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Basic Political Developments
• Turkey eyes energy role with Russia - Putin's energy agenda in Ankara likely to include discussing oil, gas, nuclear power plant projects.
• Russia backs North Korea sanctions, nuclear halt: U.S. - Ambassador Philip Goldberg made the comment to Reuters in an interview at the end of his first day of discussions in Moscow with officials in the Russian Foreign Ministry.
• S.Ossetian Leader Sacks PM - Eduard Kokoity, breakaway South Ossetia’s leader, signed a decree on August 3 dismissing head of the government Aslanbek Bulatsev.
• South Ossetian PM relieved of duties - The decree says that in connection with the prime minister’s dismissal, the South Ossetian government will also resign.
• Russia plans no drills in South Ossetia in near future – DM: Russia’s Defence Ministry has no plans to hold military drills on South Ossetia’s territory in the near future, the ministry’s official told Itar-Tass on Tuesday denying mass media reports.
• Tensions rise in South Ossetia ahead of war's first anniversary - On Tuesday, the South Ossetian communications ministry told RIA Novosti that the village of Otrev, near the republic's capital of Tskhinvali, had been shelled by Georgian forces from across the border. No injuries were reported.
• S. Ossetian village attacked from Georgia - The South Ossetian village of Otrev,
• Tskhinvali region, was attacked from the Georgian village of Plavi at
• 10:05 p.m. on Monday, the South Ossetian Defense Ministry told Interfax.
• Georgia Risks Inflaming Caucasus Again – Russia
• Uzbeks condemn Russian troop boost in Kyrgyzstan
• Uzbekistan raps plan for new Russia military base - "Uzbekistan sees no necessity... in implementing the plans to place an additional group of Russian military forces in Kyrgyzstan's south," Jahon news agency, run by Uzbekistan's Foreign Ministry, wrote.
• Ukraine's Consular General to Saint Petersburg keeps on working, questions for Russian Consular General to Odesa still remain
• Russia interested in paying Azerbaijan not in cash, but military supplies - Azerbaijani political expert Rasim Musabayov spoke in an interview with Day.Az.
• Russia: We'll defend Serbia's stance at ICJ - -- Russian Ambassador to Belgrade Aleksandr Konuzin told Tanjug on Monday that Russia will uphold Serbia's stand before the International Court of Justice (ICJ).
• Northern Fleet vessel visits Cuba - The Rescue tug “Altay” from Russia’s Northern Fleet will visit the Cuban capital Havana in the first week of August.The official visit takes place August 3-6, the Russian Embassy in Cuba told RIA Novosti.
• Russian company develops heavy UAV for military use - "The Kronshtadt engineers have developed a heavy Dozor-3 UAV with a lift-off weight of 600 kg and a payload of 100 kg, which could be used as a strike aircraft," said Viktor Godunov, member of the company's board of directors.
• Russian nuclear leftovers total 3,906 warheads - The Defense Ministry has revealed that Russian armed forces have 3.906 nuclear warheads and 811 delivery systems at the moment.The numbers were voiced by the deputy head of the National Center for Nuclear Threat Reduction, a structure in the Defense Ministry responsible for the reduction of strategic arms in accordance with international treaties.
• Kremlin: Medvedev appoints new Russian missile forces chief
• Russia strengthens India’s defences with nuclear subs - India has become the sixth country in the world to build a nuclear-powered submarine capable of firing ballistic missiles. Moscow played a key role in the construction of the current sub, and has agreed to lease another.
• Russian atomic engineer robbed in Tamil Nadu - Alexander V. Chernov, who works in the upcoming nuclear power plant in Kudankulam, and his daughter were walking on the beach Sunday when a seven-member gang assaulted them.
• Iberdrola in Talks on Russian Nuclear Reactor, Economista Says - Iberdrola Ingeneria, a unit of Spain’s Iberdrola SA, is in talks with Russia’s state-run nuclear company Rosatom Corp. to collaborate on the construction of a nuclear reactor in Kaliningrad, El Economista reported.
• Vietnam-Russia trade needs to increase - Trade between Vietnam and Russia has advanced recently but Vietnam needed to boost exports to balance the scales, a seminar in southern Can Tho City heard Monday.
• Judge Steps Down in EU Yukos Case - A judge appointed by the Kremlin to the European Court of Human Rights for a billion-dollar lawsuit by former Yukos management has stepped down after questions about his impartiality were raised because he is a Gazprom board member.
• Hedge Fund Hermitage Wins Subpoenas In Russian Fraud Case
• Russia Opens New Trial In Politkovskaya Murder - A new trial into the killing of investigative journalist Anna Politkovskaya opens Wednesday, with Russia's failure to solve her case under renewed scrutiny after the murder of a close colleague.
• Russian Supreme Court upholds banning Islamic organization as extremist - The Appeal Board of the Russian Supreme Court has upheld a ruling on finding the religious organization Tablighi Jamaat as extremist and banning its activities in Russia.
• FSB officer convicted for organising illegal migration
• Moscow police seize contraband from India, China - Russian police have seized contraband goods worth USD 29 million from India, Afghanistan, China and Turkey from a hotel premises.
• New Raid Worries Market Vendors - Police said Monday that they had interrupted a major smuggling operation at the Sevastopol market in southern Moscow, raising concerns among foreign merchants that many legitimate import businesses would be caught up in a crackdown on counterfeiting.
• Moscow's Largest Market To Be Replaced with Billion-Dollar Chinatown
• New Cherkizovo market may be constructed around Moscow - Lenin district administration of Moscow province plans to construct a wholesale trade center for foreigners working in Cherkizovo market, APA reports quoting the Kommersant.
• Yavlinsky Meets Medvedev - Grigory Yavlinsky, the former leader of Yabloko, met with President Dmitry Medvedev last week and secured his support for the party’s bid to run in the Moscow City Duma elections this fall, Nezavisimaya Gazeta reported Monday, citing a Kremlin source.
• Assets Laws Reviewed - Russia’s investigative committee of the prosecutor general’s office wants to extend punitive measures for economic crimes by confiscating assets even if they were transferred to others, Vedomosti reported.
• Moscow Comes Closer - Russian Railways, the country’s railroad monopoly, said its new high-speed Sapsan trains manufactured by Siemens will halve travel time between Moscow and St. Petersburg, the country’s two biggest cities.
• Minister Touts Pikalyovo Simulation - A proposed online game based on the events in Pikalyovo is an excellent way to train officials and recruit online gamers to management positions, Deputy Industry and Trade Minister Stanislav Naumov said on his blog Monday.
• Moscow’s Forcible Consolidation of Schools Threatens Russia with New Pikalevos, Expert Says - The Russian government’s decision to accelerate the process of school consolidation in rural areas by setting region-by-region quotas for the closure of rural schools is increasing social tensions in many parts of the country, a trend one expert suggests is “snowballing” toward new Pikalevo-like public explosions.
• Kremlin Burning Bridges With Every Neighbor - Russia’s foreign policy failures are snowballing at such a rate that they threaten a second geopolitical collapse on a par with the disintegration of the Soviet Union 20 years ago.
• Russia's Hired Lobbies in the West - Russia's attempts to promote a positive image of being a "reliable energy supplier" as well as a safe and profitable haven for foreign investments have played a significant role in Russian policy. To achieve this goal the Russian government and state-owned companies have hired Western public relations firms to tout the alleged benefits of working in partnership with Russia.
• Russians become less tolerant of people with origins in Caucasus, Central Asia – poll
National Economic Trends
• Russian Finance Ministry to place 100 billion roubles of temporarily free budget funds in three-month deposits at commercial banks at a minimum bid rate of 12.0 percent.
• Russia c.bank injects 22.53 bln roubles via repos
• Russia daily c.bank swap limit at 5 bln rbls
• Large deficits to generate heavy borrowing - Increased public borrowing could bring the debt to GDP to 16.4% in 2012, according to the Ministry of Finance.
• Funds Down $5.9Bln in July
• Russian government spent $46bn of its savings in 7M09
• Unemployed Drops by 0.3%
• Official unemployment falls to 2.14m
• Farming Output May Fall - Crop production may decline 4.5 percent this year, the newspaper said. Russia imported $35.2 billion of food in 2008 and exported $9.4 billion, Kommersant said
• Ruble Gains Most in 2 Weeks on Oil
• Russia’s ‘Unsustainable’ Deficit Threatens Growth, Troika Says
• Putin Opts for a Large Deficit and Small Investment 2010 Budget
Business, Energy or Environmental regulations or discussions
• Russian Stocks Fall First Time in 4 Days; VTB, Polyus Gold Drop
• Obstacles Remain to Foreign Share Issues - Last month, the Federal Service for Financial Markets increased restrictions on Russian companies listing shares abroad, effectively limiting initial public offerings on foreign markets to 5 percent of the company’s value. Firms with more liquid stock would be able to list up to 25 percent of their equity abroad.
• Russia's VTB Q1 loss wider than forecast
• VTB Bank posts Q1 IFRS net loss of 20.5 bln rubles, worse than forecast
• Mechel Takes Over Failing Steel Factory - Mechel will take over management of Zlatoust steel mill, the Chelyabinsk region said Monday, in a deal many say was driven more by political than economic considerations.
• Alrosa Resumes Diamond Sales - Alrosa resumed sales of unpolished gems in the market in July after a seven-month halt triggered by a collapse in demand stemming from the world recession, the company said Monday.
• ALROSA July Sales Reach $150M [pic]- ALROSA has resumed its rough diamond sales and sold $150 million worth of goods to the market in July, the Russian diamond mining company reported.
• Russia's Sibirtelecom halves 2009 capex plans
• URALCHEM announces the production results for the first half of 2009
• Russia's PIK subsidiary faces bankruptcy lawsuit
• One-Third of Russia’s Clothiers Are Going Bust, Exporters Say
• Russia specifies FSC timber for Winter Olympics
• Logging Laws Cut Investment - Financial crisis aside, Russian forests are not commercially attractive to international timber companies, which would need to invest more than 1 billion euros ($1.4 billion) to build a single large paper plant in a forest-rich area. The high cost is associated not only with the plant but with the construction of transportation, energy and housing infrastructure required to reach the country’s 880 million hectares of forests, much of which is remote and underdeveloped.
Activity in the Oil and Gas sector (including regulatory)
• Russia looks to revive oil deal with Iraq signed with Saddam - "In the first half of August, I will visit Baghdad," Russian Energy Minister Sergei Shmatko said on July 31.
• Petrom reports new oil and gas discoveries in Russia - Petrom, the largest oil and gas producer in South-East Europe has reported both gas and oil discoveries in the exploration well Lugovaya. The well is located in Kamenski license in the Saratov region (Russia).
• Matra subsidiary contracts drilling rig - Matra is pleased to announce that its 100% owned Russian subsidiary “OOO” Arkhangelovskoe” has signed a turnkey contract with Petro-Management Drilling Company for the drilling of well-13 in the Sokolovskoe Field in Orenburg. The rig to be utilised is an Uralmash-4E electric rig.
• Tatneft Drills Horizontal Wells in Tatarstan Oil Fields
Urals Energy finally transfers Dulisminskoye field to Sberbank - might be a new owner very soon
• Exxon Ignores Pleas From 50,000 People To Halt Damaging Activities That Threaten Rare Whales - The petition urges Exxon, Rosneft, and other oil companies operating in the area to suspend all oil and gas development activities near the critically endangered Western Gray Whale*s annual feeding habitat off the coast of Sakhalin Island, and calls for the creation of the Sakhalin Marine Federal Wildlife Reserve.
Gazprom
• Scorpion Offshore risks losing USD3.8m revenue in Gazprom dispute
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Full Text Articles
Basic Political Developments
Turkey eyes energy role with Russia
Putin's energy agenda in Ankara likely to include discussing oil, gas, nuclear power plant projects.
By Sibel Utku Bila - ANKARA
Russian Prime Minister Vladimir Putin is to visit Ankara Thursday for talks expected to focus on energy cooperation amid a growing Turkish role in projects to carry gas and oil to Europe.
"Cooperation in the field of energy will be a primary issue on the agenda," an aide to Turkish Prime Minister Recep Tayyip Erdogan said.
Situated between Europe and the vast oil and gas fields of the Caspian Sea and the Middle East, Turkey has emerged as a hub for pipelines to supply the energy-hungry West.
Last month, Ankara hosted the signing of a long-delayed accord to build the Nabucco pipeline to carry Caspian gas via Turkey to Bulgaria, Romania, Hungary and Austria, bypassing Russia.
The project, planned to become operational in 2014, aims to reduce European reliance on Russia and avoid a repetition of cut-offs that disrupted winter supplies and sparked accusations Moscow was using gas as a political weapon.
Turkey however has been careful not to antagonise Russia -- its top trading partner and main gas supplier -- and Erdogan has insisted that Russia should also join the countries that would provide gas for Nabucco.
"This is a long-term proposal," Erdogan's aide said. "Russia's participation in the project would not harm the aim of diversifying energy supply."
In direct competition with Nabucco, Russia is pushing for its own project to pump gas to Europe -- South Stream -- and may seek Ankara's support to have the pipe pass through Turkish territorial waters in the Black Sea rather than Ukrainian waters, according to Turkish media.
Russia and Turkey are not outright rivals in the energy field and their ties instead resemble "that game in which children try to pull each other to their side across a line," columnist Semih Idiz wrote in the Milliyet daily Monday.
Turkey is already directly linked to Russia through the Blue Stream gas pipeline, which runs under the Black Sea.
Hoping to attract Russian and Kazakh oil, Ankara is also promoting a pipeline from its Black Sea port of Samsun to Ceyhan on the Mediterranean coast, which already serves as a terminal in conduits pumping oil from Azerbaijan and Iraq.
Putin's energy agenda in Ankara is likely to include also a long-delayed project to build Turkey's first nuclear power plant.
Russia's state firm Atomstroyexport was the only bidder in an auction in January, but the Turkish government is yet to decide whether to award it the project amid misgivings over the financial terms the company offered.
Erdogan's aide said the two prime ministers would also discuss regional affairs in the Caucasus.
Russia has been mediating talks between Armenia and Azerbaijan over the Nagorny Karabakh dispute, the settlement of which is crucial for speeding up Ankara's efforts to reconcile and establish diplomatic ties with Yerevan.
Another prominent issue is Georgia, whose NATO membership Turkey supports, despite fierce Russian opposition.
Russia's military intervention in the former Soviet republic last year briefly strained relations with Turkey, which has close economic and political ties with Georgia, its northeastern neighbour.
Turkey sought to tread carefully and proposed a regional platform for stability and cooperation in the Caucasus that will bring together the two foes as well as Azerbaijan, Armenia and itself.
Despite sometimes shaky political ties, economic exchange between the two countries has boomed since the fall of Communism: in 2008, their trade volume hit 37.8 billion dollars, making Russia Turkey's number one trading partner.
Russia supplies about 60 percent of Turkey's gas imports, and more than a million Russian holiday-makers boost Turkey's vital tourism sector each year.
Russia backs North Korea sanctions, nuclear halt: U.S.
Tue Aug 4, 2009 12:26am EDT
By Conor Sweeney
MOSCOW, Aug 3 (Reuters) - Russia has renewed its support for U.N. sanctions designed to halt North Korea's efforts to expand its nuclear arsenal, the U.S. envoy for implementing the sanctions said Monday.
Ambassador Philip Goldberg made the comment to Reuters in an interview at the end of his first day of discussions in Moscow with officials in the Russian Foreign Ministry. China made a similar pledge at the United Nations last Thursday.
After North Korea's second nuclear test in May this year, the U.N. Security Council passed a resolution expanding an existing arms embargo.
It also urged states to cut off all financial ties with Pyongyang unrelated to aid programs, and called for additional firms and individuals to be placed on a U.N. blacklist for aiding North Korea.
"I think there is a unity of view among all the members of the Security Council, the sanctions committee, in implementing and in support for the resolution," Goldberg said.
He said this was intended "not as a matter to punish the North Korean people but as a matter to get us back to the main goal that we all share, which is denuclearization and non- proliferation on the Korean peninsula."
Asked if he felt Russia was responding positively to ensure U.N. sanctions were fully implemented, he said:
"I think there is very strong support amongst the entire Security Council for that goal."
Moscow sometimes has positioned itself in opposition to Washington on international issues and was reluctant to back tough new controls against North Korea but has condemned Pyongyang's continual defiance of successive U.N. resolutions.
