A memorandum of understanding (MoU) signed and due to be finalized in detail over the coming months, envisages the appointment of a new independent CEO 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 CEO, COO, CFO and an executive director.

The MoU also includes an option to sell up to 20% of a subsidiary of TNK-BP through an initial public offering on the international financial markets at an appropriate future point, subject to the consent of the Russian authorities.

The main board of TNK-BP will be adjusted to four representatives each from BP and Alfa Access-Renova (AAR), together with the three new independent directors not affiliated to either side. The company will continue to operate under English law.

TNK-BP’s current CEO, Robert Dudley, will step down before the end of 2008. In nominating his replacement, BP will offer a Russian-speaking candidate with extensive Russian business experience.

Peter Sutherland, chairman of BP, said: 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.