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Basic Political Developments
• Official calls for easing Russia - Turkmenistan visa regime
• Russia, Turkmenistan on track to visa-free travel
• Meeting of RF-Ukraine intergvrnmntl com to be held in April
• United States to establish contacts with SCO
• Russian, Chinese think tanks discuss security, SCO
• Russia hopes to enhance fight against terrorism with new treaty
• Lavrov Criticizes NATO's Security Role
• Lavrov: Russia, European Union should cooperate more effectively in fighting terror
• Kissinger: Obama likely to visit Russia within months
• Belarus upholds Russian proposals for G20 Summit in London
• Kudrin Eyes Belarus Currency Swap
• Russia can gain political influence over Belarus only through economic means
• Kadyrov, Putin Trade Barbs at Tense Meeting
• Number of Russian officials doubles under Putin
• Re-Feudalization Threatens Russia’s Future, Delyagin Warns
• Medvedev appoints Lomakin-Rumyantsev expert department head
• Plea Bargain Bill Clears Key Reading
• Murmansk government dissolves
• Russia region chief quits after ruling party row
• Governor in Russia Is Ousted by Kremlin
• Russian leadership not happy about GRU contribution to conflict with Georgia – newspaper
• At Least 17 Slain in Dagestani Battle
• Federal Security Service says one more subversive group liquidated in Russia’s Dagestan
• Retired General of Russia’s Federal Security Service was killed by his debtors – investigation
• Former members of Russian security services suspected of robbing Moscow airport’s VIP zone passenger
• ‘Civic Nation’ Project Said Alienating All Ethnic Groups within Russia
• Moscow Set to Legalize Government Funding of Church-Held Property
National Economic Trends
• Govt to submit anti-crisis plan to Duma by April 6 - Vyacheslav Volodin
• Russia may need up to five years to get out of crisis – Khristenko
• Inflation may go down to 7,5% in Russia by 2011 – Kudrin
• Economy Shrinks by 8% In First 2 Months of 2009
Business, Energy or Environmental regulations or discussions
• Oil prices may prop up Russian stocks
• Russia submits proposal to Bangladesh on setting up nuclear power plant
• Japan Atomic Cooperation? - Russia and Japan are expected to sign an atomic energy cooperation accord in May, Deputy Prime Minister Sergei Sobyanin said Saturday, Interfax reported.
• New Uranium Export Price - Atomenergoprom, the energy unit of Rosatom, and U.S. enrichment company USEC agreed Friday on new uranium export price terms from 2010.
• GE Continues to Invest in Russian Energy Sector
• Government throws Russian debtors to foreign creditors
• State Will Let Foreign Lenders Seize Assets
• Rusal, Onexim agree on debt restructuring
• Rusal/Onexim: If this is the value of assets in Russia, everything is Buy!
• Deripaska May Lose Control of Rusal With $14 Billion Debt Load
• Court Backs Alfa in Loan Dispute
• Baturina May Sell Gazprom Stake to Repay Debt, Vedomosti Says
• MMK earnings plummet more than 80% in 2008
• Polymetal said to be buying gold deposit from Leviev group for $70 mln
• Polymetal acquires another gold deposit
• Restrictions on Imports to Aid Poultry Plants
• Repayment Sought After State Firm's Default
• Russian Default Gives Investors the Jitters
• Aeroflot to Bid for CSA
• STX to Help Build Shipyard
• Help for Timber Companies - Russia may lift timber export tariffs for certain "priority" projects after the government approved a set of measures to combat the economic crisis.
• Russian Company, a Competitive Carrier, Selects VocalTec for VoIP
Activity in the Oil and Gas sector (including regulatory)
• Russia can raise oil output if price above $50
• Nord Stream, South Stream implemented according to schedule – Sechin
• Russia to develop promising deposits to win new energy markets
• Transneft to get first tranche of loan for ESPO branch to China
• Energy Firms in Cuba Talks
• First LNG from Russia's Sakhalin II to India
• Rosneft, Surgutneftegaz Tie-up Unnecessary Now, Minister Says
• Novatek stocks to be driven by domestic demand for gas
• On March 25, 2009, Head of the Shtokman Develpment Company will report on the Conference NEFTEGAZSHELF-2009
Gazprom
• Gazprom Will Supply Gas to Northern Iran
• IEA: Enough Gas for Now - The International Energy Agency, which has criticized Gazprom for not investing enough in new gas developments, said Friday that the threat of a Russian supply shortage was no longer current.
• Sakhalin Mum on Shipment
• On working meeting between Alexander Ananenkov and Igor Yudin
• Gazprom: MinFin expects lower EU gas prices
• GROs: Gazprom Buyout in the Offing?
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Full Text Articles
Basic Political Developments
Official calls for easing Russia - Turkmenistan visa regime
MOSCOW, March 23 (Itar-Tass) - First Deputy Prime Minister Viktor Zubkov called for easing the visa regime between Russia and Turkmenistan, while aiming at the prospect for giving it up altogether.
"Taking into account the increasing level and scope of interstate business cooperation, visa problems require a cardinal solution," Zubkov stated at the Russian-Turkmen economic forum, which opened in Moscow on Monday.
"I believe we have to seek the soonest streamlining of the visa regime, with the prospect of its complete cancellation," first deputy premier emphasized.
As of now, of the former Soviet republics - aside from the three Baltic states -- Russia only has visa regime with Turkmenistan and Georgia.
Russia, Turkmenistan on track to visa-free travel
RBC, 23.03.2009, Moscow 10:59:06.First Deputy Prime Minister of Russia Viktor Zubkov finds visa-free travel between Russia and Turkmenistan, the deputy PM was cited as telling a Russian-Turkmen economic forum in Moscow. He highlighted that the countries should be pushing for simplified visa procedures, which will evolve in visa-free travel in the longer run.
In 2008, trade between the two nations doubled, Zubkov noted, adding that the trend had spilled over into 2009. According to Turkmen data, trade reached $7bn in 2008. The two sides are now collaborating in over 120 joint projects worth a total of $330m, the deputy PM said. The trade structure has been positive, with not just commodities, but also machinery, equipment and textiles etc. traded between the two countries. Meanwhile, there still is room to diversify and intensify economic cooperation, Zubkov stressed.
Meeting of RF-Ukraine intergvrnmntl com to be held in April
MOSCOW, March 23 (Itar-Tass) -- A meeting of the Russian-Ukrainian Intergovernmental Commission is to be held in Moscow in early April, State Secretary, Russian Deputy Foreign Minister Grigory Karasin told ITAR-TASS on Monday.
“According to an agreement between Russian Prime Minister Vladimir Putin and Ukrainian Prime Minister Yulia Timoshenko, such a meeting of the commission is planned. The date of the meeting is discussed, most probably, it will be in early April.” “It will be useful to compare the sides’ estimates,” the diplomat said.
RBC Daily
United States to establish contacts with SCO
On March 27, Moscow will host a meeting of the Shanghai Cooperation Organization (SCO) on efforts to bring peace to Afghanistan. This will be the first time that a high-ranking U.S. diplomat, namely, Deputy Assistant Secretary of State for South and Central Asian Affairs Patrick Moon, has attended an SCO event.
Until now, Washington openly ignored the SCO, fearing greater Russian influence over China and Central Asia. However, the United States, which cannot independently solve the problems of Afghanistan and Iran, is now forced to revise its stand on the SCO.
The Shanghai Five, comprising Russia, China, Kazakhstan, Kyrgyzstan and Tajikistan, was established in 1996. Uzbekistan joined the new organization in 2001. India, Iran, Mongolia and Pakistan have observer-nation status with the SCO, while Afghanistan has guest-nation status.
"The United States is sinking deeper into the Afghan quagmire, while the SCO is the only international organization uniting all countries involved in the Afghan conflict," a Russian diplomat said on condition of anonymity.
Sergei Demidenko, an analyst with the Russian Institute of Strategic Assessment and Analysis, said U.S.-SCO cooperation could also help Washington to restore ties with Iran.
"Washington and Shiite Tehran could team up on the Afghan issue because Sunni Muslims from the Taliban and Al Qaeda movements are their common enemy," Demidenko said.
In March 2008, Iran applied for full-fledged SCO membership. The organization could become an ideal platform for U.S.-Iranian cooperation on Afghanistan and other issues.
Russian, Chinese think tanks discuss security, SCO
2009-03-22 22:37:59
MOSCOW, March 22 (Xinhua) -- Top think tanks from Russia and China discussed a wide range of security issues of common concern at a two-day seminar that ended here Sunday.
Participants at the seminar exchanged ideas on world economic and political trend, the situation in Central Asia, and prospects for the Shanghai Cooperation Organization (SCO) under the global security framework.
The seminar, "Russia and China in a new era," was co-chaired by China Institute for International Strategic Studies (CIISS) and Russian Council for Foreign and Defense Policy (CFDP).
Xiong Guangkai, chairman of the CIISS, and Sergei Karaganov, head of the CFDP, attended the meeting.
Participants in the meeting agreed that the current world is ata stage of profound change and major readjustment. The ongoing financial crisis has led to greater instability in global and regional situation. Yet, the world will continue to move towards multi-polarization despite emerging complexities in global situation.
Both sides believed that safeguarding security and stability in Central Asia serves the common strategic interests of China and Russia, and is also a necessity for deepening the two countries' strategic cooperation.
They also agreed the SCO, as a new organization of regional security cooperation, not only accords with fundamental interests of all the SCO members, but also contributes to regional and global peace and security. China and Russia shall strengthen understanding, trust and cooperation to ensure the sound development of the SCO.
As a national, nongovernmental institute on global issues, the CIISS keeps in touch with about 100 institutions from over 50 countries and regions across the world. The CFDP is Russia's famed think tank closely associated with several departments of Russian government and legislature.
Russia hopes to enhance fight against terrorism with new treaty
BRUSSELS, March 22 (RIA Novosti) - Russia hopes to raise the efficiency of the fight against terrorism with a new treaty on security, Russian Foreign Minister Sergei Lavrov said.
"In a new treaty on security, we want to achieve a new quality of cooperation in the fight against terrorism, non-proliferation of mass destruction weapons and other threats and challenges that we face," Lavrov said at the 2009 Brussels Forum.
The Brussels Forum is an annual meeting of U.S. and European political and intellectual leaders to discuss topical global issues. This year, the three-day forum has focused on the global financial crisis, climate change, energy security and civil freedoms.
The initiative to work out a treaty on European security was put forward by Russian President Dmitry Medvedev in June 2008.
According to Russia, a new treaty should stipulate respect for sovereignty, territorial integrity and political independence of countries, inadmissibility of the use of force, guarantees for the provision of equal security, basic parameters of control over armaments and reasonable sufficiency in the development of military capability.
The treaty should also include the provision that no state and no international organization may have the exclusive right to maintain peace in Europe.
Lavrov Criticizes NATO's Security Role
23 March 2009
Combined Reports
Russia is unhappy with NATO's dominant role in European security and its dealings with neighbors that used to be part of the Soviet Union, Foreign Minister Sergei Lavrov said in Brussels on Saturday.
Lavrov said both the European Union and NATO were involved in unfair dealings with Russia's neighbors.
On Friday, the EU promised a hefty program of aid trade and closer political ties to six former Soviet republics where Moscow retains influence -- Ukraine, Azerbaijan, Georgia, Armenia, Moldova and Belarus. (See story on this page.)
"Russian foreign policy is not about fear. It is about fairness," Lavrov said. "We see unfairness in dealing with our partners."
Europe's security should be run by the 56-nation Organization for Security and Cooperation in Europe, Lavrov said during the annual Brussels Forum security conference. "We should give that a try."
The idea has been repeatedly rejected in NATO capitals, which view the 56-member OSCE as unsuited for the task.
Lavrov's reiteration of Moscow's demand for a new security compact showed an enduring divide between Moscow and its former foes of the Cold War era -- 20 years after the Iron Curtain came down.
Lavrov said NATO should commit to "legally binding" security arrangements through the Vienna-based OSCE to cure what he called the alliance's appetite "for more and more scenarios" of unilateral actions.
"NATO bombed Yugoslavia without any legal justification," Lavrov said. "This bothers us. NATO takes it upon itself to judge everyone and everything."
After the Cold War, the EU and NATO took in a dozen East European nations that had been part of the Soviet-led Warsaw Pact.
Javier Solana, the EU's security affairs chief -- and a former NATO secretary-general -- said the NATO security arrangement whereby the United States is the key guarantor of European security "was a very intelligent setup."
"If there is someone who doesn't feel comfortable, he has the right to say it," he said. "I think the Americans and the Europeans are ready to engage the Russians and make them comfortable."
Moscow has pushed for an increase in OSCE's involvement in European security for some time. On Wednesday, Lavrov said the presidents of Russia, Moldova and Moldova's breakaway republic of Transdnestr agreed during negotiations outside Moscow that Russian peacekeeping troops stationed in Transdnestr could be replaced with OSCE forces once the region's status was resolved.
(AP, MT)
Lavrov: Russia, European Union should cooperate more effectively in fighting terror
Mar 23 Mon
Today, 09:29 | Interfax-Ukraine
The quality of cooperation between Moscow and the European Union in fighting terrorism must be enhanced in a new European security pact, said Russian Foreign Minister Sergei Lavrov.
"We seek a new quality of cooperation in fighting terror and nuclear weapons proliferation, and in dealing with other threats and challenges in a new security agreement," Lavrov told EU foreign policy and security chief Javier Solana at the Conversations with Russia forum in Brussels.
"Why must we not remain at the level of current structures while doing so? The answer is very simple. NATO is concerned about its own security and the Collective Security Treaty Organization about its own. Members of the Commonwealth of Independent States and of the European Union have their separate defense and security policies. This means that this common job is being done by scattered structures," Lavrov said.