EXPANDING SANCTIONS
Eight entities, including North Korea's General Bureau of Atomic Energy, and five North Korean individuals are now on the U.N. sanctions list. They face mandatory asset freezes and travel bans in all 192 U.N. member states.
Goldberg said the United States would likely expand its own sanctions list and then consider seeking U.N. support for it.
"We, under our own national law, have identified one or two entities that we will designate ourselves but we will probably at some point go back to the committee."
"We believe that the committee stands ready to accept more information and additional entities and individuals," he said.
Goldberg characterized the discussions, which also involved U.S. officials with oversight for national security and financial crimes, as very technical interpretations of national rules on inspections and on financial services and transactions.
Asked if efforts to "reset" relations between Moscow and Washington under U.S. President Barack Obama had improved the climate for the discussions, he smiled and said, "We had a very cordial and good exchange and that's what's important."
(Editing by Michael Roddy)
S.Ossetian Leader Sacks PM
Civil Georgia, Tbilisi / 4 Aug.'09 / 11:29
Eduard Kokoity, breakaway South Ossetia’s leader, signed a decree on August 3 dismissing head of the government Aslanbek Bulatsev.
Kokoity cited “health condition” of Bulatsev, according to the statement posted on the breakaway region’s governmental website.
Before becoming the breakaway region’s Prime Minister in October, 2008, Bulatsev served as the head of the Federal Tax Service in Russia’s North Ossetian Republic and prior to that he was head of the financial department of the Federal Security Service in North Ossetia.
South Ossetian PM relieved of duties
TSKHINVAL, August 4 (Itar-Tass) - President of South Ossetia Eduard Kokoity has signed a decree relieving Aslanbek Bulatsev of the duties of the republic’s government chairman for health reasons, the South Ossetian Ministry of Press and Mass Communication reported on Tuesday.
The decree says that in connection with the prime minister’s dismissal, the South Ossetian government will also resign. “Members of the government of the South Ossetia Republic shall fulfil their duties until the formation of a new government of South Ossetia,” the decree says.
Russia plans no drills in South Ossetia in near future – DM
MOSCOW, August 4 (Itar-Tass) - Russia’s Defence Ministry has no plans to hold military drills on South Ossetia’s territory in the near future, the ministry’s official told Itar-Tass on Tuesday denying mass media reports.
These reports said that on Monday some preventive exercise engaging Russian troops deployed in South Ossetia began in the republic.
“No large-scale exercise with the engagement of the 4th Russian military base deployed in South Ossetia are planned,” the official said.
The 4th Russian military base was deployed in South Ossetia after Georgia’s aggression against the republic last August.
On August 1, the Defence Ministry following Georgia’s shooting attacks on Tskhinval warned that “in case of further provocations that pose a threat to the republic’s population and Russia’s military contingent deployed in South Ossetia the ministry reserves the right to use all forces and means to protect citizens of South Ossetia and Russian servicemen.”
Tensions rise in South Ossetia ahead of war's first anniversary
MOSCOW, August 4 (RIA Novosti) - With the anniversary of last August's five-day war between Russia and Georgia over South Ossetia just a few days away, events in the region are taking on an oddly familiar tone.
In an echo of the accusations and counter-accusations that marked the buildup to last year's August 8-12 conflict, both Georgia and its former republic of South Ossetia have been trading claims of attacks on one another's territories.
On Tuesday, the South Ossetian communications ministry told RIA Novosti that the village of Otrev, near the republic's capital of Tskhinvali, had been shelled by Georgian forces from across the border. No injuries were reported.
The village was among the first to come under attack last August 8, when Georgian forces attacked the republic in an attempt to bring it back under central control. South Ossetia had enjoyed de facto independence since the early 1990s.
The Georgian Interior Ministry said late on Monday that three rocket-propelled grenades had been launched from South Ossetia at a Georgian village. Again, no injuries were reported.
Both sides also alleged attacks on their territories at the weekend. Russia has said it will use force to protect South Ossetian residents.
Last August's war saw Russian forces chase invading Georgian troops deep into Georgia amid accusations on both sides of human rights abuses. Russia eventually withdrew from Georgian territory and recognized the independence of both South Ossetia and Abkhazia, another former Georgian republic, on August 24. It has since stationed some 4,000 troops in the two republics.
The European Union, in a statement issued by current president Sweden, called for calm in the region.
"The European Union notes with concern the recent accusations of shellings and other incidents on both sides of the South Ossetian administrative boundary line," the statement said. "The EU urges all sides to refrain from any statement or action that may lead to increased tensions at this particularly sensitive time."
The statement also called on both sides to grant the European Union Monitoring Mission unrestricted access to both sides of the South Ossetian border.
S. Ossetian village attacked from Georgia (part 2)
TSKHINVALI. Aug 4 (Interfax) - The South Ossetian village of Otrev,
Tskhinvali region, was attacked from the Georgian village of Plavi at
10:05 p.m. on Monday, the South Ossetian Defense Ministry told Interfax.
Three mortar shots were fired at the village, the source said.
"Ossetia did not yield to the provocation and did not fire back,"
the South Ossetian defense Ministry said. The attack did not cause any
destruction or casualties, said the ministry.
A group of South Ossetian law enforcement officials will conduct an
investigation and into the attack on Tuesday, said the source.
It is the third mortar attack against a South Ossetian village over
the past few days, the South Ossetian ministry said.
In the early hours of July 30, two mortar shots were fired against
South Ossetia from the Georgian village of Nikozi, the ministry has
reported. No one was hurt in the attack, the South Ossetian Ministry has
reported.
However, according to the Georgian Defense Ministry, a Georgian
Interior Ministry post in Nikozi also came under attack in the early
hours of July 30. No one was hurt in the attack, the Georgian Ministry
has reported.
A similar incident occurred around 9:25 a.m. on August 1, when two
mortar shots were fired against a South Ossetian Defense Ministry post
near the Georgian village of Ditsi, South Ossetian Defense Minister
Ibragim Gasseyev told Interfax.
Georgia has called the allegations of an attack a provocation.
"There was no shooting from the Georgian and the Russian sides, Georgian
Interior Ministry spokesman Shota Utiashvili told Ekho Moskvy radio.
Georgia Risks Inflaming Caucasus Again – Russia
MOSCOW (AFP)--Russia on Tuesday accused Georgia of preparing a series of provocations on its de-facto border with breakaway South Ossetia ahead of the first anniversary of Moscow's war with Tbilisi.
Tensions have been rising between the ex-Soviet states turned foes over the last days in the volatile Caucasus region as they prepare to mark the Aug. 7 anniversary of the outbreak of the war.
"According to our information, the Georgian leadership is organizing various 'events' on the border with South Ossetia for the anniversary of August 2008," Russian deputy foreign minister Grigory Karasin told the government Rossiiskaya Gazeta newspaper.
"They have a clearly provocative character," he added.
The Russian defense ministry warned at the weekend in a startling statement that the military reserved the right to hit back with force if Tbilisi continued carrying out "provocations" in the area.
"In such an explosive region, the developments can be dangerous.
"Therefore we are obliged to envisage different possibilities of action, including in the media field," Karasin said, accusing Georgia of carrying out an "information war" against Russia.
The war last year erupted when an attempt by Georgian military to retake South Ossetia was rebuffed by Russia. Moscow then sent troops and tanks deep into Georgian territory.
After the war, Russian forces mostly withdrew into South Ossetia and another breakaway Georgian region, Abkhazia, but Moscow then infuriated the West by recognizing both regions as independent.
Uzbeks condemn Russian troop boost in Kyrgyzstan
Today, 09:10 | Associated Press
ALMATY, Kazakhstan (AP) -- Uzbekistan has condemned Russian plans to escalate its military presence in neighboring Kyrgyzstan saying it could foment instability across Central Asia.
The Uzbek Foreign Ministry's statement late Monday signals a growing rift among members of a Russian-led security alliance of ex-Soviet nations.
Russia clinched a tentative agreement Saturday allowing it to significantly boost the number of troops it has deployed in Kyrgyzstan for a period of up to 49 years.
Uzbekistan says the deal will lead to increased militarization in the region and could provoke a surge in Islamic militancy.
The United States also has an important air base in Kyrgyzstan that it uses to support military operations in nearby Afghanistan.
Uzbekistan raps plan for new Russia military base
Tue Aug 4, 2009 3:27am EDT
ALMATY, Aug 4 (Reuters) - Russia's plan to open a second military base in Kyrgyzstan would destabilise the wider Central Asian region, Uzbekistan said late on Monday, exposing fresh divisions between Moscow and its ex-Soviet allies.
Kyrgyzstan this month gave the go-ahead to Moscow's second base on its territory, close to the southern border with Uzbekistan. The country had earlier told the United States it could keep open its own military air base in the country.
"Uzbekistan sees no necessity... in implementing the plans to place an additional group of Russian military forces in Kyrgyzstan's south," Jahon news agency, run by Uzbekistan's Foreign Ministry, wrote.
It said the Russian military presence could provoke further "militarisation" and ethnic conflicts. It could also lead to a resurgence of "radical extremist" forces who may destabilise the situation in the whole region, Jahon said.
In May, Uzbekistan blamed Islamist rebels for attacks in the town of Khanabad, close to the Uzbek-Kyrgyz border, that killed one policeman. Kyrgyzstan and Tajikistan -- which borders Afghanistan -- have also reported a string of gun fights with what they called militants linked to the Taliban. [ID:nLT472379]
Uzbekistan became closely aligned with Russia in 2005 after the West condemned its handling of a protest in the town of Andizhan where government troops fired on protesters, killing hundreds, according to witnesses.
But it has since drifted away from Moscow while mending ties with the United States. This year, Uzbekistan allowed Washington to ship supplies for Afghan troops through its territory and praised President Barack Obama's address to Muslims. (Writing by Olzhas Auyezov; editing by Patrick Graham)
Ukraine's Consular General to Saint Petersburg keeps on working, questions for Russian Consular General to Odesa still remain
KYIV, August 4 /UKRINFORM/. In his interview with the 5 TV Channel, Oleh Voloshyn, the press secretary of the Ukrainian Embassy in Russia, specified that Ukraine had suspended its recommendation on early termination of powers of the Russian Consular General to Odesa even before the adequate actions of the Russian party.
“This is a matter of principle,” he noted adding that the Ukrainian side had thereby responded to the request of Russia even before Moscow's counter-measures against Ukrainian diplomats.
Voloshyn confirmed that the Ukrainian Ministry of Foreign Affairs was sincerely surprised by Russia's decision to expel Prokopovych, al the more so, as his activity did not rise any criticism on the part of the Russian authorities.
The press secretary also reported that as far as the Russian party had clearly stipulated that it would be recognizing the powers of the General Consular to Saint Petersburg so long as the Ukrainian party will be recognizing the powers of the Russian consular to Odesa. “Ukraine will be further negotiating this issue and it is yet early to draw the line here,” Voloshyn said.
He also added that the Ukrainian party had and has very serious questions regarding compatibility of Russian consular to Odesa Aleksandr Grachev's activity with a diplomatic status.
Russia interested in paying Azerbaijan not in cash, but military supplies
|[pic] |
04 August 2009 [13:37] - Today.Az
Azerbaijani political expert Rasim Musabayov spoke in an interview with Day.Az.
|Day.Az: Recently Russian Defense Minister Anatoly Serdukov arrived on a visit to Azerbaijan, in which the parties discussed |
|prospects of bilateral cooperation. What can boost Azerbaijan's military-technical cooperation with Russia? |
| |
|Rasim Musabayov: It is possible that the visit was planned long ago. The bilateral relations between Azerbaijan and Russia has a|
|military component. I recall that this is not the first visit by Serdukov to Azerbaijan. |
| |
|Russia is interested in a strong position on Azerbaijan’s arms market. Azerbaijan is a cash unlike other allies of Russia, who |
|prefer to get Russian weapons as a gift like Armenia, or on credit, which is not paid and deducted. |
| |
|Azerbaijan has the money to pay for these purchases. Weapons now are sold not only by military-industrial complex, which |
|produces new kinds of weapons. Russian has a lot of planes, tanks, which the armed forces is pleased to sell it to Azerbaijan. |
| |
|Q: What is the benefit to Azerbaijan from military-technical cooperation with Russia? |
| |
|A: Azerbaijan is not going to buy rags. In Azerbaijan there are always issues related to the fact that Russia is prepared to |
|sell weapons to Azerbaijan in order not to undermine balance. Russia supplies arms to Armenia free of charge. This option does |
|not suit Azerbaijan. |
| |
|There is a particular component of military-technical cooperation between our two countries which lies in the fact that, as far |
|as I know, Azerbaijan continues to supply Russia certain number of components worth several tens of millions of dollars from the|
|enterprises built back in Soviet times. In addition, there is rent and payment for electricity and water which is supplied by |
|Azerbaijan to the Gabala radar station. |
| |
|It is clear that Russia is interested in paying Azerbaijan for all of these not in cash but military supplies. I think that this|
|issue was discussed during the visit. |
| |
|Q: During a visit Serdukov together with Azerbaijani defense minister visited the Gabala radar station. Does this mean that they|
|can revive talks on joint use of Gabala radar by Russia and the United States? |
| |
|A: I think that yes. In any case, these plans are relevant and have not yet been delivered to archives. There is no any other |
|military facilities where Russian troops could go in Azerbaijani territory, but Gabala radar station. If Serdukov arrives in |
|Azerbaijan, it is understandable that it would be inappropriate if he not visited the site. And if we take into account that the|
|Gabala is a beautiful and picturesque region of Azerbaijan, then why would he not seize the opportunity and do not go there. |
| |
|Q: Do you think a visit to the Gabala radar station was not the main purpose of this visit? |
| |
|A: I do not think that this was the main purpose of the visit. Still, I think that the main purpose of the visit was to develop |
|military-technical cooperation. I think for the Russian military it is important to feel the mood and reaction of the |
|Azerbaijani on the Russian-Georgian relations, which may worsen and they may have military aspects. |
| |
|On the other hand, provocative acts from Iran against Azerbaijan’s Alov field is not excluded. I think that for Azerbaijan it is|
|very important to know the possible attitude of Russia for this kind of actions by Iran and counter attempts by Azerbaijan. |
|That is to what degree Azerbaijan can rely on the positive support of the Russian armed forces. Of course, Russia's armed forces|
|remain number one on the Caspian Sea with great superiority. |
| |
|/Day.Az/ |
| |
Russia: We'll defend Serbia's stance at ICJ
4 August 2009 | 10:00 | Source: Tanjug
BELGRADE -- Russian Ambassador to Belgrade Aleksandr Konuzin told Tanjug on Monday that Russia will uphold Serbia's stand before the International Court of Justice (ICJ).
Russia will defend Serbia's position in the public debate, as it is in accordance with international law, he said.
Moscow has been cooperating closely with Belgrade on that issue and will not stand aside when the ICJ debate starts, he noted.
Referring to reports by some Albanian language newspapers in Kosovo that Russia did not comment on the statements presented to ICJ by other states, he said that Russia had not taken part in considering the views of other countries for tactical reasons, "while our strategy remains the same".
The ICJ first received written statements, and then allowed those interested to submit their comments on the initial statements. Now public hearings are set to start on Dec. 1.
All UN member countries that took part in the proceedings will have a right to participate. Temporary Kosovo Albanian authorities in Priština will also be allowed to verbally justify their submissions and react to those opposing the secession proclamation.
The process of assessing the legality of ethnic Albanians' unilateral declaration was launched last fall by the highest UN court at the order of the UN General Assembly and at Serbia's initiative.
A resolution adopted by the General Assembly ordered the ICJ to provide an advisory opinion on whether the unilateral proclamation in February 2008 was in line with international law.
Northern Fleet vessel visits Cuba
2009-08-03
The Rescue tug “Altay” from Russia’s Northern Fleet will visit the Cuban capital Havana in the first week of August.
The official visit takes place August 3-6, the Russian Embassy in Cuba told RIA Novosti.
This is the second time a Russian naval vessel visits Cuba since the collapse of the Soviet Union. The first visit took place in December 2008, when a unit from the Northern Fleet led by the Destroyer Admiral Chabanenko made a successful trip to Havana.
Russian company develops heavy UAV for military use
MOSCOW, August 4 (RIA Novosti) - Russia's Kronshtadt defense company has developed a new- generation heavy unmanned aerial vehicle (UAV) for military purposes, a senior company official said on Tuesday.
