BP's Russia venture puts trust in local tycoon

21st October 2011, Comments 0 comments

BP's Russian joint venture TNK-BP on Friday agreed to keep tycoon Mikhail Fridman as its chief executive for another two years despite boardroom splits over a failed deal with state-owned Rosneft.

The announcement ends a year-long struggle by the young Deputy Chairman Maxim Barsky to assume command of Russia's number three oil producer and hands local billionaires operational control of the half-British firm.

But it also highlights a degree of trust that still runs between BP and the original Soviet-born founders of the Russian half of the joint venture despite their disagreements over recent deals and future strategy.

"We welcome this agreement," said BP Russia President Jeremy Huck.

"We look forward to many more years of growth for the benefit of Russia and TNK-BP's shareholders."

The appointment was also hailed by AAR -- a consortium formed by Fridman and three other billionaires who joined forces with BP in 2003 when the British giant was first trying to break into the world's largest energy market.

"We are very pleased to announce the strengthening of TNK-BP's management team by injecting fresh talent into the organisation, while at the same time maintaining stability at the CEO level," AAR CEO Stan Polovets said.

The announcement was preceded only a few hours by the formal resignation of the joint venture's 37-year-old CEO in waiting, Barsky.

Neither the firm nor the executive himself explained the long-anticipated decision. Reports earlier suggested Barsky had failed to win the full trust of the company while completing an initial term.

TNK-BP has had a turbulent history that reflects the trouble Western majors have had in making progress under the tough rules imposed by former president Vladimir Putin and his successor Dmitry Medvedev.

The company lost access to important fields and BP -- with oil prices soaring -- appeared in constant danger of losing its stake in the venture to either a stronger AAR presence or the Russian state.

Barsky's candidacy to head TNK-BP emerged after its US-born head Bob Dudley was expelled from Russia during another battle with AAR in 2008. The apprentice was appointed to the number two post with an eye for a promotion in January this year.

But he was never named to the top job -- a position held since 2009 on an interim basis Fridman -- and he threatened in recent interviews to resign if he was not promoted by the end of the year.

Barsky was most famous for trying to wrest day-to-day decision making powers from the BP and AAR executives in favour of the management team at his command.

His struggles appeared to have won him few friends on the executive.

The Wall Street Journal reported in September that both BP and AAR executives had expressed concerns about Barsky's ability to lead the firm past the crisis caused by the failed Rosneft alliance.

The TNK-BP board is scheduled Monday to consider whether to join a lawsuit against BP for trying to strike the Rosneft deal without giving the joint venture the right to bid on it first.

Fridman suggested the two were parting on good terms.

Fridman said TNK-BP had turned into "an international oil and gas player" under Barsky's stewardship and was now eyeing new markets in Southeast Asia and Latin America.

"These accomplishments were made possible thanks to Maxim's focused efforts," Fridman said in a company statement.

© 2011 AFP

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