Bob Dudley was at the end of his tether. The embattled chief executive of TNK-BP, BP’s Russian joint venture, could no longer do his job effectively. Suspicious that his office had been bugged and his landline tapped, the Mississippi-born oil man resorted to stepping out on the balcony to make phone calls. He began to have his office regularly swept for bugs.

Relations at the top of Russia’s third-largest oil-and-gas group had disintegrated into all-out civil war. The breakdown between its owners, BP and four Russian billionaires, was so severe that managing the day-to-day operations had become virtually impossible. So Dudley rang BP’s headquarters in London last Thursday to tell Tony Hayward, BP’s chief executive, that he was leaving Russia. Dudley said he could retain operational control of TNK-BP, but others are doubtful.

His departure was not a total surprise. Dudley had just five days before a temporary visa expired, but there had been hope that he would be able to get a new one. Instead, he booked a flight for that evening, destined for a location that BP has kept under wraps. Putting in motion an operation that had been weeks in planning, executives at TNK-BP immediately began pulling together a team that would be flown out to support Dudley. He will now attempt to run TNK-BP, a company with a workforce of more than 66,000, almost all Russians, from a secret location.

BP chairman Peter Sutherland told The Sunday Times: “He is not in a BP office or in our headquarters in London as has been suggested. I’m not going to say where he is but I don’t think he is under any physical threat.”

Dudley’s sudden departure, which BP waited to announce until he was airborne, was designed to shock its disgruntled partners at AAR, the consortium owned by Mikhail Fridman, Leonard Blavatnik, German Khan and Viktor Vekselberg that controls the other half of TNK-BP. BP was drawing a line in the sand. “Up to now we have played by the Queensberry rules and as a consequence we have been outfoxed,” said a BP insider. “That will no longer be the case.”

SINCE March, BP and TNK-BP have been subjected to a series of inquires, investigations, and raids at the hands of Russian authorities. BP’s offices have been raided twice by the FSB, the state security body formerly known as the KGB. TNK-BP’s offices have been inspected four times by the labour ministry. A former employee was arrested on charges of industrial espionage. Dudley was interrogated for six hours at the Ministry of Internal Affairs on tax-avoidance schemes engineered at TNK two years before he arrived.

Last week TNK-BP was forced to send the last of the BP secondees home amid a row over their visas. Khan, who is also responsible for government relations at TNK-BP, had ignored a request from Dudley for 150 visa renewals for foreign staff. Instead, he requested just 63 from immigration authorities, in effect ending the employment of nearly half the company’s crucial technical specialists. At one point, TNK-BP security men denied BP staff entry to TNK-BP headquarters.

The company’s travails have coincided with AAR’s increasingly public dissatisfaction with how TNK-BP was being run by Dudley, who was appointed by BP. Sutherland said: “The treatment of us by our partners has been disgraceful. We have hundreds of joint ventures in the world and in my 12 years as chairman we have never had any disputes or been subjected to the harassment tactics that have been indulged here.” He has appealed to the highest level of government, including Vladimir Putin and Gordon Brown, for help.

For Russia, the spat has been a public-relations disaster. News of Dudley’s dramatic exit sent the country’s benchmark Micex index down by as much as 6% on Friday, the sharpest single-day drop since January and a new low since Dmitry Medvedev became president three months ago. Katynka Barysch, Russia analyst at the Centre for European Reform, said: “It’s bad for Russia because of the credibility issue. This is a new government, and rule of law is one of Medvedev’s big things. But the impression is that the rules are being bent and stretched and applied unevenly.”

For its part, AAR says BP has only itself to blame. Its demands, said Stan Polovets, the chief executive, are simple. They want Dudley fired, replaced by a new chief executive that BP can appoint — as long as he is not from within the organisation. They have lobbied for higher dividends and a new independent board that will allow the company to grow into a formidable international oil giant, rather than being treated like a “BP subsidiary”. AAR has tried to debate these proposals in a “fair and amicable way”, Polovets said, but has been repeatedly rejected by BP. The rejection of an AAR plan, tabled last summer, to list the company on the London Stock Exchange, set the current chain of events in motion.

“Everything we’ve proposed in the past couple of months has been ignored or shut down by BP. They’ve pushed us into a corner and given us no choice but to be more proactive and aggressive,” Polovets said.

AAR denies “categorically” allegations that it is using the Russian authorities to apply pressure on BP.

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