Outlook It is now three months since BP was forced to give up its deal with the oil giant Rosneft amid a seemingly intractable legal dispute with its existing Russian partner TNK-BP – or, more specifically, with AAR, which owns 50 per cent of that operation.
BP came close to securing a deal with AAR and privately counselled that talks would continue – the implication being that once everybody had time to calm down, a deal would be done.
Well, that view is looking rather optimistic now. The latest news from Russia is not an announcement that the Rosneft venture is back on but that BP now intends to sue Renova, one of the partners in the AAR consortium. Its claim is that Renova has made investments in Russia without offering them to TNK-BP first, as the partnership requires. That requirement, of course, is what did for the Rosneft agreement.
The impending legal dispute does not suggest that relations between BP and AAR have become any friendlier at all over the past three months. Nor, for that matter, did last month's warning from AAR that it is considering suing BP for as much as $10 billion over the Rosneft row.
BP's behaviour immediately after the collapse of the negotiations in May, when it told itsRussian partners it was thinking of selling control of TNK to Rosneft, did not help to restore trust. Now it seems matters have gone from bad to worse.
This is a mess that Bob Dudley can ill afford as he tries to rebuild BP after last year's disaster in the Gulf. BP's chief executive gambled heavily on Russia last year and has yet to see his bravery rewarded – if anything, the company looks to be in a worse position in a market that accounted for £1.6bn of profits in the second quarter of 2011 alone.
That is not something BP'sowners will tolerate forever, particularly given the way in which the company's shares have got stuck in the doldrums – and more so following the sell-off of the past week.