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. Last Updated: 07/27/2016

British Minister Calls for Clear Rules

MTKudrin, flanked by Darling, center left, and British executives at a news briefing Wednesday at the Finance Ministry.
British Secretary of State for Trade and Industry Alistair Darling led a group of 20 top-level British CEOs on Wednesday in calling on the Kremlin to clarify investment rules in the first Cabinet-level visit to Russia since the recent souring of bilateral relations.

"Investors must know where they stand from the start," Darling told reporters after meeting Finance Minister Alexei Kudrin. "It is absolutely essential that when disagreements arise, we do everything we possibly can to resolve them."

The delegation included top officials from BP, Shell and mining giant Rio Tinto -- important players in key sectors, where foreign investment is due to be limited by a new bill.

Darling said he had raised the problems facing BP and Shell in his talks with Kudrin and at a previous meeting with Economic Development and Trade Minister German Gref. He was also due to meet Industry and Energy Minister Viktor Khristenko late Wednesday.

"Those difficulties [regarding BP and Shell] need to be resolved," Darling said. "The will is there to make it work."

BP has become the most recent target of the Kremlin's scrutiny and is currently in negotiations to allow state-run Gazprom into Kovykta, the giant Siberian gas field operated by its TNK-BP subsidiary. Gazprom is also interested in buying out the three Russian billionaires who currently hold a 50 percent stake in the TNK-BP joint venture.

BP Russia chief Richard Spies and Andrew Wood, an adviser to the company and former British ambassador to Moscow, also attended the talks Wednesday. TNK-BP spokeswoman Marina Dracheva said she was unaware of any plans for meetings with company officials in Moscow.

"We have not approached any politicians on either side," she said.

Shell sold a controlling stake in Sakhalin-2 to Gazprom in December after months of pressure from state environmental officials. Shell was represented in the delegation by Sir Philip Thomas, an adviser to the company and a former Foreign Office official.

"British business, especially natural resource companies, want to know about the certainty of the subsoil laws," Rio Tinto CEO Leigh Clifford said after the news conference. The team would continue to push for more clarity, he said, while adding that talks with government officials were useful.

The State Duma is widely expected to pass a new law on subsoil rights this year that would codify the rules that the Kremlin has increasingly made clear through its behavior towards foreign investors -- namely, that Russian state-linked companies are to have a controlling stake in all major projects involving the country's vast natural resources.

Recent shifts in the ownership structure at mining giant Norilsk Nickel, as well as leadership changes at diamond monopoly Alrosa, have prompted speculation that the mining industry could be the state's next target for restructuring.

British-Australian mining giant Rio Tinto runs a joint venture with Norilsk in which it holds a 49 percent stake. The company, RioNor, was set up last year to explore greenfield deposits of copper, brass and zinc, as well as precious metals, in Siberia and the Far East.

Britain is the country's largest foreign investor, with $5.5 billion invested in the first nine months of 2006. London is the top choice for Russian company IPOs.