The TNK-BP Autopsy

Today the Wall Street Journal is running an extensive autopsy of BP’s herculean effort to become the first foreign company to be a player in Russian oil through their joint venture in TNK-BP – a story of vast misunderstandings, mistaken presumptions of regularity, and spectacular failure. Greg White and Guy Chazan’s piece is detailed with numerous anecdotes, missteps, and lessons, and although not bringing in any shockingly new information, the overview is comprehensive and dramatic.

Of particular note is the mention of BP’s James Dupree in the article, who is believed to have been made responsible for managing the TNK-BP government relations effort – an individual who some are now saying (with 20-20 hindsight) was not senior enough to command sufficient respect within the Kremlin.  A subtle message that comes through in the article as well is the unpredictable nature of negotiating with Gazprom – that it’s impossible to do anything of this sort without your partners knowing exactly what you are trying to do (a crisis of confidentiality).

The article also has an interesting account of a meeting between BP Chairman Tony Hayward and the Kremlin kingmaker Igor Sechin – in which the British counterparts failed to understand the message that Sechin would not allow Gazprom to push in and take over the AAR stake, creating unwanted competition for Rosneft.

In short, it’s just another horror story from the world of the Russian energy sector, and not likely the last one we’ll ever hear.