BP's Russian venture rocked by financial chief's resignation

A week after Robert Dudley flees from Russia, James Owen quits troubled venture

• Terry Macalister
• guardian.co.uk,
• Monday August 04 2008 15:50 BST
• Article history

The turmoil at the top of BP's Russian joint venture intensified today when James Owen, the chief financial officer at TNK-BP, resigned without warning.

The move comes just over a week since Robert Dudley, the TNK-BP chief executive, fled Russia pleading harrassment and days after Tony Hayward, the BP chief executive, held talks to try to resolve the crisis with Mikhail Fridman, one of the four main Russian shareholders.

BP refused to comment on the latest management upheaval but TNK-BP put out a formal statement which said: "Mr Owen's [resignation] letter states that as the current shareholder issues remain unresolved he feels it is difficult for him to continue working independently, as his role demands."

Meanwhile, Dudley made a statement from a location in eastern Europe, which is not being disclosed. He said: "Our company's financial standing and internal governance processes have been greatly strengthened under his management and he [Owen] will be very hard to replace."

Sources close to TNK-BP said Owen's resignation, effective from the end of August, had nothing to do with reports that BP and its partners had agreed a peace deal involving a wholesale management change at the Russian unit, but speculation is rife that this is the case.

Two of the Russian shareholders - Viktor Vekselberg and German Kahn - have senior management positions at TNK-BP. Their umbrella group, Alfa-Access-Renova (AAR), said they would step down if BP consented to withdraw its appointee and former executive, Dudley.

It has been assumed, if not demanded by AAR, that Owen and the chief operating officer, Tim Summers, would leave at the same time and some sources said Owen was bailing out now because it had become obvious he had no long-term future with the company, which has its main oil and gas fields in Siberia.

Dudley was unable to renew his visa and left Russia late last month, citing a campaign of harassment against himself and the company. He remains chief executive and is continuing to run the company from abroad, but Hayward admitted at BP's second quarter results conference last week that this position was not sustainable for more than a few months.

BP has always claimed Dudley took his own decision to leave Russia and his chief executiveship at TNK-BP will be supported at all costs, but many industry experts believe it is only a matter of time before he agrees to leave TNK-BP, which provides BP with a quarter of its global oil and gas production but only a 10th of its profits.

BP and AAR have been fighting over control of TNK-BP for the past six months amid expectations that one or both sides would eventually have to sell their stake to the Kremlin.

The company has spent the past year fighting off claims from the tax, environmental and immigration authorities in what has been seen by some industry specialists as a rerun of the kind of problems thaat afflicted Shell until it sold part of its shareholding in Sakhalin to Russian state-owned Gazprom.

In recent months, the Russian private shareholders have accused BP of running the joint venture for their own ends, something that the British company denies. The Russian shareholders in TNK-BP were unavailable for comment about Owen's resignation.