New Russia blow for BP as oligarchs veto dividend

BP's already icy relationship with the Russian oligarchs who own the other half of its TNK-BP joint venture took another turn for the worse yesterday when they vetoed a $1bn (£640m) dividend.

The move by the directors of AAR, the quartet of billionaires led by Mikhail Fridman, pictured, who has a 50 per cent share in TNK-BP, is the latest shot in an increasingly fraught partnership with the oil major, which saw the pair clash in court last year over BP's proposed tie-up with Russia's state-owned Rosneft for Arctic exploration. BP put its stake in the joint venture up for sale in June.

Stan Polovets, AAR's chief executive, said: "At a time of continuing market uncertainty and while corporate governance at TNK-BP remains strained, we believe that a cautious stance by shareholders is called for. A payment now of an additional dividend is not prudent."

The decision comes in the wake of a slump in TNK-BP's second-quarter profits to $808m (£513m) from $2.2bn a year ago, because of lower oil costs and tax hikes.

It also puts pressure on BP, which has taken around $19bn in dividends since the joint venture was formed a decade ago, to explain the situation to its shareholders in its own results tomorrow.

BP was hit by with a $3bn bill for damages by a Siberian court last week over the attempted tie-up with Rosneft. The claim was brought by Andrei Prokhorov, a minority investor in a subsidiary of TNK-BP, who said the tie-up had damaged the interests of the joint venture. The British company has dismissed the suit as an "attempted corporate attack" and intends to appeal.

BP is expected to post an 18 per cent drop in profits for the first half of the year to $9.2bn.