be held in September.

BP, which owns half of TNK-BP, and the group of four Russian billionaire shareholders that owns the other half, are involved in a public dispute over the strategy and the management tactics of the country's third-largest oil producer.

The Russian side has demanded Dudley's resignation, accusing the BP-appointed executive of poor performance and favoritism toward BP. They also said the $4.4 billion capital expenditures plan for 2008 approved in November should be cut to $3.5 billion.

"Until the board advises me that it wishes to reduce this, management will continue with the implementation of this program, which is on track," Dudley said in the statement on Wednesday.

Dudley, who left Russia after failing to receive his visa and saying he and the company were subject to a campaign of harassment, did not disclose his whereabouts.

BP chief executive Tony Hayward said Tuesday that Dudley was in a central European location, which he would likely reveal soon.

Labor authorities said Wednesday that Dudley and other TNK-BP managers may face a court case over labor violations that could ultimately see the BP-nominated CEO barred from running a Russian company for three years.

The state labor agency has asked a court to hear a case of labor violations against senior management at TNK-BP, a spokeswoman for the agency said Wednesday. A senior official at the Moscow labor agency said earlier that it had fined TNK-BP and Dudley for labor code violations. A court could disqualify Dudley from running a company for three years if the violations were not corrected, the official said.

The labor agency raised questions about TNK-BP's use of foreign employees.

A source at TNK-BP said BP, which has the right to nominate the chief executive under the shareholders agreement that founded the venture in 2003, has not nominated a replacement for Dudley.

BP on Tuesday said that its billionaire partners wanted to tear up the agreement, a charge they denied.