July 15 (Bloomberg) -- Russian billionaires who own the TNK-BP oil venture with BP Plc, Europe's second-largest crude producer, want to buy the U.K. company's 50 percent stake to end a struggle for control.

Russia's AAR, owned by billionaires Viktor Vekselberg, Mikhail Fridman, German Khan and Len Blavatnik, is prepared to buy the half it doesn't own, Stan Polovets, the group's chief executive officer, said yesterday in an interview in New York. BP ``has no intention to sell,'' London-based spokesman Toby Odone said by telephone today.

BP has clashed with its Russian partners over management of the venture, which provides the British company with a quarter of its oil reserves and 20 percent of its output. AAR has sought to oust TNK-BP CEO Robert Dudley, saying he has put BP's interests ahead of the venture's.

``This is a continuation of the struggle for control of the British share,'' said Ariel Cohen, an expert on Russia and energy at the Heritage Foundation in Washington. ``The real question is: Who is going to be ultimate owner of BP's stake?''

The Russian shareholders could wind up selling the stake to state-owned OAO Gazprom Neft, an affiliate of the country's natural-gas monopoly OAO Gazprom, he said.

Plan to Stay

Royal Dutch Shell Plc, Europe's second-biggest oil company, was forced in 2006 to cede control of its biggest operation in Russia -- the $22 billion Sakhalin-2 oil and gas project -- to Gazprom. Regulators had revoked permits for Sakahalin-2 on environmental grounds.

``All the things we are doing clearly underline the point that we are investors,'' said Odone. ``We plan to stay there.''

Prime Minister Vladimir Putin, who was the country's president for eight years, said on May 30 in Paris that he warned BP and its partners that a 50-50 venture would lead to ``constant friction about who is on top.''

There is ``no pressure, not at all'' from the government on AAR to buy BP's stake, Polovets said. The government isn't expected to intervene in the dispute, he said, declining to comment on whether AAR consulted with the Kremlin on the matter.

Sued

``This quarrel highlights the lack of predictability for Western investors in Russia,'' Cohen said.

The government has denied any involvement in the dispute amid media speculation that state-run OAO Rosneft or Gazprom are vying for a stake.

AAR said on July 6 that it's being sued for 8.5 billion rubles ($362 million) by BP for alleged breach of a tax deed of covenant. The Russian group is prepared to sue its British partners, Polovets said, declining to comment further.

Russian President Dmitry Medvedev and U.K. Prime Minister Gordon Brown made no progress to resolve the dispute when they met for the first time on July 7 at the Group of Eight summit in Japan. Brown said he brought up the issue at the meeting. The U.K. and the European Union have warned about damage to investor confidence from BP's treatment in Russia.

``The Russian authorities don't plan to interfere in the corporate dispute between the British and Russian TNK-BP shareholders,'' the Foreign Affairs Ministry said today in a statement posted on its Web site, citing Medvedev.

The immigration authority is preparing new visas for TNK- BP's foreign staff and has already issued new documents to some people, the ministry said.

TNK-BP currently has 85 foreign staff and has secured a quota from the emigration authorities for only 71 people to prolong their working visas, the company said last week. Some expatriates will have to leave Russia by the end of this month, when their visas expire.

Unconditional

``The fundamental issue is that BP treats TNK-BP as its subsidiary and not as a joint venture,'' disregarding rights of Russian partners, Polovets said. The removal of Dudley ``is an unconditional demand,'' he said. ``It's not a question of if he will be dismissed, but when.''

AAR is unwilling to sell its stake, Polovets said.

``This company is so undervalued,'' Polovets said. ``We are very frustrated that we haven't made any acquisitions within the last five years.''

AAR is disappointed that TNK-BP hasn't performed as well as rival producer OAO Lukoil. ``TNK-BP and Lukoil started out at the same level, about $15 billion or $16 billion,'' Polovets said. ``Now they are $98 billion and we're $38 billion.''

BP shares, which fell 8.5 pence, or 1.6 percent, as of 12:55 a.m. in London, have slid 13.7 percent this year. That compares with a 9.8 percent decline by Shell.

The next TNK-BP board meeting will be in September, Polovets said. ``Hopefully between now and September there will be discussions between the partners and we come up with a resolution before then,'' he said.

AAR would like to see TNK-BP sell shares to the public, Polovets said. An initial public offering would increase the value of the company and provide a currency to make international acquisitions, he said.

To contact the reporters on this story: Dan Lonkevich in New York at dlonkevich@bloomberg.net; Halia Pavliva in New York at hpavliva@bloomberg.net.

Last Updated: July 15, 2008 10:16 EDT