Russia - WikiLeaks
Russia 090506
Basic Political Developments
• Russia's Lavrov visits U.S. to prepare for Obama-Medvedev summit - Sergei Lavrov will meet with Secretary of State Hillary Clinton in Washington on Thursday, their second meeting since they symbolically pressed a "reset" button in Geneva in March to improve relations that plunged to a Cold War low under the George Bush administration.
• Reuters ANALYSIS-Russia-U.S. ties have tentative start – Clinton set to meet Lavrov in Washington on Thursday; Progress on arms control; Tensions remain over Georgia
• U.S. warship to visit Russia for Victory Day celebrations - The U.S. missile cruiser Cowpens will start a four-day visit to Russia's Far East port of Vladivostok on May 7 to take part in Victory Day celebrations, a spokesman for Russia's Pacific Fleet said Wednesday
• U.S. envoy on DPRK to visit East Asia, Russia Wednesday
• Georgia mutiny case is another political provocation-Lavrov
• Moscow hails Poland’s efforts to correct imbalance in relations-FM: “In general, we are satisfied with the policy of the Donald Tusk government aimed at correcting imbalance in relations with Russia despite subjective difficulties that persist in many respects. Our two governments adhere to pragmatic interaction that is based on our people’s interests,” Lavrov said.
• RT: Could Warsaw thaw NATO-Russia relations? - Russia is expected to draw the attention of the Polish Foreign Minister to the fact that Moscow is not very happy with the possibility of Georgia and Ukraine entering NATO, as well as with the deploying of elements of an American air-defense missile shield in Poland.
• Russian official on ICJ "political games" - The head of the Russian delegation to the Council of Europe says the International Court of Justice should declare Kosovo's attempt to secede to be illegal. Konstantin Kosachov told Belgrade daily Večernje Novosti that there is a possibility that this court will again start playing political games and making decisions not based on law.
• Russia to expel NATO officials on Wednesday: report
• Report: Russia to expel Canadians in NATO response
• Moscow reported ready to expel 2 Canadian envoys
• Russian MP proposes Caribbean drill response to NATO exercises - Sergei Abeltsev from the Liberal Democratic Party proposed holding "large-scale drills" with the participation of the armed forces of Russia, Cuba and Venezuela in the Caribbean on July 2.
• India to flight-test new jet trainer with Russian engines
• India Grounds Russian-Designed Military Jets - India has grounded its fleet of Sukhoi-30s and asked Russia to send a team of experts following the first ever crash involving one of the war jets, officials told AFP Tuesday.
• India asks Russia to help in Sukhoi aircraft crash probe
• New training center for Air Wing Kuznetsov - Russia plans to establish its first training center for carrier plane pilots by the Sea of Azov. Building of the 2.7 million EUR center will start in 2010.
• Medvedev Slams State Stock Purchase - Direct government support of the country's stock market did not accomplish anything, President Dmitry Medvedev said Tuesday in a meeting with deputies from the party A Just Russia, where he also urged caution in -making changes to the country's tax code.
• Medvedev Puts Foot Down on Gambling - Using uncharacteristically stern language, President Dmitry Medvedev told Federal Tax Service chief Mikhail Mokretsov on Tuesday that he would tolerate no delays in moving all gambling to special regional zones within two months.
• Germans Hold Komi Man - Acting on an international arrest warrant, the German branch of Interpol detained Komi republic businessman Sergei Shpigotsky on Sunday in the town of Offenburg, the report said.
• Russian government only pretends to fight corruption - The most hardened bribe-takers in Russia are teachers, medical doctors and policemen - as much naturally follows from a report by Prosecutor General Yury Chaika he will officially present at a Federation Council meeting next week
• Corruption on the Rise - Policemen, teachers and doctors are the country's top bribe takers, ahead of bureaucrats, Prosecutor General Yury Chaika said in a new report, Vedomosti reported Tuesday.
• Vyacheslav Shport vested with Khabarovsk reg governor powers
• Director of major transport company killed in Vladivostok
• Combined federal forces in Chechnya to be replaced by security operational group - An operational group of Russian security forces is to replace the combined federal forces in the North Caucasus, a source with the Russian Defense Ministry told Interfax on Wednesday.
• Alleged leader of insurgents in Russia’s Kabardino-Balkariya destroyed by FSB, Interior troops
• Russian military intelligence special-task brigade to be relocated from Ulan-Ude to Irkutsk
• Gay Activists Prepare Eurovision March - Gay rights activists vowed Tuesday to hold a gay pride march in Moscow next week on the same day as the final of the Eurovision Song Contest, which is being held in Russia for the first time.
National Economic Trends
• Russia daily c.bank swap limit at 5 bln rbls
• Russian Service Industries PMI Eased Contraction in April
• PMI: Rate of contraction in Russian service sector eases in April
• Russian Services PMI rose to 44.4 in April - slowest pace of contraction since October 2008
• Economics: CPI down on stronger ruble, cheaper gasoline & groceries
• Troika: Russia Economic Monthly - kaleidoscope of forecasts
• Overdue Loans Reach 3.7%
• Banking sector: no respite in sight, but NPLs slow down in 1Q09 – UralSib
• NPL growth slows
• Russian unemployment down 0.7% in week
• Domestic debt strategy - Rencap
• External debt strategy – Rencap
Business, Energy or Environmental regulations or discussions
• OGK-1 sees revenue fall 26% to 10 bln rubles in Q1
• Norilsk Nickel sells blocking stake in TGK14
• Moscow genco cuts 2009 capex to 30% of 2008 level
• Steelmakers see global expansion in new light - Russian steel companies were on a major overseas shopping spree in recent years. But the downturn means most of those companies are scaling back their foreign operations.
• Novolipetsk Steel reports poor 1Q09 RAS results
• NLMK Group Q1 2009 RAS results
• Polymetal posts FY 2008 Net Loss of $15.7 million
• UPDATE 1-Russia Polymetal cuts loss in 2008
• Polyus Gold comments on deal with KazakhGold - . Both companies remain in active negotiations about the revised terms of the agreement, and Polyus Gold remains committed to making a final offer (under Rule 2.5 of the Takeover Code) by end May.
• Peter Hambro Mining buys back $40m in exchangeable bonds
• Diamond producer Alrosa to resume market diamond sales in May
• Alfa pays down $500mn of VEB debt
• Russia's Dalsvyaz secures $46 mln credit line
• Aeroflot set to pay dividend for 2008 (Part 2)
• Airline magnate offers to sell Blue Wings stake to Aeroflot for 1 euro
Activity in the Oil and Gas sector (including regulatory)
• Management of Shtokman Development AG and the Association of Oil and Gas Equipment Producers has held a meeting
• State strengthens control in Kharyaga project
Gazprom
• UPDATE 1-Sakhalin-1 to sell 20pct of gas to Gazprom-report
• Sakhalin-1 Group to Sell Natural Gas to Gazprom, Nikkei Reports - The consortium agreed to sell about 1.5 billion cubic meters of natural gas a year to Gazprom, the newspaper said, without saying where it got the information.
• Deal on South Stream Pipeline next week - Serbian Energy Minister Petar Skundric on May 5 said that Serbian gas company Srbijagas and Russian Gazprom will most likely sign a core agreement on the South Stream gas pipeline in Sochi, Russia, next week.
• Gazprom's Murky Games in Hungary - On April 28 Emfesz KFT, a major Hungarian gas distribution company owned by Ukrainian businessman Dmytro Firtash, announced that it will stop importing gas from RosUkrEnergo (RUE), a company based in Zug, Switzerland and will instead buy gas from an unknown company, RosGas AG, also located in Zug.
• Russian oligarch to buy NHL team - Russian billionaire Alexander Medvedev, who has been a thorn in the side of the NHL this season, claims he is looking at buying an NHL team, Russian website Sports.ru reports.
------------------------------------------------------------------------------------------
Full Text Articles
Basic Political Developments
Russia's Lavrov visits U.S. to prepare for Obama-Medvedev summit
WASHINGTON/NEW YORK, May 6 (RIA Novosti) - Russia's foreign minister embarks on a U.S. visit on Wednesday to prepare for a bilateral summit due in July as part of the two countries' pledges to rebuild ties.
Sergei Lavrov will meet with Secretary of State Hillary Clinton in Washington on Thursday, their second meeting since they symbolically pressed a "reset" button in Geneva in March to improve relations that plunged to a Cold War low under the George Bush administration.
In Washington, Lavrov will also meet with senior members of Congress and deliver a speech on Russia-U.S. relations at the Carnegie Center, according to Foreign Ministry spokesman Andrei Nesterenko.
"We expect substantial discussions at meetings with the leadership of the State Department, Congress and the expert community on current Russian-American relations and the problems that await resolution to ensure their sustainable development," Nesterenko said last week.
Arms control will dominate Lavrov's visit to the United States, as the two countries have pledged to draft a new arms reduction treaty to replace the Cold War-era START 1 treaty that expires in December.
The first round of "full-format" talks on the new treaty are due to take place in Moscow on May 18, with the aim of providing an outline for the pact before Russian President Dmitry Medvedev and U.S. President Barack Obama meet in July.
Lavrov's visit could be overshadowed, however, by fresh tensions in Georgia. The former Soviet republic on Tuesday accused Russia of orchestrating a failed revolt at a military base. Moscow dismissed the charges as "insane."
Russia's war with Georgia over pro-Russian South Ossetia last August and the subsequent recognition of the breakaway region by Moscow fueled tensions with the United States and other Western powers.
Moscow's relations with NATO were also strained over the expulsion last week of two Russian diplomats by the alliance. Lavrov in response said he would not attend a NATO-Russia Council meeting later this month. The move came after Moscow and the alliance resolved to resume ties suspended following the war with Georgia.
On Monday, Lavrov will preside over a UN Security Council session on Middle East conflicts. Russia is the council president in May.
ANALYSIS-Russia-U.S. ties have tentative start
Wed May 6, 2009 1:02am EDT
* Clinton set to meet Lavrov in Washington on Thursday
* Progress on arms control
* Tensions remain over Georgia
By Sue Pleming
WASHINGTON, May 6 (Reuters) - The "reset" button was pushed two months ago on U.S.-Russia ties but results so far have been mixed, with arms control the most promising area but gnarly issues such as Georgia tensions still lingering.
Secretary of State Hillary Clinton is set to see Russian Foreign Minister Sergei Lavrov in Washington on Thursday, their second major meeting since ice-breaking talks in Geneva in March when they symbolically pressed a reset button to turn a page on caustic relations under the former Bush administration.
Since the Geneva meeting, a senior U.S. official said signals coming from Moscow were uneven and it was unclear how far Russia wanted to go in improving ties.
"The challenge now is whether we can put meat on the bones and fulfill the promise of the positive part of the relationship, leading with arms control," the official said.
"Can the problems and areas of disagreement be managed or do they overwhelm it (the relationship)?" he told Reuters.
Renewed tensions this week in Georgia, with Tbilisi accusing Russia of being behind a failed mutiny at a military base, could overshadow the diplomats' talks at the State Department.
Russia fought a war with neighboring Georgia last year which exacerbated tensions with Washington and its allies and sunk relations to a post Cold War low.
""We don't want to have a confrontation over it," said the senior U.S. official. "But beyond the question of Georgia, there is a larger issue of Russia's claim to a sphere of influence."
BULLETS FLYING?
Russia expert Dmitri Trenin, director of the Moscow center for the Carnegie Endowment for International peace, predicted bullets could "start flying" again in Georgia soon.
"Unfortunately, the prevailing view is that we (the United States) somehow left Georgia behind and that Georgia is not a burning issue, not an issue at the top of the agenda. But Georgia may climb its way back," Trenin said.
Another issue is increased bickering between Moscow and NATO following the expulsion last week of two Brussels-based Russian diplomats from the military alliance.
Lavrov responded by dropping plans to attend a meeting of the NATO-Russia Council this month, a move that will have disappointed Clinton who pushed for such talks to resume after they were suspended following the Georgia war.
The senior U.S. official said Lavrov's response was seen as "odd" and Washington was puzzled.
"The question is are the Russians capable of accepting outreach," the official said.
Russia expert Charles Kupchan, a senior fellow at the Council on Foreign Relations, said the new U.S. approach needed to see some concrete results.
"I think it is important for (President Barack) Obama to begin to be able to show the pay-offs of his public diplomacy and for reaching out to the Russians," said Kupchan.
"There is a bit of a tango at work here. Washington is putting on offer a new relationship and now it behooves the Russians to reciprocate."
ARMS CONTROL
Experts say the best chance for early success is in negotiations to replace a Cold War arms reduction treaty, called START 1, that expires in December and which both sides say they are determined to get by the deadline.
The chief U.S. negotiator, Rose Gottemoeller, has indicated some flexibility, telling Russia's news agency Interfax this week that Washington was ready to count both nuclear warheads and their delivery vehicles -- a sticking point previously.
The first round of serious negotiations is set to start in Moscow on May 18, with the goal of having the outlines of a deal when Obama meets Russia's leader in July.
"Certainly, the Obama administration brings a fundamentally different view on arms control. It is prepared to negotiate further nuclear reductions in a framework that is familiar to the Russians," said Steve Pifer, former U.S. ambassador to Ukraine now with the Brookings Institution.
"Strategically when there is a good nuclear dialogue it has tended to have a positive impact on the broader relationship," he added.
But Kupchan pointed to domestic obstacles from the Russian side, with the financial crisis making it more difficult to move towards a rapprochement with Washington.
