Case Study Analysis: British Petroleum's Strategic Alliances in Russia

This case study examines the strategic partnership between British Petroleum (BP) and two Russian oil companies, Rosneft and Alpha Access Renovation (AAR). The alliance between BP and Rosneft, announced in 2011, faced challenges due to existing partnerships and conflicts of interest. The study identifies the core problem as a lack of diligence and poor alliance management, leading to disputes and undermining the partnership. It analyzes the industry dynamics, the strategies employed by BP, and the resulting conflicts, including legal actions and changes in leadership. The analysis highlights how differing objectives and the existing alliance with AAR created significant business threats, ultimately leading to BP ceding influence. The case study provides a comprehensive overview of the challenges in strategic alliances and the importance of effective communication and management in international business ventures. It also mentions the privatization of Russian oil businesses and its impact on the partnerships and the oil production in the country. Finally the study also examines the strategies used by BP in Russia.

Introduction
The aim of the study is to review a scenario related with partnership between British Petroleum (BP)
with two Russian oil companies, Rosneft which us a state owned Oil Company and Alpha Access
Renovation (AAR) which is a consortium of Soviet born oligarchs and is one of the biggest privately
owned financial organization in Russia. British Petroleum announced its strategic partnership with
Roseneft in 2011 to cover about 125000 square kilometer of Kara C which led to a series of court
injunctions being laid on BP by AAR who were also its partners (Gomes et al. 2016).
Identification of the problem
According to several authors the main reasons why the alliance between Roseneft and BP failed which
included a lack of diligence on the part of BP and also due to a poor form of alliance management. It is
pointed out that within any alliance the degree of inter partner conflict can have severe effects which
can lead to divergence of objectives and also causes the common interests and goals of partnership to
be undermined. Furthermore it has also been stated that in order for effective cooperation to develop
the levels of conflicts within the organization should be low (Hubbard et al. 2018).
After the incident of deep water horizon the focus for BP was changed to expanding its revenues and oil
assets across street world while the aim of AAR was to maintain the TNK-BP position within the oil
market in Russia which would have been undermined by the alliance between BP and Roseneft. Thus it
can be clearly seen that the alliance between BP and Rostney was considered to be a significant business
threat to AAR there you suggesting that BP is undermining its partnership with the company (Luvison
and Cummings 2017). The development of the partnership by the two Russian oil companies with BP has
been the result of privatization of oil businesses of Russia under President Boris Yeltsin resulting in the
privatization of AAR in 1999 by 51% and the 49% being owned by the state (Zoogah et al. 2015). The
production of Petroleum between 1993 and 2000 for Russia increase considerably helping it to
overcome the oil production by United States and becoming the second largest oil producer after Saudi
Arabia. The resulted mismanagement of the alliance caused a significant conflict between BP and AAR in
2008 when BP was threatened of legal actions and caused the CEO of BP Bob Dudley to be ousted and a
new board of directors was created for TNK-BP to ensure equally representation of the interest of both
BP as well as AAR. By 2019 Mikhail Fridman, of AAR became the chairman of TNK-BP there you showing
that BP finally agreed to cede influence to AAR. In the same year Maxim Broadsky was nominated as the
new CEO of TNK-BP (Keese 2017). The issue that mainly resulted in the share swap of BP as its
partnership with Russia to be undermined because of the existing alliance with BP worth AAR in the
form of TNK-BP. The Russian consortium had a legal claim in the development projects made in the
Arctic shelf and it is argue by AAR that the new alliance made between BP and Roseneft was
undermining the existing relation that was present between AAR and BP (Albers et al. 2016).

Type of industry
BP as we as AAR are oil industries who are focused on the drilling of oil Mills and production of oil
throughout the country. BP is one of the global leaders in piles drilling and have developed technologies
for creation of new oil wells across the Arctic, Pacific and northern Atlantic regions. AAR is also an oil
based industry leader that is a part of a larger AAR conglomerate who are involved in oil financing and
banking services. The company aims to utilize the Arctic shelf for the development of new oil Mills in
Russia and maintain the position of Russia as the second largest producer of oil (He and Balmer 2017).
Strategies Used By BP in Russia:
BP uses the strategies of developing cordial partnerships with the partners in Russia. The company
focuses on the development of open communication with partners. This allows a respectful integration
with the industries (Ogarenko et al. 2015).
Conclusion
From the above study it can be seen that the relationship between BP and Roseneft was one of the
biggest reasons of the conflict between BP and AAR as the existing relation was in direct completion
withal the new relation that a developed by BP. This also showed that BP failed to communicate its
ambitions for partnership development with bigger companies due to which there was a confusion and
misunderstanding which could have been others avoided.

References
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He, H.W. and Balmer, J.M., 2017. Alliance Brands: Building Corporate Brands through Strategic
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Hubbard, T.D., Pollock, T.G., Pfarrer, M.D. and Rindova, V.P., 2018. Safe bets or hot hands? How status
and celebrity influence newly public firms’ strategic alliance formation. Academy of Management
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Ogarenko, I., Bossong, K., Gerasimchuk, I. and Pickard, S., 2015. G20 subsidies to oil, gas and coal
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