Russia
Russia 090325
Basic Political Developments
• Russia open to moderate Taliban contacts: report - Russia backs the idea of talks between Afghanistan's government and moderate elements of the Taliban, a senior Russian diplomat told Interfax news agency on Wednesday.
• Russian, Turkmen presidents to hold official talks in the Kremlin
• Moscow Activists Protest During Turkmen Leader's Visit - Movement leader Lev Ponomarev told RFE/RL that the action's goal is to make the Russian Foreign Ministry focus on problems faced by Russians in Turkmenistan.
• Russia interested in long-term presence in Spitsbergen – Lavrov
• Not happy with telecom conflict - Russian Foreign Minister Sergei Lavrov hopes the on-going conflict between Norwegian Telenor and Russian VimpelCom will be solved without harm for both parties.
• CIS could face greater terror threat amid economic crisis - anti-terrorist center (Part 2) - The CIS Anti-Terrorist Center (ATC) has forecast an increase in terrorist and extremist activities in the CIS countries due to the global economic crisis.
• Population across the CIS expect things to get worse
• International fuel & energy forum to open in St Petersburg
• Dmitry Medvedev will meet with UN Secretary General Ban Ki-moon.
• Lavrov surprised by NATO exercise - I must note we were surprised that the manoeuvres being held in the Norwegian waters practice operations in the event of deterioration in a conflict over access to resources, Russia’s Foreign Minister told Interfax at the press-conference after his bilateral meeting with Norwegian Foreign Minister Jonas Gahr Støre yesterday.
• NATO chief warns of 'difficult' Russia relations
• Russia postpones gas consultations with Ukraine
• Russia-Belarus agreement on transit of goods between customs of two the countries ratified
• Meeting of the Security Council on the National Security Strategy of the Russian Federation through to 2020
• Submarines can be armed with tactical nuclear weapons
• Nuclear powered icebreaker collided with oil tanker - The nuclear powered icebreaker “Yamal” collided with the tanker “Indiga” during ice escort in the Kara Sea last week.
• Head of St. Petersburg State University: China plays key role in Russian culture exchanges
• United Russia Backs Acting Mayor in Sochi Vote
• Russian deputies want Putin up on the mat - Putin will have to answer the questions during the annual report to the parliament on April 6. Russian deputies are interested in the anti-crisis measures of the government.
• Shuvalov Promises Fairy-Tale Ending - Prime Minister Vladimir Putin brought out the big guns to pitch the government's anti-crisis measures Tuesday, two days before United Russia, which he chairs, gathers with a mandate to promote the plan more aggressively.
• Communists See an Opportunity to Shine - As the crisis worsens, the vexing question for politicians is just who will reap the political spoils of the economic hardships.
• Dismissed GRU spetsnaz members may join criminal groupings in Russia - newspaper
• Large-scale anti-terrorist exercises taking place in Russia’s city of Valdai
• Russian volunteers keep eye on citizens, and the police
• Red Cross Campaigns Against TB
• Many Russians Seek Asylum - Russians are the third-biggest group in the world to seek asylum in other countries, after Iraqis and Somalis, the United Nations refugee agency said Tuesday.
National Economic Trends
• Gov't to receive finalized draft 2009 budget
• Issuance of subordinated loans through VEB will be continued – Kudrin
• Russia wont tap expensive international capital markets to finance budget deficit
• Russia not planning capital controls-Kudrin
• Bank of Russia unveils foreign currency purchases
• Banks Face More Defaults - Finance Minister Alexei Kudrin said Tuesday that the country's banks faced a second wave of problems from companies in the real sector that fail to repay loans.
• RBS EM Strategy Update | Russia macro in the news
• Deputy Economic minister says chance to avoid second wave of crisis
• Russia expects new outburst of financial problems
• Government considers individual bankruptcy law
• Ministries Spar on Tax Cut Proposals - Economic Development Minister Elvira Nabiullina said Tuesday that her ministry would submit proposals soon on corporate tax breaks, a move that could face resistance from the fiscally prudent Finance Ministry.
• Dollar Purchases Keep Ruble Down
• Deripaska’s GAZ Vehicle Maker Is Too Big to Fail, Ivanov Says - “We don’t want to nationalize anything except when it’s unavoidable,” Ivanov said in a Bloomberg Television interview yesterday in Moscow. “It’s the last resort.”
Business, Energy or Environmental regulations or discussions
• Lukoil, Norilsk Nickel, Polyus Gold: Russian Equity Preview
• REVIEW: Power companies urge clear rules for long-term market
• Progress Demanded On Capacity Market
• Mosenergo almost doubles RAS earnings to 1.4 bln rubles in 2008
• E.On warns on electricity investment - Global power firms pledged more than $30 billion to upgrade Russia's decrepit network. That's based on an official government report by 2020 electricity demand will triple. Independent experts say that's recklessly optimistic in the best of times, let alone the current downturn.
• OGK-1 to Sell Shares to Government
• Metals & Mining sector: Coking coal benchmark price may be down 60%
• BHPB and Nippon Steel settle on $129/t coking coal price
• Government earmarks RUB45bn for diamond purchases
• Sechin Asks Norilsk for Financial Details
• NLMK Reports Q4 Losses, Blames Falling Steel Market
• Amtel applies to Shuvalov for support
• PIK Group: No comment on Kerimov speculation; debt restructuring the priority
• New Company to Provide International farming management and transfer of technology to Russia
• Evroset could be MegaFon's partner
• Russia to Rescue FLC After Coupon Payment Default, Ivanov Says
• RBC mulls debt restructuring
• VTB expands investment bank ops in Asia, Mideast - Interview with Herbert Moos, CEO of VTB Capital
• STX denies Russian shipyard involvement - SOUTH Korea’s STX Group told Lloyd’s List that news reports of its involvement in a $1bn shipyard project in Russia’s Far East are premature.
Activity in the Oil and Gas sector (including regulatory)
• Russia to Be ‘Cautious’ on Reserves, Retain Fifth, Ivanov Says
• Energy Ministry reveals gas industry development plan
• WSJ: Oil Markets Pay Scant Attention to Russia - Last week, the Russian government predicted 2009 oil output of 9.68 million barrels a day, a 1.1% annual drop. But a Dow Jones Newswires survey of 12 analysts puts the decline at more than twice that rate, with the most pessimistic predicting a slump of 7%.
• Rosneft to purchase 5.5% in VCNG for RUB 1.5 billion
• Russia and Kazakhstan to provide oil for Burgas – Alexandroupolis project
• TNK-BP upgrades 2009 production outlook
• Alternative gas suppliers face overproduction in Russia – analysis
Gazprom
• Gazprom Neft Surges 30% on Report Gazprom Will Buy Eni Stake
• Eni backs Russia on new EU gas links
• UPDATE 1-Gazprom to exercise ENI buyback option early April
• Gazprom to Buy Eni’s 20% of Oil Arm in April, Vedomosti Says
• Gazprom, ENI urge South Stream pipeline project
• Gazprom Buys 50% Of A2A Beta To Seal Gas Deal With A2A, Iride
• Polish gas firm PGNiG in talks with Gazprom Export on legal details of gas supplies in 2009
• GAZPROM SQUEEZED BY CENTRAL ASIAN CONTRACTS - What seemed like sweet deals with Central Asian energy producers just about a year ago is turning into albatross contracts for Gazprom, Russia’s suddenly embattled natural gas conglomerate.
• Gazprom: More needed to help Ukraine - Gazprom Deputy Chairman Valery Golubev said from Brussels on Monday following the Ukrainian decision that Ukraine needed about $16 billion to effectively overhaul its gas pipelines, RIA Novosti reports.
------------------------------------------------------------------------------------------
Full Text Articles
Basic Political Developments
Russia open to moderate Taliban contacts: report
16 mins ago
MOSCOW (Reuters) – Russia backs the idea of talks between Afghanistan's government and moderate elements of the Taliban, a senior Russian diplomat told Interfax news agency on Wednesday.
U.S. President Barack Obama said in a newspaper interview published on March 7 that he was open to the idea of reaching out to moderate elements of the Taliban in Afghanistan, where insurgent violence is at its highest since U.S.-led forces ousted the militant Islamist movement in late 2001.
"If the leadership of Afghanistan considers the establishment of contacts with the moderate wing of the Taliban movement necessary, the Russian side would not object to this on condition that they lay down their arms, recognize the constitution and the government of Afghanistan and renounce ties with Al-Qaeda," Deputy Foreign Minister Alexei Borodavkin told Interfax.
The United States is expected to release a review of its own policy toward Afghanistan on March 27.
Analysts familiar with the region believe the United States must engage in dialogue with Taliban-led insurgents if it is to succeed in Afghanistan.
The country has been governed by a U.S.-backed administration since the Taliban was overthrown following the September 11, 2001 attacks in the United States but has faced a resurgent Taliban ahead of presidential elections due this August.
(Reporting by Conor Sweeney; Editing by Jon Boyle)
Russian, Turkmen presidents to hold official talks in the Kremlin
MOSCOW, March 25 (Itar-Tass) - Russian President Dmitry Medvedev and his Turkmen opposite number Gurbanguly Berdymukhamedov who is staying on a state visit in Russia will hold official talks in the Kremlin on Wednesday.
The two leaders met informally at the Barvikha residence near Moscow on Tuesday evening, while formal talks, in narrow and extended formats, are scheduled for Wednesday.
The results of the talks will be reflected in a joint statement of the two presidents. A package of bilateral documents will also be signed. After the signing ceremony, Presidents Medvedev and Berdymukhamedov will meet journalists.
“Our agenda is big, the state visit reflects a high level of relations between our two countries and between our peoples,” the Russian president told Gurbanguly Berdymukhamedov at their meeting on Tuesday.
For his part, President Berdymukhamedov thanked the Russian side for hospitality. He said he was sure that his current visit to Moscow would be successful and would give a new impetus to bilateral cooperation.
The Russian and Turkmen presidents met in February last year when Berdymukhamedov was in Moscow on a working visit. They met at the informal CIS summit in St. Petersburg in June and during Medvedev’s visit to Turkmenistan in July.
After finishing talks in Moscow, Gurbanguly Berdymukhammedov will visit St. Petersburg.
Russia is Turkmenistan’s main foreign economic partner. The trade turnover between the two countries has increased by 35% since 2007 to reach 6.9 billion dollars in 2008.
Gas cooperation forms the basis of partnership. Turkmenistan is the world’s second largest gas producer and exporter in the post-Soviet territory after Russia. According to various estimates, Turkmenistan’s potential gas reserves range between 11 and 24 trillion cubic meters.
In April 2003, the presidents of Russia and Turkmenistan signed an agreement on gas cooperation for the next 25 years. The document gave Russia the right to purchase Turkmen gas and enter international markets jointly with Turkmenistan, modernize and build gas transportation networks, exchange technologies. Russia will also take part in the development of Turkmen gas deposits.
Every year, Gazprom buys about 50 billion cubic meters of Turkmen gas. The price of gas for Russia has constantly been rising in recent years. It stood at 65 dollars per 1,000 cubic meters in January 2006 but went up to 130 dollars in the first half of 2008 and to 150 dollars per 1,000 cubic meters in the second half of 2008. According to bilateral agreements, the price for Turkmen gas will be calculated on market principles, i.e. dependent on changing situation in the world energy markets. According to unofficial sources, the price is about 240 dollars per 1,000 cubic meters.
At present, Turkmen gas is being transported along the “Central Asia-Centre” gas pipeline. Its annual capacity doesn’t exceed 50 billion dollars. Therefore, the construction of new pipelines is urgent for both sides.
On May 12, 2007 the presidents of Russia, Kazakhstan and Turkmenistan met in Turkmenbashi, Turkmenistan, to sign a joint declaration on building the Caspian gas pipeline. On December 20, 2007 a trilateral inter-governmental agreement on cooperation in the construction of gas pipelines was signed. On July 25, 2008 an agreement was signed on Gazprom’ s participation in gas investment projects in the territory of Turkmenistan. The agreement provides for increasing the capacity of the Turkmen section of the Caspian gas pipeline up to 30 billion cubic meters.
The length of the gas pipeline will be about 1,700 kilometers of which more than 500 km will run via Turkmenistan and about 1,200 kilometers via Kazakhstan.
The construction is to begin in 2009.
