TNK-BP's 'harassed' chief leaves Russia

MOSCOW, Russia (AP) -- The chief of TNK-BP has left Russia amid escalating tensions over control of the Anglo-Russian joint venture that is the country's third-largest oil producer, but he vowed Thursday to continue to run the company from abroad.

The announcement by Robert Dudley came three days before the expiration of his visa, which Russia has failed to renew on the grounds that he allegedly does not have a valid work contract. Dudley has argued that his contract is open-ended.

The contract is one of an array of disputes that in recent months has plagued the company half-owned by Britain's BP and half by a consortium of Russian tycoons. The dispute has raised questions about conditions for large-scale foreign investment in Russia.

BP has accused the Russian investors of corporate raider tactics to wrest control of the company.

The Russians have pushed hard for Dudley's removal, arguing that he acts in the interests of BP rather than for the joint venture. Russian authorities have launched a barrage of probes against the firm, ranging from labor checks to tax investigations.

Analysts have speculated that the Russian investors orchestrated the assault, but the consortium, AAR, denies the claims.

"In light of the uncertainties surrounding the status of my work visa and the sustained harassment of the company and myself, I have decided to leave and to work outside Russia temporarily," Dudley said in a statement. "During this period I will continue to discharge my duties and I have all necessary authority to do so."

A separate statement from TNK-BP late Thursday said Dudley had left Russia.

AAR chief executive Stan Polovets said Dudley's plan to run the company from afar "shows once again that BP has considered and continues to consider TNK-BP as an affiliate and not as an independent company that needs a strong and experienced leader who would lead the company in the interests of the shareholders," the Interfax news agency reported.

Earlier Thursday, TNK-BP warned that the shareholder dispute could hurt production, if its Russian co-owners push through a plan to cut investment.

TNK-BP proposed a $4.4 billion investment plan for 2008, but at an acrimonious board meeting in Cyprus earlier this month, the Russian shareholders called for it to be curtailed by $900 million, and the money paid out as dividends.

TNK's Chief Operating Officer Tim Summers told reporters that cutting investment to $3.5 billion could lose the company between one and five million tons of production in the next 12 months.

"If we were to do that, it would have an impact," said Summers. "But it's not our plan to do that."

The Russian shareholders have also railed against the number of expensive foreign employees at the company. BP said this week it had decided to withdraw 148 of its foreign employees from the Russian operations.

The wider conflict has prompted concerns that the company could face interruptions to its operations, concerns the company says are justified.

Presenting the company's first half results, Summers said the company had posted record profits of $4.7 billion, more than double the $2.1 billion in the same period last year, adding it is the company's best year to date.

Hitting back at AAR's assertions that the company has underperformed its peers, he noted output has risen in the past four consecutive quarters, reaching 1.63 million barrels per day. In terms of replacing reserves, TNK-BP has outstripped its Russian peers, he said. But it is a strategy that has been slammed by the Russian shareholders, who claim increasing reserves serves only the interests of BP.

"This is core to the existence of oil companies," said Summers. "If you don't replace reserves, you end up going out of business rather quickly."

Meanwhile, 75 expatriates at the company are still awaiting new visas, said Summers, adding that his visa expires next week. The authorities said Thursday that no TNK-BP employee would be forced to leave the country while their visa application is still being processed.

Copyright 2008 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

All About BP plc