Russia - WikiLeaks
Russia 081201
Basic Political Developments
• Russia, India to boost anti-terror cooperation - Russia's president has praised India's response to the Mumbai terror attacks and pledged to step up anti-terrorism cooperation with the country.
• Medvedev’s India visit as scheduled - Mr. Medvedev is likely to be the first world leader to visit India after the Mumbai attacks. He is scheduled to start his maiden visit to New Delhi on December 5.
• Mumbai attacks may be linked with al-Qaeda, Russia’s top spy reasons
• RF, Norway bring into effect easier visa rules, readmission treaty
• Russia, Venezuela to start naval drills in Caribbean
• Latin America tour proves mutual interests to develop ties with RF
• Following visit Russian leader calls for bigger Latam role
• King of Bahrain to visit Russia on December 1-2
• Russian Envoy Warns NATO Over Ukraine Membership – BBC
• Gen Akhmetkhanov appointed N Ossetia Interior Minister
• Russian PM Putin To Hold Phone-in Thursday -Official Web site
• Russian hackers penetrate Pentagon computer system in cyber attack
• U.S. concept of uncontested nuclear strike unfeasible - rocket force commander (Part 2 Report: Russia to upgrade missiles - Interfax news agency quotes Col.-Gen. Nikolai Solovtsov as saying Russia's intercontinental ballistic missiles will be modernized to protect them from prospective space-based components of the U.S. missile defense system.
• Russia to deploy new missile from 2009: military
• Reports on resignation of higher military leaders is "blatant lie" – Russian Defence Ministry
• Russian military denies resignations
• Report: officers gagged over Russian reforms - Russia's top military officer has banned officers from talking publicly about sweeping reforms to the armed forces, an apparent effort to stem growing discontent among the military's top brass, a newspaper reported Saturday.
• Draft National Security Strategy discussed in Novosibirsk
• Anna Politkovskaya murder trial: Russia asks Interpol to detain suspect
• Hundreds protest Russian journalist's beating - A few hundred people have demonstrated in the Russian capital to protest an attack on a crusading journalist. Rights activists and opposition politicians joined colleagues and friends of Mikhail Beketov at Sunday's protest in Moscow.
• Bomb goes off near police car in Chechnya, no victims
• 3 police, civilian killed in attack on police post in Makhachkala
• Four killed in Makhachkala attack
• Failed systems prompted manual docking of cargo spacecraft to ISS -Mission Control Center (Part 2)
• Zyuganov reelected as leader of Russia’s Communist Party
• Boris Titov: 5 Ways to Manage Russia's Crisis - Finance Minister Alexei Kudrin always considered himself an advocate of the free market, while the members of Britain's Labor Party have often been criticized for being too socialist. Now it turns out that Kudrin is even more left-leaning than his British colleagues are.
National Economic Trends
• Ministers to review long-term financial market strategy
• Central Bank raises discount rate
• Russia's VEB decides to refinance commercial banks' foreign debt
• Customs Union Hardly Compatible with WTO - Russia’s government has signed a package of agreements on the uniform terms for tariff preference within the Customs Union. But a raft of documents legalized within the EurAsEC will become null and void once any member of the new alliance joins the WTO.
• Russia Manufacturing PMI Drops to Lowest on Record (Update3)
Business, Energy or Environmental regulations or discussions
• Russia stock market edges down on falling oil
• Euro’s mean weighted rate to rouble for “today” goes down
• Energy Ministry mulls aid to power sales companies
• Putin Dispels Power Sector Concerns - Prime Minister Vladimir Putin pledged Friday not to slow the development of the power industry, responding to concerns from Germany's E.On, Russian news agencies reported Friday.
A Russian twist in prospects for Jamaica's bauxite/alumina sector
• Russia May Lend Metal Companies $3 Billion More, Vedomosti Says
• Steel Sector: On VEB waiting list
• Russia's RUSAL nominates Prokhorov to Norilsk board
• Norilsk reports 9M08 production numbers
• Russia's Mechel, TMK seek $3 bln state loans-paper
• Coal Sector: Looking for state support
• Banking Sector: CBR hikes rates, widens bi-currency basket
• Sberbank and sector deposit flows: November trends
• Russia's Sberbank considers Hungary's OTP, Raiffeisen as M&A targets
• Russia's Alfa Bank says buys stake in smaller rival
• EuroChem increases stake in K+S to 15%
• Sistema increases pledge vs Sistema-HALS debt
• How a Russian-Norwegian partnership turned frosty - When a dispute between two cellphone companies, Telenor of Norway and Altimo of Russia, returned to court recently, it seemed fitting that one of the settings was the Siberian city of Omsk, home of a Soviet-era labor camp.
• Pirate attacks on shipping have upside for Russian railways
• Russian Railways transportation hit by crisis
• Moscow Points the Way With Airport Competition - While Most Nations Sport Monopolies, Rivalry Between Two Russian Gateways Ushers in Improvements for Carriers, Travelers
• Generation Companies: Putin supports initial plan of wholesale market liberalization
• X5 Posts Loss, Cuts Forecast, Investment Plans as Economy Slows
• Mutual Funds Still in Crisis, But Less So
• Hermitage claims further intimidation as Russian police arrest adviser
• New measures for Russian Arctic protection - The Russian Ministry of Natural Resources believes a new National Council should be established in order to meet the growing environmental challenges in the Russian Arctic.
Activity in the Oil and Gas sector (including regulatory)
• Russia slashes oil export duty - An oil export duty of $192.1 per tonne has become effective in Russia today.
• Russian players fail to get extra duty cut - Russia's Prime Minister Vladimir Putin has signed a decree cutting December oil export duties to the earlier announced levels despite a last minute attempt by oil producers to get a bigger cut.
• Russian oil to cost about $50/barrel in 09-deputy minister
• Putin Gives E.On a Guarantee - The German energy company E.On has asked Russian Prime Minister Vladimir Putin for a personal guarantee on the effectiveness of its investment in Russian energy and on fulfilment of contracts for the delivery of natural gas to Europe.
• China may finally get its Russian oil pipeline - There were many smiles and handshakes in Moscow last week as Russian and Chinese officials signed a deal aimed at supplying China with up to 600,000 barrels of oil a day while Beijing will lend Russian companies up to $30 billion for pipeline and oil field development.
• Top Management Changes at TNK-BP
• TNK-BP output woes on low oil price
• TNK-BP Will Buy Networks of Retail Sites in Russia and Ukraine for $891 Million by the End of 2008
• Oil price drop forces TNK-BP to axe jobs
• Glencore Acquisition of Russneft Neutral for Subsidiaries
• Other buyers preferred for Repsol over Lukoil - Spanish interior minister
• Raising Oil Output Still State's Goal
Gazprom
• Gazprom hopes Ukraine to pay its gas debt by year's end
• New Gazprom natural gas price formula may end need for annual talks
• Ukraine starts paying Russia gas bill-Gazprom,agency
• Gazprom cuts gas production
• Gazprom and PDVSA Sign Deal on Joint Examination of Venezuelan Block
• PDVSA, Gazprom Ink Agreement on Ayacucho 3 Block
• Gazprom, TNK-BP delay Kovykta deal again
• Schlumberger signs advanced technology agreement with OAO Gazprom
• Gazprom, Schlumberger Sign Advanced Tech Agreement
• Russia, Serbia to Sign Papers on Oil, Gas Projects on Dec 5
• Regulator sets final fine on Gazprom Neft at 1.3 bln rubles
• Gazprom consolidates control in TGK-1
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Full Text Articles
Basic Political Developments
Russia, India to boost anti-terror cooperation
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The Associated Press
Published: November 30, 2008
MOSCOW: Russia's president has praised India's response to the Mumbai terror attacks and pledged to step up anti-terrorism cooperation with the country.
The Kremlin says Dmitry Medvedev expressed condolences and support in a telephone conversation Sunday with Indian Prime Minister Manmohan Singh.
It says Medvedev and Singh stressed their intention to increase anti-terror cooperation and would discuss the issue during Medvedev's planned visit to India in early December.
Russia and India feel threatened by terrorists with links to Pakistan.
Pakistan supported Islamic guerrillas that fought Soviet troops in Afghanistan in the 1980s, and Russia says militants active in its Caucasus region have ties to al-Qaida and other foreign groups.
Medvedev’s India visit as scheduled
Vladimir Radyuhin
MOSCOW: The terrorist attacks in Mumbai will not cause any change in Russian President Dmitry Medvedev’s plans to visit India next week.
“There are no plans to postpone the President’s visit scheduled for early December, unless the Indian side makes other proposals,” said Kremlin spokeswoman Natalia Timakova, according to the RIA Novosti news agency. Mr. Medvedev is likely to be the first world leader to visit India after the Mumbai attacks. He is scheduled to start his maiden visit to New Delhi on December 5.
Mr. Medvedev and Prime Minister Vladimir Putin have both sent messages to the Indian leaders condemning the “horrendous” terror strikes and voicing strong support for measures taken by India to end the attacks.
Meanwhile, a Russian daily reported the terrorists who attacked the Taj hotel released Russian nationals after seeing their passports. Nine employees of the Russian arms exporting company Rosoboronexport safely left the Taj after the attackers checked their identity papers.
“The terrorists let go the Russians after seeing their passports,” the Rossiiskaya Gazeta reported. The Russian Foreign Ministry said no Russian nationals had suffered in the attacks.
Mumbai attacks may be linked with al-Qaeda, Russia’s top spy reasons
30.11.2008
The terrorists involved in multiple attacks in Mumbai, India, killing almost 200 people could be closely linked with Osama bin Laden's al-Qaeda network, according to a top Russian security official. "The Russian secret services have information that certain groups that have carried out attacks in Mumbai have contacts with Al-Qaeda,'' news agency PTI cites the official, identified as a senior source at one of Russia's spy agencies. "In particular, the terrorist group Lashkar-e-Tayyiba. This group's militants undergo special training in al-Qaeda camps, located on the border between Pakistan and India.''
Earlier, Russian Federal Security Service (FSB) head Alexander Bortnikov noted 'growing activity' of international terrorist organisations, which are trying to expand their activities beyond Afghan-Pakistan zone. "There is need to note growing activities of international terrorist organisations in the Afghan-Pakistan zone and in the countries of North Africa. A stable tendency to expand their activities to the other territories, including that of European states and our country is clearly visible,'' Director of the FSB is quoted RIA Novosti news agency as saying while chairing the National Anti-Terrorism Committee.
RF, Norway bring into effect easier visa rules, readmission treaty
MOSCOW, December 1 (Itar-Tass) -- The Russian-Norwegian governmental agreements on easier visa rules and readmission will come into force.
The first agreement “envisages an easier procedure of issuing single-entry visas for a period up to three months, as well as multiple visas for some categories of people,” an official at the Russian Foreign Ministry said.
“Such categories of people, as businesspeople, scientists, figures of culture, athletes, journalists, students and teachers, a wide range of relatives of citizens living in Russia or Norway will be exempt from excessive bureaucratic formalities for receiving Schengen visas,” the official said.
“Multiple visas for a period from one to five years can be issued,” the ministry’s official said. “The holders of diplomatic passports will be able to go on trips between the two countries in the visa-free regime that should give a qualitatively new impetus to contacts between officials of the countries,” he said.
The agreement unifies visa fees, which will cost 35 euros, and sets a standard period of visa issuance at not more than ten calendar days. “Meanwhile, such categories of people, are close relatives, who live legally in Russia or Norway, students, disabled people, scientists and members of official delegations will be exempt from visa fees,” the Russian Foreign Ministry’s official said.
Speaking on the bilateral agreement on readmission, the Foreign Ministry noted that the agreement aims “to provide effective procedures to return to the country of citizenship or permanent residence people, who are staying illegally in the Russian Federation or the Kingdom of Norway and to assist in the transit of such people.”
“The readmission agreement will be initially applied only regarding citizens of our countries or those countries, with which Russia has already signed similar bilateral agreements,” the official said. “As for citizens of other countries, the agreement will be applied for them three years after the foresaid agreement has come into force,” the Foreign Ministry official said.
The foresaid agreements coming into force were signed on June 8, 2007. They comply fully with the similar agreement, which Russia and the European Union signed and which entered into force on June 1, 2007.
Russia, Venezuela to start naval drills in Caribbean
CARACAS/MOSCOW, December 1 (RIA Novosti) - Russia and Venezuela will begin joint naval exercises in the Caribbean on Monday, lasting two days.
Four Russian and 12 Venezuelan ships will practice sea rescue operations and maneuvering, and conduct live-firing artillery drills. The exercises will include tactics to counter terrorism and drug trafficking, and will involve helicopters and planes, Russian and Venezuelan officials said earlier.
The Russian warships, led by the nuclear-powered cruiser Pyotr Veliky (Peter the Great) arrived in Venezuela on Tuesday - the first such deployment since the Cold War - ahead of the Russian president's first visit to the Latin American country.
The exercises are widely seen as Moscow's response to the United States' aid to Georgia after its brief war with Russia and U.S. plans to deploy missiles in Central Europe. Russia has denied any connection.
Two Russian strategic bombers carried out patrols along the coast of South America in October.
During their visit to Russia's Admiral Chabanenko destroyer last week, Russian President Dmitry Medvedev and his Venezuelan counterpart Hugo Chavez said the planned drills were designed to ensure stability in the region and were not aimed against third countries.
They said other Latin American states could join their countries' naval exercises in the future.
Latin America tour proves mutual interests to develop ties with RF
MOSCOW, December 1 (Itar-Tass) -- Russian Foreign Minister Sergei Lavrov considers as the most important outcome of Latin America’s tour of the Russian delegation led by President Dmitry Medvedev “a clear-cut and graphical confirmation of mutual interests to develop relations in all spheres.”
In his view, these interests primarily concern trade and economic cooperation, particularly investment cooperation, as well as military-technical, humanitarian, cultural and education cooperation. “We are building up on a pragmatic, commercial and market basis our cooperation with those countries, which President Dmitry Medvedev visited. But certainly with some benefits, which are granted in relations between any two friendly countries,” Lavrov said in an interview published in the Rossiiskaya Gazeta newspaper on Monday.
Latin America’s interest in Russia, though the countries of the foresaid region have earlier orientated only towards the cooperation with the United States, the Russian foreign minister explains with a multi-polar system taking shape and emerging new economic growth centers. “Economic growth brings about economic and political influence. New opportunities open up, particularly in the trade and the investment sphere, in a bigger number of countries, than it was before. The Latin American states are seeking to take advantage of these opportunities,” the Russian minister believes. “They are also willing to see political problems in the modern world solved under the principles of international law. We agree with them in this issue,” Lavrov said.
The Latin American states “are also willing to play the central role in the United Nations Organisation and are seeking for a lower external interference in conflict situations inside their region.
The Latin American states should decide themselves on how to build relations with their neighbors,” Lavrov said.
This approach to conflict settlement “is laid down in our proposal on a pan-European security treaty. We believe that these are the major reasons, why Latin American countries begin looking for partners not only in the North, but also in the East and the West, including Russia,” the Russian foreign minister said.
Following visit Russian leader calls for bigger Latam role
Russian president Dmitri Medvedev said he was very satisfied with his Latinamerican tour which took him to Peru, Brazil, Venezuela and Cuba because it enabled to re-establish strong links with the region. “Latinamerica is a special region, which we must admit in the last few years we did not pay the attention it deserves”, said the Russian leader in a video message in his blog in the Russian presidency site.
“Latinamerica is a region developing fast, which has a concentration of significant intellectual and natural resources, and most important the peoples of the region want to cooperate with Russia”, added Medvedev.
“I consider the trip extremely useful and we were able to re-establish or establish new links with countries with which we did not have such close affinities”, he emphasized.
“We are prepared to increase political, economic and military cooperation with Latinamerican countries and their leaders, particularly in a world with so many security problems and challenges”.
Medvedev is the first head of state of post Soviet Russia to visit Peru, Venezuela and Cuba.
“It’s good to listen to each other and to learn from each other”, said the Russian president who underlined the “very interesting conversation held with Cuban leader Fidel Castro, who for the last five decades has been one of the key politicians of the region and has gone through the most incredible events”.
During his Latinamerican tour Medvedev participated in the APEC forum (Asia-Pacific Economic Cooperation) held for the first time in Lima, Peru and later in the ALBA, Bolivarian Alternative for the Americas, conference organized by Venezuelan President Chavez in Caracas.
Russia under former president now Prime Minister Vladimir Putin has been displaying a more aggressive stand in Latinamerica and the Caribbean, which is seen as an effort from Moscow to counterbalance the US expansion in Europe particularly in the former Soviet satellites bordering Russia.
King of Bahrain to visit Russia on December 1-2
MOSCOW, November 30 (RIA Novosti) - King of Bahrain Hamad Bin Isa Al-Khalifa will visit Moscow on December 1-2 on the invitation of Russian President Dmitry Medvedev, the Kremlin press office said on Sunday.
"Russian-Bahraini talks at the highest level are planned for December 2," the press office said.
