BP is facing another crisis after the oligarch who led its Russian joint venture quit and insiders warned that the billion-pound tie-up was heading for failure.
Trouble had been brewing for months but the City was still shocked when Mikhail Fridman, right, the Russian billionaire who headed TNK-BP and represented Alfa-Access-Renova (AAR), the consortium of oligarchs with a 50 per cent stake in TNK-BP, quit yesterday.
A source close to AAR said: "The Russian shareholders have lost faith in BP as a partner. This partnership appears to have run its course and we are most likely heading towards some kind of disengagement. It has been increasingly difficult for Mikhail to run the business in this environment."
Another source close to TNK-BP's board said: "There is a breakdown in governance at TNK-BP."
BP, meanwhile, said that Mr Fridman had left for "personal reasons", with a spokesman adding that his role had "largely been ceremonial" and said his departure would not affect the business. But it is the latest sign of discontent at TNK-BP. Just last week the joint venture, which is Russia's third-biggest crude producer, cancelled a board meeting and postponed a decision on its dividend as it was still looking to replace an independent board director and the board did not have a quorum. TNK-BP's board has been below full strength since December, when Gerhard Schröder, the former German chancellor, and James Leng, former chairman-elect of Rio Tinto, quit.
The company has been engaged in international arbitration over BP's attempt to secure a $16bn (£10bn) share swap and tie-up with Kremlin-owned Rosneft in the Arctic. The AAR oligarchs argued the move would damage TNK-BP's work in the country and secured a High Court injunction to freeze BP's negotiations. It claimed that the deal, which later collapsed, breached a shareholder agreement granting TNK-BP the right of first refusal to any venture in Russia or Ukraine. BP still denies this and an arbitration panel will post its findings later this summer.
Mr Fridman had been chief executive of TNK-BP ever since an earlier dispute in 2008, which saw the company's then head of Russia, the American Bob Dudley, who now runs the whole of BP, being forced to escape from Russia.
A Moscow energy industry insider said Mr Fridman's resignation would not herald the end of his involvement. "As long as he owns it, he will de facto run it," he said. "This is just a way to formally disassociate himself from the management. Looks like preparing the ship for a storm."