"The Kronshtadt engineers have developed a heavy Dozor-3 UAV with a lift-off weight of 600 kg and a payload of 100 kg, which could be used as a strike aircraft," said Viktor Godunov, member of the company's board of directors.
"It can carry various types of reconnaissance equipment and weaponry," he added.
The Russian military stressed the need to provide its Armed Forces with advanced means of battlefield reconnaissance in the wake of a brief military conflict with Georgia last August, when the effectiveness of Russian military operations was severely hampered by the lack of reliable intelligence.
According to various estimates, the Russian military needs up to 100 UAVs and at least 10 guidance systems to ensure effective battlefield reconnaissance.
At present, Russia's Vega Radio Engineering Corp. is the only domestic company which manufactures UAVs for the Russian Armed Forces.
The company's new-generation Tipchak mobile aerial system has been designed for reconnaissance and target designation purposes on the battlefield in any weather conditions. The first Tipchak system was put in service at the end of 2008.
Tipchak operates up to six UAVs launched from a pneumatic catapult. Each UAV has a range of 40 kilometers (25 miles) and a 3-hour endurance. It can provide targeting for artillery and theater-based ballistic missiles at distances up to 350 km (about 220 miles).
The new Dozor-3 UAV takes off and lands as a regular aircraft, and has a 6-hour endurance.
Russia Russia has also bought 12 unmanned aerial vehicles from Israel in a recent deal worth $53 million.
Russian nuclear leftovers total 3,906 warheads
04 August, 2009, 11:20
The Defense Ministry has revealed that Russian armed forces have 3.906 nuclear warheads and 811 delivery systems at the moment.
The numbers were voiced by the deputy head of the National Center for Nuclear Threat Reduction, a structure in the Defense Ministry responsible for the reduction of strategic arms in accordance with international treaties.
Colonel Sergey Ryzhkov told Krasnaya Zvezda newspaper that since July 31, 1991, when the START agreement was signed by the US and the then Soviet Union, the Russian nuclear stockpile dropped more than twofold from 8,757 warheads. The number of missiles capable of nuclear warhead delivery was reduced almost threefold from 2,288 in 1991 to 811 today.
The American military had 10,563 warheads and 2,246 missiles in 1991, and now they have 5,573 warheads and 1,195 missiles, the colonel added.
Since the 1991 START agreement, Russian military specialists have made 464 inspections of US nuclear sites, while Americans have made 559 inspections on Russian territory. Ryzhkov said both sides worked in accordance with the spirit of START and the progress they made in nuclear reduction helped build stability in the world and brought a sense of predictability in bilateral relations.
Earlier on July 6, Dmitry Medvedev and Barack Obama signed a protocol on the principles of further nuclear weapons reduction as a basis of a new treaty to replace START when it expires later this year. The goal is for both sides to have 500 to 1100 strategic delivery systems and 1500 to 1675 warheads in seven years after the new treaty is ratified.
Kremlin: Medvedev appoints new Russian missile forces chief
[pic]2009-08-04 04:16:36
MOSCOW, Aug. 3 (Xinhua) -- Russian President Dmitry Medvedev appointed Lt. Gen. Andrei Shvaichenko as the new commander of the Strategic Missile Forces (SMF), the Kremlin said on Monday.
The presidential decree ordered that Col. Gen. Nikolai Solovtsov, head of the missile forces, was replaced by his deputy Shvaichenko.
The new commander, 56-year-old, took the post as the first deputy commander of the missile forces in 2001.
The outgoing commander, who has held the position since 2001, reached the mandatory retirement age of 60 in December 2008 and is now discharged from military service.
Solovtsov might seek the top post at the Moscow Institute of Thermal Technology (MIT), the Itar-Tass news agency quoted an unnamed source with the defense sector as saying.
MIT is the designer of the silo-based and mobile Topol-M intercontinental ballistic missiles. Its director general resigned following the recent failed launch of Russia's new Bulava ballistic missile.
Russia strengthens India’s defences with nuclear subs
04 August, 2009, 09:48
India has become the sixth country in the world to build a nuclear-powered submarine capable of firing ballistic missiles. Moscow played a key role in the construction of the current sub, and has agreed to lease another.
The INS Arihant is India’s new nuclear submarine, which completes its plans for effective nuclear deterrence.
Speaking at the launch ceremony, India’s Prime Minister Manmohan Singh stressed that his country has no plans of aggression.
“We do not have any aggressive designs, nor do we seek to threaten anyone. Nevertheless, it is incumbent upon us to take all possible measures necessary to safeguard our country and to keep pace with the technological developments taking place worldwide.”
India plans to create a blue-water Navy to safeguard its interests in the Indian Ocean, and to defend against any attack.
While it is building its own warships and submarines, which take several years, it makes sense for India to use the expertise of other countries that already have powerful navies. This is where Russia fits in.
“There has been some participation with the design, architects, in whatever manner it was required, that was worked out between the two governments. This is one example of partnership, partnership to the extent that new technologies need to be inducted,” Singh said.
Russia will be giving India one of its Akula class nuclear submarines on a 10-year lease. This submarine, which has completed the first stage of sea trials in Russia, is far more advanced than the INS Arihant and will be operational earlier too.
This cooperation with Russia is a key part of an ambitious military modernization programme by India, which has hiked its military budget in the current financial year by 24% to $28.4 billion.
Russian atomic engineer robbed in Tamil Nadu
Chennai, Aug 4 (IANS)
A group of miscreants robbed a Russian atomic engineer’s camera and misbehaved with his daughter at a beach in Tamil Nadu’s Tirunelveli district, officials said Tuesday.
Alexander V. Chernov, who works in the upcoming nuclear power plant in Kudankulam, and his daughter were walking on the beach Sunday when a seven-member gang assaulted them.
The miscreants, all aged below 20, misbehaved with the Russian girl and snatched Chernov’s Canon camera and fled.
Police officials told IANS that a search is on for the culprits on the basis of a complaint filed by the Chernov.
The Russian engineer is staying in the AnuVijay residential colony where employees of Kudankulam Nuclear Power Project live.
According to officials of the power project, there are over 100 Russian engineers working at the Kudankulam nuclear power project.
The Nuclear Power Corporation of India Ltd (NPCIL) is working on the 2×1000 MW project with Russian technical assistance.
The first unit is expected to be commissioned early next year.
As per the deal between India and Russia, two more reactors of similar or even slightly higher capacity will come up at Kudankulam.
Iberdrola in Talks on Russian Nuclear Reactor, Economista Says
By Sharon Smyth
Aug. 4 (Bloomberg) -- Iberdrola Ingeneria, a unit of Spain’s Iberdrola SA, is in talks with Russia’s state-run nuclear company Rosatom Corp. to collaborate on the construction of a nuclear reactor in Kaliningrad, El Economista reported.
Spending on the reactor may reach 5 billion euros ($7.2 billion), the newspaper said, citing Iberdrola Ingeneria President Ramon de Miguel.
To contact the reporters on this story: Sharon Smyth in Madrid at ssmyth2@.
Last Updated: August 4, 2009 02:09 EDT
Vietnam-Russia trade needs to increase
Trade between Vietnam and Russia has advanced recently but Vietnam needed to boost exports to balance the scales, a seminar in southern Can Tho City heard Monday.
Vietnam’s exports accounted for only 0.25 percent of Russia’s total imports, while Russia’s exports made up about 1.2 percent of Vietnam’s total import value, according to the seminar.
Vietnam exports to Russia mainly agricultural, forestry and fisheries products, and imports commodities including gasoline, steel and fertilizers for domestic production.
The delegates said Russia is a new market which Vietnamese businesses want to penetrate but they still face difficulties in payments and technical barriers when exporting goods to it.
The governments of both countries should intervene and create open mechanisms to boost bilateral trade, they said.
Reported by Chi Nhan
Judge Steps Down in EU Yukos Case
04 August 2009By Nikolaus von Twickel / The Moscow Times
A judge appointed by the Kremlin to the European Court of Human Rights for a billion-dollar lawsuit by former Yukos management has stepped down after questions about his impartiality were raised because he is a Gazprom board member.
Valery Musin, a St. Petersburg law professor, said he thought that there was no conflict of interest but that he was resigning after this was suggested by the court, Kommersant reported Monday.
“I believe that [my election to the Gazprom board] does not influence my impartiality, but since the court registrar himself has raised the question, to rule out any doubts about this, I decided to withdraw,” he was quoted as saying by the paper.
Court registrar Soren Nielsen had written to Musin days after his election to the Gazprom board on June 26 and suggested that he step down, the report said.
Reached by telephone in Strasbourg, a court spokeswoman refused to give any comment on the report Monday, explaining that the Yukos case was still pending. The spokeswoman refused to give her name, in line with court policy.
Musin is chief of the civil law office at St. Petersburg State University’s law department and a former teacher of President Dmitry Medvedev and Prime Minister Vladimir Putin.
He was appointed by the Kremlin as an ad hoc judge to sit on the Yukos case after Russia’s permanent judge at the Strasbourg court, Anatoly Kovler, withdrew for unknown reasons, Kommersant reported.
According to the court’s web site, Musin was among the seven judges that in January signed the decision to accept a $34 billion lawsuit against the government, brought forward by former Yukos managers.
In June, Gazprom’s shareholders elected Musin as an independent board member, replacing Boris Fyodorov, a former finance minister who died last year.
The company’s former managers say the charges against Yukos, once the country’s biggest oil firm, were fabricated so the government could snap up the firm.
The plaintiffs said Monday that they had “total faith in the court and anticipate that the case will go ahead as planned,” spokeswoman Claire Davidson said by telephone from London.
Media reports suggested that a first hearing would take place this November, but the date is in doubt because the Kremlin first has to appoint a new judge, Kommersant reported.
The paper said Medvedev has one month to appoint another ad hoc judge but that this period could be extended to two months or longer.
Hedge Fund Hermitage Wins Subpoenas In Russian Fraud Case
August 3, 2009
Hedge fund Hermitage Capital Management is taking part of its fight with Russian authorities onto its home turf.
Hermitage, once Russia’s largest foreign investor, has been given the go-ahead to subpoena U.S. banks in its effort to find $230 it says was stolen using documents seized by the Russian government. According to Hermitage, which is perhaps best known for having its CEO, William Browder, barred from Russia after criticizing corporate governance there, the money was stolen by Russian officials and then laundered in New York.
U.S. District Judge Laura Swain has given the hedge fund permission to subpoena JPMorgan Chase and Citibank, seeking testimony and records related to wire transfers. Hermitage may also subpoena RenCap Securities, the U.S. arm of Russia’s biggest investment bank.
Hermitage says the information yielded by the subpoenas “will provide evidence that Hermitage and its executives and counsel are the victims, not the perpetrators, of a fraud that cost the Russian Treasury $230 million,” and will help it in four cases currently pending in Russia, court documents show.
Russia Opens New Trial In Politkovskaya Murder
MOSCOW (AFP)--A new trial into the killing of investigative journalist Anna Politkovskaya opens Wednesday, with Russia's failure to solve her case under renewed scrutiny after the murder of a close colleague.
Russia's supreme court last month annulled a February jury verdict acquitting all the suspects accused over Politkovskaya's 2006 murder, a decision widely seen as a major embarrassment for prosecutors.
The murder last month of prominent Russian rights activist Natalya Estemirova - who worked continuously with Politkovskaya to investigate abuses by Russia forces in Chechnya - has again brought the case to the fore.
"The first hearing will start Wednesday at 11:00 am (0800 GMT) and will be open to the public," Alexander Minchanovsky, a spokesman for the military court where the trial is to held, told AFP.
Politkovsksya, who was sharply critical of Russia's strongman Vladimir Putin and his policies in Chechnya, was gunned down in the stairwell of her appartment building on on October 7, 2006 in an apparent contract killing.
The suspects are all accused of being accessories to the murder and the authorities have still failed to find the triggerman, let alone identify the mastermind of the killing.
Politkovskaya's family say the entire investigation has been mishandled. Instead of a retrial, her daughter Vera and son Ilya are calling for a new investigation into the murder of the journalist.
"On Wednesday we will insist that the case be sent back to investigators," Ilya Politkovsky told AFP.
Of the suspects, Chechen brothers Dzhabrail and Ibragim Makhmudov are accused of acting as drivers at the murder scene for the killer, who prosecutors say was a third brother, Rustam, who is still at large.
Sergei Khadzhikurbanov, a former police investigator is charged with providing logistical assistance for the killing.
One of Politkovskaya's former editors at her newspaper the Novaya Gazeta - which has seen four of its journalists murdered since 2001 - also said the case clearly required a new investigation.
"Jury members (at the first trial) told me the investigation was incomplete and they lacked evidence for a guilty verdict," the daily's deputy editor Sergei Sokolov told AFP.
"The investigators were obstructed in their work," he said without saying who had conspired to impede the investigation.
Rights groups say the blatant failure of Russian authorities' to bring Politkovskaya's killers to justice has created a climate of impunity that increases the danger of their work, especially in the restive North Caucasus region.
03 August 2009, 10:07
Russian Supreme Court upholds banning Islamic organization as extremist
Moscow, August 3, Interfax - The Appeal Board of the Russian Supreme Court has upheld a ruling on finding the religious organization Tablighi Jamaat as extremist and banning its activities in Russia.
"The decision has been left unchanged, and the appeal was turned down," Supreme Court spokesman Pavel Odintsov told Interfax.
The Supreme Court granted a Prosecutor General's Office request on finding Tablighi Jamaat as an extremist organization in early May.
Tablighi Jamaat, whose headquarters are in India, is engaged in propagating Islam worldwide.
Media sometimes call the organization "an invisible legion of jihad."
Meanwhile, the Prosecutor General's Office website reported that the court had resolved that the activities of Tablighi Jamaat's structural divisions "threaten interethnic and inter-religious stability in Russian society and territorial integrity of the Russian Federation."
"The said religious association's purposes include the establishment of global supremacy through disseminating a radical form of Islam and the foundation of a unified Islamic state called the Global Caliphate on the basis of regions with traditionally Muslim populations," it said.
The law enforcement agencies of some Central Asian states consider Tablighi Jamaat a potential threat to their national security. In Tajikistan, Tablighi Jamaat's activities were earlier banned by a court.
Tablighi Jamaat is not officially registered anywhere.
FSB officer convicted for organising illegal migration
KALININGRAD, August 4 (Itar-Tass) - A military servicewoman of the Russian Federal Security Service’s (FSB) border guard department for the Kaliningrad region has been found by a military court guilty of organising illegal migration of foreigners and forgery by an official.
“The head of the border control unit of the Khrabrovo-Aeroport checkpoint, Senior Lieutenant Irina Oliferchuk at the request of her acquaintance was rubberstamping passports of foreigners on arrivals or departures to and from the RF territory,” investigator of special cases Sergei Neilenko told Itar-Tass.
In fact, foreign citizens after registering in the Kaliningrad region based on the “in absentia” border control stamps, continued to illegally stay in Russia. In the period from November 2008 to February 2009, the FSB officer registered such kind of services for 8 citizens of Uzbekistan, Azerbaijan and Armenia.
The military court imposed a fine of 100 thousand roubles on Oliferchuk.
Moscow police seize contraband from India, China
Moscow, Aug 3 (PTI) Russian police have seized contraband goods worth USD 29 million from India, Afghanistan, China and Turkey from a hotel premises.
The contraband goods were manufactured in India, Afghanistan, China and Turkey and there were no covering documents to confirm the legitimacy of the presence of these goods in Russia, Department for combating economic crimes (DEB) said today.
"According to preliminary estimates, the warehouse of the hotel Sevastopolskaya contained contraband goods worth at least USD 29 million," the economic crimes department added.
As per the officials, an inspection of the goods seized ascertained that most of the clothes, accessories and perfumery products were counterfeit in their production.
DEB personnel also claimed to have stopped a large channel through which Chinese goods were smuggled into the country.
New Raid Worries Market Vendors
04 August 2009 By Anna Malpas / The Moscow Times
Police said Monday that they had interrupted a major smuggling operation at the Sevastopol market in southern Moscow, raising concerns among foreign merchants that many legitimate import businesses would be caught up in a crackdown on counterfeiting.
Traders have been locked out of the market since police raided it Friday and confiscated $29 million in goods, which they said were either fake or dangerous. The investigation comes just over a month after the vast Cherkizovsky Market was shuttered amid similar claims, leaving thousands without work and billions of dollars of goods impounded.