The Belgian forum also discussed a new glance at European security, NATO's enlargement and the necessity to reform the Organization for Security and Cooperation in Europe.
Security guards barred Russian journalists from entering the conference hall, where Lavrov was speaking, even though all Russian reporters had accreditation badges as members of the official Russian delegation, earlier reports said.
The Brussels forum is an annual meeting of influential American and European politicians. Russia's foreign minister addressed the forum for the first time.
Kissinger: Obama likely to visit Russia within months
MOSCOW. March 21 (Interfax) - Former U.S. secretary of state Henry
Kissinger, in a television program on Saturday, expressed a surmise that
U.S. President Barack Obama would visit Russia within the next few
months.
Kissinger said in the 'Saturday News with Sergei Brilyov' program
on Russia's Rossiya channel that it is very important for Obama to visit
Russia.
Kissinger is a co-chairman of an American-Russian public dialogue
group whose Russian co-head is Yevgeny Primakov, formerly Russian prime
minister and foreign minister and today president of the Russian Chamber
of Commerce and Industry.
The group met in Moscow this week, and Kissinger and Primakov also
met with Russian President Dmitry Medvedev.
Several former senior U.S. politicians came to Moscow with
Kissinger this week. They included former secretary of state George
Shultz, ex-defense secretary William Perry, ex-treasury secretary Robert
Rubin, and ex-senator Sam Nunn.
Media reports said the purpose of their visit was to help organize
a meeting between Obama and Medvedev and a visit by Obama to Moscow.
Media reports have said Obama may come to Russia early in July, before a
planned summit of the Group of Eight in Sardinia on July 8-10.
Belarus upholds Russian proposals for G20 Summit in London
23.03.09 12:50
President of Belarus Alexander Lukashenko paid a working visit to the Russian Federation on the invitation of his Russian counterpart Dmitry Medvedev, BelTA learnt from the president's pres service.
The leaders continued their informal negotiations in Sochi in line with the agreements reached during their meeting on March 19.
The agenda included a wide range of issues regarding bilateral relations and the international issues.
The Heads of State discussed a possibility of constructing sports facilities for the winter Olympics 2014 with the help of Belarusian constructors. Dmitry Medvedev, in particular, offered the Belarusian side to take part in several large projects. In this respect Alexander Lukashenko has told his Russian colleague that Belarus is implementing a large investment project on building a biathlon stadium. "We would like you to look into the issue and provide all possible support," the Belarusian Head of State.
As for the G20 Summit in London on April 2, Alexander Lukashenko said that the Belarusian government looked through the proposals of the Russian side for the summit. "We support them in full," the Belarusian leader added.
Dmitry Medvedev and Alexander Lukashenko considered the issues of interregional cooperation, integration processes as well as international issues.
Kudrin Eyes Belarus Currency Swap
23 March 2009 Bloomberg
MINSK -- Russia may agree on a currency swap with Belarus to boost trade and investment during the economic crisis after turning down a request for a 100 billion ruble ($3 billion) loan, Finance Minister Alexei Kudrin said Friday.
China and Belarus on March 11 agreed on a currency swap worth $3 billion. The three-year accord is worth 20 billion yuan, or 8 trillion Belarussian rubles.
"I wish Belarus good luck with its currency swap agreement with China," Kudrin told reporters in Minsk. "As for Russia, we still need to study this mechanism, but it's not out of the question."
Belarussian President Alexander Lukashenko failed to win approval for the $3 billion loan from President Dmitry Medvedev during talks outside Moscow on Thursday, Kommersant reported. The two presidents went skiing near Sochi on Saturday.
Russia received a request for the loan in December after agreeing to provide a $2 billion loan a month earlier. Deputy Finance Minister Dmitry Pankin said in January that Russia was "not even considering" the new request.
Kudrin said Russia would provide the final $500 million of the $2 billion loan soon, probably after the Russian budget is approved by the State Duma.
Kudrin said Russia and Belarus have been talking about "using our national currencies for settling accounts," and that an April deadline had been set for proposals on this issue.
Asked about long-standing plans for a common currency in Russia and Belarus, Kudrin said this is a "very delicate matter."
Kommersant
Russia can gain political influence over Belarus only through economic means
Recognition of Abkhazia and South Ossetia's independence by Belarus, something Moscow is pressing Minsk hard for, is unlikely to change much in unloosening the tight North Caucasus knot, Boris Makarenko, head of the Center for Political Technologies, writes.
When the Caucasus war was over, Europe decided that with relations with Moscow getting increasingly complicated, it could not afford to ignore ties with any of its neighbors. This set off a war of symbols - the lifting of visa sanctions, approval of an IMF loan for Minsk, and the carrot of inclusion in the Eastern Partnership program. The line is so simple and plain that even Minsk's theoretical recognition of Sukhumi and Tskhinvali will not make the West abandon it.
But what does Moscow need from Minsk? First and foremost, it should understand that the patron-client model in international relations will survive in the 21st century, too, but that in every century it functions differently. Vassals no longer bring tribute to their master (rather they milk him), and political loyalty is bought not with garrisons or viceroys, but through soft diplomacy.
Russia can lord it on the post-Soviet space on one condition only: it will not be the lordship of a white tsar or a Communist Party secretary approved on Moscow's Old Square, where the Soviet Communist Party had its headquarters. The only successful lordship can only be that of a big country giving an example of development and exporting this success to "fellow nations."
Moscow should make an inventory of its relations with Minsk. President Lukashenko is fond of saying that the Belarusian industry provides hundreds of thousands of Russians with jobs. But in the absence of these Russians, the Belarusian economy would have ground to a halt, because since Soviet days Belarus has been a huge "assembly shop," the final stage of economic links stretching from all over the former Soviet Union, and has not changed its profile in the past 20 years. But the crisis does not discriminate. And it is in Russia's interests not to let the Belarusian economy fall - they are interconnected. And if this cooperation develops, no Western influence in Belarus will turn its gaze away from Russia.
Kadyrov, Putin Trade Barbs at Tense Meeting
23 March 2009
By Maria Antonova / The Moscow Times
Prime Minister Vladimir Putin held a tense meeting with Chechen President Ramzan Kadyrov on Friday, trading thinly veiled barbs about whose responsibility it was to rebuild the impoverished republic.
While the government aims to cut the budget for regional subsidies this year, Kadyrov has been pressing for more federal support. President Dmitry Medvedev said in February that regional leaders who were not meeting expectations on handling the crisis would be called to Moscow for meetings.
Putin opened the meeting by asking whether Kadyrov's "discussion with the Finance Ministry was finished," without elaborating.
"Everything is great with the Finance Ministry now," Kadyrov said.
"Friends?" Putin asked.
"Friends, thanks to you, Vladimir Vladimirovich!" Kadyrov replied, according to a transcript of the meeting on the government's web site.
In the choppy exchange, which stood out from the usually fawning gubernatorial reports to the prime minister, Putin asked Kadyrov about problems in his region, including wage arrears and unemployment.
Answering a query about aid to Chechens who suffered in an earthquake last year, Kadyrov said his government had given families construction materials and used the "national way -- when people help one another."
"But it's important to give state help, as well," Putin said. "What about the hospital that was destroyed?"
"We did everything that was in our power," Kadyrov said, adding that a new hospital project was being reviewed at the federal level -- in the Health and Social Development Ministry. Putin responded that it needed to be a modern hospital, to which Kadyrov replied: "Of course. Euro-standard."
"The main thing for us is your word that you settle this issue," Kadyrov said, responding to another jab from Putin about the quality of the facility.
The prime minister then abruptly turned his attention to a giant mosque finished in Grozny in October. Called "The Heart of Chechnya," it can hold 10,000 worshipers and is finished with rare marble and 36 Swarovski crystal chandeliers. It is located on Prospekt Vladimira Putina. "And how is your mosque functioning? I saw that you've held some big events," Putin said, referring to the festivities on the prophet Mohammed's birthday earlier this month.
While the sparring suggested a worsening of mutual frustration over who dictates Chechnya's spending priorities, Kadyrov appeared satisfied with the results of the meeting. A statement on the Chechen government's web site said Putin gave "special attention" to the mosque and was "impressed" by the scope of the celebrations.
Gazeta.ru, Vedomosti
Number of Russian officials doubles under Putin
The Federal State Statistics Service (Rosstat) said the number of civil servants had soared from 485,566 to 846,307 between 1999 and October 2008, a 74% increase.
The national administrative machinery, which also comprises state-power agencies' officials not listed among civil servants, has swelled from a million to 1.8 million people, exceeding the number of officials prior to the break-up of the Soviet Union.
Analysts say society has been overloaded, citing this as one of the causes of the current economic crisis.
Under President Vladimir Putin, the bureaucratic machinery swelled despite job cuts and proposed administrative reforms. In 2004, the Kremlin announced a decision to cut the 1,500-member Presidential Executive Office by 20%.
Presidential Executive Office head Sergei Naryshkin recently decided to axe another 100 jobs and was surprised to learn shortly afterwards that the Executive Office employed the same number of officials - 1,500.
Olga Kryshtanovskaya, director of the independent Institute of Applied Politics, said an increase of nearly 100% in the number of civil servants highlighted a nationwide bureaucratization.
She said in 1981, the 400,000-strong Soviet political elite, namely, Communist Party officials and military personnel, accounted for 0.1% of the 300-million population.
In 2000, the 1.2-million Russian political elite comprised 0.8% of the 145-million population. Kryshtanovskaya said the country's political elite had topped 3 million by early 2009, despite negative population growth.
She said officials now accounted for over 2% of the population, and that society was being overloaded. "This factor has probably contributed to our economic problems because state-machinery allocations should not exceed a certain limit," Kryshtanovskaya said.
Re-Feudalization Threatens Russia’s Future, Delyagin Warns
March 22, 2009
Paul Goble
Vienna, March 22 – The Russian government is increasingly staffed by officials interested only in pleasing those above them and lacking any interest in understanding the wider world, a reflection of broader changes in the relationship between knowledge and status under conditions of globalization and specifically Russian conditions.
But in some other countries at least, including the United States and Great Britain, Mikhail Delyagin argues in an essay published at the end of last week in “Yezhednevny zhurnal,” this process has produced a return to feudalism in government and society already evident in Russia.
In an article in which he provocatively suggests that Russia’s “administrative system has gone directly from socialism, bypassing capitalism, to feudal times,” Delyagin says that this development is in the first instance the product of trends that are affecting many countries in a time of globalization and also some specifically Russian problems.
As “human activity has become so specialized,” he writes, “the achievement of social success takes too much effort and time and has been converted into a separate and independent activity,” one not rooted as was more typically the case in earlier times as something linked to “the study of the surrounding world.”
Consequently, Delyagin continues, individuals are increasingly forced to choose between seeking knowledge and pursuing social and political success, a divergence of paths which not only isolates those pursuing the one from those seeking the other but also has an especially profound effect on government officials by “depriving them of important human qualities.”
And thus while it has always been true that “young careerists have understood that the opinion of the bosses about the world is significantly more important [to their careers] than its real nature,” the specialization Delyagin points to has made that attitude even more widespread because young people often lack the skills to pursue knowledge on their own.
Beginning in the first years of this decade, Delyagin says, he noted the rise not just of “particular examples” of this kind of personality but rather “a whole wave of people who sincerely did not understand the importance of reality in general,” denying “subconsciously” that it existed independently from “that form in which it exists in the consciousness” of the bosses.
The rise of such people reflected, the Moscow commentator says, not just the pattern found elsewhere but also “the general tendency of the degradation of Russian education” and especially Russian higher education, in which students “frequently do not acquire the minimally necessary knowledge and are deprived of the habits of acquiring new information.”
These trends are not only mutually reinforcing – why learn how to learn if that is not what the powers that be want and will pay for – but entails other negative consequences as well: a devaluation of knowledge, an increase in corrupt use of personal ties, and a belief that the ability to crush one’s opponents is more important than defeating them through understanding.
In such “a feudalized state” as Russia has become, it is not possible to articulate a serious ideology because that requires some knowledge and willingness to acquire more. Indeed, Delyagin suggests, “without knowledge, you won’t create an ideology; without it, you will have access only to religion.”
Over time, this feudalization will destroy the ability of the young to think independently and mean that “science will become socially insignificant, and the preparation of decisions, including the most important government ones, will ever more often be based on emotions and prejudices and not on facts.”
With the passing of the older generation of scientists who were trained in Soviet times, “Russian science will die. And elsewhere fundamental science will be conducted only in the United States and a few schools in Great Britain,” a development that will seriously reducing the chances not only for scientific progress but for political progress as well.
On the one hand, Delyagin’s article is the kind of rant many intellectuals often make. But on the other, it contains a serious warning not only for Russia but for other countries as well: We are heading toward “a new Middle Ages, a new period of barbarism,” he writes, one in which people with power will ever more frequently ignore facts, however much they protest otherwise.
Medvedev appoints Lomakin-Rumyantsev expert department head
MOSCOW, March 23 (Itar-Tass) -- Russian President Dmitry Medvedev issued a decree appointing Ilya Lomakin-Rumyantsev head of the Russian Presidential Expert Department, the Kremlin press service reported on Sunday.
Ilya Lomakin-Rumyantsev was born on September 5, 1957 in Moscow. He graduated from the Lomonosov Moscow State University with a diploma of economist.
1993-1998 – the executive director of the Moscow compulsory medical insurance fund.
1998-2000 – the chief of the insurance supervision department of the Russian Finance Ministry.
2000-2001 – the president of the Foundation of Complex Applied Research.
