Margareta Pagano: Dudley's fish is on the hook, but can he land it?

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The Independent Online

An old Russian proverb says any fish is good if it is on the hook.

After months of chaotic angling, it now looks as though BP's Bob Dudley has finally speared his Arctic prey following the arbitration agreement reached in the London courts on Friday saying that BP must hand over the Russian exploration deal to its joint venture, TNK-BP.

It's not the big fish Dudley wanted but it still gives BP a half share in the exploration rights to the oilfields in the Kara Sea, which is about the same size of the North Sea.

There's no doubt the court ruling was a victory for the four Russian businessmen who control Alfa Access Renova, the group which controls the other half of TNK-BP, including Len Blavatnik the ambitious American-Russian industrialist who has just bought Warner Music (see right). The Russians have dropped their objection to a $16bn share-swap deal that BP and Rosneft agreed when the exploration project was announced earlier in the year.

Dudley may have got Kara on the hook, but he's still got to get Rosneft on side before landing the deal. What we don't know yet is whether Rosneft, its original partner in the Arctic deal, will approve the compromise – there's a long Russian holiday this weekend and a response isn't expected until later this week. Like BP, Rosneft has previously said it opposed TNK-BP becoming involved in the exploration project.

Under the original agreement, BP had expected to take a 10 per cent stake in Rosneft, with the Russians acquiring 5 per cent of BP. But, under the new deal, Rosneft will also have to accept strict rules governing its share swap with BP, which the latest agreement said could be undertaken for "investment purposes only" and that neither side is allowed to appoint directors to the other's board.

Dudley's reputation has suffered from this fiasco, with investors accusing him of misreading Russian politics so shortly after BP's cack- handed approach to the Gulf of Mexico disaster. But those close to him defend his strategy, arguing that doing business in the litigious wild east requires certain wild west-style tactics. I suspect they may be right.

Investors certainly believe Dudley is close to a deal with the shares rising 3 per cent to 452p after the ruling.

BP's position in the world's biggest oil-producing country is strengthened, and will guarantee it potential oil reserves in other areas of the Arctic which holds a quarter of the world's unexplored reserves. Handing half of the current exploration rights to TNK makes the Kara venture less profitable for BP, but there will be more. Oil prices fell sharply during a roller-coaster week for commodities trading but the price long term will be up.

Not even Dudley knows how Rosneft will react to the ruling – there's been no contact between the two because of all the injunctions and court actions – you'd have to be inside the Kremlin to find out. But there are a couple of good signs – Rosneft and BP signed another deal in Germany last week where the two of them are also partners and Rosneft still needs access to BP's state of the art technology for its Arctic deep-sea drilling.

If Rosneft doesn't agree to allow TNK-BP in, the deal could still collapse and everyone would be the loser – BP, the Russian government and the AAR oligarchs. But Dudley could still be a winner – if he finds himself exiled to Siberia he will have one helluva potboiler to write.

Dreams: Blavatnik wins Warner for $3.3bn – cash – and eyes up EMI

Expect to hear more from Len Blavatnik. The Russian-born, American-raised businessman trumped rival bidders, offering $3.3bn ($8 a share) late on Friday to become the new boss of Warner Music, which has some of the world's top artists, from Fleetwood Mac to Cee Lo Green, in its empire. Blavatnik bought Warner through Access Industries, which also owns stakes in oil, chemicals and media companies such as TNK-BP, LyondellBasell Industries and Rusal. A generous philanthropistr he gave £75m to Oxford University last year to set up the Blavatnik School of Government. Warner's chief executive, Edgar Bronfman Jnr, is likely to stay on and,with Blavatnik, will now have a go for EMI, which Citigroup is likely to put up for sale any time now. Clearly, he's thinking about tomorrow...

Walker should follow Horta-Osorio's lead and tell it the way it is

Antonio Horta-Osorio's decision to take the knife to Lloyds Banking Group and set aside the £3.2bn for claims relating to the epic mis-selling of payment protection insurance was refreshing and instantly won him many fans. Presenting his first results since taking over at Lloyds, the Portuguese banker also said: "It is the right thing to do". He should be congratulated. Bankers don't have much of a record for doing the right thing and it's to be hoped they will follow his lead pronto.

Royal Bank of Scotland's Stephen Hester chose not to on Friday when announcing higher first quarter losses. But he did at least say the bank is working on how much it needs to provide for compensation, which could be as high as £1bn. Hester also welcomed the decision by the Financial Services Authority to appoint Sir David Walker to review the "review" into RBS's failure. Both RBS and the FSA have been reluctant to publish the report for fear of legal actions against them by shareholders. Sir Fred Goodwin, RBS's ex-chief executive, has taken legal action to prevent publication in case of action by investors.

Both the FSA and Hester claim that there is no "smoking gun" buried in the report. That's beside the point. There was a huge smoking gun at the centre of the failure – Sir Fred and his directors. They may not have been malicious in their intent but their ambition certainly proved deadly.

Walker is a tough nut. He should, like Horta-Osorio, decide that publishing the report is the right thing to do. Anything other than full publication is a national disgrace and an insult to the investors whose money has been lost.