BP row deters construction firms from investing in Russia

Keller has shelved plans to move into Russia until a row between oil company BP and its Russian joint venture partner is resolved.

The ground engineering specialist is believed to be one of a number of UK companies waiting for an outcome to the dispute before deciding whether to enter the country.

Justin Atkinson, Keller’s chief executive, said: “It’s a huge untapped market. We’re looking at Moscow and St Petersburg, although things are obviously difficult at the moment.”

The row between BP and Russian members of its TNK-BP joint venture flared up in April after BP claimed its partner was trying unfairly to gain control of the company. As a result Robert Dudley (pictured), the joint venture’s chief executive, is running the group from a secret location outside the country.

Last month Peter Mandelson, the EU trade commissioner, attacked the “menacing behaviour” of TNK-BP’s Russian shareholders.

Other companies believed to have put Russian plans on hold as a result of the row include Atkins and WSP. Chris Cole, chief executive of WSP, this week said he was “proceeding with caution” in Moscow and St Petersburg.

Over the six months to 30 June, Keller increased pre-tax profit by 19% to £54.2m as a result of its push into the Middle East and eastern Europe. Turnover grew 28% from £443.9m to £568.7m.

As a result of the global drive, more than 60% of its profit comes from outside the US compared with 30% three years ago.

Atkinson said UK markets were resilient except for residential. He said turnover from that sector was likely to fall from 30% to less than 15%.

Keller said full-year results would be “broadly in line” with last year. The forecast for the full-year is a pre-tax profit of £100m on turnover of £1bn.