The Kingdom of Bahrain is a chain of islands in the Persian Gulf in Southwest Asia and is the smallest Arab country. Bahrain consists of three relatively large and a host of small islands 16 km (10 miles) east of the coast of Saudi Arabia and is linked to it by a causeway.
|Russian Envoy Warns NATO Over Ukraine Membership – BBC |
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|Sunday November 30th, 2008 / 16h33 |
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|LONDON (AFP)--Many politicians from North Artlantic Treaty Organization countries look at the world "like dogs" and see the |
|world only in black and white, Russia's ambassador to the military alliance told the BBC in comments released Sunday. |
|Dmitry Rogozin also said there was a "real threat that the Ukrainian state will fall apart" if it joins NATO, ahead of a meeting|
|of its foreign ministers in Brussels Tuesday, who will discuss the proposed candidacy of Ukraine and Georgia. |
|"Unfortunately, many NATO politicians look at the world - I'm sorry - like dogs," he told BBC television, according to a |
|transcript released by the broadcaster. |
|"Dogs see the world not in colour but in black and white. For us, NATO is an alien political bloc because entry into NATO for us|
|is closed off - they will never invite us in. |
|"And when this alien political bloc is getting closer to our borders, it's hugely alarming." |
|He added that if Ukraine were to "force the pace" of entry to NATO, it would provoke "a total political crisis in the country. |
|"By comparison, the current instability will look like a soap opera," he said. "Broadly speaking, there is a real threat that |
|the Ukrainian state will fall apart." |
|Ukraine and Georgia, both former Soviet states which are neighbors of Russia, had hoped to secure a Membership Action Plan, |
|which helps countries wanting to be NATO members prepare, at the two-day Brussels meeting. |
|But U.S. Secretary of State Condoleezza Rice has warned that they are "not ready for membership." |
|Analysts say concerns about Georgia's suitability were raised by the war in August which saw Russian troops pour into the |
|country, while worries about Ukraine are linked to political turmoil and rows between President Viktor Yushchenko and Prime |
|Minister Yulia Tymoshenko. |
|Gen Akhmetkhanov appointed N Ossetia Interior Minister | |
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|VLADIKAVKAZ, December 1 (Itar-Tass) - Major-General Artur Akhmetkhanov has been appointed North Ossetia’s new Interior | |
|Minister, the republic’s government has reported. Akhmetkhanov who has earlier occupied the post of the deputy interior | |
|minister of Bashkortostan, on Monday will be introduced to the personnel of the North Ossetian Interior Ministry. | |
|Lieutenant-General Sergei Arenin headed the North Ossetian Interior Ministry since 2005. Several high-profile crimes have been | |
|committed in the republic over the past year, including the murder of head of the republic’s directorate for combating | |
|organised crime Mark Metsayev and head of the criminal investigation department Vitaly Cheldiyebv, a terrorist act in the | |
|centre of Vladikavkaz, assassination attempt on the city’s vice mayor Mairan Tamayev and murder of mayor Vitaly Karayev. None | |
|of the crimes has been solved. North Ossetia’s head Taimuraz Mamsurov has called the work of the republic’s law enforcement | |
|agencies “a failure.” | |
|Akhmetkhanov was born in Bashkortostan in 1962. He graduated from Bashkortostan State University and Administration Academy of | |
|the Russian Interior Ministry. He is a lawyer by education. | |
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|Russian PM Putin To Hold Phone-in Thursday -Official Web site | |
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|Sunday November 30th, 2008 / 13h48 | |
|MOSCOW (AFP)--Prime Minister Vladimir Putin will hold a live phone-in with ordinary Russians on Thursday, an official Web site | |
|said, in a move that has stoked speculation about his future political ambitions. | |
|The televised phone-in will be a repeat of a custom Putin started when he was president and his maintenance of the tradition | |
|while prime minister has been seen as evidence of ambitions to return to the Kremlin. | |
|"The conversation with Vladimir Putin will take place on December 4 at midday (0900 GMT)," the Web site set up to organize the | |
|event announced Sunday. "Vladimir Putin... will answer your questions." | |
|The nationwide phone-in will be broadcast on the Rossia state television channel, as well as radio, and viewers are requested | |
|to send their questions in advance by telephone or by internet. | |
|The repeat of the phone-in is being seen as further evidence that Putin still holds the real power in Russia, despite ceding | |
|the presidency to his anointed successor, Dmitry Medvedev, in May. | |
|Kremlin-proposed constitutional amendments increasing presidential mandates from four years to six have also been seen by | |
|critics as a move to prepare the way for a new Putin presidency. | |
|During Putin's presidency, the phone-in became a national tradition where he answered dozens of questions from ordinary | |
|Russians on everything from missile tensions with the West to the most local issues in the provinces. | |
|But this time, economic concerns are likely to be a major concern as Russia grapples with the effects of a global slowdown and | |
|a fall in energy prices. | |
|The phone-in, in the past, has allowed Putin to show his awareness of the average Russian's problems. | |
|During his last call-in session as president in 2007, Putin lashed out at the U.S.-led war in Iraq as a "dead end" and famously| |
|said outside powers hoping to seize Russia's oil wealth were indulging in "political erotica." | |
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|Russian hackers penetrate Pentagon computer system in cyber attack |
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|Computer hackers suspected of working from Russia successfully penetrated Pentagon computer systems in one of the most severe cyber attacks|
|on US military networks. |
|By Alex Spillius in Washington |
|Last Updated: 12:11AM GMT 01 Dec 2008 |
|The electronic attack was so serious that Adm Michael Mullen, the chairman of the joint chiefs of staff, briefed President George W Bush |
|and Robert Gates, the defence secretary. |
|Defence officials told the Los Angeles Times that the attack struck computers within the US Central Command, which oversees Iraq and |
|Afghanistan, and involved malicious software - known as "malware" - that permeates a network. |
|"This one was significant, this one got our attention," said an official, speaking anonymously. |
|Officials did not disclose the extent of the damage and would not elaborate on the reasons for believing the assault originated in Russia. |
|The Pentagon and other US government departments face repeated cyber attacks, especially from Russia and China, either from individuals or |
|indirectly from those countries' governments. |
|Within the past 18 months Russia has been accused of orchestrating major electronic attacks on neighbours Estonia and Georgia. |
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|U.S. concept of uncontested nuclear strike unfeasible - rocket force commander (Part 2) |
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|MOSCOW. Dec 1 (Interfax-AVN) - The United States will be unable to |
|deliver a nuclear missile strike at Russian territory without any |
|retaliation, Commander of the Russian Strategic Rocket Force Col. Gen. |
|Nikolai Solovtsov told Interfax on Monday. |
|"Is such a concept possible in practice? I am sure it is not," |
|Solovtsov said, commenting on the concept of an uncontested first |
|nuclear strike debated in the United States. |
|"The U.S. concept of an uncontested first nuclear strike implies |
|the complete neutralization of any response from the Russian strategic |
|nuclear forces, that is the destruction of all strike missiles," |
|Solovtsov said. |
|"It is believed that the bulk of Russian strategic missile systems |
|would be destroyed in the places of their deployment in a pre-emptive |
|counter-force strike of U.S. strategic offensive forces. The remaining |
|launched Russian missiles would be eliminated by U.S. missile defense |
|systems," he said. |
|"The Americans will never manage to implement this scenario because |
|Russian strategic nuclear forces, including the Russian Strategic Rocket |
|Force, will be capable of delivering a retaliatory strike given any |
|course of developments," he said. |
|"The existing and even more so the future Russian missile attack |
|warning system will be capable of promptly identifying a massive nuclear |
|missile strike at Russian territory and sending appropriate information |
|to state and military command posts," Solovtsov said. |
|"After receiving authorization from the Supreme Commander-in-Chief |
|of the Russian Armed Forces it will not take our strategic rocket force |
|more than two-three minutes to carry out the task of launching missiles. |
|This means that the strike group of the force is always ready for a |
|strike of reply," he said. |
|In case of such a strike "most of the missiles will be fired before |
|the warheads of the adversary strike the deployment areas of missile |
|formations," he said. |
|"This is guaranteed by the high operative and technical readiness |
|for immediate combat use and also the promptness and stability of the |
|combat command in conditions of resisting the adversary," the general |
|said. |
|Up to 96% of launch facilities of the rocket force are in due |
|readiness for launch on a daily basis, he said. "This guarantees the |
|task of striking key targets constituting the core of the military- |
|economic potential of any aggressor," he said. |
|"However, we are also prepared for the worst case scenario in a |
|nuclear conflict. Thanks to the mobile component of the strike group |
|with enhanced survivability, the Rocket Force has the necessary |
|potential to carry out missions in case of a so-called deep reply strike |
|when missiles are launched after a nuclear strike of the aggressor," |
|Solovtsov added. |
|"This is not a groundless statement. It is based on the results of |
|simulating various scenarios of the breakout and development of nuclear |
|missile conflicts," he said. |
|The grouping of advanced RS-12M2 Topol-M and RS-24 missile systems |
|that are expected to be introduced will be highly effective in |
|penetrating the U.S. layered missile defense system, he said. |
|"In the final account all these factors will guarantee the |
|fulfillment of the combat tasks of the Strategic Rocket Force in various |
|military-strategic conditions," Solovtsov said. |
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|Report: Russia to upgrade missiles |
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|58 minutes ago |
|MOSCOW (AP) — A top Russian general is quoted as saying the military will upgrade its missiles in response to U.S. plans to deploy weapons |
|in space. |
|Interfax news agency quotes Col.-Gen. Nikolai Solovtsov as saying Russia's intercontinental ballistic missiles will be modernized to |
|protect them from prospective space-based components of the U.S. missile defense system. |
|Solovtsov is the chief of Russia's Strategic Missile Forces. |
|Russian officials have criticized U.S. plans for space-based weapons, saying they could trigger a new arms race. Washington has resisted |
|efforts by Russia and China to negotiate a global ban on weapons in space. |
|Solovtsov also reportedly said Monday that the military will commission new RS-24 missiles with multiple warheads. |
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|Russia to deploy new missile from 2009: military |
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|by Staff Writers |
|Moscow (AFP) Nov 28, 2008 |
|Russia will from December 2009 deploy its new RS-24 intercontinental missile, designed to counter defence systems like the controversial US|
|missile shield, the military announced Friday. |
|The announcement of the deployment of the RS-24, a multiple-warhead, nuclear-capable missile, came amid continued disagreement between |
|Moscow and Washington over US missile defence plans. |
|"It is expected the new missile complex including the RS-24 intercontinental ballistic missile will be deployed with Russian forces from |
|2009," Nikolai Solovtsov, the commander of Russia's missile forces, told Russian news agencies. |
|"It is planned that the main regiment equipped with this missile... and one squadron will be put on combat duty in the Teikovo missile unit|
|in December 2009," he said, referring to a base northeast of Moscow. |
|The military on Wednesday successfully test-fired the RS-24 for the third time, launching it from northern Russia and hitting targets 6,000|
|kilometres (4,000 miles) away on the Kamchatka Peninsula that juts into the Pacific Ocean. |
|The earlier tests took place in May and December 2007. Experts and Russian news agencies have said the missile is capable of carrying three|
|nuclear warheads. |
|The military has said the RS-24 is designed to overcome air-defence systems such as the controversial US missile shield planned for |
|deployment in eastern Europe. |
|Moscow has repeatedly expressed its fury over the plans of outgoing US President George W. Bush to place a missile defence radar system in |
|the Czech Republic and linked interceptor missiles in Poland. |
|President Dmitry Medvedev and Prime Minister Vladimir Putin have urged Barack Obama to drop the plans when he takes over the White House in|
|January but the US president-elect has yet to reveal his intentions. |
|The RS-24 is a new missile which builds on the technologies of Russia's Topol-M missile but has the novelty of multiple independently |
|targetable warheads, according to the Russian military. |
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|Reports on resignation of higher military leaders is "blatant lie" – Russian Defence Ministry |
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|30.11.2008 |
|The Ministry of Defence of the Russian Federation denied mass media reports that a group of higher military leaders had submitted official |
|reports on resignation from military service, news agency Interfax says. "These messages is nothing but blatant lie", news agency cites |
|Colonel Alexander Drobyshevsky, acting chief of the press and information service of the Russian Ministry of Defence. This is how he |
|commented on the information of some mass media that acknowledging their disagreement with the modernization of Armed Forces, a group of |
|higher military leaders allegedly had submitted official resignation reports. |
|The chief of the Main Intelligence Directorate of the General Staff, General Valentin Korabelnikov, was mentioned among them. Army General |
|Korabelnikov has been holding this post for 11 years, the leadership highly evaluated his work in the Chechen Republic and Kosovo, daily |
|Kommersant writes. He has been always considered as one of the "stable" higher military leader. |
|Besides the newspaper writes that in the army already there were cases of the open discontent with the new reform. The measures of |
|confidence in this connection become tougher: dialogue with journalists is forbidden to officers, infringers will be dismissed and even |
|criminal proceedings will be brought, according to Kommersant. |
|Russian military denies resignations |
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|Published: Nov. 30, 2008 at 2:41 AM |
|MOSCOW, Nov. 30 (UPI) -- The Russian Defense Ministry called reports that top officers have resigned to protest proposed reforms "brazen |
|lies" Saturday. |
|Col. Alexander Drobyshevsky, a spokesman for the ministry, also responded to reports of a crackdown on information about the proposed |
|changes in the military by Gen. Nikolai Makarov, the chief of staff. |
|"A number of deputy defense ministers are now on missions to the military districts to explain these issues to the servicemen," he said. |
|Previously this month, Makarov reported "the creation of a new look for the army" to the Duma, Kommersant reported. The plan included |
|cutting the number of regular and reserve officers by 160,000. |
|News media in Moscow have reported the resignation of Gen. Vladimir Isakov, deputy defense minister and chief of the logistics service, and|
|Gen. Vladimir Isakov, who heads the General Staff's main investigation department. |
|"These reports are brazen lies," Drobyshevsky said. |
|Report: officers gagged over Russian reforms |
| |
|By MIKE ECKEL – 1 day ago |
|MOSCOW (AP) — Russia's top military officer has banned officers from talking publicly about sweeping reforms to the armed forces, an |
|apparent effort to stem growing discontent among the military's top brass, a newspaper reported Saturday. |
|The daily Kommersant also reported that six top-ranking officers have tendered their resignation amid Defense Minister Anatoly Serdyukov's |
|reforms, aimed at modernizing Russia's 1.1 million-member armed forces. |
|Defense Ministry spokesman Col. Alexander Drobyshevsky could not be immediately reached for comment. But Interfax and RIA-Novosti quoted |
|him as calling the report of resignations a "brazen lie." |
|The Kremlin is grappling with growing opposition in the military to the most sweeping overhaul of Russia's armed forces in more than a |
|generation. |
|Last month, Serdyukov announced he was cutting hundreds of generals, disbanding nine out of every ten army units and abolishing a bulky |
|Soviet-era structure focused on divisions and regiments in favor of smaller brigades. The number of junior officers, such as lieutenants, |
|will be increased by 10,000 to 60,000. |
|Kommersant reported that Gen. Nikolai Makarov, head of Russia's joint chiefs of staff, on Nov. 11 signed an order barring officers from |
|publicly discussing the reforms. Violators would be discharged and would face criminal charges, the paper reported. |
|It was unclear whom the prohibition specifically concerned. |
|Kommersant also said six senior officers have tendered their resignations since the Nov. 11 order, including Gen. Valentin Korabelnikov, |
|the head of the joint chiefs' Main Intelligence Directorate, known as GRU. |
|Russian media have been filled with reports of the discontent among officers, and President Dmitry Medvedev didn't attend the annual Armed |
|Forces conference of top officers from all services, held in Moscow on Nov. 11. The daily Nezavisimaya Gazeta said Medvedev's absence — the|
|first time since 1996 that a Russian president had missed the meeting — reflected the Kremlin's unease with the discontent. |
|Earlier this month, several retired generals publicly warned that the reforms were destroying Russia's military capability and suggested |
|the Kremlin could face open revolt. |
|Russian national pride has surged in recent years. Extensive state-run TV coverage of military maneuvers — such as sending long-range |
|bombers on trans-Atlantic missions or a naval flotilla to the Caribbean for exercises — have given Russians renewed confidence in their |
|armed forces. |
|Pride has also surged in the wake of the August war in the South Caucasus, where Russian troops humiliated Georgia's US-trained armed |
|forces. |
|Draft National Security Strategy discussed in Novosibirsk |
| |
|NOVOSIBIRSK, December 1 (Itar-Tass) -- Heads of legislative and executive bodies of the regions, integrated in the Siberian Federal |
|District, as well as heads of the law enforcement agencies, took part in a meeting for discussing the draft National Security Strategy of |
|Russia for a period ending in 2020, which was held herе. The meeting was chaired by Secretary of the Russian Security Council Nikolai |
|Patrushev. |
|“The main characteristic feature of the draft strategy, which is under discussion today, is the idea that Russia’s national security should|
|be ensured by putting into effect the national strategic priorities,” Patrushev said. According to his information, “it is a working |
|version of the documents,” and he expected suggestions from the participants in the meeting. |
|The main purpose and task of the Strategy as a system-forming document is the creation of inside and outside conditions promoting the |
|fulfilment of the strategic national priority tasks, in combination with the priority tasks of the stable development of the Russian |
|Federation. With this in view, the Strategy is to coordinate the work of state bodies, of state, corporate and public organisations for the|
|protection of Russia’s national interests and the upholding of the security of the individuals, the society and the state. |
|“We shall discuss the draft document in the Far Eastern Federal District on Tuesday, after which it will be discussed in the Volga Federal |
|District,” Patrushev said. |
|Anatoly Kvashnin, an official representative of the President in the Siberian Federal District, attended the meeting. |
|The draft Strategy has already been discussed and approved at meetings held in the Urals, Southern, Central and North-Western Federal |
|Districts. |
Anna Politkovskaya murder trial: Russia asks Interpol to detain suspect
Russia has asked Interpol to detain a suspect over the 2006 murder of journalist Anna Politkovskaya.