2001-2004 – a senator in the Federation Council of the Federal Assembly from the State Assembly of the Russian Republic of
Mari-El; a deputy, the first deputy chairman of the Federation Council Committee for Budget Policy.
Since March 2004 – the chief of the Federal Service for Insurance Supervision.
Plea Bargain Bill Clears Key Reading
23 March 2009
By Natalya Krainova / The Moscow Times
The State Duma on Friday passed in a crucial second reading a bill that would allow prosecutors to offer reduced punishments to suspects and defendants who cooperate with investigators.
While it's a common practice in the United States, current Russian law does not allow prosecutors to offer formal plea bargains to defendants.
Deputies said the bill passed Friday is aimed at giving authorities more leverage in cracking down on organized crime. "Law enforcement agencies hope the bill will help track members of crime syndicates," State Duma Deputy Vladimir Vasilyev, one of the bill's authors, told The Moscow Times.
If enacted, the bill would give cooperative suspects a firm guarantee of reduced punishments by obliging prosecutors to sign a formal contract when offering a plea bargain, Vasilyev said.
Currently prosecutors can offer informal plea bargains, though judges often issue harsh sentences despite a suspect's cooperation. The bill is primarily aimed at defendants suspected of crimes of medium severity but could in certain cases be offered to defendants charged with serious felonies, Vasilyev said.
If a suspect fulfills his obligations under the plea bargain, the court would be required to issue a prison sentence no greater than half of the maximum allowable sentence for a given crime, according to the bill.
Lawyers had mixed opinions on the legislation. Yelena Liptser, defense lawyer for former Yukos executive Platon Lebedev, said the bill would allow for "various violations on the part of the investigators" because they would be the ones drawing up the terms of the plea bargain. Liptser also said witness protection in Russia is so underdeveloped that it is unclear which is preferable: a prison term or the threat of violent retribution for suspects who walk free after giving evidence against others.
Murad Musayev, defense lawyer for two Chechen brothers acquitted last month in the murder of investigative journalist Anna Politkovskaya, praised the bill for forcing investigators to put plea bargains in writing. "Oral agreements are often violated by investigators," Musayev told The Moscow Times by telephone Friday.
Murmansk government dissolves
2009-03-23
Following the dismissal of Governor Yevdokimov and the appointment of Dmitry Dmitriyenko new acting governor, the whole Murmansk regional government resigns.
According to MBnews.ru, all the leaders of regional ministries and committees will meet today at 1 pm and subsequently hand in their resignations.
Mr. Dmitriyenko will then start forming his new government team. According to Kommersant, the new acting governor says he will build his new administration on local staff and that he plans no regional revolution, but rather an “evolutionary development”
Russia region chief quits after ruling party row
11 mins ago
MOSCOW, (AFP) – The governor of Russia's northern Murmansk region has resigned after falling out with United Russia, the ruling party of Prime Minister Vladimir Putin, officials and reports said Monday.
Yuri Evdokimov had infuriated the United Russia leadership by daring to support his ex-deputy instead of the ruling party's candidate in elections for the mayor of the city of Murmansk on March 15, the Kommersant newspaper said.
Sergei Subbotin, an independent, then beat the United Russia candidate Mikhail Savchenko by a crushing margin of 25 percent, in a rare setback for the dominant ruling party.
"On the day of the elections, Evdokimov was involved in illegal agitation for a candidate and called on people to support him," a Kremlin source told the newspaper.
"This is unacceptable," the source added. Evdokimov had served as head of the Arctic region since 1996.
A Kremlin statement on Saturday said that President Dmitry Medvedev had accepted Evdokimov's resignation at the wish of the governor and had appointed a fisheries official in his place.
The Kremlin source told Kommersant that recent statements by the governor "which were frankly of an unconstructive nature" had also caused irritation.
United Russia dominates the national Russian parliament but analysts believe the country's leadership is concerned about the effect of the ongoing economic crisis on public opinion in Russia's regions.
The Russian president has the power to sack regional governors, whom he also appoints before confirmation by regional parliaments.
Until changes imposed by then president Putin in 2004, the governors of Russia's regions and autonomous areas had been elected by popular vote.
Medvedev in February sacked three regional governors and accepted the resignation of another.
March 22, 2009
Governor in Russia Is Ousted by Kremlin
By CLIFFORD J. LEVY
MOSCOW — President Dmitri A. Medvedev replaced the governor of a northwest region on Saturday, apparently seeking to ensure that the ruling party remained in control there after it suffered a surprising defeat in local elections.
Mr. Medvedev’s move in the region, Murmansk, suggested that the Kremlin wanted to clamp down quickly on hints of disloyalty among its cadre of governors as it faces possible discontent at the regional level over the financial crisis.
The dismissed governor, Yuri A. Yevdokimov, is a member of the ruling party, United Russia, but he had been feuding with party leaders lately. And in the mayoral election this month in the city of Murmansk, Mr. Yevdokimov supported an independent candidate, who triumphed easily over United Russia’s nominee.
The loss in the city, which is the region’s capital and has about 320,000 people, was a rebuke to United Russia. It led to a round of recriminations that reached all the way from the Murmansk region, which borders Finland and Norway, to party headquarters in Moscow.
Governors in Russia used to be elected, but are now appointed by the president, under a system that was put in place by Russia’s paramount leader, Prime Minister Vladimir V. Putin, when he was president in 2004. The change was widely seen as an effort by Mr. Putin to centralize power in the Kremlin.
But many mayors continue to be elected, and these elections have become a test of the ruling party’s strength.
At least three well-known candidates, for example, are expected to vie next month to become mayor of the southern city of Sochi, which is to host the Winter Olympics in 2014.
The Kremlin announced Mr. Yevdokimov’s replacement on its Web site on Saturday and, as is typically the case, the statement said he had voluntarily resigned. It seemed clear, though, that if he had not done so, he would have been dismissed.
The statement also said Mr. Medvedev had nominated Dmitri Dmitrienko, a senior federal fisheries official, to serve as governor.
Russian leadership not happy about GRU contribution to conflict with Georgia – newspaper
22.03.2009
The term of military service of Army General Valentin Korabelnikov, the head of the Main Intelligence Directorate of the General Staff of Russian Armed Forces has been prolonged for two years, though experts all the same do not exclude his forthcoming resignation, Moscow-based daily Vzglyad reports.
It is a fact that the GRU head was absent from the enlarged Defence Ministry board session on March 17. The ministry’s press service said Army General Korabelnikov was on holidays. At the same time it is obvious that such high-ranking military functionaries do not leave for holidays at the time of accounting undertakings, daily Vzglyad points out. It is not excluded that the state leadership have some claims to military intelligence community, the paper marks.
Assumptions that Army General Korabelnikov has written an official report on resignation appeared in May, 2008, simultaneously with resignation of the former chief of General Staff of Armed Forces of the Russian Federation, Yuri Baluyevsky. Earlier this month, the rumours about voluntary resignation of the GRU head became more intense: in particular, reports on alleged Korabelnikov’s resignation appeared in a number of Russian mass media outlets.
All this time most different opinions concerning Korabelnikov’s alleged resignation were voiced behind the scene. Nobody had any doubts that the General "has rested", in particular, various versions have been expressed on the General’s disagreement with disbandment of the GRU special-task units.
It was also said that the Russian leadership was going to transfer a part of the GRU functions to the Foreign Intelligence Service (SVR) under Mikhail Fradkov. As if the maintenance of some means of conducting of intelligence is burdensome for the military budget they have been supposed to be transferred to the SVR balance. The experts warned about possible strengthening of the SVR if that would occur, and breakdown of the parity settled from the Soviet times between the two secret services. However, on March 19, the assumption on forthcoming transfer of certain GRU functions to the Foreign Intelligence Service was denied by the deputy chief of General Staff, Colonel-General Vasily Smirnov. «This is complete nonsense, nobody from the leadership of the General Staff and Ministry of Defence has put this question», stated Smirnov. «On my data, the GRU also in the further will exist as independent body of military intelligence», emphasized the deputy chief of Russia’s General Staff, according to Vzglyad.
Anyhow, according to a Defence Ministry source of the newspaper, the claims to the GRU on the results of the August conflict with Georgia were sounded in the closed part of the Defence Ministry October board session. The sources of the Vzglyad approve that the speakers at the session did not hesitate in expressions, characterizing the work of military intelligence in the course of the conflict.
Before the beginning of the warfare, the location of divisions of the opponent was revealed. The Command of 58th army had at its disposal the information on structure of the confronting grouping, its forces and means. Proceeding from this, it is reasonably simply to calculate the tasks facing the opponent, the paper notes. It stresses, however, that there are data which can not be gathered neither by air surveillance means, nor the absent intelligence satellites. This is data on numbering, disposition and moving of enemy divisions, moral condition of its personnel, the reading of captives about specific character of prepared operations.
The seized staff documents and samples of the opponent’s weaponry also have been playing a considerable role. The General Staff of Armed Forces of the Russian Federation did not have anything from set forth above, according to sources of the Vzglyad. The most important is that the military intelligence was unable to reveal or report to the state leadership the specific day and hour of the beginning of the Georgian assault.
It is not excluded that absence at the expanded session of the Defence Ministry of Army General Korabelnikov is a prelude to his resignation, the paper says. As concerns his possible successors, except for his direct deputies, the sources of the newspaper Vzglyad have been recommending to look closer at some key figures of Russia’s Interior Ministry.
At Least 17 Slain in Dagestani Battle
23 March 2009
Combined Reports
MAKHACHKALA -- Three days of intense fighting between police and insurgents in a wooded area of Dagestan ended Saturday with five officers and about a dozen militants left dead, officials said.
Clashes are frequent in Dagestan, but the fighting in an area near the border with Georgia and Azerbaijan was some of the most intense in recent months. Helicopter gunships fired on the militant positions.
Regional Interior Ministry spokesman Mark Tolchinsky said 14 insurgents were killed, but Interfax cited the Federal Security Service as saying 12 died.
"The group committed several crimes in two regions in Dagestan," Dagestani Interior Minister Adilgirei Magomedtagirov told reporters.
"There are at least three non-Russians with Arab nationality among the dead militants, perhaps even four," he said.
State-owned Vesti-24 television showed a row of dead rebels lying in the snow with Kalashnikov rifles slung across their limp shoulders.
Magomedtagirov said a collection of Kalashnikov rifles, machine guns and a sniper rifle were found where the militants were hiding.
Earlier, television showed helicopter gunships firing from the snowy skies at targets in a forest and armored vehicles rolling into the mountainous area.
The police action, which began Wednesday, came after officials in the regions complained to regional authorities about the presence of the gunmen.
Underscoring the seriousness of the fighting, state-run television prominently showed a meeting Friday between Prime Minister Vladimir Putin and Dagestan's leader, Mukhu Aliyev.
In the Dagestani capital, Makhachkala, police fatally shot four men Friday who failed to stop their car at a checkpoint and began shooting at officers, city police spokesman Shamil Guseinov said.
The bodies of the four were shown on television lying among shattered glass near a battered, white Lada car.
Dagestan's militants are seen as having been inspired by separatists in neighboring Chechnya.
The fighting is the latest round of violence to plague the North Caucasus, pitting criminal gangs, Islamic militants or feuding clans against one another or against government and police forces.
A three-hour shootout Thursday north of the capital of Kabardino-Balkaria left four gunmen killed.
(AP, Reuters)
Federal Security Service says one more subversive group liquidated in Russia’s Dagestan
22.03.2009
Because of bad weather, Russian security forces have ended an operation against suspected separatist rebels in the southern region of Dagestan. At least 21 people are said to have died during three days of clashes, Euronews reported. Eyewitnesses speak of fierce fighting, in which the army used helicopter gun ships.
The unidentified Federal Security Service’s Dagestan directorate group of public relations spokesman said the militants' leader, Abdulgapur Zakaryayev, was among those killed during the two-day operation in the North Caucasus republic, Interfax reported. The official said one of three gangs operating in the republic has been liquidated. Those illegal armed formations have operated in the area of Karabudakhkent, Sergokainsk and Buinaksk districts, news agency adds. The FSB spokesman expanded that the groups of Magomedali Vaghabov and Kuppa-Shamil have left in the area.
In other development, the FSB Dagestan directorate received the operative information that there were the members of subversive and terrorist group preparing fulfillment of terrorist act in Makhachkala. The VAZ-2106 vehicle with the suspects was revealed. At an attempt to stop the car and examine the passengers they opened fire at employees of police and the FSB. As a result of firefight the four suspects have been killed, Interfax cites the spokesman of the FSB Dagestan directorate group of public relations.
Dagestan, which borders on Chechnya, is a predominantly Muslim Russian republic in the Caucasus and its militants are seen as having been inspired by separatists in neighbouring area. Various, often religiously inspired, rebel groups are active in the region.
Retired General of Russia’s Federal Security Service was killed by his debtors – investigation
22.03.2009
According to the version of investigators, on the day of his death the retired Major-General of Russia’s Federal Security Service (FSB) Alexander Rogachev went for an appointment with people whom he had given loans, online paper Life.ru reports. The murder took place at night from February 21 to 22 in Moscow. Rogachev left his house at 22:00 and warned his spouse that he would return soon.
The detectives investigating the murder of Rogachev (47) tend to the version that he was shot dead by his debtors. His second wife Anastasia Dubina told about it the operatives in the first hours after detection of the General’s corpse. However, nobody believed her as visible traces of violence were not immediately not found by visual observation on the former security officer’s body.
It is not known yet who was sitting in the car together with the murdered General. Apparently Rogachev had met those whom he was waiting for. Investigation say there were two killers, was was sitting by the driver, the second behind him. The bullet which entered into Rogachev’s nape got stuck in the General’s head. Blood from the wound somehow leaked down his back, not touching his shirt, and accumulated in the area of the back pocket of trousers. Only a tiny drop of blood has got on the seat. Therefore when it was still possible to get fingerprints of to examine each centimeter of the vehicle nothing was done. The killers have taken also the General’s mobile phone to not leave any traces to detectives, Life.ru marks.
