BP Plc may struggle to revive output growth at its Russian venture as a dispute with the oil company's billionaire partners escalates and efforts to revive aging fields fall short.
BP's partners in TNK-BP said they will boycott a shareholder meeting today and challenge any decisions taken through the courts, AAR Chief Executive Officer Stan Polovets said yesterday in an interview with Bloomberg News.
"If the conflict escalates and continues for some time, it will have a negative impact on the company operations," Polovets, who represents the partners, said.
At the same time, advanced techniques aimed at improving oil recovery are "not proving to be as successful as we had hoped," according to Polovets.
BP owns 50 percent of TNK-BP Ltd, with the other half split between companies controlled by billionaires Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik, together known as AAR.
BP is locked in a dispute with the billionaire shareholders, who have called for TNK-BP CEO Robert Dudley to resign for favoring BP's interests over their own. Dudley said in February that output should rise 18 percent to 1.9 million barrels a day in 2012 as the company develops US$15 billion of projects to resume production growth.
"This argument is about performance, performance and performance," Polovets said yesterday, adding that TNK-BP's share price and production growth have lagged behind other Russian oil companies. "Most of his (Dudley's) decisions have been in favor of one shareholder: BP."
TNK-BP Chief Operating Officer Tim Summers rejected criticism of the oil venture last week, saying its performance has been among the best in the world since it was formed in 2003.
Polovets said the dispute could hurt TNK-BP if there is no speedy resolution.