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Last Updated: Friday, 29 August, 2003, 16:17 GMT 17:17 UK
BP completes Russia deal
By Hugh Fraser
BBC World Service business staff

The British oil giant, BP, has completed a $6bn deal to set up a joint venture with the Russian oil company, TNK - one of the biggest foreign investment deals ever in Russia.

The finalising of the agreement - which gives BP a 50% stake in Russia's third largest oil company - follows approval by the Russian anti-monopoly ministry earlier this week.

BP says the deal now makes it the world's second largest oil company.

When the deal was announced in February it was to be the biggest ever foreign investment in Russia.

It was seen as a vote of confidence in the comparative economic stability of the country following the turbulent years of reform during the 1980s and 90s.


Since then it has been overtaken by an even bigger investment in Russia by BP's rival, Shell.

But Russia's business climate has taken a negative jolt during the intervening months while BP has been completing its deal with its Russian partner, TKN.

Another of Russia's biggest oil companies, Yukos, is being investigated by the Russian prosecutor's office.

A key man in Yukos, Platon Lebedev, has been arrested on charges of fraud and tax evasion.

The charges relate to the controversial privisisations of the 1990s. It was a period when mineral resources worth many billions were sold to businesses at what were considered by many to be knockdown prices.

Most of Russia's business leaders were greatly enriched during the privatisations, and now, if the whole legal basis of the process is being qestioned, many of them will be left feeling insecure.

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