Last Updated: 11:27PM GMT 30 Nov 2008
Politkovskaya, whose articles in the Novaya Gazeta newspaper were deeply critical of the Kremlin's actions in war-torn Chechnya, was shot dead outside her Moscow home on October 7, 2006 in an apparent contract killing.
Four of her killer's accomplices are currently on trial in Moscow - but whoever ultimately ordered her murder has never been identified and the killer is believed to be on the run.
"We know who carried out this crime and he is now the subject of an international arrest warrant," general prosecutor Yuri Chayka said in an interview with state television.
He added that Russian authories were working with the international police agency, Interpol.
"I was at Interpol recently and discussed the question during meeting with the secretary general of Interpol. Now we are working actively on this," the Russian official said.
Of the four suspects on trial, one is a former agent of the FSB security service, the successor to the Soviet-era KGB. Pavel Ryaguzov is suspected of providing Politkovskaya's home address to the killer.
Two of the other defendants, Dzhabrail and Ibragim Makhmudov, are Chechen brothers accused of following her in her last weeks.
The fourth defendant is Sergei Khadzhikurbanov, a former police investigator from the Moscow police's organised crime unit. All the defendants have entered not guilty pleas.
Hundreds protest Russian journalist's beating
14 hours ago
MOSCOW (AP) — A few hundred people have demonstrated in the Russian capital to protest an attack on a crusading journalist.
Rights activists and opposition politicians joined colleagues and friends of Mikhail Beketov at Sunday's protest in Moscow.
Beketov is in a coma. He was found badly beaten near his home in the Moscow suburb of Khimki, where he edits a local newspaper. He has criticized local officials and investigated allegations of corrupt and illegal destruction of forests in the area.
A similar protest was held in Khimki on Saturday.
Demonstrators said Beketov's beating shows how far authorities in Russia will go to silence critics. Attacks on journalists who investigate alleged wrongdoing by the authorities are common.
Bomb goes off near police car in Chechnya, no victims
GROZNY, December 1 (Itar-Tass) -- An explosive device went off near a police car in Chechnya, ITAR-TASS learnt at the law enforcement bodies of the republic.
The incident occurred in the Staropromyslovsky district of the city of Grozny on Sunday. “An unidentified explosive device went off near a UAZ police car with four policemen inside that stopped not far from the market Real in the Staropromyslovsky highway,” a law enforcer specified.
According to the source, there were no victims among the personnel. The car was damaged.
Investigation is underway.
3 police, civilian killed in attack on police post in Makhachkala
MAKHACHKALA, December 1 (Itar-Tass) -- Three policemen and a pedestrian were killed in an attack on a police post in Makhachkala, Dagestan, on Sunday, the press service of the Makhachkala police department told Itar-Tass. The police killed an attacker in the shootout.
The clash has broken out at about 8.30 pm Moscow time on Sunday at the crossroads of Gamidov and Gagarin Streets. Unidentified gunmen, the number of whom has not been clarified yet, opened fire at a police post. A police officer died instantly, another two policemen were severely injured. One of them died on the way to hospital, another one died at the hospital during a surgery. The pedestrian died of lethal wound.
The policemen returned the fire and killed an attacker, who is under identification now.
The search operation for several accomplices of the killed bandit is underway. They escaped from the scene by car.
Four killed in Makhachkala attack
MAKHACHKALA. Nov 30 (Interfax) - Four people have been killed in a
clash between a police patrol and unidentified criminals in Makhachkala
on Sunday evening, the press service of the city police department told
Interfax.
"One police officer was killed on spot after an attack on a police
patrol. Two policemen died in hospital. One of the attacked was killed
by return fire. He is being identified," the press service said.
A police UAZ vehicle on patrol was attacked at the intersection of
Gamidov and Gagarin streets in Makhachkala at about 8.40 Moscow time.
| |
Failed systems prompted manual docking of cargo spacecraft to ISS -Mission Control Center (Part 2)
KOROLYOV, Moscow region. Nov 30 (Interfax-AVN) - Failed systems of
the first 'digital' Progress M-01M cargo spacecraft prompted its manual
docking to the International Space Station (ISS), Vladimir Solovyov,
Russian Mission Control Center's Flight Director for the ISS, told
journalists.
"A number of problems with automatic approach emerged at the final
stage of the docking," Solovyov said.
"Frequency information was lost and the Kurs (Course) system
trackers were toggling," he said.
"As a result we brought the spacecraft 30 meters from the ISS and
ordered the crew to switch to the manual control of the spacecraft," he
said.
Mission Control Center experts will study reasons behind the
failures, he said, acknowledging that this was not the first failure
aboard the cargo spacecraft. Experts had remarks to the work of the
spacecraft's systems and measuring complexes on the Earth during a four-
day flight of the scarcest to the ISS.
Solovyov pointed out that there were problems with the delayed
opening of the Progress' antenna after it was inserted in the orbit. He
did not rule out that heat and dynamic loads during the taking-off were
the reason behind this.
Zyuganov reelected as leader of Russia’s Communist Party
MOSCOW, December 1 (Itar-Tass) -- Gennady Zyuganov was reelected as chairman of the Central Committee of the Communist Party of Russia on Sunday. He leads continuously the party since 1993 and chairs the Central Committee of the Communist Party since 1995.
The 13th Communist Party Congress, which ended on Sunday, has formed a new lineup of the party’s Central Committee and the Central Control and Audit Commission.
At its first organizational plenum after the congress the Central Committee has formed the Presidium and the Secretariat of the party and elected its chairman.
The top party officials remained the same. Ivan Melnikov was reelected as Zyuganov’s first deputy and Vladimir Kashin as Zyuganov’s deputy. Vladimir Nikitin was reelected as chairman of the Central Control and Audit Commission.
The Communists increased the numerical strength of all party’s governing bodies. Central Committee’s secretary for organizational issues Valery Rashkin noted that 147 people were elected in the Central Committee, as 126 people were elected in the committee four years ago. Some 37 people (31 before the congress) were elected in the Central Control and Audit Commission. The number of candidates in the party’s Central Committee has increased sharply from 57 to 105 people. Some 82% of them are newcomers.
The Central Committee Presidium increased to 16 members (by four people), the number of members in the Secretariat has doubled (from five to ten people).
“Almost all of them have academic degrees, were elected in the State Duma and other elective bodies. Such lineup will work effectively,” Gennady Zyuganov said about newly elected members of the party’s supreme bodies.
5 Ways to Manage Russia's Crisis
01 December 2008
By Boris Titov
Finance Minister Alexei Kudrin always considered himself an advocate of the free market, while the members of Britain's Labor Party have often been criticized for being too socialist. Now it turns out that Kudrin is even more left-leaning than his British colleagues are.
At a time when British Prime Minister Gordon Brown is preparing to reduce that country's value-added tax by 2.5 percent, to 15 percent, Kudrin is fighting hard to keep Russia's VAT at current levels.
The crisis has forced Britain to shift its policies toward the right. Its members now understand that it is unwise to overburden the business community with taxes and, at the same time, expect it to drive the economy. When businesses are slapped with too many taxes, they become heavy and sluggish. They think only about how to survive and not how to develop and modernize.
The global financial crisis is similar to a fire. When your house is burning, the first, immediate response should be to use every means at your disposal to extinguish the flames. Most other countries are using their high-powered hoses to contain the fire. But Kudrin is carrying water in buckets, because he is worried that that the well might dry up in a year or two. But if the house burns down today, that water won't save it later.
The authorities have promised the business community that they will lower the tax on profits. But during a crisis, 90 percent of businesses are not earning a profit, so what good is this tax benefit now? Whatever income businesses earn is quickly eaten up by runaway expenses, including rising interest rates, value-added tax, social taxes, property tax and so on.
Delovaya Rossia, of which I am the chairman, has five main proposals for managing the crisis.
First, the authorities should eliminate or reduce VAT, because our studies have shown this particular tax to be the most burdensome for businesses and most susceptible to corruption.
Second, the authorities should institute a 50 percent tax deduction on innovation-related expenses, such as purchases of new equipment and technologies.
Third, we suggest increasing the number of manufacturers that can use the simplified tax system by expanding the eligibility requirements to include companies with revenues up to 60 million rubles ($2.2 million) per year.
Fourth, we suggest that businesses should be given a two-year deferment on VAT and profits taxes for the third and fourth quarters of this year. This is a necessary emergency measure for companies buried in debt -- particularly in those cases where banks have recently increased interest rates on adjustable-rate loans to 25 percent. Without this tax deferment, a huge number of companies will face bankruptcy.
Finally, the state should provide credit guarantees to manufacturers. The guarantees would cover up to 50 percent of loans received from commercial banks at annual interest rates not exceeding 15 percent. Prime Minister Vladimir Putin has supported these proposals.
Delovaya Rossia's proposals could provide a tangible stimulus to production. The top priority is to stimulate the development of manufacturing enterprises, and this calls for industry-specific initiatives.
To his credit, Kudrin did a great deal to combat the chaos of the 1990s when he instituted budgetary discipline, eliminated wide-scale corporate tax evasion and reduced the negative impact of the Dutch disease on the country's economy. He deserves credit for winning these tough battles.
The current financial crisis, however, presents a new set of problems. Unfortunately, Kudrin is fighting nonexistent phantoms. Applying yesterday's solutions to today's problems will only make the crisis worse. The new challenges facing us call for new solutions, new policies and new people -- possibly including a new finance minister.
The business community will be powerless to fight the crisis if the government does not rethink its approach to Russia's manufacturers and continues to rely on corporate behemoths in the oil and gas sectors to be the main engine for the economy.
Countries and the world typically emerge from such crises with a new economy. Does it, therefore, make sense to count beans by calculating how much money the federal budget will lose by lowering VAT?
If Russia wants to reduce the negative effects of the crisis, the government needs to improve the business climate for private companies. Russia was able to overcome the negative consequences of the 1998 default thanks to the millions of Russians who decided to go into business, and the 13 percent flat income tax was a key innovation that helped spur economic development and growth in this sector. But in 2008 and beyond we will need new innovations, and one of the best places to start would be by eliminating or sharply reducing the value-added tax.
Low taxes for a crisis-stricken economy are like life-saving drugs for a seriously ill patient, but to be effective they must be administered in time. If the patient is already dead, it is meaningless to offer him or her medicine.
Boris Titov is the chairman of Delovaya Rossia.
National Economic Trends
Ministers to review long-term financial market strategy
RBC, 01.12.2008, Moscow 09:26:04.Russian ministers will consider a draft financial market development strategy until 2020 at a Presidium meeting today. The document was introduced to the government by the Federal Financial Markets Service (FFMS) and has been approved by the Finance and Economy Ministries, as well as the Central Bank.
The strategy contains several target figures. The FFMS expects that the capitalization of public companies traded on Russian financial markets will amount to RUB 170 trillion (approx. USD 6.16 trillion) in 2020 (up from RUB 32 trillion, or approx. USD 1.16 trillion, as of January 1, 2008), while share trading volumes will reach RUB 240 trillion (approx. USD 8.69 trillion) (up from RUB 31.4 trillion, or approx. USD 1.14 trillion), the value of outstanding corporate bonds will total RUB 19 trillion (approx. USD 688.16bn) (up from RUB 1.2 trillion, or approx. USD 43.46bn), and pension savings and private pension funds' reserves will equal RUB 12 trillion (approx. USD 434.63bn) (up from RUB 600bn, or approx. USD 21.73bn). In its calculations, the FFMS did not take into account the crisis conditions on the Russian financial market, and based its projections on data as of January 1, 2008.
Central Bank raises discount rate
RBC, 01.12.2008, Moscow 09:47:06.The Bank of Russia has raised the discount rate to 13 percent as of December 1, 2008. This is the second time that the discount rate has been increased over a one-month period. As reported earlier, the Central Bank hiked the rate from 11 to 12 percent per annum on November 11. The overnight loan rate has also been raised from 12 to 13 percent per annum, among other things.
Russia's VEB decides to refinance commercial banks' foreign debt
VIENNA, November 30 (RIA Novosti) - Russia's national development bank Vnesheconombank (VEB) has made a decision to refinance foreign liabilities of commercial banks, Central Bank First Deputy Chairman Alexei Ulyukayev said on Sunday.
Speaking at the Russian economic and financial forum in Austria, Ulyukayev said the decision had been made two days ago by the VEB Supervisory Board.
Ulyukayev said that until now VEB"s regulatory framework excluded commercial banks from refinancing.
Russia has been hard-hit by the global credit crisis, which has felled Western banks and pushed developed economies into recession. The country's stock markets have lost around two thirds of their value since their May highpoints, amid declining oil prices and other investor concerns.
In particular, the Central Bank has granted $50 billion to VEB to extend subordinated loans to domestic businesses to help them refinance their foreign liabilities.
In October, VEB granted around $10 billion to refinance the foreign debts of energy companies, metals producers, and construction, transport and communications firms.
Customs Union Hardly Compatible with WTO
Russia’s government has signed a package of agreements on the uniform terms for tariff preference within the Customs Union. But a raft of documents legalized within the EurAsEC will become null and void once any member of the new alliance joins the WTO.
The government inked past week a number of agreements related to the interaction of Customs Union members. One of them is the agreement on tariff quotas on the agricultural product and the product similar to it. Under the agreement, the quota shares will be equally distributed amid the applicants. As to the third parties, the size will be determined after consulting with suppliers and provided their share of imports to the common customs territory will be at least 10 percent.
Amid other documents, the parties sealed a protocol on applying special rates of import duties in cases of emergency. The Customs Union members may lower the import duties for a while if the acute shortage for a definite product is noticed. On the other hand, the duties will be hiked if protective measures are applied.
Besides, people in the government signed yesterday the protocols for tariff benefits and for the single system of tariff preference. “It should help fill the market, but it is no longer the protection policy, i.e. the protection of domestic producer,” commented Renaissance Capital analyst Elena Sharipova.
Russia Manufacturing PMI Drops to Lowest on Record (Update3)
By Alex Nicholson
Dec. 1 (Bloomberg) -- Russian manufacturing shrank more in November than during the 1998 financial collapse as the global economic crisis drove output and new orders to record lows and companies cut jobs, VTB Bank Europe said.
VTB’s Purchasing Managers’ Index fell for a fourth month to 39.8, its lowest level, from 46.4 in October, the bank said in an e-mailed statement today. The previous low was 43.2 in September 1998, a month after the government’s ruble devaluation and default on $40 billion of debt. A figure above 50 means growth, below 50 a contraction. The bank surveyed 300 purchasing executives.
“The sense of doom and gloom was only deepening,” in November, Tatiana Orlova an economist in Moscow at ING Group NV said by telephone. “The mood isn’t getting any better.”
Industrial production has slumped and unemployment is rising as declining commodities prices and the seizure of credit markets prompt an outflow of capital. Investors withdrew $190 billion from the country since August, BNP Paribas SA estimates, as oil fell below the $70-a-barrel average needed to balance the 2009 budget.
“Driving the rapid contraction of the manufacturing sector in November was a record fall in incoming new work,” the bank said in the statement. New export contracts tumbled because of “fallout from the global financial crisis.”
Lower Ruble
The ruble, which the central bank manages against a basket of dollars and euros, weakened 0.1 percent to 27.9438 per dollar by 11:11 a.m. in Moscow, from 27.9231 on Nov. 28. Against the euro, it was little changed at 35.4468, from 35.4379. The benchmark Micex stock index, fell 0.21 percent to 610.04 at 11:12 a.m.
Russian economic growth, which Prime Minister Vladimir Putin touted as a major achievement before stepping down as president in May after eight years, will slow to 3 percent next year from an average of 7 percent a year since 1999, the World Bank estimates. The economy grew 8.1 percent in 2007.
Adding to evidence that recessions in the U.S., Europe and Japan are dragging down the world’s fastest-growing economies, China’s manufacturing also shrank by the most on record in November as export orders plunged.
OAO Severstal, Russia’s largest steelmaker, shut down a blast furnace that supplied 13 percent of the pig iron produced at its main Russian factory because of its age and as global steel demand weakens, the company said on Nov. 28.
Slowing Output
Industrial production in October grew at the slowest annual pace since the Federal Statistics Service changed its methodology at the start of 2003, according to revised data. Unemployment rose to 6.1 percent from 5.3 percent in September.
“Sharp falls in output were also accompanied by a substantial decline in employment,” said Dmitri Fedotkin, an economist at VTB Research, in the report.
OAO Magnitogorsk Iron & Steel, the third-largest Russian steel company, and OAO Razgulay Group, a Russian grain and sugar producer, have said they will shed staff and may decrease wages for some remaining workers.
“What began as a financial crisis became an economic one before our eyes,” Putin said at the Nov. 20 congress of his United Russia party in Moscow.
