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Western money greets Russian oil power in London

LONDON, June 26 (Reuters) - East met West on Thursday to forge the closest ties on Russian oil and gas development since the Rothschild family sat down with Tsar Nicholas over a century ago.

As part of a London oil conference attended by Russia's President Vladimir Putin and top Russian and European oilmen, British oil giant BP signed a landmark investment worth over $6 billion.

The BP move and a $10 billion investment by rival Royal Dutch/Shell offshore Siberia mark growing western investor confidence in Russian economic reforms and a thirst for Moscow's oil and gas among industrialised nations nervous about security of Middle East supplies.

Britain and Russia also signed a memorandum of understanding to co-operate 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," Putin said.

"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."

Despite the flag waving, Russia, the world's second-biggest oil exporter faces a dilemma, if a three-year boom in oil prices that has helped drive Russia's recovery starts to evaporate.

Weaker crude oil prices would bolster economies in the energy-dependent West, but could hurt Russia as badly as any member of the international producer cartel OPEC, which props up prices through supply restrictions.

Western nations want to draw Russia closer to them, but Russia may also feel a need to stay friendly with OPEC when the hard times return.

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