"During tough economic times, leaders tend to play the Populist card. In the case of Russia, the Populist card generally means drumming up some anti-American sentiment," said Kupchan. (Reporting by Sue Pleming; editing by Vicki Allen)
U.S. warship to visit Russia for Victory Day celebrations
VLADIVOSTOK, May 6 (RIA Novosti) - The U.S. missile cruiser Cowpens will start a four-day visit to Russia's Far East port of Vladivostok on May 7 to take part in Victory Day celebrations, a spokesman for Russia's Pacific Fleet said Wednesday.
Victory Day, May 9, marks the final surrender by Nazi Germany to the Soviet Union on the Eastern Front of WWII, referred to as the Great Patriotic War in Russia and other former Soviet republics.
"During the war, our countries were allies, and the crew of Cowpens will commemorate both Russian and U.S. sacrifices during WWII," the official said.
During the visit, the U.S. delegation will meet with senior staff from the Pacific Fleet and take part in a number of cultural and sports events.
USS Cowpens (CG-63) is a Ticonderoga-class guided-missile cruiser. In 2003, it became the first U.S. Navy ship to launch missiles in the U.S.-led invasion of Iraq, firing the first 37 Tomahawk cruise missiles.
U.S. envoy on DPRK to visit East Asia, Russia Wednesday
06.05.09 00:29
U.S. special representative on the Democratic People's Republic of Korea (DPRK) Stephen Bosworth will leave here on Wednesday to visit China, South Korea, Japan and Russia in a bid to concentrate effort to push Pyongyang back to the six-party nuclear disarmament talks, the State Department said Tuesday, according to Xinhua.
"The purpose of this trip is to work with our allies to find a way forward in convincing the North to come back to the negotiating table," State Department deputy spokesman Robert Wood told reporters.
Bosworth and his entourage are due to arrive in Beijing on Thursday, travel to Seoul on Friday before visiting Tokyo on May 11 and traveling to Moscow on May 12.
In order to push the six-party talks forward, Bosworth, who was former U.S. ambassador to South Korea, visited Beijing, Tokyo and Seoul in early March.
Bosworth's upcoming visit to East Asia, plus Russia, occurs after the DPRK launched a long-range rocket on April 5, announced its withdrawal from the six-party talks, and threatened to conduct a second nuclear test and ballistic missile tests unless the United Nations apologizes for condemning and punishing its rocket launch.
Georgia mutiny case is another political provocation-Lavrov
MOSCOW, May 6 (Itar-Tass) - Russian Foreign Minister Sergei Lavrov has called the story with the mutiny in Georgia another provocation in the information and geopolitical fields. He was shown on the Vesti news television channel on Wednesday.
“I think that this is another provocation, a provocation both in the information field and in the geopolitical field,” he said. “The current Georgian leadership has well approved itself as a supporter of such kind of provocations and I am certain that it is absolutely not accidentally that this provocation was made just on the eve of the NATO war games in the Georgian territory that are beginning on May 6, despite all our warnings,” said the Russian diplomacy head.
Moscow hails Poland’s efforts to correct imbalance in relations-FM
MOSCOW, May 6 (Itar-Tass) - Moscow hails the Polish government’s efforts to correct disproportions in relations with Russia, Foreign Minister Sergei Lavrov said at the meeting with his Polish counterpart Radoslaw Sikorski on Wednesday.
“In general, we are satisfied with the policy of the Donald Tusk government aimed at correcting imbalance in relations with Russia despite subjective difficulties that persist in many respects. Our two governments adhere to pragmatic interaction that is based on our people’s interests,” Lavrov said.
“We are ready to continue this trend,” he said.
Later in the day the two ministers “will exchange opinions on a wide range of issues on the bilateral agenda as well as on international affairs,” Lavrov said stressing the importance of the strategic committee for Russian-Polish relations that resumed its work.
Sikorski also welcomed as positive the resumption of the committee’s work and expressed the hope that “such work will be continued at the level of the intergovernmental commission as well.”
The Polish diplomat said this was his second visit to Moscow.
“Some issues that we plan to discuss will soon reach a favourable conclusion. We would be glad to see Prime Minister Vladimir Putin in Poland,” Tusk said.
He said Poland is a country that makes the EU more sensitive to Eastern neighbourhood.
Could Warsaw thaw NATO-Russia relations?
06 May, 2009, 11:15
Poland’s Foreign Minister Radoslav Sikorsky is in Moscow to mend some fences, and try to warm the chill wind between Poland and Russia as the two countries do not see eye to eye on plans for anti-missile defence.
Currently, the Polish FM is meeting his Russian counterpart, Sergey Lavrov.
Sikorsky and Lavrov are expected to hold talks for much of today trying to find some common ground. There are several very important issues they are expected to focus on, such as European security, energy supplies, and missile defense.
Russia is expected to draw the attention of the Polish Foreign Minister to the fact that Moscow is not very happy with the possibility of Georgia and Ukraine entering NATO, as well as with the deploying of elements of an American air-defense missile shield in Poland.
All these issues are of great importance to the Russian side, particularly in light of the recent statements of the new US administration to reboot ties with Russia and start relations afresh, though the back and forth steps the Obama administration has been taking on the matter clearly show that it's trying to pursue different goals that are unattainable simultaneously.
Russian Foreign Minister Lavrov is also expected to raise the issue of international energy security, especially in light of Moscow’s proposals to draw a new legal basis for global energy cooperation.
Trade is another issue to be closely discussed, as Poland is an important trade partner of Russia. Both countries want to continue developing investment and innovation areas.
Upon his arrival to Moscow, the Polish FM announced that he is interested in good relations with Russia, yet there are several major issues that cannot be avoided.
The visit of the Polish FM comes at a time of diplomatic tensions between NATO and Russia. The latest news about the expulsion of two Russian diplomats from Russia’s NATO mission in Brussels is that Russian Foreign Minister Lavrov will not be attending the important high level Russia-NATO meeting that was scheduled for May 19.
This action of the Russian FM shows the extent of Russia’s outrage about NATO accusing Russian diplomats who have been working in Russia’s NATO mission for many years of spying.
The spy scandal itself took place a couple of months ago when a high-ranking Estonian official who worked for the Estonian defense ministry was branded as a Russian spy who had been acquiring secret documents directly from NATO for five years since Estonia joined NATO in April 2004.
Russia called the expulsion of its diplomats from Brussels a harsh and serious provocation.
Russia’s representative in NATO, Dmitry Rogozin, said that this fresh diplomatic scandal is nothing but an attempt to torpedo the warming relations between Russia and NATO.
That is why one of the things that may come up in the talks between Sergey Lavrov and Radoslav Sikorsky today is possible counter-measures by the Russian Foreign Ministry concerning the expulsion of the Russian diplomats from Brussels.
Russian official on ICJ "political games"
6 May 2009 | 10:00 | Source: Večernje novosti
BELGRADE -- The head of the Russian delegation to the Council of Europe says the International Court of Justice should declare Kosovo's attempt to secede to be illegal.
Konstantin Kosachov told Belgrade daily Večernje Novosti that there is a possibility that this court will again start playing political games and making decisions not based on law.
"That would be a great defeat for international law and the court," he warned.
Asked whether Serbia's possible EU membership would affect the country's ties with Russia, including Moscow's position on Kosovo, Kosachov said that initially, when the EU started accepting eastern European countries, there was a lot of "nervousness", but that later on, "we saw that this brought no essential problems, rather it created new possibilities on many occasions".
NATO membership, Kosachev continued, is another matter, "but I think there are no serious discussion on this issue in Serbia at the moment".
He also ruled out the possibility that Kosovo could one day join the Council of Europe.
"In any case, not while there's disunity within the EU. Anyway, the Russian position will not change. It is important that Russia and Serbia do not stand alone. We need other countries in order to block attempts to legalize Kosovo's independence," Kosachov explained.
Russia to expel NATO officials on Wednesday: report
2009-05-06 01:05:03
MOSCOW, May 5 (Xinhua) -- Russia will announce on Wednesday expulsion of head and member of staff of the NATO information office in Moscow, the Interfax news agency reported on Tuesday citing a source from the Russian Foreign Ministry.
Isabelle Francois, the director of the NATO Information Office in Moscow who was also accredited with the Canadian Embassy in Russia as attache, and a worker of her office are likely to be deprived of diplomatic accreditation in Russia, according to a high-ranking official from the ministry.
No official comments are available on this information currently, said Interfax.
"We will officially announce our measures immediately after presenting a relevant note, for which the Canadian ambassador will be called to the Russian Foreign Ministry tomorrow," said the official.
"The note will say that the said persons are deprived of diplomatic accreditation in Russia as a response measure. We will refrain from declaring them personae non gratae," he said.
"We have not been initiators of such an approach. We have been forced to act this way," he added.
Earlier on Tuesday news agencies reported citing a diplomatic source that Russian Foreign Minister Sergei Lavrov has dropped plans to attend the May NATO-Russia meeting at the ministerial level.
The decision is an apparent protest to the expulsion of two Russian diplomats from the NATO headquarters in Brussels.
"Due to the provocative actions against two employees at the Russian mission to NATO, there are no plans for a ministerial level meeting of the Russia-NATO Council (NRC)," the RIA Novosti news agency quoted the source as saying.
Russia has informed NATO that the meeting within the framework of NRC is inappropriate, the Interfax news agency reported.
"We informed our partners of this decision at the meeting of the preparation council of the NATO-Russia Council this morning. We find a ministerial meeting inappropriate and insist on an urgent meeting at the level of ambassadors to discuss and resolve the conflict," Russia's permanent representative Dmitry Rogozin at NATO.
The meeting would be the first meeting between Russia and NATO at such a high level since the Russia-Georgia conflicts in last August, said Itar-Tass news agency.
Rogozin confirmed on Tuesday that the Belgian Foreign Ministry has formally notified Russia about withdrawing accreditation from the two Russian diplomats for allegedly espionage.
He earlier described the accusations of spying act as "far-fetched, irresponsible and provocative," and pledged firm reaction to the decision from Russia.
Report: Russia to expel Canadians in NATO response
By DAVID NOWAK, Associated Press Writer David Nowak, Associated Press Writer – 51 mins ago
MOSCOW – Russia will expel two Canadian diplomats in retaliation for NATO's recent expulsion of two Russian envoys from the alliance's headquarters in Brussels, a Russian news agency quoted a Foreign Ministry official as saying Wednesday.
The director of the NATO Information Office in Moscow, Isabelle Francois, and a colleague were likely to be expelled, Interfax reported. The official said both are attaches with the Canadian Embassy.
Nicholas Brousseau, a spokesman for the Canadian Embassy, said Ambassador Ralph Lysyshyn had been summoned to the Russian Foreign Ministry for a morning meeting Wednesday. Brousseau could not confirm the reason for the summons.
Francois could not be reached immediately.
NATO last week announced it would revoke the accreditation of two members of Russia's mission to NATO allegedly over a spy scandal dating back to February.
Russia's Foreign Minister Sergey Lavrov on Monday withdrew from a Russia-NATO council meeting scheduled for late May in protest at the "provocative" move.
Russia had vowed retaliation for the expulsions. Its chief NATO envoy, Dmitry Rogozin, told Russian news agencies Russia's response would be "firm."
The Foreign Ministry official defended the retaliatory step. "We are not the ones to have initiated this approach. We have been forced to act in this way," Interfax quoted the official as saying.
Russia is also riled by NATO military exercises scheduled to begin Wednesday in neighboring Georgia, which fought a recent war with Russia.
Russia sees the war games as Western meddling in its rightful sphere of influence. Russian officials have accused NATO of intervention in Georgia's domestic politics by holding the exercises there.
Georgian Interior Ministry spokesman David Dzhokhadze told the Associated Press in Tbilisi that no battlefield maneuvers were planned until at least May 11. Until then, organizational meetings would dominate proceedings, he said.
Dzhokhadze said Georgia expects 15 countries to take part in the exercises after official notification from Switzerland, Kazakhstan, Moldova and Serbia that they would not take part. He said reports of the withdrawal of Armenia — which is dependent on Russia for its economic survival — had not been confirmed.
Moscow reported ready to expel 2 Canadian envoys
The Canadian Press
May 6, 2009 at 1:10 AM EDT
MOSCOW — Two Canadian diplomats working for NATO will be told to leave Russia in retaliation for the earlier expulsion of two Russia envoys by the alliance, the Interfax news agency said Tuesday.
Quoting unidentified Russian officials, the Russian agency said the two Canadians who work in NATO's information bureau in Moscow will be expelled on Wednesday.
There had been no announcement Tuesday from the Russian Foreign Ministry.
In Ottawa, Defence Minister Peter MacKay told reporters that neither NATO nor the Canadian government had been officially informed.
“It's a concern when you have Canadians that are working for our country abroad, working at NATO, working to advance our interests, and they appear at this point to have been summarily asked to leave,” Mr. MacKay said.
“And we'd like to know why.”
Russia's Foreign Minister has pulled out of a meeting with NATO this month to protest the alliance's military exercises in Georgia and the expulsion of the two Russian diplomats last week from NATO headquarters in Brussels.
Russia's NATO envoy, Dmitry Rogozin, said Russian retaliation for the expulsions would be “firm,” the ITAR-Tass news agency reported.
NATO's expulsion of the Russians were in apparent retaliation for a spy case dating back to February, Mr. Rogozin said in televised comments.
The Russian foreign minister's decision to withdraw from the May 19 meeting was based on concerns about last week's expulsions and military exercises in Georgia that start Wednesday.
Russia is frustrated by what it sees as western meddling in its traditional sphere of influence. Moscow opposes Georgia's efforts to join NATO.
NATO maintains the war games in Georgia, which fought a short war with Russia last August, are not directed at Russia.
The NATO exercises, which continue through June 1, are initially to include about 1,300 personnel from 19 NATO and partner countries.
