Issue #1480 (42), Friday, June 5, 2009

BUSINESS

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BP Head Tells Russia To Drop Investment Barriers

Bloomberg

BP Plc Chief Executive Officer Tony Hayward urged Russia, the world’s largest energy supplier, to drop barriers to foreign investment and mitigate risks at a time when “capital is in short supply.”

“Erecting barriers to the inflow of foreign direct investment is questionable,” Hayward said Thursday at the St. Petersburg International Economic Forum. “Russia would benefit from higher investment.”

The global oil industry scrapped or delayed projects valued at $170 billion from October to mid-April as crude prices tumbled and banks restricted access to capital, according to the Paris-based International Energy Agency, which advises 28 industrialized nations on energy policy.

BP’s largest investment in Russia is its joint venture, TNK-BP, with local billionaire partners. TNK-BP accounts for about a quarter of the London-based company’s production and reserves. BP is also cooperating with Russia’s state-owned Rosneft to search for oil and natural gas in the country’s Far East and in the Arctic, according to BP’s web site.

Nations that are rich in oil and gas, such as Russia, Venezuela and Brazil, are restricting foreign access to resources as part of a policy described by Hayward as “a new form of protectionism” or “resource nationalism.” That hurts global investors “in a world where capital is in short supply and is likely to remain so for some time,” he said.

“Restricting foreign investment will also slow down the transfer of technology and managerial know-how” in Russia, Hayward said. “In the short term, in response to the financial crisis, increased investment in the energy complex will boost government revenues.”

Hayward called upon Russian legislators and the government to improve “the stability of the fiscal and regulatory regime, the respect of property rights and the rule of law.”