Cameron wins no relief for BP from Medvedev

12th September 2011, Comments 0 comments

British Prime Minister David Cameron on Monday received no firm assurance on BP's future in Russia from President Dmitry Medvedev during rare talks that touched on the safety of Western investments.

Cameron led a high-powered business delegation to Russia for the first bilateral visit by a British prime minister since the year before the two sides' ties snapped over the 2006 murder of a prominent Kremlin foe in London.

The British prime minister billed his trip as a trust-building exercise that could create chances for new British companies and calm the fortunes of veterans such as BP that had run-ins with Russian authorities in the past.

BP struck a $16 billion Arctic oil exploration agreement with the state oil giant Rosneft that collapsed in May amid infighting between the British firm and the local partners in its Russian joint venture.

The deal has since been awarded to the US supergiant ExxonMobil while BP had its offices raided by bailiffs as part of a $3-billion court case by minority shareholders in its Russian holding.

The suit now threatens the future of a venture that provides BP with about a quarter of its annual production and 10 percent of its profits.

Cameron included BP chief Bob Dudley in his delegation but did not mention its problems during his morning speech at Moscow State University or the public sections of his later meetings with Medvedev and Prime Minister Vladimir Putin.

But the Kremlin's top political adviser Sergei Prikhodko said in answer to a reporter's question that Cameron "raised the issue of the BP company's interest in continuing its active operations in Russia."

It was not clear from the Kremlin aide's comments what sort of support for BP Cameron had sought.

But Prikhodko said that Medvedev told Cameron he had no right to intervene in BP's conflict with its Russian partners over the failed Rosneft tie-up.

"As far as the individual issues in this case are concerned, the Russian president noted that their solution can only be found through legal venues," Prikhodko said in reference to the impending court hearing.

"Obviously, the executive branch cannot interfere in this process."

The damages claim has been scheduled for a September 21 hearing in the Ural Mountains district of Tyumen.

"As far as we understand, the British side does not intend to politicise this issue," Prikhodko said. "This is very important."

BP had won Putin's personal blessing when it struck the initial Rosneft alliance and has previously managed to maneuver through treacherous Kremlin politics to establish one of its most profitable businesses abroad.

But the court case has only heightened BP shareholders' concerns about Dudley's decision to bet so big on Russia. Medvedev himself said he was unhappy to see Russia's trade ties with Britain dominated by so many energy deals.

The Kremlin identifies Britain as Russia's fifth-biggest investor with 2010 investments of some $40 billion.

"But the structure of these investments is far from ideal because it primarily deals with financing hydrocarbon trade operations," Medvedev said during a joint press appearance with Cameron.

"In fact, we would like to see this investment balance to look slightly different."

Medvedev also noted that Russian companies remained interested in the British market -- a comment delivered amid efforts by Gapzom to expand into the island's power market and secure a new deal with Royal Dutch Shell.

"We are, of course, talking about British companies' investments in Russia and Russian companies' investment in Britain," Medvedev said.

© 2011 AFP

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