With files from The Associated Press
Russian MP proposes Caribbean drill response to NATO exercises
MOSCOW, May 6 (RIA Novosti) - A Russian MP has proposed responding to NATO military exercises in Georgia by inviting Cuba and Venezuela to take part in full-scale drills in the Caribbean Sea.
The Cooperative Longbow/Cooperative Lancer 2009 command-and-staff exercise, which Moscow has criticized as unhelpful in the wake of last summer's armed conflict between Russia and Georgia over South Ossetia, starts on Wednesday and runs until June 1.
Sergei Abeltsev from the Liberal Democratic Party proposed holding "large-scale drills" with the participation of the armed forces of Russia, Cuba and Venezuela in the Caribbean on July 2.
"So that our U.S. partners do not question our peaceful intentions, [I propose] holding the exercises under the codename of 'Reset-2009'," Abeltsev said.
The new U.S. administration recently stated its desire to "reset" relations with Moscow.
He also said the decision to hold the drills in Georgia during WWII Victory Day celebrations was a "total revision of the history of the Great Patriotic War" and a direct insult to Moscow that bordered on a "malicious humiliation."
According to NATO, the drills in Georgia are aimed at improving interoperability between NATO and partner countries, within the framework of Partnership for Peace, Mediterranean Dialogue and Istanbul Cooperation Initiative programs, and will not involve any light or heavy weaponry. Russia was invited to take part in the exercises, but declined the opportunity.
Over 1,300 troops from 19 NATO member or ally states were originally scheduled to participate, but Kazakhstan, Latvia, Estonia, Moldova, Serbia and Armenia have already withdrawn.
India to flight-test new jet trainer with Russian engines
NEW DELHI, May 6 (RIA Novosti) - India's Hindustan Aeronautics Limited (HAL) will start in May flight tests of a new jet trainer equipped with Russian AL-55 I engines, The Hindu newspaper said on Wednesday.
The Intermediate Jet Trainer (IJT) is expected to go into service in the Indian Air Force (IAF).
According to the paper, the trainer has been certified by the IAF to replace the obsolete Kiran aircraft as a stage-2 trainer. The IAF has placed an initial order for 12 IJT trainers.
"The IJT has a state-of-the-art cockpit, override and failure simulation from the rear instructor cockpit, a sortie debrief facility, a modern and modular fuel-efficient engine, a light alloy airframe structure with a total life close to 10,000 hours, zero-zero ejection seats, designed to facilitate easy maintenance, and capability to carry 1,000 kg of armament load for training," the newspaper said.
The AL-55 I engine was specifically designed for the IAF by Russia's Saturn aircraft engine maker. HAL will produce the engine under license at its engine plant near the southeast Indian town of Koraput.
The Indian Air Force trains pilots in three stages using different aircraft. Stage 1 primary training is on a simple propeller aircraft, now HAL's HPT-32 aircraft. Stage 2 is undertaken on a basic jet trainer with a higher degree of complexity to enable the trainee to master the art of flying. Stage 3 is conducted on an advanced jet trainer, comprising all phases of combat training, the paper said.
The IAF may order a total of over 200 IJT trainers to replace some 250 Kiran aircraft acquired between 1967 and 1989.
India Grounds Russian-Designed Military Jets
May 5, 2009
NEW DELHI (AFP)--India has grounded its fleet of Sukhoi-30s and asked Russia to send a team of experts following the first ever crash involving one of the war jets, officials told AFP Tuesday.
"There are no formal grounding orders but the entire fleet will not fly until precautionary checks are carried out on each of the 55 aircraft currently in our inventory," a top air force official said on condition of anonymity.
"There is no timeframe for the checks which are being carried out," he said, adding that the nuclear-capable Sukhoi-30s, confined to their hangers after one of them crashed on April 30, could remain out of service for several weeks.
Russian defence exporter Rosoboronexport has been asked to send a team of engineers and designers from Sukhoi Aviation Corp. to inspect India's grounded fleet as well as join an ongoing probe into the crash.
India, which introduced Sukhoi-30s in 2002, is currently building 140 of the planes under Russian licence to replace its MiG-21 jets, dubbed "Flying Coffins" by pilots because of their poor safety record.
India asks Russia to help in Sukhoi aircraft crash probe
Today, 12:49 PM
India has grounded its fleet of Sukhoi-30s and asked Russia to send a team of experts following the first ever crash involving one of the war jets, officials told AFP Tuesday.
"There are no formal grounding orders but the entire fleet will not fly until precautionary checks are carried out on each of the 55 aircraft currently in our inventory," a top air force official said on condition of anonymity.
"There is no timeframe for the checks which are being carried out," he said, adding that the nuclear-capable Sukhoi-30s, currently confined to their hangers after one of them crashed on April 30, could remain out of service for several weeks.
Russian defense exporter Rosoboronexport has been asked to send a team of engineers and designers from Sukhoi Aviation Corp. to inspect India's grounded fleet as well as join an ongoing probe into the crash.
India, which introduced Sukhoi-30s in 2002, is currently building 140 of the planes under Russian license to replace its MiG-21 jets, dubbed "Flying Coffins" by pilots because of their poor safety record.
The Indian air force, the world's fourth largest, is also finalizing a deal to buy 126 modern warplanes for $12 billion.
New training center for Air Wing Kuznetsov
2009-05-06
Russia plans to establish its first training center for carrier plane pilots by the Sea of Azov. Building of the 2.7 million EUR center will start in 2010.
Pilots at Russia’s only air craft carrier, the Northern Fleet’s “Admiral Kuznetsov”, have till now been sent for training at the Crimea in Ukraine, but problems with Ukrainian authorities have complicated the situation and training has repeatedly been cancelled. Russia pays Ukraine 500 USD per year in rent for the center. According to some sources, Ukraine now plans to rent the facilities also to China, newspaper Kommersant reports.
The new training center will be located at an old airfield outside Yeysk in the Krasnodar territory. The project is already approved by President Dmitry Medvedev. The building is expected to take two years and 1500 persons will serve at the base.
The need for Russia to have its own training center for carrier plane pilots is connected with Russian plans for expansion of the carrier fleet. In July last year BarentsObserver quoted Commander of the Russian Navy, Vladimir Vysotsky, saying Russia intends to hold five or six aircraft carriers, which are to operate from both the Northern fleet on the Kola Peninsula and at the Pacific fleet in the Far East.
Medvedev Slams State Stock Purchase
06 May 2009
By Ira Iosebashvili / The Moscow Times
Direct government support of the country's stock market did not accomplish anything, President Dmitry Medvedev said Tuesday in a meeting with deputies from the party A Just Russia, where he also urged caution in -making changes to the country's tax code.
"We should admit, in all honesty, that direct government support of the stock market achieved nothing," the president said. "The stock market develops according to its own laws."
As the liquidity crisis snowballed and stock markets faltered last autumn, Finance Minister Alexei Kudrin said the state had allocated 175 billion rubles ($5.3 billion) for investing in "secure, high-yield" Russian securities.
As of last month, it had spent 167 billion rubles of those funds, according to information posted on the Finance Ministry's web site.
Analysts said that while it would be next to impossible for any government to reverse a market decline by buying stocks, the strategy could have had other positive effects.
"It's hard for a government to step in front of the market and drive up prices," said Ronald Smith, head of analytical research at Alfa Bank. "But there were some very large buyers who had margin calls, and without government buying, providing liquidity, we could have seen much more of a rout."
"And, if they bought at the right time, the state could have gotten some really good deals," Smith said.
The benchmark MICEX Index is up 54 percent on the year and is 86 percent off last year's lows. The market was currently showing "not bad growth," although it was too early to say that a trend had developed, Medvedev said.
He also addressed several tax-related topics, including a proposal to lower the value-added tax and income taxes, as well as the introduction of a unified property tax.
Extreme caution should be used in making any changes to taxation legislation, especially during a crisis, Medvedev said.
A unified property tax, however -- an idea that Prime Minister Vladimir Putin revived last week and was brought up again by A Just Russia deputies on Tuesday -- is worthy of discussion, he said.
Putin said last week that the measure, which would charge property owners a single tax for land and for the building standing on it, would increase revenue for city governments.
Medvedev also said a proposal to cut value-added tax was still on the table, "despite what various bureaucrats have said."
"The topic of lowering VAT has been discussed for quite a while, although without any results," Medvedev said. "Everybody seems to agree that it should be done, yet something always gets in our way." He added that it was too early to discuss repealing the flat tax.
The A Just Russia meeting was the second in a series of discussions with the leadership of the country's four main political parties. He met with United Russia last month and plans to hold sessions with the Liberal Democratic Party and the Communist Party.
Speaking at the meeting, Medvedev said a lowering of the entry barrier for political parties to participate in elections was possible. Under current law, parties must meet a 7 percent threshold to gain proportional representation in the State Duma.
"This point depends on the development of our political system. In a certain period, we considered [the 7 percent barrier] desirable. ... But that doesn't mean that this is forever," he said.
Medvedev Puts Foot Down on Gambling
06 May 2009By Maria Antonova / The Moscow Times
Using uncharacteristically stern language, President Dmitry Medvedev told Federal Tax Service chief Mikhail Mokretsov on Tuesday that he would tolerate no delays in moving all gambling to special regional zones within two months.
"It is imperative that these rules go into effect in due time. There will be no revisions, no pushing back -- despite the lobbying efforts of various businesses," Medvedev said at their meeting at his Gorki residence outside Moscow.
"This is the state's position," he said. "You have to control this process, and the activities of gambling establishments must cease on June 30."
New rules approved in late 2006 require all gambling establishments to move to one of four zones established for the industry by July 1 of this year. Casinos must be closed, and betting will be banned outside the zones, which are located in areas on the Azov Sea, in the Far East and in the Altai and Kaliningrad regions. The legislation was introduced to the State Duma by then-President Vladimir Putin.
The rules have come under fire from casinos and investors in the gambling zones, who have said that the zones don't have the infrastructure to build new casinos in time for the summer deadline.
Casino owners have said they will be forced to transform their establishments into less profitable restaurants, concert halls and even poker clubs to stay open in Moscow, their main market. There are currently 549 gambling establishments in the capital, Deputy Mayor Sergei Baidakov said last month.
The deadline for moving the establishments out of cities was changed once before the rules were signed into law, from the original date of January 2009. Last year, United Russia Deputy Alexander Popov offered to push the deadline to 2012 but later retracted his proposal without explanation.
Medvedev's firm position on the issue Tuesday could indicate a standoff between his word and the powerful gambling lobby, analysts said.
"The business is very influential and has a strong lobby, including in the Duma," said Dmitry Oreshkin, an analyst with the Mercator think tank.
He said it was no secret that the gambling industry pays large taxes and kickbacks, so many bureaucrats are interested in leaving gambling in Moscow. "If the lobby wins in delaying the deadline, it will essentially mean that the state's word means nothing, so it's important for Medvedev, who is trying to show he is a serious politician," he said.
Medvedev pressed Mokretsov over his readiness to deal with gambling businesses. "How ready is the Federal Tax Service to control gambling after the new rules go into effect?" he said, Interfax reported.
Mokretsov reassured the president that the tax agency, which has been given increasingly more control over the gambling industry in the past two years, was ready to "administer the business in the four gambling zones." He noted that the industry has shrunk by 42 percent in the first four months of 2009.
Mokretsov became tax chief in early 2007, replacing Anatoly Serdyukov, who went on to head the Defense Ministry. Prior to his work in the agency, Mokretsov worked for St. Petersburg's city tax department. "He is not a silovik, he is an intellectual," Finance Minister Alexei Kudrin said in explaining Mokretsov's appointment at the time. "Siloviki" is a term applied to government officials with ties to the security services.
Germans Hold Komi Man
German authorities have detained a Russian businessman on suspicion of large-scale tax evasion in Russia, Interfax reported Tuesday.
Acting on an international arrest warrant, the German branch of Interpol detained Komi republic businessman Sergei Shpigotsky on Sunday in the town of Offenburg, the report said.
Shpigotsky is wanted in Russia for purportedly evading 400 million rubles ($12.2 million) in taxes.
Russian authorities say he committed the crime as the head of the company Instroigaz LTD, which is based in the Komi republic town of Ukhta and develops gas pipelines. (MT)
Russian government only pretends to fight corruption
Vedomosti
The most hardened bribe-takers in Russia are teachers, medical doctors and policemen - as much naturally follows from a report by Prosecutor General Yury Chaika he will officially present at a Federation Council meeting next week.
According to his statistics, physicians, college and university faculty and policemen are predominant among bribe-takers, while only 189 perpetrators were exposed among federal, regional and municipal government officials.
Over 80% of people convicted for bribery were charged with accepting less than 30,000 rubles (less than $1,000). A total of 3,500 bribe giving cases were sent to court, mainly involving drivers.
So far, what we are witnessing is a pretend fight against corruption. It is pointless to measure success by the number of cases that go to court, said Kirill Kabanov, head of the National Anti-Corruption Committee, an advocacy group. Most of these cases are the result of entrapment - that is why most of them involve teachers and doctors. Most real cases never reach the courts.
The presidential anti-corruption package to come into effect soon is unlikely to change this pattern, agrees Mikhail Grishankov, deputy head of the State Duma security committee. It has always been easier to bring minor bribe-takers to court, while dealing with high-level corruption cases requires strong political will.
The Prosecutor General's report cites dwindling effectiveness of the Interior Ministry's own security department. The number of corrupt police officers exposed dropped by more than a quarter (down 26.3%). Indicatively, the number of top officials of the Federal Drug Control Service charged with corruption fell to one-ninth of the previous year's level - three cases in 2008 from 28 in 2007.
A source in the Interior Ministry's central staff said police crime and corruption was a latent indicator and the figures cited could mean nothing at all.