Moscow Activists Protest During Turkmen Leader's Visit
March 24, 2009
MOSCOW -- The Russian movement For Human Rights held a protest in Moscow urging the Foreign Ministry to help Russian citizens in Turkmenistan, RFE/RL's Russian Service reports.
Movement leader Lev Ponomarev told RFE/RL that the action's goal is to make the Russian Foreign Ministry focus on problems faced by Russians in Turkmenistan.
Many ethnic Russians in Turkmenistan held dual citizenship until former President Saparmurat Niyazov abolished the practice and forced ethnic Russians to choose either Russian or Turkmen citizenship.
Ponomarev said the protest is intentionally scheduled for March 24, when Turkmen President Gurbanguly Berdymukhammedov arrives in the Russian capital for talks with Russian counterpart Dmitry Medvedev on bilateral economic cooperation and construction of a new Caspian natural gas pipeline.
Russia interested in long-term presence in Spitsbergen – Lavrov
MOSCOW, March 25 (Itar-Tass) - Russian Foreign Minister Sergei Lavrov said on Tuesday that Russia was interested in long-term economic and scientific presence in Spitsbergen Archipelago in Norway.
‘We confirmed that we are ready to solve all issues of constructive practical interaction with the Norwegian side in compliance with the existing treaty,” Lavrov said in Moscow after talks with his Norwegian counterpart.
“We also noted good perspectives for implementing joint projects in ecology, especially in the provision of nuclear and radiation safety, and the development of cross-border cooperation,” Lavrov went on to say.
He added the two countries had broad horizons for Arctic cooperation.
Not happy with telecom conflict
2009-03-24
Russian Foreign Minister Sergei Lavrov hopes the on-going conflict between Norwegian Telenor and Russian VimpelCom will be solved without harm for both parties.
As BarentsObserver reported yesterday the Telenor – Vimpelcom case was an issue Norwegian Foreign Minister Jonas Gahr Støre would bring up in his bilateral talks with Russian Foreign Minister Sergei Lavrov in Moscow.
After the meeting, RosBusinessConsulting quoted Lavrov saying that the Russian Government and specifically the Russian Foreign Ministry would have a difficulty influencing the settlement process, as this concerns a private company. - We are not happy with what's taking place, Lavrov added.
Yesterday a Norwegian Foreign Ministry spokesman said to Reuters: - From what we can tell, this issue is indeed damaging the image of Russia as a recipient of foreign investment.
Earlier today, just some few hours before the dispute between Telenor and VimpelCom was discussed bewteen Lavrov and Støre, a court in the Siberian city of Omsk rejected Telenor’s appeal to suspend a 1,7 billion ruling, reported by BarentsObserver.
The Russian arrest of Telenor’s 29,9 percent of the VimpelCom company triggered harsh reactions from a wide specter of foreign investors in Russia.
CIS could face greater terror threat amid economic crisis - anti-terrorist center (Part 2)
ODINTSOVO, Moscow region. March 25 (Interfax) - The CIS Anti-
Terrorist Center (ATC) has forecast an increase in terrorist and
extremist activities in the CIS countries due to the global economic
crisis.
"I can forecast a real increase in the risk of terrorist and
extremist activities in the CIS due to the ongoing economic crisis," ATC
Director Police Col. Gen. Andrei Novikov said at a meeting of the CIS
countries' chief national anti-terrorist officers on Tuesday.
The devaluation of national currencies, a number of companies
partially or completely halting their production and growing
unemployment have been seen in all CIS countries, he said. "There is a
serious threat of increased criminal activities in general. I can say
that the economic crisis is also growing into a social one," Novikov
said.
Central Asia countries could be faced with the toughest challenge
as more and more migrant workers continue to return to their home
countries from Russia, he said.
Therefore, it becomes all the more important to adjust parameters
of our cooperation against terrorists and extremists amid the socio-
economic crisis, Novikov said.
The CIS anti-terrorist units must focus primarily on improving the
way intelligence and law enforcement agencies conduct research and
gather information, the ATC director said.
After the April 2008 meeting of the CIS chief national anti-
terrorist officers, the ATC began forming an analytical intelligence
unit. It is this analytical intelligence that will enable the monitoring
of potential platforms of terrorist activities in the CIS, Novikov said.
It is job is not to carry out search operations, but to conduct large-
scale analyses based on the actual information received from its
partners, that is CIS intelligence agencies, he said.
Population across the CIS expect things to get worse
bne
March 25, 2009
Every other Russian expects things to get worse before they get better, says a poll by the Post-Crisis World Institute and the Public Opinion foundation, reports Interfax. Of those polled in Russia, 43.3% think that the economic situation will get worse in the next few months, but few will take to the streets in protest.
The poll also covered Ukraine and Kazakhstan. The Ukrainians are the most pessimistic where 61.1% believe things will get worse soon.
The Kazakhs were the most sanguine where only 16.6% believe life will get harder before the summer.
Some 12.6% of Russians, 6.5% of Ukrainians and 35.4% of Kazakh nationals expect that the situation will improve, reports Interfax.
Likewise, the Kazakhs were the most approving of their government's actions to stem the crisis with 66.3% giving their government a thumbs up, against 40.7% in Russia and just 13.5% in Ukraine. Of those that criticized the government for its action (or lack of it) the numbers were 9.2% in Kazakhstan, 21.5% in Russia and a whopping 74.3% in Ukraine.
As for the populations opinion of the anti-crisis programme itself, 70% of Kazakhs believe the government has a program to overcome the crisis, 58.5% of Russians and 19.1% of Ukrainians.
Interestingly Russians put more faith in the leadership of Russian president Dmitry Medvedev to effectively overcome the crisis (44.9%) than they do in Prime Minister Vladimir Putin (44.3%).
The pessimism is a big problem as collapsing consumer demand will pull down the economy more effectively than bank system problems and indeed will cause the very bank system problems everyone is so afraid of now. It is not clear how the government can effectively pull the population out of their funk, but having confidence in the leadership is a key factor at the moment.
Another poll found that more than half of Russia's population have seen their incomes fall. The All-Russian Center for Public Opinion Research (VTsIOM) found that incomes in 56% of households fell in February. Another 29% said their savings had also fallen, while those that said they don't have enough money to buy food was up b 14%.
The poll also found that Russians won't demonstration, despite their disillusionment. It is unlikely that mass protest rallies will be held in Russia over the current economic situation, said Valery Fyodorov,
"I think people's answers to the question as to what they intend to do to improve their situation in the crisis indicate whether the people will go to the barricades. The overwhelming majority - 45% - said that people should mobilize, become more active and do everything within their competence to change the situation," Fyodorov told a press conference in the Interfax central office on Tuesday.
International fuel & energy forum to open in St Petersburg
ST.PETERSBURG, March 25 (Itar-Tass) - More than 500 heads of energy and petrochemical companies, representatives of ministries and organizations, investment and consulting firms from Russia, Norway, Slovenia, Turkey, Finland and Ukraine will participate in the 9th St. Petersburg international fuel and energy forum on Wednesday.
A delegation of Vietnam is a newcomer to the forum organized by the Russian Ministry of Natural Resources, the Russian Ministry of Energy, the Russian Academy of Sciences, the Russian gas monopoly Gazprom and the state corporation Rosatom.
The forum will mark a new step in reforming the domestic energy industry- the flagship of innovative and technological development of the Russian economy.
The delegates to the forum will discuss thte functioning of fuel and energy complex in conditions of changing economic situation.
“Special attention will be paid to the development of the Russian energy market, investments and innovations in the fuel and energy sector, the development of sea oil and gas deposits and the continental shelf, problems of Russian oil refining and chemical processing of fossil fuel, the efficiency of the nuclear industry as well as thermonuclear and renewable energy sources,” the organizing committee said.
The Lenexpo firm has unveiled six specialized exhibitions on mineral raw materials, fuel and energy resources, oil processing and petroleum chemistry, oil exports, transportation of hydrocarbon resources, equipment and nuclear energy.
Dmitry Medvedev will meet with UN Secretary General Ban Ki-moon.
The Secretary General is coming to Moscow to participate in the Special Ministerial Conference on Afghanistan to be held under the auspices of the Shanghai Cooperation Organisation.
The SCO includes Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. India, Iran, Mongolia and Pakistan are observer states in the SCO.
Lavrov surprised by NATO exercise
2009-03-25
The scenario in the NATO exercise ending in Northern Norway today surprise Moscow.
- I must note we were surprised that the manoeuvres being held in the Norwegian waters practice operations in the event of deterioration in a conflict over access to resources, Russia’s Foreign Minister told Interfax at the press-conference after his bilateral meeting with Norwegian Foreign Minister Jonas Gahr Støre yesterday.
Today is the final day of the NATO exercise Cold Response 09, involving more than 7000 soldiers from 13 countries. The exercise started on March 16 and is the biggest NATO exercise in Norway this year.
The soldiers have trained in the two northern Norwegian counties of Nordland and Troms and in the coastal waters outside at deploying military quick reaction forces into an area of crisis.
The NATO-Russia ties have improved lately, but both parts still have their disagreements. Yesterday NATO’s top commander John Craddock told Reuters:
- Russia seems intent on weakening Western institutions and its relations with NATO will likely be more strained in the coming years than at any time since the Cold War ended.
NATO chief warns of 'difficult' Russia relations
6 hours ago
WASHINGTON (AFP) — US relations with Russia have entered a period of "uncertainty" as Moscow appears determined to sow discord within Europe and undermine US influence, NATO's top commander warned.
"The relationship with Russia is likely to be more difficult to manage in coming years than any time since the end of the Cold War," General John Craddock told a congressional hearing in written testimony.
Citing Russia's military action supporting breakaway regions in Georgia in August 2008 and disputes over gas supplies to Europe in January this year, Craddock wrote Moscow's actions "suggest that their overall intent may be to weaken European solidarity and systematically reduce US influence."
The stark warning comes as President Barack Obama's administration seeks to reduce tensions with Russia, suggesting possible concessions on plans for a missile defense system in Central Europe in exchange for Moscow's support on diplomacy over Iran's nuclear program.
Obama is due to meet his Russian counterpart, Dmitry Medvedev, for the first time at the Group of 20 summit in London on April 2.
Craddock, who also serves as head of US European command, told the Senate Armed Services Committee that Russia had adopted a "newly assertive posture" towards its neighbors and to European states that rely on Russian energy.
"We are in a time of uncertainty in the US-Russian relationship brought about by disagreements over European security, Russia's role in what it regards as its neighborhood, and Russia's decision to send forces into Georgia and to recognize the breakaway regions of South Ossetia and Abkhazia," he wrote.
The refusal of other neighboring countries to back Russia's recognition of South Ossetia and Abkhazia reflected "regional unease over a revanchist Russia," the commander said.
The US military sought "a pragmatic military-to-military relationship" and hoped that talks with Russian counterparts would resume soon, he said.
Russia's actions in Georgia had altered the assumptions of the post-Cold War era that borders in the region were no longer under threat, the general told lawmakers.
"My judgment in that is that the events of last August in Georgia essentially changed the assumption that we made 15 years ago or more.
"And the assumption after the end of the Cold War and the dissolution of the Soviet Union and the Warsaw Pact was that there were no borders that were under threat of invasion in Europe and Eurasia, that that would not be the case," he said.
"And I think that assumption has been now proven false."
While Washington has planned to reduce the size of US forces stationed in Europe, Craddock said he recommended army brigades designated to return in coming years should remain, saying they contribute to "deterrence efforts" -- though he did not mention Russia.
Tensions rose meanwhile between Russia and Ukraine after Moscow expressed anger over Kiev's agreement with the European Union for investment in its gas pipeline network.
Russia's reaction revived fears of a repeat of a gas dispute in January which left a dozen EU countries without energy supplies.
Russia postpones gas consultations with Ukraine
24.03.2009
Russia postponed the intergovernmental consultations with Ukraine due to the fact that Ukraine and the European Commission adopted a memorandum on the development of Ukraine's gas transportation system.
The content of the memorandum "at least arouses questions," Russian President Dmitry Medvedev said at a Security Council meeting.
"International consultations at the level of prime ministers of the two countries are scheduled for the next week. We probably should postpone them in order to decide on consequences of this document," Medvedev said.
Russian Prime Minister Vladimir Putin backed the president's proposal. The Russian side "scrutinized this document," Putin said.
All this may significantly complicate talks between Naftogaz and Gazprom, Reuters reports.