About 1,070 Russian companies have already announced plans to cut approximately 45,000 jobs, Rossiyskaya Gazeta, the government’s official newspaper, said on Nov. 14, citing the Health and Social Development Ministry’s estimates. The reductions have affected the finance and automobile industries, construction and tourism companies and some manufacturing workers, the paper said.
“The economic pain is shifting to the man on the street,” said Maxim Oreshkin, head of research at OAO Rosbank, in a telephone interview. Oreshkin said he expected the consumer sector would contract in the first quarter of 2009 as the impact of layoffs works its way into consumer spending.
Manufacturing Prices
In November, prices that manufacturers pay declined for the first time in a decade, while the prices they charge dropped for the first time in the survey’s history.
“Reflecting the rapid deterioration in the activity profile and weakening commodity prices, inflationary pressures eased significantly,” Fedotkin said.
The annual inflation rate reached 14.2 percent last month, compared with the government’s official year-end forecast of 11.8 percent.
The PMI is derived from indexes which measure changes in output, orders, employment, suppliers’ delivery times and stocks, according to VTB.
To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@.
Last Updated: December 1, 2008 03:22 EST
Business, Energy or Environmental regulations or discussions
Russia stock market edges down on falling oil
(Interfax, dd/01.12.2008, godz. 09:24)
The Russian stock market edged down on Monday due to the drop in oil prices triggered by OPEC's decision to defer a cut in output and negative trends in American stock index futures.
The MICEX stock index was down 0.2% to 610.16 by 10:45 a.m., however the RTS was up 0.09% to 658.75, driven by Rosneft (RTS: ROSN), which grew 1.3%.
Benchmark stocks fell 0.4%-2.2% on the MICEX, with drops for Rosneft (0.8%), Gazprom Neft (RTS: SIBN) (2.2%), Gazprom (RTS: GAZP) (-1%), VTB (RTS: VTBR) (-0.3%), Lukoil (RTS: LKOH) (-0.5%), MMC Norilsk Nickel (RTS: GMKN) (-0.4%), Rostelecom (RTS: RTKM) (-1%), Surgutneftegas (RTS: SNGS) (-1%), Tatneft (RTS: TATN) (-0.4%) and Transneft (RTS: TRNF) (-1.2%).
However there was growth for Polyus Gold (+3.3%), and Sberbank (RTS: SBER) was unchanged from Friday.
Euro’s mean weighted rate to rouble for “today” goes down
MOSCOW, December 1 (Itar-Tass) – The euro’s mean weighted rate amounted to 35.4205 roubles for one euro for “today” delivery during Monday’s unified trading at the Moscow Interbank Currency Exchange (MICEX).
In comparison with Friday, euro’s mean weighted rate to rouble for “today” plunged by 23.28 kopecks.
The volume of trade equaled to 81.304 million euros and 306 deals were concluded.
Energy Ministry mulls aid to power sales companies
RBC, 01.12.2008, Moscow 10:28:12.In a move to provide aid to power sales companies during the crisis, the operational management of such companies by other market participants is being considered, Energy Ministry Sergei Shmatko told journalists. He said that a meeting would be held in the near future to discuss the option. Among the companies that could carry out such management, the minister noted, are regional power grids and power generation companies, particularly those to which the power selling companies are indebted. Shmatko pointed out, however, that the transition to operational management had to be agreed upon by each party.
Putin Dispels Power Sector Concerns
01 December 2008
Prime Minister Vladimir Putin pledged Friday not to slow the development of the power industry, responding to concerns from Germany's E.On, Russian news agencies reported Friday.
"All the plans that we set out for this sector, we will fulfill. We will not cut them back," Putin said, RIA-Novosti reported.
On Friday, Putin received E.On's chief executive, Wulf Bernotat, at the presidential residence in Novo-Ogaryovo. Bernotat was reported as saying the planned liberalization of the power market was a key factor in E.On's $6 billion acquisition of power producer OGK-4 this year.
Since the acquisition, the global financial crisis has knocked Russian share price indexes down by some 70 percent, and many industries have begun to lobby against the full liberalization of electricity prices by 2011, which power firms like OGK-4 are counting on to make a profit.
"As far as we are being assured, nothing has changed," Bernotat said, Interfax reported. "It is important to us to know that all obligations will be fulfilled. … It is important for us to have political support," he was quoted as saying.
"We are conducting fruitful negotiations with [Deputy Prime Minster] Igor Sechin and [Energy Minister] Sergei Shmatko on this issue, but it is important for us to have political support," Bernotat said.
E.On, through its subsidiary E.On Ruhrgas, owns a minority stake in Gazprom and is a key importer of Russian gas into Europe. It is also working with Gazprom on the Nord Stream gas pipeline.
Reuters, MT
A Russian twist in prospects for Jamaica's bauxite/alumina sector
published: Saturday | November 29, 2008
R. Anne Shirley, Business Writer
Dr Cartlon Davis, one of the most respected authorities on the bauxite alumina industry, pointed out in May that the ownership structure has moved from a very stable group of four of the six 'majors' in the field - Alcoa, Alcan, Reynolds, and Kaiser.
Davis in an article published in The Sunday Gleaner of May 25 wrote on the recent changes in the ownership structure of the various entities in the Jamaican bauxite/alumina sector, as well as the impact of rising oil prices on the costs of production and bauxite quality.
Over 56 years, the Jamaican operations were an integral part of the vertically integrated structure of the four corporations.
"These four companies, (plus Pechiney of France and Alusuisse of Switzerland) bestrode the international aluminium world like a colossus to form the 'Six Sisters' (borrowing from the term applied to the powerful seven companies then operating in the international petroleum industry) of the alumina industry," Davis wrote.
"In this relatively settled environment, both government and management knew with whom they were dealing."
Major player
This is no longer the case, and currently the major player in the Jamaican market is the giant Russian aluminium company UC Rusal which was formed in early 2007 out of a merger agreement between the giant Rusal - 68 per cent; SUAL, a smaller Russian company - 20 per cent; and Glencore International AG, the Swiss firm that along with its predecessor Marc Rich had been involved with the Jamaican alumina/bauxite industry since the 1970s - 12 per cent.
The new merged entity has its headquarters in Moscow, and its major shareholder is the richest billionaire in Russia, Oleg Deripaska, owner of a metals-to-agriculture conglomerate.
Deripaska has a 57 per cent stake in UC Rusal.
UC Rusal owns the Windalco Kirkvine and Ewarton works, as well as 65 per cent of Alpart. Hydro Aluminium of Norway owns the other 35 per cent.
"It is pertinent to point out that the major owner of Rusal (and UC Rusal), Mr Deripaska, has just purchased 25 per cent of the Arctic Norilsk Nickel company for about US$13 billion; and it is understood that this purchase has 'distracted' him somewhat from addressing the issues of assets like those in Jamaica," Davis wrote.
Norilsk is the supplier of one-fifth of the world's nickel, and when the acquisition was made by UC RUSAL, the corporation indicated its intent to eventually create an international metals major by combining the two companies.
Power struggle
In order to make the acquisition, UC Rusal had pledged its shares in Norilsk as collateral for a two-year US$4.5 billion loan from a syndicate of nine creditors on the international market.
However, since that time Norilsk's stock has plunged almost 60 per cent from its peak in May 2008 as global nickel prices have plummeted, western investors have fled the Russian stock markets, and UC Rusal has become involved in a power struggle with the other major shareholder in Norilsk - the largest single shareholder, Russian Vladimir Potanin and his company Interros - over the management of the company.
UC Rusal had also announced a large scale investment plan for the next few years, despite the setbacks of the financial crisis and the sharp fall in metal prices.
Projected investment
Up through September 2008 the conglomerate had indicated that, excluding acquisitions, it was planning to invest between US$2.5 billion and US$3 billion to fund organic growth and greenfield projects every year for the next five years. This is a total projected investment of around US$10 billion to US$15 billion overall.
The firm also announced in mid-September that it would be investing approximately US$3 billion for the construction of three aluminium smelters in China over the next seven years.
This move into China signals the importance of the Chinese market to UC Rusal's growth prospects. The CEO of the group, Alexander Bulygin, told EuroWeek that he expects China to generate about 50 per cent of UC Rusal's total revenue in the future.
However, it will be interesting to see if any of these plans will have to be revised or postponed for the foreseeable future.
On October 30, it was announced that UC Rusal was the first beneficiary of a US$4.5 billion loan package from the Russian state-owned bank Vnesheconombank (VEB), which was entrusted with US$50 billion by the Kremlin.
Those funds were drawn down from the world's third largest gold and foreign exchange reserves which stood at US$515.7 billion in mid-October to bail out indebted Russian firms facing margin calls on Western loans before the end of 2009.
The news reports out of Moscow indicate that the loan was made because UC Rusal was facing the threat of having to hand over its stake in Norilsk to overseas creditors unless it managed to refinance the original loan.
Financial crisis
Deripaska, the major shareholder in UC Rusal, had been forced in the financial crisis to relinquish his stakes in a number of foreign companies including the Canadian auto parts maker Magna International Inc and the German builder Hochtief.
In the case of the UC Rusal stake in Norilsk Nickel, it is clear that the Russian government was not willing to relinquish Russian majority control in that entity and signals the Kremlin's intention to keep certain strategic assets in Russian hands.
It should be noted that in addition to nickel, Norilsk also produces half of the world's palladium from its mines above the Artic Circle.
Of importance to Jamaica, UC Rusal is leading an approach to the Russian Government with a proposal to create a strategic state metal reserve.
Such a metal reserve is seen as a way to stem the crisis in the Russian metal processing industry, as it will work not only to diversify government investments, but would also help to stabilise metal prices.
Proposal
They are proposing that Russia should try to obtain intergovernmental agreements to be signed with a number of countries to cut aluminium production by 10 per cent for the next two years as a way to shore up the market.
It will be important for the Jamaican government and the local alumina/bauxite industry to keep tabs on these events as there could be significant repercussions for Jamaican exports.
This bauxite alumina sector is Jamaica's third largest foreign exchange earner behind remittance and tourism earnings.
rashir0@
Russia May Lend Metal Companies $3 Billion More, Vedomosti Says
By Paul Abelsky
Dec. 1 (Bloomberg) -- Russian metals companies may get $3 billion in loans from state lender Vnesheconombank, Vedomosti reported, citing people with knowledge of the matter.
The bank, known as VEB, gave a preliminary approval to lend about $2 billion to OAO Mechel to refinance debt, the Moscow- based newspaper said. OAO Severstal has requested $325 million to pay off Eurobonds, while Russian pipemaker OAO TMK needs about $1 billion, Vedomosti said.
Steelmaker Evraz Group SA said it gained $1.8 billion in loans from VEB last week.
To contact the reporter on this story: Paul Abelsky in St. Petersburg at pabelsky@.
Last Updated: December 1, 2008 01:08 EST
Steel Sector: On VEB waiting list
UralSib
December 1, 2008
Mechel and TMK seek VEB loans. This morning Vedomosti reported that Mechel (MTL - Buy) and TMK (TMKS - Buy) are seeking the loans from stateowned Vnesheconombank (VEB). According to an undefined source, Mechel is looking for around $2 bln mainly to refinance a $1.5 bln bridge loan taken to acquire the mining assets of Oriel Resources in Russia and Kazakhstan. Mechel's request is currently at an early stage of approval, but could be examined at a credit committee meeting of the VEB Supervisory Board this week. TMK submitted an application for a $1 bln loan from VEB to refinance its $2 bln short-term debt (including $600 mln bridge loan to acquire IPSCO assets). TMK's application has been already passed early stages of approval at VEB.
TMK CEO interview: key takeaways.
In separate news, Vedomosti today also published an interview with new TMK CEO, Alexander Shiryaev, who was appointed this month, replacing former CEO Konstantin Semerikov. The main takeaways are as follows:
1) The CEO confirmed that TMK has submitted a loan application to VEB, but has not specified the amount;
2) October production of industrial welded and seamless pipes (low marginal segment) was reduced by 28% and 5% MoM, respectively, while OCTG (oil and gas) pipe output in November-December could be reduced by 10%;
3) A decline in the company's Russian operations will be more that offset by strong production volumes from IPSCO assets in North America that were consolidated in June 2008. Total pipe output in 2008 will reach 3.2 mln tons (up 7% YoY).
4) The new CEO is confident in 20-25% YoY production growth next year driven mainly by the new PQF mill at Tagmet, new large diameter pipe mill at the Volzhsky plant and inclusion of TMK IPSCO assets;
5) Alexander Shiryaev expects EBITDA next year to rise by 10-20% YoY to $1.3-1.4 bln;
6) TMK has so far not faced non-payments from its key customers, which include Russian oils companies and Gazprom;
7) TMK is not considering any M&A deals at this stage.
Positive news for the sector. We believe the VEB loans to metals & mining companies is positive for the sector. With Evraz having received a $1.8 bln loan from VEB last week, we believe that both Mechel and TMK stand very high chances of receiving money from VEB too - currently Russian state banks are the only source of financing for them. If the above loans are approved, we would expect to see a short-term rally in Mechel and TMK shares. The news will be also positive for the companies bonds.
Russia's RUSAL nominates Prokhorov to Norilsk board
Fri Nov 28, 2008 8:11am EST
MOSCOW, Nov 28 (Reuters) - Russia's aluminium major RUSAL said on Friday it had added its major shareholder Mikhail Prokhorov to its list of candidates for the board of metal giant Norilsk Nickel (GMKN.MM: Quote, Profile, Research, Stock Buzz).
A RUSAL spokeswoman said it had left Prokhorov, who holds a 14 percent stake in RUSAL, off the list of nominees issued on Thursday because of a technical error.
The Russian aluminium producer on Thursday nominated five of its own candidates as well as five independent businessmen, including powerful Kremlin deal broker Alexander Voloshin, to the body. [ID:nLR487601]
Shareholders will vote on the candidates at a Dec. 26 extraordinary general meeting when the board is expanded to 13 members from nine.
Prokhorov in April sold a 25 percent plus two shares stake in Norilsk Nickel to RUSAL in a cash and share deal that gave him the 14 percent stake in the aluminium company. (Reporting by Alfred Kueppers and Aleksandras Budrys)
Norilsk reports 9M08 production numbers
Rencap
December 1, 2008
Last week (24-28 Nov) Norilsk published 3Q08 production figures showing 9M08 production down 4% YoY, to 168.9 kt (58 kt for 3Q08) from 175.1 kt in 9M07, for its Russian Kola and Taymyr operations. The Russian operations accounted for 77% of total production, Harjavalta 17%, Africa 11% and Australia 4%. All other divisions managed to collectively make up for the loss in Russia to make total nickel production 218 kt relative to the 219 kt in 9M07. Uncharacteristically no full year guidance was given. Overall saleable copper production increased to 316 kt from 312 kt (+1%). Platinum production fell 10% YoY and platinum 11% YoY due to scheduled maintenance and repair works at NMP and deliveries of nickel concentrate to Harjavalta refinery for test runs. The Polar division has also been running lower recovery ore blends through the concentrators. Over 95% of copper production originated from Russia. Harjavalta produced a total of 14.4 kt of refined nickel from July to Sep 2008, including 7.7 kt of in-house nickel from Black Swan and Western Areas feed 6.8 kt of toll feed. Operations of the Harjavalta refinery and Western Australia were impacted by interruptions in nickel concentrate handling at the Esperance port (Australia), gas shortages and subsequent power outages resulting from an explosion at Veranus Island (Australia) which affected many producers in Western Australia
We believe 2009 will be very tough for Norilsk. We cannot be certain the company has ruled out more production cuts.
Russia's Mechel, TMK seek $3 bln state loans-paper
12.01.08, 02:04 AM EST
MOSCOW, Dec 1 (Reuters) - Russian steelmakers Mechel and TMK have requested a total of $3 billion in state loans to refinance their foreign debt, the Vedomosti business daily reported on Monday, citing unidentified sources.
Vedomosti quoted a source close to Mechel and an investment banker as saying that Mechel was seeking just under $2 billion, mainly to refinance debt taken to fund its $1.5 billion purchase of Britain's Oriel Resources earlier this year.
TMK has requested around $1 billion, a source in the mining industry told Vedomosti.
The newspaper quoted a source close to state-owned bank VEB, which has been tasked with helping Russian companies refinance their debt, as saying that Mechel's request gained preliminary approved from VEB's credit committee last week.
TMK's request has also been recognised as justified, said an industry source.
Vedomosti said that Severstal , the country's largest steelmaker, has also requested a loan. It did not specify the amount.
Earlier this month, Russian steelmaker Evraz Group was reported to have requested a $1.8 billion loan from VEB to refinance its debt incurred to acquire Canadian steel pipe maker IPSCO.
Coal Sector: Looking for state support
UralSib
December 1, 2008
Coalminers ask for state help with non-payments. Last Friday, it was announced that in early November Russia's leading coking coal producers wrote to Deputy Prime Minister Igor Sechin to request government assistance to tackle mounting receivables from steelmakers. Non-payments from steel makers have reached uncomfortable levels and coal companies continue to struggle to collect money from their customers. This letter was co-signed by Raspadskaya, Belon, Sibuglemet and Siberian Business Union, which combined are owed roughly $500 mln (RUB13.6 bln). They also requested a variety of temporary privileges including changes to the corporate tax code and special rail tariffs.