Fighting corruption does not mean sending everyone to jail - we have already tried that, said Anatoly Lyskov, head of the Federation Council committee on legal and judicial issues.
Corruption on the Rise
Policemen, teachers and doctors are the country's top bribe takers, ahead of bureaucrats, Prosecutor General Yury Chaika said in a new report, Vedomosti reported Tuesday.
Prosecutors sent 28,451 corruption cases to court last year, up 5.2 percent from 2007, Chaika said in the report, which is to be presented to the Federation Council on May 13.
"Corruption has been escalating over the last 10 years at every level of legal and government administration," Chaika said in the report, Vedomosti reported.
Eighty percent of those charged with bribery took less than 30,000 rubles ($900), the report said. (MT)
Vyacheslav Shport vested with Khabarovsk reg governor powers
KHABAROVSK, May 6 (Itar-Tass) - Vyacheslav Shport has become new governor of the Khabarovsk Territory. The territorial Duma (legislature) at its extraordinary meeting on Wednesday made a decision to vest him with gubernatorial powers. A total of 25 out of 26 deputies of the regional parliament voted for Shport, there were no votes against.
The candidature of Vyacheslav Shport was submitted to the regional parliament by Russian President Dmitry Medvedev. The territory’s former governor, Viktor Ishayev, who headed the region since 1991, was appointed RF president’s plenipotentiary representative in the Far East Federal District from April 30.
The inauguration ceremony of the new governor of the Khabarovsk Territory will be held on Wednesday afternoon.
Director of major transport company killed in Vladivostok
VLADIVOSTOK, May 6 (Itar-Tass) - Director of a large transport company, Igor Oganessian has been killed in Vladivostok.
The killer made four shots at Oganessian, the director of the Agat company, from a gun fitted with a silencer at the moment when the man was getting out of the apartment block where he lived.
Oganessian died of wounds instantaneously, while the killer threw his gun away and escaped from the site of the crime.
Police enacted an interception plan and launched a search for the criminal, while investigation agencies rushed a group of operatives to the site.
Investigators believe Oganessian’s professional activity might be the main cause of the killing.
Combined federal forces in Chechnya to be replaced by security operational group
MOSCOW. May 6 (Interfax-AVN) - An operational group of Russian
security forces is to replace the combined federal forces in the North
Caucasus, a source with the Russian Defense Ministry told Interfax on
Wednesday.
"As the counter-terrorist operation regime in Chechnya has been
lifted, the combined federal forces are to be disbanded by September 1.
Instead of it, an operational group including servicemen from the
Defense Ministry, the Interior Forces, and other security agencies is to
be set up," it said.
"The operational group is necessary in case a new counter-terrorist
operation regime is imposed if the situation in Chechnya worsens," the
source said.
With the liquidation of the combined federal forces, other forces
staying in Chechnya on a temporary basis will also be withdrawn, the
source said. "This mainly concerns Interior Forces and some Defense
Ministry units," it said.
The withdrawal of the troops will require optimization of the
central military commandant office and the reduction of the military
prosecutor's office structure in Chechnya, the source said.
"The implementation of these plans will certainly depend on the
situation in the Chechen republic, which is now far from stabilization,"
the source said.
Alleged leader of insurgents in Russia’s Kabardino-Balkariya destroyed by FSB, Interior troops
05.05.2009
In the Russian republic of Kabardino-Balkariya, the alleged leader of a local armed underground Tseitun Sultanov, involved in commitment of a series of acts of terrorism, and his helper Alim Boziyev were destroyed as a result of a joint specialoperation of the Federal Security Service (FSB) of Russia and the Ministry of Interior troops, news agency ITAR-TASS reports.
The special operation was taking place in the settlement of Khasanya. The insurgents rendered armed resistance and were destroyed,a spokesperson of the Centre of Public Relations of the Federal Security Service told ITAR-TASS.
Russian military intelligence special-task brigade to be relocated from Ulan-Ude to Irkutsk
05.05.2009
The 24th separate special-task brigade of the Main Intelligence Directorate (GRU) of the Joint Staff of Armed Forces of the Russian Federation will be relocated from Ulan-Ude to Irkutsk, online paper NEWSru reports, referring to commander of the Siberian Military District Colonel-General Alexander Postnikov who told that to the press during delivery of keys from apartments to officers of the Siberian Military District.
He said that the relocation had already begun. It will come to the end by December 1, 2009, when the brigde will completely be placed in the territory of Irkutsk higher military aviation engineering school.
The arrangement about the relocation has been reached during a meeting between the governor of Irkutsk area and Minister of Defence of the Russian Federation Anatoly Serdyukov on April 2, 2009. Accommodation of the special-task brigade in the school’s territory will employ 90 % of employees of the school which was disbanded in January, 2009.
The offer on relocation of the brigade was earlier directed to the Ministry of Defence of the Russian Federation by Colonel-General Alexander Postnikov. The leadership of the Armed Forces of the Russian Federation together with the government of Irkutsk area has defined 100 apartments which will be given to the personnel of the brigade. They will be purchased this summer. "So by this autumn all the officers and ensigns having families can be placed in the service housing", according to Postnikov.
The 24th separate special-task brigade of the Siberian Military District was generated on November 1, 1977, on the basis of the 18th separate special-task company, news agency Teleinform reports. It participated in operations in the hot points in the territory of the former USSR in the 1990s, and also in the First Chechen campaign of 1994-1996.
Disbandment of parts of the Main intelligence service of the Joint Staff is carried out within the limits of the military reform of the Russian Armed forces initiated by Minister of Defence Anatoly Serdjukov.
Earlier the wide resonance was caused following the reports on disbandment of 67th special-task GRU brigade, deployed in Berdsk. On March 9, a rally was taking place there, its participants demanded resignation of minister Serdyukov.
It was also reported that also the 12th separate special-task brigade of the GRU in Asbest was to be disbanded, news agency notes.
|Gay Activists Prepare Eurovision March |
| |
| |
|06 May 2009 |
|By Anna Malpas / The Moscow Times |
| |
|Gay rights activists vowed Tuesday to hold a gay pride march in Moscow next week on the same day as the final of the Eurovision |
|Song Contest, which is being held in Russia for the first time. |
| |
|City Hall has repeatedly denied permission for gay pride demonstrations in recent years, and attempts to hold such marches in |
|defiance of the bans have been marred by violence. |
| |
|But prominent gay rights advocate Nikolai Alexeyev on Tuesday called on President Dmitry Medvedev to allow the marchers to |
|demonstrate in Alexandrovsky Sad, near the Kremlin, should Mayor Yury Luzhkov refuse to allow the event on May 16, when the |
|Eurovision final is to be held. |
| |
|"There will never be a better time to raise the question in this country," Alexeyev told a news conference packed with foreign |
|journalists. "If Medvedev and Luzhkov position Russia as a European country and invite Eurovision, the question of [gay] rights |
|should proceed in a European way." |
| |
|Alexeyev publicly posted an appeal on Medvedev's newly launched LiveJournal blog -- only for it to be removed soon afterward, he|
|said. |
| |
|At a Eurovision presentation in December, Luzhkov reiterated that a gay parade would not be allowed during the contest. He has |
|previously called gay parades "satanic." |
| |
|Up to 100 activists could turn out if the march does not receive permission from City Hall and up to 500 if permission is |
|granted, Alexeyev said. |
| |
|Gay rights activists have been beaten and arrested during attempts to hold peaceful demonstrations in recent years. In 2006, |
|more than 100 activists were arrested, including German lawmaker Volker Beck. In 2007, anti-gay protesters attacked British gay |
|rights activist Peter Tatchell and singer Richard Fairbrass of the band Right Said Fred, who were both arrested. |
| |
|Tatchell plans to attend this year's march, as do activists from Chicago's Gay Liberation Network, Alexeyev said. |
| |
|Eurovision organizers have not weighed in to support the demonstration, Alexeyev complained. "The Eurovision leadership does not|
|want to get in contact and is practically a co-conspirator," he said. |
| |
|In an e-mailed comment on Tuesday, Eurovision spokesman Sietse Bakker said he was aware of the planned march but stressed that |
|the events are separate. |
| |
|"Of course, we took notice of the aims of this organization to hold a gay parade in Moscow on the same day as the final. But we |
|are not connected to this event and fully focused on the final preparations," Bakker said. "As guests in Moscow, we feel obliged|
|to organize the event within the limits of local law. If organizers of other events decide differently, that is up to their |
|judgment." |
| |
|Russia's entrant in the contest, Anastasia Prikhodko, expressed tentative support for gay rights in e-mailed comments Tuesday. |
|"I think love has no color," she wrote. She added, however, "I don't really understand the point of a special parade." |
| |
|In a related stunt, one of the march organizers, Irina Fet, will apply for a single-sex marriage license at a Moscow registry |
|office on May 12, the day of a Eurovision semifinal. |
| |
|A Russian Internet journalist, Yelena Tokareva, heckled Fet at Tuesday's news conference, asking, "Why are you putting your |
|sexual organs on display?" |
National Economic Trends
Russia daily c.bank swap limit at 5 bln rbls
05.06.09, 03:29 AM EDT
MOSCOW, May 6 (Reuters) - Russia set the daily limit for currency swap operations with the central bank at 5 billion roubles ($152.5 million) on Wednesday, the same as in the previous trading session.
Limits on how much foreign currency banks can swap for roubles in the central bank were introduced from Oct. 20 in a bid to hinder currency speculators. Operations which do not involve the central bank are unaffected. ($1=32.78 Rouble)
Russian Service Industries PMI Eased Contraction in April
By Paul Abelsky
May 6 (Bloomberg) -- An index of Russian service industries ranging from banks to mobile phone retailers contracted at the slowest pace in six months as business confidence improved, VTB Capital said.
The Purchasing Managers’ Index was at 44.4 last month, compared with 43.9 in March, VTB Capital said in an e-mailed statement today. A reading below 50 indicates a contraction. The VTB survey of 300 purchasing managers at service companies began in October 2001.
“The sector’s performance is still under pressure from the deteriorating business conditions on the back of weakening demand,” Svetlana Aslanova, an analyst at VTB Capital, said in the report.
Russian retail sales fell an annual 4 percent in March, the biggest decrease since September 1999, as frozen credit markets and falling incomes forced Russians to curb spending.
While the gauge of service industries declined for the seventh consecutive month, it continued to rebound from December’s record drop of 36.4. The rate of decline in new orders eased for the third month after reaching a record contraction in January, VTB said. Total services activity in Russia contracted at the slowest pace since last October.
Prices charged by companies declined for the first time since VTB started compiling the survey as providers competed by offering lower tariffs and discounts, the bank said. Input prices advanced at the slowest pace on record, after rental rates and some commodities declined.
Russia’s inflation rate fell more than expected in April, dropping to 13.2 percent after rising in March to 14 percent, and consumer-price growth slowed to 0.7 percent in the month, the Federal Statistics Service said yesterday.
The seasonally adjusted services PMI is a composite of five differently weighted indexes including business, employment and new, outstanding and future business, according to VTB.
To contact the reporter on this story: Paul Abelsky in St. Petersburg at pabelsky@.
Last Updated: May 6, 2009 00:00 EDT
PMI: Rate of contraction in Russian service sector eases in April
MOSCOW, May 6 (Prime-Tass) -- Russia’s service sector continued to contract in April, but both total activity and new business signaled weaker falls compared to March, London-based VTB Capital said in its latest survey of the sector released Wednesday.
The seasonally adjusted headline Russian Services Purchasing Managers Index (PMI) rose to 44.4 in April from 43.9 in March, the bank said. The PMI rose for the fourth month running from December’s record low of 36.4, indicating a sustained moderation in the rate of decline to its weakest since last October, the bank said.
Readings above 50.0 signal an increase on the previous month, while readings below 50.0 signal a contraction.
New business declined for the seventh consecutive month, the bank said. Input prices rose at the slowest rate in the survey history in April.
Almost half of the survey panel anticipates growth of business activity over the next 12 months, reflecting hopes of an end to the current global economic downturn.
Firms remained under pressure to cut staffing levels as activity and new business continued to fall. The rate of job shedding eased slightly since March but was still among the sharpest indicated by the survey to date.
“In April, the Russian Services PMI rebounded to 44.4 from 43.9 in March, driven by the slowest contraction in business activity and new contracts since last October. However, the sector’s performance is still under pressure from the deteriorating business conditions on the back of weakening demand. Companies’ concerns over rising price competition and the risk of client contraction contributed to the output price deflating for the first time since the survey began,” Svetlana Aslanova, an analyst at VTB Capital, commented on the survey.
The Russian Services PMI is derived from a monthly survey of 300 purchasing executives in Russian services companies. It has been conducted since October 2001.
VTB Capital plc is a London-based subsidiary of Russia's second largest bank, government-controlled VTB Bank. VTB Capital was previously known as VTB Bank Europe.
Russian Services PMI rose to 44.4 in April - slowest pace of contraction since October 2008
VTB Capital
May 6, 2009
April's data points to the Russian services-based economy continuing to recover from the lows seen in December 2008, and at a stronger rate than in the manufacturing sector. However, the latest reading of 44.4 still points to the seventh consecutive month of contraction. Both business activity and incoming new business indices were marginally up in April, while the employment index registered a weaker rate of job cuts. The Input price index fell from 56.9 to 52.5, indicative of weakening price growth, while the prices charged index fell from 52.6 to 49.3, pointing to a contraction for the first time in the survey's history (since October 2001) Our View: The April outturn of VTB Capital's Russian PMIs is in line with the global PMI recovery trend: in the US, the ISM manufacturing rose from 36.3 to 40.1 while ISM non-manufacturing rose from 40.8 to 43.7 in April. However, although the rate of contraction is weakening, we are still not yet in real growth territory (i.e. above the 50 level), except for China (the CLSA manufacturing rose from 44.8 to 50.1 in April).