The two companies are discussing the price Naftogaz will pay for gas in the second quarter of this year. The Russian side may seek to levy fines on Naftogaz for importing a smaller amount of gas in the first quarter than stipulated in the contract.
The EU agreed on Monday, March 23, to help Ukraine make expensive but necessary improvements to its gas supply network in exchange for more reliable transit service and grater market transparency.
"It seems to me the document about which we are talking is, at a minimum, ill-considered and unprofessional because to discuss such issues without the basic supplier is simply not serious," Putin said in the Black Sea resort of Sochi.
Russia's former president also hinted that his country might have to re-think its relationship with the European Union, dw-world.de reports.
"If the interests of Russia are ignored then we will have to start re-examining the principles of relations with our partners," he said.
Russia-Belarus agreement on transit of goods between customs of two the countries ratified
MOSCOW, March 25 (Itar-Tass) - The Federation Council upper house of Russian parliament has ratified the agreement between the governments of Russia and Belarus on the transit of goods between customs of the two countries. The agreement signed on June 29, 2007 is aimed to facilitate the procedure of customs clearance and customs control over good and to fix uniform rules for the transfer of such goods.
The agreement establishes uniform rules for customs payments, as well as the rights and duties of persons transferring transit goods and deals with other matters in this sphere.
It was noted in the Federation Council that the agreement is aimed at further development of economic and commercial relations between Russia and Belarus as participants in the Customs Union. It was stressed particularly that “the ratification of the agreement would not require additional expenditures from the federal budget nor would reduce its revenues.”
Meeting of the Security Council on the National Security Strategy of the Russian Federation through to 2020
Russian President Dmitry Medvedev held a meeting of the Security Council on the National Security Strategy of the Russian Federation through to 2020 and the measures necessary to implement it.
The President stressed that the new document is organised around principles that reflect state policy in the sphere of security and is based on Russia's national priorities.
The Strategy is designed to improve the quality of public administration, to coordinate the activities of public authorities and government and volunteer organizations in order to protect Russia's national interests and the security of the person, society and state.
The President said that during the period of global crisis Russia should not abandon its strategic planning and the implementation of its long-term plans. In this regard, he also presented the Framework for Strategic Planning to the members of the Security Council, a document necessary for the implementation of long-term national priorities.
In light of the discussion at the meeting it was decided to finalise the Strategy within the next month.
Submarines can be armed with tactical nuclear weapons
2009-03-24
- Probably, tactical nuclear weapons will play a key role in the future, the Russian Navy’s deputy chief of staff, Vice Admiral Oleg Burtsev said in a surprise statement on Monday.
Tactical nuclear weapons were officially removed from all of the Northern fleet’s multi-purpose submarines in 1992. An agreement between President Mikhail Gorbachev and George Bush (the older) from October 1991 stipulated such removal. This was two months before the breakup of the USSR. In January 1992 Russian President Boris Yeltsin confirmed the deal to remove all non-strategic nuclear weapons from naval vessels and scrap 1/3 of them. The rest were put into onshore storage facilities.
Since then, the Russian multi-purpose submarines sailing in the Barents Sea and other world oceans have not been armed with nuclear weapons. At least not officially. Speculations that Kursk, the submarine that sank in the Barents Sea in 2000, carried nuclear weapons were denied with the reference to the 1992 agreement.
The statement from the Navy's deputy chief of staff, Vice Admiral Burtsev, is therefore either a confirmation that the Russian navy already have tactical nuclear weapons onboard some of their submarines, or a clear signal that multi-purpose submarines can be armed with such weapons of mass destruction it the future.
Quoted by RIA-Novosti Burtsev said: - The role of tactical nuclear weapons in the Navy may grow, (...), the increasing range and precision of tactical nuclear weapons makes them an important asset.
The International Herald Tribune writes that Russia in 2006 signaled it no longer intended to abide by the 1991 decision when then-Defense Minister Sergei Ivanov said that Russian submarines were carrying tactical nuclear weapons on patrol.
Last December, chief of the Russian military's general staff, Gen. Nikolai Makarov, said Russia will keep its arsenal of tactical nuclear weapons, which he said were necessary to counter a massive NATO advantage in conventional weapons, writes the International Herald Tribune.
The Northern fleet today operates two classes of multi-purpose submarines, the Akula-class which can be armed with nuclear-tipped torpedoes and the Oscar-II class which can carry both cruise-missiles and torpedoes. In addition, several of the Northern fleets surface vessels, based in Severomorsk, can be armed with tactical nuclear weapons. Among them is the navy’s flagship, the battle cruiser Pyotr Veliky.
With advances in the range and sophistication of tactical nuclear arms, Russian military leaders say low-yield nuclear warheads attached to cruise missiles fired from attack submarines make more sense than loading powerful bombs onto bigger strategic submarines, United Press International (UPI) reported with reference to RIA-Novosti.
The new Graney-class nuclear-powered attack submarine will reportedly has the ability to launch long-range cruise missiles tipped with nuclear warheads. The first Graney-class submarine, to be named Severodvinsk, is currently under construction at the Sevmash naval yard in the town of Severodvinsk in Arkhangelsk Oblast.
As BarentsObserver reported in February, Sevmash General Director Nikolai Kalistratov said priority No. 1 in 2009 will be the construction of the submarines Yury Dolgoruky and Severodvinsk. RIA-Novosti reported last week that the submarine will be delivered to the navy in 2010-2011.
According to a naval source speaking with RIA-Novosti the Russian Navy maintains a fleet of 60 submarines in active service, including 10 nuclear-powered strategic submarines, over 30 nuclear-powered multi-purpose submarines. There are some few spsial purpose submarines. The rest are diesel-electric submarines.
2/3 of all nuclear powered submarines belongs to the Northern fleet with homeports at the Kola Peninsula. The other 1/3 are based with the Pacific fleet in Russia's Far East.
Nuclear powered icebreaker collided with oil tanker
2009-03-24
The nuclear powered icebreaker “Yamal” collided with the tanker “Indiga” during ice escort in the Kara Sea last week.
The accident occurred in the Gulf of Yenisey on the 16th of March, the Ministry of Transport’s Coordination Centre for Salvation Operations at Sea told news agency Sea News.
The tanker got a 9.5 meter long crack on the main deck from the impact. The tanker was only carrying ballast at the time, and there was no pollution of the environment in the accident.
The 16 168 tons dead weight tanker “Indiga” belongs to Murmansk Shipping Company. It shuttles between the oil terminal in the Gulf of Ob and the floating oil storage vessel “Belokamenka” in the Kola Bay.
The tanker is now being followed by the ice breaker “Yamal” to the White Sea, where it will be escorted by a salving ship to Arkhangelsk for reparations.
This week a new Norwegian report on oil transport from the Russian part of the Barents region will be published. The report is a joint project of the Norwegian Barents Secretariat and Akvaplan-Niva
Head of St. Petersburg State University: China plays key role in Russian culture exchanges
2009-03-25 11:28:52
by Xinhua writers Yu Maofeng, Gao Fan
MOSCOW, March 25 (Xinhua) -- The teaching of Russian plays an important role in the exchanges between Russia and China, says Ludmila Verbitskaya, president of St. Petersburg State University.
Verbitskaya is chairwoman of the International Association of Teachers of Russian Language and Literature and she spoke with Xinhua on the eve of the opening of the Russian Language Year in China.
The university president hailed China as an important partner in the exchanges of Russia's language and culture.
She said the reciprocal language theme years to be held in China and Russia from 2009 to 2010 are the extension and development of the Year of Russia in China in 2006 and the Year of China in Russia in 2007.
Hundreds of events have been held during the national theme years, the professor said. She said the activities, with abundant content and various forms, have enhanced mutual understanding between China and Russia and have offered opportunities to know the current situations in each other's countries.
"Once they begin to take a great interest in a country, they will come up with the idea of learning its language," Verbitskaya said.
As to the upcoming Russian Language Year in China, the university president said teachers of the two countries would cooperate in many ways, including jointly editing textbooks, sending teachers to Russia for further education and staging summer camps.
The two sides will hold national Russian contests for middle school and college students in China, she said. Moreover, the Russian Language Year will also see new Russian teaching centers established in Chinese universities as well as more seminars and exhibitions.
China ranks high among the dozens of countries where Russian is taught in terms of the level and the number of its students, Verbitskaya said.
The Chinese government attaches great importance to Russian-language teaching, and Chinese universities have been successful in educating translators and diplomats versed in Russian. Those efforts have facilitated the friendly cooperation between the two countries, the professor said.
Verbitskaya noted that the 12th International Conference on Russian Language would be held in the Chinese financial hub of Shanghai in 2011.
In the previous conference held in Bulgaria in 2007, China was given the right to hold the 12th conference over Kazakhstan, Belarus and India.
"This will be the first time that the conference is held in an Asian country," she said.
Recalling the scene when she attended an international seminar on Russian teaching in Shanghai last October, Verbitskaya spoke highly of China's teachers and students.
"We sang a Russian song together. I saw in them the hopes of language exchanges between our countries," she said.
In a gesture to show welcome, the 73-year-old professor wore a red dress while doing the interview. "I have been to China for many times, and I know that red is the favorite color of Chinese," she said.
United Russia Backs Acting Mayor in Sochi Vote
25 March 2009 The Moscow Times
United Russia announced Tuesday that its candidate for the Sochi mayoral election will be acting Sochi Mayor Anatoly Pakhomov.
The party said it would submit papers to register Pakhomov's bid with elections officials on Wednesday, state-run Vesti television reported. Pakhomov formerly served as Anapa's mayor.
Candidates have until Thursday to register for the April 26 election, which has become one of the year's most intriguing political events.
The ultranationalist Liberal Democratic Party said Tuesday that it would not nominate State Duma Deputy Andrei Lugovoi, who faces murder charges in Britain in connection with the 2006 poisoning death of Alexander Litvinenko in London, to run for mayor.
Lugovoi had said he was considering running for mayor of the Black Sea resort city, which is to host the 2014 Winter Olympics. But Igor Lebedev, head of the LDPR faction in the Duma, said the party had decided not to nominate Lugovoi because he has no ties to the city.
Lugovoi, "with all due respect, is an outsider for Sochi," Lebedev said, Interfax reported.
The party will instead nominate lawyer Alexei Kolesnikov, a party leader in the Krasnodar region, Lebedev said.
Several high-profile candidates, including opposition politician Boris Nemtsov and prominent businessman Alexander Lebedev, have announced plans to run.
Nemtsov suggested in an interview with Silver Rain radio on Tuesday that Lugovoi's bid was ended on orders from the Kremlin. The Kremlin would not want a man wanted by Britain on murder charges running for mayor of an Olympic city, Nemtsov said.
Unidentified assailants ambushed Nemtsov on Monday, pouring ammonia over him as he made his way to a news conference in Sochi, the candidate and his supporters said.
Sixteen candidates had submitted registration papers to the local elections commission as of Tuesday afternoon.
Russian deputies want Putin up on the mat
24.03.2009
The factions of the Russian Parliament, the State Duma, submitted three questions to the Regulation Committee, which they prepared for Prime Minister Vladimir Putin. Each of the factions asked three questions. Putin will have to answer the questions during the annual report to the parliament on April 6. Russian deputies are interested in the anti-crisis measures of the government.
The Communist Party of the Russian Federation was the first to submit its questions, The Vedomosti newspaper wrote. The communists want Putin to tell them what the government was doing and which actions it plans to take in the nearest future to prevent the growth of communal tariffs. They also want to know why the government is unwilling to provide free medical healthcare services and hot food at schools under the conditions of the crisis.
The communists wondered if Putin was aware of the fact that Russia’s three major banks – VTB, Sberbank and Gazprombank – had spent 1.5 trillion rubles to purchase their own shares and currency in spite of the fact that the funds were assigned to support the real sector of economy.
The Liberal and Democratic Party of Russia (LDPR) wonders whether the government was going to freeze the tariffs of natural monopoles. Liberal Democrats are also worried about the fate of the Russian enterprises that had raised currency loans and faced bankruptcy over the growth of the dollar and the euro against the ruble.
Just Russia party asked questions about the fate of its legislative and anti-crisis initiatives.
United Russia wonders about the toughening of discipline in the structure of power agencies. The ruling party wants to know whether the government is going to give any priority to science-intensive technologies. United Russia also asked Putin to report on anti-unemployment measures of the government.
