LONDON (Dow Jones)--BP PLC (BP) plans to appeal a decision by a Moscow labor court to ban the chief executive of its Russian joint venture TNK-BP Holding (TNBP.RS) from holding executive office in Russia for two years, a BP spokesman said.
"We are very disappointed with this decision. However, Robert Dudley remains chief executive pending completion of an appeal process," said the BP spokesman. "Robert Dudley has BP's full support," and can continue to head the company from outside Russia through the appeal process, BP said. If the appeal fails, TNK-BP would have to find a new CEO, the spokesman said.
Alfa-Access-Renova, BP's Russian partner in TNK-BP, wasn't available for comment on the court's ruling.
Russian labor authorities summoned Dudley to their premises after discrepancies were found in a recent labor inspection. "We believe this is clearly a further example of the administrative activity orchestrated by the other shareholders in TNK-BP," the BP spokesman added.
This is the latest chapter in a a bitter struggle between BP and its Russian partners in TNK-BP over control and strategy of the venture.
The dispute burst into the open early this year when the Russian principals in AAR - Mikhail Fridman of Alfa Group, Len Blavatnik of Access Industries and Viktor Vekselberg of Renova - demanded Dudley's dismissal, complaining of mismanagement and poor performance.
BP has stood by Dudley and accused AAR of seeking to seize control of TNK-BP, but analysts say it has been fighting a losing battle against strong-arm tactics.
"The Russian (investors) are getting away with nothing short of murder...they can terrorize BP, making any excuse to wrestle control of their joint venture," said Fadel Gheit, an equity analyst at New York-based Oppenheimer and Co.
Dudley was forced to leave Russia in July, claiming sustained harassment from Russian authorities, after being denied renewal of his visa. Chief Financial Officer James Owen quit last week, citing the difficult working conditions at the company. BP was forced to withdraw 148 technical specialists seconded to the Russian venture in late July when they ran into visa difficulties, amid AAR complaints that they were too expensive.
The permanent departure of Dudley will make BP's position even more uncomfortable, Gheit said. "You cannot run a company long distance like that. You can't control things by email and phone," and it would be foolish for BP to pretend otherwise, he said. If TNK-BP does get a new chief, AAR will be in the driver's seat to make that choice, he said.
BP has to accept the fact that it will lose control of the joint venture and probably have to sell it to another Russian company, such as OAO Gazprom (GAZP.RS), he said.