BP back on collision course over TNK

British oil giant faces new battle over who will run its key Russian subsidiary
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British Petroleum is heading for another potentially damaging showdown with its partners in its Russian subsidiary TNK-BP, less than a year after the chief executive of the business was forced to quit amid arguments between the two sides.

The oil giant yesterday nominated Pavel Skitovich as its choice for the post of chief executive of TNK-BP, putting it on a collision course with AAR, the group of four Russian billionaires who co-own the business. They are hoping to install one of their own, Viktor Vekselberg, as a temporary chief executive at the beginning of June.

TNK-BP, which is responsible for almost a quarter of BP's daily oil output, is currently run by Tim Summers, the deputy of Robert Dudley, the BP-appointed chief executive who left Russia last July. However, Mr Summers' contract ends on 1 June.

While BP and AAR have agreed that the next chief executive of the company should be independent of either grouping, representatives of AAR have let it be known that they expect Mr Vekselberg, who has a 12.5 per cent stake in TNK-BP, to take on the role on a temporary basis once Mr Summers' term expires.

Yesterday, however, a spokesman for BP said it believed Mr Skitovich, a former Soviet Union diplomat and mining company chief executive, was the ideal candidate for the role.

The oil giant, which has the right to nominate a chief executive under the terms of its previous agreements with AAR, said: "As far as we are concerned, the search for a new CEO is over – we have formally nominated a very strong candidate and we hope that the approval process will be completed in due course."

AAR could not be reached for comment last night, but the four Russian billionaires, including Mr Vekselberg, do have the right to block the nomination. That could plunge BP back into conflict with the Russians, just at the time when it needs stability from its most important subsidiary. Last year's battle between BP and AAR was bruising for both sides, with Mr Dudley eventually leaving Russia, claiming he was forced out by a campaign of intimidation against him led by the Russian government at the behest of the billionaires.

Many other expatriates working at TNK-BP were forced to leave at the same time, with international investors warning that the row was undermining confidence in Russia's business sector.

However, BP and AAR, led by the billionaire Mikhail Fridman, did eventually reconcile their differences and agreed to appoint an independent chief executive, as well as three new independent directors. Gerhard Schröder, the former German chancellor, Jim Leng, the chairman of Corus steel, and Alex Shokhin, the president of the Russian Union of Industrialists and Entrepreneurs, subsequently joined the board, but the independent chief executive has still to be agreed.

Yesterday, a spokesman for BP said it was waiting to hear back from AAR about whether its nomination was acceptable, and that it had not yet received any indications either way about the billionaires' view.

Tony Hayward, the BP chief executive, is understood to have held talks with Mr Fridman last month about the future of TNK-BP. The British company has already had one nomination for the chief executive's post rejected by its Russian partners, and a further disappointment will be seen as evidence that BP is struggling to exert any control over its subsidiary.

However, if approved, Mr Skitovich could be a smart appointment. He ran Polyus Gold, the biggest gold mining company in Russia, for five months during 2007, at a time when the company's shareholders were battling over its assets.