Shuvalov Promises Fairy-Tale Ending
25 March 2009
By Ira Iosebashvili / The Moscow Times
Prime Minister Vladimir Putin brought out the big guns to pitch the government's anti-crisis measures Tuesday, two days before United Russia, which he chairs, gathers with a mandate to promote the plan more aggressively.
The rollout included meetings, speeches and round tables headlined by people like Economic Development Minister Elvira Nabiullina, Finance Minister Alexei Kudrin and First Deputy Prime Minister Igor Shuvalov, who said Russia could become the world's most desirable place to live by 2020.
Speaking in Voronezh, Shuvalov said the government's "strategic plans" for national development through 2020 remained in place despite "difficult conditions" and "the changing prices of our basic export commodities."
The government is doing "everything possible to make sure that Russia becomes the most desirable place to live in the world," he said.
"This is not absurd, nor is it a fairy tale," he said. "We have all of the necessary conditions for this."
He said one of the most important indications of whether the government has been successful would be the growth of the country's middle class to make up as much as 60 percent of the population by 2020. Other targets are a fourfold growth in manufacturing productivity across the board.
Echoing comments made by Putin during the initial presentation of the anti-crisis plan last Thursday, Shuvalov said the government should be selective when deciding to bail out troubled companies.
"Rather than just saving an enterprise, we should understand what kind of future potential this enterprise has," he said.
Shuvalov also talked about the necessity of reforming the "bureaucratic machine" to enable it to more quickly process documents that are vital in fighting the crisis.
"We need to be faster," he said.
The anti-crisis plan was also discussed in the State Duma on Tuesday, where Speaker Boris Gryzlov said deputies had suggested amendments to the government's 2009 budget.
"We understand that there are a few points that can be clarified before it is brought to the Duma," Gryzlov said.
Specifically, Gryzlov said the Duma recommended that the projected budget deficit be lowered to 7.4 percent, so that it amounted to no more than 1 percent of projected gross domestic product. The budget plan for this year — approved by the government last week and now awaiting discussion in the Duma — assumes a budget deficit of 8 percent of GDP.
Gryzlov was quick to point out that even with a deficit, the government would still meet its social obligations and in some cases even increase financing for them.
Another proposed amendment would backtrack on plans to dip into the Reserve Fund to balance the budget. Extra money on the balance sheets of state corporations should be used instead, Gryzlov said.
Gryzlov, who heads United Russia's faction in the Duma, is not the first official to recommend a creative use for corporate funds: Regional Development Minister Viktor Basargin said Monday that extra money on the balance sheets of corporations should be used to fund regional investment projects.
Gryzlov's assurances on social spending came after senior United Russia official Vyacheslav Volodin said Monday that every citizen was "safely protected," even though it was a "very difficult" thing to accomplish during the crisis.
The social theme was also touched on by many speakers at a round table at the Center for Conservative and Social Policy, an organization within United Russia, according to a transcript posted on its web site.
The media blitz comes on the heels of a closed-door meeting with 30 top United Russia officials on Friday, where Kremlin deputy chief of staff Vladislav Surkov urged party members to publicly rally around the state's anti-crisis policies.
Surkov set out three main talking points — social programs will not be cut, the economy will be oriented toward domestic demand and mothers and children will be supported, said Tatyana Yakovleva, a member of the Duma's health care committee who attended the meeting, Gazeta.ru reported.
Surkov has been quick to reprimand any deviation from the party line among government officials. Last week, he attacked two Medvedev advisers, Igor Yurgens and Arkady Dvorkovich, who criticized the state's handling of the crisis.
United Russia leaders will meet with Shuvalov on Thursday to discuss the anti-crisis measures.
While social unrest has largely failed to materialize, a greater percentage of the population is being buffeted by the financial crisis. A survey released Tuesday by VTsIOM, the state-run pollster, indicated that 44 percent of Russians view the economy as "in crisis," a 10 percent increase from December, and 12 percent said the economy was in a "catastrophic" state, compared to 1 percent last March.
The government is on a public relations drive "to show, first of all, that it has things under control and everything is proceeding according to plan," said Leonty Byzov, a researcher with VTsIOM.
"The other reason is to absolve the authorities of any blame if things go wrong," he said. "By saying that things are under control, they hope that if things are going badly for someone, he will blame his mayor or governor rather than the state."
Communists See an Opportunity to Shine
25 March 2009
By Nikolaus von Twickel / The Moscow Times
As the crisis worsens, the vexing question for politicians is just who will reap the political spoils of the economic hardships.
A natural candidate is the Communist Party. With 57 seats, it has the second-biggest faction in the State Duma and is widely seen as the country's biggest opposition movement.
The party still commands huge organizational clout in the regions, a legacy of Soviet days when it had a monopoly on politics. It also has a strong following among pensioners and workers and offers a message of economic equality that everyone understands.
But the Communists have been seemingly slow in grabbing the opportunity.
In regional elections on March 1, the first such test since the crisis began, the Communist Party placed a distant second to United Russia, the country's dominant political force headed by Prime Minister Vladimir Putin. United Russia cemented its grip on elected posts, winning between 42 percent and nearly 80 percent in various votes, while the Communists collected between 8 percent and 27 percent.
Analysts said the Communists are not prepared to support street protests with a radical anti-government stance. Some describe the party's position as a "systemic" opposition force, verging on Kremlin-friendly.
"They have lived too long as his majesty's opposition and have become used to building a comfortable relationship with the Kremlin," said Nikolai Petrov, an analyst with the Carnegie Moscow Center.
Petrov said the Communists would always garner 15 percent to 25 percent. "But more is not possible, because the party is seriously limited in its behavior. They just won't take part in very tough anti-government protests," he said.
The Communist Party denied that it cooperates with the Kremlin in any way.
"This is plain wrong, and this can be proven by the fact that we are planning nationwide protests on April 4," said Pavel Shcherbakov, spokesman for deputy party leader Ivan Melnikov.
Melnikov himself has promised that the protests will be fiercer than previous ones. "This will not just be a wake-up call," he said in recent comments posted on the party's web site. The tougher slogans will include "Where is our money?" and "New course, new government," he said.
Yet media reports last week suggested that party leader Gennady Zyuganov had promised to abstain from instigating protests in return for "administrative favors" — including a direct phone line to President Dmitry Medvedev and a place for Communist Duma Deputy Oleg Denisenko on the president's "Golden 100" list of the country's best managers.
Shcherbakov said Zyuganov did get a direct phone line — as did the leaders of the other three factions in the Duma — but called the reports of a Kremlin deal part of an "information war" against the party.
The Communist Party, however, has gradually embraced a social democratic stance and been loosing support among its traditional electorate like heavy industry workers, said Alexei Mukhin, an analyst with the Center for Political Information.
"Working-class voters tend to support United Russia. The Communists mainly appeal to pensioners and some middle-class citizens," he said.
Oleg Smolin, a Communist Duma deputy from Omsk, said working-class voters might favor United Russia thanks to its "domination of information channels," primarily the national television channels, which are all state-controlled.
But he also acknowledged that his party could do more to win popular support during the crisis.
"There is inertia — and in my mind the party has not yet fully adapted its work to the crisis," he told The Moscow Times.
Smolin was adamant that taking to the streets was the right thing to do. "To let such a situation pass without protests would be more than strange for an oppositional party. Therefore, the number of protests must grow," he said.
Spokesman Shcherbakov promised that the party would make use of its superior strength in the regions.
"We really have the biggest organizational strength out there," he said. "We will make strikes and walkouts happen."
In a sign that the authorities are taking the threat seriously, government pressure appears to be growing on Communists in the regions.
In Bryansk, Zyuganov had to cancel a campaign speech before the local elections on March 1 after a local plant refused to provide its premises.
Zyuganov met with Bryansk voters outside the plant anyway and was later summoned by the Duma's ethics commission to answer to charges of organizing an illegal protest, the party said in a statement posted on its web site. He has not appeared before the commission yet.
In Vladivostok, the Justice Ministry issued a warning to the party's regional branch for participating in protests against increased tariffs on imported cars.
Duma deputies from United Russia and the nationalist Liberal Democrat Party last week accused the Communists in Vladivostok and a local grass-roots movement called Tiger of receiving grants from foreign organizations, a charge that both organizations denied.
Lev Gudkov, director of the Levada Center, an independent polling organization, said authorities had good reason to be concerned about the Communists' activities in the regions.
"They have promoted protests for a long time and to some success. And they still are the biggest functioning opposition party," he said.
Gudkov said public opinion is often pitted against Moscow in far-flung regions, especially the Far East where Vladivostok is located. "They were always unhappy with the federal government," he said.
Dismissed GRU spetsnaz members may join criminal groupings in Russia - newspaper
24.03.2009
Russian media have been discussing the actually going on liquidation of Berdsk special-task brigade of the Main Intelligence Directorate (GRU) of Armed Forces of the Russian Federation. According to the Moscow-based daily Izvestia, it is believed in the GRU that this will not be the last reduction in the directorate.
The officers of the most secret special-task troops consider that many of them will be offered to continue their military service in the Interior Troops. The paper doubts that it is possible for the reasons of moral and psychological character. On specificity of the preparation the GRU spetsnaz troops are "the good saboteurs", as the paper puts it. They are trained to kill (and to not at all to capture) terrorists, they have brilliant recruiting acquirement, they are able to survive without food and water long and in any conditions. “These are people with skills of "clever machines" which are impossible to re-program and even more, to talk them into performing functions of the riot police, for instance,” Izvestia writes.
At the same time, the Ministry of Defence constantly declares an indispensability of transformation of all units in the condition of constant combat readiness. However, an elite unit, Bersk brigade in this particular case, which is well-trained, has proved its efficiency in actual military conflicts and in delicate government assignments, appears unnecessary, the paper marks.
According to Izvestia, members of this brigade, mostly ethnic Chechens, during the military conflict in Georgia arrived to cities of Poti and Gori, and some residents of Tbilisi consider that they saw their APCs even in the suburbs of the capital city of Tbilisi.
“If the members of the GRU spetsnaz will remain without work the probability of their enormous demand by the organized criminal groupings or foreign recruiters is high”. One can imagine that among the criminal company they will not be playing local roles, Izvestia points out.
Large-scale anti-terrorist exercises taking place in Russia’s city of Valdai
24.03.2009
Large-scale two-day anti-terrorist exercises have begun yesterday in the city of Valdai of the Novgorod area, news agency RIA Novosti reports, referring to the spokesman of regional directorate of the Federal Security Service of Russia.
During the Metel-Valdai exercises, actions of law enforcement bodies in the situation of capture of hostages in one of city educational establishments have been trained, according to the FSB official.
According to the news agency source, employees of the FSB regional directorate, the Department of Interior, directorates of the Federal Protection Service, Ministry of Defence, Ministry of Emergency Situations, members of Novgorod state authority bodies and municipalities are taking part in the exercises.
The regional operative staff of the National Anti-terrorism committee has been supervising the exercises. According to the FSB regional directorate, more than 30 command-staff and tactical-special exercises have been held in the region within three last years by this staff, RIA Novosti adds.
Russian volunteers keep eye on citizens, and the police
By Michael Schwirtz
Published: March 25, 2009
[pic]
MOSCOW: Moscow's typically traffic-clogged central thoroughfare was jammed this day with people, basking in a rare late-winter sun as a fire department marching band in lime-green uniforms and shiny gold helmets warmed up for a spring festival parade.
As the band prepared to march, Vladimir K. Kazerzin moved in with his men to help clear a path through the crowd. Mr. Kazerzin is a former philosophy teacher, not a police officer, and that is the point. He leads a contingent of volunteers, called druzhiniki, who patrol with increasing frequency in the capital alongside the professionals to bolster their ranks and, at times, counter their belligerence.
"Look at that sad-looking soldier in comparison with my guys," Mr. Kazerzin said with a glimmer of pride, pointing out a particularly morose conscript soldier working crowd control along with his volunteers. Nearby, Moscow police officers barked aggressively at the crowd from under big fur hats to clear out, prompting snarls of indignation.
Meanwhile, Mr. Kazerzin's men, mostly college students in red armbands and with piercings glittering in their ears, smiled and chatted with passers-by while directing them to spots where they could watch the parade without getting in the way.
For those who recall life in the Soviet Union, the druzhiniki are often a nostalgic reminder of the citizen patrols of students and grandmothers walking the streets in red armbands at the behest of the Communist Party to keep a lookout for hooligans and petty criminals.
