July 2008: Peter Sutherland, chairman, BP

Because …

Right now, much of what passes for achievement in the world of business is the ability to fight fires. Few are better equipped to do this than the BP chairman, Irishman Peter Sutherland. He has travelled to Moscow to try and sort out an argument that has raged over BP’s Russian joint venture, TNK-BP.

The company, formed in 2003, is Russia’s third-biggest oil producer and accounts for one-quarter of BP’s global oil production.

Russian challenges

Sutherland, who has faced a range of challenges in recent times, has not been afraid to call the issue as he sees it and for this he is Business Person of the Month.

“It’s just a return to the corporate raiding activities that were prevalent in Russia in the 1990s,” Sutherland said recently. “This is bad for us and for the company and, of course, very bad for Russia.”

He was reacting to calls by BP’s joint venture partners (Russian oligarchs Mikhail Fridman, Len Blavatnik and Viktor Vekselberg) for TNK-BP chief executive Robert Dudley to resign. They claim he is acting exclusively in the interests of BP. They have also gone to court to try and reduce the number of BP employees working under contract at TNK-BP.

“The issue isn’t whether Dudley is a good chief executive, or if there are too many foreign managers and BP is stifling the company’s growth overseas,” Sutherland was quoted as saying. “It’s unfortunately a much simpler dispute of control of the company.”

Fridman was less than complimentary in response. “What he said has nothing to do with reality. It is based on untruthful propaganda, which we call in Russia ‘Goebbels propaganda’,” he said.

Police raids

Worst of all, BP’s Moscow offices and those of joint venture TNK-BP have been raided by Russian security services and Dudley has been questioned by the police. This makes it more than just an internal company matter and some have suggested that it is a blatant attempt to force BP out of Russia.

This would not be without precedence. Shell found its 55% holding in the huge Sakhalin oil and gas field reduced to 25%. While the goings-on with regard to TNKBP are the affairs of a private company, it is hard to believe that the Kremlin is not exerting influence of one sort or another. Few will shed a tear over a dent in the prospects of one of the big oil companies but, with world energy markets in such a volatile state, the readiness of one country with such a slew of resources to throw its weight around and over-step the mark of acceptable business practice is far from healthy. Sutherland will need every bit of his immense diplomatic skills to reach a reasonable compromise and all energy consumers will only gain from his success.