Sept. 4 (Bloomberg) -- BP Plc and its billionaire partners in Russian oil venture TNK-BP are close to settling a management conflict by firing the unit's chief executive officer and inviting independent directors onto the board, two people familiar with the talks said.

BP, which owns 50 percent of the five-year-old venture, may agree to remove by the end of the year TNK-BP CEO Robert Dudley, a demand that investors Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik have made central to the fight over control of the venture, Russia's third-largest crude producer.

BP has been locked in the dispute with its Russian partners over strategy and management at the venture, which accounts for almost a quarter of BP's worldwide production and proved reserves. The conflict has battered the U.K. company's shares and Russia's reputation with investors.

``This agreement could be positive for the Russian market in general,'' Oleg Maximov, an oil analyst at Moscow-based Troika Dialog brokerage, said today by phone. ``Many investors were very concerned about this situation.''

The shareholders will also agree to expand the board of TNK-BP Ltd. to 11 directors, four from each side and three independents, the people said. The current board has 10 members, split evenly between BP and AAR.

Dudley left Russia July 24, citing ``sustained harassment'' amid court battles and labor and tax inspections that led to him being disqualified from his post in Russia for two years. TNK-BP has appealed the disqualification decision.

`Hope' of Accord

Stan Polovets, who heads up the company that represents the Russian billionaire shareholders, known collectively as AAR, declined to comment on reports in Vedomosti and the Financial Times that TNK-BP's owners may sign an agreement today to end the dispute over control of the company.

``There has been no agreement reached, but we are definitely in talks,'' Robert Wine, a London-based BP spokesman, said today by phone. ``We would hope to reach agreement very soon.''

BP rose as much as 13.5 pence, or 2.7 percent, to 519.5 pence in London trading and was 2.1 percent higher at 516.75 pence at 8:21 a.m.

The shareholders will also examine selling shares in a unit of TNK-BP Ltd. to boost the company market value, one of the requirements requested by the billionaires, the people said.

To contact the reporters on this story: Torrey Clark in Moscow at tclark8@bloomberg.net.

Last Updated: September 4, 2008 03:22 EDT