Former members of Russian security services suspected of robbing Moscow airport’s VIP zone passenger
22.03.2009
Additional details of robbery at Moscow’s Vnukovo airport have become known, Russia’s daily Komsomolskaya pravda reports. On March 19, four camouflaged men with black masks and AK automatic machine-guns attacked one of the passengers from Makhachkala. The robbers withdraw his bag with 43 million 668,000 roubles, the paper expands.
The assailants arrived by a black Audi-8 vehicle with special signals, flashing lights and a number plate of the service car of Moscow city-mayor Yuri Luzhkov. Thus the armed gangsters have provided themselves with an unhampered way to the airport building. The number plate appeared to be false as the mayor’s vehicle was parked at a special parking lot that day. The gangsters have burst into the bus which had to bring up the passengers to their cars. The investigators have found out that the victim was simply a courier of a Makhachkala company Carat. Employees of this firm have already been detained several times for transportation of undeclared amount of money, the paper tores.
According to the preliminary version, the courier was carrying cash to Moscow businessmen, the natives of Makhachkala. The police video have fixed the armed robbery. The investigators say that the speed of operation allows to assume that the robbers have been former employees of secret services, as the operation was carried out fast and thoroughly, Komsomolskaya pravda marks.
‘Civic Nation’ Project Said Alienating All Ethnic Groups within Russia
March 21, 2009
Paul Goble
Vienna, March 21 – Efforts to promote a common civic nation in the Russian Federation threaten both the identities of the individual nations who make up the country’s population and the common culture and political loyalty they share in much the same way that the advocacy of a “Soviet nation” in the 1970s had the potential to do.
Those who advocate the creation of a civic Russian nation (“rossiiskaya natsiya”) say they are modeling it on the American nation, but in fact, Kamil Tangalychev, a Tatar poet from Mordvinia, it represents an updating of the idea of a Soviet nation (“sovyetskaya natsiya”), something the USSR Supreme Soviet rejected in 1977 as a threat to the country’s cohesion.
In an essay posted on the portal today, Tangalychev says that “the term ‘American nation’ serves as a weighty argument [in the minds of some like Valery Tishkov, the director of the Moscow Institute of Ethnology and Anthropology] for the creation of a faceless conglomerate under the name ‘Russian nation’”.
Indeed, the poet continues, the Moscow ethnographer, who is also a prominent member of the Social Chamber, argues that such an entity already has come into existence and insists that those who deny that reality appear to be blinded by “a lack of enlightenment, narrow-minded nationalism, or political ambitions.”
But in reality, Tangalychev says, many of the most thoughtful people in the Russian Federation oppose this concept, concerned as were Soviet officials a generation ago that efforts to promote a common “nation” as opposed to a common “people”(“narod”) “can destroy or at least harm” the capacity of “people of various ethnic background to live on one land.”
Forcing people to give up their ethnic identities for a civic one in this way represents a threat to the largest ethnic nation, the Russians, and the smallest of the peoples of the North, Tangalychev argues. And he cites with approval Aleksandr Solzhenitsyn’s dire warning on precisely this point:
“Today the very memory that ‘we are Russians’ has again begun to disturb society. By the way, a ban on that has been placed not on us alone: any recollection of national membership is considered to be shameful now. [But] only a people that has preserved its organic spiritual connection with its ancestors is worthy of enriching the spiritual experience of the world.”
If Russia were a nation of immigrants like the United States, Tangalychev says, then the idea of a civic nation might be appropriate. But Russia not only is not a nation of immigrants but also has evolved a system in which many nations live together as one people, something that could become impossible if individuals are told to exchange their ethnic nation for a civic one.
The great Russian historian Nikolay Karamzin, the writer notes, “called us the Russian (‘rossiiskiy”) people, but this is in no way the same thing as ‘a Russian [“rossiiskaya”) nation.’ The word ‘people’ unlike the word ‘nation’ defines the chief thing that unifies us, a common Motherland in which we live and develop,” with many cultures and many tongues.
“Perhaps,” he writes, “it would have been simpler and more comfortable to have in the state a single ‘nation,’ but historical reality and the natural ethnic truth in Russia were and are different. And it is impossible to develop a country by ignoring this historical reality, one in which the superstructure contradicts the base.”
One of the reasons some of the advocates of a single civic Russian nation give for that idea is their fear of “’ethnic separatism’ in the national republics of the Russian Federation. “But,” he says, “a worthy national-cultural status for each people, above all the development and preservation of languages will be the most effective defense against ‘separatism.’”
Indeed, the whole complex of ideas associated with a single civic Russian nation, including among others the rejection of “friendship of the peoples” as an atavistic survival, is far more “able to give birth to national-ethnic dissatisfaction” -- the very threat the advocates of a civic Russian nation say their project will prevent.
Two parts of Tangalychev’s argument make it noteworthy. On the one hand, the most vociferous opponents of the “civic Russian nation” up to now have been ethnic Russian nationalists who see that idea as a direct threat to the survival of their ethnic nation. Tangalychev shows that many non-Russians see it in much the way.
And on the other, by drawing the comparison with the idea of a “Soviet nation” which Brezhnev-era officials rejected because of its dangers, the poet from Mordvinia is suggesting that promotion of a “civic Russian nation” could prove even more explosive in the Russian context than its rejected predecessor was in the Soviet one.
Moscow Set to Legalize Government Funding of Church-Held Property
March 21, 2009
Paul Goble
Vienna, March 21 – After pleading poverty and lobbying hard, the Russian Orthodox Church has won a major political victory, although it appears that it may have been knocking on a door that those inside were quite prepared to open. Specifically, Moscow has now agreed to push for a plan to pay for restoring church property even after it is returned to the Church.
The Russian Orthodox Church earlier won a major victory when the Russian government announced its support for draft legislation that would return almost all church property seized by the Soviets. Indeed, some commentators suggested that the Church would become the biggest landowner in the country, possibly owning even more than Gazprom.
But from the Church’s point of view that was not only untrue but also created some serious problems. On the one hand, the draft legislation calls for the return of such property for the use of the Church but explicitly denies the religious hierarchy from renting or selling the property under most conditions, thus limiting the Church’s income.
And on the other hand, that draft legislation specifies that once the Church reacquires the property, it is responsible for maintaining it as religious property, something that officials like Metropolitan Kliment, the Patriarchate’s administrator, now say the Church as a result of the economic crisis lacks the funds to do.
The Church’s need for government help was made even more directly by Archpriest Vsevolod Chaplin, deputy chief of the Church’s External Relations Department, who told parliamentarians a week ago that “it is obvious that [religious organizations] sometimes need help since their possibilities are limited.
From the point of view of the government and the society, such legislation by itself would create serious problems, making it far more difficult for the authorities to provide money to the Church given Constitutional prohibitions and possibly leading to the further decay of important cultural and historical monuments which many churches represent.
Now, after lobbying the government – although the Church hierarchy denies that it has done so – the government and the Church have come up with a solution, a new bill that would permit the government to continue to pay for the restoration of churches that are historical-cultural monuments.
On Thursday, Vice Prime Minister Aleksandr Zhukov announced the new bill, saying that it was “necessary to take measures of a legal nature which will create the necessary legal base for the possible financing from budget sources objects of culture of the Russian Federation which are being held as property by religious organizations”
“Kommersant” suggested that this represents a major shift in the government’s position, a clear tilt to the Church, but it appears more likely that this new arrangement reflects the recognition by some in the government of the problems that the earlier piece of draft legislation creates, problems that the Church has been at some pains to point out.
Indeed, a senior Duma deputy with whom the Moscow paper talked suggested that the new law would not have any change in the amount of money the government provides religious organizations – about three billion rubles (90 million US dollars) – but would ensure that it could legally continue after the property was returned to the Church.
The primary beneficiary of this arrangement will be the Russian Orthodox Church. At present, there are 6584 cultural and historical monuments in the Russian Federation with a religious connection. Of these, 6402 are Russian Orthodox, 79 are Muslim, 68 are Catholic, 13 are Evangelical Lutheran, 21 are Buddhist and one is Jewish.
Some civil libertarians are concerned this funding violates the Constitution’s requirement of separation of church and state, even though Russian officials say that they will be providing money for buildings and not for religious activities, a distinction familiar to people in many other countries.
But in Russia, there is another and perhaps more serious concern: the quality of restoration work conducted by the Church. Two weeks ago, Aleksandr Kibovsky, the head of the federal agency responsible for preserving Russian cultural objects, said that it was quite poor, thus raising questions about such funding.
However that may be, the Russian government and especially President Dmitry Medvedev is committed to spending money in this area, and yesterday “Rossiiskaya gazeta” reported on the start of restoration at the New Jerusalem Monastery, one of the sites they appear to care most about.
National Economic Trends
Govt to submit anti-crisis plan to Duma by April 6 - Vyacheslav Volodin
MOSCOW, March 23 (Itar-Tass) - The Russian government will submit an anti-crisis plan to the State Duma by April 6, secretary of the presidium of United Russia's General Council Vyacheslav Volodin said at a meeting with regional Party officials on Monday.
Volodin said amendments to federal budget - 2009 will be made on the basis of the anti-crisis plan, which the government approved as groundwork last week and is finalizing at present.
Addressing the heads of regional Party organizations, legislatures and factions in regional parliaments, Volodin urged them to carry out broad discussions of the plan by April 6, in order to be able to come up with proposals at the conference next Monday.
Russia may need up to five years to get out of crisis – Khristenko
MOSCOW, March 23 (Itar-Tass) - Russia may need three to five years to get out of the crisis, Russian Minister for Trade Industry and Trade Viktor Khristenko believes.
“Back in September last year I said it will take us at least three years to get out of the crisis, but most likely up to five years,” Khristenko said in an interview with the Itogi magazine on Monday.
Focusing on possible losses in the real sector, he said they would be different for different sectors. “But we shall never again have the pre-crisis level, we shall get out of this scrape with a different character of industry,” he stressed.
This character is outlined “in branch strategies, which we approved before” the crisis, he added. “Strange as it may seem, but if the crisis has not influenced these strategies,” Khristenko stressed. “We have only strengthened our resolve to implement them,” he added.
Khristenko compared the crisis with an illness of children – “unlike grownups they run a high temperature, but quickly develop immunity, and as a rule, there are no complications”.
“The Russian economy is a child, we have a higher ‘temperature’ than in the West, and symptoms are more acute, but we have all chances not to become chronics if we understand what we must part with in its structure, and what redo or create from scratch,” the minister for trade and industry emphasized in the interview.
Inflation may go down to 7,5% in Russia by 2011 – Kudrin
MOSCOW, March 22 (Itar-Tass) -- The Inflation rate in Russia may go down to 7,5% by 2011, Russian Deputy Prime Minister and Finance Minister Alexei Kudrin said in an interview with the Channel One news show “Voskresnyoe Vremya” (Sunday Time) on Sunday.
“We hope to reduce the inflation rate to 7.5% by 2011,” Kudrin said.
The Russian government hopes to keep the inflation rate within 13-14% this year. In the second half of 2009 the annual inflation rate will slow down to 10%, Kudrin said.
|Economy Shrinks by 8% In First 2 Months of 2009 |
| |
| |
|23 March 2009 Reuters |
| |
|The economy shrank 8 percent in the first two months of the year, the Economic Development Ministry said Friday, as First Deputy|
|Prime Minister Igor Shuvalov signaled that growth could return by the year's end. |
| |
|The Russian economy has been rocked by a collapse in oil prices, vast outflows of capital and waning demand for exports as the |
|global economic crisis intensified. |
| |
|Consequently, gross domestic product is likely to contract by 7 percent year on year in the first quarter, Economic Development |
|Minister Elvira Nabiullina told the government Thursday, according to the text of her speech published Friday. |
| |
|The ministry stuck by its forecast for full-year contraction of just 2.2 percent, suggesting that things could improve before |
|too long. That optimism was picked up by Shuvalov. |
| |
|"In some sectors, we are noticing more liveliness and a positive mood," he told reporters. "We are already near the bottom, and |
|we feel that by the end of the year we could have growth ... [But] it could be worse if the situation on the external market |
|deteriorates." |
| |
|Data suggest, however, that the situation stabilized in February -- even though the slowdown is in full swing and companies are |
|cutting thousands of jobs per day -- giving some cause for investors and politicians to feel more optimistic. |
| |
|Oil is now worth $5 more than the $41 per barrel year average factored into the government's revised 2009 forecasts and budget. |
|But any signs of light at the end of the tunnel could be quickly extinguished by a renewed slump in crude prices. |
| |
|"In an optimistic scenario of renewed world economic growth in 2010 and rising oil prices, the Russian economy could grow by |
|between 2 and 4 percent in 2010," Nabiullina said. |
| |
|She added that the realization of government anti-crisis measures -- worth some 1.6 trillion rubles ($47 billion) this year -- |
|would play a key part in the economy's turnaround. |
| |
|For now, data remains grim, but within the details there is reason for hope. Industrial production slumped 13.2 percent year on |
|year last month, the second-worst reading on record but an improvement on January's 16 percent contraction. |
| |
|Purchasing managers indexes for the services and the manufacturing sector have edged up in the past two months, though both |
|remain deep in contraction territory. |
| |
|Job losses have stabilized at 300,000 per month, while nominal wages have risen from January's eight-month low. A 14.1 percent |
|fall in capital investment was less than expected. |
| |
|"Stronger than expected data might suggest that the Russian economy could have already passed through the worst phase of the |
|crisis," UniCredit said in a research note. "On the other hand ... all important indicators ... remain in deep negative |
|territory or on a strong downward trend. This provides continued downside risks to economic growth." |
Business, Energy or Environmental regulations or discussions
Oil prices may prop up Russian stocks
RBC, 23.03.2009, Moscow 10:41:41.Although the key U.S. stock indices closed in the red on Friday, Russian shares are unlikely to decline today, experts say, since higher oil prices may lend them strong support. In the oil sector, Surgutneftegas stocks are still technically attractive for investors. Meanwhile, Lukoil, Rosneft, and Gazprom have all been trading in a narrow range for a long time, and it seems impossible to predict their dynamics after they leave that range. The situation is clearer with Surgutneftegas, analysts point out, as its short-term rise target is RUB 25.5 (approx. USD 0.76) per share. In the morning, speculators may also turn their attention to Norilsk Nickel securities and Sberbank shares. On the whole, the euro is expected to continue appreciating against the dollar, and oil and gold prices may climb further, according to experts.
