It seems to me that we might be witnessing the severe wounding -- and likely downsizing -- of one of the major members of Big Oil. At the same time, we again are being given yet another demonstration that doing business in Russia is fraught with peril that just may not be worth the effort.

Yesterday, an escalating feud between British oil giant BP (NYSE:BP) and its three Russian billionaire partners in TNK-BP Ltd., a large oil and gas joint venture that operates in Russia, took a decided turn for the worst when Robert Dudley, the BP employee who heads the partnership, was essentially forced to leave Russia. Dudley had been under increasing attack by the Russian partners, and Russian authorities had refused to renew his work visa.

Here's my take:

  • Recent history tells us that there's an increasing possibility that BP won't be active in Russia much longer. Royal Dutch Shell's (NYSE:RDS-A) (NYSE:RDS-B) interests have already been crushed in a Russian bear hug, and ExxonMobil (NYSE:XOM) is probably worried that it's next as it continues to plug away on Sakhalin Island. A pattern is becoming clear.
  • A breakup of TNK-BP could severely wound BP since the partnership accounts for about a quarter of the company's total global production.
  • Other Western oil companies, such as France's Total (NYSE:TOT), which aspires to do more work in Russia, should be counseled to think again.
  • I'll bet that within a short time -- perhaps as little as a couple of years -- all oil and gas activity in Russia will occur under the aegis of what are effectively government companies, like Gazprom and Rosneft.
  • And despite talking a good line, those in the new Medvedev government are no more interested in the rule of law than were Mr. Putin and his minions.

For Fools and their portfolios, I realize it's tempting to become involved in Russia's thriving economy through investments in Lukoil or Russian mining-and-metals company Mechel (NYSE:MTL). That's probably the sort of temptation BP and Shell felt several years ago.

Bet they wish they hadn't.

I welcome all opinions from my Foolish friends regarding what this now-raging battle means for BP, Russia, and the energy industry. Hit me with your comments below.

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Fool contributor David Lee Smith doesn’t own shares in any of the companies mentioned, Russian or Western. He does, however, welcome your comments. The Fool has a disclosure policy.