BP chief executive Bob Dudley suffers blow after Dmitry Medvedev criticises both sides for failure to do due diligence over Arctic tie-up
The reputation of BP boss Bob Dudley took a heavy blow on Wednesday when the Russian president, Dmitry Medvedev, accused the top brass at BP and Rosneft of failing to do proper due diligence in their failed tie-up.
Dudley is already under fire from City shareholders over the collapse of his plans for a share swap and Arctic exploration partnership deal with Rosneft, which was meant to give BP a new start after the problems in the Gulf of Mexico last year.
Medvedev did not mention Dudley by name and is also believed to have been aiming his remarks at former Rosneft chairman Igor Sechin, but his words will hit home at BP London headquarters.
"Those who prepared the deal should have paid closer attention to the nuances of the shareholder agreement," said Medvedev, adding: "It would have been necessary to conduct more careful due diligence inside the government."
The Kremlin power politics that helped blow a hole in BP's proposed partnership with Rosneft were on display ahead of an attempt on Thursdayto heal the rift with existing Russian partners inside TNK-BP.
Medvedev ordered Sechin to step down as chairman of Rosneft last month as part of a wider demand that ministers give up top jobs on the boards of large state-controlled companies. Sechin is deputy prime minister and a key ally of prime minister Vladimir Putin, with whom Medvedev has a prickly relationship.
There has also been speculation that the Russian shareholders inside TNK, grouped together inside the Alfa Access Renova (AAR) consortium, were being tacitly supported by Medvedev in their attempts to derail the proposed $16bn share swap and joint Arctic exploration by BP and Rosneft.
They point out that during Putin's eight-year presidency, resistance by any business oligarch to the government's wishes could have landed them in jail, as was the case with Mikhail Khodorkovsky.
Despite the turbulence and the formal end to a period of partnership talks, Rosneft said some kind of cooperation with BP was still possible. The British company has a TNK-BP board meeting in Cyprus on Thursday with the break-up of the Rosneft deal an inevitable point of discussion.
Rosneft said: "As a result of the negotiating process between BP and AAR, Rosneft has received proposals which go beyond the previous agreements and do not require the extension of the deadline which expired on 16 May. These proposals make it possible to discuss our further cooperation outside the agreements which have already expired."
But Rosneft sources said have also suggested that it is also talking to other firms such as Exxon, Chevron and Royal Dutch Shell as well as Chinese companies about the Arctic opportunity.
Industry experts said it was unlikely that any of these companies would want to go as far as a share swap with the Russian company. Rosneft added it would soon announce its own plans to develop the Arctic Kara Sea blocks it had planned to develop with BP.
Source: http://www.guardian.co.uk/business/2011/may/18/medvedev-criticises-bp-igor-sechin-on-rosneft-deal
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