Tuesday, 26 May 2009

Former Soviet diplomat nominated to lead TNK-BP out of damaging row

BP nominated a former Soviet diplomat to lead the troubled TNK-BP oil company yesterday in an attempt to end a damaging conflict with four Russian billionaire shareholders.
The oil giant put forward Pavel Skitovich as chief executive of the Anglo-Russian joint venture, ten months after Robert Dudley, the previous head, fled Moscow during a wrangle over control of the company.
The choice of Mr Skitovich appeared designed to settle the stand-off with the Russian shareholders, Mikhail Fridman, Viktor Vekselberg, German Khan and Len Blavatnik. BP and the consortium representing the quartet, Alfa Access Renova (AAR), each owns 50 per cent of TNK-BP.
Under a peace deal to end the confrontation over Russia's third-largest oil producer, the two sides agreed last September that BP would retain the right to nominate a chief executive for approval by the board, but that the candidate would be a Russian-speaking figure independent of either of the owners.
Mr Skitovich, 43, served as Soviet vice-consul in Uganda for six years and has worked as a senior manager at the Interros group owned by Vladimir Potanin, a billionaire oligarch seen as particularly close to the Kremlin. Mr Skitovich was chief executive of Polyus, Russia's largest gold producer, for five months in 2007.
Toby Odone, BP's spokesman, said: “As far as we are concerned, the search for a new CEO is over. We have formally nominated a very strong candidate and we hope that the approval process will be completed in due course.”
Agreement on Mr Skitovich's nomination is unlikely before next Monday, when the contract of Tim Summers, TNK-BP's acting chief executive, expires. Vedomosti, the business daily, reported yesterday that Mr Vekselberg may become interim chief executive until an appointment is made.
Mr Vekselberg controls 12.5 per cent of TNK-BP, which accounts for nearly a quarter of BP's total daily oil production. A TNK-BP spokeswoman declined to comment and AAR representatives did not respond to requests for information.
If Mr Skitovich is confirmed as chief executive, it would end a shareholder battle that worried foreign investors in Russia. AAR accused BP of treating the company like a private subsidiary and of blocking efforts to expand beyond Russia.
Tony Hayward, BP's chief executive, alleged that the Russian shareholders were trying to tear up the joint-venture agreement signed in 2003. They denied this, but there were persistent suspicions that the Kremlin wanted to see control of the company pass fully into Russian hands.
TNK-BP faced a barrage of official inspections and investigations as the shareholder dispute intensified. Its Moscow headquarters were raided by the Federal Security Service, after an employee was charged with industrial espionage. It was the target of three labour inspections and a tax investigation by Interior Ministry police that led to Mr Dudley being questioned for five hours. BP withdrew 148 technical specialists seconded to TNK-BP after a legal challenge to their visa status.
Mr Dudley had to leave Russia last July after being unable to renew his work visa because of objections from AAR, which insisted that he should be sacked. He tried to run the company from a secret location abroad for a time, but stepped down in December.
BP paid $6.75 billion for a 50 per cent stake in TNK to form the joint venture in 2003, then the biggest single foreign investment in Russia. The deal was considered so important to both Britain and Russia that it was signed in the presence of Tony Blair, then Prime Minister, and Vladimir Putin, then President.
Source: The Times

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