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Russian investment: Investors into Russia not Shell shocked

Oil-rich oligarchs strolling through Kensington might be becoming a common sight but a visit by senior Russian politicians is not an everyday occurrence in London. So when the vice-minister of economic affairs leads a delegation of notables to the world’s leading financial centre, serious roubles must be at stake.

Indeed they are. The delegation came last month to publicize the tender of the first Russian public-private partnership (PPP) deal set to come to market. The project is a highway cutting through St Petersburg, the Western High Speed Diameter (WHSD), which is designed to improve access to Russia’s most important port.

Reduced stake

On the surface it would appear that the timing could not have been worse. A day after the event, the Russian government’s strong-arming of Shell into reducing its stake in the Sakhalin-2 liquefied gas project hit the front pages of the national press. The Anglo-Dutch company was forced to reduce its stake from 55% to 25%, so ceding majority control to state-controlled energy company Gazprom. This raised doubts about the survival of investor interest in Russia.

If the reaction of potential investors in the WHSD project is anything to go by, interest is still strong. “We are interested in the project,” confirms Rudolf Krapf, director at Austrian construction company Bauholding Strabag. “We do not overestimate the Shell situation, and I don’t think it will deter other investors coming to Russia.”

Al Breach, Moscow-based chief strategist at UBS Brunswick, says: “The [Sakhalin] outcome was the inevitable conclusion, people knew it was going to happen.

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