Though their numbers have dwindled since the Soviet collapse, the government is working to revive the druzhiniki in part to help law enforcement agencies combat what officials fear will be a spike in crime and public disorder amid the growing unemployment and rising prices of the economic crisis. A group of lawmakers in Russia's Parliament is pushing legislation that could enhance the authority of existing volunteer patrols.
Today, these volunteer groups appear little different from the civilian neighborhood watch organizations found in many countries. But in Russia they offer a rare example of volunteerism in a society that remains largely skeptical of civic groups after years of forced social activism in the Soviet Union, though some fear a return to the days of civilian informers.
But the groups' proponents dismiss such fears. "When it comes to protecting children and driving teenaged hooligans from the playground, people will come together," said Vasily I. Solmin, a former submariner in Russia's Pacific Fleet, who now heads a group of druzhiniki in Moscow.
Druzhiniki all but disappeared after the Russian government withdrew its support with the collapse of the Soviet Union, but re-emerged in force in Moscow following terrorist attacks on two apartment buildings that killed hundreds in 1999, said Irina Svyatenko, a Moscow City Parliament member.
"At that time, people just decided to start patrolling their neighborhoods," she said. "They did not ask anyone for permission, and there was no government initiative. People just decided that this was needed."
There are now as many as 17,000 volunteers in Moscow and units in more than 40 other regions of Russia, said Vyacheslav I. Kharlamov, an assistant to the chief of the Moscow druzhiniki. In the capital, volunteers help the police with crowd control at major public events like concerts, sporting events, festivals and protests.
A favorite among the druzhiniki is working the annual Fourth of July reception put on by the American Embassy. "They even feed us and sometimes give us a bottle of beer," Mr. Kazerzin said.
In Soviet days, he said, they could detain people on misdemeanor charges and write traffic tickets, and they were compensated if injured while on patrol. For the most part, today's druzhiniki get little outside of free public transportation and the red armband.
"We should be working on those issues that the police simply don't have time for, like small street crimes and crime prevention," Mr. Kharlamov said.
The new legislation, which will probably come up for hearings in Russia's Parliament this spring, would institute the druzhiniki on a federal level and allow them to impose fines for failure to obey their orders and provide compensation for injuries suffered while on patrol. Legislators have even debated the possibility of allowing the volunteers to carry weapons like batons or stun guns.
"We are now giving society a chance through this structure to fight against crime, help protect public order and, most importantly, to guarantee security in one's own backyard," said Vladimir A. Vasilyev, the head of the Security Committee in Russia's Parliament.
Critics, however, worry that this emboldened civilian police force could easily succumb to the corruption that already pervades Russia's law enforcement agencies.
"If today we already have problems controlling our police, what happens when we create a far less trained, less disciplined and less controlled structure?" said Aleksandr Cherkasov of the Moscow-based human rights organization Memorial. "What we will get is this obscure formation beyond the control of the police that will ultimately merge with criminal elements."
Not so, said Valery I. Maximov, a retired police officer who now commands a 126-member regiment of volunteers in Moscow. He argues that because the volunteers are required to patrol with the police, their presence can actually dissuade officers from yielding to corruption.
"When they patrol along with police," he said, "I know that the officer will not take a bribe because the druzhinik is watching."
Red Cross Campaigns Against TB
25 March 2009
By Anna Malpas / The Moscow Times
More than 117,000 Russians contract tuberculosis and about 25,000 die from the treatable disease every year, the Federal Consumer Protection Service said Tuesday on World Tuberculosis Day.
These figures are up to eight times higher than European norms, it said in a statement.
About 10 percent of new cases are resistant to multiple drugs. This type of tuberculosis occurs when patients do not complete a course of treatment. It is equally infectious and requires much more expensive drug treatment.
"The situation with tuberculosis could run out of control in the next five years," the statement said.
A Red Cross-sponsored exhibition that opened at the Polytechnical Museum on Monday recruited celebrities to encourage Russians to have regular lung scans to diagnose tuberculosis.
"Tuberculosis is the No. 1 killer today. It's a national catastrophe for Russia," Raisa Lukuttsova, the chairwoman of the Russian Red Cross, said at the opening.
More than 30 show-business stars, including television host Tina Kandelaki, former Miss Russia Viktoria Lopyreva and the pop duo t.A.T.u. were pictured with the results of their scans -- all of which were negative -- in photos taken by Serzh Golovach.
Top tuberculosis experts took part, including Vladislav Yerokhin, the director of the Central Tuberculosis Research Institute, as did writer and radical politician Eduard Limonov.
Limonov was one of the few photographed celebrities who turned up to the opening, saying he did so because it was a charity event. He was billed as a writer by the Red Cross and posed for a photograph next to the former Miss Russia.
Limonov spent more than two years in prison on arms charges, exposing himself to a high risk of tuberculosis, but said his scan came out clear. "I've got asthma, but you can't cure that. Everything's fine," he said.
Actress Yekaterina Strizhenova said being tested for tuberculosis was nerve-wracking.
"To be honest, I was frightened, because you never know what the scan will show," she said. "Afterward, I took my whole family along to be checked."
Many Russians Seek Asylum
Russians are the third-biggest group in the world to seek asylum in other countries, after Iraqis and Somalis, the United Nations refugee agency said Tuesday.
About 20,500 Russian nationals applied for asylum in 2008, with Poland being a prime destination, the UN High Commissioner for Refugees said in a report.
Russians were followed by Afghans, with 18,500 requests. Iraqis accounted for most of the requests, or 40,500, and many filed claims in Turkey, Sweden and Germany.
In total, some 383,000 asylum seekers applied to live in Western countries in 2008, a 12 percent rise from the previous year.(MT)
National Economic Trends
Gov't to receive finalized draft 2009 budget
RBC, 25.03.2009, Moscow 09:33:46.The government expects to receive the finalized draft amendments to the federal budget for 2009 and the period until 2011 on March 25, in order to be committed to the State Duma. After March 19 debates, the government commissioned the Finance Ministry to give finishing touches to the document. Apart from changes induced by the anti-crisis program, the new budget will feature new parameters resulting from the focus on social support. For instance, the cabinet wanted special attention to be paid to budget assignments for pensions, benefits and compensations to dismissed military personnel. The budget will also provide for more money to be assigned to the Summer Universiades to be held in Kazan in 2013 and student loans. Additionally, the budget of designing a joint Russian-Indian transport aircraft will be boosted.
Issuance of subordinated loans through VEB will be continued – Kudrin
MOSCOW. March 25 (Interfax) - The issuance of subordinated loans
through the Russian Bank for Development and Foreign Economic Affairs
(Vnesheconombank, or the VEB) will be continued, said Russian Deputy
Prime Minister and Finance Minister Alexei Kudrin.
"We have suspended the issuance of subordinated loans through the
VEB, but this program will be continued. Its terms and parameters are
being clarified now," Kudrin said at a banking conference in Moscow.
Russia wont tap expensive international capital markets to finance budget deficit
bne
March 25, 2009
The cost of borrowing on international capital markets is currently too high to make it an option to finance Russia's expected 8% budget deficit this year, says Deputy Prime Minister and Finance Minister Alexei Kudrin reports Interfax.
"Russia would currently be borrowing at Libor + 6% annually," Kudrin said at a government meeting on Tuesday March 24. "A careful plan as regards the deficit in the Central Bank's monetary and credit policy will enable us to maintain macroeconomic stability," he said.
The government said this week that it will transfer about RUB600bn from the state reserve funds to plug the spending gap.
The crisis has resulted in many people recognizing that the previous macroeconomic policy was incorrect, he said, noting that such high oil prices and capital inflow likely will not be seen again. "There are now conditions for the creation of normal growth in money and a low level of inflation," Kudrin said.
Russia not planning capital controls-Kudrin
Wed Mar 25, 2009 4:39am EDT
MOSCOW, March 25 (Reuters) - Russia is not planning to re-introduce capital controls, Finance Minister Alexei Kudrin said on Wednesday.
"I think for now that we will be able to withstand (without any capital controls) and in the future it will play to our advantage," Kudrin said.
He also said that Russian banks have paid back $50 billion of their debts since Oct. 1, 2008, and that their current international liabilities stand at $151 billion while assets are $147 billion. (Reporting by Dmitry Sergeyev, writing by Toni Vorobyova)
Bank of Russia unveils foreign currency purchases
RBC, 25.03.2009, Moscow 10:43:08.In March 2009, the Bank of Russia bought up several billions of rubles worth of foreign currencies on the domestic market, the bank's First Deputy Chairman Alexei Ulyukayev told journalists today. The amount is less than RUB 10bn (approx. USD 300.57m). The official also informed that the Bank of Russia had downgraded the capital flight forecast for 2009, yet he withheld any specific figures. The current forecast stands at USD 90bn.
Banks Face More Defaults
25 March 2009 Bloomberg
Finance Minister Alexei Kudrin said Tuesday that the country's banks faced a second wave of problems from companies in the real sector that fail to repay loans.
"Some held off to the last minute, waiting for the market to revive," Kudrin said at an Economic Development Ministry meeting.
The strategy did not pan out, and there is no reason to expect a rise in demand for Russian products in the near future, he said.
Russia has allocated 300 billion rubles ($9 billion) to support the banking system this year as part of a plan to mitigate the effects of the country's economic and financial crisis.
Russian lenders may face a sharp increase in bad loans from the corporate sector as the global slowdown and a drop in personal incomes stifle growth, UralSib said in a report this month.
"The amount of overdue loan payments to banks in Russia may rise to 4.5 percent of the total amount in the first three months of this year, compared with 3.8 percent at the start of 2009," the Central Bank said in January.
Anatoly Aksakov, president of the Russian Association of Regional Banks, said in Prague on Tuesday that the amount of toxic loans in Russia, which now stands at about 4 percent of the total, is "going up quite, quite fast."
RBS EM Strategy Update | Russia macro in the news
Timothy Ash, RBS
March 24, 2009
Quite a few interesting developments today in Russia.
First, it is interesting that on the back of a well-needed global risk rally we have a bevy of international policy makers appearing as party poopers in their commentary; Germany's economy minister is suggesting that the German economy has yet to reach its low point. Russia's finance minister Kudrin, meanwhile, is on the wires this morning warning that Russian banks face a second wave of bad debts and that people should not assume that the recent oil price rise, or indeed global market rally, will sustain. Kudrin's agenda is his mission to try to reign in public spending, which threatens to boost the budget deficit to the equivalent of 8% of GDP in 2009, from a 4% surplus in 2008. Kudrin is eager to conserve his ammo in the various fiscal reserve funds that the MOF has at its disposal.
Second, the Ministry of Economy reported real GDP declined by 7.3% YOY in February. This is actually an improvement from the 9.9% YOY decline in December and 8.8% YOY decline in January; albeit it still suggests that the government will likely struggle to limit the recession to its current forecast which is for a 2.2% YOY contraction for the full year in 2009.
Third, the ministry of economy reported merchandise trade statistics for February. These show a decline in the monthly surplus to US$5.8bn, down from US$14.6bn one year earlier. Reflecting weaker oil and commodity prices, exports were down 45.9% YOY, and imports were lower by 36.2% YOY. On current trends the merchandise trade surplus still looks set to decline by around US$100bn in 2009, threatening sto push the current account into deficit; albeit obviously this is still highly sensitive to oil/commodity prices.
Fourth, the CBR has been actively intervening buying dollars (US$3-4bn) in recent days to limit FX appreciation following the global risk rally. This just underscores that the CBR still values a weaker exchange rate both to help rebalance the current account/external financing position and to help underpin real GDP growth; no doubt the CBR will be taking a close look at the hefty real GDP downturns posted on the past 3 months.
Fifth, state-owned VTB's has unveiled an offer to buy back its 2015 eurobonds for 64 cents; reports suggest they have already retired around half the outstanding principal via forays into the open market. There seems to be a trend developing herein, with KKB announcing something similar today. The timing of the offer by VTB is strange given that Russia's own finance minister was talking down the global economy's prospects earlier today; or maybe they are linked, as perhaps this might encourage bondholders to part with their bonds for cash at this stage.