The closure of Cherkizovsky has also dented relations between Russia and China. Beijing sent a high-level delegation to Moscow last month to negotiate on behalf of its citizens but failed to win any major concessions.
The Interior Ministry said in a statement Monday that its economic security department “closed a major channel for smuggling consumer goods produced in China” at the Sevastopol market.
The traders there come primarily from Afghanistan, India and Pakistan, said Madzhumder Mukhammad Amin, president of the Migrants the of Russian Federation.
“People are worried. Their business is there, and their goods are there,” Amin said. The hotel complex includes storerooms, he said.
“It wasn’t like Cherkizovsky. Everything was official, there were contracts,” he said.
The market is based in a hotel complex near the Sevastopolskaya metro station. Two 15-story buildings at the Soviet-era complex have been used for trading since the early 1990s.
The hotel rooms were converted into stalls selling clothes, jewelry and knickknacks at knockdown prices. Customers pay an entrance fee and then climb narrow stairs between floors or use crowded lifts.
Police arrested apparently counterfeit goods worth at least 900 million rubles ($29 million), the statement said, adding that the merchandise came from India, Afghanistan, China and Turkey.
“A significant part of the clothes, accessories and perfume of famous brands had signs of counterfeit production,” the statement said.
A “large quantity” of children’s toys smelt strongly of phenol, it said. Tests found that the toys broke health and safety standards.
Investigators also found “counterfeited documents” in delivery trucks showing that the goods went through customs in the northwestern and central regions.
Monday’s statement comes after the Investigative Committee announced on Thursday that an organized criminal group, which included customs officials, was charged with smuggling goods headed for the Sevastopol market.
Those charged include the head of the Serpukhovskaya branch of the customs office in Podolsk and an inspector there. Investigators also charged the general director of Rostek-Serpukhov, which runs a customs warehouse in the Moscow region, and employees from customs broker Krug, the statement said.
If convicted, the suspects face up to 12 years in jail.
Eight trucks were searched, and the suspects are thought to have carried out more than 100 trips between November 2008 and April this year, investigators said, adding that they had established that the goods were stored and sold at the Sevastopol market.
Sammy Kotwani, president of the Indian Business Alliance, estimated that 50 to 60 Indian businessmen trade there.
“They don’t know what is happening. They are still waiting outside, and they have no information,” Kotwani said Monday afternoon.
The Indians who work there “are all small-time businessmen, small traders,” Kotwani said. Some are ethnic Indians who lived in Afghanistan.
As of March 31, the hotel complex was fully owned by Buxton Asset Management and Torrington Asset Management, both registered in the British Virgin Islands, according to documents posted at the corporate governance web site Open.vestnikao.ru.
Sevastopol general director Failya Alyautdinova did not respond to requests for comment Monday.
Migrants were promised access to their stalls on Tuesday morning at 9 a.m. but are worried that they won’t be able to get to storage rooms and that police will confiscate their goods overnight, said Amin, president of the migrants federation, after visiting the Sevastopol market on Monday evening.
“The head of the investigative group personally promised me that there would be access [to storerooms],” Amin said.
The problems at the Sevastopol market threatened to compound the situation surrounding Cherkizovsky’s closure on June 29, as many of the vendors have sought work at other markets — threatening jobs and raising rents.
Vedomosti reported Monday that most Cherkizovsky traders were going to the Luzhniki and Moskva markets in southeastern Moscow.
Rent for a stall has more than doubled at Moskva, going up from 120,000 rubles ($3,860) per month to 250,000 or even 450,000 rubles, a trader told Vedomosti. A spokesman for Moskva said there used to be 3,000 Chinese traders at the market, but numbers have grown to 3,600 since Cherkizovsky closed.
Activists from a group called Anti-Cherkizon announced plans Monday to block the Moscow Ring Road, or MKAD, calling for the management at the Sadovod market in southeastern Moscow to stop accepting traders from Cherkizovsky.
A high police presence was brought in to stop the unsanctioned protest, RIA-Novosti reported.
The Sadovod market’s workers also protested the influx on July 13.
Moscow's Largest Market To Be Replaced with Billion-Dollar Chinatown
03.08.2009
The Moscow Government and a Chinese delegation from the Chinese Ministry for Commerce took a decision to construct a new shopping center instead of the infamous Cherkizovsky Market, which is the largest market in Europe. A spokesman for the Moscow authorities, Vladimir Malyshkov, said that China was ready to invest $1 billion in the construction of the new center. The complex is supposed to include a shopping center, a logistics center, a customs point, a two-star hotel and a migration service department, The Kommersant newspaper reported.
The closure of the Cherkizovsky Market in June 2009 alarmed the Chinese authorities. Up to 70 percent of 100,000 people, who worked at that market, were the Chinese citizens. A great amount of goods produced in China remains on the territory of the closed market. The goods are reportedly worth $5 billion.
“Russia and China have reached a consensus on the issue of the Cherkizovsky Market. Our countries will draft a joint plan of fighting against gray imports,” Deputy Commerce Minister Gao Hucheng reported after the negotiations with Moscow authorities.
The new complex, designed to replace the Cherkizovsky Market may occupy a part of the territory of the closed market. Several other sites near the Moscow ring road with areas of 40-60 hectares are also being considered.
“Such districts are known as Chinatown around the world, but I don't like the name. On the other hand, we have an Armenian Trade Center, so why not having a Chinese one too?” Malyshkov said.
The construction of the new complex will most likely take two years.
New Cherkizovo market may be constructed around Moscow
[ 04 Aug 2009 10:51 ] [pic]
Baku – APA. Lenin district administration of Moscow province plans to construct a wholesale trade center for foreigners working in Cherkizovo market, APA reports quoting the Kommersant.
The representatives of Chinese Diaspora offered Lenin district administration to construct a trade center covering 40 ha area.
The new market may be constructed in the territory of Salaryevo and Nikolokholamsk village. The area is between the cemetery and the place of industrial waste. Experts consider that the company owning the area may sell it for $20 million.
The delegation of the Chinese government held talks with their Russian colleagues concerning the citizens who became unemployed after the closure of Cherkizovo market. The results of the talks were not released. Moscow mayor Yuri Luzhkov stated that he was not going to deal with the employment of tradesmen of the closed market.
Cherkizovo market, the biggest market of Moscow, was closed on June 29, 2009. As a result of it, over 100,000 tradesmen from various countries became unemployed. There are Azerbaijanis among them, too.
Yavlinsky Meets Medvedev
Grigory Yavlinsky, the former leader of Yabloko, met with President Dmitry Medvedev last week and secured his support for the party’s bid to run in the Moscow City Duma elections this fall, Nezavisimaya Gazeta reported Monday, citing a Kremlin source.
The source said the country’s leadership informed Mayor Yury Luzhkov that he should not hinder the liberal party’s campaign. Luzhkov announced last week that he would head the United Russia ticket in the city council elections. (MT)
Assets Laws Reviewed
ST. PETERSBURG (Bloomberg) — Russia’s investigative committee of the prosecutor general’s office wants to extend punitive measures for economic crimes by confiscating assets even if they were transferred to others, Vedomosti reported.
The state should be able to recover ill-gained property or funds by seizing them from relatives and associates of those convicted of crimes such as embezzlement, the newspaper said, citing an interview with Alexander Bastrykin, head of the investigative committee.
Current legislation, which already allows for confiscating assets, is only applied in 10 out of 100 cases, Bastrykin told Vedomosti. Those convicted of economic crimes may be able to escape prison terms by compensating the state with money or property, he added.
Moscow Comes Closer
ST. PETERSBURG (Bloomberg) — Russian Railways, the country’s railroad monopoly, said its new high-speed Sapsan trains manufactured by Siemens will halve travel time between Moscow and St. Petersburg, the country’s two biggest cities.
The train completed its first test run Thursday, reaching an average speed of 160 kilometers to 250 kilometers per hour, allowing it to cut travel time between the two cities to 3 hours 45 minutes from as long as 8 hours, the Moscow-based company said Thursday in an e-mailed statement.
Russian Railways plans to begin operating the new link in December. In May 2006, the state-run monopoly signed a 276 million-euro ($388.4 million) contract with Siemens, Europe’s biggest engineering company, for eight high-speed trains and agreed the following April to pay 354.1 million euros to receive technical support for 30 years, according to the statement.
Minister Touts Pikalyovo Simulation
04 August 2009The Moscow Times
A proposed online game based on the events in Pikalyovo is an excellent way to train officials and recruit online gamers to management positions, Deputy Industry and Trade Minister Stanislav Naumov said on his blog Monday.
The online multiplayer game “Pikalyovo Simulator” is being developed by Management Company #1, a consulting firm that United Russia has contracted for various projects.
“The unfinished story of Pikalyovo shows that the ruling class can no longer put off accepting the role of ‘owner of the country.’ By not taking on this role, the state is setting the stage for the creation of an opposition,” said the game’s description, which was posted on the company’s web site.
Naumov praised the project on the blog, saying it “can serve as a basis for rating and selecting prospective managers who can make decisions in ambiguous situations … and be invited into real projects.”
Moscow’s Forcible Consolidation of Schools Threatens Russia with New Pikalevos, Expert Says
August 03, 2009
Paul Goble
The Russian government’s decision to accelerate the process of school consolidation in rural areas by setting region-by-region quotas for the closure of rural schools is increasing social tensions in many parts of the country, a trend one expert suggests is “snowballing” toward new Pikalevo-like public explosions.
At a Moscow press conference at the end of July, Sergey Komkov, the president of the All-Russian Education Foundation who serves as an advisor to the State Duma, said that in recent years some 12,000 rural schools had been shuttered, with that number now increasing at the rate of 600 to 800 a year(sobkorr.ru/news/5/4A686865448EF.html).
Given rapidly declining populations in the country’s rural areas, such closures and the consolidation of rural schools are perhaps unavoidable, however unpleasant and unwelcome they are to village residents and however difficult they make it for local communities, Russian and non-Russian alike, to survive.
But Komkov said he has information that Moscow has given regional officials specific quotas for closing schools. The central authorities told Kaluga oblast to close 27 schools this year and Lipetsk oblast to close 40, numbers justified by references to “restructuring and modernization” but quotas that local people find it nearly impossible to block.
In fact, “if someone attempts to correct the existing situation,” Komkov continued, “he becomes the victim of corrupt bureaucrats and siloviki.” As an example of this, he points to the criminal case launched against the former head of a district official in Chuvashia after he sought to repair a school that higher officials wanted to close but in which there were still 100 pupils.
As part of their effort to promote school consolidation, regional officials often promise that the new schools will have computers and other equipment. But in most cases, as ever more parents are discovering, the powers that be do not provide any money for such things and ignore the problems of bussing children over long distances.
In the past, Komkov noted, people often said that there are “two misfortunes in Russia: fools and roads.” But now, he continued, “a third has been added: fools who carry school children on bad roads” where the risk of accidents is high and the time involved for young people considerable.
As a result, Moscow’s forced school consolidation program is adding to the tensions in the regions, the educational specialist said. “The Pikalevo syndrome is growing like a snowball,” and while Prime Minister Vladimir Putin was able to resolve problems there through a visit, he won’t be able to do so in all the other places with similar or even worse problems.
The problems that Komkov pointed to are exacerbated by three other developments affecting rural Russia that various officials and commentators have been discussing in recent days. First, the disappearance of villages, something that often follows the closing of schools, calls into question Russia’s definition of itself.
As Mikhail Budaragin argued in an essay last week, Russians have traditionally defined themselves by the territory they held through social population but must now rethink both themselves and their position in the world not in terms of geography but with regard to technology (actualcomment.ru/day_article/420.html).
While that rethinking may help Russia to overcome current agricultural shortfalls even with further declines in the rural population, it will also open “a Pandora’s box” of issues having to do with how Russians achieved freedom by fleeing from centers of control to the rural periphery that few are now discussing.
Second, the consolidation of rural schools on the basis of declining population is likely to hit micro-nationalities especially hard, including the Nentsy who were forced to abandon three villages this year (pravdasevera.ru/?id=1051776249) and the Wepsy who want to keep their native language schools (?piople&news_action=show_news&news_id=4543).
And third, as “Vedomosti” reported today, Russia’s roads are going to get worse as officials are planning to cut spending on road repair and construction by two-thirds over the next three years as a result of the economic crisis, reductions that will only add to the problems of consolidation (vedomosti.ru/newspaper/article.shtml?2009/08/03/207959).
In fact, the real cuts are likely to be even greater than that in many places given that Moscow is pressing ahead with plans to build roads for the Sochi Olympics and a few other high profile projects. Indeed, “Vedomosti” reports that next year some Russian experts estimate that seven or eight regions won’t have enough money for any road repair at all.
Consequently, Russia’s roads, never one of that country’s best advertisements, are certain to get worse before they get better, making the way to the new forcibly consolidated schools even more difficult and representing yet another example of the way in which Moscow is resolving the country’s economic problems with little regard for much of the population.
Kremlin Burning Bridges With Every Neighbor
04 August 2009 By Vladimir Ryzhkov
Russia’s foreign policy failures are snowballing at such a rate that they threaten a second geopolitical collapse on a par with the disintegration of the Soviet Union 20 years ago.
What makes this tragedy so comic is that our leaders are essentially running backward into the future and calling it progress. At the same time, they shake their fists and foam at the mouth as they rant about Russia’s greatness, claim that it is “getting up from its knees” and endlessly repeat myths about its “new successes” and “historical initiatives.” By running backward, Russia inevitably stumbles and falls, while its clumsy foreign policy initiatives become the laughing stock of the world.
The Kremlin was not able to exploit its huge reserves that it accumulated after eight years of an oil boom by turning its economic power into political clout in the global arena. On the contrary, Russia’s global standing has worsened across the board.
Russia’s leaders have managed to alienate even its strongest allies. The alliance with Belarus is crumbling before our eyes as Kremlin leaders attempt to punish Minsk for years of foot-dragging over the sale of Belarus’ largest enterprises to Russia’s inefficient and nontransparent monopolies, for delaying plans to introduce a unified currency and establish other political and economic institutions intended to strengthen ties between the two states. Russia reacted with “milk and meat wars,” and Minsk responded in kind by refusing to attend a Collective Security Treaty Organization summit even while it was supposed to hold the rotating chairmanship of the organization — an embarrassing, if not humiliating, snub to President Dmitry Medvedev. What’s more, Belarus has joined the Eastern Partnership offered by the European Union and has actively diversified its foreign policy.
Armenia, which is hemmed in on all sides by closed borders with Azerbaijan and Turkey, suffered greatly during the days of the Russia-Georgia war last August. This quickly drove Yerevan to intensify its dialogue with Turkey over prospects for opening their common border that has been closed for decades, and, like Belarus, to join the EU’s Eastern Partnership.
Russia has also burned bridges with Turkmenistan. Throughout the recent economic boom years, Turkmenistan pumped gas to Russia to compensate for its growing deficiency, thereby helping to save the reputation of Gazprom — and thus Russia — as a reliable supplier of gas to Europe. But Moscow’s gas war with Kiev forced the EU to cut back sharply on purchases of Russian gas. This led to a drop in gas prices, and once that happened Moscow unceremoniously reneged on its contractual obligations to purchase gas from Turkmenistan. In early April, Russia shut the valve on the pipeline that imported Turkmen gas. This was the alleged cause of a major explosion in Turkmenistan — and a major explosion in Russian-Turkmen relations as well. The result is that Turkmenistan is now searching for more reliable commodity markets, has offered to join the Nabucco project as a gas supplier, is ready to discuss the Trans-Caspian pipeline project and has already given the Chinese access to its gas fields. A gas pipeline to China is also under construction.
Moscow was entirely alone in its decision to recognize the independence of South Ossetia and Abkhazia. Besides Nicaragua, not a single country followed Russia’s example. Russia has even managed to sever ties with Georgia — a country with a Russian Orthodox population that has always enjoyed warm relations with Moscow — for the highly questionable goal of wanting to maintain two microscopic puppet-satellite states in one of the most explosive regions of the world. If the Kremlin’s goals were to achieve international isolation and disdain and to increase the threat of a military conflict in the Caucasus, it was very successful.
Russia’s unnecessarily antagonistic actions toward Ukraine have turned the otherwise “brotherly relationship” into a hostile one. In the 1990s, when Ukraine also had trouble paying for its imports of Russian gas, the shortfall was simply added to its external debt, which it later paid back. Today, Moscow’s actions have helped consolidate Ukrainian society around an anti-Russia platform, prompting Kiev to seek membership in the EU and NATO. It also pushed Ukraine toward formulating a new national idea that is based on a rejection of the historical fraternity between our two nations.