While the level of incomplete work shrank in the Russian services sector, indicative of weak pressure on capacity from incoming business (the fastest rate of decline was seen in post & telecommunications), survey respondents continued to express high confidence in the future growth of business activity (especially in the hotels & restaurants, transport & storage and renting & business activities areas), to a certain extent supported by the slowdown in profitability contraction witnessed in April. Easing inflationary pressures (see our CPI story) might support consumer purchasing power.
Economics: CPI down on stronger ruble, cheaper gasoline & groceries
UralSib, Russia
May 6, 2009
Rosstat confirms its last week's CPI estimate. In its inflation report yesterday Rosstat confirmed last week's preliminary April CPI estimate of 0.7% MoM. On a 12-month rolling basis consumer prices rose last month by 13.2% YoY, which is a major positive change on the March figure of 14% YoY. In our view, three factors played a key role in helping to bring CPI rate down: falling domestic gasoline prices, the stronger ruble and lower prices for fresh fruit and vegetables. The likelihood that over the next few months Russia will manage to keep the CPI rate at its current levels or even bring it further down depends heavily on future movements in the ruble rate as well as on trends in global and domestic crude oil prices. So far we see no reason to change our current yearend CPI forecast of 13.8% YoY.
Retail gasoline down almost 15% YoY. In April on a monthly basis domestic retail gasoline prices continued to fall, for the eighth consecutive month.
Compared to April 2008 gasoline in Russia was on average cheaper by 14.8% which is the biggest price decline for this product over the past decade. Another important development was a fall in prices for fruit and vegetables (minus 0.1%YoY), which was unexpected because of seasonal factors - at this time of the year prices tend to increase as food stocks from last year's harvest deplete and imports increase. We believe that the fall in the price of vegetables was mainly driven by ruble appreciation affecting the price of imports.
Future holds many inflation risks. The future inflation trend remains tightly linked to the prospects of an improvement in the global economy. If the world economy continues to demonstrate more signs of improvement, this could mean that crude oil prices will probably stay at their current prices. This, in turn, will support the ruble and continue to put downward pressure on the prices of consumer imports. However, stronger crude oil will eventually affect domestic prices: we expect retail gasoline prices in Russia to stabilize or even start to grow within the next 1-2 months. Another future inflationary factor is the new tariff hikes planned for July. Also the possibility that Russia could have a smaller grain, fruit and vegetable harvest this year could negatively affect consumer prices in July-September when seasonal factors traditionally push food prices down. Therefore, despite promising developments in the April inflation figure, the risk that Russia could endure higher inflation in 2H09 remains.
Vladimir Tikhomirov
Russia Economic Monthly - kaleidoscope of forecasts
Troika, Russia
Wednesday, May 6, 2009
Deep fall in January, slight bounce in February March. Though the trend in retail and investment was negative in y o y terms (down 4.0% and 15.4%, respectively) in March, seasonally adjusted m o m figures paint a brighter picture. Investment and industrial output recovered moderately in February March from the bottom reached in January. Construction also demonstrated signs of a revival.
Inflation slows. In April the CPI rose 0.7%, compared with 1.4% a year earlier. We expect inflation to come in below 1% for the month, versus 1.4% in April 2008.
Annualized inflation is now at around 11%, though the accumulated y o y figure is close to 13.5%. Inflation will continue to slow and may reach single digits in annualized terms by end 2Q09.
Central Bank reduces basic interest rates. Rates were cut by 0.5 pp from April 24, leaving the refinancing rate at 12.5% and the fixed repo rate at 11.5%. We expect the Central Bank to continue reducing basic interest rates as inflation decelerates, and we would not rule out the possibility of the next interest rate cut taking place in May. These moves are quite positive and will contribute to the revival of lending and economic activity in the country.
We expect the economy to grow m o m in April December. The Economics Ministry estimates that GDP fell 9.5% y o y in 1Q09. However, companies will likely start rebuilding inventory, and there could be a recovery in gas exports. This should compensate for the dramatic contraction in 1Q09, hence we expect GDP in real terms to return to the level of 2008 already this year (though in nominal dollar terms GDP will be down).
Overdue Loans Reach 3.7%
Russian banks' overdue loans in March rose to 3.7 percent of the total as the deteriorating economic outlook and a drop in personal incomes stifled growth, the Central Bank said on its web site Tuesday.
The banking sector's nonperforming loans from corporate and retail clients grew to 636.1 billion rubles ($19.4 billion), or 3.7 percent, from 3.4 percent in February. The system's entire bad loans, including overdue payments from banks, were at 3.1 percent. (Bloomberg)
Banking sector: no respite in sight, but NPLs slow down in 1Q09
UralSib, Russia
May 6, 2009
Assets contract, bigger losses and NPLs. The Central bank (CBR) has published 1Q09 statistics for the Russian banking system. March is the first month of ruble appreciation this year, and during the month it rose by 6% against the dollar. The CBR statistics indicate that in March Russian banks posted bigger losses than in February and NPLs are still on the rise - from 3.4% in February to 3.7% in March - but at a much lower pace than in previous months, while assets and loans continue to contract.
Outlook still bleak, profit taking strategy makes sense. There are no signs of a real improvement in the banking sector in these statistics, except for the NPL growth slowdown. We believe that dynamics in the NPLs ratio is now mainly the result of loan portfolio contractions. We expect the balance sheet to continue to contract, but anticipate some improvement in 2H09 when inflation will most likely decline and loan interest rates will go down, making loans more attractive. NPLs are set to grow further, however a decline in risk-weighted assets is supporting Russian banks' capital adequacy ratio (N1) which was up to 16.9% in March from 16.4% in February. That said, we believe that the risk that NPLs may reach 10% by the end of the year is still high and this could threaten the capital adequacy of Russian banks even on the back of an assets contraction. We regard the recent rally in Russian banking stocks as a profit-taking opportunity as the fundamentals of the sector are still weak and risks for minorities persist.
NPLs are still growing, but more slowly. At end-1Q09 gross NPLs amounted to 3.7% of gross loans vs. 3.4% at the end of February and corporate NPLs contributed the most to this sharp growth with a jump to 3.4% in March vs. 3.0% in February. Retail NPLs comprised 4.7% in March up from 4.4% a month earlier. We expect asset quality to deteriorate further but at a much lower pace than in previous months.
Bigger losses in March, CAR is still high at 16.9%. According to the CBR the Russian banking system posted a net loss of RUB 7.8 bln ($220 mln) in March vs. a net loss of RUB 1.3 bln ($37 mln) in February. Since February the impact of growth in bad loan provisions has played a dominant role, negatively affecting the profitability of Russian banks. The capital adequacy ratio (statutory N1 ratio) of Russian banks remained robust in March and was up to 16.9% from 16.4% in February mainly due to a loans contraction.
The N1 ratio is likely to decline going forward even on the back of an assets contraction as NPLs rise however the future placement of subordinated loans or injections into tier-1 capital will provide support.
Balance sheet contracts. At the end of March, the assets of Russian banks totaled RUB 28.5 tln ($840 bln) and had contracted 2.3% MoM vs. a decline of 1.9% MoM in Febraury. Retail deposits also followed suit, declining by 0.3% in March and totaled RUB 6.2 tln ($183 bln), while corporate accounts fell 2.0% to RUB8.8 tln ($260 bln). The loans/deposits ratio declined to 1.19 in March from 1.20 in February mainly due to a steeper contraction for loans than for deposits.
NPL growth slows
Troika, Russia, Asset Quality Monitor - May 2009
Wednesday, May 6, 2009
March saw overdue loans continue to rise, from 3.4% to 3.7%, though growth in arrears decelerated m o m from its high in February. Overdue loans increased 9% m o m, less than half the level of February's jump.
_ Corporate loans in particular are showing a strong slowdown in asset quality deterioration, with a $1.4bn rise in overdue loans taking the level to 3.5%.
_ While this slowdown is positive, the true state of asset quality continues to be clouded by the high level of debt restructuring that banks are undertaking.
_ Interest rate easing should help. We expect to see another Central Bank cut in basic interest rates this month, which should help stimulate credit growth and facilitate debt restructuring.
_ Provisioning and capital remain solid. Banks provisioned ($2.0bn), slightly ahead of the growth in overdue loans ($1.6bn) in March, and overall coverage remains adequate at 178%. The sector's CAR is sufficient at 16.9%.
Andrew Keeley
Russian unemployment down 0.7% in week
bne
May 6, 2009
Things are still grim, but a host of economic indicators have begun either to slow their fall or reverse.
The latest was a slight fall in the rate of unemployment. This is probably the most important indicator at the moment as consumer demand is the main economic driver and the only thing that can lift the faltering Russian economy this year.
The number of officially registered unemployed persons in Russia decreased 0.7% to 2.268 million people in the week to April 29, the Healthcare and Social Development Ministry said Prime-Tass reports.
The ministry said that the fall in unemployment was greatest in the Jewish Autonomous District, the constituent republic of Tuva, and in the Astrakhan and Sakhalin regions, the newswire said.
Unemployment has risen much faster than anyone - especially the government - was expecting and total unemployment (about three times more than the official rate) reached 9.5% at the end of April. Once the total level goes over 10% wages for new hires starts fall, reinforcing a vicous circle of lower spending, lower profits, lower investment, and lower growth. Moreover, at this level joblessness increases the chance of social unrest.
The good news on unemployment comes on top of a larger than expected fall in the rate of inflation and also a slowing in the rise of non-performing loans in Russians banks.
The early optimists are now saying that Russia's economy may start growing from May, after falling 9.5% in the first quarter and the total size of the economy could end this year at the same level it ended 2008.
Domestic debt strategy
Rencap, Russia
Wednesday, May 6, 2009
NDF rates continue to tighten
Positive market sentiment continued on the Russian domestic market yesterday (5 May), with the rouble/basket rate still on a slow appreciation trend. By the end of the day the rouble/basket rate dropped to 37.75 and the Central Bank of Russia (CBR) could have accumulated an additional $0.5-1.0bn into reserves. NDF rates were down another 50 bpts yesterday, indicating a further drop in rouble devaluation expectations. The one-year NDF rate decreased to 12.0% yesterday. However, over the next couple of days the rouble/basket appreciation trend could be interrupted as investors may prefer to become more cautious ahead of the release of US banks' stress tests results.
Rally in the first-tier universe
Purchases prevailed yesterday in the rouble bond market, where we saw relatively high trading turnover. The biggest investment activity was concentrated in the longer-duration City of Moscow bonds. In particular, the turnover in the threeyear Moscow-54 exceeded RUB1bn. Moscow-54's yield of 16.5% still looks fairly attractive to us, with a premium to the NDF curve of over 300 bpts. Yesterday we saw a rally in Gazpromneft-4, with its price breaking through 103.0. Sistema- 1's price appreciated another 0.25 ppt, closing at 101.0 (YtP at 18.3%). Favourable rouble liquidity, and the lack of outstanding, liquid, high grade instruments could support the continuation of the first-tier universe rally.
Nikolay Podguzov
External debt strategy
Rencap, Russia
Wednesday, May 6, 2009
Rally in the Russian segment continues: Of the liquid issues, interest in TNK-BP
Yesterday (5 May), investors in the Russian eurobond segment were still optimistic, with many Russian investors enjoying the May holidays, most of the buying was by foreign investors. The EMBI+ spread to the benchmark Russia-30 narrowed 26 bpts, reaching 438 bpts. Buying interest in sovereign and corporate issues remained, supported by a rising oil price.
Bid quotes for the benchmark Russia-30 were up 1.3 ppts, closing at 98.625. Five-year Russian CDS tightened 30 bpts (to 325 bpts.). Quasi-sovereign instrument prices rose as well. The Gazprom19 added around 1 ppt and closed higher than the nominal value for the first time since its placement 17 Apr (currently its price is 100.375 and YtW 9.19%). On the back of a rally in Gazprom, we think TNK-BP issues are still worth looking at. We think the long-term issues of TNK-BP 17, 18 are quite attractive, with their yields currently higher than 13.0%.
TMK 11 and Evraz 13 are our second-tier picks
Metals and mining sector instruments outperformed strongly after slumping in the end of April. After publishing its operational and financial results yesterday, TMK 09 was up by 1.25 ppts. We think we could see demand expand to the longer-term issue TMK 11, with its more attractive 29.0% yield. Better-than-the-market dynamics were demonstrated by Evraz 13, rising 1.625 ppts and closing at 69.00-71.25. Evraz 13 still stands out on the issuer's yield curve. In particular, the yield of Evraz 18 is 17.5%, ie almost 250 bpts lower than that of Evraz 13. Yesterday we saw purchases in eurobonds even with low liquidity, especially Alfa-Bank12, Ak-Bars11 and SibirTelecom11.
Investors could take a break from buying today
In our opinion, Russian eurobonds are still worth buying. However we think over the next few days, investors are likely to be more cautious waiting for US banks stress-test results. The rally in the Russian eurobond segment could continue next week if global market sentiment remains positive.
Business, Energy or Environmental regulations or discussions
OGK-1 sees revenue fall 26% to 10 bln rubles in Q1
MOSCOW. May 6 (Interfax) - OGK-1 saw first quarter revenue fall 26%
year-on-year to 10.096 billion rubles, the generating company said in a
statement.
Electricity output declined almost 20% on lower demand, which also
drove down prices on the free section of the electricity market, the
statement says.
