Edgar Filing: BP PLC

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

          for the period ended 4 September, 2008

           BP p.l.c.
                 (Translation of registrant's name into English)

                 1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
                    (Address of principal executive offices)

     Indicate by check mark whether the registrant files or will file annual
     reports under cover Form 20-F or Form 40-F.

Form 20-F        |X|          Form 40-F
                         ---------------               ----------------

     Indicate by check mark whether the registrant by furnishing the information
     contained in this Form is also thereby furnishing the information to the
     Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
     1934.

Yes                            No        |X|
                         ---------------               ----------------

September 4, 2008

BP AND AAR MOVE TO RESOLVE JOINTVENTURE DISPUTE

An overhaul of the governance structure of

Russia

third largest oil company, TNK-BP,

has been agreed in principle

the

two main

owners,

BP and Alfa Access-Renova (AAR). The aim is

to better align

their respective interests and

improve the transparency of TNK-BP's equity.

A memorandum of understanding (MOU), signed today and due

be finalised

in detail over the

coming

months,

envisage

the re-structuring of

the

TNK-BP

board through the appointment of

three new

directors

independent of either side

The MOU

also include

an option to

sell up to

20 per cent

of a subsidiary

TNK-BP

through an initial public offering (IPO)

on the international financial markets

at an appropriate future point

, subject to the consent of the Russian authorities

BP chairman Peter Sutherland said that

an agreement wou

align the

two sides

around a sha

red agenda for value growth and

allow BP and

AAR

to move forward, relieving recent

tension

"It will create a stable base from which to grow the joint venture to the benefit of everyone involved, including the Russian state for which strong capital investment and continued technical innovation to boost declining oil output are so important," Sutherland said.

BP chief executive Tony Hayward described the

agreement

as "a

sensible

means of resolving

a situation

that could not

continue without causing serious

damage

to what has been an immensely successful joint venture for all concerned.

"I now look forward to

a fruitful conclusion of negotiations so that we can rebuild trust with

AAR

and resume our

record of success for the benefit of all parties

" he said.

transparent, responsible

approach to governance

will be

a critical factor

in the appeal of TNK-BP

to potential future

investors

if the company

is to be fully valued o

n the financial markets

The MOU envisages the appointment of a new independent chief executive nominated by BP and approved by the TNK-BP board. The management committee, responsible for running
operations, will be reduced significantly from the current 14 members and will include the chief executive, the chief operating officer, the chief financial officer and an executive director.

The main board of TNK-BP

will

be adjusted in size

four

representatives each from BP and

AAR

together with the

three

new

independent directors not affiliated to either side

. The company

will continue to operate under English law.

Current chief executive

Bob Dudley

will

step down before the end of the year

. In no

nating his replacement, BP will

offer a Russian-speaking candidate with extensive Russian business experience.

The new CEO will

be explicitly

incentivised to focus on

further

mproving transparency, financial returns

and the market value of the company's shares.

Describing

Dudley as "an absolutely outstanding CEO

of great courage and strength of character

Hayward

said:

"Bob originally

intended

to step down

at the beginning of the year but volunteered to stay in place to guide the joint venture through what he realised would be

a difficult transitional phase

. He will

be very hard to replace.

During the last

five years h

is leadership has been crucial in building what is

arguably the most successful oil business in

Russia

, with the best record of production growth, reserves replacement and total shareholder return

. He has overseen extraordinary performance, financial and technical, delivering dividends of more than $

billion during that period and paying taxes and duties to the

Russian Federation

of over $8

0 billion, a record that is surely unrivalled,"

Hayward

said.

Notes to Editors

TNK-BP posted record profits of $4.7 billion in the first half of this year - more than double the $2.1 billion for the same period in 2007.

Revenues totalled $28.3 billion in

last half-year, compared with $

17 billion in the first half of 2007.

Oil production has risen

in the past four consecutive quarters, to a level of 1.63 million barrels a day.

TNK-BP has more than

replaced reserves each year since it was formed in August 2003.

Further enquiries

BP Press Office,

London

: +44 (0)207 496 4076

BP Russia,

Moscow

: +7495 363 6262

- ENDS -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BP p.l.c.
(Registrant)

Dated: 4th September, 2008

/s/ D. J. PEARL
..............................
D. J. PEARL
Deputy Company Secretary