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Daily Telegraph: BP’s new boss will need to keep the bear happy

Business comment
By Damian Reece, City Editor

Hopefully Tony Hayward is brushing up his Russian as he prepares to move into the chief executive’s eyrie at BP’s St James’s Square headquarters.

Russia, President Putin, the Kremlin and Gazprom are looming large on the long list of crucial and sensitive issues facing BP’s leader-elect.

Huge Siberian gas reserves represent an important part of his inheritance. His challenge is ensuring they produce a strong revenue stream. The price for such an achievement is, as yet, unknown.

Confrontation between the Kremlin and Shell over control of a huge offshore gas field changed the rules between oil companies with expertise and development funds and an administration wanting to rewrite the script so Gazprom ends up with its hands firmly on the gas taps.

BP has been attempting to bend to the Kremlin wind. Whether it has bent far enough remains to be seen. The offer by BP and its Russian partners to cede control of the huge Kovykta development to Gazprom is sensible but risky. Give the Russian bear one bone and he will start looking for another. Hayward should get his snow boots on and see if he can soothe the bear.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/02/17/ccom17.xml

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