The Kremlin's Big Squeeze

It's one of John Browne's biggest personal triumphs. In September, 2003, the CEO of oil giant BP (BP) sealed a deal to create TNK-BP, a joint venture that would become Russia's fourth-largest oil company and which today accounts for a quarter of the British company's global production. Now Browne's designated successor, Tony Hayward, is surely counting on the project to keep the oil—and profits—pumping, particularly after a year that saw BP's reputation and stock hammered because of repeated missteps in production and safety. One sign of TNK-BP's importance: Browne and Hayward met with Russian President Vladimir V. Putin at his dacha outside Moscow in March to discuss the venture.

There's a lot to discuss. BP clearly wants to preserve the lucrative partnership it built with tycoons Mikhail Fridman, Viktor Vekselberg, and Len Blavatnik—a unique 50-50 venture that gave the Western company unprecedented access to vital Russian oil and gas. But BP may have to accept some changes as the Kremlin continues strengthening its grip on energy. Speculation is swirling that the tycoons may sell out to Gazprom, the state gas giant.