January 31, 2011, 10:12 am / Business

AAR will try to deprive BP of dividends

BP's Russian partners in TNK-BP have called an emergency board meeting to discuss another way to put pressure on the British company in connection with its alliance with Rosneft. The only issue on the agenda of the meeting, which will be held by Alfa-Access-Renova (AAR), is the refusal to pay BP dividends for the fourth quarter of last year. This could be a serious blow for BP: the company will lose $1.8 billion.

“AAR fears that TNK-BP's prospects in Russia are very unclear. Because of this, the company needs to pursue more aggressive expansion outside of Russia, which requires a significant injection of capital,” said one source familiar with the situation. However, the decision to refuse to pay dividends should be supported by the board of directors of TNK-BP, in which the Russian and British sides are each represented by four businessmen. Meanwhile, TNK-BP legal adviser Igor Maydannik wrote to David Peattie, BP's director in Russia, who is also a director of TNK-BP, saying that he had violated his official duties by failing to promptly inform the board of directors about his negotiations with Rosneft, the source said. Last week, TNK-BP's Russian partners asked London's High Court to suspend the deal between BP and Rosneft. A hearing is scheduled for Tuesday.

The timing of the TNK-BP emergency meeting was chosen with great taste: it occurs on the eve of the publication of financial results and an update of BP's strategy. The market believes that new BP CEO Bob Dudley will announce dividends that will be only half of previous levels. In all three previous quarters, BP did not pay dividends at all. At the same time, dividends from TNK-BP were an important source of income for the company. And the joint venture with TNK accounts for about a quarter of the company’s annual production.