BP agrees peace deal with Russian partners

by Graeme Wearden The deal will see 20% of TNK-BP sold to outside investors through a stockmarket flotation. Thursday September 04 2008 10:00 BST. BP has agreed a peace deal with its Russian partners over the future of their joint venture, TNK-BP, under which embattled chief executive Robert Dudley will quit. The oil giant announced this morning that Dudley will leave TNK-BP before the end of the year, as part of an agreement hammered out with the four Russian billionaires who also own the business. Under the memorandum of understanding, 20% of TNK-BP will be sold to outside investors through a stockmarket flotation, as long as the Russian government gives its approval. Several new independent directors will also be appointed, as part of a plan to curtail the powers of the new chief executive. BP chairman Peter Sutherland claimed that the deal would benefit both of the warring parties, improve transparency and relieve the recent tensions. "It will create a stable base from which to grow the joint venture to the benefit of everyone involved, including the Russian state for which strong capital investment and continued technical innovation to boost declining oil output are so important," Sutherland said. The four oligarchs had repeatedly demanded Dudley's removal, claiming he ran TNK-BP in BP's interests. He is currently working remotely after fleeing Russia in July after his visa renewal was refused, and was fined 500 roubles (£11) in August for breaking the country's labour laws as the dispute intensified. Dudley's replacement will be named by BP, but will have to be approved by the whole TNK-BP board. The company said it plans to find a Russian-speaking candidate with extensive Russian business experience. Shares in BP rose by almost 4% this morning after the agreement was announced, up 18.75p at 524.75p. Last month ratings agency Fitch warned that it might cut TNK-BP's debt rating if the dispute was not resolved. The row has already claimed chief financial officer James Owen, who resigned suddenly in early August.