New deal sparks BP dividends squabble
Tensions are set to increase between BP and its partner in the TNK-BP joint venture, as the Russian billionaires meet today over whether to block around $1bn in dividend payments owed to the UK-listed oil giant.
The Alfa-Access-Renova (AAR) consortium, which represents BP's partners in the TNK-BP joint venture, have called an extraordinary board meeting for later today in response to BP's plans to tie-up with Russian state oil company Rosneft. The sole issue on the agenda will be whether AAR will move to halt the payment of BP's half of TNK-BP's $1.8bn dividends from the fourth quarter.
The Russian partners were understood to be furious with BP's move. One joint venture insider said the UK group had "torn up the shareholder agreement" with the Rosneft deal, adding any opportunities for expansion in Russia were supposed to be presented to TNK-BP first. "None of the protocols were followed," the insider added.
BP is adamant it has not broken the terms of the joint venture. It revealed the surprise deal with Rosneft earlier this month, to comprise a $5bn share-swap.
Its TNK-BP partners - Mikhail Fridman, Viktor Vekselberg, German Khan and Len Blavatnik - moved last week to block the deal by lodging a legal challenge with the High Court in London. Should their case prove successful, negotiations between BP and Rosneft over the swap must cease.
A source close to the situation said AAR had the power to hold the dividend payment because of the structuring of the joint venture, adding it could be necessary because of "the uncertain position" in which the Rosneft deal leaves TNK-BP, as well as "the prospects of enhanced competition from Rosneft". The source added that TNK-BP may have to look to expand abroad "because of that greater competition".
It also emerged yesterday that TNK-BP is taking legal action against one of the BP executives on its board. It is understood that the joint venture general counsel had written to David Peattie, head of Russia and Kazakhstan for BP Russia, saying he was in "clear breach of his duties" as a director of the venture, following his role in the Rosneft negotiations. The lawyers said he must refrain from further talks with Rosneft and that "TNK-BP is starting legal proceedings against him".
Insiders were not keen to be drawn on relations between the two sides, but one said: "We remain in discussions about how we can best resolve our problems."