David Prosser: Dudley's only Russian option now is the onehe wanted least of all

 

Outlook BP could not have expected Rosneft to wait forever. Still, it is always painful to see one's former partner stepping out with someone else, let alone a major rival – and all the more so given that BP and Rosneft were just about to exchange vows before a troublesome member of the audience announced it certainly did know of a lawful impediment to the wedding. Sadly, BP's Russian partners at TNK-BP could not be persuaded to forever hold their peace.

Rosneft can hardly be blamed for turning to Exxon, for thecollapse of the Arctic deal with BP was not the fault of the Russian company. Far from it – Rosneft worked hard to resolve the impasse, coming within a whisker of a deal to buy out AAR, the Russian investors in TNK-BP, an agreement that would have resurrected the possibility of going to the Arctic with BP.

It looks, however, as if Rosneft has simply run out of patience. It needs a Western oil major with deepwater drilling experience to help it exploit the potential of the reserves thought to lie at the bottom of the Arctic Ocean. And the interests in the Gulf of Mexico that Exxon is offering look just as juicy as the share swap BP brought to the table. (It will certainly be fascinating to see how those American politicians who dubbed BP "Bolshoi Petroleum" when the Rosneft deal was first announced feel about Exxon's alliance.)

So where does this leave Bob Dudley, the BP chief executive who looked to be such a safe pair of hands when he took over from Tony Hayward in the wake of the Deepwater Horizon disaster a year ago? Well, as far as Russia goes, it leaves him with only one game in town – and a pretty troublesome one at that. For some time after the collapse of the Rosneft deal, BP appeared to be under the impression it was only a matter of time before a compromise was found. Not only has that optimism been misplaced, but in the meantime, BP's relationships with some AAR shareholders have deteriorated further. So much so that the law suits have started flying again.

The problem is that Mr Dudley needs Russia. For all BP's talk of its global interests – witness the deal completed with Reliance in India yesterday – its Russian ventures are crucial. The feuding with AAR does not necessarily mean that TNK-BP will eventually go the way of the Rosneft deal, but thisunhappy situation cannot continue indefinitely.

There have been suspicions that those members of the AAR consortium that have been especially difficult in recent months have been calculating this would encourage BP and Rosneft to put a buy-out deal back on the table. If the suspicions are correct, that strategy plainly hasn't worked – so maybe the awkward squad will now lighten up. But don't bet on it, unless Mr Dudley is prepared to force down some humble pie too.

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