NEW WORLD ORDER_Why Western producers must learn humility

Kevin Rosser, head of oil and gas at the specialist consultancy firm Control Risks, says that foreign oil firms such as BP will not be hounded out of Russia altogether, but will have to settle for less profitable terms in future.

"The trend in Russia is towards greater state control over the natural resources sector, without crowding out the private sector entirely. Most people look at Russia and feel disturbed at what has happened in the last few years. But we have not, in fact, seen the wholesale exclusion of Western companies.

"It's not that the door is closed for foreign companies in Russia, but to succeed they will have to agree new and less favourable business models with the Russian government. PSAs [production sharing agreements] or deals where foreign companies have majority control are looking anachronistic.

"There are fewer and fewer places in the world for companies to go, and this has dramatically increased the negotiating power of host governments. In an opportunity-constrained industry, Western companies can't afford to ignore Russia - even if that means having to radically rethink the business model."

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