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Financial Times: Interview transcript: Yuri Fedotov: Royal Dutch Shell and BP have encountered difficulties in the Russian energy sector

By Daniel Dombey

Published: June 5 2007 21:42 | Last updated: June 5 2007 21:42

Britain’s relationship with Russia has been overshadowed in recent months by the continuing controversy over the killing in London last year of Alexander Litvinenko, the former KGB agent turned British citizen, who was poisoned by the radioactive isotope polonium 210.

The UK has requested the extradition of Andrei Lugovoi, a Russian national who the Crown Prosecution Service accuses of Litvinenko’s murder, but this is unlikely to proceed.

Royal Dutch Shell and BP have also encountered difficulties in the Russian energy sector, while tensions have also grown over US plans to install missile defence bases in Poland and the Czech Republic.

In an interview with the Financial Times, Yuri Fedotov, Russia’s ambassador to the UK, sets out Moscow’s call for the incoming government of Gordon Brown to “depoliticise” the Litivinenko affair, as well as outlining the “rules of the game” for energy investment.

EXTRACTS RELATING TO SHELL & BP

On TNK-BP Kovytka and, particularly, Shell, are you worried at all about the signal to foreign investment if licences are revoked, are you worried about a chilling effect on investment in Russia?

In business one must be really cautious in generalising matters… Shell encountered serious problems in Sakhalin and I’m not going to dwell on the details…That was a kind of an agreement that could never be signed nowadays by any Russian Government or anywhere else. But that was a matter which we consider as settled.

Shell has found a solution which allows the consortium to continue to be a part of this project and they have been to some meetings at the highest level and I think a deal has been struck.

On Kovytka, that is a little been different because a license was on the production and they didn’t start the production, and the consortium which consisted not only of BP, but some other companies…

As you know, a bill, a draft law is [being] considered in the Russian Parliament on the subsoils and the strategic areas which would place on foreign investment an even more transparent context where the rules of the game will be well known and they’re not going to be changed while the game is on.

Some of the areas marked as strategic will be regulated in terms of foreign investment. Foreign investment will be allowed but with some conditions. The other areas will be open for the free market competition.

But the basic rule of the game is the strategic energy resources. Foreign investors should have 49 per cent but no more of the company’s assets?

But we’re not discovering America. It happens in many other places.

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