TNK-BP is a joint venture company owned or operated by United kingdom Petroleum, additionally known as BP,
and the Alfa, Access/Renova group, more commonly called AAR. Both BP and AAR each own 50 percent of
TNK-BP. TNK-BP was made in 2003 after a merger between BP and TNK that satisfied the argument
between the two companies above Sidanco and its particular subsidiary Chernogorneft's ownership that were on-
going for years. The partnership put together BP's knowledge, equipment, and experience; and Russia's new
supply of essential oil fields. The business enterprise relationship that seemed to get started as a win win for both parties has noticed
its reveal of problems over the years.
Becoming a profitable business has not seemed to be a problem that TNK-BP offers faced. Via 2002-
2011 they have proven revenue expansion year after year. In 2002 they showed sales revenues of $9. a couple of billion,
and have grown this number every year to $54. 9 billion in 2011. They may have also demonstrated a positive net
income annually ranging from $1. 5 billion dollars in 2002 to $9. 2 billion dollars in 2011 (Annual Report, 2011).
The first concern arose in the very beginning of the merger in June 2003, Robert Dudley, TNK-BP
CEO said, " With all credited respect intended for BP, it had a fairly obscure idea as to what was going on in RussiaвЂќ
(Moffett, 2011). BP as a business was very interested in the huge amounts of olive oil that were in Russia, although
they did not do a very good job of understanding the economic or political climate of Russia at the moment.
The extended line of arguments in the partnership began in June the year 2003 as well when ever AAR
informed BP that they can had issues with the bonus deals and entitlement for expatriates. In 2004, AAR wished
payments for their fraction of the company to be produced sooner. In May 2008 three oligarchs of AAR
hit with Tony Hayward, then CEO of BP, and insisted that Robert Dudley end up being removed as CEO of TNK-
BP because he was showing opt to the BP side in the joint venture over the Russians, plus the disputes
might continue to this day. BP and AAR could also have arguments about increasing TNK-BP
operations outside of Russian federation and Siberia because of the immediate competition it will place against BP.
During all of these conflicts between AAR and BP, TNK-BP was also working into government
issues in Russia. In April of 2005, TNK-BP was hit with a $1 billion tax bill from the Russian federal government
that linked to earnings via 2001. Later that year, the Russian government not simply canceled auctions on
three major essential oil fields, nevertheless also reported that businesses that were a lot more than 50% possessed by non-Russians
would not be permitted to participate in the upcoming sale the following yr for new areas. In 2006, a
licensing dispute began in the Kovykta gas field in Siberia that forced TNK-BP to keep the oil
expansion there strictly for Russia in anxiety about the certificate being terminated. After angering Vladimir Putin,
who was offering as the Russian President at the time, TNK-BP eventually marketed its share in the Kovykta gas
discipline to Gazprom. In 2008, TNK-BP office buildings were raided by Russian officials and an employee was
detained upon charges of espionage. That same season BP faced issues when trying to invigorate visas for
expatriate workers getting only about half of the needed visas approved by the Russian government.
Complications Statements and Analysis
All of these issues lead to three main problems that TNK-BP faced. The first problem is that BP
was not ready to deal with the cultural and political distinctions that come with executing business in
Russia. The second problem is there is no managing party inside the joint venture. The third problem is
that TNK-BP is continually the recipient of seemingly targeted, unfair treatment by the Russian government.
Because previously explained, BP was not prepared to handle the ethnical and political differences of
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