The EU also drew its conclusions about Russia’s unreliability after the latest battle in January of the endless succession of gas wars, which resulted in more than 20 European countries being left without heat in bitterly cold temperatures after Russia cut off gas shipments that had already been purchased. Consequently, the EU reduced its purchases of Russian gas, made headway on developing the Nabucco pipeline, including allocating increased funding for the project, and stepped up the development of projects to import gas from Africa and the Middle East. The EU also invited Ukraine to join an alliance for purchasing gas from countries other than Russia. Both South Stream and Nord Stream have experienced setbacks that may complicate the future development of these pipeline projects. In short, this is the lowest point in the 16 years of EU-Russian relations.
Meanwhile, Russia’s relationship with NATO is also becoming increasingly adversarial. Azerbaijan is distancing itself from Russia and aligning itself more with the West. Moscow gave financial aid to Kyrgyzstan to push Bishkek to close the U.S. military base at Manas. But in the end, the Americans were allowed to stay after they increased the rental payments and renamed the base as a “transit center.” Despite U.S. President Barack Obama’s visit to Moscow for the July summit, no “reset” in U.S.-Russian relations has taken place. In fact, they remain unchanged, as is evidenced by Vice President Joe Biden’s recent visits to Kiev and Tbilisi and by the sharp comments toward Russian that he made in his interview with The Wall Street Journal a week ago.
Prime Minister Vladimir Putin’s attempt to restore Russia’s influence over the former Soviet republics has failed miserably. Moscow’s standing in the region is weaker now than it was even eight years ago, when Putin took over the presidency from Boris Yeltsin. This is a direct result of Putin’s failed policies during his two terms as president — the inability to modernize the economy, the systemic destruction of the country’s democracy, the sharp rise in corruption and the increase in the monopoly control of key industries under his state capitalism model. If you add to all of this a countless string of inept foreign policy disasters, it is easy to understand why Russia’s neighbors have turned their backs on Moscow and are looking to Western military, economic and political institutions for support and cooperation.
Vladimir Ryzhkov, a State Duma deputy from 1993 to 2007, hosts a political talk show on Ekho Moskvy.
Russia's Hired Lobbies in the West
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Publication: Eurasia Daily Monitor Volume: 6 Issue: 148
August 3, 2009 02:11 PM Age: 11 hrs
Category: Eurasia Daily Monitor, Home Page, Domestic/Social, Foreign Policy, Economics, Energy, Russia
By: Roman Kupchinsky
Russia's attempts to promote a positive image of being a "reliable energy supplier" as well as a safe and profitable haven for foreign investments have played a significant role in Russian policy. To achieve this goal the Russian government and state-owned companies have hired Western public relations firms to tout the alleged benefits of working in partnership with Russia.
Records of this activity can be found on the Foreign Agents Registration Act (FARA) website of the U.S. Department of Justice (criminal/fara). The most lucrative contract to date was between the Russian government and Ketchum Inc. (N.Y) via its parent company Ketchum Limited in the U.K., to provide "communications support" for the Russian government during the 2006 G8 summit meeting until December 31, 2006. The amount allocated to finance Ketchum's activities in the U.S. was $2 million (criminal/fara).
Ketchum is an arm of the U.S. PR giant Omnicom (). According to the filing document, Ketchum agreed to develop "briefing points for interviews; press releases, fact sheets...and facilitate meetings between representatives of Russia's G8 Presidency and persons who are frequently quoted as experts in stories about international relations such as authors and academics." Ketchum landed another lucrative two-month contract from the Russian government in January 2007 worth $845,000 "for the purpose of promoting energy security." Ketchum wrote in its FARA statement that it would use its teams to focus on governments and media in WTO member countries such as the U.K., U.S., Germany, France, Japan and Canada to help them understand the goal of energy security, Russia's accession to the WTO and "Russia as a place favorable for foreign investments" (criminal/fara).
However, the most lucrative contracts have been awarded by Gazprom, the Russian state-owned gas company to Gavin Anderson and company. In March 2007, Gazprom began paying Gavin Anderson $100,000 per month to "provide financial media relations" and to "improve understanding of Gazprom's basic business strategies. Strengthening the trust of investors in Gazprom" (criminal/fara). Gazprom apparently felt that negative information about its practices and opaque dealings were hurting the company and it was willing to pay a high price to remedy the situation.
GazpromExport, a fully owned subsidiary of Gazprom, also joined these PR activities in 2006-2007. However, GazpromExport chose Ketchum to do its PR - not Gavin Anderson. The reasons for this are unknown, but it might indicate that the CEO of GazpromExport Alexander Medvedev was more comfortable with Ketchum, a company which seemingly is favored by Prime Minister Vladimir Putin.
FARA was notified by Ketchum in August 2007 that GazpromExport would pay $247,500 per month ($147,500 more per month than its parent company, Gazprom, was paying Gavin Anderson) for their services. Ketchum's description of these services was brief: "Ketchum will pursue various activities, including arranging interviews between representatives of Gazprom and members of the media...monitoring media coverage."
GPlus Europe, a subsidiary of Ketchum, was hired by the Kremlin in 2007 to improve media relations. They signed a deal for media handling and government advocacy which included GPlus' work in Brussels and Paris as well as subcontracts with consultancies Dimap in Berlin and Reti in Rome. GPlus was also hired by GazpromExport to promote the concept that Gazprom and GazpromExport are fully transparent entities. The GPlus team working on the GazpromExport contract consists of fourteen individuals, with four members concentrating on PR within Germany alone.
The leader of the GazpromExport team at GPlus is allegedly Milina Moncekova who accompanies Alexander Medvedev on his trips throughout Europe. Other members of the team have responsibilities for PR within the rest of Europe. The head of the team in Germany is Peter Witt, formerly the German deputy permanent representative to the E.U. (EDM, May 26).
A leading member of the team working the account is Gregor Kreuzhuber who, according to the GPlus Europe website: "Spent over ten years in the European Commission as a spokesperson and political adviser to two different commissioners. Kreuzhuber's last post was with the Commission Vice-President in charge of Enterprise and Industry Gunter Verheugen" (). According to the European Observer: "No one takes a pay cut to join the PR sector. A mid-ranking E.U. official such as Kreuzhuber would take home at least 6,000 Euros per month in his previous job and an individual such as Witt 7,000 Euros per month" (, February 2).
Nonetheless, GPlus was not only whitewashing GazpromExport, according to PRWeek, in 2008. GPlus was criticized by Brussels-based PR firm Aspect Consulting, for promoting Russia's view of the war with Georgia and for being part of the Russian "propaganda" machine. Aspect Consulting, hired by the government of Georgia, told PRWeek: "There are agencies that work for Russia... but I do not know how they can be comfortable about that."
On January 25, at the height of the Ukrainian-Russian gas war, GPlus was suspended from the European Union's lobbying register for failing to disclose the identity of three clients. Peter Guilford, one of GPlus' founders, said the firm had informed the commission in December when it first joined the registry that it had pre-existing confidentiality agreements with three clients, who did not want their names disclosed. Two of those clients are no longer represented by GPlus. "We have been super-transparent," (sic) Guilford said, noting that the clients in question included two trade associations and one corporation." Ketchum's reputation might be further discredited as new information is revealed in the media about Gazprom's shady dealings in the gas trade (blog, August 3).
Russians become less tolerant of people with origins in Caucasus, Central Asia – poll
MSCOW. Aug 4 (Interfax) - Russians' ethnic tolerance has generally
increased over the past few years, and the list of the people they
dislike the most is topped by people with origins in the Caucasus,
Central Asia, and Gypsies, indicates a poll conducted by the All-Russian
Center for Public Opinion Research (VTsIOM).
The poll was conducted in 42 regions, territories, and republics of
Russia.
Fifty-five percent of the respondents surveyed said they do not
dislike any other ethnicities. The poll shows that Russians' ethnic
tolerance has increased by 21% over the past four years.
Thirty-one percent of the respondents surveyed said they like
Russians and Slavs in general the most (31%). The other most popular
ethnicities are Belarusians and Ukrainians (13% and 11%, respectively).
Seven percent of the respondents said they like Europeans (Englishmen,
Frenchmen, Germans, Italians, and Spaniards), four percent said they
like people with origins in the Caucasus (Adygs, Georgians, Kabardins,
etc.), three percent like Tatars, and 2% said they like Bashkirs and
people with origins in Mordovia.
The least popular ethnicities are Americans, Buryats, Jews,
Chinese, Moldovans, and Japanese (1% each).
Twenty percent of the respondents said their attitude to all
peoples is the same.
The poll shows that the number of Russians who like Russians and
Slavs in general has been declining since 2005 (it is now 31% against
36% in 2005) and the percentage of those who like all ethnicities has
increased considerably (from 8% to 20%).
The anti-rating of ethnicities is topped by people with origins in
the Caucasus (Azerbaijanis, Georgians, Armenians, Dagestanis, Chechens,
etc.), with 29% of the respondents expressing irritation about them. The
second least popular group includes people from Central Asia (Tajiks,
Uzbeks, and Kazakhs), with 6% of the respondents expressing dislike of
them. They are followed by Gypsies (4%, Americans, Chinese, Ukrainians,
and Baltic nations (3% each), Europeans (Englishmen, Germans), and Jews
(2% each).
Some of the respondents said they are negative about Moldovans,
Tatars, Turks, Asians, Arabs and Muslims, and people from Africa (1%
each).
The poll shows that the percentage of those Russians who disliked
people form the Caucasus has increased to 29% from 23% in 2005. The
percentage of those who dislike people from Central Asia has increased
to 6% from 2% in 2006.
National Economic Trends
MOSCOW - Russian Finance Ministry to place 100 billion roubles of temporarily free budget funds in three-month deposits at commercial banks at a minimum bid rate of 12.0 percent.
Russia c.bank injects 22.53 bln roubles via repos
4-AUG-2009 09:17
MOSCOW, Aug 4 (Reuters[pic]) - The Russian central bank injected 22.53 billion roubles ($721.2 million) of one-day funds into the banking system[pic] at a rate of 8.26 percent in its first auction of the day on Tuesday. The minimum interest rate[pic] was set at 8.0 percent, and a maximum of 25 billion roubles had been on offer for the two repo auctions scheduled for the day.
Following are results of the latest auction, provided by the central bank on its Web site (cbr.ru):
Date Aug 4 Aug 3 Aug 3
Session 1st 2nd 1st
Amount (bln rbls) 22.53 5.61 13.52
Bids (bln rbls) 22.53 9.34 22.40
Average rate 8.26 9.01 8.44
NOTE - For details of central bank repo tenders click here .
($1=31.24 Rouble) Keywords: RUSSIA REPOS/FIRST
(Moscow Newsroom; +7495 775 1242; moscow.newsroom@)
Russia daily c.bank swap limit at 5 bln rbls
4-AUG-2009 07:33
MOSCOW, Aug 4 (Reuters) - Russia set the daily limit for currency swap[pic] operations with the central bank at 5 billion roubles ($160 million) on Tuesday, the same as in the previous trading session.
Limits on how much foreign currency banks can swap for roubles in the central bank were introduced from Oct. 20 in a bid to hinder currency speculators. Operations which do not involve the central bank are unaffected. ($1=31.24 Rouble) Keywords: RUSSIA SWAP/
(Moscow Newsroom, +7495 775 12 42, moscow.newsroom@)
Large deficits to generate heavy borrowing
Citibank, Russia
August 4, 2009
Increased public borrowing could bring the debt to GDP to 16.4% in 2012, according to the Ministry of Finance. On 30 July the Russian government adopted the basic parameters of fiscal policy for 2010-12 (see Russia Macro Weekly, 30 July 2009). The government's budget plan is for a deficit of 7.5% of GDP in 2010 (about US$100bn) and 3% in 2012. Part of the public spending in excess of budget receipts will be covered by Russia's wealth funds. However with the Reserve Fund likely to be completely exhausted in 2010 the Russian Ministry of Finance envisages borrowing of over US$43bn in 2010 on the domestic and international capital markets including US17.8bn in Eurobonds and US2-4bn in loans from the World Bank and commercial creditors. Overall, the Ministry envisages borrowing of more than US$20bn a year in the international financial markets in 2010-12 and for ruble debt to increase by 50% during this period (Figure 2).
We believe fast growth in borrowings could be a challenge for the Russian government. On the domestic market the Ministry of Finance is caught between satisfying the fiscal needs of the federal budget and sustaining a suitable borrowing rate for the corporate sector. In January-July the government placed around 50% of its planned domestic debt during the primary auctions, while trying to avoid pushing interest rates up. Lower refinancing rates could make current yields more attractive, but with the budget's large injections of liquidity towards the end of 2009-beginning of 2010, we believe the CBR has limited room for further rate cuts (even though we would not rule out another 50bp cut). In international debt markets, Russia will probably face increasing interest rates due to the likelihood of monetary tightening after the recession is over and inflation starts to rise. Moreover, Russia will have to compete for scarce financial resources with many other developing countries in need.
Funds Down $5.9Bln in July
The Finance Ministry said Monday that the country’s two sovereign wealth funds fell by a combined $5.9 billion in July after the government continued to tap cash to help plug the first budget gap in a decade.
The Reserve Fund, which will be emptied by the end of next year, declined to 2.8 trillion rubles ($88.5 billion), compared with $94.5 billion the month before. The National Welfare Fund, which the government is using to provide loans to recapitalize banks and bolster the pension system, stood at 2.9 trillion rubles, compared with $89.9 billion the month before. (Bloomberg)
Russian government spent $46bn of its savings in 7M09
Alfa, Russia
Tuesday, August 4, 2009
According to recently released information, the Russian government's savings declined by $46bn in January-July 2009. While the National Welfare Fund was up by $2bn and reached $90bn as of the end of July, the Reserve Fund has dropped by $48bn.
The Russian government expects to cut the Reserve Fund to $44bn by the year's end and to have fully expended it by mid-2010. The National Welfare Fund is expected to be fully used by 2013. However, the latter estimate assumes that the government will be able to attract international and local borrowing of $18bn and $24bn, respectively, in 2010. If this borrowing turns out to be unavailable or expensive, the government will be forced to use up the National Welfare Fund more quickly in order to finance spending.
Another important point is that the $46bn decline in total state savings since the beginning of the year has had little effect on the banking sector. June's 4.2% m-o-m increase in corporate accounts and 1.3% m-o-m growth in assets, reflecting the budget deficit, were still coupled with a 1% decline in both retail and corporate lending.
Unemployed Drops by 0.3%
The number of people officially registered as unemployed in the country slid 0.3 percent in the week to July 28, the Health Ministry said in a statement on its web site Monday.
The figure dropped by 5,600 to 2.15 million people, said. (Bloomberg)
Official unemployment falls to 2.14m
bne
August 4, 2009
The economic good news continues with the number of people registered as unemployed falling to 2.1m in July, Healthcare and Social Development Minister Tatyana Golikova said, ITAR-TASS reported.
The number of registered jobless people was 2.15m as of July 22, according to previous reports.
Total unemployment currently amounts to 8.5%, Golikova said.
Farming Output May Fall
Agricultural production may shrink 1.7 percent this year, compared with an earlier forecast for a 3.9 percent expansion, Kommersant reported, citing an Agriculture Ministry report.
Crop production may decline 4.5 percent this year, the newspaper said. Russia imported $35.2 billion of food in 2008 and exported $9.4 billion, Kommersant said. (Bloomberg)
Ruble Gains Most in 2 Weeks on Oil
04 August 2009Bloomberg
The ruble strengthened the most in two weeks against the dollar, and Russian stocks rallied after oil rose above $70 for the first time in a month.
The currency gained as much as 1.9 percent to 31.02 per dollar, snapping four days of declines. The 30-stock MICEX Index, which is made up mostly by energy companies, rose 4.3 percent to 1,098.95, the highest close in seven weeks. Crude oil for September delivery jumped 3.4 percent to $71.84 a barrel in New York.
Oil prices have doubled since February, boosting the earnings outlook for the world’s biggest energy exporter. Russia drained more than a third of its foreign-exchange reserves to help stem a 35 percent devaluation of the ruble from August to January as crude dropped by more than two-thirds.
“With oil at $70, Russian risk perception is positive,” said Ivan Tchakarov, a London-based economist at Nomura Holdings Inc. “The ruble is trading around its fair value. It is finely balanced at the moment.”
