BP CEO and incoming replacement to meet with investors, government officials in Russia

By Jane Wardell, AP
Tuesday, August 3, 2010

BP’s Dudley to visit Russia 2 years after ejection

LONDON — BP PLC’s incoming Chief Executive Robert Dudley and the man he will succeed, Tony Hayward, are heading to Russia this week to build bridges with investors and the government, barely two years after Dudley was thrown out of the country in a corporate dispute.

The two men will meet with Deputy Prime Minister Igor Sechin and other officials on a brief visit that BP spokesman Toby Odone said marked a “handover.”

Warm ties with Moscow are a priority for BP, particularly in the wake of the disastrous Gulf of Mexico oil spill, as Russia accounts for a quarter of the London-based company’s global oil output.

Investors in the country also may be key in BP’s plans to sell up to $30 billion in assets to cover spill costs, but CEO-elect Dudley has some networking to do after being thrown out of the country in 2008 amid a dispute at TNK-BP, the company’s 50-50 joint venture with a group of Russian oligarchs.

Rustam Kozharov, a spokesman for Sechin, who also chairs OAO Rosneft, the country’s largest oil producer, said the three men will discuss joint projects and the prospects for further cooperation when they meet on Wednesday. Kozharov declined to comment on any potential asset purchases.

TNK-BP said last week that it was in talks to buy the company’s stakes in oil projects in Venezuela as BP notches up sales to hit its target over the next 18 months.

But Venezuelan Oil Minister Rafael Ramirez objected to any sale of BP’s share in a state-controlled joint venture unless authorized by his government.

“No company may sell shares that it has in Venezuela. No one can go around negotiating (a sale of) shares without authorization by the Venezuelan state,” Ramirez told reporters in Caracas on Tuesday.

BP is a minority partner in a heavy crude project in Venezuela’s crude-rich Orinoco River basin, holding a stake of nearly 17 percent, while the state oil company Petroleos de Venezuela SA owns 83 percent.

In BP’s latest signed deal, it said Tuesday it is offloading its oil and gas exploration business in Colombia for $1.9 billion to a consortium of Ecopetrol, Colombia’s national oil company, and Talisman of Canada.

Like the agreed sale of assets in the U.S., Canada and Egypt to Apache Corp. for $7 billion, BP will receive a cash deposit for the Colombian sale, giving it some ready capital. The company last week revealed it has taken a charge of $32.2 billion to cover spill costs as it posted a record $17 billion second-quarter loss.

Dudley is no stranger to BP’s operations in Russia, but his last experience there as head of the TNK-BP joint venture ended sourly in 2008 when he was refused a work visa and forced out of the country amid a dispute with BP’s billionaire partners.

Dudley continued to run the venture from a series of secret locations for some weeks before giving in to pressure and stepping down.

That dispute now has been resolved by the appointment of three independent directors to TNK-BP’s board and its Russian shareholders have publicly welcomed Dudley’s appointment as CEO. They say they bear the U.S.-born executive no grudge, giving BP an opportunity for his reintroduction to the country.

Hayward was also heavily involved in TNK-BP, having served on its board from its creation in 2003 until 2007, when he was appointed BP’s chief executive.

In a sign of the venture’s importance — and BP’s faith in its gaffe-prone outgoing leader — BP has said it plans to propose Hayward as a non-executive TNK-BP board member.

Analysts have said that Hayward — who traveled to Moscow at least four times a year when he was on the TNK-BP board, forging strong contacts with the Russian government — would be an asset for BP’s representation in the venture.

His appointment is not expected to change TNK-BP’s strategy to increase Russian output, expand overseas and go public in the next few years.

Odone declined to provide more detail on the schedule for the two men while in Russia, but said the visit would be a brief one. He added that Dudley would also soon visit other BP operations around the world to get up to speed before taking over the top job on Oct. 1. No schedule has yet been set for those visits, he said.


AP writers Vladimir Isachenkov and Nataliya Vasilyeva contributed to this report from Moscow, and Fabiola Sanchez contributed from Caracas, Venezuela.

will not be displayed