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Strategic Alliances, Collaboration and Joint Ventures Case Study

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Case Title:

TNK–BP: Is the Joint Venture on the Verge of Derailment?

Publication Year : 2010

Authors: R Ganesh Ram, A Syed

Industry: Oil and Natural gas

Region:Russia

Case Code: SCJ0035IRC

Teaching Note: Not Available

Structured Assignment:  Available

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Abstract:
The joint venture between TNK-BP faced a crucial test of survival when both the partners, BP and the Alfa, Access / Renova represented by the Russian oligarchs - Mikhail Fridman, Viktor Vekselberg and Leonard Blavatnik - accused each other of wresting control of the partnership. BP was subjected to state investigations for tax evasion and industrial espionage. Allegations of playing favouritism, treating TNK-BP as its subsidiary, and mismanagement were the accusations made against BP. While BP alleged that the oligarchs were preventing the smooth operation of the venture, playing shareholder activism, and were thwarting capital expansion programmes by cashing out dividends. The dispute reached a crescendo and threatened to affect the Russian reputation as a favourable investment destination. Though a peace deal to restructure the management was reached, suspicions ran high as to whether the deal would uphold in the coming future. The case highlights the problems that plagued the TNK-BP joint venture and gives a brief overview of the position of Russia in the global oil industry.

Pedagogical Objectives:

    This case study aims at achieving the following pedagogical objectives:
  • To assess Russia's position in the global oil industry.
  • To analyse the reasons for dispute between the joint venture partners TNK and BP.
  • To evaluate the road ahead for the joint venture with respect to the peace deal.

Keywords :  OPEC (Organisation of the Petroleum Exporting Countries), Russian oligarch, Oil reserves, Vertically integrated companies, Soviet bureaucracy, Western Siberia, Kovikta, Sidanko, Yukos, BP, Espionage, Joint venture

Contents : 
The Russian Oil Industry
BP and TNKs JV: What Ails the Association?
TNK-BP’s position in Russia (production and reserves)
The Onset of Trouble
Russian Crude Oil Exports 2006-2007
Issues in the Russian Energy Industry during the Soviet Union Period
The Three Main Russian Shareholders
Corporate Structure of TNK BP

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