Russian Bid in Bangladesh
DHAKA, Bangladesh -- Russia entered a race with China and South Korea on Sunday to win a contract to build a 1,000 megawatt nuclear power plant for energy-starved Bangladesh, officials said.
Russian envoy Gennady Trotsenko presented a proposal to Yafes Osman, state minister for science and information and communication technology. China and South Korea have made similar proposals in the last year, but Bangladesh has yet to make a decision. "We have placed a proposal for undertaking efforts to set a nuclear power plant in Bangladesh," Trotsenko told reporters after meeting Osman. (Reuters)
Russia submits proposal to Bangladesh on setting up nuclear power plant
2009-03-22 18:58:50
DHAKA, March 22 (Xinhua) -- Russian Ambassador to Bangladesh Gennady P Trotsenko on Sunday submitted a formal proposal to Bangladesh's State Minister for Science and ICT Yeafesh Osman for setting up a nuclear power plant to meet the country's growing demand for energy, private news agency UNB reported.
Talking to reporters here Sunday after meeting with the state minister, the ambassador was quoted as saying Russia is making endeavors to assist Bangladesh to construct a nuclear plant to meet the energy needs in the south Asian country.
He said a Russian team of experts would soon come here to discuss this issue with the concerned authorities.
The state minister told reporters that they would study the proposal and hold further discussions on it with the Russian expert team.
Earlier, reports said Russia has proposed backing for a 1,000-megawatt nuclear power station in Bangladesh.
Bangladesh has a shortage of electricity with generation of around 3,500 MW against the demand of 5,000 MW.
Japan Atomic Cooperation?
Russia and Japan are expected to sign an atomic energy cooperation accord in May, Deputy Prime Minister Sergei Sobyanin said Saturday, Interfax reported.
The agreement between the governments may be signed during an official visit by Prime Minister Vladimir Putin to Tokyo, said Sobyanin, who also heads the supervisory board of Rosatom, the country's nuclear holding. (Bloomberg)
New Uranium Export Price
Atomenergoprom, the energy unit of Rosatom, and U.S. enrichment company USEC agreed Friday on new uranium export price terms from 2010.
The terms, which apply to exports equal to half of U.S. demand, should "give impetus to long-term commercial orders from utilities" after 2013, when a government accord regulating the sales expires, Atomenergoprom said in an e-mailed statement. Both the U.S. and Russian governments need to approve the new terms.
Russia has earned more than $7.6 billion in uranium exports to the United States since 1993, when the two countries signed a so-called Megatons to Megawatts nonproliferation agreement to process fuel from Soviet warheads for use in power plants, Rosatom said in January. (Bloomberg)
GE Continues to Invest in Russian Energy Sector
Saturday, March 21, 2009
Reinforcing its commitment to support the development of Russia’s energy infrastructure, GE Energy has signed an agreement to build a new facility in the Kaluga Region-about 180 kilometers southwest of Moscow—that will provide services for GE power generation equipment installed in Russia and the Central Asian States. The agreement to construct the facility was signed with the government of Kaluga Region, the Kaluga Region Development Corporation and the administration of Kaluga City at a ceremony held last evening at the Mansion of the Ministry of Foreign Affairs in Moscow.
The new Kaluga facility will include an office building and industrial shop, and in its first phase will handle the repair and service of GE heavy-duty gas turbine components. GE Energy anticipates that the facility, once fully operational, will employ between 50 to 100 highly skilled Russian engineers and service staff. Commissioning and startup of the center is scheduled for the first quarter of 2011.
“The establishment of the Kaluga service center is part of our multi-step localization plan for Russia,” said Rod Christie, CEO, GE Energy Central & Eastern Europe, Russia and CIS. “All of our work in Russia supports the country’s broader goals to promote energy security, efficiency and reduce environmental impact by utilizing world-class technologies.”
Christie added that GE’s commitment to the region includes “collaborating with Russian companies to supply products, services and technologies as well as ensuring that our Russian customers have full access to all of our technical, operational and engineering resources.”
The announcement to build the Kaluga service center follows the opening earlier this month of a new GE Energy sales, services and technology center in Moscow. Currently, 140 people work for GE Energy in Russia, but GE expects that workforce to grow as the company continues its localization efforts in the country and as customers modernize their energy assets.
The Kaluga service center will include an office building and an industrial shop dedicated to the latest technologies for the repair of heavy-duty gas turbine nozzles, transition pieces, combustion liners, power nozzles and rotors; and the repair and overhaul of Jenbacher gas engines.
GE has been active in Russia since the early 1900s, and today offers the full range of products and services for the country’s energy sector. GE’s installed base of equipment in Russia includes more than 400 gas turbines, 65 steam turbines, 300 compressors and more than 600 units of additional equipment such as air coolers, condensers, scrubbers and pipes. In addition, more than 230 Jenbacher gas engines have been delivered throughout Russia, in applications ranging from flare gas reduction programs to high efficiency combined heat and power projects.
Vedomosti, Kommersant
Government throws Russian debtors to foreign creditors
The government does not seem to think it a big deal if Russian assets get into the hands of foreign banks. First Deputy Prime Minister Igor Shuvalov said the debt UC Russian Aluminum (RusAl) owes the state would not be exchanged for the holding's shares. On the other hand, the government is not preventing RusAl's foreign creditors from obtaining stakes in the world's largest aluminum producer this way.
Investment banks do not think creditors would welcome the decision. The government is leaving them to face Russian debtors on their own.
Last fall, the Russian government spared no effort to prevent foreign banks from gaining control over Russian stakes pledged to secure large corporations' loans. Prime Minister Vladimir Putin initiated the policy, and RusAl was the first company to take out a $4.5 billion loan from the Development Bank (VEB) to clear a foreign loan secured with a 25% stake in Norilsk Nickel.
Alfa Group was issued $2 billion to bail the 44% VimpelCom stake out of Deutsche Bank. PIK, Sitronics and other companies took out smaller loans.
"It seemed at the beginning of the downturn that Russia had a lot of cash. Now the government has realized that its resources aren't unlimited and might not last the country throughout the hard times," said Yulia Tseplyayeva, chief economist with Merrill Lynch. "Officials must have realized that the crisis will last longer and have left shareholders to solve their own problems, possibly by attracting foreign investors."
"No one said foreign creditors could not gain ownership of a certain part of Russian assets. It is important that this part do not reach a critical mass," a government official explained.
The prime minister's spokesman, Dmitry Peskov, added it was important to avoid the bankruptcy of strategic companies. Finance Minister Alexei Kudrin said he did not rule out this risk, but confirmed the government's decision not to buy into UC RusAl to help it pay its debts.
The government has stakes in other companies, and will take care of them like any major shareholder. The money for this purpose has been earmarked, Kudrin said.
UC RusAl is not running a high risk of being controlled by a foreign owner. Two of the company's creditors said no one had offered them the possibility of trading off debt for shares. "We aren't interested in this, and would rather have our money back," one of them said.
State Will Let Foreign Lenders Seize Assets
23 March 2009 Reuters
Russian firms unable to repay debts to foreign lenders may have to surrender stakes to their creditors, First Deputy Prime Minister Igor Shuvalov said Friday, leaving indebted billionaires to fend for themselves.
Shuvalov said only a few Russian companies were off-limits to foreign shareholders and that the government would take a "friendly approach" to Western creditors seeking stakes in companies that owe them money.
"Some Russian investors have taken on such high debt levels that they have suffered injuries not compatible with life," Shuvalov told a news briefing.
Russia's once-mighty billionaires, who took on huge debts to fund growth when money was cheap, must repay $130 billion in corporate debt this year, a challenge that has grown tougher since the Kremlin halted bailouts to plug its budget deficit.
Shuvalov, one of two first deputies to Prime Minister Vladimir Putin, said Western creditors were more likely to want their debts repaid than to acquire stakes in ailing Russian businesses.
"They do not want to acquire assets, because it is extremely dangerous at the moment," he said. "No one needs assets at the moment, because they are worth nothing."
But he said the government would study any applications by international lenders to convert their debts into equity.
"If we don't like it, we will explain why. The list of [strategic] enterprises for which we are ready to fight is very limited. We are talking about only a few, not dozens."
The country, tackling a five-year peak in jobless rates as it heads into its first recession in a decade, has pledged more resources to social support and, analysts say, is less willing to support those who accumulated fabulous wealth in boom years.
Shuvalov said the government had no plans to nationalize United Company RusAl, the aluminum giant controlled by Oleg Deripaska, which has debts of about $14 billion.
"If we were to nationalize it, can you imagine how many applications we would get tomorrow?" Shuvalov said, referring to other companies who might ask to be nationalized.
"[Russian businessmen] are doing fine as far as their private lives are concerned. They have earned good money in the past few years and have spent well on their families," he said.
"Now, they would get rid of a bad asset and buy new ones in a couple of years? No, that would be an overly easy situation. ... We hope they will continue to work and pay debts back."
Shuvalov said he would oppose extending VEB's $4.5 billion loan to RusAl -- used partly to acquire its stake in Norilsk Nickel -- for another year when the facility expires in October.
He said the company could either refinance this loan at Russian commercial banks or find new shareholders.
Shuvalov also urged foreign investors not to be afraid of Russian courts. He said the most important cases would be reviewed by the Supreme Arbitration Court, which he said was free of corruption.
Rusal, Onexim agree on debt restructuring
RBC, 23.03.2009, Moscow 09:32:48.Rusal and Onexim Group have agreed to restructure Rusal's debt of $2.8bn, the two companies said in a joint press statement. The deal involves the conversion of $2bn of debt into Rusal's shares, boosting Onexim's share in Rusal to 18.5 percent, while the shares of other shareholders will change accordingly. En+ will be left with 53.8 percent, Sual will keep 18 percent, and Glencore 9.7 percent. The remaining debt of $800m will be restructured, and Rusal is poised to agree on the terms of such a restructuring deal with other creditors in the near future.
The accord signed between the aluminum and investment companies bounds Onexim not to use the put option on all of Rusal's shares it holds for the period while a standstill agreement with international banks - Rusal's creditors - is in effect, as well as help Rusal to achieve further restructuring deals in the future.
The deal with Onexim is yet another important stage in restructuring Rusal's debt, the statement indicates. Earlier, the company managed to push back the deadlines for repaying debt to international banks by two months, and reckons on reaching a standstill agreement before that time. These steps, along with the production optimization program, will help the company weather the crisis.
Rusal/Onexim: If this is the value of assets in Russia, everything is Buy!
UralSib
March 23, 2009
Onexim has agreed not to exercise its put option on any of its Rusal shares during
the period of the standstill agreement
Rusal leading a charmed life. Yesterday, UC Rusal (unlisted) and Onexim Group
(unlisted) announced that they have reached an agreement on restructuring Rusal's
$2.8 bln debt to Onexim. The parties agreed that $2 bln of debt will be converted
into Rusal shares. Following the deal, Mikhail Prokhorov's Onexim Group will increase
its stake in Rusal from 14% to 18.5%. The stakes of other shareholders will change
accordingly, with Oleg Deripaska's En+ holding falling from 57% to 53.8%,
shareholders of SUAL Group falling from 18.9% to 18%, and Glencore from 10.3% to
9.7%. The remaining $800 mln debt to Onexim will be restructured. Rusal intends to
agree the terms of the above restructuring with the rest of its lenders in the near
future. As part of the agreement, Onexim has agreed not to exercise its put option
on any of its Rusal shares during the period of the standstill agreement signed with
Rusal's international lending banks and to facilitate Rusal's further debt
restructuring. Rusal recently signed a two-month standstill agreement with its
international lending banks. During this period, Rusal will negotiate the terms of a
long-term debt restructuring.
$36 bln implied equity valuation. The transaction implies a staggering $36 bln equity
valuation for Rusal. Following this deal, Rusal will have an estimated $12 bln in debt.
We believe it is unlikely that Rusal will generate sufficient EBITDA to cover its
interest payments this year. It is hard to understand why Onexim would have agreed
to such a high valuation for a company that appears to be insolvent. This suggests
that there is a third party dictating the valuation.
A possible benchmark valuation. The implied valuation does not bode well for foreign
creditors. Should the deal be used as a benchmark valuation and the estimated $7.4
bln of debt owed to foreign banks be converted into equity at a similar ratio, foreign
banks would get no more than 17% in Rusal. Importantly, given the high valuation,
foreign banks would have to wait for aluminum to recover to something closer to
peak cycle prices before they could think of recovering their money.
VTB Capital writes:
Based on the increase in Prokhorov's stake in UC RusAl, the company is valued at
USD 36bn, which is not significantly lower than the USD 52bn at which it was valued
last autumn when Prokhorov became one of RusAl's shareholders. This is surprisingly
high, taking the impact of the crisis into account.