Sixth, the recent warming in relations between PM Putin and his Ukrainian counterpart, Yulia Tymoshenko appears to have been dealt something of a blow following the latter's initialling of an energy accord with the EU in Brussels y/day. YT was due to visit Moscow next week to talk over Ukraine's request for a US$5bn loan for gas purchases from Russia. President Putin announced this morning that the visit has been delayed, with Moscow letting it be known that it is less than pleased with its exclusion with the energy accord with the EU. Moscow has been very conciliatory in recent weeks, even appearing to accept that Ukraine would be able to scale back gas purchases to 33 billion cu metres in 2009, from the 44 billion cu metres contracted in the long term pricing agreement reached in January. Potentially this could be a big hit to Ukraine, which might boost its gas import bill by US$2.5bn as a result. The extent of Russia's displeasure was evident by comments suggestive that Moscow might also need to review its relations with the European Union as a result of the EU-Ukraine gas accord. Perhaps with progress appearing in negotiations with the IMF to secure the release of the much-delayed second tranche under the SBA, and the EU offering a couple of billion dollars in financing to modernise the gas supply network, YT is feeling less included to accept Russian bail-outs.
Deputy Economic minister says chance to avoid second wave of crisis
bne
March 25, 2009
Several government officials were out this week predicting doom and gloom for the economy as a second bout of instability looms, thanks to the worsening position of the bank sector. However, Russia's Deputy Economic Development Minister Andrei Klepach said a second wave of panic could be avoided if the measures being put in place now are effective.
"We are near the bottom already. Although the (economic) slowdown has not been stopped and will continue, its pace has sharply slowed. Still, there are risks that the second negative wave may start by autumn due to the deterioration of companies' finances caused by a lack of loans and a lack of domestic demand," he said, reports Prime Tass.
"We expect that measures to share risks among banks and the government will work. We are seeing an interruption in lending right now, but we expect banks to start a new phase (of lending) in the near future," Klepach said.
Russia expects new outburst of financial problems
24.03.2009
Russia’s Finance Ministry is expecting another outburst of problems in the financial system. The problems are going to be connected with the credit default in the real sector of economy and with the reduction of oil prices, Russia’s Finance Minister Aleksei Kudrin said Tuesday. Russian stock indexes collapsed after the minister’s statements.
“We are expecting the next outburst of financial problems. It will be a back wave linked with the credit default in the real sector of economy,” the minister said. He added that one should not hope for an increase of product demand in the real sector of economy, Interfax reports.
The demand, which the government stimulates, is a short-term artificial instrument. “The demand of the state is artificial, it’s like a dropping bottle for a patient, to help him recover at least a little,” the minister said.
Mr. Kudrin also said that the Russian government and the Central Bank paid a lot to ease the consequences of the first wave of the crisis in the national financial system.
“We were standing on the brink of the financial collapse, but we prevented it, and I must here thank the Central Bank and the State Duma for giving us an opportunity to take decisions quickly,” Kudrin said. He continued with saying that the Russian economy would have collapsed like it did in 1998, if urgent measures had not been taken.
“We must realize the fact that banks manage the funds of their clients and depositors when they give loans to companies – this makes up 60 percent of the total amount of funds. Therefore, when you hear someone saying that banks should take risks in their activities, we must realize that our money will be at stake there,” the minister said.
Russian President Dmitry Medvedev said last week that the Russian government should not allow situations when selfish requirements of creditors may disrupt the activities of large enterprises. Journalists say that the finance minister and the president differ in their approaches to various issues.
Aleksei Kudrin believes that the rise of international stock markets and oil prices was a temporal phenomenon, RIA Novosti reports.
“The challenges of the world economic crisis are still preserved. We must not relax over a certain rise of stock indexes and oil prices,” he said.
Government considers individual bankruptcy law
VTB Capital
March 25, 2009
The Minister for Economic Development, Elvira Nabiullina, has announced that the government is preparing legal amendments that would allow retail borrowers to restructure their debts: either to postpone payments for up to five years or to use property to redeem the debt in part. According to current Russian legislation, only companies and business people can file for bankruptcy. Under the new law, any borrower unable to repay RUB 100,000 or more in the next six months would be eligible for bankruptcy.
Given that the government is focusing on social support, the individual bankruptcy law comes as a logical step. The threshold of RUB 100,000 is quite low (although we note that the definition of who would be eligible has not been finalised yet) and not only mortgages but also a part of car loans and consumer credit might be admissible.
However, we think that it will take the government a while to pass the new amendments as it would need to estimate the likely effect on the banking system first.
Ministries Spar on Tax Cut Proposals
25 March 2009
Combined Reports
Economic Development Minister Elvira Nabiullina said Tuesday that her ministry would submit proposals soon on corporate tax breaks, a move that could face resistance from the fiscally prudent Finance Ministry.
The economy ministry's focus is on boosting growth, and the conflict between the two departments could intensify this year as Russia enters its first recession in a decade. Tax cuts would further undermine falling budget revenues, but some companies are lobbying for reduced levies to help them weather the global downturn.
Speaking at the same meeting, Finance Minister Alexei Kudrin said the country should not become complacent about the recent rise in oil prices, which he called "temporary."
Oil has recently rallied -- 30 percent this month alone -- helping the country's stock market rebound. But Kudrin cautioned against excessive optimism.
"A certain growth on the stock markets and in oil prices must not get us complacent," Kudrin said, RIA-Novosti reported. "This is most likely to be a temporary improvement."
As Kudrin predicted an impending slump on global stock markets, Russian shares fell. The MICEX Index closed down 4 percent, and the RTS Index was down 2.1 percent Tuesday.
"This year, new anti-crisis measures in tax policy are possible," Nabiullina said. "In the coming days, we will come out with concrete initiatives aimed at supporting national companies and ensuring a stable revenue base for the budget."
Nabiullina said, however, that now was not the time to cut the value-added tax, which her ministry had proposed reducing last year to 12 percent from 18 percent.
"There is no capacity in the budget to cut VAT in this way due to falling revenues," she said. She did not say what new tax initiatives the Economic Development Ministry was now planning to propose.
First Deputy Prime Minister Igor Shuvalov said in January that the government would resume discussions over possible value-added tax cuts and general taxation reform this spring.
Kudrin has signaled that 8 percent is the limit for the deficit, but there is room for discussion on the top priorities within the current spending allocation.
"I am also for not raising taxes in the near future. Of course, we should not now, during the peak of the crisis, make the work of businesses more difficult," Kudrin said.
The budget plan for this year -- approved by government last week and now awaiting discussion in parliament -- assumes a budget deficit of 8 percent of gross domestic product. Kudrin said it would currently be too expensive for Russia to borrow on international finance markets to cover its deficit, putting the price at LIBOR plus 6 percent, Interfax reported.
Some 300 billion rubles ($9 billion) has already been transferred out of the Reserve Fund to cover the gap, a Finance Ministry official said this week. Another 300 billion rubles is expected before the end of the month, followed by a further 600 billion during April and 400 billion in May.
Deputy Economic Development Minister Andrei Klepach said Tuesday that economic activity in the country shrank 7.3 percent in February compared with the same month a year ago, after an 8.8 decline in January.
Dollar Purchases Keep Ruble Down
25 March 2009 Reuters
The Central Bank intervened in the currency market for the fourth consecutive trading day on Tuesday, buying dollars to keep a lid on the ruble's rally to two-month highs, dealers said.
The ruble remained on strong footing despite a small bout of profit-taking in Russian stock markets -- which hit 4 1/2-month highs on Monday -- and oil prices.
The ruble firmed as far as 38.57 versus a euro/dollar basket and is now up about 4.5 percent since the start of March.
"The market's a happier place again, spring has sprung and everyone is short dollar-ruble again," said a trader at a foreign bank in Moscow.
"It [ruble strengthening] probably will continue as long as stocks and oil stay bid. The positioning is still quite light."
Dealers said the Central Bank appeared to be moving its bid in a creeping fashion of about 5 kopecks at a time -- at first buying foreign currency about 38.70 rubles versus the basket, and then moving gradually to 38.59 to 38.60.
"I don't think the Central Bank has any desire for a strong appreciation of the ruble," said another dealer.
The ruble recovery comes after it lost about a third of its value in six months to adjust for the worst economic outlook in a decade, with the Central Bank spending tens of billions of dollars to keep currency depreciation gradual.
The Central Bank has pledged to keep the ruble within a 26-41 range versus the basket, but it has also said it would intervene to prevent excessive volatility. Officials have indicated that they see current exchange rate levels as appropriate given the present price of key export oil.
A weaker currency benefits exporters, but Economic Development Minister Elvira Nabiullina on Tuesday cautioned against excessive moves.
"There is now a real risk of a global devaluation race due to attempts by individual countries to stimulate economic growth. Triggering that process may become as dangerous for the world economy and trade as direct protectionism," she said.
Analysts say the upward pressure on the ruble gives the Central Bank an opportunity to replenish gold and forex reserves -- down by more than a third from their August peak to $376 billion.
The Central Bank's own measures on Tuesday contributed to tighter liquidity and demand for rubles. It cut the amount on offer at its first repo auction of the day to 10 billion rubles ($300 million), the lowest since limits were introduced in September. The daily cap for FX swap operations with the Central Bank was set at zero for the first time since January.
Dealers said, however, that such liquidity restrictions were partly offset by the Central Bank's ruble selling interventions, as well as by the injection of budget funds into the economy.
Deripaska’s GAZ Vehicle Maker Is Too Big to Fail, Ivanov Says
By Lyubov Pronina and Ellen Pinchuk
March 25 (Bloomberg) -- OAO GAZ, billionaire Oleg Deripaska’s vehicle maker, and some privately owned coal and metals companies are too big to fail, and the Russian government will step in to prevent them from falling into bankruptcy, Deputy Prime Minister Sergei Ivanov said.
“We don’t want to nationalize anything except when it’s unavoidable,” Ivanov said in a Bloomberg Television interview yesterday in Moscow. “It’s the last resort.”
Ivanov said “half of the city” of Nizhny Novgorod, about 400 kilometers (250 miles) east of Moscow, works for GAZ. “We cannot be ignorant of this fact, and we are interested to help the people, to fight unemployment.”
Finance Minister Alexei Kudrin said last week that the state won’t bail out all companies it deems systemically important to the economy, and some may go bankrupt. The government plans to support GAZ, carmaker OAO AvtoVAZ and Rosatom Corp., the state’s nuclear holding company. There are no plans to capitalize Deripaska’s United Co. Rusal, he said.
The government last week approved a 1.6 trillion ruble ($47.6 billion) anti-crisis program as part of a revised budget that contains a 2.98 trillion ruble deficit, or 7.4 percent of planned gross domestic product.
The government expects the economy to contract 2.2 percent this year -- Russia’s first recession in a decade -- as prices for oil, gas, metals and other commodities slump because the global economic crisis is weakening demand around the world.
Ivanov reiterated the government’s policy that companies with state involvement won’t be allowed to fail, while support for private companies will be selective.
“As for the shares and the value of the company, if it’s a private company, only the market will decide,” he said.
To contact the reporter on this story: Lyubov Pronina in Moscow at lpronina@; Ellen Pinchuk in Moscow at epinchuk@
Last Updated: March 25, 2009 05:02 EDT
Business, Energy or Environmental regulations or discussions
Lukoil, Norilsk Nickel, Polyus Gold: Russian Equity Preview
By Lucian Kim
March 25 (Bloomberg) -- The following companies’ shares may have unusual price changes in Russia trading. Stock symbols are in parentheses, and prices are from the previous close unless otherwise noted.
The 30-stock Micex Index sank 4 percent to 815.79. The dollar-denominated RTS Index dropped 2.1 percent to 721.64 at the close in Moscow.
OAO Lukoil (LKOH RX): Crude oil fell from the highest close in almost four months as a stronger dollar reduced the appeal of commodities to investors. Shares in Russia’s largest independent oil producer fell 3.4 percent to 1,328.69 rubles.
OAO GMK Norilsk Nickel (GMKN RX): Copper fell as investors judged that prices near a four-month high no longer reflected the outlook for shrinking demand this year. Shares in Russia’s largest mining company fell 11.1 percent to 2,203.90 rubles.
OAO Polyus Gold (PLZL RX): Gold fell the most in almost a week on speculation that a U.S. government plan to rid banks of toxic assets will revive lending and the economy, eroding the appeal of the precious metal. Shares in Russia’s biggest gold miner rose 0.5 percent to 1,445.96 rubles.
