BP's Russian partners block £1.1bn payout

The billionaire backers of BP's Russian joint venture have agreed to vote down TNK-BP's $1.8bn (£1.1bn) dividend proposal at the company's board meeting next month.

The move adds to the pressure from the four members of the Alfa-Access-Renova (AAR) consortium, which shares ownership of TNK-BP 50/50 with the British oil major, over BP's $10bn share-swap and Arctic exploration deal with Russian rival Rosneft.

According to AAR, the Rosneft deal announced by BP last month violates the TNK-BP shareholder agreement that all Russian activities be pursued through the joint venture, or that it at least be given the option to participate.

The consortium filed an interim injunction last week, to be heard in the High Court in London today, claiming that the TNK-BP board was not duly consulted on the deal, and calling for it to be halted until the two sides reach a resolution.

The AAR members – Mikhail Fridman, Victor Vekselberg, Leonard Blavatnik and German Khan – met in Moscow yesterday to decide on their response to the issue of the dividend, which would be split between AAR and BP.

"The decision for now is not to approve the fourth-quarter dividend," Stan Polovets, the chief executive of AAR, said after the meeting.

The group claims that BP's deal with Rosneft has such serious implications for TNK-BP's domestic business that it forces the company to massively accelerate its international expansion plans. In such circumstances, the company needs all the cash it can muster, and should therefore not be paying out a dividend to shareholders, the argument goes.

The TNK-BP board meeting voting on the dividend is scheduled for 17 February. There are 11 board members, with four BP nominations and another three independents alongside four AAR representatives. The dividend vote is not open to the independent appointees, so the combined AAR vote is sufficient to block the dividend.

Although TNK-BP's injunction calls for a halt to the Rosneft tie-up, the company is likely to be trying to ensure a slice of the deal for itself, rather than stopping it altogether. But BP sources said last week that the possibility of involving TNK-BP never arose during discussions with Rosneft, because the company has none of the offshore expertise needed for the highly technical Kara Sea exploration project.

AAR's challenge has also raised eyebrows because the Rosneft deal has overt backing from Moscow's highest political circles including the Prime Minister, Vladimir Putin, and his deputy, Igor Sechin, who is also the chairman of Rosneft.

BP made little comment on the developments regarding the TNK-BP dividend yesterday, with a spokesman for the company saying only that the company "aims to settle this in a business-like way".

The news comes as the latest WikiLeaks documents reveal that the owners of BP's Russian arm "systematically" explored new ventures in "rogue states" including Burma, Cuba and Sudan.

Speaking to US diplomats in Moscow at the height of the crisis in June 2008, Bob Dudley the then head of TNK-BP, and now the company's CEO said the Russian billionaires wanted to expand TNK-BP's operations into Burma, Cuba and Sudan, "which posed problems for BP given US and other Western sanctions". US officials told Mr Dudley they were "concerned" about his "personal safety".