The news is obviously positive for the company as it takes another successful step
towards dealing with its high debt burden. Earlier, the company had agreed on a
two-month standstill with the international lending banks. However, UC RusAl has
enormous debt to pay this year: according to Kommersant, it totals some USD
8.1bn, including USD 1.8bn to foreign banks, USD 4.8bn to the Bank for
Development and USD 1.5bn to other Russian banks. USD 700mn of this debt is
interest payments.
Deripaska May Lose Control of Rusal With $14 Billion Debt Load
By Yuriy Humber
March 23 (Bloomberg) -- Oleg Deripaska, the billionaire aluminum magnate who was once Russia’s richest man, may lose control of his United Co. Rusal as it buckles under $14 billion of debt and plunging metal prices.
Lenders will meet this week for discussions and consider consolidating loans and swapping them for equity, said a banker familiar with the situation who declined to be identified as the talks are private. Rusal has until early May to renegotiate $7.4 billion owed to more than 70 foreign banks including ABN Amro NV, Citigroup Inc., BNP Paribas SA and Merrill Lynch & Co.
“At this stage, Deripaska’s stake is likely to fall below 50 percent,” said Michael Kavanagh, an analyst with UralSib Financial Corp. in Moscow. “Unless there are signs of an aluminum recovery, I can’t see how Rusal can be saved without using equity.”
Deripaska, 41, has lost 88 percent of his fortune in the past year, according to Forbes magazine, as Russian stock prices collapsed and the price of aluminum fell to a seven-year low. Russia won’t step in to help pay the debt of its largest aluminum producer, First Deputy Prime Minister Igor Shuvalov said last week.
Rusal isn’t counting on financial help from the government and plans to reorganize its borrowings and cut costs, the Moscow-based company said in an e-mailed response to questions. Sergei Babichenko, a spokesman for Deripaska, declined to comment on whether he may reduce his stake in Rusal.
Smelter Modernization
Yesterday, though, Deripaska agreed to trim his position in Rusal to 53.8 percent from 56.8 percent to restructure $2.8 billion of debt owed to billionaire Mikhail Prokhorov. Some $2.0 billion of the debt will be converted into Rusal shares.
Deripaska borrowed to modernize Rusal’s aging Russian smelters and expand into Guinea, Ukraine and Nigeria. Last year, seeking to create a diversified metals producer rivaling Australia’s BHP Billiton Ltd., Rusal took out a $4.5 billion loan to help fund the purchase of Prokhorov’s 25 percent stake in OAO GMK Norilsk Nickel.
Rusal sought to expand its output as global aluminum demand grew. The lightweight metal used in cars and beverage traded at a record high of $3,380 a metric ton in London in July. It has tumbled 56 percent since then as global demand for raw materials collapsed. State-owned lender Vnesheconombank gave Rusal a one- year bailout in October. Shuvalov said the facility shouldn’t be rolled over.
“He’s done some exceptional things, but he’s had the markets on his side,” said James Beadle, an investment strategist with Moscow-based Pilgrim Asset Management. “This is the worst crisis he’s ever faced.”
Unsolved Murders
Raised in the Krasnodar region in Russia’s south, Deripaska started trading while at college in Moscow. He later worked with investor Michael Cherney and was managing an aluminum smelter in Siberia at the age of 26.
In the mid-1990s, several groups vied for control of Russia’s aluminum industry, and unsolved murders accompanied the struggle, spawning the label aluminum wars. Deripaska and Cherney survived and pooled their assets, which were merged in 2000 with billionaire Roman Abramovich’s aluminum operations.
Cherney and Abramovich were later bought out and a merger with Russian rival OAO Sual Group and assets from Swiss trader Glencore International AG has left Deripaska with 53.8 percent of Rusal. Deripaska was ranked as Russia’s richest man in 2008 with his wealth estimated by Forbes at $28 billion. Rusal is valued by UralSib at $15 billion excluding debt, compared with $30 billion before commodity prices fell.
Output Cuts
Closely held Rusal doesn’t publish its profit. Revenue in the first half of 2008 was $8 billion on sales of 2.2 million tons of aluminum. ING Groep NV estimates earnings before interest, tax, depreciation and amortization may drop 64 percent to $2.1 billion this year.
Rusal and other aluminum makers have slashed output amid a global supply surplus. Alcoa Inc., the largest U.S. producer, last week forecast a second straight quarterly loss.
Servicing Rusal’s debt may require at least $1.5 billion a year, said Alexander Pukhaev, an analyst at VTB Capital in Moscow. Rusal must also repay the government bailout.
“Deripaska wants to retain equity control, but this is looking almost unfeasible given the kind of money he needs to raise,” said Mikhail Stiskin, an analyst with Troika Dialog in Moscow. “While outright bankruptcy is surely not an option, the shareholder structure may undergo significant changes.”
Should Rusal’s lenders take a stake in the company, that may only be a stop-gap while they try to find a buyer. The banks lack the expertise or desire to run Rusal, said Timothy McCutcheon, a partner with DBM Capital Partners in Moscow. The aluminum producer’s assets include six smelters in Russia Siberia region, which borders China and Mongolia.
“No bank in their right mind would seek a Siberian factory,” McCutcheon said.
Rusal should look to investors from China or the Middle East for cash, following the example of Rio Tinto Group, said Cary Pinkowski, a former investment banker at Canaccord Capital and now chief of Kola Mining Corp., a nickel and gold miner in Russia. “The Chinese would be a buyer of the metal.”
To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@
Last Updated: March 22, 2009 20:00 EDT
Court Backs Alfa in Loan Dispute
23 March 2009
By Anatoly Medetsky / The Moscow Times
A Moscow court on Friday ruled in favor of Mikhail Fridman's Alfa Bank in a loan dispute with Oleg Deripaska's property developer, despite the billionaires' vows of friendship three days earlier and a warning from President Dmitry Medvedev.
The Moscow Arbitration Court ordered struggling developer Glavmosstroi to pay 502.6 million rubles ($15 million) to Alfa in the overdue loan and fees, turning down the defendant's motion to allow time for an amicable settlement, Interfax reported.
Glavmosstroi, part of Deripaska's holding vehicle Basic Element, said it would appeal.
"Alfa Bank's tough stance in relation to Basic Element companies didn't change at all despite the assurances by ... Fridman of an intention to hold a constructive dialog and look for a mutually acceptable settlement of the debt problem," Glavmosstroi said.
The court battle went on after Fridman and Deripaska issued a joint statement Tuesday to say they would work to settle their disputes because they were friends. The statement followed Fridman's meeting with Medvedev earlier that day.
Medvedev harshly criticized banks, without naming any, last Monday for being too aggressive in their attempts to recover overdue debts, which could scuttle some companies. Rising unemployment is a major concern for the government.
Basic Element says its units, including aluminum giant United Company RusAl, owe a total of $650 million to Alfa Bank. A Basic Element spokesman could not immediately comment Friday on whether Alfa changed course in any of its other lawsuits with the company.
An Alfa Bank spokeswoman declined immediate comment Friday.
The Glavmosstroi payment will aggravate its financial situation but leave it enough funds to continue business as before, said spokesman Vitaly Korolyov.
Baturina May Sell Gazprom Stake to Repay Debt, Vedomosti Says
By Denis Maternovsky
March 23 (Bloomberg) -- Yelena Baturina, the billionaire wife of Moscow Mayor Yury Luzhkov, said she may sell her stakes in state-run Russian companies including OAO Gazprom to pay off 15 billion rubles ($450 million) of debt, Vedomosti said.
Baturina is also considering selling all the shares she controls in OAO Rosneft and OAO Sberbank to pay off debt held by her ZAO Inteko holding company, she told the newspaper in an interview published today.
Baturina owns about 1 percent of Sberbank, 0.44 percent of Gazprom and 0.03 percent of Rosneft, stakes that have a combined market value of about 18.5 billion rubles, Vedomosti said.
To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@
Last Updated: March 23, 2009 01:51 EDT
MMK earnings plummet more than 80% in 2008
MOSCOW. March 23 (Interfax) - Magnitogorsk Iron & Steel Works (MMK)
(RTS: MAGN) saw its net profit to Russian Accounting Standards (RAS)
plummet more than 80% in 2008.
The Russian steel major said it closed the fourth quarter with net
losses of 23.4 billion rubles. It has said net profit was 33.4 billion
rubles in the nine months ended September 30, so profit for the year was
10 billion rubles, down from 51.7 billion rubles in 2007.
Net losses were 3.8 billion rubles in the third quarter of 2008.
| |
Polymetal said to be buying gold deposit from Leviev group for $70 mln
MOSCOW. March 23 (Interfax) - Polymetal (RTS: PMTL), Russia's
biggest silver producer and a major gold producer, has agreed to buy the
Sopka Kvartsevaya gold deposit in the Magadan region from companies
controlled by Israeli businessman Lev Leviev in a deal worth up to $70
million, the Kommersant newspaper said, quoting unidentified sources.
The paper said the license holder, LLC Rudnik Kvartsevy, was sold
last week to a consortium of five firms acting on Polymetal's behalf.
The will require another couple of months to structure, and clearance
from the Russian Federal Antimonopoly Service, the paper's sources said.
Ruis, the holding company for Leviev's Russia-based assets, was not
immediately available for comment, and Polymetal declined to comment.
Sopka Kvartsevaya contained C1+C2 reserves of 20.215 tonnes of gold
and 573.1 tonnes silver as of 2006. Commercial development was due to
begin this year at a rate of at least 100,000 tonnes of ore.
The Leviev group also controls the Karalveem gold deposit in
Chukotka, among other assets.
Polymetal acquires another gold deposit
VTB Capital
March 23, 2009
might use it as resource base for its Magadan processing assets - continues
increasing its reserves
News: Kommersant, quoting an unnamed source, writes that Polymetal has agreed
to acquire the Sopka Kvartsevaya gold deposit in Magadan Region. The deal is
reportedly valued at close to USD 70mn. According to the paper, the deposit's
(C1+C2) reserves stand at 20.2 tonnes of gold and 573.1 tonnes of silver.
Our View: The news has not come as a surprise since Polymetal's CEO Vitaly Nesis
has previously announced that the company had made a short-list of five targets for
acquisition and we believe that the Sopka Kvartsevaya gold deposit was the first of
them. The deposit is located in Magadan Region (as is the company's major Dukat
deposit), and in our view might be considered as an additional resource base for the
company's Magadan mining and processing assets. This will obviously allow
Polymetal to escape significant capex expenses on deposit development.
It is positive that Polymetal continues to increase its reserves - the company has
recently acquired the Goltsovoye deposit (also located in Magadan Region) and
announced its first resource estimate for Birkachan and Oroch deposits, which
significantly increased the company's reserves.
Restrictions on Imports to Aid Poultry Plants
23 March 2009 Bloomberg
CHICAGO -- Russian poultry-meat output will increase 8.8 percent in 2009 as the government restricts imports and producers receive subsidies to offset expenses, the U.S. Foreign Agricultural Service said Friday.
Broiler-meat production may total 1.74 million tons, up from 1.6 million tons in 2008, attaches Erik Hansen and Mikhail Maksimenko said in a report. Imports may drop 15 percent to 980,000 tons from 1.155 million tons in 2008.
"Continued government imposition of import-restricting policies" may contribute to domestic output gains, the report said. "The fact that the production forecast is still positive in the middle of a serious global financial crisis is directly related to investment-credit subsidies."
Russia was the largest importer of U.S. chicken meat last year, buying 1.8 billion pounds, down 3.8 percent from 2007, according to U.S. Department of Agriculture data.
In a separate statement, the USDA said Russia was halting poultry imports from three U.S. plants, including facilities owned by Tyson Foods and Sanderson Farms, after reporting that shipments contained the residue of antibiotics.
The USDA "has requested information from Russia," spokeswoman Amanda Eamich said Friday. "We will then work with the establishments to determine if in fact the antibiotics and anti-parasitics were used and will then take appropriate actions."
Repayment Sought After State Firm's Default
23 March 2009 Bloomberg
Finance Leasing, the state-owned company that defaulted in December, faces demands for early repayment on as much as $250 million of bonds.
FLC missed $12 million of coupon payments on its $150 million of 10 percent bonds due 2013 and $100 million of 9.25 percent four-year notes, said Nicolas Genechesi, who helps manage $400 million at Forum Asset Management in New York. Investors held a conference call March 16, where they decided to press for "accelerated" repayment on the 2013 securities, said Genechesi, who holds $3.7 million of FLC's debt.
The airplane leasing company is owned 28.7 percent by the government and 51.8 percent by United Aircraft Corporation, the state-controlled aerospace group. Government agencies provided so-called comfort letters, saying they support the bonds while stopping short of a formal guarantee. Russian companies have $100 billion of debt coming due this year.
"If the government doesn't resolve the FLC default very quickly, all Russian state-owned companies will be viewed differently by domestic and foreign investors," Genechesi said. The default may "end up costing them many billions of dollars," he said.
Kirill Baranov, FLC's deputy chief executive, declined immediately to comment on the creditors' demands.
Nail Malyutin, the company's general director, said in a statement on March 13 that FLC was "actively" trying to resolve the default and was "seriously inclined to solve it and fulfill our obligations to creditors."
Andrei Saiko, a spokesman for the Finance Ministry, declined to comment.
"We are carefully monitoring the situation, but it hasn't required our direct involvement," UAC spokesman Konstantin Lantratov said Thursday. "We have received no requests from FLC."
Investors in FLC's defaulted four-year bonds are also considering pushing for early repayment, Genechesi said.