It was reported earlier that the genco posted a net profit of
999.424 billion rubles in the first quarter of 2009, triple the level of
a year earlier. OGK-1 said the increase was the result of lower costs
for commercial gas and coal compared with 2008. In addition the genco
did not have to make purchases on the exchange or buy gas above its
limits due to the lower demand for electricity.
The company plans to allocate the profit to priority investment
projects, particularly the final phase of technical re-equipment at the
Kashirskaya district electricity station (GRES).
Long-term liabilities increased 18% from the beginning of the year
to 5.322 billion rubles while short-term liabilities fell 12% to 8.006
billion rubles, according to the genco's financials.
Key financial indicators for the first quarter of 2008 and 2009 are
presented in the table below ('000 rubles):
Q1 2009 Q1 2008
Revenue 10 095 736 13 590 918
Costs 8 082 034 11 915 463
Gross profit 2 013 702 1 675 455
Sales profit 1 286 107 907 905
Other revenue 711 453 104 108
Other expenses 01 369 413 631
Pretax profit 1 229 221 557 109
Net profit 999 424 310 669
The Russian accounting standards financials do not include the
results for Nizhnevartovskaya GRES, which has operated independently
since August 1, 2008. They will be included in OGK-1's consolidated IFRS
financials, the statement says.
OGK-1 includes the Permskaya, Verkhnetagilskaya, Kashirskaya,
Urengoiskaya and Iriklinskaya GRES. Nizhnevartovskaya GRES, once an
integral part of the company, has been transferred into a joint venture
with TNK-BP (RTS: TNBP) - CJSC Nizhnevartovskaya GRES - in which OGK-1
owns 75% minus one share.
Norilsk Nickel sells blocking stake in TGK14
Rencap, Russia
Wednesday, May 6, 2009
RBC reported yesterday (5 May), quoting a source at Norilsk Nickel, that Norilsk Nickel has sold a 28% stake in TGK14 to a joint venture between Russian Railways and ESN Group. According to RBC, the deal was struck at "market conditions". On 22 June 2008, the Railways/ESN JV acquired a 35.3% stake in TGK14 by buying an additional share issue and the state's TGK14 stake. However, despite assurances from the CEO of Russian Railways, the corresponding tender offer to other TGK14 shareholders, which is mandatory under Russian corporate legislation, has never been completed.
Given the time lapse since the JV acquired its 35% stake in TGK14, we think it highly unlikely that the tender offer, which was supposed to have been triggered at the time, will be completed. Furthermore even if the JV chooses to launch a tender offer based on the acquisition of shares from Norilsk Nickel, TGK14 minority shareholders would not gain as we take the expression "market conditions" to denote that the deal was carried out at, or close to, current market prices. In our view a further conclusion from these events is that a state-controlled entity has seen fit to ignore its legal responsibilities with regard to TGK14 minority shareholders.
Moscow genco cuts 2009 capex to 30% of 2008 level
Rencap, Russia
Wednesday, May 6, 2009
Mosenergo reported in a statement yesterday (5 May) that the company's board has approved a 2009 investment budget of RUB11.5bn ($350mn), 70% below the 2008 level. According to the company, 35% of the budget has been allocated to a 420 MW project at CHP-26, while planned projects at CHPs 12,16, 20 and 25 have been cut from earlier plans. Previously, Mosenergo management had disclosed that these projects would be pruned because of what management claimed were unduly low market payments for capacity.
While Mosenergo's initiative on capex cuts may render the company liable to fines for violating capacity agreements concluded with the (wholesale market) System Operator, we think that it puts further pressure on the government to introduce a transparent, economically-based market model for pricing new capacity.
Steelmakers see global expansion in new light
06 May, 2009, 05:57
Russian steel companies were on a major overseas shopping spree in recent years. But the downturn means most of those companies are scaling back their foreign operations.
Severstal was the first Russian steel company to buy production assets in North America. Now the firm may become the first to leave the continent, with those assets on the market, and the construction and car production sectors they service, amongst the hardest hit by the deteriorating economy. Boris Krasnozhenov, Metals and Mining Analyst at Renaissance Capital, believes the downturn has been so severe that some players need to leave the market.
“Prices for these products went down dramatically over last several months. The price of hot coal now in the U.S. is below $400. So, basically, most of the companies using the blastfurnace method of production in the United States are currently not able to break even at the current price level.”
Other Russian steel majors besides Severstal, like Evraz and Novolipetsk Steel also acquired assets in United States. Evraz managed to maintain profitability abroad by acquiring assets in high value added goods in the U.S. like large diameter pipes and rails. Now many in the industry think that in future, Russan steel firms will do things differently. Pavel Tatyanin Senior Vice President at Evraz believes that a more selective approach to expansion is the key.
“Over time the impact will come and clearly people will be more focused on really value accretive assets and acquisitions, and will be less concerned and driven by tonnes as the key sort of measurement for consolidations but rather they will be focused on efficiencies. And a lot of deals that happened in the past would have never happened in the new world, I guess.”
The metals sector enjoyed unprecedented growth before the crisis, and became one of Russia's most prominent manufacturing industries to reach overseas. But in future, it's likely to be more measured in its enthusiasm for buying overseas assets.
Novolipetsk Steel reports poor 1Q09 RAS results
Troika, Russia
Wednesday, May 6, 2009
Novolipetsk Steel yesterday released a very weak set of 1Q09 RAS results, showing dramatic deterioration in earnings since 4Q08. The only bright spot was Maxi Group's Nizhneserginsk Metal, which demonstrated a meaningful recovery from an operating loss in 4Q08, probably after running down the expensive scrap inventory carried over from 3Q08. Elsewhere, the picture was really bleak, with Altai Coke plunging massively into the red, bringing the aggregate number across all subsidiaries to almost zero.
We estimate that the quarterly depreciation charge under RAS must be around $30m for the whole group, suggesting low 1Q09 EBITDA to the tune of $35m. We believe that high cost inventory of raw materials and finished goods held by some subsidiaries at end 2008 could have significantly distorted the numbers, and there could also be some profits at the trader level, which should be added in order to obtain the correct figure for the whole group. For example, production costs at Altai Coke imply a price of purchased coal of around $150/tonne, while the market price during the quarter was below $50/tonne. Nevertheless, it is not clear whether such adjustments would be enough to bring the reported figures in line with our $1.3bn forecast for 2009 consolidated EBITDA.
On a positive note, Novolipetsk Steel has confirmed its crude steel production forecast for 2009 of 10m tonnes, suggesting that the company is going to maintain the output level attained in April through the end of the year. Our current forecast is 8m tonnes, so the company is obviously enjoying stronger demand than we had expected, though earnings may be low.
We currently have a SELL recommendation on the stock with a target price of $1.40 per share. We will review our valuation shortly to accommodate the recent developments in the sector. Right now, however, Novolipetsk Steel appears to be valued by the market at a premium to the sector, which may not be sustainable in the short term given the unimpressive financial performance thus far.
NLMK Group Q1 2009 RAS results
Wednesday, 06 May 2009
Novolipetsk Steel the LSE‐listed leading Russian steel producer announces Q1 2009 Russian Accounting Standards financial results for its major companies.
Russian Accounting Standards accounting results differ materially from US GAAP accounting results and are not comparable to financial statements prepared in accordance with US GAAP. The RAS accounting results of NLMK Group’s major companies are not indicative of the financial condition or results of these entities under US GAAP. Reference should be made only to consolidated financial statements prepared in accordance with US GAAP for information with respect to NLMK Group’s financial condition and results of operations to be published in May 2009.
|Ql'09 |Q1'08 |Change |Q4'08 |Change | |Revenue |1265 315 |4 864 255 |-73.99% |4 761 100 |-73.42% | |Gross profit |736 186 |3 073 639 |-76.05% |2 616 409 |-71.86% | |Operating profit |601 388 |2 945 498 |-79.58% |2 482 124 |-75.77% | |Net profit |572 675 |2 351668 |-75.65% |2 251 404 |-74.56% | |
In ‘000 RUB
VIZStal
|Q1'09 |Q1'08 |Change |Q4'08 |Change | |Revenue |1265 315 |4 864 255 |-73.99% |4 761 100 |-73.42% | |Gross profit |736 186 |3 073 639 |-76.05% |2 616 409 |-71.86% | |Operating profit |601 388 |2 945 498 |-79.58% |2 482 124 |-75.77% | |Net profit |572 675 |2 351668 |-75.65% |2 251 404 |-74.56% | |
In ‘000 RUB
In Q1 2009 the global demand for transformer steel decreased due to the economic downturn and customers’ significant stockpiles accumulated in the previous periods. This led to cuts in export and domestic sales volumes and decreased VIZStal Q1 2009 financial results. As over 70% of VIZStal electrical steel was exported in Q1 2009, prices in Russian rubles were higher than in the comparable quarters of 2008. This partially offsets lower sales volumes. Decreased operating profit drove down Q1 2009 net profit as compared to the comparable quarters.
Stoilensky
|Q1'09 |Q1'08 |Change |Q4'08 |Change | |Revenue |2 853 181 |6 128 790 |-53.45% |3 698 872 |-22.86% | |Gross profit |1 292 689 |4 322 708 |-70.10% |2 501 707 |-48.33% | |Operating profit |1092 919 |4 098 984 |-73.34% |2 286 421 |-52.20% | |Net profit |1 057 770 |3 490 869 |-69.70% |1916 949 |-44.82% | |
In ‘000 RUB
The poorer market environment for steel and raw materials led to the decline in prices for Stoilensky products and, hence, lower financial results in Q1 2009. Higher supplies of iron ore concentrate to NLMK Lipetsk site in Q1 2009 due to the increase in steel production and substantial decrease in consumption of pellets purchased from third parties, as well as an increase of 5.2 times in iron ore sales to other customers partially made up for lower revenue. The decline in Q1 2009 revenue YoY is attributable to 30% lower sales volumes to the Lipetsk based production site, and lower prices for the salable products.
Altai Koks
|Q1'09 |Q1'08 |Change |Q4'08 |Change | |Revenue |2 749 465 |6 295 902 |-56.33% |4 610 187 |-40.36% | |Gross profit |-534 618 |1 748 776 | |83 690 | | |Operating profit |-777 786 |1121 908 | |-573 260 | | |Net profit |527 794 |811782 | |-1010 083 | | |
In ‘000 RUB
Q1 2009 sales revenue decreased QoQ due to a worsening pricing environment. Higher supplies to NLMK Lipetsk site in Q1 2009, due to the decommissioning of four coke batteries at the main production site in Lipetsk coupled with an increase in steel production, offset lower sales volumes to other customers. Therefore, overall sales volumes remained at levels of the previous quarter. Provisions for coal and coke inventories impairment accrued in December 2008 and positive foreign exchange differences secured Altai Koks Q1 2009 net profit.
NTK
|Q1'09 |Q1'08 |Change |Q4'08 |Change | |Revenue |851 156 |581 799 |46.30% |967 911 |-12.06% | |Gross profit |101 134 |215 960 |-53.17% |138 707 |-27.09% | |Operating profit |44 382 |165 784 |-73.23% |64 722 |-31.43% | |Net profit |42 334 |134 065 |-68.42% |53 081 |-20.25% | |
In ‘000 RUB
The QoQ decrease in transportation volumes delivered to the third parties and higher discounts offered to larger customers were the key factors contributing to lower Q1 2009 financial results of NTK. An increase in railway tariffs throughout 2008 and Q1 2009 contributed to NTK’s sales revenue growth YoY. Higher leasing payments in the Q1 2009 cost structure due to NTK’s leasing of 91 units of rolling stock drove the gross profit down.
In Q1 2009 NTK own and leased rolling stock grew by 2% to 4,800 units.
Polymetal posts FY 2008 Net Loss of $15.7 million
06 May, 2009, 12:24
Major Russian gold and silver producer, Polymetal, has posted a FY 2008 Net Loss of $15.7 million under U.S. GAAP.
The bottom line loss narrowed from the $22.8 million Net Loss posted for FY 2007, with Adjusted EBITDA jumping 161% year on year to $182.6 million, on Revenues of $502.7 million, up 63%.
The company attributed the result to strong sales volumes and average prices throughout the year for both gold and silver, combined with increased production of both precious metals. The downside was an increase in production costs, coupled with an increase in debts, and debt servicing costs.
Despite the net result Polymetal CEO, Vitaly Nesis, was upbeat about production, and enthusiastic about the outlook.
“Significant improvement in operating profitability and competitive cost position will definitely allow us to proceed with the aggressive expansion program and capitalize on the re-emergence of gold as the safe-haven investment of choice.”
UPDATE 1-Russia Polymetal cuts loss in 2008
Wed May 6, 2009 8:00am BST
* FY loss narrows to $15.7 mln from $22.8 mln
* EBITDA up 161 pct to $192.6 mln
* Revenues up 63 pct to $502.7 mln
(Adds details, quote, background)
MOSCOW, May 6 (Reuters) - Russian gold and silver miner Polymetal (PMTL.MM: Quote, Profile, Research) (PMTLq.L: Quote, Profile, Research) said on Wednesday it cut its net loss last year to $15.7 million from 2007's $22.8 million, in spite of the economic crisis.
"Financial results for 2008 demonstrate excellent fundamentals of our business in the face of the global financial crisis," Vitaly Nesis, CEO of Polymetal, said in a statement.
"Significant improvement in operating profitability and competitive cost position will definitely allow us to proceed with the aggressive expansion program and capitalise on the re-emergence of gold as the safe-haven investment of choice".
Earnings before interest, taxation, amortisation and depreciation (EBITDA) rose by 161 percent to $192.6 million, the statement said. Revenues rose by 63 percent to $502.7 million.
Revenues rose due to an increase in gold and silver sales and a rise in the realised metal prices, Polymetal said.
