To briefly summarise that dispute, which lead to Mr. Dudley scurrying out of Russia in 2008 and trying to run the joint venture from undisclosed locations in Europe, Dudley was accused by BP’s AAR consortium partners of running the Joint venture as if it was a BP subsidiary, hiring a raft of BP engineers at inflated salaries on secondment and trying to do a deal behind the joint venture’s back with Gazprom.
In January BP agreed to a $16 billion share swap with Russian state oil giant Rosneft and a joint exploration deal on a large chunk of the Kara Sea in the Arctic. Rosneft, whose chairman Igor Sechin, is the powerful deputy prime minister, needed BP’s deep water drilling expertise. The deal won the blessing of Prime Minister Vladimir Putin and amid a media circus in London the deal was signed in mid January.
Mr. Dudley no doubt believed that the clout of Rosneft and the blessing of Mr. Putin would be enough to silence the troublesome AAR partners led by the wily and stubborn Mikhail Fridman.
Once again he thought wrong.
Failing to understand the nuances and interplay of the different but intertwining nature of the Russian power structures, he is now at odds with the AAR partners of BP, whose claim that he flouted a shareholder agreement by doing the deal with Rosneft behind their backs has been supported by a Swedish arbitration court. He has been castigated by Prime Minister Putin for keeping quiet about the contract with AAR and he risks being hounded through the courts by Rosneft whose chairman Igor Sechin is threatening to sue for the damage inflicted on the company.
Oh, and now the shareholders of BP are raising their voice. David Cummings, head of UK equities at key BP investor Standard Life Investments, told the BBC the logic for doing the share swap with Rosneft “has gone”.
“I mean they’ve just had their joint venture blocked, and that’s to explore in the Arctic… at the moment we don’t think BP has got a plan B.”