WASHINGTON, July 20 (Reuters) – U.S. President Barack Obama and British Prime Minister David Cameron will hold talks on Tuesday overshadowed by controversy over BP Plc (BP.L)(BP.N) that could test the vaunted “special relationship” between their countries.

They are expected to discuss BP’s role in the Gulf of Mexico oil spill and whether the British energy giant had influence in the release of the Lockerbie bomber from a Scottish prison last year — issues that have complicated transatlantic ties. [ID:nN19218995]

Cameron’s first visit to Washington as British prime minister comes amid a U.S. backlash against BP. With an eye to British pensioners and other investors at home, he has pledged to stand up for the embattled company.

Aides to both leaders insist the talks aim to build on a personal rapport they struck up at last month’s Group of 20 summit in Canada and that the agenda will focus more on the war in Afghanistan, the global economy and the Middle East.

But BP and its role in the worst oil spill in U.S. history loom large. Differences over BP’s treatment and over approaches to economic recovery raise fresh questions about a historic Anglo-American alliance already past its heyday.

Scoffing at “endless British preoccupation with the health of the special relationship,” Cameron wrote in the Wall Street Journal that he would be “hard-headed and realistic” about U.S. ties and said both countries must also strengthen bonds with rising powers like China and India. [ID:nLDE66I0I8]

DEMANDS FOR INQUIRY

Under heavy criticism over the Gulf disaster, BP faces demands from U.S. lawmakers for an official inquiry into whether it had a hand in the release of the Libyan convicted in the 1988 bombing of a Pan Am flight over Lockerbie, Scotland.

BP has confirmed it lobbied the British government in 2007 over a prisoner transfer deal because it was concerned a slow resolution would hurt an offshore drilling deal with Libya.

But the company said it was not involved in talks on the release of Abdel Basset al-Megrahi, sentenced to life for the deaths of 270 people, including 189 Americans.

On the eve of Cameron’s visit, the British government reiterated that BP had no role in the decision to free Megrahi and said it had no plans to re-examine the release, which took place despite fierce U.S. objections.

Scottish authorities said they freed the intelligence officer because he was terminally ill and they believed he had only three months to live. He is still alive in Libya.

U.S. Secretary of State Hillary Clinton told senators she was urging Scottish and British authorities to review the case.

Cameron’s aides have sought to play down the issue. He stressed in a BBC interview that, as opposition leader at the time, he thought the release was “utterly wrong.”

His visit also comes as U.S. lawmakers consider a range of rules that could require tougher safety standards on offshore drilling or bar companies like BP from new offshore leases.

Cameron has made clear he will defend BP, saying it must remain “strong and stable” to make good on its promise to compensate oil spill victims and for the sake of employees and people with pension funds invested in the company in both countries.

Obama, whose approval ratings have been undercut by public anger over the disaster, has taken a hard line with BP, although his rhetoric has softened recently amid criticism his administration had gone too in bashing the company.

Obama and Cameron will meet amid hopes a capping test on the blown-out well, which has largely choked off the undersea flow of oil, will pave the way for a permanent fix. [ID:nLDE66I13M]

UNITED FRONT, DIFFERENCES

Against this backdrop, they will present a united front on issues like sanctions against Iran and try to strike a balance between keeping up the fight in Afghanistan while signaling to skeptical voters they are progressing on exit strategies.

Obama and Cameron are sure to pay homage to their countries’ special relationship — in keeping with predecessors since Winston Churchill coined the phrase in 1946 — when they hold a joint news conference after they meet and have lunch.

But Cameron has indicated his new Conservative-Liberal Democrat coalition will work together pragmatically without being too slavish to U.S. interests.

Obama has also demonstrated a desire to see relations evolve, although he has been careful to avoid offending British sensibilities as he did earlier when he returned a loaned bust of Churchill on display in the Oval Office.

Cameron has led European attempts to cut budget deficits that have ballooned in the wake of the global financial crisis, while the United States has urged caution, arguing that reducing borrowing too fast could hinder the fragile recovery.

Both sides have agreed to disagree for now.

Cameron seems unwilling to be cast as America’s “poodle” — as British media dubbed former Labour Prime Minister Tony Blair to former President George W. Bush. But he has acknowledged that Britain is the “junior partner” of the United States.

With more to gain from their encounter, Cameron is also looking to benefit from sharing a stage with Obama, who is more popular in Britain and much of Europe than he is at home. (Additional reporting by Matt Falloon; Editing by John O’Callaghan)