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BP resigned to letting oligarchs run TNK-BP-sources

Published 10/06/2009, 01:16 PM
Updated 10/06/2009, 01:18 PM

* Most likely Fridman to remain interim CEO-sources

* Oligarch's CEO candidate ahead of BP's man-source

By Dmitry Zhdannikov

MOSCOW, Oct 6 (Reuters) - Oil major BP is resigned to leaving management control of its key Russian venture TNK-BP in the hands of its oligarch partners to avoid a new corporate war, sources close to the company said.

It is most likely that current interim Chief Executive Mikhail Fridman, one of the key Russian co-owners, will retain his position and would keep his ally, German Khan, TNK-BP's co-owner and executive director, to run the day-to-day operations into the new year, the sources said.

The sources told Reuters that BP had no chance in the foreseeable future to promote its protege to CEO, leaving the day-to-day decisions at the firm, which generates a quarter of BP's worldwide oil output, to the oligarchs.

The void at the helm of TKN-BP, which generated $5.3 billion in profit last year, is the result of a dispute that erupted last year when the oligarchs said they were unhappy with BP's management and its unwillingness to allow the venture to expand abroad.

BP accused the oligarchs of using administrative resources to force their man, CEO Bob Dudley, out of the country along with a number of other expatriate workers.

Fridman's appointment as interim CEO was perceived as the final step by BP to cede much of its influence at TNK-BP. It followed months of bureaucratic red tape imposed by the government on BP's Russian operations, in heavy contrast with statements by the Kremlin that it would not get involved in the conflict.

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TNK-BP said in May that it hoped to select a new CEO by the end of the year. Two newly appointed executives are in the running for the top job -- BP nominee Pavel Skitovich and the Russian partners' candidate, Mikhail Barsky, who came from small oil firm West Siberian Resources.

One source said that Skitovich would be pushed aside.

"There is a broad belief that work is under way to find a place for Skitovich from which he will never be able to escape again, some sort of corporate grave," said one source close to TKN-BP and BP.

NOMINEES GREEN

Keeping Fridman, Russia's fourth-richest man with personal wealth of $6.3 billion estimated by Forbes magazine in May, in charge as interim chief, appears the most realistic option, according to another source close to the two companies.

"Both guys (Skitovich and Barsky) are still very green as managers," said the second source.

Skitovich, 44, ran Polyus Gold, Russia's largest gold miner, for five months in 2007. Barsky, a 35-year-old executive, has previously worked at investment bank Troika Dialog and a unit of gas giant Gazprom.

TNK-BP said it was not wise to talk about who controlled management.

"We are not talking about people representing the interests of one or another group of owners. We are one team and many of us have worked here since the beginning," TNK-BP spokeswoman Marina Dracheva said.

BP spokesman Vladimir Buyanov said talks were still under way to choose a new chief.

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"We want to make sure we have the right person to lead this very successful company," he said.

BP still has its person in the position of chief operating officer. COO Tim Summers is due to be replaced by another BP veteran, the head of BP Azerbaijan, Bill Schrader, later this month.

Still, in the TNK-BP ranks, the COO is not necessarily the second in command.

"We don't see Fridman very often here. So if you want a decision, you must go to Khan," said a third source close to the companies. (Editing by Karen Foster)

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