Polymetal produced 285,000 ounces of gold in 2008, which is equal to some 5 percent of total Russian output, and 17.2 million ounces of silver.
The company's net debt stood at $312.3 million at the end of 2008, up 41 percent from a year earlier. (Reporting by Aleksandras Budrys; editing by Simon Jessop)
Polyus Gold comments on deal with KazakhGold
Troika, Russia
Wednesday, May 6, 2009
Following a statement from KazakhGold last week, Polyus Gold has followed suit, in essence reiterating the points made in the first statement. Both companies remain in active negotiations about the revised terms of the agreement, and Polyus Gold remains committed to making a final offer (under Rule 2.5 of the Takeover Code) by end May.
The final offer will obviously be subject to approval from the UK Takeover Panel, as well as from the two companies' BoDs.
As a reminder, KazakhGold did not post its annual financial results by end April, as per the new regulations on the LSE that took effect this year. It subsequently requested that the regulator suspend trading of its shares until the results are released.
The previous offer from Polyus Gold stood at 0.423 local shares for 1 share of KazakhGold, translating into around $17.00 per share. The offer was already revised downward by some 30% last autumn.
Mikhail Stiskin
Peter Hambro Mining buys back $40m in exchangeable bonds
Troika, Russia
Wednesday, May 6, 2009
Peter Hambro Mining announced that it has acquired a further $40m in nominal value of its 7% gold equivalent bonds at a price of $95 per each $100 of nominal value plus accrued interest.
As a reminder, $180m worth of exchangeable bonds were issued by the company in 2007, carrying a coupon of 7% and maturing in 2012. The bonds are exchangeable into an equivalent of 180,000 oz of gold at the holders' option on or after October 19, 2008, and considering the high prevailing bullion prices, they are likely to be put.
The company had already purchased $87m in nominal value of the bonds, and the remaining nominal value of outstanding exchangeable bonds is $53m. The company also has $140m in convertible bonds maturing in 2010, and we estimate its pro forma cash position as of early 2009 at $257m with debt of $252m.
Mikhail Stiskin
Diamond producer Alrosa to resume market diamond sales in May
ST. PETERSBURG, May 6 (RIA Novosti) - Russia's largest diamond miner, Alrosa, will resume in May the sale of diamonds, earlier suspended over the ongoing economic crisis, the company's CEO said on Wednesday.
"We are restarting sales in May," Sergei Vybornov said.
Vybornov said Alrosa had already signed contracts with five companies on diamond sales worth some $300 million by the end of the year.
Alrosa accounts for 97% of Russian and 25% of global diamond output. The Russian government holds a 50.9% stake in the company.
Vybornov also noted that market prices for diamonds were currently around the mid-2007 level.
Alfa pays down $500mn of VEB debt
Rencap, Russia
Wednesday, May 6, 2009
Event: Vedomosti reports today (6 May) that Altimo, Alfa's subsidiary, has paid $500mn to VEB according to the terms of a debt repayment agreement. According to Vedomosti Alfa was supposed to pay off the debt in April.
Alfa received $2bn in financing from VEB in Oct 2008 when a margin call was made on a $2bn Deutsche Bank loan. Alfa had its entire 44% stake in VimpelCom pledged for this loan (the stake is now pledged to VEB). So far Alfa has paid off $0.5bn in debt, with the major part ($1.5bn) still owed. Last year, Alfa received $1.2bn from the sale of Golden Telecom and Sotelco (a Cambodian operator) to VimpelCom as well as dividends from VimpelCom ($218mn) and Turkcell ($72mn). This year Alfa can count on dividends from Kyivstar ($190mn) and Turkcell ($35mn), as well as dividends from MegaFon which have not yet been approved by its board.
Russia's Dalsvyaz secures $46 mln credit line
Wed May 6, 2009 5:06am EDT
MOSCOW, May 6 (Reuters) - Russian regional fixed-line operator Dalsvyaz (ESPK.MM: Quote, Profile, Research, Stock Buzz) said on Wednesday it had secured a revolving credit line of 1.5 billion roubles ($45.76 million).
Dalsvyaz, controlled by national telecoms group Svyazinvest, said it would obtain the credit facility from Svyaz Bank, which was last year bailed out by state Development Bank VEB.
The interest rate on the two-year credit will not exceed 17 percent, the biggest fixed-line telecommunications operator in the Far Eastern region of Russia said on its Web site.
On Tuesday, its peer Southern Telecom (UTEL.MM: Quote, Profile, Research, Stock Buzz) also said it had agreed a 3 billion rouble loan from Svyaz Bank, which traditionally services state telecoms companies. ($1=32.78 ROUBLE) (Reporting by Anastasia Teterevleva; writing by Maria Kiselyova; Editing by Jon Loades-Carter)
Aeroflot set to pay dividend for 2008 (Part 2)
MOSCOW. May 6 (Interfax) - The board of directors of Aeroflot
Russian Airlines (RTS: AFLT) recommended that shareholders approve a
dividend for 2008 at their annual meeting, the flagship carrier said in
a statement.
The board, meeting on Tuesday, did not specify the size of the
recommended dividend. A source on the board said the directive for
voting by state representatives had not been prepared.
Aeroflot boosted net profit in 2008 0.5% to 6.044 billion rubles.
The airline paid 1.367 rubles per share for 2007, a 6% increase
over the dividend for 2006. The 2007 dividend amounted to 1.519 billion
rubles or 25% of net profit.
Aeroflot charter capital is split into 1.111 billion shares each
with par value of 1 ruble.
The state has a 51.17% stake and National Reserve Corporation
controls roughly 30%.
Airline magnate offers to sell Blue Wings stake to Aeroflot for 1 euro
06 May, 2009, 00:52
Aleksander Lebedev, is offering his majority stake in Germany’s Blue Wings airline to Aeroflot for just 1 euro, saying it would help the Russian carrier, in which he has a 30% stake, gain a European foothold.
Speaking with RT, Lebedev said that if Aeroflot takes up his offer on Blue Wings – which has recently had its licence reinstated – the Russian air flagship would be in a better competitive position in Europe, while the airline sector in Russia consolidates.
AL: "Consolidation is necessary in the sector. I would probably like to see 10 companies operating in this sector instead of a hundred and more. Same as in the banking sector – we don't need a thousand banks. We probably need a couple of hundred, which are much more strong, with bigger capital, and much more transparent, and much more quality, and low cost to the consumer."
RT: You have offered your share in Blue Wings to Aeroflot and that decision is pending. How likely would you say Aeroflot is to acquire Blue Wings?
AL: "Aeroflot has always been ready to aspiring to get a platform in Europe. Previously they've been ready to pay money for Alitalia, Czech Airlines, Serbian Airlines. I want to stress they've been ready to pay for it. Now, I am offering them a minority stake for 1 euro without any financial commitment. The point is, if they get in, that will strengthen my position vis a vis the German authorities. Once Aeroflot is in, we can compete, we can develop new routes, we can actually make Aeroflot a bigger and stronger company."
RT: How do you see the future of the air transportation business in Russia?
AL: "Well, we're all hit by the crisis but we are such a big country that if you really can provide a quality service with a reasonably low airfare, that could compete with railway or normal cars in the country. I'm saying less government regulation, more open sky regime, and more quality private sector in a transparent way."
RT: You write in your blog today that the German government has returned Blue Wings' license for flight. How has the company's debt been affected by its inability to service passengers since it lost its license last month?
AL: Well, we have been grounded for 36 days. We've lost more than 100,000 passengers and had to relocate some of our passengers who had already bought tickets to other companies and on top of that, Lufthansa has started flying Dusseldorf-St. Petersburg and Moscow, saying these are not really good routes. And I think the LB – that's the German regulator – could have achieved what they wanted without grounding us. And that's the simple point. They had some questions, we had been in discussions with them, but this is not a point for me as a main investor to be paying for 500 Germans who were supposed to be flying but, instead of that, they've been grounded and I have actually delayed salaries in Novaya Gazeta for more than a month since we're all in the process in crisis. It's not about coming up with some extra money out of pocket, instead of getting revenue from the number five airline in Germany. And I don't think it's ever happened in Europe – I think it's unprecedented.
RT: You've offered your share in Blue Wings to Aeroflot and that decision is currently pending. How likely would you say it is for Aeroflot to acquire Blue Wings?
AL: Aeroflot has always aspired to get a platform in Europe. Previously, they've been ready to pay money for Alitalia, Czech Airlines, and Serbian Airlines. I want to stress that they've been ready to pay for it. Now, I am offering them a minority stake for 1 euro without any financial commitment. The point is, if they get in, that will strengthen my position vis-à-vis the German authorities. Once Aeroflot is in, we can compete, we can develop new routes, we can actually make Aeroflot a larger and stronger company.
RT: Do you think that carriers stand a chance against Lufthansa in terms of competition in the German market?
AL: We owe that actually to both nations – to Russians and Germans. The more competition we have, the lower the air fares and the more quality we can get. Since Aeroflot has lost most of the competition in Germany and Europe and the major Russian cities, I don't see how we can compensate them for that by competing more now. Lufthansa is a very strong company. It gets a lot of support from the German government, but that doesn't mean we couldn't compete properly with it.
RT: How do you see the future of the air transportation business in Russia?
AL: We're all hit by the crisis, but we are such a big country that you can succeed if you really can provide a quality service with a low airfare that could compete with railway or normal cars in the country. We are destined to fly much more than we fly now. It's just we need to copy low-cost, with less government regulation, a more open sky regime, and more of a quality private sector in a transparent way.
Activity in the Oil and Gas sector (including regulatory)
Management of Shtokman Development AG and the Association of Oil and Gas Equipment Producers has held a meeting
06.05.2009
Today, Yury Komarov, CEO of Shtokman Development AG met with Alexander Romanikhin, President of the Association of Oil and Gas Equipment Producers. The meeting was attended by Hervé Madeo, technical director of Shtokman Development AG, and Garry Oganov, VNIIBT Director. The Parties had a comprehensive exchange of views on expanding the participation of Russian companies in the Shtokman Project. Y.Komarov emphasized that the company is focused on cooperating with Russian companies and on full use of production and scientific - technological potential of local industry. Head of Shtokman Development AG adduced examples of changes in tender requirements, so that local companies could participate in it.
A. Romanikhin offered to create a joint working group, consisting of technical specialists from Shtokman Development AG and the Association of Oil and Gas Equipment Producers, and also to review an option of consortium that would consist of competitive Russian companies.
On May 15, Shtokman Development AG and the Association of the Oil and Gas Producers will hold the workshop “Presentation of the first phase of the Shtokman gas and condensate field development project. Requirements to suppliers and tender procedure”. The meeting will review the possibility of local companies to take part in implementation of large investment project.
The meeting starts at 10 o’clock in Moscow, 3 Malaya Pirogovskaya str., Shtokman Development AG. Tel: (495) 514-4468, 514-5856 – Helen Gennadievna.
Importance
The Yuzhno-Russkoye field is an example of efficient Russian-German partnership aimed at providing stable energy security in Europe. The project execution based on asset swap and entire chain development from production to final consumer will strengthen Gazprom positions as a global player on the energy market.
Location
The Yuzhno-Russkoye gas condensate field is located in the Krasnoselkupsky region of the Yamal-Nenets Autonomous Okrug.
Reserves
The Yuzhno-Russkoye gas condensate field reserves are as follows: 825.2 bcm of gas ABC1 category, 208.9 bcm of gas C2 category, 5.7 mln tons of oil.
Project Operator
Severneftegazprom, is the liсense owner for hydrocarbon exploration, development at the field.
The Agreement on Share Swap between Gazprom and BASF AG was signed in 2007. According to the Agreement, Gazprom increased its stake in the authorized capital of Wingas GmbH up to 50 per cent minus one share. In its turn, BASF AG acquired a 25 per cent stake minus one voting share and one share without voting rights, which is an equivalent to a 10 per cent stake in the project’s economy. During the deal closing specified by the Agreement, Gazprom Group will receive a 49 per cent stake in Wintershall AG authorized capital. Wintershall AG holds licenses to develop and produce hydrocarbons in the frames of the concessional agreements in Libya).
Additionally, In June 2006 Gazprom and E.ON AG signed a Framework Agreement on Asset Swap in gas production, marketing and electric power industry. In the frames of the Agreement E.ON will participate in the project of developing the Yuzhno-Russkoye field and Gazprom will get stakes in E.ON assets in Western and Central Europe. As of December 2007, Gazprom and E.ON achieved significant progress in business talks on asset swap.
Commercial Launch
The start-up complex was commissioned in October 2007.
On December 17, 2007 Gazprom and BASF signed a certificate on asset swap deal closing in the sector of gas production and marketing.
In the presence of Dmitry Medvedev, First Deputy Chairman of the Russian Federation, Chairman of the Gazprom Board of Directors and Frank-Walter Steinmeier, Minister of Foreign Affairs of Germany, the Gazprom Headquarters has hosted a ceremony dedicated to the commercial launch of the Yuzhno-Russkoye oil and gas condensate field.
Design Capacity
The field will reach a 25 bcm design capacity in 2009.
Current Situation
As of December 2007, 26 gas wells are under operation producing 15 mcm of gas per day.
Geological survey at the field continues. Work is underway to increase the number of existing wells and to develop infrastructure. The field start-up facility was brought online in October 2007.
State strengthens control in Kharyaga project
2009-05-05
Russian authorities, including the FSB, demand a bigger level of control in the Kharyaga project in the Nenets Autonomous Okrug company. That will increase pressure on field operator Total and its Norwegian partner StatoilHydro.
Russian federal authorities are dissatisfied with the management of the field, one of three Russian projects run according to a production sharing agreement.