Receivables jumped by 200-300%. Coal miners, as they are at the bottom of the value chain, are in a vulnerable position given the tight liquidity and are failing to receive cash for their product. Raspadskaya has already disclosed that it has about $180 mln of receivables (compared to $43 mln at the end of 1H08) from major customers, and it is failing to make collections. Belon reported that receivables increased to $81 mln from $30 mln at the end of 2007. However, these levels of receivables are not yet critical for the companies, but concern is rising. Moreover, feedback from the companies shows that now the situation has started to recover slightly. Namely, Raspadskaya after shutting down production for a week has now resumed mining and is making shipments to its customers. Steelmakers have also started to pay off some of their obligations.
No structural changes on the horizon. The situation with non-payments - while improved - has not changed much and is still stressed. We believe the situation will only changed when money starts to fully circulate again. Otherwise, demand for steel products and coking coal will remain extremely low, meaning no money for coal shipped. Although we have little visibility on what next year will bring in terms of pricing and volumes, we expect Raspadskaya and Belon not to suffer critically due to very high margins for the former and diversified sources of revenue for the latter.
Banking Sector: CBR hikes rates, widens bi-currency basket
UralSib
December 1, 2008
Refinancing rate is raised to 13% ... The Central Bank (CBR) announced on Friday that it will raise the refinancing rate by 100 bps to 13%, effective from today. This is the sixth hike in the refinancing rate this year, following a 100 bps increase on 12 November. The CBR also raised other money market rates by the same amount. The CBR's moves are aimed at reigning in inflation and stemming the capital outflow evident in recent months.
... and ruble is weakened by 1% to bi-currency basket. In tandem with the money market rate hikes on Friday, the CBR also widened the bi-currency basket corridor by RUB0.3 to RUB31.3, allowing the ruble to depreciate by 1%. The corridor spread now amounts to 10% or RUB3.
Banks are allowed to place currency deposits with CBR. In addition, as of today the CBR is allowing local banks to open correspondent accounts with it in dollars and euros to manage short-term liquidity in foreign currencies. The measure should prove effective in stemming capital outflow, as previously accounts were held in non-resident banks, which were treated as capital outflow.
Closer to reality. The CBR's measures last Friday are in line with its plan to eventually float the ruble. Representatives of the CBR said that the ruble will not be allowed to depreciate steeply, but any further measures to control the ruble will be of a fundamental nature, once the ruble becomes floatable, rather than of a technical nature. We believe that the hike in money market rates is not an effective measure at the moment to prevent capital outflow and tame inflation, as this rate is not a benchmark of the investment costs for investors. With inflation set to approach 14% this year the hiking of interest rates by the CBR is in line with the current market environment. The recent moves could be negative for second-tier banks borrowing money from the CBR via REPO deals. However, the rate hike will likely encourage individuals to save more money, as banks generally follow such moves with higher deposit rates of their own.
Sberbank and sector deposit flows: November trends
Rencap
December 1, 2008
On Friday (28 Nov), Reuters quoted Dmitry Tarasov, Sberbank's head of strategic planning, and National Banking Council member Anatoly Aksakov on November's retail deposit trends at Sberbank and in the banking sector, respectively. We note the following:
According to Tarasov, on the latest available data, in November Sberbank has registered a small inflow of retail deposits (no numbers were provided), and final MoM growth should be zero-to-positive. In December, he expects the usual seasonal pick-up in deposit inflows to the bank, which may compensate for the 2.5% outflow in October.
According to Aksakov, as of 25 Nov, the net outflow of retail deposits from the system since 31 Oct was less than 0.5%.
An estimated marginally positive inflow of retail deposits to Sberbank in November, following a 2.5% outflow in October, compares with inflows of 1% and 3% in the same months at VTB. This suggests Sberbank is losing market share to its key competitor in this window, when depositors move to state banks looking for safety. One obvious reason for this is that VTB's rates are roughly 2 ppts higher, so the situation may change if Sberbank raises its rates (management recently noted this as a possibility). This would, however, clearly have a negative effect on the bank's net interest margin.
Russia's Sberbank considers Hungary's OTP, Raiffeisen as M&A targets
bne
December 1, 2008
Interfax is reporting unnamed sources as saying that Sberbank, Russia's largest lender, sees Hungary's largest bank OTP and Austria's Raiffeisen as potential acquisition targets, Interfax has reported on Monday.
The story didn't specify whether the Austrian bank was the CEE division Raiffeisen International or its parent group RZB, a much bigger fish to fry.
The source said Sberbank would like to buy a bank in Central and Eastern Europe, of which only OTP and Raiffeisen would be available. The banks' management have already met and conducted talks with the banks but with no result just yet, the news agency said.
Russia's Alfa Bank says buys stake in smaller rival
11.30.08, 10:54 AM EST
MOSCOW, Nov 30 (Reuters) - Russia's Alfa Bank has bought a controlling stake in a distressed regional rival, it said in a statement on Sunday, further evidence that a global squeeze on credit is troubling Russia's sprawling banking sector.
Alfa Bank, the country's biggest private bank, had been looking for takeover targets among Russia's 1,000 banks during the global economic downturn which has hit the Russian banking sector hard and forced it to consolidate.
'Today, Alfa Bank, has announced the acquisition of a controlling stake in leading bank Severnaya Kazna,' Alfa Bank said in a statement.
'In conjunction with the Central Bank of Russia and the Deposit Insurance Agency, Alfa Bank will make efforts to stabilise and strengthen the position of Severnaya Kazna in the Urals' banking sector.'
Alfa Bank did not say how much it had paid for its stake in Severnaya Kazna which is in the top 100 biggest Russian banks.
(Reporting by James Kilner; Editing by Richard Hubbard) Keywords: RUSSIA BANKS/
EuroChem increases stake in K+S to 15%
Rencap
December 1, 2008
EuroChem, the largest Russian nitrogen and complex fertiliser producer, and its holding company, have increased their stake in German potash producer K+S to 15% from 10%. EuroChem announced that one of its shareholders bought more than 10% in K+S 1H08 and the subsidiary later acquired around 5%. Shares of K+S rose 3.5% on the news. EuroChem, which now controls 15% in K+S, is interested in sharing K+S's potash mining experience and potentially the trading capacities of the European potash price maker. EuroChem has bought two licences for Palasher in the Perm region and Gremyachenskoye in the Volgograd region and now plans to start construction of a mine in Gremyachenskoye. Each project is estimated to require more than $1.5-2bn of investment.
Sistema increases pledge vs Sistema-HALS debt
Rencap
December 1, 2008
According to Kommersant today (1 Dec), Sistema will not only pledge the 71.1% it owns in Sistema-HALS, but will also add MBRD shares as collateral for its $350mn loan from VTB. The new conditions do not imply a pledge increase in the event of Sistema-HALS' market cap decreasing. VTB also opened a new two-year credit line to Sistema-HALS for RUB7bn.
Via the new agreement with VTB, Sistema has solved the major issue the holding had in terms of margin calls. Moreover, Sistema-HALS received the funds to fulfill/initiate some projects, including the Detskiy Mir renovation.
How a Russian-Norwegian partnership turned frosty
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By Kevin J. O'Brien
Published: November 30, 2008
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BERLIN: When a dispute between two cellphone companies, Telenor of Norway and Altimo of Russia, returned to court recently, it seemed fitting that one of the settings was the Siberian city of Omsk, home of a Soviet-era labor camp.
For the feud, which began in 2004 over a disagreement about how to invest in Ukraine, has grown into a standoff of Cold War proportions, with accusations of corporate espionage and legal skullduggery being exchanged in courtrooms and arbitration panels on three continents.
Like other relationships between Russian investors and outside partners, the Altimo-Telenor alliance has soured at a time when Russia has grown increasingly assertive in business and other matters.
In 2001, when Altimo and Telenor agreed to joint management of Russian and Ukrainian mobile operators in which they both held stakes, the partnership seemed tailor-made for both sides. Telenor, one of the first Western telecommunications investors in the former Soviet Union, needed a local partner. Altimo wanted an experienced international operator with financial clout and technological know-how.
"Telenor had everything that Altimo needed," said Kresimir Alic, an analyst at International Data Corp. in Zagreb, Croatia.
The trouble started in 2004, when Telenor opposed Altimo's plan for VimpelCom, their partnership in Russia, to buy a Ukrainian mobile operator, Ukrainian Radio Systems. Telenor worried about damage to its partnership with Altimo in Ukraine, called Kyivstar.
With powerful business and political interests involved on both sides, the dispute broadened. Telenor is 54 percent owned by the Norwegian government. Altimo is controlled by Mikhail Fridman, a Kremlin ally and the chairman of Alfa Group, one of the largest telecommunications investors in Russia.
Analysts say the dispute has not had any direct effects on day-to-day operations of Kyivstar, which is the largest mobile operator in Ukraine, or VimpelCom, which is the second-biggest operator in Russia, after MTS. But they say the raw tone of the conflict is raising diplomatic tensions between Norway and Russia, which have cooperated on a number of business projects.
In Ukraine, Altimo prevailed, with VimpelCom taking over Ukrainian Radio Systems, or URS, in April 2006. In a series of rulings, the Ukrainian Supreme Court has sided with Altimo.
But that did not end matters. Telenor has contested the decisions, saying the companies had agreed under their partnership to settle disputes by arbitration in Geneva and New York, rather than Russia and Ukraine.
Telenor has sued Altimo in New York; Altimo has countered with its own lawsuit against Telenor in Geneva.
Over the past year, the companies have hurled increasingly bitter accusations at each other, and the dispute has been marked by bizarre twists.
In Omsk, Telenor is appealing the ruling of a Russian trial court judge in the Siberian town of Khanty-Mansiysk, who ordered Telenor in August to pay $2.8 billion for trying to obstruct VimpelCom's takeover of URS. The judge, E.A. Karankevich, made his ruling at 2 a.m., said Jan Edvard Thygesen, Telenor's head of central and Eastern Europe.
Before announcing the fine, Thygesen said, Karankevich openly discussed the level of the penalty - at one point considering $5.7 billion - before lawyers began arguing the case.
"This case has been a judicial farce," Thygesen said in an interview. "We are confident we will get this overturned when the Russian Supreme Court in Moscow hears our appeal."
Kirill Babaev, a senior vice president at Altimo in Moscow, disputed Thygesen's assertion that the Russian trial judge had improperly set fines before hearing the case.
"The judge was not doing this," Babaev said. "He was simply following Russian court procedure. Telenor has never respected our court system."
On Nov. 12, Altimo said in a news release that it had been offered documents suggesting that Telenor was behind the tapping of private phone conversations and e-mail messages of Alfa managers and investors traveling in the United States.
But Thygesen, of Telenor, said the documents were fabrications. Dag Melgaard, another Telenor spokesman, said that Telenor had hired investigators, but that they had done no wire-tapping.
Telenor, in turn, questions the origins of the lawsuit in Khanty-Mansiysk, which was filed in April by a company registered in the British Virgin Islands called Farimex Products, which said it owned a 0.002 percent stake in VimpelCom. It is not clear why the suit was filed in Khanty-Mansiysk, though that is the home of another Altimo partner, a company called CT-Mobile.
Farimex, in a class-action suit on behalf of VimpelCom shareholders, sued both Telenor and Altimo for $3.8 billion in damages allegedly caused by the dispute over Kyivstar.
Copies of Farimex's incorporation papers provided to the International Herald Tribune by Telenor appear to show a Russian citizen, Dmitry Fridman, as a registered officer of the company.
But Dmitry Fridman has never appeared in the Siberian court proceedings, Thygesen said. Telenor said it believed that Altimo had been added as a defendant to give Farimex the appearance of neutrality. The judge threw out the claims against Altimo.
Both Altimo and Telenor say they have no way of locating Dmitry Fridman. Thygesen said Dmitry Fridman was related to Mikhail Fridman, but Altimo denies any connection between the two men.
"Dmitry Fridman is not a relative of Mikhail Fridman," Babaev said.
Efforts to locate Dmitry Fridman and Farimex were unsuccessful.
Telenor has also questioned actions by the court in Omsk. In October, it froze Altimo and Telenor shares in VimpelCom. Altimo's owner, Alfa, had pledged the shares as collateral toward a loan from Deutsche Bank. At the time, Deutsche Bank was poised to seize the shares as security, after a decline in VimpelCom's share price. While the stock was frozen, Alfa secured a letter of credit from a Russian state development bank, avoiding seizure of the shares.
On Oct. 25, the Telenor chief executive, Jon Fredrik Baksaas, called Mikhail Fridman and offered to buy Altimo's Kyivstar stake, Thygesen said. Fridman rejected the offer, Thygesen said. Babaev said he was aware of the conversation, but he declined to comment on what had been discussed.
On Nov. 19, a U.S. federal judge in New York, acting at Telenor's request, found Altimo in contempt for violating a November 2007 arbitration ruling that faulted Altimo for skipping Kviystar board meetings and for owning stakes in Kyivstar competitors.
Babaev said Altimo was considering an appeal. In the meantime, analysts say, the fallout from the prolonged legal battle has deepened tensions between Norway and Russia, whose relationship has already been strained over fishing and energy development in the Barents Sea.
"The relationship between the two countries is in crisis at the moment," said Danila Bochkarev, an analyst in Brussels at The EastWest Institute, a think tank. "Telenor-Altimo is a part of that."
December 1, 2008, 11:44
Pirate attacks on shipping have upside for Russian railways
Pirate attacks are making cargo transit through the Suez Canal unsafe. This is providing an opportunity for increased container shipments from Asia to Europe, through Russia, by rail, with Russian railways looking to boost demand.
2 weeks - that’s an average time cargo ships take to travel from Asia to Europe, carrying much of what we eat, wear and use at home. Now Pirates are threatening the viability of the well established route. Some shipping companies are diverting their vessels around Africa - making journeys more costly - by hundreds of thousands of dollars.
But it may become an opportunity for the TransSiberian Railway. The head of Russian railways Vladimir Yakunun said that last year the company demonstrated a container train that travelled from Beijing to Hamburg in 18 days. He’s looking to attract new customers by holding costs as low as possible.
“We will be trying to make this route more attractive by offering our customers tariffs fixed for three years at least. These tariffs will fluctuate only in line with inflation.”
But analysts say those tariffs are even more frightening than pirates. They are 4 times higher than the cost of shipping by sea, and that's not the only problem facing the Trans-Siberian route according to Aleksey Bezborodov, Analyst with Infranews.
“To attract at least several per cent of container shipments to the land bridge, Russian Railways needs to build about 10-15 logistic centers, every 500 km along the railroad. It would cost the company about $1 Billion. The company, which earns about $42 Billion a year could have easily done it.”
So taking some of the traffic from the Suez canal would benefit Russian Railways - although in volume terms, it can carry less than 1% of the freight that currently travels by sea.
Russian Railways transportation hit by crisis
RBC, 01.12.2008, Moscow 11:13:58.Due to the economic crisis, the cargo transportation of Russian Railways fell 20 percent in November 2008 compared with the same month a year earlier, the RBC Daily newspaper reported today. Meanwhile, the company expects the figure to drop by even more than 20 percent in December. In this case, Russian Railways's annual cargo transportation will ease between 3 and 4 percent in 2008 against the previous year.
Cargo transportation began to fall on October 16, and its dramatic decline during the last two and a half months of 2008 may exceed the rise in the previous nine and a half months, according to the company's estimates. As a result, annual revenue is expected to be RUB 50bn (approx. USD 1.81bn) lower, Russian Railways's First Vice President Vadim Morozov said.
DECEMBER 1, 2008
Moscow Points the Way With Airport Competition
While Most Nations Sport Monopolies, Rivalry Between Two Russian Gateways Ushers in Improvements for Carriers, Travelers
By DANIEL MICHAELS
MOSCOW -- A heated battle for passengers between the Russian capital's main airports offers an unlikely model of competition for the aviation industry.
In most cities, airports are monopolies. Even in cities that have more than one, including New York, Paris and Tokyo, airports are usually owned by the same operator. That means airlines can rarely make the kind of choices passengers take for granted, such as choosing an airport for its efficiency, shopping or lounges.
Not so in Moscow, where two international airports, Domodedovo and Sheremetyevo, owned by rival organizations, battle for business. The result is lower fees, better service and fast-improving facilities all around.
Domodedovo Airport, for example, recently convinced several top airlines to make it their Russian base, thanks to a major modernization that added more than 20 new restaurants, jewelry boutiques and a shop where passengers can rent DVDs to watch in booths.
Sheremetyevo Airport responded by building a fast rail link to Moscow, complete with a Starbucks at the airport station.
Moscow's airport rivalry highlights a paradox of the global aviation industry: Airlines compete fiercely with each other for customers, but they face many monopolist suppliers, such as air-traffic control systems, fuel distributors and airports. Resulting costs and poor services get passed on to travelers.
Regulators world-wide are starting to tackle the issue -- and some see Moscow as a paradigm.
Britain's competition authority, for example, last year considered breaking up BAA, the company that runs London's three big airports. In testimony before the regulator, officials from the International Air Transport Association, a trade group, cited Moscow as evidence of the benefits that competition could bring London's airport system. IATA testified that fees at Moscow's fast-growing, privately owned Domodedovo Airport are as much as 20% lower than at Sheremetyevo, the state-owned hub of flag carrier Aeroflot.