No other government-supported company has failed to service its foreign-currency debt since Russia defaulted on its sovereign bonds in 1998, said Mikhail Galkin, a fixed-income analyst at MDM Bank. "However, we've already seen local-currency defaults by state companies," he said.
Investors in FLC's debt include 40 to 50 foreign and Russian financial institutions, said bondholder Genechesi.
Government support for the notes "makes them quasi-sovereign," and "you may end up in a situation where other Russian companies might find it difficult to refinance," Genechesi said.
Investors in FLC's $150 million of securities will ask the bonds' trustee, Bank of New York Mellon, to request full repayment "within three weeks," Genechesi said. FLC and the government failed to respond to investors' requests for payment, he said.
FLC's debt was downgraded six levels to Caa3, nine steps below investment grade, by Moody's on Jan. 20, following the company's default.
The ratings firm cited lack of state support for the company despite its "close ties with the government" and said its finances were being hurt by a "rapidly worsening" aircraft industry.
MARCH 23, 2009
Russian Default Gives Investors the Jitters
Failure to Pay Interest Is the First by a State-Owned Company in a Decade; an Isolated Case?
By JOANNA SLATER in New York and ANDREW OSBORN in Moscow
A tiny default by a Russian aircraft-leasing company is sending ripples through the much larger market for the country's debt.
The default by Finance Leasing Co. on $250 million of bonds is the first by a Russian state-owned company on foreign debt since the country's 1998 financial meltdown.
That is rattling foreign investors, who worry that Russia could allow many more companies to renege on billions of dollars of debt while it grapples with an economic and financial crisis.
"It's clear that the capacity and willingness of the government to...provide support to a large number of entities is declining," says Ed Parker, head of emerging Europe sovereigns at Fitch Ratings.
After suffering a currency crash and a default on its sovereign debt a little more than a decade ago, Russia began to recover thanks to soaring energy prices.
That drew back foreign investors. And when times were good, Russian companies borrowed heavily in international debt markets, to the tune of more than $215 billion since 2006, according to Dealogic.
Now they are facing an environment where it is impossible to get funding from abroad and the local banking system is under huge strain.
The ruble has also tumbled, making it more onerous to repay debts denominated in dollars or euros.
J.P. Morgan Chase & Co. estimates that Russian firms need to refinance or pay off at least $40 billion in foreign-currency borrowing this year alone. To do that, many will need help from the Russian government.
FLC's default has raised the ire of investors, a number of whom said they participated in the issue only because of the company's ties to the government.
"It was the first Russian bond I bought in 10 years, and I regret it," says Michel Lahaie, head of Axiom Investment Management, a Hong Kong money manager who invested funds both personally and on behalf of clients. "Frankly, we're all stupid for lending money to Russia."
The government has made it clear that it can't help the entire corporate sector with its foreign-currency debt.
Earlier this year, it scrapped a $50 billion fund aimed at helping companies with such borrowing.
In addition, Russia has depleted its considerable foreign-exchange reserves, spending more than one-third of what was once a $600 billion stockpile since last August.
Some analysts believe FLC will prove to be an isolated case, since it seems to involve specific issues of mismanagement.
However, others note that by allowing FLC to default, the message from the government appears to be "we'll take care of the big guys, but after that, you've been warned," says Jonathan Schiffer, lead sovereign analyst for Russia at Moody's Investors Service in New York.
Investors shouldn't assume that "just because a company is directly or indirectly owned by the state that that provides some sort of comfort for bondholders," he says.
FLC is a subsidiary of United Aircraft Corp., a large Russian state-owned conglomerate that includes the makers of the famed MiG fighter planes and Sukhoi jets. The state directly owns a 29% stake in FLC and a further 52% indirectly through United Aircraft, itself 90% state-owned.
In December, FLC defaulted on $250 million in debt held by investors including major American, British and European banks, institutional investors, and hedge funds, as well as Russian banks.
On one part of that borrowing, it failed to make its first interest payment. The $150 million five-year bond was issued last June with a coupon of 10%. Moody's rated the debt two notches below investment grade. It said the company enjoyed a "medium" level of government support and noted that "a default on the part of the company could cause embarrassment, as it would imply government mismanagement in an area of great economic importance."
FLC declined requests for comment.
Maxim Sysoev, a spokesman for United Aircraft Corp., FLC's parent company, said the situation was "complex" and the company was monitoring the situation to see if FLC "can cope on [its] own."
Some investors remain convinced that Russian authorities will step in.
"They really are wise enough to know that this is a crucial issue and a crucial industry," says Francois Nordhof, an asset manager at Banque de Commerce et de Placements, a Swiss private bank that is one of the bondholders.
If you need foreign investors in the future, he says, "you need not to disappoint them, even in the current turmoil."
Aeroflot to Bid for CSA
CSA, the Czech national airline being sold by the government, is likely to receive bids from Aeroflot and Air France-KLM Group on Monday, when initial expressions of interest are due.
Aeroflot will register its interest before the deadline, deputy chief executive officer Lev Koshlyakov said Friday. Air France CEO Pierre-Henri Gourgeon said March 2 that the company planned to bid, and the airline said Friday that it had nothing to add. (Bloomberg)
STX to Help Build Shipyard
ST. PETERSBURG -- STX Shipbuilding agreed to help build a $1 billion shipyard near the Baltic Sea port of Primorsk, Russia's biggest oil terminal, investment company Summa Capital said Friday.
The shipyard will be complete in five years and focus on building oil and gas tankers with a dead weight of as much as 250,000 tons, Summa said in a statement. South Korea's STX, which owns Europe's largest shipyard, will contribute shipbuilding technology, Summa said. The Russian company will finance the project with loans and its own funds and plans to recoup its investment in 11 1/2 years. (Bloomberg)
Help for Timber Companies
Russia may lift timber export tariffs for certain "priority" projects after the government approved a set of measures to combat the economic crisis.
Financial support for Russia's biggest forest industry ventures, including loans and interest payment assistance, will also be made available, the government said in a document published on its web site late Thursday. (Bloomberg)
Russian Company, a Competitive Carrier, Selects VocalTec for VoIP
Monday March 23, 2009, 4:51 am EDT
HERZLIA, Israel--(BUSINESS WIRE)--VocalTec Communications Ltd. (NasdaqCM:VOCL), a global provider of carrier-class multimedia and voice-over-IP solutions for communication service providers, announced today that Russian Company, an alternative carrier in Russia, selected VocalTec's technology to further develop its VoIP network. Through this collaboration, Russian Company can now seamlessly connect their legacy telephony network with VocalTec's new packet based network. The deployment was achieved in partnership with Sintera, a leading Russian systems integrator.
As part of their VoIP infrastructure, Russian Company will deploy VocalTec's Essentra™ BAX, an application server enabling the delivery of residential and hosted enterprise VoIP services to their subscriber base. In addition, Russian Company will utilize VocalTec’s Essentra™ CX, a scalable carrier-grade media gateway controller, to enable the termination of their IP traffic to the PSTN as well as for the termination of legacy PABX traffic to PSTN by CX (IUA and M3UA).
VocalTec is one of the first telecom vendors to receive comprehensive Class-5 certification for its VoIP softswitch solution, including certification for local node deployments under the new requirements issued by the Russian Ministry of Communications. This deployment provides further validation that VocalTec’s Essentra solution meets all mandatory quality, functionality, legal and interoperability requirements, for commercial deployment throughout Russia.
"We are very much impressed by VocalTec's high-quality solutions," said Alexander Astrahanchev, General Manager at Sintera. "We rely on VocalTec's ability to quickly respond to our customers’ needs, allowing us to bring cutting-edge communication services. VocalTec enables us to remain at the technological forefront of VoIP by its continuous introduction of new and improved applications to the marketplace."
"We look forward to expanding Sintera's service offering with our end-to-end solutions, as well as leveraging Sinetra’s deep knowledge of the Russian market to increase our presence in the region," said Ido Gur, President and CEO of VocalTec. “Russia is a strategic market for VocalTec and I strongly believe that Sintera's experience as a leading systems integrator in Russia coupled with VocalTec's capabilities in VoIP technology is a winning combination."
Activity in the Oil and Gas sector (including regulatory)
Russia can raise oil output if price above $50
Mon Mar 23, 2009 5:04am EDT
MOSCOW (Reuters) - Russia can sustain and even raise oil output if prices stay above $50 per barrel, Russia's Energy Minister said, adding he believed it would make no sense to merge oil majors Rosneft (ROSN.MM: Quote, Profile, Research, Stock Buzz) and Surgut (SNGS.MM: Quote, Profile, Research, Stock Buzz).
Sergei Shmatko also said Russia and China were close to finalizing work on a $25 billion loan to Rosneft and oil pipeline firm Transneft and added Gazprom was ready to raise supplies to Poland to compensate for lower supplies from gas trader RosUkrEnergo.
"Today when the price of oil is approaching $50 per barrel, the eyes of oil firms are beginning to light up again. If it stays at above these levels, I'm sure they will ramp up production," Shmatko told reporters
"I read about this in the newspapers, but I do not share this idea," Shmatko said about media reports that state oil major Rosneft could merge with private Surgut.
"Tell me whether there is any point in making major decisions on consolidation amid the market fall and on the back of the economic crisis?"
(Reporting by Vladimir Soldatkin, writing by Oleg Shchedrov)
Nord Stream, South Stream implemented according to schedule – Sechin
MOSCOW. March 22 (Interfax) - Economic problems are not hindering
the construction of the Nord Stream and South Stream pipelines, and
Russia remains a reliable provider of energy resources, Deputy Prime
Minister Igor Sechin has said.
"All major infrastructure projects, including Nord Stream and South
Stream, are being implemented according to plan," Sechin said in an
interview with the Vesti Nedeli program on Rossiya television on Sunday.
"The environmental aspects are in the final phase of negotiations,
and preparations are nearly over on intergovernmental agreements. Some
of them have been signed already," he said.
"Setbacks in energy shipments to Europe in January indicate that
diversification is a must," Sechin said.
"We are well aware of our responsibility to the customers, and
we'll guarantees reliable supplies," he said.
Nord-Stream on track
2009-03-20
Sebastian Sass, head of Nord Stream's EU representation, says progress with the underwater Baltic pipeline is good and that construction can start early 2010.
The Russian-German Nord Stream company recently published its more than 1000-page environmental assessment report. According to Mr. Sass, head of Nord Stream's EU representation, progress is good in the project.
Mr. Sass, a citizen of Finland, also underlines that despite the financial crisis, the company has no problems securing interest from investors.
-Of course, if you look at commodity prices, they are not what they were last year. And of course, we need to take a close look at what the development is in terms of interest rates, or liquidity of banks. But if we look at the interest of investors, we are regarded as a top industry which is safe, Mr. Sass says to .
Russia to develop promising deposits to win new energy markets
MOSCOW, March 22 (Itar-Tass) - Russia will develop promising oil and gas deposits to win an access to new sales markets of energy resources, said Deputy Prime Minister Igor Sechin in an interview with the Vesti Nedeli programme of the Rossiya TV channel, which was telecast to Far Eastern regions of the country.
According to the vice-premier, Russia will “develop new deposits which will be aimed at winning a foothold on other sales markets”. Thus, Sechin continued, it will be possible “to remove a redundant volume from traditional markets which do not permit now our companies to work efficiently”.
“We started developing infrastructure, making use of the fact that prices for components and commodities now permit to carry out large-scale construction of infrastructure projects,” he added. “For instance we implement successfully enough construction of the new trunk pipeline with the exit to the Pacific (VSTO).”
Sechin added that plans which Moscow discussed with Beijing, include designing and construction of a siding from the VSTO to China; and this work will start this April.
The vice-premier noted that implementation of all major infrastructure projects, including Nord Stream and South Stream, passes according to plan. “We are about to come to ecological agreements, and preparation of intergovernmental agreements with several states is nearing completion,” Sechin noted. “Some of such agreements have been signed. The interruption with deliveries to Europe last January showed the need for diversification.”
“We understand our responsibility in this sense before consumers and will ensure reliability of our guaranteed supplies,” Sechin assured.
According to the vice-premier’s forecasts, the Russian economy will remain dependent on oil and gas over the next decade, but this is not only dependence, but also definite chances for the country. “We created our gold and hard currency reserves precisely thanks to these possibilities, the so-called buffer of security which now helps our enterprises to ride out crisis difficulties,” he underlined.
“But if we are to speak about my dream,” Sechin continued, “I should dream that we should refine crude only at our enterprises in 10-15 or maybe 20 years, retaining added value, making new goods, supplying our consumers with goods which conform to the strictest standards, requirements and parameters which are needed by the market.”
Transneft to get first tranche of loan for ESPO branch to China
Monday, 23 Mar 2009
Interfax citing Mr Nikolai Tokarev Transneft president as saying that Russian pipeline operator Transneft expects to receive the first tranche of a loan totaling USD 10 million immediately after construction commences on a branch of the East Siberia-Pacific Ocean oil pipeline to China.
Mr Tokarev said "Under the terms of the contract, Transneft should be given the first tranche after construction starts on the branch to China. He said that construction on the branch to China is slated to start in April 2009. He added that in April, our builders will be at the site ready to start working.”
Mr Tokarev said everything has already been prepared for this. Tenders have been called, contractors have been selected and it is clear where financial resources are coming from since the project was carried out last year with a Chinese grant. Everything is in place for the construction to start in late April. He said that that an inter-governmental agreement between Russia and China would be submitted to the two countries' parliaments for ratification around March 20.
Russian and Chinese officials met in Beijing on February 17th this year to sign documents on China's USD 25 billion loans to Rosneft and Transneft in return for Russian crude oil supplies to China. Under the agreement, Rosneft will receive a loan of USD 15 billion in exchange for delivering 15 million tons of crude to China for 20 years, while Transneft will receive USD 10 billion.
