BP CEO Lord Browne is to meet with Russian President Vladimir Putin in the Kremlin, with the agenda likely to revolve around the recent major back tax bill issued to BP's Russian joint venture, TNK-BP, and the wider related issues in the Russian energy sector.
Lord Browne’s visit comes just a week after TNK-BP was hit with a demand of nearly $1 billion from Russian authorities relating to taxes dating back to 2001.
When added to last years Yukos saga, which saw the Russian oil giant crippled by a mammoth $27 billion retrospective tax demand, the recent trend by the Russian government to slap massive tax demands on energy companies has, not surprisingly, made western investors in the country’s energy sector rather nervous.
The BP boss may ask for an explanation for the tax request, which TNK-BP board member Viktor Vekselberg refuted last week, although it is believed that the meeting was scheduled before the tax demand was made.
Whether Lord Browne addresses the tax issue or not, it is expected that he will seek assurances of the future stability of the energy industry in Russia, which has been destabilized by the Yukos issue. Additionally, a new Russian law that blocks foreign ownership of certain key assets is also likely to be on the BP head’s list of topics for discussion.
Whatever the outcome of the talks between Putin and Browne, the meeting will be successful in bringing to light the increased western concern over the recent changes to the business environment in Russia, which will put pressure on Putin to act to reaffirm his county’s commitment to an open and healthy trade and investment policy.