The U.K. listened. Bowing to government pressure, BAA's Spanish owner Ferrovial SA now plans to sell London's second-biggest airport, Gatwick. British Airways PLC and other big customers are too entrenched at Heathrow to switch to Gatwick, but airlines say competition could prompt airport managers to trim fees and start to resolve problems such as chronic fuel-supply shortages.
"I'd love to have competing airports everywhere in the world," says Bruno Matheu, executive vice president for marketing at Franco-Dutch carrier Air France-KLM SA, an Aeroflot partner in the SkyTeam airline alliance. Air France-KLM uses Sheremetyevo in Moscow.
Moscow's airport market didn't develop overnight.
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Until recently, few big airports world-wide were worse than Sheremetyevo, the Soviet Union's international gateway, built for the 1980 Olympics. Checking in for a flight could take hours. So could driving jammed roads to the airport, which lacked rail connection.
During Russia's privatization drive of the 1990s, local investors bought Domodedovo, which was previously Moscow's airport serving Soviet Central Asia. The investors, grouped into an upstart charter-airline operator, East Line Group, renovated a terminal at Domodedovo and oversaw construction of a train line to Moscow.
East Line charged airlines landing and operating fees that undercut Sheremetyevo by around 30%. For passengers, Domodedovo's rail link guaranteed a 40-minute trip to downtown Moscow. Private Russian carriers, largely frozen out of Aeroflot's base at Sheremetyevo, expanded quickly at the spacious Domodedovo.
East Line's big break came in 2003, when British Airways announced it would switch from Sheremetyevo to Domodedovo.
"The authorities were shocked that a major airline would leave the government airport," recalls Daniel Burkard, BA's former country manager for Russia. He says a big factor was that East Line offered a big business-class lounge.
Mr. Burkard, a 41-year-old German, says he was so impressed by Domodedovo's management that when his BA contract in Moscow ended in 2005, he joined East Line as its business development manager and started wooing other airlines to Domodedovo.
He promoted the airport's many domestic airlines, which allow foreign carriers to reach small cities across the former Soviet Union, and in 2005 catapulted Domodedovo over Sheremetyevo as Moscow's biggest airport in terms of passenger traffic. Other attractions include a children's area staffed with nurses, fast immigration lines for Westerners, and competing vending machines, operated by rival suppliers.
In 2006 Mr. Burkard convinced up-market Austrian Airlines AG to switch from Sheremetyevo. The move prompted other carriers in the Star Alliance to rethink their choice in Moscow. Last year Deutsche Lufthansa AG, one of the biggest foreign carriers in Russia, also made the jump.
When AMR Corp.'s American Airlines decided last year to enter the Moscow market, managers visited both international airports. They were impressed by Domodedovo.
The airport's executives "were a bit more aware of how we do business," says Craig Kreeger, American's senior vice president for international operations. Since flights began this June, Mr. Kreeger says, Domodedovo has fulfilled its commitments better than many airports in more developed markets.
Over the past three years, 28 carriers have either shifted to Domodedovo or started new Moscow service there.
Domodedovo's success brought it unwanted attention, however. During Vladimir Putin's recent presidency, many of Russia's 1990s privatizations were reversed.
At East Line, government security officials repeatedly searched facilities and confiscated property. Government lawsuits against East Line yielded court rulings that threatened the company's control of the airport. The Kremlin's objective wasn't clear, but appeared to be related to battles between powerful clans for control over the lucrative airport business, according to people close to the conflict. Recent appeals-court decisions supporting East Line seem to have ended the problem, although political shifts might prompt new challenges.
Two years ago, Sheremetyevo started to fight back, as a new management team began redeveloping the airport. In June, Sheremetyevo got a 30-minute rail link to Moscow. One new terminal recently opened and two more are slated for completion by 2010. In the old terminal, workers are now repainting brown walls white, modernizing check-in desks and installing more shops.
Generation Companies: Putin supports initial plan of wholesale market liberalization
UralSib
December 1, 2008
Investors are looking for political support. Wulf Bernotat, the chairman of German utilities holding E.ON, met Prime Minister Vladimir Putin on Friday, Interfax reported. During the meeting Bernotat asked Putin for political support for E.ON's activity in Russia. E.ON owns 76% of OGK-4 (OGKD - Buy). We regard the appeal as a response to a letter sent two weeks ago by Russia's oil companies in which they asked the government to delay the liberalization of the wholesale electricity market. In his meeting with Bernotat, Putin said the energy sector is the core sector for the Russian economy and the government will not amend the original reform plan for the energy sector. We consider this statement to be positive for the generators as political support suggests the initial schedule will be adhered to.
Liberalization of the wholesale electricity market the key driver. At present 25% of the wholesale electricity market has been liberalized; full liberalization should be attained within the next two years. The initial schedule helped the sector attract $32 bln in investment from strategic investors, including both foreign and Russian energy giants such as E.ON, Enel, Fortum and Gazprom. A delay or even cancelation of market liberalization would be value destructive for the sector as the current "cost-plus" tariff system does not permit the companies an adequate return on investment. In addition a delay would worsen the overall investment climate in Russia.
Undervalued assets. Russia's thermal generation companies are trading at an EV/capacity multiple of $65kW, which is significantly below developed and emerging market peers. We believe this discount is due to specific utilities sector risk (such as the possible delay to market liberalization) and high corporate risk, as the companies will likely use additional share issues to finance their large capex programs, which will be value-dilutive for minorities at the current depressed share prices. Our top picks are RusHydro and OGK-4, which will benefit the most from market liberalization as they operate the most efficient power plants in the sector.
Matvey Tait
X5 Posts Loss, Cuts Forecast, Investment Plans as Economy Slows
By Meera Bhatia and Bradley Cook
Dec. 1 (Bloomberg) -- X5 Retail Group NV, Russia’s largest supermarket chain, posted a loss in the third quarter and slashed its sales forecast and investment plans for next year as economic growth slows.
The net loss of $14.7 compares with year-earlier net income of $17.8 million, the Moscow-based company said today in a Regulatory News Service statement. Sales jumped 48 percent to $2.19 billion.
X5, controlled by billionaire Mikhail Fridman, cut its 2009 forecast for the second time in two months and halved its investment target to $500 million, citing the global financial crisis. X5 now expects sales in ruble terms to climb at least 25 percent next year, down from the 40 percent predicted by the company as recently as Oct. 10.
“In the current economic environment, food retail remains one of the most resilient sectors as consumers shop for their basic needs,” Chief Executive Officer Lev Khasis said in the statement. “X5’s scale, purchasing power and ability to respond to changes in the marketplace give us a clear competitive advantage.”
Russia’s economy is growing at the slowest pace in a decade as the cost of borrowing money surges and prices fall for commodities including oil, the country main export earner. Russian manufacturing shrank by the most on record last month, according to VTB’s Purchasing Managers’ Index, which fell to 39.8 from 46.4 in October.
“X5 is relatively well-positioned as a defensive play in the face of deteriorating consumer demand as a result of its grocery exposure,” Goldman Sachs analysts including Mlada Yegikyan said in a research note before the earnings report.
President Dmitry Medvedev’s economic aide, Arkady Dvorkovich, said last month that Russia’s economic growth may slow to 2 percent next year from the Economy Ministry’s forecast of 7.3 percent growth in 2008, according to the state-run RIA Novosti news service. Growth has averaged about 7 percent a year since 1999.
The ruble lost 8.6 percent versus the dollar in the third quarter, making imports more expensive.
To contact the reporters on this story: Meera Bhatia in Oslo at mbhatia2@; Bradley Cook in Moscow at bcook7@.
Last Updated: December 1, 2008 03:49 EST
Write to Daniel Michaels at daniel.michaels@
Mutual Funds Still in Crisis, But Less So
Private investors withdrew 724.4 million rubles from mutual funds in November, according to investfunds.ru. BFA management company lost the greatest chunk of them, 226.5 million rubles, although Finansist has suffered the greatest losses overall, with 228.2 million withdrawn. Troika Dialog clients withdrew 120.2 million rubles, and Uralsib lost 88.8 million rubles. A few funds ended the month in the black. The biggest gains were experienced by Gazprombank Asset Management (up 47.8 million rubles), the Bank of Moscow (41.6 million rubles) and UFG Asset Management (31.6 million rubles).
For the fourth month in a row, bond funds have lost the most. In November, 543.2 million rubles were taken out of them. Experts say the risk of default has frightened off investors. Only 80.3 million rubles have been taken out of money market funds. In spite of the fact that the MICEX index dropped 40 percent in November, stock funds saw a net increase of 4.71 million rubles the same month. Investors placed 28.7 million in the Alfa Bank Enterprises with State Shares fund and 24.3 million rubles in the Petr Stolypin fund. Index funds, which are made up exclusively of blue-chip stocks, were the most popular in November. They attracted 140.9 million rubles.
In September, mutual funds lost more than 1.5 billion rubles, and in October they lost about 3 billion rubles. “Private investors have already experienced fear, panic and desperation and now they are in a state of apathy and they don’t want to do anything with their fund shares,” commented Igor Ryabov of UFG Asset Management. The value of private assets in mutual funds has fallen from 136 billion rubles in January of this year to 49.3 billion on November 30, which was the size of the market in 2005.
Hermitage claims further intimidation as Russian police arrest adviser
bne
November 28, 2008
Hermitage Capital Management, which once ran Russia's largest investment fund, has condemned what it claims is further intimidation by an organized criminal group working in collusion with Russian authorities after one its legal advisers was arrested by the Interior Ministry on November 24.
Sergei Magnitskiy, a legal and accounting adviser with the Moscow-based law firm Firestone Duncan, which has provided services to a number of foreign clients including HSBC and Russian holding companies of the Hermitage Fund, was arrested by the Interior Ministry following a raid on his home and is currently being held in a pre-trial detention centre in Moscow. The Tverskoi District Court approved the detention in what the fund claims has become a routine decision in the Russian court system, which has overseen the turning of pre-trial detention into a "commercial business" for Russian investigators and prosecutors.
"In violation of the Russian law, [the Interior Ministry] did not allow Firestone Duncan's lawyer to be present during the search. The officers seized numerous privileged legal and audit documents in respect of various clients of Firestone Duncan. This was the third such raid on Firestone Duncan by Russian police conducted in breach of the Russian law since 2007," Hermitage said in a statement released November 27.
Hermitage claims this is yet another example of intimidation by a criminal gang, backed by corrupt elements within the Russian state, which misappropriated money from the three Hermitage Fund companies and then fraudulently reclaimed $230m in taxes. "The perpetrators of the large-scale fraud against the Russian government and the Hermitage Fund directed the money to specially opened accounts in two small Russian banks, Universal Savings Bank and Intercommerz, and subsequently laundered the $230m through various Russian and international banks," Hermitage claims.
Hermitage has been embroiled in a battle with shadowy forces within the Russian state since 2005, when the investment firm's CEO William Browder, a crusading investor-rights activist, suddenly had his visa for Russia revoked and was barred from entering the country. It's widely suspected that the decision to revoke his visa was connected with his outspoken attacks on Gazprom and Kremlin-linked oil major Surgutneftegaz for their dodgy business practices.
Hermitage says this latest move by the Interior Ministry is not the first time that lawyers and advisers representing HSBC and the Hermitage Fund have been the subject of unlawful harassment. In August, the offices of three other Moscow-based lawyers were illegally searched by the Interior Ministry to prevent these lawyers from representing HSBC and the Hermitage Fund in court proceedings scheduled for the following day.
On September 3, the International Bar Association (IBA) issued a statement condemning the treatment of the HSBC and Hermitage Fund lawyers as a contravention of the Basic Principles on the Role of Lawyers adopted by the United Nations. Mark Ellis, executive director of the IBA, stated that such actions indicate further deterioration of the rule of law in Russia. "When government agents interfere with the work of lawyers, it is not only the legal profession that is threatened, but the overall legal order in the state," Ellis said.
New measures for Russian Arctic protection
2008-11-28
The Russian Ministry of Natural Resources believes a new National Council should be established in order to meet the growing environmental challenges in the Russian Arctic.
The National Council on sustainable development in the Russian Arctic zone could help Russia handle increasing industrial pressure against its Arctic areas, Ministry representative Amirkhan Amirkhanov said at a conference this week.
The desired organizational adherence of the proposed council and its mandate remains unclear.
Mr. Amirkhanov highlighted that run-down infrastructrure and environmental “hot spots” in the Russian Arctic are of major concern to the Ministry of Natural Resources, a press release on the issue reads. In addition, the expected growth within extraction, processing and transport of hydrocarbons and minerals will pose new threats to the Arctic, he added.
“The main sources of pollution in the Arctic Ocean and along the Arctic coasts are global and regional emitted wastes from metallurgy companies, the oil and gas industry, nuclear-powered vessels and coast bases”, the ministry press release reads.
Also ship wrecks are causing the ministry’s concern. Alone in the Kola Bay outside Murmansk, there are about 200 sunken vessels, five of which pose a major threat against shipping in the area.
Mr. Amirkhanov heads the Department of State Policy and Regulations in the field of environment. He participated in a ministry round table conference on pollution in the Arctic this week.
Activity in the Oil and Gas sector (including regulatory)
Russia slashes oil export duty
RBC, 01.12.2008, Moscow 10:42:19.An oil export duty of $192.1 per tonne has become effective in Russia today. A relevant decree was signed by Russian Prime Minister Vladimir Putin on November 26. The duty on oil products will amount to $141.8 and $76.4 per tonne of light and heavy oil products, respectively.
The previous oil export duty, effective from November 1, stood at $287.3 per tonne. The duty reached $205.9 per tonne of light oil products and $110.9 per tonne of heavy oil products.
Russian players fail to get extra duty cut
By Upstream staff
Russia's Prime Minister Vladimir Putin has signed a decree cutting December oil export duties to the earlier announced levels despite a last minute attempt by oil producers to get a bigger cut.
The Russian government said in a statement oil duties will fall to $192.1 per tonne of crude oil from 1 December, compared to $287.3 per tonne currently.
Industry and government sources told Reuters Putin held a meeting on Wednesday with oil executives, Russia's top energy official Igor Sechin and Finance Minister Alexei Kudrin after oil producers asked the government to make a steeper cut in duties arguing that exports remain loss-making.
"Kudrin argued that the budget is also posting heavy losses and cannot afford a deeper cut," said a source familiar with the outcome of the meeting, who asked not to be named because he is not authorised to talk to the press.
Russian companies say they are posting heavy losses on exports because of the system of oil export duties, which are set based on Urals crude prices for a period of two months and are applied with a delay of one month.
But with global oil prices sinking the government has broken with this practice and has started revising duties more often.
Nevertheless the latest duty is based on Urals prices for the period between 15 October and 15 November, when they stood at between $70 and $50 per barrel. Since then Urals prices have fallen below $50 and touched as low as $43 per barrel.
Russia's budget heavily depends on oil revenues and companies warn they might be forced to cut exports and production if sales remain loss-making.
Thursday, 27 November, 2008, 23:58 GMT | last updated: Thursday, 27 November, 2008, 23:58 GMT
Russian oil to cost about $50/barrel in 09-deputy minister
Reuters, Sunday November 30 2008
MOSCOW, Nov 30 (Reuters) - The average price of Russian oil will hover at about $50 a barrel next year, nearly half a previous 2009 estimate for the country's main cash earner, one of Russia's top economic advisers said on Sunday.
On Monday, deputy minister for economic development, Andrei Klepach, and his team of advisers will present new forecasts for Russia after a global credit squeeze that triggered economic turmoil and weakened the price of oil.
"In line with our basic scenario the average price of Urals oil in 2009 will be $50 per barrel, in 2010 $55 per barrel and in 2011 $60 per barrel," he told an economic forum in Vienna according to the RIA Novosti news agency.
Russia had previously estimated Urals oil to be priced at $70 per barrel this year and $95 per barrel in 2009.
On Friday, Urals oil traded at just under $46 per barrel compared with about $140 per barrel earlier this year. Since then global credit lines have closed forcing world stock markets and commodity prices to tumble.
The Russian government has said it can defend itself next year against a price of about $50 per barrel of oil because of its $475 billion in gold and cash reserves, built up mainly by oil and gas exports, which have fuelled an economic boom.
It has already pledged $200 billion to prop up indebted companies and spent $50 billion defending the rouble against a potential devaluation. (Writing by James Kilner; Editing by Andrew Macdonald)
Putin Gives E.On a Guarantee
The German energy company E.On has asked Russian Prime Minister Vladimir Putin for a personal guarantee on the effectiveness of its investment in Russian energy and on fulfilment of contracts for the delivery of natural gas to Europe. Putin received E.On chief Wulf Bernotat on Friday and called him “a strategic partner in the full sense of that word.” E.On is the largest foreign shareholder in Gazprom, with a 6.43-percent share. In October, it agreed to trade 2.93 percent for a share in the Yuzhno-Russkoe field. That agreement was the result of several years of difficult negotiations.
E.On also spent €4.6 billion on a 76-percent share in Russian electric company OGK-4. “One important condition for our decision on serious investments in electricity was the liberalization of the electricity market,” Bernotat said. “It is, of course, very important for us to know that all of the plans for liberalization and their complex conditions will be rigorously implemented.” He added that ensuring fuel (coal and natural gas) for electricity production and the inclusion of new capacity in the network were also of concern to the German investor. Bernotat said that “fruitful” negotiations were underway on those points with Russian Deputy Prime Minister Igor Sechin, Energy Minister Sergey Shmatko and “colleagues from Gazprom.”