Oil climbed to the highest level in a month Monday as factory output in China rose to its highest level in almost a year, while the U.S. manufacturing index showed that conditions in July were the best in 11 months.
The ruble ended the day up 1.7 percent at 31.11 versus the dollar and rose 0.3 percent to 44.53 per euro.
Rosneft added 4.4 percent to 199.22 rubles, its highest close since June 11. LUKoil, the country’s biggest private oil producer, gained 2.4 percent to 1,608.86 rubles, its third day of gains.
Gazprom rose 4.5 percent to 169.53 rubles, its highest level since June 16.
Sberbank climbed 8.7 percent to 46.17 rubles as the ruble strengthened against the dollar. A stronger currency may discourage Russians from withdrawing or converting ruble deposits, Sberbank’s primary means of funding.
Russia’s ‘Unsustainable’ Deficit Threatens Growth, Troika Says
By Paul Abelsky
Aug. 4 (Bloomberg) -- Russia’s “unsustainable” budget deficit in the next three years is a “major threat to economic stability” and won’t spur economic growth, Troika Dialog said.
“Such fiscal policy leads straight down the path to deadlock,” Moscow-based economists Evgeny Gavrilenkov and Anton Stroutchenevski at Troika, Russia’s oldest investment bank, said in a report today. “Cutting expenditures” and working to balance the budget “remains the most reasonable way out.”
The government last week approved a plan to run a deficit of 7.5 percent of gross domestic product next year to counter the worst economic crisis since Russia defaulted on $40 billion of domestic debt in 1998. This year’s shortfall, the country’s first in a decade, may reach as much as 9.3 percent, according to Finance Minister Alexei Kudrin.
The planned spending this year is almost triple the amount in 2005, Troika said. As a share of GDP, the expenditure is the third biggest among major economies after the U.S. and U.K. and the world’s fifth largest in absolute terms. The outlays will fan inflation and undermine the ruble, according to Troika.
“In contrast with this year, the central bank won’t be able to sterilize excess liquidity from the financial system, reducing the amount of credit given to the banking system,” the report said.
Russia may also fail to borrow almost $20 billion annually in the next three years on favorable terms, Troika said. Sovereign bond yields will probably grow “substantially” as other state-run companies seek to raise funds, according to the report. Higher yields will also boost private borrowing costs.
‘Crowding Out’
“Domestic borrowing could be increased, but again at the cost of crowding out the private sector,” the economists wrote. “The prospect of economic revival appears quite gloomy.”
Russia expects the yield on its first international sale of bonds since the 1998 financial crisis to be about 8 percent, dropping to 7 percent in 2011 and 6 percent in 2012, according to the Finance Ministry. The government wants to narrow the budget gap to 3 percent of GDP by 2012.
The yield on Russia’s 2030 dollar bonds was 7.3 percent yesterday after reaching 10 percent in March.
To contact the reporter on this story: Paul Abelsky in St. Petersburg at pabelsky@.
Last Updated: August 4, 2009 02:54 EDT
Putin Opts for a Large Deficit and Small Investment 2010 Budget
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Publication: Eurasia Daily Monitor Volume: 6 Issue: 148
August 3, 2009 01:59 PM Age: 11 hrs
By: Pavel K. Baev
Prime Minister Vladimir Putin made his cabinet agree on a budget for 2010 that contains few anti-crisis ideas and hardly fits into the directives on stimulating innovations issued by President Dmitry Medvedev. As such, this budget proposal, which will be duly approved by the compliant State Duma in September, is not necessarily a final executive order; for that matter, the 2009 budget as executed now bears little resemblance to the document signed and sealed last fall. Nevertheless, the budget that is finalized now has significance beyond the usual appointment of winners among interest groups. Evgeny Gontmakher, an influential and controversial economist, argued a few months back that the decision on priorities in this budget might decide Russia's fate in no smaller measure than the coup in August 1991 or the financial collapse in August 1998 (Vedomosti, April 22).
Every budget in Putin's "era" contained a 20-25 percent increase of expenditures from the previous year, and the political decision on the 2009 budget was to increase spending still further despite a 35 percent drop in income. That created a deficit that by the latest estimate could reach 9.3 percent of the GDP (RIA-Novosti, July 30). It was clearly impossible to continue the spending spree, so the expenditures in the new budget are "frozen" at the current level, which still makes them some 50 percent higher than the level of income. Consequently, the deficit is planned at the level of 7.5 percent of GDP, which according to Putin is the limit beyond which macro-economic stability could be affected (Kommersant, RBC Daily, July 31). This stability is assured by the "moderately-optimistic" scenario of 1 percent growth in 2010, 2.6 percent in 2011 and 3.8 percent in 2012; these figures are taken as basic guidelines, while the "conservative" scenario predicted zero growth in 2010 and weaker recovery afterwards (Vedomosti, July 13).
The new budget therefore demanded clearer priorities than just small flat cuts in every department and the structure of expenditures proves two propositions about Putin's policy: that he is afraid of the growing discontent within the country and that he has no ideas on revitalizing the economy. Much spin is put on the social orientation of the budget, but where Gontmakher insisted on investing in the quality of human capital while channelling funds into education and health care, Putin has opted for various direct payments, including a 50 percent increase in pensions, aiming at disarming "irresponsible" protesters (Nezavisimaya Gazeta, July 22). It might appear that only cold-hearted economists could argue against helping impoverished pensioners, but in fact the costs of populist measures are very high as investments in infrastructure that create employment and build a foundation for post-crisis modernization are mercilessly cut (gazeta.ru, July 29).
One possible way to improve the parameters of the budget was to increase taxation on the gas monopoly Gazprom, but the half-hearted proposal from the Finance Minister Aleksei Kudrin was firmly overruled by Putin after a meeting with Gazprom's CEO Aleksei Miller (, July 30). This special attention will not only push the budget deeper into the red, it will also necessitate a further 25 percent devaluation of the ruble even if oil prices remain above $60 per barrel and that will keep inflation in the mid-teens (Nezavisimaya Gazeta, July 30). The main source of covering the deficit is the accumulated financial reserves that currently amount to $400 billion. That, however, will not be enough and Kudrin has acknowledged the need to resort to external borrowing that in 2010 could be limited to $18 billion and reach $60 billion by 2012 (lenta.ru, July 28). These figures are quite moderate in themselves and the external debt reaching 15-17 percent of GDP is not a heavy burden, but there is also corporate debt, which Kudrin estimates as exceeding $400 billion (RIA-Novosti, July 31). Much of that debt is covered by state guarantees and they are in fact expanding as the government is indirectly involved in negotiations on restructuring loans that have brought such "champions" as aluminum giant Rusal to the brink of bankruptcy.
Entering again into the money market Russia would have to think hard about its credit ratings and reputation - and that implies certain changes in its foreign policy behavior. Indeed, the ability to pay off the external debt was one of the main sources of Putin's confidence in Russia's rising power and his arrogant challenging of Western interests was in no small measure based on the assumption that Russia was free of this humiliating dependency. Now it is necessary once again to bargain with uncharitable international financial institutions, so Moscow would have to contemplate financial consequences every time it feels tempted to offend potential creditors. It might appear that the high level of defense expenditures preserved in the 2010 budget contradicts this as yet barely visible trend towards a more humble foreign policy. However, the deep cuts in the officer corps envisaged by the Defense Minister Anatoly Serdyukov's reform plan are very costly, and such long-standing programs such as the new submarine missile Bulava and the satellite navigation system GLONASS bedeviled by setbacks, must be brought to fruition - again at a very high cost (Nezavisimoe voennoe obozrenie, July 31).
Putin's economic policy, of which the new budget is just one manifestation, is increasingly disappointing for many economists, who argue that if a right measure is taken with a six to nine month delay, it becomes a wrong measure in the context of the deepening recession (, July 27). The main source of these delays and half-measures is the dilemma that Putin is facing: either to dismantle his system of rigid state control over key economic activities or to focus on rescuing it and condemn Russia to protracted stagnation. He tries to postpone this choice by experimenting with "manual management" of local problems and harvesting PR dividends, but he can hardly fail to see that his orders cannot make credit flow from the banks clogged by bad loans or generate demand for antiquated cars produced by Avtovaz. Nothing in the budget suggests that Putin has recognized the imperative of scrapping his model of "command petro-economy," and that most likely means that long hours of reconciling intake and disbursement were wasted because someone else would have to take responsibility.
Business, Energy or Environmental regulations or discussions
Russian Stocks Fall First Time in 4 Days; VTB, Polyus Gold Drop
By Mark Sweetman
Aug. 4 (Bloomberg) -- Russian stocks fell for the first time in four days as VTB Group reported a first-quarter loss and OAO Polyus Gold followed bullion prices lower.
The 30-stock Micex Index slipped 1.3 percent to 1,084.92 at 10:51 a.m. in Moscow. The RTS Index added 0.1 percent to 1,069.51.
VTB, Russia’s second-largest bank, slumped as much as 4.5 percent and traded down 3.4 percent at 4.27 kopeks. The state- run bank had a net loss of 21.4 billion rubles ($689 million) after it increased provisions for bad loans. A kopek is a hundredth of a ruble.
Polyus Gold, the nation’s biggest producer of the precious metal, dropped 19.91 rubles, or 1.5 percent, to 1,269.50. Gold for immediate delivery fell 0.1 percent to $955.60 an ounce at 8:29 a.m. in Singapore.
Coal producer OAO Raspadskaya declined 1.5 rubles, or 1.8 percent, to 86 rubles.
To contact the reporter on this story: Mark Sweetman in Moscow msweetman@
Last Updated: August 4, 2009 03:09 EDT
Obstacles Remain to Foreign Share Issues
04 August 2009By Oleg Nikishenkov / Special to The Moscow Times
From its peak in May to its nadir in October, the MICEX Index lost 74 percent of its value, one of the most significant market declines in the world.
Despite — or possibly because of — trade on the MICEX being halted more than 30 times to temper its decline, there was a massive flight of Russian securities trading abroad. At its low point in October, more than half of Russian securities were traded on the London Stock Exchange.
Local markets have since regained part of what was lost, and officials are working to see that it doesn’t happen again.
The government has recently introduced two key measures to boost liquidity and decrease volatility on the local markets, but critics say the extra restrictions may scare off foreign capital and hamper growth.
Last month, the Federal Service for Financial Markets increased restrictions on Russian companies listing shares abroad, effectively limiting initial public offerings on foreign markets to 5 percent of the company’s value. Firms with more liquid stock would be able to list up to 25 percent of their equity abroad.
Another government measure, which President Dmitry Medvedev signed into law in April, allows foreign companies to list ruble-denominated shares on Russian exchanges. It also boosts the role of Russian Depositary Receipts, or RDRs — securities traded on local exchanges but representing equity of a foreign company — as financial instruments.
The rules aim to keep domestic companies from running to foreign exchanges and retain equity from Russian majors on local exchanges. The financial markets service hopes that such measures will put to rest old fears among foreign investors and companies.
“Most risks that existed previously are gone,” Vladimir Milovidov, the service’s head, said in a recent interview. “It’s clear now that the level of risk locally is acceptable to the foreign community.”
Russia, because of its location and history, is well situated to become a regional financial center and offer direct competition to cities such as Dubai and Hong Kong, Milovidov said.
The goal of transforming Moscow into an international financial center began gaining traction shortly before the recession hit. While the crisis has put such plans on hold, officials from Mayor Yury Luzhkov to Medvedev have again started articulating their vision of Moscow as the next London.
But there is much work to be done.
The first half of 2009 saw more than $55 billion of Russian investment abroad, the markets service has said. By creating instruments such as RDRs, the service hopes to retain Russian capital now invested in foreign assets and Russian firms listed abroad. But this looks to be a difficult task — there has not yet been a single issue of RDRs.
In addition to attracting foreign firms, the regulator also hopes to attract back to domestic markets Russian firms that have listed abroad. Some of the country’s biggest firms have held IPOs abroad, depriving local markets of much-needed volume. In 2006, Rosneft held a multibillion-dollar IPO on the London Stock Exchange in what was then the sixth-largest initial share sale on record.
Some of the blue chips are pushing back against the proposed rule to limit listings abroad.
Sberbank is in negotiations with the markets service to lift the requirement that issuers of Global Depositary Receipts set aside part of the issue for the Russian market. The talks have led to speculation that the bank may be preparing a GDR issue.
And just as local majors aren’t thrilled about being forced to list domestically, convincing high-quality foreign firms to issue RDRs may be difficult.
“If Western economies are in bad shape, why would Russians buy foreign stock? And if the economic situation is better, why would foreign equity come here?” said James Beadle, chief strategist at Pilgrim Asset Management.
Small-cap equities were the most desirable foreign equities for private Russian investors, he said, but for most investors buying abroad is too expensive a procedure.
The Federal Service for Financial Markets has applied strict rules for foreign issuers seeking to issue here, closing the door for many foreign small-caps. Would-be issuers must be a member of the Financial Action Task Force, an anti-money-laundering organization; develop a prospectus in Russian; and survive the Federal Service for Financial Markets’ registration procedure.
Another obstacle that may scare off already wary foreigners is the absence of a central depositary — an institution where securities are held and transfers among traders are recorded. That role currently is fulfilled by independent bodies: the National Depositary Center and the Depositary Clearing Center.
A prime candidate to issue RDRs might not even be foreigners. The instrument might be a convenient tool for the many firms that operate in Russia but are registered abroad, such as Evraz Group, registered in Luxembourg, and X5 Retail Group, registered in Holland.
Companies such as these have expressed interest in the instrument but are concerned about technical and legal barriers. Evraz Group is interested in the RDR but wants to see a precedent set first and doesn’t want to be the pioneer, spokesman Alexander Boreiko said.
But instruments are only as good as the macroeconomic situation they operate in, and by that measure there is a long way to go, analysts say.
Foreign investment for Russia in 2008, the latest period for which data is available, was down 14 percent from the previous year. And until foreign investors are more willing to invest in Russia, the liquidity measures will continue to have a limited effect.
UPDATE 1-Russia's VTB Q1 loss wider than forecast
Tue Aug 4, 2009 2:33am EDT
* Q1 net loss 20.5 bln rbls vs 12.4 bln in poll
* Q1 net interest income 34.3 bln rbls
* Does not expect return to profit this year
* Provisions to exceed 8 pct of loan portfolio in '09
MOSCOW, Aug 4 (Reuters) - VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz), Russia's second biggest lender, reported a 20.5 billion rouble ($656.2 million) net loss for the first quarter on Tuesday as loan provisions rose faster than expected.
Analysts had expected VTB to show a net loss of 12.4 billion roubles. They see the bank as an indicator of the health of the wider Russian banking sector.
"The level of provisions is to remain high in 2009 and we would not expect to return to profit this year," VTB's chief executive officer Andrei Kostin was quoted as saying in a press release.
VTB is planning to raise at least 180 billion roubles in new capital as early as September to offset the impact of the rising bad loans.
VTB's larger rival, state-controlled Sberbank (SBER03.MM: Quote, Profile, Research, Stock Buzz) has earlier defied expectations by staying in the black in the first quarter despite surging provisions [ID:nLE295374].
(Reporting by Dmitry Sergeyev; editing by John Stonestreet)
VTB Bank posts Q1 IFRS net loss of 20.5 bln rubles, worse than forecast (Part 3)
MOSCOW. Aug 4 (Interfax) - The VTB (RTS: VTBR) Bank closed the
first quarter of 2009 with net losses of 20.5 billion rubles to
International Financial Reporting Standards (IFRS), the bank said in a
press release.
Analysts told Interfax in a consensus forecast that they thought
the bank would show losses of 12.7 billion rubles for the quarter.
VTB's equity decreased by 2.7% during Q1, to 381.5 billion rubles
from 392.1 billion rubles. Liabilities rose 3.8% to 3.431 trillion
rubles. Combined liabilities and equity rose 3.1% to 3.813 trillion
rubles.
The capital adequacy ratio fell to 15% at the end of Q1, from 17.3%
at the end of Q4.
The bank said provisions for loan impairment grew to 49.2 billion
rubles in Q1 2009 from 30 billion rubles in Q4 2008. This was 7.1% of
the average gross loans in annualized terms, compared with 4.8% in Q4.
Past-due and rescheduled loans grew to 4.3% of the portfolio at the
end of Q1 2009, from 2.4% at the end of 2008. "Although down from 147.6%
at the end of December 2008, the coverage ratio for overdue and
rescheduled loans by allowances for loan impairment remained adequate at
118.3% at the end of March 2009."
