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BP/Rosneft: Dudley Takes the Rap

So, Alfa-Access-Renova (AAR), the Russian shareholders in TNK-BP, have got their wish, after it was announced that an arbitration panel in Stockholm voted to block BP from forming an alliance with Rosneft.  Or have they?  If Deputy Prime Minister and Rosneft chairman Igor Sechin has his way, the deal could go ahead anyway: Rosneft’s official response to the news of last night’s injunction was mellow, insisting that the delay is only temporary, and that ‘In any case, we want to follow the plan.  We are satisfied with BP as a partner.‘  This does seem the most likely outcome, and today’s news gives AAR two advantages in the process: the first being that it ups the stakes for its compensation.  A couple of pieces today suggest that the next step for AAR could be a buyout.  AFP suggests such a deal could command ‘billions of dollars‘, and this article reasons that TNK-BP’s Russian shareholders are used to ‘quick and high returns on land they know well‘ and as such, surely would prefer not to be at the mercy of the unknown possibilities of the Arctic, which could take decades to produce a return. 
The second advantage for AAR is that the injunction throws a neat little spanner into the works of its long-time rival, Robert Dudley, who is taking much of the flak today for the stalled deal.  There is certainly no love lost between them: Dudley was forced to leave Russia in July 2008 due to AAR’s objections.

One analyst said that Dudley had been left with ‘egg on his face‘.  Another quoted by Reuters said: ‘Given his (Dudley’s) past relationship in Russia, how difficult it has been, he should have been a bit more appreciative of how tricky it can be operating in Russia.‘ Another suggested that ‘People will be a bit surprised that they ended up getting themselves into this pickle particularly because he has (Dudley’s) got so much experience in dealing with the AAR partners.‘ 
Unsurprisingly, the CEO of AAR himself singled out Dudley for his role in the failed deal: ‘Willfully ignoring the provisions of the shareholder agreement was a serious misjudgment by BP that has severely damaged the relationship between the TNK-BP shareholders; it has also harmed BP’s reputation in Russia. We expect Bob Dudley to make every effort to rectify the situation and rebuild the trust that has been lost.‘