In spite of those extensive activities, Bernotat told Putin that “It is, of course, important for us to obtain political support and your support in this issue.” Putin responded that “All plans that we have made in this area we will not cut back on and they will be fulfilled.” He did not specify which plans he was referring to or when they will be fulfilled. A source in the presidential administration told Kommersant that the real emphasis in the talks between Putin and Bernotat was the German’s desire for a guarantee of gas deliveries to Europe in the event that Russia and Ukraine enter into another Gas war in January.
China may finally get its Russian oil pipeline
Jonathan Manthorpe, Vancouver Sun Published: Friday, November 28, 2008
There were many smiles and handshakes in Moscow last week as Russian and Chinese officials signed a deal aimed at supplying China with up to 600,000 barrels of oil a day while Beijing will lend Russian companies up to $30 billion for pipeline and oil field development.
But before joining in the jollities it is worth remembering we have been here before. There have been several similar agreements in the protracted and sometimes nasty negotiations between Moscow, Beijing and Japan about bringing Russia's vast Siberian oil and gas reserves to the Asian marketplace.
The guts of last week's agreement look very much like the first deal in 2002, but which have been overtaken by internal political power plays in Moscow and rivalry between China and Japan for the lion's share of Russia's Siberian crude.
The current context, however, is that while Russia, the world's second largest oil exporter after Saudi Arabia, still wants to diversify its markets away from Europe and towards Asia, oil prices tumbling towards $50 a barrel make paying for the massive Siberian infrastructure projects a problem.
But China has cash and a new willingness to put big bundles of it on the table in the form of loans to pay for the oil field development and pipeline construction that would deliver up to 600,000 barrels of oil a day, about four per cent of China's demand.
With China's Premier Wen Jiabao and his Russian counterpart Prime Minister Vladimir Putin looking on last week, the main arm of Russia's state-controlled oil and gas industry agreed to guarantee those deliveries to China.
In return China will offer long-term credits of up to $12 billion for Russia's state pipeline company Transneft and $15 billion to state oil producer Rosneft.
The core project is the construction of a 4,000-kilometre pipeline from Taishet near Lake Baikal in Siberia, through the mid-point city of Skovorodino to the port city of Nakhodka facing Japan.
Construction of the first half of the pipeline started early in 2006 and is expected to be completed as far as Skovorodino by March next year at a cost of $14 billion.
The stretch from Skovorodino to the sea at Nakhodka is predicted, somewhat optimistically, to be ready to run early in 2014.
What last week's agreement adds, if it's completed, is a $800-million spur line south from Skovorodino south to China's refinery hub at Daqing to deliver the 600,000 barrels a day pledged.
The problem will be to fill the pipeline, especially when Japan wants its share shipped by tanker from the Nakhodka end.
The first China-Russia memorandum of understanding on this issue was in 2002. The idea then was to ship China about 560,000 barrels a day, eventually by pipeline, but as much as possible by rail in the interim.
That tentative agreement fell foul of then president Putin's grave suspicions about the political ambitions of Mikhail Khodorkovsky who owned Yukos Oil.
Khodorkovsky wanted to end run the state-controlled company Transneft by building his own pipeline to China from Siberia.
But before Khodorkovsky could get his project under way Putin struck. Yukos was forced into bankruptcy and its assets sold to the state oil company Rosneft and Khodorkovsky was under arrest.
This uncertainty in Russia intensified the lobbying by Beijing and Tokyo for most favoured market status for Siberian oil.
In 2004 then-prime minister Mikhail Fradkov seemed to come down on the side of Japan when Transneft was given the go-ahead for construction of the Taishet-Nakhodka pipeline.
But Beijing did not give up. It has invested heavily in improving relations with Moscow in recent years now that the old rivalry over who represented the true fount of authentic communism is a distant memory.
Beijing has courted Moscow as a counterbalance to what it sees as efforts by Washington to contain China's economic and diplomatic rise.
China has also leaned heavily on Russia for arms supplies as it has invested heavily in turning the People's Liberation Army into a modern and well-equipped force.
And Beijing looks over the border with lustful eyes into the apparently limitless treasure trove of land and resources in Siberia and the Russian Far East.
Moscow does not entirely trust Beijing's lust. There are already far too many illegal Chinese immigrants in the Russian Far East for Moscow's taste or the equanimity of local Russians.
But Moscow also sees its resource-rich eastern provinces with their access to Asian markets as a huge opportunity that is not to be missed.
So perhaps this will, finally, be the pipeline deal that sticks.
jmanthorpe@
Top Management Changes at TNK-BP
December 01, 2008, Monday
TNK-BP announced that it had received the resignation of its founding President and CEO, Robert Dudley, in accordance with the memorandum of understanding (MOU) between Alfa Access-Renova and BP in early September. Mr. Dudley’s resignation is effective from today, December 1st.
TNK-BP also announced the appointment of Tim Summers as interim CEO in addition to his current duties as the company’s Chief Operating Officer. Mr. Summers is appointed Chief Executive until the appointment and commencement of a new non- affiliated CEO as agreed by the shareholders.
The appointment of a new CEO is currently being progressed by the company’s shareholders as are changes to the charters and Boards of Directors of TNK-BP Holding and TNK-BP Management, together with attendant ancillary matters.
“I depart TNK-BP after more than five challenging and immensely satisfying years building and leading this unique and progressive Russian oil major”, Robert Dudley stated. “I wish the new management team every success in continuing the company’s development.”
Incoming CEO Tim Summers noted “It is vital that the transition is effected smoothly and seamlessly. I will focus on closing out our strong performance in 2008 and in setting our business plan for next year in this difficult business environment.”
TNK-BP output woes on low oil price
By Upstream staff
Russia's TNK-BP, half-owned by BP, is cutting refining and marketing business staff at its head office and expects oil production to suffer if oil prices do not recover in 2009, a company executive said today.
Alexander Kaplan, vice-president of TNK-BP, told a news conference the company would cut its head office's downstream business staff by 15% to 250 people before the end of the year.
He said the company was working on an assumption that oil prices would stick at around $60-$70 per barrel next year.
Production could suffer seriously if prices fall below $50, he said.
"We have deposits which are under the threat of closure because every tonne of oil produced generates a loss," he said.
Russian companies have repeatedly called on the government to sharply lower oil export duties as oil prices have been falling in recent months faster than the government-adjusted duties, thus pushing the companies into loss.
Kaplan said TNK-BP had no plans to cut exports in November and December.
The Russian government ordered oil companies to resume full shipments after they drastically cut export plans, citing very high export duties.
Kaplan said TNK-BP's final budget plan would be approved at a board meeting in December.
Thursday, 27 November, 2008, 10:29 GMT | last updated: Thursday, 27 November, 2008, 10:32 GMT
TNK-BP Will Buy Networks of Retail Sites in Russia and Ukraine for $891 Million by the End of 2008
November 28, 2008, Friday
TNK-BP will complete its transactions for buying networks of retail sites in the Russian Federation and Ukraine by the end of this year, Alexander Kaplan, Acting Executive Vice President, Downstream, TNK-BP, said to journalists.
He noted that 154 retail sites, 81 land plots for retail sites, and 5 oil depots have been purchased. According to him, these purchases were made between December 2007 and March 2008. “These transactions are practically completed at this time. There are payments still to be made by the end of this year,” said Mr. Kaplan.
The press service of TNK-BP informed that the networks of retail sites and oil depots were purchased for $891 million.
Mr. Kaplan noted that this year TNK-BP bought retail sites in Saint Petersburg, Moscow, and Krasnodar.
As reported earlier, in late February 2008 the Federal Antimonopoly Service allowed TNK-BP Ltd. to purchase 24 companied engaged in supplies of oil products and fuels. According to the information of the Petroleum Information Agency (ANI), the companies listed in the permission of the Federal Antimonopoly Service are controlling approximately 110 retail sites and several oil depots in Moscow, Moscow Region, and Saint Petersburg. Representatives of TNK-BP said that the company was conducting negotiations for purchasing a number of independent companies owning retail sites, some of which are under the management of the company “Magistral.” Most of the retail sites operated by these companies are working under franchising contracts as TNK retail sites.
After completion of transactions for buying networks of retail sites in Moscow and the Moscow Region, TNK-BP may control more than 20% of the retail market of this region.
In the beginning of 2008, the company operated approximately 100 own retail sites working under the BP and TNK brands and 70 jobber retail sites in Moscow and the Moscow region.
Two weeks ago, the Antimonopoly Committee of Ukraine allowed the joint venture LLC “Kersher” (Kiev) to rent 36 retail sites and 2 oil depots in Kiev and the Kiev Region from the “Gepard” group. The joint venture “Kersher” represents TNK-BP in the retail market of oil products in Ukraine. The company manages the own retail sites of the holding in Ukraine, controls the retail sales of oil products from the Lisichansk Oil Refinery, and provides associated services to end users.
Currently, the network of TNK-BP in Ukraine includes 40 retail sites, and its jobber network is at the stage of reforming and re-branding. The company announced about its intention to expand its jobber network under a renewed brand to include up to 300 retail sites.
Source: Interfax-ANI
Oil price drop forces TNK-BP to axe jobs
News wires
Russia's TNK-BP said it expects oil production to suffer if oil prices do not recover next year, adding it has cut jobs in its downstream business segment.
Alexander Kaplan, vice-president of TNK-BP , told a news conference the company would cut its head office's downstream business staff by 15% to 250 people before the end of the year.
He said TNK-BP was working on an assumption oil prices would stick to between $60 and $70 per barrel next year. Production could suffer if prices fell below $50, he said.
"We have deposits which are under the threat of closure... because every tonne of oil produced generates a loss," he said.
Russian production is heading for a first decline this year after a decade of growth as companies like TNK-BP face deposit depletion and cannot afford to launch new fields due to a heavy tax take.
Russian companies have repeatedly called on the government to sharply lower oil export duties as oil prices have been falling in the past months faster than the government-adjusted duties, thus pushing the companies into losses.
Kaplan said: "(This year) was the best year in the company's history...Today we already understand that next year will be very different. It will be tough for us as for any other Russian company.
"Today we don't have funds for commercial projects, for (products) output quality improvement. We only have funds to support (operations). It affects refining and to a certain extent - marketing and production," he added.
However he said TNK-BP had no plans to cut exports in November and December. The Russian government ordered oil firms to resume full shipments after they drastically cut export plans, citing very high export duties.
Kaplan said TNK-BP's final capital expenditure plan would be approved at a board meeting in December.
Friday, 28 November, 2008, 00:11 GMT | last updated: Friday, 28 November, 2008, 00:11 GMT
Glencore Acquisition of Russneft Neutral for Subsidiaries
CiG
December 1, 2008
Swiss commodity trader Glencore has applied to Germany's anti-trust watchdog for approval of its planned acquisition of a 25% stake in oil holding Russneft, the anti-monopoly service announced on Nov. 27. Glencore's potential blocking interest in the company is however unlikely to affect the share prices of Russneft subsidiaries Aganneftegazgeologiya, Varyeganneft, Saratovneftegaz, Orsknefteorgsintez, and Udmurtgeologiya, in our view. Overall, we see little if any investment appeal left in Russneft subsidiary shares. This is due both to their negligibly small free float, and to the fact that a mandatory buyout of minorities in subsidiaries owned 95%+ Russneft - previously a potential price growth driver - expired on August 1.
Other buyers preferred for Repsol over Lukoil - Spanish interior minister
27th November 2008
By Staff Writer
Spanish interior minister Alfredo Rubalcaba has said that he would prefer some other company over Russian oil major Lukoil for buying Sacyr Vallehermoso's 20% stake in Repsol, according to Reuters.
Lukoil is seeking to acquire construction firm Sacyr's 20% stake in Repsol in addition to acquiring interest from other stakeholders. The Spanish government has said that while it prefers Repsol to stay under local control, it will not interfere in private negotiations, according to the news source.
Meanwhile, Spanish prime minister Jose Zapatero was quoted by the local media as denying that SEPI, the Spanish state holding company, will acquire Sacyr's stake in Repsol.
Lukoil is offering E28 per Repsol share, assessing the Spanish oil company at double its current value. Industry speculation persists over possible interest from French energy major Total.
Raising Oil Output Still State's Goal
28 November 2008
By Anatoly Medetsky / Staff Writer
Editor's note: This is the 11th in a series of reports about the effect of the global financial crisis on Russia.
[pic]
Anyone who thinks that oil and wealth automatically go hand in hand obviously hasn't been paying attention to export revenues in recent months.
Producers of crude lost an estimated $3.3 billion on exports in September and October, according to Alfa Bank, and the losses have continued to mount this month.
The financial difficulties come at a hard time, as production will fall this year for the first time in a decade, threatening the country's share in the global market. But the government continues to press for production to grow and guarantee Russia's place as the world's second-largest exporter — a factor that has underpinned the country's growing international clout.
"Suppose that global crude prices recover in a couple of years and we have dwindling production," said Alexandra Yevtifyeva, an economist at VTB. "We would lose our significance as a reliable supplier of energy."
Falling production would mean a reduced ability to influence international prices, a goal that the government has articulated of late, said Igor Lotakov, a partner at PricewaterhouseCoopers.
"If we begin a rollback now, our position will no doubt grow weaker," he said. "If we give up everything, revenues will drop, and we will still be unable to influence the situation [with prices], much as we are unable to now."
The reason for the financial difficulties is that while oil prices have fallen by about two-thirds since their summer highs to just below $50, the fall in export duties that the government charges per barrel of oil has lagged behind.
The strong earnings in the first half of the year mean that the major producers should end up comfortably in the black, but smaller producers have seen those profits wiped out.
The last time Russian oil traded below $50 per barrel was in the first half of June 2005, when the ruble was trading at about 28.5 rubles to the dollar — less than a ruble off its current value.
In that sense, the situation today is a virtual mirror of conditions then.
But costs have soared since 2005, as reserves in existing fields have been depleted and the locations of the greenfields meant to replace them have grown more remote and difficult to exploit. Double-digit annual inflation has also contributed to increased outlays.
The steep rise in the cost of borrowing generated by the current global crisis has only put further strain on producers.
Some producers have already scaled back their investment plans for next year, and it is almost inevitable that others will follow suit. Senior executives at LUKoil, the country's second-largest producer, and Gazprom Neft, in the fifth spot, have predicted further declines in national output next year.
LUKoil chief Vagit Alekperov, however, has vowed that the company will raise production by at least 1 percent in the year ahead.
The crisis has also had a chilling effect on the world's largest gas producer, Gazprom. A company executive said in mid-November that the state-owned giant would extract less gas this year, in part, because of falling domestic and European demand.
Prices for gas exports, Gazprom's main source of revenue, are tied directly to oil prices, but with a lag time of six to nine months, meaning that the company is currently reaping the highest export revenues in its history. But these prices will also start to slide in the second quarter of next year.
Even with lower gas prices, Gazprom is in better shape than companies in the oil sector, as export and extraction taxes are lower than on oil.
The company has said it will continue developing new Arctic fields in Yamal and the Shtokman deposit in the Barents Sea, and deputy CEO Alexander Medvedev said at a recent industry conference that the company's investment plans depend on a long-term oil price of $45 to $60 a barrel.
With possible difficulties at Gazprom still off in the relative distance, the government's focus has been on helping the oil sector.
Even before the financial crisis struck in full in August, the government had already devised tax incentives for the oil sector to take effect in January, in a move to try to halt the slide in production.
Following the plummet in world prices, more tax cuts to stimulate production are in consideration, and changes have been introduced to help export duties track prices more closely. The new system — approved by the State Duma on Nov. 21 — would see the duties revised every month, as opposed to every two months, as was the case before. The duties will now also be calculated on prices for the previous month rather than the previous two.
There is disagreement whether the change would make exports profitable in December. Whatever the case, the percentage of revenues earned going to the government would remain unchanged.
Moreover, the profit tax reduction proposed on Nov. 20 by Prime Minister Vladimir Putin, to come into force in the new year, will not be significant enough to prompt oil companies to jack up investment, said Artyom Konchin, an analyst at UniCredit Aton.
LUKoil vice president Leonid Fedun said last month, before Putin's profit tax proposal, that the government would have to offer the industry significantly higher tax savings if it wanted output to grow even marginally.
"Russia is in a phase of dwindling production," Fedun said at a recent investment conference. "So far, I don't see when we will move out of this phase."
Royal Dutch Shell chief executive Jeroen van der Veer said earlier this month that investment in oil projects could still be attractive at a world price of $50 per barrel — if taxes and royalties on production were not too high. LUKoil will decrease drilling next year, which will slow production growth in 2010 and 2011, Fedun said. Senior executives at Surgutneftegaz, the country's fourth-largest producer, and Gazprom Neft have said in recent weeks that their output will fall next year.
"With oil companies starting to wind back their 2009 [capital expenditures] programs … the reversal of the downward production trend in 2009 is no longer a guarantee," Uralsib's Viktor Mishnyakov wrote to investors in a recent note.
The government, however, is still calling for a rise in production.
"The global financial crisis, instability on the global commodity markets and a fall in oil prices demand that we take the measures that would allow a sustainable growth and development of the industry in contemporary conditions," Putin said at a meeting this month.
