If so many “positive signals” were truly coming out of both camps this past weekend (with one Russian investor saying he thought the skirmish would be settled in a few days – remarks echoed by both BP Chief Executive Tony Hayward and TNK-BP's head Robert Dudley) how, then, did this situation run off the rails?

Talks between BP PLC and its Russian partners in joint venture OAO TNK-BP have broken down, people close to the discussions said Wednesday.

The Russian owners -- tycoons Mikhail Fridman, Len Blavatnik and Viktor Vekselberg through their Alfa Group, Access Industries and Renova holding companies -- had asked BP to agree to certain changes in how TNK-BP is run by 9 a.m. GMT (5 a.m. EDT), the people said.

BP didn't respond to this request, which in particular asked for greater authority within TNK-BP for Alfa co-owner German Khan, a big cut in the number of foreign staff at the company and board parity for the 50:50 owners, rather than the existing BP majority.

The Russian owners now plan to pursue legal action in relation to what they consider infringements of their rights in electing the board. BP is hoping for more talks with its Russian partners, people close to BP said.

The break-down in talks follows more positive signals over the weekend from both sides. Mr. Vekselberg said Friday that he expected the row to be settled in the next few days, words echoed Saturday by both BP Chief Executive Tony Hayward and TNK-BP's head Robert Dudley. "I'm confident we will resolve our differences," Mr. Hayward told an economic forum in St. Petersburg.

Mr. Hayward met with Mr. Fridman Friday, with the latter referring to "substantive" discussions that will resume next week. The Russian partners recently demanded the resignation of BP-appointed Mr. Dudley, accusing him of ignoring their interests when running the firm, Russia's third-biggest oil producer. BP rejected the move, reiterating its full support for Mr. Dudley, who has since spoken out about the importance of strong corporate governance.

The shareholder spat follows a string of other headaches for TNK-BP, which has had its offices searched by the Federal Security Service, one employee arrested on industrial-espionage charges and foreign staff seconded from BP stranded outside the country following visa problems.

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