Deal ends feud over BP's Russia venture

MOSCOW, Sept 6 (AFP) British and Russian shareholders yesterday announced an end to a months-long feud for control of joint oil venture TNK-BP, in a move hailed by the Kremlin as a positive signal to foreign investors. brThe agreement is a sensible means of resolving a situation that could not continue without causing serious damage to TNK- BP, which is jointly held by BP and a Russian consortium, BP chief executive Tony Hayward said in a statement. brIn a separate statement, Mikhail Fridman, representing the group of Russian billionaires that owns 50 per cent of the company, said the agreement opens fundamentally new opportunities for the development of TNK-BP. brThe deal, which envisages the departure of British chief executive Robert Dudley but no shift in the balance of ownership, was also welcomed by EU Energy Commissioner Andris Piebalgs as a positive development for global oil markets. brI am confident that this agreement shall allow energy supplies from TNK- BP to fully come on stream on the global markets, Piebalgs said in a statement after Thursday's memorandum of understanding by the shareholders. brThe deal was also greeted positively by investors, with TNK- BP shares on Moscow's stock exchange up 8.13 per cent at the close of trading. brBP shares were also trading around 3.6 per cent higher around midday on the London Stock Exchange but later dropped back to minus 0.1 per cent. brBP's portion of TNK-BP accounts for a quarter of the British company's global production, 10 per cent of its earnings and a fifth of its reserves. brKremlin officials quickly welcomed the resolution to a conflict that analysts said had cast a cloud over an already weak business environment. brThis resolution will benefit the shareholders, the company itself and naturally Russia as a whole, President Dmitry Medvedev's economics advisor, Arkady Dvorkovich, was quoted by Interfax news agency as saying. brThe resolution... will undoubtedly have a favourable influence on Russia's investment climate, he said. brThe dispute between British and Russian shareholders in TNK- BP, Russia's third largest oil producer, was seen as a test of Medvedev's promises to improve the business climate. brThe deal closes the books on an ugly chapter for TNK-BP, said Andrew Neff, an analyst with US-based research group Global Insight. brNevertheless ... TNK-BP is not out of the woods just yet as there are important details still to hammer out, Neff said, referring to disputes over TNK- BP projects outside Russia and a deal on the Kovykta gas field in Russia.