Finance Minister Alexei Kudrin was more specific, saying at a separate event that the ministry was betting on annual output increases of 0.5 percent per year until 2015. He said the price for Urals blend would remain about $50 a barrel next year.
Officials at the Energy Ministry and the Economic Development Ministry declined to be interviewed for this story.
The growth projections may, ironically, be based on the positive effects of changes brought on by the financial crisis, such as a weaker ruble, which has lost almost one-fifth of its value against the dollar since mid-July.
"That is a substantial benefit for companies like ourselves, which are primarily exporters of raw materials and generating revenues in dollars," said Peter O'Brien, chief financial officer at Rosneft, the country's largest oil company. "That should help us substantially in continuing to manage this cost growth."
Prices from providers of oil-field services could also come down, as costs for steel and cement fall and there is more competition for fewer investment projects in the industry, O'Brien said at the investment conference.
Despite the losses on fall exports, major oil producers will still boast robust profits for the year.
"It will without question be the best year on record for Rosneft in terms of volume and in terms of earnings," O'Brien said. "And that is despite what we all see today."
Alfa Bank estimated that Russian oil producers lost an average of $9.70 on every barrel they exported in September and $14.60 in October. It put the total losses across the industry for the two months, based on total export volumes, at $3.3 billion.
Integrated oil companies were able to redirect some exports to their refineries or to channel some production into storage tanks owned by Transneft, the national pipeline company. But shutting down wells is not a real option, as the substantial cost to restart them makes the practice too expensive.
Smaller oil companies, without their own refineries as an alternative to crude exports, were desperate, said Yelena Korzun, director of Assoneft, an association that brings together a number of smaller producers.
"Exports in September and October ate up absolutely all of the profits that had been accumulated over the year," Korzun said. "It led some companies to reduce production in November."
Gazprom
Gazprom hopes Ukraine to pay its gas debt by year's end
Today, 10:14 | Interfax-Ukraine
Moscow, Dec. 1 (Interfax) - Gazprom hopes that Ukraine will pay its gas debt to the company before the year's end.
"This is the condition for us to switch to long-term contracts with Naftogaz Ukrainy, as it was provided by the intergovernmental memorandum. We count on this very much," Gazprom spokesman Sergei Kupriyanov told the Vesti Nedeli TV program.
The main task is to settle of problems with Ukraine's colleagues before the end of 2008, he said.
The spokesman, however, noted that Gazprom hopes that Ukraine will pay the debt for September and a part of October by December 1. "We hope that we will get the debt for September and a part of October paid by December 1, as it was agreed, and will begin talks on our further cooperation on [December] 2," he said.
Gazprom expressed readiness to pay for the transit of Russian gas through Ukraine's territory in advance, the spokesman said. "This could have been a considerable assistance as to the debt payment," he said.
Until the debt is paid, the only price for 2009 that can be discussed is "the price equal to the European," Kupriyanov said. "And the current price in Europe is over $400" per 1,000 cubic meters, he added.
New Gazprom natural gas price formula may end need for annual talks
Journal Staff Report
|KIEV, Nov. 27 - Russian natural gas giant Gazprom has suggested a formula for calculating future gas prices for Ukraine, a move |
|that may finally end the political component in price talks, a senior official said Wednesday. |
| |
|For the past five years Ukraine has been pressing to switch to formula-based gas prices as opposed to holding annual negotiations|
|with Russia over prices that had often led to sharp disputes. |
| |
|“For the first time we have received a formula from Gazprom,” Oleh Dubyna, the head of aftogaz Ukrayiny, the national oil and gas|
|company, said at an energy conference. |
Ukraine starts paying Russia gas bill-Gazprom,agency
Reuters, Sunday November 30 2008
MOSCOW, Nov 30 (Reuters) - Ukraine has started to pay a Russian gas bill, the Russian gas monopoly Gazprom said on Sunday, reducing the danger of a standoff of the sort that threatened gas supplies to Europe two years ago.
A Soviet-era pipeline network transports a fifth of Europe's gas from Russia across Ukraine, and European countries worry that a row between the two countries could cut their supplies -- as it did briefly in January 2006.
Gazprom says Ukraine owes it $2.4 billion for September-November gas supplies plus interest for late payment. Ukraine says it owes $2 billion.
"We see this money and are ready to resume negotiations on Dec. 2 to resolve the issue of gas supplies," Gazprom spokesman Sergei Kupriyanov told Vesti television, according to ITAR-Tass news agency. Kupriyanov did not say how much Ukraine had paid.
The row over payment erupted just as Russia and Ukraine were about to negotiate the price for gas supplies next year.
Relations between Russia and Ukraine have worsened over the last few years, partly because former Soviet Ukraine wants to join both NATO and the European Union -- ambitions which anger Russia. (Writing by James Kilner, editing by Tim Pearce)
11/28/2008 16:06
RUSSIA
Gazprom cuts gas production
The economic crisis, lower industrial output and a warmer than usual fall have reduced European energy demands. This might lead to lower investments with the risk that production might prove insufficient in a few years. Moscow (AsiaNews/Agencies) – Gazprom has decided to cut gas production projections for 2008 by about 10 billion m3. Russia’s leading energy producer said it was responding to the effects of the global economic crisis and an unusually warm fall which have reduce demand both in Russia and the European Union. Experts suggest instead it is trying to keep prices high.
Gazprom will produce 552-553 m3di gas this year, down from the originally planned figure of 561-563 m3. Unlike petrol, gas prices in the European Union have remained at their highest levels; in October, the average price of gas in Europe was above US$ 500 per 1,000 m3.
The impact of the world’s financial crisis on the metallurgic sector, the construction industry and power stations has forced companies to announce reductions in production volumes
Russian gas exports to EU countries have thus dropped; for example, by 19 per cent in Germany and 13 per cent in Poland.
Gas prices follow oil prices eventually, with a delay of several, and are expected to drop around February next year, another reason for buyers to put off purchases now.
But for the online journal EastWeek lower revenues from gas sales will exacerbate the problem of insufficient investments in developing new gas fields.
Indeed Gazprom has often been criticised for not investing enough in research and up scaling Russia’s gas fields, preferring instead to focus on foreign investment to ensure its leadership role in the world.
In Russia itself the authorities have given the energy giant a monopoly position at the expense of other gas producers.
Now its production cannot even cover the domestic market by 4 billion m3 which may reach 120 billion m3 in 2010 and 340 billion m3, this according to the International Energy Agency (IEA).
On the short run, lower demand at present will allow Gazprom to create reserves, but without major investments the risk of a gas deficit in a few years will increase given the growing demands at home and in the European Union.
Gazprom and PDVSA Sign Deal on Joint Examination of Venezuelan Block
Friday, November 28, 2008 7:54 AM
(Source: Datamonitor)[pic]Russian gas major Gazprom and PDVSA have signed an agreement for the joint examination of the Venezuelan block Ayacucho-3 in the Orinoco oil belt.
The agreement results in the commencement of the second stage of operations at the Ayacucho-3 block and follows the agreement on the evaluation and certification of the reserves entered into in July 2008.
The work being carried out under the new agreement will result in a feasibility study. On the basis of the study, Gazprom and PDVSA will be able to obtain permissions from the National Assembly of Venezuela to set up a joint venture for oil production at the block.
A service of YellowBrix, Inc.
PDVSA, Gazprom Ink Agreement on Ayacucho 3 Block
Gazprom 11/28/2008
URL:
Within the frame of the official visit paid by Dmitry Medvedev, President of the Russian Federation to Venezuela, Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee and Rafael Ramirez, Venezuelan Energy & Mines Minister, President of Petroleos de Venezuela SA (PdVSA) signed an Agreement on joint examination of the Ayacucho 3 block in the Orinoco Oil Belt.
Once signed, the Agreement means the commencement of the second stage of operations at the Ayacucho 3 block and follows the Agreement on evaluation and certification of the reserves entered into in July 2008.
The work being carried out under the new Agreement will result in a Feasibility Study. On the basis of the Study the parties will be able to obtain permissions from the National Assembly of Venezuela to set up a joint venture for oil production at the block.
The exclusive right to produce natural gas is being held by the Venezuelan state-run oil and gas company Petroleos de Venezuela SA (PdVSA).
Gazprom operates in Venezuela under the Memorandum of Understanding signed with PdVSA in January 2005.
In August 2005, Gazprom was proclaimed the winner of a tender for Phase A of the Rafael Urdaneta project and was awarded the natural gas exploration and development licenses for the Urumaco 1 and Urumaco 2 blocks in the Gulf of Venezuela.
In accordance with the bidding rules for Urumaco 1 and Urumaco 2, Gazprom set up two joint-stock companies UrdanetaGazprom – 1, SA and UrdanetaGazprom – 2, SA. The potential natural gas reserves of these blocks average 100 bcm.
Furthermore, Gazprom signed with the Venezuelan party contracts to elaborate the General Scheme for the gas industry development in Venezuela and conduct activities related to imaging creation for the first stage of the South American gas pipeline.
On July 22, 2008 Gazprom and PdVSA signed the Agreement on evaluation and certification of the Ayacucho 3 block reserves.
Pursuant to the Agreement, a Gazprom subsidiary, Gazprom Latin America B.V., will jointly with PdVSA complete geological modeling, evaluation and assessment of the block reserves before the end of 2008, to be subsequently certified by an independent auditor.
Gazprom, TNK-BP delay Kovykta deal again
RBC, 28.11.2008, Moscow 14:30:49.The Kovykta field deal will not be closed by the end of November as previously planned, TNK-BP Executive Director for Gas Business Development Viktor Vekselberg told journalists today. He expressed hope, however, that the deal would be completed by the year-end.
As reported earlier, the deal involves the sale of stakes in the Kovykta project - including 62.8 percent of shares in RUSIA Petroleum, the field's license holder, and 50 percent of the East Siberian Gas Company's shares - from TNK-BP to Gazprom. However, the parties have repeatedly postponed the signing of the contract, as large-scale work on the evaluation of the stake's price had to be carried out. The price will be determined on the basis of past costs and interest, which are now estimated at roughly $1bn.
Schlumberger signs advanced technology agreement with OAO Gazprom
Fri. November 28, 2008; Posted: 04:40 AM
Nov 28, 2008 (M2 EQUITYBITES via COMTEX) -- SLB | Quote | Chart | News | PowerRating -- Schlumberger Limited (NYSE:SLB), an oilfield services company, reported on 27 November that it has entered into an agreement with energy company OAO Gazprom which covers the application of advanced technology to enhance the efficiency of exploration and development for hydrocarbon resources. The agreement includes Gazprom fields in Russia as well as in other areas around the world. In addition to the application of advanced technology, the companies will collaborate on research and development activities as well as on the training and development of Gazprom personnel.
Pursuant to the agreement, the parties will form a joint working group and coordinating committee that will select the technology projects for joint implementation while preparing a programme for long-term cooperation.
Comments on this story may be sent to admin@
Gazprom, Schlumberger Sign Advanced Tech Agreement
Gazprom 11/28/2008
URL:
OAO Gazprom and Schlumberger have signed an agreement covering the application of advanced technology to enhance the efficiency of exploration and development for hydrocarbon resources. The agreement covers Gazprom fields in Russia as well as in other worldwide areas.
The agreement was signed during a working meeting at Gazprom Headquarters between Alexey Miller, Chairman of the Gazprom Management Committee and Andrew Gould, Chairman and Chief Executive Officer of Schlumberger Limited. In addition to the application of advanced technology, Gazprom and Schlumberger agreed to collaborate on research and development activities as well as on the training and development of Gazprom personnel.
As part of the agreement, the parties will form a Joint Working Group and Coordinating Committee that will select the technology projects for joint implementation while preparing a program for long-term cooperation.
Russia, Serbia to Sign Papers on Oil, Gas Projects on Dec 5
Friday, November 28, 2008 7:51 PM
(Source: Daily News Bulletin; Moscow - English)[pic]MOSCOW. Nov 28 (Interfax) - Russia and Serbia plan to sign documents on December 5 on joint oil and natural gas projects, a source in the Russian-Serbian Intergovernmental Committee for Trade and Economic, Scientific and Technological Cooperation told Interfax.
The documents will be signed at a ceremony in Belgrade where the chief executive of Russian natural gas monopoly Gazprom (RTS: GAZP), Alexei Miller, will represent Russia.
The documents may include a contract on the purchase by Gazprom Neft (RTS: SIBN) of a 51% stake in Serbian monopoly oil company Naftna Industrija Srbije (NIS or Petroleum Industry of Serbia), a memorandum on the construction of one of the strands of South Stream gas pipeline through Serbian territory, and a memorandum on the construction and modernization of the Banatski Dvor underground gas depot.
During talks on those projects, Serbia has tried to force extra commitments on Gazprom and persuade the Russian company to sign a package deal under which Gazprom would pledge its involvement in all three projects.
The Serbian press said the extra commitments would include pledges to invest 700 million euro in modernizing NIS instead of 500 million, an amount agreed previously, and to buy 19.5% interest in the Serbian company, an amount worth about 500 million euro, from the population.
Serbia has also been demanding that more gas be pumped through its strand of South Stream, a pipeline that would follow a route bypassing Ukraine, believed to be an unstable transit stage, and running from the Russian Black Sea coast to Bulgaria or Romania and on to southern Italy and Austria.
A Russian-Serbian intergovernmental agreement stipulates that the strand handle a minimum of 10 billion cubic meters of gas a year.
However, an annual level of 21 billion to 22 billion cubic meters was agreed at talks in September between the head of Gazprom's strategic development department, Vlada Rusakova, and the acting director general of Serbian state-owned gas company Srbijagas, Sasa Ilic.
Today an annual amount of between 23 billion and 25 billion cubic meters is under discussion, the Intergovernmental Committee source told Interfax.
As for the Banatski Dvor project, a Russian-Serbian venture is to be set up on the basis of the depot, which is under construction. Gazprom would take ownership of a 51% stake in the venture, for which purpose the Russian company would have to buy into a company that today is a 100% subsidiary of Srbijagas.
Serbia valued the depot's assets at 156 million euro and further investment on the part of both partners at 140 million euro. The Russian side declared the valuations to be several times as high as they need to be.
After receiving technical documents on the project in December, the Russian side will carry out a feasibility study, and the deal is due before the end of June.
The intergovernmental agreement gives Gazprom an exclusive right to use all the facilities of the depot, which has an approximate minimum storage capacity of 300 million cubic meters and is to dispense a minimum of 1.6 million cubic meters daily.
On Thursday, Miller had a meeting in Moscow with the new general manager of Srbijagas, Dusan Bajatovic, Gazprom said.
Gazprom said in a statement that Miller and Bajatovic had looked at work that has been done on the feasibility study for South Stream's Serbian strand, had agreed moves to set up a joint venture to run the project, and had discussed prospects for increasing Serbia's total underground gas storage capacity to enlarge the country's resources for importing and transiting Russian gas.
NIS controls 72% of Serbia's oil and gas market and owns two oil refineries with a combined annual capacity of 6.3 million tonnes.
(c) 2008 Daily News Bulletin; Moscow - English. Provided by ProQuest LLC. All rights Reserved.
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Regulator sets final fine on Gazprom Neft at 1.3 bln rubles
MOSCOW. Dec 1 (Interfax) - The Federal Anti-Monopoly Service on
Friday again decided to fine Gazprom Neft (RTS: SIBN) 1.3 billion rubles
for abusing its dominant position on the fuel market, a spokesman for
the regulator told Interfax.
"Today we held a meeting and issued a resolution to impose the
fine. The amount remained the same - 1.3 billion rubles," the spokesman
said, adding that representatives of the oil company were not present at
the meeting.
Officials at Gazprom Neft said the company is still mystified as to
why the regulator issued two resolutions to impose the fine, and said
the company intended to challenge the decision in court.
The FAS on November 24 decided to fine Gazprom Neft 1.3 billion
rubles and TNK-BP (RTS: TNBP) 1.112 billion rubles for abusing their
dominant positions on the oil products market.
Gazprom Neft said Thursday that it had received notification from
FAS about a second meeting on the case concerning the fine of 1.3
billion rubles.
Gazprom consolidates control in TGK-1
2008-12-01
Russian energy major Gazprom is reshuffling the leadership of the TGK-1. The move comes as Gazprom is consolidating control over the company – one of the biggest electricity generators in Northwest Russia.
Gazprom has appointed Boris Veinzikher the new leader of the Territorial Generating Company No 1 (TGK-1). He replaces Valerii Rodin, who has headed the company since September 2006, a press release from the company reads.
Sources close to Gazprom say to newspaper Vedomosti that Mr. Rodin has resigned on his own will. However, TKG-1 is the last of Gazprom electricity generating assets which gets a Gazprom appointee as leader.
Gazprom last September secured a 28,66 percent stake in the TGK-1. In addition, the company now controls another 17,65 percent stake through its company Russian Energy Projects. Finnish Fortum owns 25,66 percent, while Norilsk Nickel owns 5,60 percent.
The TGK-1 runs electricity generating units in Leningrad Oblast, the Republic of Karelia and Murmansk Oblast. The company over the first nine months of 2008 has a turnover of 21,7 billion RUB.
The TGK-1 has a total generating capacity of 6 278,4 MW.
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