Russia seeks assurances from Britain over BP

By Kim Sengupta, Diplomatic Correspondent

Russian President Dmitry Medvedev will seek a guarantee from David Cameron, the Prime Minister, this week that the BP oil disaster will not damage the Russian economy.

The Russian ambassador to the UK, Yuri Fedotov, yesterday revealed that officials in Moscow are in talks with the embattled oil giant, which extracts 25 per cent of its oil from Russia, on whether it has plans to cut back in the face of massive losses over the Gulf of Mexico oil spill.

The planned talks at the G8 summit in Canada come as the BP board considers large-scale restructuring to prepare for a multi-billion dollar payout for clean up operations and compensation. BP is expected to consider selling $10bn (£6.7bn) worth of assets including North Sea operations, as well as a 1.4 per cent stake in Rosneft, the largest oil company in Russia, worth around $1bn.

It is unlikely that BP will sell its joint venture with the private TNK consortium, which contributes 10 per cent of its profits, not least because the company wants to diversify out of the US over concerns it faces long term unpopularity there. BP boss Tony Hayward, who has faced withering criticism in the US, was conspicuously absent from a gathering of global oil industry leaders in St Petersburg last weekend.

The Russian government and business community were under the impression he was busy handling the Gulf crisis only to discover that he was watching a yacht race around the Isle of Wight.

Mr Fedotov, said: "We want to see how it will work and how this situation will affect the overall strategy of BP and how it may affect these joint ventures in Russia. We want to have some guarantees it will continue to work."

Asked about Mr Hayward's visits to Russia, the ambassador said "We hope to see him again when he does not have other distractions."

Other issues to be covered in the meeting include wanted fugitives, easing visa restrictions and improving trade ties. The UK has sought the extradition of a former KGB official, Andrei Lugovoi, over the murder of Alexander Litvinenko, a fellow ex-agent, in London four years ago.

Moscow says Britain has refused to return more than 40 wanted people.

Mr Fedotov said Mr Cameron and Mr Medvedev would have a "meaningful meeting" with serious discussions about developing ties, and stressed it was not just a "courtesy call".

"We believe that [the meeting] could be a natural opportunity to open a new page in our bilateral relations," he said.