VTB said its Debt Center, established in 2008 to work with
borrowers in difficulty and secure the bank's position in restructuring
situations, became fully functional in the quarter, with a dedicated
team able to manage problem assets and maximize recoveries. In the first
quarter of 2009, the Debt Center was engaged in the recovery of more
than 120 problem loans totaling over 62 billion rubles. More than 80% of
those assets represented loans to large companies."
Provisioning will be high throughout the year and could top 8% of
total lending by the end of 2009, the bank said, echoing previous
guidance.
The bank said the sharp increase in provisions, coupled with a one-
off charge of 10.3 billion rubles related to the reclassification of
interest rate swaps, drove the net losses of 20.5 billion rubles in Q1
2009. It said the exceptional charge was due to the reclassification of
interest rate swaps from the hedging to the trading book. These related
to foreign currency loans which were restructured into ruble loans, as
part of the process VTB is undertaking to help its clients put their
financing on a more sustainable footing. In addition, VTB booked a loss
of 1 billion rubles from trading securities in the first quarter of
2009.
Core income, defined as net interest income before provisions and
net fee and commission income, went up 30% to 38.6 billion rubles in Q1
2009 from 29.7 billion rubles in the same period last year,
"demonstrating the continued earnings power of VTB's business." Net
interest income before provisions increased 30.9% to 34.3 billion rubles
from 26.2 billion rubles in Q1 20087 due to strong lending growth. Net
fee and commission income increased almost 23% year-on-year to 4.3
billion rubles from 3.5 billion rubles. The net interest margin
decreased to 4.1% from 4.6% in the fourth quarter of 2008, largely due
to increased funding costs.
VTB continued to optimize its debt obligations. A net gain from the
buy-back of 5.5 billion rubles was booked in the reporting period. The
nominal value of Eurobonds bought back during the first quarter of 2009
amounted to $600 million.
The Group's total assets increased 3.1% to 3.813 trillion rubles at
the end of Q1 2009, up from 3.697 trillion rubles at the end of 2008.
VTB's total gross loan portfolio went up 7.5% to 2.848 trillion rubles
from 2.65 trillion rubles.
"Despite the Government's anti-crisis measures, Russian companies
continue to face serious difficulties refinancing their operations. With
foreign credit markets remaining mostly shut for Russian corporates, VTB
has been working actively to provide alternative sources of finance in
the domestic market and has been able to deepen its relationships with
high quality borrowers. VTB's investment in VTB Capital has also
provided additional expertise in that client segment. This is enabling
VTB to create strong and high quality relationships which will stand the
Bank in good stead when the economy returns to healthy growth," VTB
said.
As a result, VTB was able to report growth in corporate loans of
7.7% to 2.438 billion rubles from the year end 2008. VTB Group's share
of the corporate loan market increased from 12.7% to 12.9%. Retail loans
increased by 5.8% to 409.5 billion rubles from 387.1 billion rubles at
the end of 2008 with VTB's market share up slightly to 8.9% (2008 -
8.8%) in that segment.
Customer deposits increased 11% quarter on quarter to 1.223
trillion rubles from 1.102 trillion rubles. "Although this increase
partly reflected the impact of the devaluation of the ruble on dollar
denominated deposits, there was a marked increase in both corporate and
retail inflows reflecting confidence in the VTB brand."
"Focus on cost control and improved efficiency remained a key
priority for the bank," VTB said. In the second half of 2008, the Group
implemented a number of cost cutting measures across all of its
businesses. Progress on these measures is reflected in the first quarter
results. Staff and administrative expenses decreased 17.8% quarter-on-
quarter to 17.1 billion rubles. As a result, VTB's cost-to-core income
fell to 44.3% from 55.1% in the fourth quarter of 2008 and remained
broadly stable as compared to the first quarter of 2008.
The number of VTB Group employees fell by 1.3% or 565 employees to
41,427. The Group's largest employer, its retail bank VTB24 (RTS: GUTB),
cut 2.2% of its staff or 394 people to 17,487.
After a period of rapid expansion, VTB24 has shifted its strategic
focus towards customer relationship management while consolidating its
operations and branch network. The number of branches of the Group's
retail bank VTB 24 fell to 480 from 504 at the end of 2008. The bank has
also shifted its product focus away from mortgage lending towards
shorter term loans.
VTB expects its consolidated loan portfolio to rise more than 10%
in ruble terms this year.
The group does not expect overall expenditures for 2009 as a whole
to exceed Q4 expenditures in annualized terms in rubles. On this basis,
VTB does not expect to close the year with profit.
"In the face of extremely tough economic conditions, VTB is working
hard alongside the Government to support its customers. We continue to
maintain tight control on costs and risks. The level of provisions is to
remain high in 2009 and we would not expect to return to profit this
year. We are confident that we will be able to weather the storm and
emerge successfully with a strong franchise when the economy recovers,"
VTB President and Chairman of the Management Board Andrei Kostin was
quoted as saying.
VTB was Russia's second largest bank by assets, according to the
Interfax-100 ranking at the end of the first quarter of 2009. VTB24 was
the seventh biggest.
VTB is about to launch a rights offering to bolster its share
capital by 90 billion rubles. It said in a statement published by the
Rossiiskaya Gazeta newspaper that shareholders would be able to exercise
their rights to buy 90 billion rubles of new stock between August 5 and
24. The placement price will be decided when the rights offer expires.
VTB 24 will accept the offers to buy the shares.
A VTB source also told Interfax that VTB would start a road show
for depositary receipts in Britain, Continental Europe and the United
States on or after August 10 and that it could place 10% of the new
share issue abroad.
VTB's share capital could go up 2.34-fold to 157.241 billion rubles
if the whole 90 billion rubles is placed.
The state currently owns 77.5% of VTB, institutional investors own
17.7% and individuals own 4.8%. Russian investors own 12.2% and foreign
investors own 10.3%. The government's stake in VTB is not expected to
exceed 90% even if existing shareholders do not exercise their right to
buy the new shares, VTB's chief financial officer, Nikolai Tsekhomsky,
said at the bank's AGM at the end of June. He said the government's
stake would be decided after the supervisory council decides on the
placement price, probably in August.
Mechel Takes Over Failing Steel Factory
04 August 2009By Nadia Popova / The Moscow Times
Mechel will take over management of Zlatoust steel mill, the Chelyabinsk region said Monday, in a deal many say was driven more by political than economic considerations.
A three-way strategic partnership was agreed on by Estar Group, former owner of the plant, Mechel and the Chelyabinsk region, which has been managing the mill since workers staged a hunger strike over unpaid wages. The nature of the partnership was not disclosed. The Chelyabinsk-based Zlatoust plant, one of the oldest steel producers in Russia, suspended its production from late April until mid-June because of a lack of orders. The plant filed for bankruptcy on May 27, but the case was rejected by the court.
The plant’s ownership was uncertain until the local prosecutor’s office found in late June that it was owned by State Duma Deputy Vadim Varshavsky, who had previously denied ownership.
Mechel agreed to the deal because it has had success in similar projects, namely the Beloretsk and Izhevsk steel mills, chief executive Andrei Deineko was quoted as saying in a statement. The mills were nearing bankruptcy when Mechel bought them.
Deineko also cited a “longtime positive relationship with the regional government” as a reason for the deal.
The regional government said the decision was not an easy one for Mechel.
“We understand that Mechel doesn’t have any spare money,” said Vladimir Yelistratov, a Chelyabinsk region deputy industry and natural resources minister who has been charged with supervising the Zlatoust plant.
“Yes, the choice of Mechel was a political decision, and it was the regional government’s — not Mechel’s — initiative to create the strategic partnership with the Zlatoust plant. But we want the partnership to be mutually profitable,” he said. “The synergy is possible, as Mechel’s [Chelyabinsk Steel Mill] and Estar’s plants are located only around 120 kilometers from each other.”
Mechel spokesman Ilya Zhitomirsky and Ilya Ananyev, the governor’s spokesman, declined to comment. Nobody answered the phone at Estar’s press office on Monday.
Regional governments have been quick to head off problems after protests in June forced Prime Minister Vladimir Putin to visit Pikalyovo, where he reopened a closed plant and rebuked its owner. President Dmitry Medvedev later threatened to fire governors who failed to cope with unemployment and wage arrears.
Analysts say the deal could spell financial trouble for the steel giant.
“Mechel’s own steel facilities are the least efficient among Russian majors, and this would further erode the firm’s cost competitiveness in steelmaking,” Alfa Bank said in a note Monday. “This acquisition may be part of the quid pro quo for state support in financing Mechel’s long-dated projects.”
“There is no huge economic benefit in taking control of a nearly bankrupt enterprise with last century’s equipment and technologies,” Alfa Bank analyst Sergei Krivokhizhin said.
Alrosa Resumes Diamond Sales
04 August 2009Bloomberg
Alrosa resumed sales of unpolished gems in the market in July after a seven-month halt triggered by a collapse in demand stemming from the world recession, the company said Monday.
Domestic and foreign buyers purchased rough diamonds valued at $150 million, including gems worth $13 million bought at a Moscow auction. PO Kristall, the country’s largest diamond polisher, plans to buy gems worth at least $100 million from Alrosa before the end of the year, it said.
The diamond market is strengthening as demand for jewelry and other luxury goods stabilizes after a plunge caused by the world slowdown. De Beers, the world’s biggest producer of the gems, temporarily shut mines in Botswana and Namibia this year as the recession caused the company’s first-quarter output to plunge 91 percent.
ALROSA July Sales Reach $150M [pic]
Posted: 08/04/09 03:29
By Avi Krawitz
ALROSA has resumed its rough diamond sales and sold $150 million worth of goods to the market in July, the Russian diamond mining company reported.
“Starting from July 2009 the current market situation has enabled ALROSA to resume its trading operations and sizably increase market supply,” the company said in a note on its website. Sales under long term contracts accounted for the largest proportion of the supplies, it added.
ALROSA explained that it views the “consistent development of long term customer-producer relationships” as a key priority in its marketing of diamonds. In line with this program, the company reported that it resumed its long term relationship with Kristall adding that the Russian diamond manufacturing company intends to buy at least $100 million worth of rough from ALROSA before the end of 2009. In addition, the mining company said it plans to restart sales to local manufacturers in Yakutia.
ALROSA has also resumed its international special size diamond tenders due to the “steady demand for large size diamond goods” seen in the past two months. The company suspended thye auctions in September 2008 when the economic crisis hit global markets. The first auction in Moscow garnered $13 million with the next tender scheduled in Antwerp.
ALROSA stressed it intends to act responsibly regarding its sales policy, and in particular, “where it concerns volumes of special size goods to be offered at auctions, carefully monitoring current changes in the situation on the market for large size goods.”
Unlike most of its mining counterparts, ALROSA continued production during the economic crisis at near-full capacity but kept goods off the market by selling to the RF State Depository of Precious Metals and gems, Gokhran.
Russia's Sibirtelecom halves 2009 capex plans
Mon Aug 3, 2009 8:28am EDT
* To spend 2.3 billion roubles on capital expenditure
* Plan cut from 4.5 billion roubles
* Aims at reducing debt by at least 10 percent
YEKATERINBURG, Russia, Aug 3 (Reuters) - Russian regional telecom company Sibirtelecom (STKM.MM: Quote, Profile, Research, Stock Buzz) has almost halved its capital spending forecast for this year in a move to reduce its debt burden, its Chief Financial Officer said on Monday.
Alexander Sheifer said in an Internet conference the investment plans were "significantly adjusted" and foresee 2.3 billion roubles ($73.83 million) in capital expenditure instead of an earlier planned 4.5 billion roubles.
The company had already said in June it was cutting 2009 spending to 4.5 billion roubles, down 60 percent on the year-earlier figure. [ID:nLH828456]
Sheifer said Sibirtelecom planned to raise 2.5 billion roubles via bonds and credit lines in the near future and would use part of the proceeds to refinance existing debt.
He added the company aimed at reducing debt by at least 10 percent this year.
Sibirtelecom (ENCO.RTS: Quote, Profile, Research, Stock Buzz), controlled by national telecoms group Svyazinvest, is Russia's No.6 cellular carrier, with more than 5 million mobile subscribers. ($1=31.15 ROUBLE) (Reporting by Natalya Shurmina; writing by Maria Kiselyova, editing by Will Waterman)
URALCHEM announces the production results for the first half of 2009
Press release
August 4, 2009
URALCHEM, OJSC ("the Company" or "URALCHEM"), one of the largest producers of nitrogen and phosphate fertilizers in Russia and the CIS, today reported production results for the first half of 2009.
According to the results for the 1st half of 2009, URALCHEM enterprises produced 2,216,078 tonnes of commercial products, which is a 10% decrease compared to the 1st half of 2008 (including Voskresensk Mineral Fertilizers, OJSC).
Dmitry Osipov, Chief Executive Officer of URALCHEM commented: "Despite the ongoing instability in the international fertilizer markets, URALCHEM production results in the first half of 2009 show only a 10% decrease in the production of key commercial output compared to the first quarter of 2008. The decrease in production is mainly due to the ongoing difficulties with supplies of apatite concentrate - key raw material for phosphate fertilizers. As a result, in the first half of 2009 the production of these fertilizers, including DAP and MAP only reached one third of the result of the first half of 2008. It should be noted, however, that the Company was able increase the output of key nitrogen fertilizers by 10%. The world crisis resulted in a significant decrease in actual demand for fertilizers that has not yet restored. Nevertheless, the results of the first half of 2009 show that we have developed and are implementing an efficient program to overcome the effect of the economic decline and maintain stable production".
Russia's PIK subsidiary faces bankruptcy lawsuit
Mon Aug 3, 2009 1:08pm EDT
MOSCOW, Aug 3 (Reuters) - A unit of Russian residential developer PIK Group (PKGPq.L: Quote, Profile, Research, Stock Buzz)(PIKK.MM: Quote, Profile, Research, Stock Buzz), which is in debt to the tune of $1.3 billion and engaged in lengthy restructuring talks, faces a bankruptcy lawsuit, court filings showed on Monday.
Leasing Force has filed the bankruptcy lawsuit against OOO PIK Development in the Moscow Arbitration Court, the court database showed.
Leasing Force, registered in a small city south of Moscow, could not be reached for comment.
A PIK spokeswoman declined to comment, saying the company had not fully examined the court filing.
Several creditors have sued PIK for overdue debts, including state bank VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz) for 2.7 billion roubles ($86.68 million), holding company Sistema (SSAq.L: Quote, Profile, Research, Stock Buzz), the former owner of PIK peer Sistema Hals (HALS.MM: Quote, Profile, Research, Stock Buzz), for 950 million, and a unit of Renaissance Capital investment bank for 443.6 billion.
PIK's largest creditor, top Russian lender Sberbank (SBER03.MM: Quote, Profile, Research, Stock Buzz), which is owed 10.7 billion roubles, may restructure the bulk of the debt into a single facility, analysts have said.
Creditors are usually reluctant to test Russia's bankruptcy laws, largely untried in court, as way of getting back their money.
Of Russia's publicly listed developers, RTM (RTMC.MM: Quote, Profile, Research, Stock Buzz) has filed for bankruptcy. Among other high profile cases, aluminium tycoon Oleg Deripaska's construction company, Glavstroi, faces two bankruptcy suits. ($1=31.15 Rouble) (Reporting by Yuliya Komleva; writing by Melissa Akin; editing by Karen Foster)
One-Third of Russia’s Clothiers Are Going Bust, Exporters Say
By Holger Elfes
Aug. 4 (Bloomberg) -- A third of Russia’s 42,000 clothing retailers will close by the end of this year after the economic crisis hurt local spending, according to the head of the European Fashion and Textile Export Council.
The likely retail failures and order cutbacks in Russia mean companies in fashion-exporting nations such as Germany will deliver less apparel for the winter season, said Reinhard Doepfer, who leads the Brussels- and Stuttgart-based industry group. He said the Council surveyed German clothing makers and found an average of 35 percent of their deliveries to Russia would be unsold this summer.
“Many important German fashion suppliers have deleted between 20 percent and 30 percent of Russia’s fashion retailers from their customer records, because they don’t meet the basic conditions of doing business any more,” Doepfer said in an interview at last week’s CPD fashion fair in Dusseldorf.
