Schroeder Will Join TNK-BP to End Owners’ Dispute

By Eduard Gismatullin

Jan. 15 (Bloomberg) -- Gerhard Schroeder, the former German chancellor, will join TNK-BP’s board as a non-executive director as BP Plc’s Russian oil venture installs new management and seeks to put a damaging power struggle behind it.

James Leng, chairman of Corus Group Plc, and Alexander Shokhin, president of the Russian Union of Industrialists, will also become non-executive directors, BP said today in a statement. Mikhail Fridman, a shareholder in TNK-BP, said the new directors will help the company become an “international major” to compete with the world’s largest oil producers.

BP Chief Executive Officer Tony Hayward and his billionaire partners in TNK-BP -- Fridman, German Khan, Viktor Vekselberg and Len Blavatnik -- agreed on Sept. 4 to end an eight-month dispute over the running of the venture by removing CEO Robert Dudley, who left the company on Dec. 1. The power struggle hurt output and discouraged investors.

“It’s going to be reasonably positive in the context of Russia and all those vagaries that it brings with it,” Jason Kenney, an analyst at ING in Edinburgh, said today by telephone. Schroeder “can hopefully progress assets for TNK-BP using the influence” he has with Prime Minister Vladimir Putin, he said.

Nord Stream

Schroeder has close personal ties with Putin and chairs OAO Gazprom’s Nord Stream pipeline venture, which plans to build a link under the Baltic Sea to supply Russian natural gas directly to Germany. President Dmitry Medvedev was Gazprom’s chairman before being elected to the presidency last year.

Russian investors have pushed for TNK-BP to expand internationally, proposing projects in Poland, Germany and northern Iraq. BP’s directors have previously shot down most of these suggestions, according to the billionaire shareholders, collectively known as AAR.

TNK-BP stockholders “have agreed to appoint the three directors to avoid the risk of deadlock between the 50:50 owners of the joint venture, which are represented on the 11-strong board by four directors from each side,” BP said.

TNK-BP Ltd. shareholders may soon announce the nomination of Denis Morozov, the former head of miner OAO GMK Norilsk Nickel, to the post of CEO, BP said Jan. 9. Morozov has a “high” chance of being appointed to the job, Vekselberg said Nov. 13.

Tim Summers will continue as acting CEO until the new nomination, BP said today in the e-mailed statement.

Board Expansion

Last week, BP and the Russian investors approved expansion of the board to 11 directors, four from each side and three independents. The earlier board had 10 members, split evenly between BP and AAR.

Stockholders also agreed, as part of the September accord, to study the sale of shares in a unit of TNK-BP Ltd. and ways to boost the company’s market value, BP said Jan. 9. TNK-BP, Russia’s third-largest oil company, accounts for almost a quarter of BP’s output.

The new directors, “along with a recently agreed new system of corporate governance, will strengthen our company and make it more competitive, efficient and valuable,” Vekselberg said today in an e-mailed statement.

Shokhin serves as a non-executive director on the boards of OAO Lukoil, Russia’s largest publicly traded oil company, and OAO Russian Railways, the national rail monopoly.

Leng, in addition to his post at Corus, is deputy chairman of Tata Steel Ltd., India’s biggest steelmaker, which bought Corus in January 2007. He also advises on investments at HSBC Holdings Plc, Europe’s largest bank.

Rio Tinto Group, the world’s third-largest mining company, yesterday said Leng will take over as chairman in April, replacing Paul Skinner, who will retire.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net