To contact the reporter on this story: Lucian Kim in Moscow at lkim3@
Last Updated: March 24, 2009 23:00 EDT
REVIEW: Power companies urge clear rules for long-term market
MOSCOW. March 25 (Interfax) - The time allotted for adopting the
rules for the long-term generation capacity market in Russia, which are
supposed to give companies assurances of a return on investment in new
power facilities, runs out in a week, but fundamental disagreements
among those involved in this process have yet to be resolved.
Power companies think the ball is now in the government's court,
and are anxiously waiting for the cabinet meeting on industry investment
programs scheduled for April 9.
Market players agree that the long-term capacity market should be
launched as soon as possible, as without a long-term model for the
market there is no direction for the sector's development.
Foreign investors losing patience
Until recently, primarily power companies owned by Russian
investors had said they would revise their investment programs, while
foreign investors were considered stalwarts sure to carry out previously
announced plans. But the lack of certainty from the government
concerning the long-term rules of the game has forced foreign investors
as well to announce possible revisions of their investment programs.
Germany's E.ON, for example, no longer rules out that plans for
construction of new generation capacity could be changed. OGK-4's (RTS:
OGKD) investment program could be revised, said Sergei Tazin, the
general director of E.ON Russia Power, said a conference in Moscow.
Tazin said that at present, the Russian energy market still lacks
the rules by which an investor can navigate over the long-term. All
risks, he said, are still on the side of the investor.
E.ON will fulfill the genco's investment program, however, with
rising risks and changes in the macroeconomic situation, the company has
the right to revise it, Tazin said.
He told Interfax that macroeconomic parameters [the rate of the
ruble] had changed by 30% and therefore, the investment program is due
for revision.
OGK-4's investment program includes the construction of four new
gas powered turbines and one steam powered block with a combined
capacity of 2.4 gigawatts. E.ON will invest 2.3 billion euro into the
construction of the new facilities.
E.ON is actively employing political channels in order to back up
its investments in Russian electricity production. At the end of
November, during the onslaught of the financial crisis, rumors
circulated that the liberalization of the Russian power market could be
frozen. During this period, E.ON's CEO Wulf Bernotat met with Russian
Prime Minister Vladimir Putin and made a request for political support
regarding the concern's operations in Russia.
Bernotat said that market liberalization was a key issue for the
company in order to implement investment. ""As far as we are being
assured, nothing has changed. It is important to us to know that all
obligations will be fulfilled," Bernotat said.
The head of Enel Russia & CIS, Dominique Fache agreed. The Italian
energy company is the majority shareholder of wholesale generation
company OGK-5 (RTS: OGKE).
Advising the government to look a little farther than its own nose,
Fache said the capacity market is an instrument for investors. Enel is
not asking the state for money, but wants the rules of the game to be
observed, he said.
Better slow but sure
The long-term model for the capacity market is still being
discussed and "many open questions remain," said Mikhail Slobodin, head
of IES Holding, which manages a number of territorial generation
companies.
For example, it is still unclear whether the model will be
restricted by price caps, duration of contracting capacity and the
contracting regime, Slobodin told reporters.
It is also unclear how banks and power companies will be able to
work together to raise financing within the context of the capacity
market.
The Energy Ministry recently held a meeting with bankers at which
the long-term model for the capacity market was discussed, according to
Interfax sources.
There is also the important question of contracts to provide
capacity that were signed by the new strategic shareholders of
generation companies when the assets of former electricity monopoly
Unified Energy System were sold off, Slobodin said, adding that the
question was whether these contracts would be "separate or inside the
capacity market."
Slobodin said the capacity market now comes down to "an ideological
choice that the state will make."
"Without a comprehensible contract base none of the generators will
raise money," he said.
Strategic investors think the rules for the long-term capacity
market should been adopted as soon as possible, but they are not
advocating excessive haste.
"It's simpler to have the correct capacity market, than to have it
quickly but incorrect," Slobodin said.
Another important issue, he said, is the status of nuclear and
hydro power generation, and whether they will operate on a level playing
field with thermal power plants or get special treatment in the
long-term model as they do now.
Deputy general director for energy at SUEK, Sergei Mironosetsky
said the coal giant is not abandoning the investment program for its
generation companies, but that it is necessary to balance the
construction of new capacity with actual demand for electricity.
"Who will pay for such an amount of new capacity?" he said.
OGK-1 (RTS: OGKA) head Vladimir Khlebnikov agreed, saying the
general plan for the industry needed to be revised, both in terms of the
timeframe and geography.
The supervisory board of the Market Board last discussed the plan
for the long-term capacity market on February 27, but the document was
only "accepted for review," as the positions of producers and consumers
were diametrically opposed.
"The government must decide what's more important - the recoupment
of investment in construction of capacity or for consumers to get cheap
electricity," one industry representative said after the meeting.
Earlier it was reported that the Market Board had proposed to the
Energy Ministry to abandon the general competitive selection of capacity
within the context of the long-term market model. Under the new plan
submitted to the Energy Ministry, all generation capacity included in
the long-term capacity market would be divided into "mandatory new
generation," as prescribed in the general plan for deployment of energy
facilities in the period to 2020; "new generation" not prescribed by the
general plan; and "existing generation."
The basic concept for the long-term capacity market proposed to
guarantee "mandatory new generation" long-term recovery of construction
costs; to gradually reduce the amount of guaranteed payment for
"existing generation" starting in 2016; and to conduct auctions for "new
generation" in free power transfer zones.
However, despite what they say, companies are unlikely to take a
firm stance on cancelling investment plans and take responsibility for
failing to fulfill investment programs. Otherwise, generation companies
face big fines under their contracts to provide capacity.
Whether Russian power companies will get what they wish for will
apparently become clear after the government meeting tentatively
scheduled for April 9.
Progress Demanded On Capacity Market
25 March 2009
By Nadia Popova / The Moscow Times
Foreign and domestic power generators teamed up on Tuesday to demand that the state stop dragging its feet on the introduction of a so-called capacity market.
"We just need the rules of the game to be observed," Dominique Fache, Enel's CEO for Russia and the CIS, told an industry conference in Moscow. "It is not a theoretical problem, it directly affects our EBITDA."
European energy giants such as E.ON and Enel, along with domestic companies, have together invested about 900 billion rubles ($27 billion) in the country's electricity sector.
The introduction of the power capacity market, in which companies will be able to auction off generation capacity that is not yet constructed, has been put off since last summer.
"We are not confident that we will get any profit if the government doesn't make it clear what the price caps and the terms of the capacity contracts will be," Mikhail Slobodin, head of IES-Holding, the country's biggest private investor in the electricity sector, said on the sidelines of the conference.
"Before they set the rules, we will be uncertain about the future of our investment."
Domestic generators also insisted that the modernization plan for the country's aging energy sector be updated.
The plan requires investors to spend 11.6 trillion rubles to create 186 gigawatts of new capacity through 2020, with severe fines for those that do not meet the deadlines.
But restricted access to financing have put some domestic generators in a difficult financial position and put a crimp in their investment plans.
"The plan has to be changed, this is the question of common sense," OGK-1 chief executive Vladimir Khlebnikov said on the sidelines of the conference, adding that plummeting electricity consumption rendered some of the extra capacity unnecessary.
Industry experts were supportive of investors' ideas.
"The forecast for the power consumption has been overestimated 3 to 3 1/2 times if you take into account the effects of the crisis," Bulat Nigmatulin, head of the Institute of Natural Monopolies, told the conference.
"An error of 1 percent in growth estimates will cost investors $5 billion."
The plan projects growth in power consumption of 4 percent a year. Demand fell almost 8 percent in January and 5 percent in February and is expected to fall 4.5 percent to 9 percent for the whole year.
"Building 6.4 gigawatts of capacity a year is unrealistic. My estimate is for a maximum of between 4 and 4.5 annually," said Igor Kozhukhovsky, head of Energy Forecasting Agency, a state-run analytical center. A total of 12.8 gigawatts of new capacity is planned to be built in 2009 and 2010.
The government is expected to discuss the possible changes to the investment plan at a meeting on April 9.
Mosenergo almost doubles RAS earnings to 1.4 bln rubles in 2008
MOSCOW. March 25 (Interfax) - Mosenergo (RTS: MSNG) boosted net
profit to Russian Accounting Standards (RAS) 80% in 2008 compared with
2007 to 1.371 billion rubles, the genco said in materials.
Net profit was 739.47 million rubles in 2007.
E.On warns on electricity investment
25 March, 2009, 10:03
Germany's E.On says it will delay new projects if the state doesn't keep promises, after claims officials have misled power companies about the potential of Russia's electricity market to make them build extra capacity.
Global power firms pledged more than $30 billion to upgrade Russia's decrepit network. That's based on an official government report by 2020 electricity demand will triple. Independent experts say that's recklessly optimistic in the best of times, let alone the current downturn.
Chief culprit is former state power supremo Anatoly Chubais, according to Dr Bulat Nigmatulin, Deputy Director of the Institute for Monopoly Problems.
“Chubais tricked not just the energy companies, but the government itself. He based the sector's official report on winter 2006 consumption when there were freak frosts, and record GDP growth. Needing another 750 billion kilowatt hours by 2020 is twice the best-case and 3.5 times the likely scenario.”
In the next 12 years E.On vowed to pump $2.3 billion into Russian electricity. But the government has also broken promises to set up the lucrative wholesale system known as the capacity market. Sergey Tazin, CEO of E.On Power Russia says the company is now looking at holding off on new projects.
“The future capacity market is key as that's where we expect return on investments. We will be maybe taking options of delaying of commissioning some projects.”
Adding to industry woes is that power supply contracts tend to be long-term. That means firms can't renegotiate prices in the crisis, even though electricity use in Russia's already slumped 13% this year.
OGK-1 to Sell Shares to Government
25 March 2009 Reuters
Electricity producer OGK-1 hopes to issue new shares for sale to the government, whose help it needs to keep expansion on track in the country's oil and gas heartland, general director Vladimir Khlebnikov said Tuesday.
OGK-1 needs 34.4 billion rubles ($1.03 billion) over the next three years to carry out its growth plans, which are needed to secure power supplies to key oil and gas-producing regions, Khlebnikov said.
"That would be the ideal outcome. If we could attract all of this money [the 34.4 billion rubles] through a new share issue, then we would look for a way to secure long-term loans from [Vneshekonombank]," Khlebnikov told reporters.
He added that the details of such a decision could be finalized during the drafting of the state budget for 2010, which could set aside funds for buying the new shares.
Russia, the world's largest gas producer, depends on exports of its energy resources for most of its federal budget.
OGK-1 has been particularly strapped for cash in recent months, because it was the only one of the country's 20 thermal power producers not to attract a strategic investor during the privatization of the electricity sector between 2005 and 2008.
Khlebnikov said his power company will not be able to fulfill its investment commitments in Urengoi, one of the world's largest gas-producing areas.
The launch of new turbine units at its power station in Urengoi, planned for 2009, will not be possible even in 2010, he said. Urengoi is vital for maintaining Gazprom's output.
Ever since it failed to attract a buyer, majority ownership of OGK-1 has remained with one of several state-controlled companies, most recently state electricity trader Inter RAO, which took over management of OGK-1 last week.
Inter RAO has agreed to lend 700 million rubles to OGK-1 to help it refinance its short-term debt. OGK-1 has also sought additional financing from VEB.
Khlebnikov said he hopes that the government will realize the difficulty of OGK-1's position and cut back some of the commitments it made to build new power generating capacity across Russia.
OGK-1 owns and operates six power stations scattered around the country with a total generating capacity of 9.5 gigawatts.
nOGK-4, the power producer controlled by Germany's largest utility E.ON, may delay plans to build new plants because of the economic slump, Sergei Tazin, head of E.ON Russia Power, said Tuesday, Interfax reported.
OGK-4's 2.3 billion euro ($3.1 billion) investment program will be reviewed because of the slowdown and the lack of a long-term power capacity market, Tazin said.
Utilities cannot secure returns on investments in new facilities because Russia has yet to introduce a long-term capacity market, he said.
Metals & Mining sector: Coking coal benchmark price may be down 60%
UralSib, Russia
March 25, 2009
BMA lowers coking coal price for Nippon by 60%. Australian coking coal producer BHP Mitsubishi Alliance (BMA) has reportedly agreed to a muchreduced benchmark price of $115-125/ton with Nippon Steel of Japan. This price will take effect from 1 April. This new price is 60% lower than the coking coal price for the current contract year of $300/ton. Effectively, this could mean that Chinese steelmakers are now likely to negotiate a similar or even lower price. As a result, the global coking coal benchmark (Australian FOB) is likely to suffer a huge contraction this year which will negatively impact Russian coalminers.
