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BP, TNK sign $6bn Russia deal

Blair, right, greets Putin as he arrives at the energy summit.
Blair, right, greets Putin as he arrives at the energy summit.

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LONDON, England -- British oil group BP and Russia's TNK have signed a multibillion-dollar contract to create a joint energy venture, the biggest single foreign investment deal in post-Soviet Russian history.

The agreement, signed Thursday in a joint statement by the companies, will see BP invest a total of $6.15 billion (5.3 billion euros) in TNK to create a new firm, TNK-BP, in which each side holds a 50 percent stake.

The deal was signed at a London energy conference on the sidelines of a state visit to Britain by Russian President Vladimir Putin.

The BP move -- and a $10 billion investment by rival Royal Dutch/Shell in Siberia -- represent growing confidence in the West over Russia's economic reforms and a need for its oil and gas among industrialised nations nervous about the security of Middle East supplies.

British and Russian energy ministers also signed a memorandum of cooperation in the construction of a gas pipeline under the Baltic from Russia into Europe and connecting with Britain.

"BP and Shell are ready to invest $17 billion and such a decision is a reflection of the positive trends in Russia's investment climate," Reuters reported Putin as saying.

"The things that bind us together in politics security and economics are very important," British Prime Minister Tony Blair told the conference.

"Together we can achieve our mutual goals of global stability, economic growth, and international development."

Blair said the deals would make Britain the largest single investor in Russia, but environmentalists said the TNK-BP joint venture would be disastrous for the planet unless the Kyoto pact on greenhouse gas emissions was in place. (Putin under pressure)

In a falling stock market in London BP shares were down 0.8 percent at 421 pence at 1030 GMT.

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