Independent, The (London): OUTLOOK: Russian roulette

THE THREE Russian oligarchs with whom Lord Browne shared a platform in London yesterday are reformed characters - "reasonable, business-minded people" as one of them put it. BP's chief executive must hope so because the last time he danced with the Russian bear he got badly mauled. That was back in 1997 when BP bought a 10 per cent stake in a company called Sidanco. By the time it arrived in Moscow to inspect the assets, the juiciest bits had mysteriously been siphoned off. BP's next stop was the courts.

The businessmen BP was dealing with then are the self same businessmen it has now paid $6.8bn to for a 50 per cent share of Russia's third-largest oil company, TNK-BP. So how are relations these days with Mikhail Fridman, Len Blavatnik and Victor Vekselberg, the respective heads of Alfa, Access and Renova?

Lord Browne's frank, if not altogether re-assuring, answer is that the better they get know one another, the less he suspects them which suggests there is still a long way to go before he stops counting up the cutlery after dinner. Trust, as Lord Browne also observed, is never an absolute concept in business. But it is the basis on which the City is going to judge this latest investment. Despite some very bullish numbers on TNK- BP's future oil production and reserves, and a five-hour presentation to the investment community yesterday, BP's shares ended the day lower.

There are, none the less, some important things in favour of BP's Russian advance. For a start, it has first-mover advantage. Exxon and Shell, which are now scrabbling to follow BP's lead into the country, will have to pay a fat premium to the price that Lord Browne achieved. Second, who is to say that putting money into Russia is any more risky than investing in, say, Nigeria, where Shell has a big exposure. Third, although BP's $7bn investment in Russia is large by most companies' standards, it is a small one for Big Oil. Russia will represent 15 per cent of BP's production but tie up only 3 per cent of its capital.

BP has put plenty of safeguards in place - UK-style corporate governance standards, incorporation in the British Virgin Islands, equal board representation and dispute-resolution based on English law. But still a nagging question remains. BP's favourite oligarchs may be in in Vladimir Putin's good books today. But will the same be true tomorrow?