German clothing companies ranging from luxury brand Hugo Boss AG to menswear maker Ahlers AG targeted Russia for growth as the nation’s economic growth outpaced that of Germany earlier this decade. Boss, known for its men’s suits, reported a wider loss last week, citing a 35 percent plunge in revenue from eastern Europe, excluding the effect of foreign-exchange moves. Russia is the label’s largest market in the region.
Germany is Europe’s second-largest fashion-exporting nation, trailing only Italy. Germany’s first-quarter fashion sales to Russia declined 6 percent to 162 million euros ($231 million), according to Doepfer.
The decline will accelerate during the year, as autumn- winter orders have fallen about 30 percent, he added.
Too Pessimistic
Some Russian analysts said Doepfer’s estimate was too pessimistic, though they acknowledged the weak local demand.
“About 10 percent to 20 percent of retailers may go bankrupt this year, but not a third,” said Anna Lebsak- Kleimans, president of Moscow-based researcher Fashion Consulting Group. Some of the halted German shipments will be replaced by cheaper imports from China and Turkey, she said.
“Retail chains may be reducing the number of outlets, but they are not shutting down completely,” she said.
The gross domestic product in Russia, the world’s biggest energy exporter, shrank 9.8 percent in the first quarter, the worst contraction in 15 years. The average monthly wage dropped 5.2 percent in June.
Germany exported clothes worth 750 million euros last year to Russia, 6 percent more then in the previous year, according to Doepfer. Italy exported fashions to Russia worth 1.25 billion euros, and will also post a decline, he said.
To contact the reporter on this story: Holger Elfes in Dusseldorf at helfes@.
Last Updated: August 3, 2009 20:00 EDT
Russia specifies FSC timber for Winter Olympics
4 August, 2009
Forest Stewardship Council (FSC) certified timber has been specified for use in the 2014 Winter Olympics in Russia.
FSC-certified timber is recommended for use in all construction work, including new buildings, transport and energy infrastructure. The Games’ green specification standard says only wood with legal documentation and proof it does not come from conservation areas will be permitted to used.
“It is the first time during the 10 years that FSC has been established in Russia that FSC certification and FSC-certified products are endorsed for internal use by the Russian government,” said Andrei Ptichnikov, director of FSC Russia’s national office.
The games will be held in the Black Sea resort city of Sochi.
Logging Laws Cut Investment
04 August 2009By Maria Antonova / The Moscow Times
The web site for the Ivanovo regional administration proudly displays Czech plans to build an 870 million ruble ($28 million) timber-processing plant.
This is the kind of project that the region’s forestry committee has used to justify its reluctance to lease small plots to small and medium-size forestry companies. It wants big investors.
The catch is that the Czech plant, which was approved by the regional administration in September, has never materialized. Industry insiders said that of 187 investment projects in the timber industry that have been approved by the Industry and Trade Ministry, investors have stayed put for only five.
Most of the projects are “soap bubbles,” flaunted by regional administrations and existing only on paper, and even the few remaining investors may quit soon, said Denis Sokolov, director of the Timber Industry Confederation of the Northwest, a lobby group.
Financial crisis aside, Russian forests are not commercially attractive to international timber companies, which would need to invest more than 1 billion euros ($1.4 billion) to build a single large paper plant in a forest-rich area. The high cost is associated not only with the plant but with the construction of transportation, energy and housing infrastructure required to reach the country’s 880 million hectares of forests, much of which is remote and underdeveloped.
The Forest Code leaves responsibility for those costs to the investor, while the government merely gives them access to the forest on preferential terms. Faced with such hurdles, companies tend to choose tropical timber markets, where denser biomass provides a bigger profit margin and facilities do not have to be heated during the winter.
What exactly derailed Czech company CE Wood’s plans to build a timber-processing plant in the Ivanovo region is unclear.
The holding was expected to build the plant within two years and invest into forest works in the region while operating on a 49-year lease.
The Ivanovo regional administration, in an e-mailed reply to faxed questions, would only say the plant had not been built because “the investor stopped activities on the project in the region.”
It did not say why the project remained on its web site. But a regional forestry committee official called the administration’s announcements about the investment “just PR.” Moreover, the project was supposed to be developed using bank loans, which is unlikely given the credit crunch, he said.
The September decree that approved the project expired in June, he added.
CE Wood, which offered to construct the facility in March 2008, declined to comment when asked to explain its departure.
The federal government had hoped to attract investors like CE Wood with the Forest Code, a law that has been implemented in phases since 2006 in an effort to reform the industry. Investment projects that boost deep processing of timber are part of the government’s plans to lead the country away from exporting cheap rough timber. Such exports made up about 30 percent of the industry’s total production last year.
According to the Forest Code, investment projects in the timber industry need to receive at least 300 million rubles ($9.6 million) of investment into infrastructure or timber processing facilities to receive access on preferential terms and bypass the auction procedure.
Both President Dmitry Medvedev, who worked as a director at Ilim Pulp in the 1990s, and Prime Minister Vladimir Putin have publicly endorsed the development of timber processing as a national goal. As part of that effort, the government had intended to hike export tariffs for rough timber to 50 euros per cubic meter at the start of this year, hoping to encourage exports of timber products with higher added value. The tariff would have made it essentially impossible to export rough timber, industry players said, and in November the government delayed the hike by nine to 12 months.
Putin attempted to re-engage interest in the country’s rough timber at a meeting with Finnish Prime Minister Matti Vanhanen in early June. “It’s important for our Finnish friends to use this time-out to develop deep processing industries for timber on Russian territory,” he said at the time.
But his words appear to have fallen on deaf ears. Between 6 million and 10 million cubic meters of rough timber have been stuck at the Russian-Finnish border since September as Russian exporters hope that their contracts with Finnish importers will be renewed, Finnish radio station YLE reported July 14.
The Finns instead have introduced a program to use domestic timber, while China, another big importer, is now taking Canadian timber, said Sokolov, of the timber industry confederation.
“We have lost those markets because they know the tariffs will be introduced eventually, and the one-year time-out doesn’t change anything,” he said.
It’s already been a rough first half for the industry. Board lumber, hardboard and plywood output in the first six months of 2009 is down 30 percent to 40 percent compared with last year, according to the State Statistics Service. Pulp and paper products are also down, by 10 percent to 30 percent.
Roughly a quarter of the country’s timber is used as firewood and for other personal needs, while about 30 percent is exported before processing.
Russian timber is also facing a formidable challenge from tropical countries. Sokolov said a large plant producing 1 million tons of pulp per year would require 5 million hectares of Russia’s northern forest but only 700,000 hectares of tropical forest. It is no wonder then that Stora Enso, a Finnish company that considered a project in Nizhny Novgorod last year, eventually went to Uruguay, Sokolov said.
With the conditions set by market forces, the credit crunch and the Forest Code, the industry could soon lose all small timber producers, and no large investors will materialize to take their place, said Alexei Yaroshenko, director of the forest program at Greenpeace. The industry is currently contracting by about 10 percent every month, he said.
Activity in the Oil and Gas sector (including regulatory)
Monday, August 3, 2009
Russia looks to revive oil deal with Iraq signed with Saddam
MOSCOW — Russia intends to conclude a major energy deal in Iraq.
Officials said Russia's Energy Ministry wants to obtain final approval from the Baghdad government for participation in Iraq's West Qurna-2 crude oil project.
Russia's LukOil has sought implementation of a contract signed with the former Saddam Hussein regime for the development of West Qurna-2 and suspended in 2002.
"In the first half of August, I will visit Baghdad," Russian Energy Minister Sergei Shmatko said on July 31.
In August, the Iraqi Oil Ministry was expected to reopen bids for West Qurna-2, with oil reserves estimated at six billion barrels.
Officials said Russia, which wrote off $12 billion worth of debts to Iraq, was promised that LukOil would be a key bidder in any tender.
They said Iraq would seek investments of $4 billion.
Petrom reports new oil and gas discoveries in Russia
The tests of Lugovaya-1 well confirm gas and oil accumulations, and the production is of approximately 6,500 boe/day. Petrom, the largest oil and gas producer in South-East Europe has reported both gas and oil discoveries in the exploration well Lugovaya. The well is located in Kamenski license in the Saratov region (Russia).
Lugovaya-1well was tested and flowed from a hole test conducted at 3,882 m depth. The first tests are very encouraging, revealing a flow rate of over 2,500 bbl/d light sweet oil in one zone and two gas-bearing formations flowed combined 550,000 cm/d sweet gas as well as 75 cm/d condensate (4,000 boe/d).
“The exploration success and especially the well’s capability of flowing at such high rate are very encouraging and confirm the concepts developed together with our peers in Russia, by a mixed team of geologists”, said Johann Pleininger member of Petrom Executive Board, responsible for Exploration and Production Division.
Petrom started operating in Russia in 2006, after the acquisition of 74.9% equity in Ring Oil Holding & Trading Ltd, and jointly conducted exploration operations with the minority shareholder of eight blocks in Saratov region, located 1,000 km Southeast of Moscow and in the area of Komi, 1,200 km Northeast of Moscow.
Matra subsidiary contracts drilling rig.
Tuesday, Aug 04, 2009
Matra is pleased to announce that its 100% owned Russian subsidiary “OOO” Arkhangelovskoe” has signed a turnkey contract with Petro-Management Drilling Company for the drilling of well-13 in the Sokolovskoe Field in Orenburg. The rig to be utilised is an Uralmash-4E electric rig.
Site preparation has commenced at the well-13 location and mobilisation of the rig will commence within the next few days. The contract allows for a 6 week period for mobilisation and commissioning of the rig at the new location and drilling to 3850m is expected to take approximately 120 days, after spud, at a cost of $4.5million (excluding VAT).
Matra’s Managing Director, Peter Hind said:
“We are pleased to get drilling operations underway – we expect to spud the well in mid-September and to have the well results very early in the New Year. This is a very important well for Matra and we will report again once the well has spud.”
Source: Matra Petroleum
Tatneft Drills Horizontal Wells in Tatarstan Oil Fields
OAO Tatneft 8/3/2009
URL:
OAO Tatneft has built 200 new horizontal wells and about 50 lateral horizontal wellbores in the oil fields of Tatarstan. Drilling of such wells is performed in the oil fields with complicated geological structure.
The drillers have mastered the technology of drilling branched horizontal wellbores both in different productive strata, as well as same layer. Drilling in productive layers is carried out in the mode ensuring maximal preservation of the natural reservoir permeability. Average oil production rates of the horizontal wells and the lateral horizontal wellbores is significantly, sometimes two-fold, higher, than the production rates of vertical and directional wells.
Drilling of the horizontal wells is performed with application of screw type downhole motors with variable geometry and MWD telemetry systems with hydraulic and electromagnetic communication channels. The length of the conventionally horizontal wellbore section in the formation extends up to 650 meters. Penetration is carried out through the mostly oil saturated part of the formation within a one meter "corridor" of drilling thickness.
Urals Energy finally transfers Dulisminskoye field to Sberbank - might be a new owner very soon
VTB Capital, Russia
August 4, 2009
News: Urals Energy is divesting 100% of its wholly owned subsidiary ZAO NK Dulisma (which holds the Dulisminskoye oil and gas field) under an agreement to OOO Sberbank Capital (a wholly owned subsidiary of OAO Sberbank), for the full discharge of a USD 130mn loan and partial discharge of a USD 500mn loan. The company also stated that there had been progress over settling the remaining portion of the USD 500mn loan with Sberbank. This loan is related to the company's acquisition of a 35% stake in the Taas-Yariakh assets in East Siberia, which requires regulatory clearances and third party actions.
Vedomosti speculates that the main candidate for purchasing the Dulisma field from Sberbank is Alliance Oil Company.
Our View: The news is not a surprise. Back in January 2009, Urals Energy approved the transfer of 99% in Dulisma and 35% in Taas-Yariakh to Sberbank in order to repay its loans. At the end of June 2009, trading in the shares of Urals Energy was suspended.
As of 31 December 2007, the proved reserves of the Dulisminskoye field were 43mmbbl of crude and condensate and 13bcm of gas. At USD 500-700mn, the price of the Dulisminskoye field (based on proved reserves) implies an EV/Reserves ratio at USD 4.0-5.6/boe (or a 56-119% premium to the current average EV/Reserves of Russian oil and gas companies).
The Dulisminskoye field is located in East Siberia and we expect the zero export duty to be introduced for it in the near future. Should Alliance Oil Company acquire the field, it would be a positive development for the company, increasing its production portfolio. In addition, the field is close to the Khabarovsk Refinery (which Alliance Oil Company owns).
Exxon Ignores Pleas From 50,000 People To Halt Damaging Activities That Threaten Rare Whales
4 AUGUST 2009 - More than 50,000 people have demanded that oil and gas giant ExxonMobil and several other companies suspend damaging industrial activities that harm the Western Gray Whale, one of the world*s most critically endangered whales.
The thousands of signatures from around the world were delivered on petitions to the CEO of ExxonMobil in Irving, Texas, and Exxon*s Moscow headquarters, just as the first whales arrived in their summer feeding grounds - the area of Exxon*s Sakhalin I oil and gas project - at northeast Sakhalin Island, in the Russian Far East. Pacific Environment and WWF, which delivered the petitions, requested a response from Exxon within two weeks, a deadline that passed today.
The petition urges Exxon, Rosneft, and other oil companies operating in the area to suspend all oil and gas development activities near the critically endangered Western Gray Whale*s annual feeding habitat off the coast of Sakhalin Island, and calls for the creation of the Sakhalin Marine Federal Wildlife Reserve.
There are only about 130 Western Gray Whales remaining, including just 25 breeding females. These whales feed only in the summer and autumn, and their primary feeding area lies in and adjacent to Exxon*s Sakhalin-1 project in the Piltun Bay area.
*The Western Gray Whale population is at great risk of extinction,* said Aleksey Knizhnikov, Oil & Gas Environmental Policy Officer, WWF-Russia. *It is imperative that all oil companies operating in its feeding area acknowledge the effects of their operations on the whales, which have just arrived to feed for the summer, and immediately halt all damaging industrial activities until the whales have left.*
The Western Gray Whale Advisory Panel (WGWAP), composed of 11 prominent international scientists, met in April with representatives from Shell and Sakhalin Energy, as well as WWF and Pacific Environment to discuss how oil and gas development is affecting the whales* main annual feeding area off the Sakhalin Island. The WGWAP reiterated their urgent plea for a moratorium on industrial activities carried out by oil and gas companies that are expected to disturb Western Gray Whales in and near their primary summer/autumn feeding season (July through October). Scientists on the panel have called for the moratorium following a large decrease in the number of whales in their annual feeding area near the shore during a period of loud industrial activity in the summer of 2008, including a seismic survey. This is significant because if the whales are displaced from this primary annual feeding area, they may have less success surviving and reproducing.
*Noise from oil and gas development is displacing the whales from their main annual feeding area,* said Leigh Henry, Program Officer, WWF. *Any disturbances or additional stresses on the Western Gray Whale could push the already critically endangered population closer toward extinction.*
Sakhalin II project sponsors, including Shell, Gazprom, and other companies heeded scientists* warnings and postponed the seismic surveying they had planned for 2009. However, Exxon, Rosneft, and BP have so far refused to amend their summer 2009 construction and extraction plans in and around Piltun Bay.
*Immediate action is needed,* says Doug Norlen, Policy Director for Pacific Environment. *Over 50,000 people have joined scientists in calling on Exxon, Rosneft, and others to stop their potentially destructive activities at Sakhalin Island and every single one of these people will be watching to see if these companies do the right thing for the Western Gray Whale.*
Gazprom
Scorpion Offshore risks losing USD3.8m revenue in Gazprom dispute
Mon. August 03, 2009; Posted: 09:23 AM
Aug 03, 2009 (M2 EQUITYBITES via COMTEX) -- SRPOF | Quote | Chart | News | PowerRating -- 3 August 2009 - Oslo-listed but Bermuda-based drilling rig operator Scorpion Offshore Ltd (OSL: SCORE) said last Friday it risks losing USD3.8m in revenue in a worst-case scenario in a dispute with Russian majorGazprom OAO (MCX: GAZP). In a fleet status update, Scorpion said that Gazprom is disputing the stated revenue as the Russian giant considers that 550 hours were lost in May 2009 for the jack-up rig Offshore Vigilant, which it has chartered from Scorpion, as a result of "fishing jobs".
Scorpion and Gazprom have hired a third party to find a solution. Scorpion will not book the revenue before the issue is resolved.
(EUR1 = USD1.4)
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