Energy Firms in Cuba Talks
Cubapetroleo and a Russian group that includes Gazprom and LUKoil are in talks to explore for oil off the coast of Cuba.
Cupet, as Cuba's state-owned oil company is known, may sign a contract with the group by the end of the year, Manuel Marrero, senior oil adviser to the Cuban Basic Industries Ministry, said Thursday in an interview. The Russian group has "the technology and the financial resources to go into deep waters" off Cuba, he said. (Bloomberg)
First LNG from Russia's Sakhalin II to India
Fri Mar 20, 2009 10:06am EDT
NEW YORK, March 20 (Reuters) - The first cargo of liquefied natural gas from Russia's Sakhalin II export project was heading to the Hazira terminal in India, not Japan, according to AISLive ship tracking data on Reuters.
Project operator Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) had previously said that the cargo was intended for Japan. (Reporting by Edward McAllister; Editing by John Picinich)
Rosneft, Surgutneftegaz Tie-up Unnecessary Now, Minister Says
By Stephen Bierman
March 23 (Bloomberg) -- OAO Rosneft, Russia’s largest oil company, shouldn’t take over Siberian crude producer OAO Surgutneftegaz now because the move would create no immediate benefits, Russia’s energy minister said.
“The oil sphere is already working in a consolidated enough manner,” Sergei Shmatko told reporters late March 20 in Moscow. “On the wave of a falling market, on the wave of an economic crisis, is there any point in making a serious decision on consolidation?”
Speculation of a tie-up followed a report by Russian newspaper Vedomosti last month that Vladimir Bogdanov, Surgutneftegaz’s chief executive officer, may be on a list of candidates for state-run Rosneft’s board.
Surgutneftegaz’s $20 billion cash stockpile may prove too attractive for debt-laden Rosneft to pass up, Yulia Bushueva, an analyst with UniCredit SpA in Moscow, also said in a Feb. 18 note. Rosneft must pay down or refinance $7 billion in debt this year, according to its year-end financial statement.
Shmatko said the state had already attained a number of goals in consolidating the industry.
“From the point of view of cooperation, between the state and the company, and cooperation between the companies, there is no problem,” Shmatko said.
The candidacies of Bogdanov and Nikolai Tokarev, president of pipeline operator OAO Transneft, for the Rosneft board are yet to gain approval within the Russian government, Vedomosti reported today, citing unidentified government officials. First Deputy Prime Minister Igor Shuvalov considers the two nominations “debatable,” the newspaper said.
To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@.
Last Updated: March 23, 2009 03:01 EDT
Novatek stocks to be driven by domestic demand for gas
RBC, 23.03.2009, Moscow 09:57:01.Novatek published its IFRS-based financial statement for the fourth quarter of 2008, indicating that its aggregate revenue for the period stood at $605m, down from $683m in Q4 2007, and $843m in Q3 2008. EBITDA reached $229m, a drop from $311m year-on-year and from $403m month-on-month. Net profit slid to a mere $97m, a drastic decrease from $202m and $234m, respectively. The gas producer's operating results were lower than expected, which analysts link to lower-than-expected growth of spending on materials, services and other items, as well as changes in the mining tax. The company channeled $4.9m of its expenses into reserves for tax payments and expenses on prospecting.
Analysts point out two non-monetary factors that had an impact on Novatek's net profit: around $100m in losses from the exchange rate difference, and a lower income tax (an extra $42.7m was received due to a cut in income tax to 20 percent from 24 percent). The gas producer also announced that with capital outlays at $1.3bn (compared with $769m in 2007) in 2008, its free cash flow was zero. Analysts expect the results to have marginal effect on the company's quotes, however, as the demand in Russia is currently viewed as the main driving factor for Novatek's shares.
On March 25, 2009, Head of the Shtokman Develpment Company will report on the Conference NEFTEGAZSHELF-2009
20.03.2009
Yuri Komarov, Head of the Shtokman Development Company will report on “Shtokman project: advanced opportunities for Russian industry” on March 25, 2009 at the Annual International Conference “Offshore Drilling Equipment”.
The Conference objective is to expand participation of Russian industrial enterprises in implementation of major offshore projects. The event will specify fundamental requirements for the manufactured equipment and its suppliers. Major Companies will impart their experience on the development of profitable oil and gas fields and plans as for the development of Russian offshore projects. The Participants of NEFTEGAZSHELF Conference will discuss recommendations for executive and legislative bodies and report on experience in working with the Contractors.
The Conference NEFTEGAZSHELF will be attended by Yuri Shamalov, Director General of Gazflot, Rudolf Ter-Sarkisov, Deputy General Director in Sevmorneftegaz, LUKOIL, Total, Statoil Hydro representatives and others. The event will be visited by the representatives of local and federal authorities (Minenergo, Minpromptorg, Rostekhnadzor, Rostekhregulirovaniye), as well as Company’s Directors involved in the designing and manufacturing of high-tech equipment.
The meeting between Offshore Project Operators and Equipment Designers and Suppliers will expand the delivery of industrial products onto the new markets. The Conference NEFTEGAZSHELF will form transparent and open markets of offshore Contractual works in the Russian Federation.
Gazprom
Gazprom Will Supply Gas to Northern Iran
20.03.2009 10:50
Russian Energy Minister Sergei Shmatko and Iranian Oil Minister Qolam Hosein Nozari signed a hydrocarbon memorandum on Sunday.
Under the document, Russia is to supply the country with fuel on account of the gas it buys from Turkmenistan.
In exchange for the deliveries of Central Asian gas, it may buy various types of fuel from the southern part of the Islamic republic, including oil, condensate and compressed gas.
Moreover, Russia intends to be involved in building a compressed gas plant in southern Iran.
The memorandum also envisions cooperation in initiating energy projects in both Russia and Iran as well as in third states, exchange of technology and financial resources for projects and establishing joint ventures.
Gazprom department head Stanislav Tsygankov say Azerbaijan's territory may be used for the deliveries of gas to neighboring Iran.
The South Caucasus republic commands a suitable infrastructure linking it to the gas distribution networks of both Russia and Iran.
"There is the gas pipeline from Azerbaijan, which is not being used at present but is quite operational," he said.
However, Nazim Samadzada, deputy head of Azerbaijan's state-controlled gas supplier Azerigas, said that although technical capacities are available for the transportation of Russian gas to Iran via Azerbaijan, this first requires signing of a respective inter-governmental agreement and agreeing on the transit fee.
In addition to that, Natig Aliyev, Azerbaijani Minister of Industry and Energy, did not rule out that problems would surface with gas transportation itself.
"If the planned transit transportation process fails to comply with Azerbaijan's interests, we will reject it," he warned.
IEA: Enough Gas for Now
The International Energy Agency, which has criticized Gazprom for not investing enough in new gas developments, said Friday that the threat of a Russian supply shortage was no longer current.
"This danger has been alleviated now by the effects of the financial crisis and the fall in demand for gas," Tim Gould, the IEA's program manager for the Caspian Sea region and southeastern Europe, told an energy conference in Moscow on Friday. "It remains to be seen whether this is a supply crunch avoided or a supply crunch postponed." (Bloomberg)
Sakhalin Mum on Shipment
Gazprom's Sakhalin-2 project loaded a test shipment of liquefied natural gas as it prepares to send the first cargo to Japan, a spokeswoman said.
"The test load was part of the startup process," Galina Dubina, a spokeswoman for Sakhalin Energy, said Friday. "It was not the first cargo, the first cargo will go to Japan." Sakhalin Energy can confirm neither the buyer nor the destination of the test load, she said. (Bloomberg)
March 20 2009 17:10
Moscow
On working meeting between Alexander Ananenkov and Igor Yudin
The Gazprom Headquarters hosted a working meeting between Alexander Ananenkov, Deputy Chairman of the Company’s Management Committee and Igor Yudin, Director General of Saturn – Gas Turbines.
The meeting discussed the prospects for further cooperation placing a focus on retrofitting the existing fleet of Gazprom’s gas pumping units between 2009 and 2010 and the relevant increase in purchases from Saturn – Gas Turbines.
Background:
On December 23, 2008 the Board of Directors approved the changes in the Provision on preferentially contest-based awards of contracts for the supply of goods, completion of works and rendering of services for Gazprom and its subsidiaries. Under the changed provision the suppliers of domestic goods will be granted additional preferences through 2010 when contracts are awarded for the supply of goods for Gazprom Group.
Additionally, Gazprom is stepping up a set of measures aimed at increasing the purchases of domestically produced goods through implementing the Program for assisting Russian companies in mastering new kinds of products with the application of innovative technologies.
Based on the results of the first quarter of 2009 the share of domestic equipment in Gazprom’s orders is forecasted to exceed 92 per cent of the whole total.
Saturn – Gas Turbines is an integral supplier of ground power equipment for the needs of petroleum industry and utility sector. The company is focused on engineering, production, after-sales service, installation and commissioning of gas-turbine units, comprehensive building of power-generating stations and production of equipment for nuclear power plants.
Gazprom: MinFin expects lower EU gas prices
UralSib
March 23, 2009
Lowered 2009 EU gas price forecast ... On Wednesday 18 March, Vedomosti
reported, citing unnamed Finance Ministry sources that in 2009 the average price for
gas supplied by Gazprom (GSBEX - Not Rated) to the EU will decline from the
previously expected level of $280/mcm to approximately $260/mcm. The reason for
the difference between the two forecasts is a downward revision in the ministry's
2009 Urals price forecast from $50/bbl to $41/bbl combined with a sharp decline in
gas demand.
... on the back of weak 1Q09 demand. Gazprom announced its 2009 EU gas price
estimate of $280/mcm during a meeting with investors on 6 February and
commented that it expected a slight decline in export volumes in 2009 to 170 bcm
from 179 bcm in 2008. According to the central dispatch office of the fuel and energy
complex, Gazprom's gas output in February 2009 was 39.56 bcm, which is down
18.2% on the same period in 2008 and 11.2% lower than in January 2009. Also, it
was reported last week in the media that volumes of gas exports to countries outside
the Former Soviet Union fell by 60% on the same period last year from January to
15 March, from 40 bcm to 24 bcm. The high export gas prices of 1Q09 limited gas
demand and out downward pressure on gas prices, but we expect gas demand to
recover in 2Q09 on the back of lower gas prices, which are following oil prices with a
6-9 month lag.
In 2009 gas export sales expected to fall 25%. These changes in Gazprom's export
plans do not come as a surprise, as we expected the company to revise its business
plan in response to 1Q09 gas demand. Based on our preliminary estimates, we
believe that in 2009 the volume of gas sales to the EU will only decline 3.8% YoY as
gas demand will start to recover in 2Q09 when gas export prices decline in line with
oil prices (i.e. following a 6-9 month lag). If correct, this would put the average 2009
export gas price at $339/mcm, which would result in a 20.2% decline in total
European gas sales in 2009 to $59 bln.
GROs: Gazprom Buyout in the Offing?
CIG
March 23, 2009
It's been almost two weeks since a new independent valuation of gas distribution
organizations (GROs), to be swapped by state-owned Rosneftegaz for a 0.89% stake
in Gazprom, was published, but market reaction to an impressive difference between
the valuation and current market prices has been muted at best. Apparently,
investors have lost all hope that a buyout offer would be forthcoming once Gazprom
consolidates the GROs. We would argue that as soon as investors feel an offer is in
the works, a number of oblgazes will inevitably demonstrate strong and rapid
growth. We consider Saratovoblgaz (upside: 341%), Voronezhoblgaz (225%),
Omskoblgaz (174%), Volgogradoblgaz (144%), and Smolenskoblgaz (122%) to be
the most undervalued stocks that at the same time enjoy decent liquidity by the
sector's standards.
So Will There Be a Buyout After All?
As a result of the transaction currently underway (the Federal State Property Service
is now transferring its stakes in 89 GROs, Rosgazifikatsiya, and a number of other
gas assets to state-owned Rosneftegaz, which will at a later stage exchange them for
0.89% of Gazprom equity), the state will establish control over the gas monopoly,
which, in turn, will see its stakes in oblgazes increase. On March 6, 2009, Interfax
released the results of an Economiko- Pravovaya Ekspertiza valuation that revealed
dramatic differences with current GRO market prices. This creates arbitraging
opportunities because after the deal is closed, Gazprom will be legally required to
offer a buyout of oblgaz minorities at the price of the deal. The fact that the market
effectively ignored this whole situation tells volumes about investor confidence in the
likelihood of a Gazprom offer. While we agree that an offer is far from certain at this
point, we believe this is because Gazprom will be hard-pressed to come up with an
estimated $1 bn in cash to buy out oblgaz minorities. This is why the gas giant will
probably attempt to wriggle out of the offer requirement. On the other hand, the
deal between Rosneftegaz and Gazprom is at arm's length, and therefore Gazprom
will be statutorily bound to offer a buyout at the deal price to minorities in any GROs
where it will end up holding 30%, 50% or 75% of equity.
Our Rating: Speculative We also attribute the lack of investor enthusiasm towards
GROs to the fact that small caps, having become excessively speculative, are out of
vogue at the moment to begin with. We thus wouldn't rule out that oblgazes could
rally sharply anytime, possibly on a rumor of an imminent Gazprom buyout offer. We
therefore recommend closely watching the GROs over the next few months, and rate
SPECULATIVE those oblgazes that offer an upside potential. We see the biggest
upside (i. e. the difference between the current offer price and the new valuation),
coupled with acceptable liquidity, in Saratovoblgaz (341%), Voronezhoblgaz (225%),
Omskoblgaz (174%), Volgogradoblgaz (144%), and Smolenskoblgaz (122%).
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