As BarentsObserver reported last week, Russian Deputy Minister of Energy Stanislav Svetlitsky and Nenets Governor Igor Fyodorov in a meeting agreed that the field operators will have to cut costs in the Arctic project.
The French oil company recently announced that it will not get net profits in the Kharyaga project this year, which means that both federal and regional authorities will not get much-desired project revenues. That is not acceptable for the authorities, currently strained by the economic downturn in the country. The Russian ministry of Energy already indicates that “serious inspections will take place at the Kharyaga project”.
On the initiative of Nenets Governor Igor Fyodorov, a special Kharyaga task force will be established. That is to conduct monthly monitoring of project production, as well as evaluate project spending of operator Total and its contractors. Included in the that task force will be representatives of the regional department of Natural Resources and Environment, the Nenets Oil Company, the Interior Ministry and the FSB, a press release from the regional administration reads.
Gazprom
UPDATE 1-Sakhalin-1 to sell 20pct of gas to Gazprom-report
Tue May 5, 2009 2:01pm EDT
(Adds Exxon, Gazprom, Rosneft reactions, details, background)
MOSCOW, May 5 (Reuters) - The Sakhalin-1 consortium has agreed to sell 20 percent of the natural gas extracted from the large oil and gas project to Russian gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz), Nikkei reported on Tuesday citing unnamed sources.
The price of the gas, which has been the main sticking point in talks over the sale, is still being negotiated, the Japanese business daily said in its issue due for publication Wednesday.
U.S. energy major Exxon Mobil (XOM.N: Quote, Profile, Research, Stock Buzz) operates Sakhalin-1, on the Russian Pacific coast island of the same name, in cooperation with Russian state oil firm Rosneft (ROSN.MM: Quote, Profile, Research, Stock Buzz), Japan's Itochu (8001.T: Quote, Profile, Research, Stock Buzz), Marubeni (8002.T: Quote, Profile, Research, Stock Buzz) and India's ONGC (ONGC.BO: Quote, Profile, Research, Stock Buzz).
Gazprom spokesman Sergei Kupriyanov said he could not immediately comment on the report, as did a spokesman for state-controlled Rosneft. A spokeswoman for Exxon Mobil also declined to comment.
Gazprom has long said it needs the gas produced at Sakahlin-1 to cover domestic needs, while Exxon has long-stated it is looking for the best price, though has eyed major importer China for some time.
The project has been producing oil for several years and reached peak production of 11.2 million tonnes in 2007.
It has been producing gas since 2005 and shipping small volumes to continental Russia. It has signed a deal to supply China with 8 billion cubic metres (bcm) of gas a year and hopes to start the supplies next decade. (Reporting by Simon Shuster and Vladimir Soldatkin; Editing by Keiron Henderson)
Sakhalin-1 Group to Sell Natural Gas to Gazprom, Nikkei Reports
By Masumi Suga
May 6 (Bloomberg) -- Exxon Mobil Corp., Itochu Corp. and Marubeni Corp. agreed to sell about 20 percent of natural gas output from their Sakhalin-1 project to Russia’s OAO Gazprom, the Nikkei newspaper reported.
The consortium agreed to sell about 1.5 billion cubic meters of natural gas a year to Gazprom, the newspaper said, without saying where it got the information.
Gazprom’s attempts to buy all the output, estimated at 8 billion cubic meters annually, from the project have failed and the government-run company is seeking to secure enough supplies to meet domestic demand, Nikkei said.
Full production of natural gas is scheduled to start in 2012, according to the newspaper.
To contact the reporter on this story: Masumi Suga in Tokyo at msuga@
Last Updated: May 6, 2009 00:07 EDT
Deal on South Stream Pipeline next week
06. May 2009. | 09:18 Source: Beta
Serbian Energy Minister Petar Skundric on May 5 said that Serbian gas company Srbijagas and Russian Gazprom will most likely sign a core agreement on the South Stream gas pipeline in Sochi, Russia, next week.
Serbian Energy Minister Petar Skundric on May 5 said that Serbian gas company Srbijagas and Russian Gazprom will most likely sign a core agreement on the South Stream gas pipeline in Sochi, Russia, next week.
He did not give reporters the specific date of the signing, which, as he put it, will envisage conditions for the founding of a joint company that will manage the South Stream's section in Serbia.
In an interview with the April 30 issue of the Novi Sad daily Dnevnik, Srbijagas General Manager Dusan Bajatovic announced that the company will sign a contract on the South Stream pipeline with Gazprom on May 14.
Skundric said that the signing of the deal on the international pipeline will be "at a high level," but was unable to say whether the representatives of all states involved in the project will be present in Sochi.
Srbijagas and Gazprom in Moscow in late December 2008 signed a document on the basic conditions for an agreement on cooperation in the construction of the South Stream gas pipeline through Serbia. Based on that document, the Russian national gas company holds a 51 percent stake in the joint venture.
On April 15, Skundric said, "A feasibility study on the construction of the gas pipeline through Serbia is to be finished by September 2009 and the study on the entire South Stream project... by the end of June 2010."
The future pipeline is to transmit Russian gas below the Black Sea to Bulgaria and further on through a 900-kilometer pipeline to other European countries. According to announcements from Moscow, the pipeline is targeted for completion in 2015.
Gazprom's Murky Games in Hungary
[tt_news]=34948&tx_ttnews[backPid]=7&cHash=b2a0221c67
Publication: Eurasia Daily Monitor Volume: 6 Issue: 86
May 5, 2009 02:24 PM Age: 12 hrs
By: Roman Kupchinsky
Gazprom may be preparing to take over a large part of the Hungarian domestic gas distribution network. A new, highly opaque deal is in the works as a result of which Hungary's energy security could be threatened. On April 28 Emfesz KFT, a major Hungarian gas distribution company owned by Ukrainian businessman Dmytro Firtash, announced that it will stop importing gas from RosUkrEnergo (RUE), a company based in Zug, Switzerland and will instead buy gas from an unknown company, RosGas AG, also located in Zug.
An Emfesz press release claimed that: "RosGas is a company in Gazprom's network of business interests." Furthermore, the press release stated that: "The new gas acquisition system of Emfesz is independent of Ukraine. Gazprom, whose interest is to keep Emfesz consumers supplied with gas, has played a role in shaping the system. The supply of all Emfesz's gas consumers is continuously guaranteed and the fact that RosGas will be the gas provider of Emfesz involves no perceptible change for the latter's customers" (emfesz.hu, April 28).
Emfesz, the second largest Hungarian gas distributor which imports 3 billion cubic meters annually, was forced to turn to another middleman for its gas supplies after RUE was removed from the Ukrainian - Central Asian gas trade in January 2009 (emfesz.hu, January 9). However, the owner of Emfesz Dmytro Firtash, has several commercial interests. He is also the 45 percent owner of RUE - 50 percent of which is owned by Gazprom and 5 percent by Firtash's business partner, Ivan Fursyn.
Gazprom's spokesman Sergey Kuprianov, sharply contradicted the allegation that the company was linked to Rosgas: "It is well known that the only export channel for Russian gas is the company Gazprom Export. The company RosGas which was named today in the Hungarian media has no relation to Gazprom and is not part of the Gazprom Group" (Interfax Ukraine, 29 April).
According to company records located by Jamestown, RosGas AG was first registered in Zurich, under the name IKRON AG on December 10, 2008 and changed its name eight days later to RosGas AG while relocating to Zug -only a few weeks before the Ukrainian-Russian gas conflict began in January 2009. The two principle shareholders of RosGas are Andras Laki, and Tamas Grazda, a Hungarian national who also happens to be the acquisitions and mergers director for Emfesz and a member of the management board of Emfesz, Poland (moneyhouse.ch, April 3).
The immediate suspicion is that RosGas AG is yet another in a long line of shadowy intermediary companies created by Firtash and Gazprom. However, in the case of RosGas this may mask a possible attempt by Gazprom to cut gas supplies to Firtash's Emfesz, as a precursor to a company takeover -vastly increasing its share of the Hungarian domestic gas distribution network.
Hungary has been a key target for the Russian state-owned Gazprom since the collapse of communism within Central Europe. Viewed as a potential major European gas hub, Hungary first became a target of the Kremlin in 2002 when the mysterious gas trading company, Eural Trans Gas (ETG) was registered in Budapest. That year ETG took over the contract from a Russian company, Itera, acting as the intermediary for supplying gas from Turkmenistan to Ukraine. ETG was a totally opaque structure which was later exposed as belonging to Ukrainian gas trader Dmytro Firtash and his partner, Ivan Fursyn, a banker from Odessa with close ties to the administration of then-Ukrainian president Leonid Kuchma.
ETG was paid for its services with 13 billion cubic meters of gas by the Ukrainian side which it then sold on the European market for a considerable profit. Soon after it began trading, the company's owners were suspected of having connections to the Russian mafia. This was denied by the then-unknown owners of ETG, who instituted a number of libel suits against anyone alleging the company had mafia links. The Kremlin became nervous and closed down ETG in July 2004, replacing it with a new intermediary company, RosUkrEnergo (RUE).
The 50 percent owners of RUE were the same individuals that had established ETG, Dmytro Firtash and Ivan Fursin, while the remainder of RUE was owned by Gazprombank -which at the time a fully owned subsidiary of Gazprom. The Kremlin, for undisclosed reasons, claimed that it did not know the identity of Gazprombank's Ukrainian partners in RUE.
According to the company website, one year before the dissolution of ETG, Firtash created a new Hungarian company: "Emfesz, the First Hungarian Natural Gas and Energy Trading and Service Provider Ltd., was founded in 2003 to develop a major gas and energy business in Hungary following the liberalization of the country's energy market with the passing of the Hungarian Gas Act in that year." Firtash presumably had the go-ahead to do this from Gazprom and a guarantee that he would be able to buy gas for Emfesz from RUE where he controlled 50 percent of the company. Firtash's website stated: "The company (Emfesz) has a long-term, 10 year contract with RosUkrEnergo, a Swiss gas distribution company, for the supply of gas from Central Asia to Hungary."
As the Firtash-Gazprom relationship began souring in 2008, Gazprom made a number of offers to buy a substantial share of Emfesz, however Firtash refused to sell. In April 2009 the Russian audit chamber announced that Firtash owed Gazprom $514 million, exerting more pressure on him to turn over his Hungarian operation to Moscow (, April 21).
If RosGas begins supplying Emfesz with the large quantities of gas it is contracted to sell in Hungary, it will raise questions over the source of that gas. Is it possible that RosGas is another Gazprom scheme to possibly siphon off funds for the Kremlin and reward Firtash for his long-standing loyalty to the Kremlin.
Russian oligarch to buy NHL team
Today, 10:50 PM
Russian billionaire Alexander Medvedev, who has been a thorn in the side of the NHL this season, claims he is looking at buying an NHL team, Russian website Sports.ru reports.
"Actually, we have considered 10 opportunities and we're doing due diligence on three teams," Medvedev told reporters Tuesday following an oldtimers' game at the world men's hockey championship in Zurich, Switzerland.
"It will help us make our decisions."
Medvedev, who is deputy chairman of Gasprom, the world's biggest natural gas producer, would not say which teams he is looking at, but hinted he thinks the NHL should put more teams in Canada.
"We find it strange that hockey cities like Quebec City do not have an NHL team," he said.
Medvedev can say what he wants, but the chances of NHL commissioner Gary Bettman welcoming him with open arms as an owner are remote, at best.
Medvedev is the man behind Russia's Kontinental Hockey League — he serves as league president — and he is the person the NHL blames for the fact there no transfer agreement exists between the NHL and European federations to pay for development fees.
Medvedev was elected to the governing executive council of the International Ice Hockey Federation last spring, and the buzz was he could cut a deal with the NHL.
But European officials now quietly say all he has done is antagonize the NHL.
The NHL has accused the KHL of poaching NHL players under contract. For example, Alexander Radulov returned to Russia this season rather than honor his pact with the Nashville Predators.
Moreover, many Russians still under contract and playing in the minor leagues signed with a KHL team.
Medvedev is scheduled to meet with NHL executive vice-president Bill Daly and Paul Kelly, the executive director of the NHL Players' Association, later this week as a member of the IIHF's executive council.
But Medvedev made it clear that no negotiations toward an umbrella transfer agreement are planned, at least not in his mind.
"There will be no negotiations, just discussions and talks," he said.
As for the KHL, Medvedev said the global economic crisis has impacted on the upstart league, and the 24-team league could shrink.
"We have taken measures to stop the escalation of salaries, so every good player will be well paid and average players should get average salary, [and] those teams who still have outstanding debts, in respect to salaries at the end of May, will void the right to play," he said. "We do not need clubs with debt."
On another front, Medvedev said there has been contact with a representative of five Swedish teams about forming a pan-European league.
The five biggest teams in Sweden's Elite League recently served notice they are leaving, possibly to form another alternative to the NHL or to join the KHL.
Medvedev said that former NHL forward Hakan Loob, now the general manager of Sweden's Farjestad BK, wrote him a letter requesting a meeting.
"They want to make a presentation in respect of the future of European hockey," Medvedev said.
Medvedev hopes to meet with Loob next month.
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
- october 28 2014
- russia wikileaks
- report of the special committee on the problem of
- minnesota state university moorhead
- veterans resources
- euractiv in depth bible study videos
- headlines in partnership with prophecy update
- stc 2015 draft general report on russia military modernization
- 23 июня «день М» fb2
- rysslands handel
Related searches
- 10 facts about russia s history
- facts about russia for kids
- videos about russia for kids
- learn about russia for kids
- map of russia for kids
- russia kids learning tube
- russia for kids printables
- information about russia for kids
- russia and central asia map
- german soldiers in russia ww2
- china and russia warn us
- iran china russia news