Russian domestic price is already way below targeted benchmark. At the end of last year, the Federal Anti-monopoly Service (FAS) forced Russia's top coalminers (including Mechel, Evraz and Raspadskaya) to sign long-term contracts with their customers to make pricing more transparent and predictable. Coking coal prices under these long-term contracts were tied to Australian FOB contracts via the export parity price (the contract price was $220/ton). Nevertheless, there is now only a spot market in Russia with a current coking coal spot price of around $45-50/ton. The new benchmark of $120/ton could result in a Russian domestic price of $60-70/ton ($120/ton less 15% quality discount and $35/ton of transportation expenses).
Abolishment of long-term contracts is negative for coalminers. This range of $60-70/ton is slightly below our expectations, since this price for 2H09 coupled with approximately $50/ton in 1H09 would result in a 2009 price of only $55-60/ton, which is significantly below our latest forecast of $70/ton. Moreover, some steelmakers are already trying to move away from long-term contracts (and the pricing formula as well). If the spot market prevails - and in the absence of improved domestic steel demand and an increase in steel capacity utilization - the domestic coking coal market is likely to remain under pressure in 2009 and prices could average as little as $45-50/ton for the year. Either way, there is downside risk to our estimates for coalminers (Raspadskaya, Mechel and Belon). However, non-integrated steelmakers such as NLMK and MMK would benefit from lower coking coal prices.
BHPB and Nippon Steel settle on $129/t coking coal price
Alfa, Russia
Wednesday, March 25, 2009
Over the past two days, several sources have stated that BHP Billiton and Japanese steel makers headed by Nippon Steel have agreed on a coking coal price for the 2009-2010 financial year. This has reportedly been settled at $129/t FOB Australia for hard-coking coal grades, exceeding our forecast of $120/t. We think this level will be adopted as a global benchmark, as in previous years. We also note that the Chinese factor does not come into play in these negotiations, as China became net impoter of coking coal only in the mid-2000-s, buynig 5m t of metcoal in 2007 vs. 58m t of Japanese exports. We regard this news as POSITIVE for Russian coking coal miners, particularly for Mechel, Raspadskaya and Belon. Mechel will export its Yakutia coal to the Asian steelmakers at $129/t FOB Far East, which is ~ $107/t on an ex-works basis. We also think that the new level could lift domestic coking coal prices, now at $50-55/t, up to $75/t for the the blend, which is fully in line with our previous forecast.
Government earmarks RUB45bn for diamond purchases
Rencap, Russia
Wednesday, March 25, 2009
Kommersant reports today (25 Mar) that according to the adjusted 2009 federal budget, the government has earmarked RUB45.4bn for Gosfond, a special government fund, to purchase diamonds. In our view the measure is designed to support Russia's largest diamond miner, Alrosa. The company earlier reported that it has only been selling diamonds to the government, not to export markets. We think the designated amount could make up approximately up to 50% of Alrosa's annual sales. However, the company still has to secure the remaining part or cut production plans dramatically. Another question is at what prices will Alrosa be selling the diamonds to the government because these figures are not usually disclosed. The news is positive for Alrosa in our view, as the government is indicating its intentions to support the company. However, we do not think it will improve Alrosa's financial standing significantly. S&P earlier reported that Alrosa has to repay $1.2bn in debt in 2009 (click here to view S&P cuts Alrosa to BB-, maintains Negative outlook in our 26 Nov 2008 Fixed Income Daily Snapshot) and we think the company will be forced to look for refinancing. In our view, Alrosa will most likely receive debt refinancing from VTB, which lent the company RUB44.2bn in December to repay debts due in the end of 2008. However, even assuming this support, we do not recommend Alrosa debt, as VTB bonds trading at a 250 bpts discount to Alrosa (VTB35, with a put in 2015 and YtP of 15.3%) or Bank of Moscow due in 2013 (YtM of 19.7%) look to be safer investments to us.
Sechin Asks Norilsk for Financial Details
25 March 2009 Reuters
Deputy Prime Minister Igor Sechin has asked Norilsk Nickel to supply details about its financial situation and dealings in its shares, Vedomosti said Tuesday.
Sechin sent a letter to the company requesting details of transactions closed at the beginning of this year, Vedomosti cited two unnamed sources close to Norilsk and its shareholders as saying.
Sechin asked for details of a buyback program through which Norilsk purchased 4 percent of its stock from shareholders -- a deal that at the time was opposed by rival shareholder United Company RusAl.
Exploration licenses acquired by Norilsk, then transferred to Mikhail Prokhorov's Onexim holding, were also questioned in the letter, Vedomosti said.
Norilsk Nickel confirmed receiving the letter and sending a reply but declined to provide more details.
NLMK Reports Q4 Losses, Blames Falling Steel Market
25 March 2009 Reuters
Novolipetsk Steel, or NLMK, slid to a fourth-quarter net loss and said steel markets continue to deteriorate, which will impact its results in the current quarter and send its shares lower.
The company, controlled by Vladimir Lisin, said its fourth-quarter net loss totaled $480.6 million, compared with a third-quarter profit of $1.23 billion.
It expects first-quarter 2009 revenue of $1.1 billion and an earnings before interest, taxation, depreciation and amortization margin of about 20 percent.
This indicates that revenues would reach about half of the fourth-quarter level of $2.06 billion, although first-quarter volume production will increase by about 21 percent, quarter on quarter, to 2.1 million tons.
NLMK shares closed down 9.1 percent at 45.93 rubles per share on MICEX.
The company expects the steel market to remain weak all year.
"In 2009, we expect a significant year-on-year decrease in revenue due to lower sales volumes and price environment deterioration," chief financial officer Galina Aglyamova said in the statement.
"We anticipate that production volumes will reach 10 million tons of steel."
Novolipetsk is also cutting its 2009 investment and maintenance capex by 48 percent year on year to $1 billion.
Novolipetsk joined domestic and international rivals by cutting prices and production in the fourth quarter.
In January, it reported that fourth-quarter steel output fell 40.2 percent from the third quarter and warned that declining prices would affect first-half 2009 results.
The company became the second Russian steelmaker to report a fourth-quarter loss after rival Severstal said earlier this month that it slipped $1.21
Amtel applies to Shuvalov for support
VTB Capital
March 25, 2009
First Deputy Prime Minister Igor Shuvalov discussed supportive measures for tyre producers with Amtel's management yesterday. The director of the Amtel-Voronezh plant asked the government not to cancel a USD 25mn defence order and to provide state warranties for refinancing USD 44mn in working capital required to resume production. Amtel's debt stands at USD 460mn and one of the potential ways of restructuring it currently being discussed is a merger with the tyres holding being created by Rostekhnologii and Pirelli. Our View: After several attempts by Sibur to save Amtel from bankruptcy, tyre producers have leveraged their lobbying resources and found supporters in the government. In our view, Shuvalov's visit is a positive sign for the company as it shows that the government is ready to provide some help and that the risk of bankruptcy has taken a step back, at least for a while. However, there has been no official announcement of any specific supportive measures. Furthermore, it is too early to discuss the prospects of a potential merger with Pirelli-Rostekhnologii tyres, so the Amtel bankruptcy saga might resume after a pause of several months.
PIK Group: No comment on Kerimov speculation; debt restructuring the priority
Rencap, Russia
Wednesday, March 25, 2009
Yesterday (24 Mar), PIK Group issued a press release (in response to press reports last week) that Suleyman Kerimov was negotiating to acquire a 40-45% stake in the company. PIK reiterated that its primary focus is restructuring its balance-sheet debt, but that it would not comment on specific press reports. Action: We reiterate our BUY rating on PIK, and $4 target price. Rationale: Reports that Kerimov might acquire a stake in PIK appear credible to us given his recent acquisition of Oleg Deripaska's Glavstroy construction assets and his involvement in the change of ownership of Hotel Moscow. From PIK's perspective, a strategy to restructure its debt is urgently required (9M08 short-term debt of $900mn, including $262mn from VEB) and Kerimov's involvement could help facilitate this. It is, however, important to note that the acquisition of a 40-45% stake would not trigger a mandatory bid for minority shares if the acquisition resulted from the default of pledged assets. Nonetheless, progress on debt restructuring would allow investors to consider PIK's option value and significant upside potential, and in this regard would be positive.
New Company to Provide International farming management and transfer of technology to Russia
Press Release
March 24, 2009
New Europe Agricultural Limited (NEA), a farming management company comprising both English and Russian executives with over a decade of farming and management expertise in Russia, has recently signed a management contract on 80,000 hectares in the 'Black Earth' region of Russia. This forms part of its ongoing corporate strategy to manage 500,000 hectares of fertile farmland in the Black Earth region.
NEA's management team includes Aleksei Permitine, who is Managing Director of Krasny Selo Group plc. The company intends to build on Aleksei's extensive government relations at national and local levels in Russia, as well as direct industry contacts with farm owners and funding institutions.
Aleksei Permitine says: "NEA will manage farms for and on behalf of the Krasny Selo Group and other landowners both Russian and International. This utilizes the team's management expertise in the farming and property sectors to provide proficiency in acquisitions and considerable practical experience to the Russian agricultural arena".
Mark Lewis, Production Director of NEA believes that the development of motivated, efficient management and the practical day to day application of international advances in yields and techniques are major factors influencing the future success of Russian agriculture.
Mark Lewis says: "Training and skills transfer is a key element of our planning. NEA management will provide training and intellectual transfer of technology at a local level in order to bring production yields and quality up to European levels".
Krasny Selo has initiated discussions with a large Russian bank interested in co-investment and debt provision into the agricultural sector of the Russian economy in concert with Krasny Selo and international investors.
Evroset could be MegaFon's partner
Rencap, Russia
Wednesday, March 25, 2009
According to Kommersant today (25 Mar) negotiations between MTS and Evroset are dragging on. The talks concern sale by the mobile retailer of 7.2mn contracts over the course of 1.5 years (35-40% share in the contracts sold by the retailer) for compensation of $167-173mn. According to the article, Evroset proposed similar conditions to MegaFon. MegaFon would prepay for the first year for the pledge of a 25.1% stake in Evroset (VimpelCom has an option to buy it).
It was through Evroset, the largest retailer in Russia, that MTS mainly boosted its subscriber base in 4Q07-2Q08. However, after the purchase of the network by Mamut (50.1%) and VimpelCom (49.9%), MTS's share of contracts sold decreased to around 20%, according to Kommersant. We do not think MTS will be able to restore its leadership with the retailer in contract sales, but in our view it would like to increase its share and approach VimpelCom. The $167-173mn compensation represents $24 commission per subscriber, which seems quite high to us at the current RUB/$ rate, however it reduces uncertainty over the growth of MTS's (or MegaFon's) subscriber base while MTS's and MegaFon's liquidity positions allow them to spend these funds. Moreover, the funds should help Evroset meet its debt obligations.
Russia to Rescue FLC After Coupon Payment Default, Ivanov Says
By Denis Maternovsky and Ellen Pinchuk
March 25 (Bloomberg) -- OAO United Aircraft Corp. will help its Finance Leasing Co. unit repay $250 million to bondholders after it became the first state-run Russian company in more than a decade to default on a foreign-currency coupon payment, Deputy Prime Minister Sergei Ivanov said.
“The management of United Aircraft is very active in trying to settle the issue,” Ivanov said in a Bloomberg Television interview in his Moscow office yesterday. United Aircraft must “act somehow to help” because it may face a cross default on its debt, he said.
Bondholders are seeking “accelerated” repayment on the securities after Moscow-based FLC missed coupon payments on its $150 million of 10 percent bonds due 2013 and $100 million of 9.25 percent four-year notes in December. The plane-leasing company is 28.7 percent owned by the Russian government and 51.8 percent by United Aircraft, the state aerospace holding.
No other government-backed company has failed to service its foreign-currency debt since Russia defaulted on sovereign ruble bonds in 1998, according to Mikhail Galkin, an analyst at MDM Bank in Moscow.
Russian companies have about $100 billion of foreign- currency debt to repay this year and are struggling to refinance loans and bonds as the financial crisis cuts access to funding.
Ivanov, a board member at United Aircraft and a former defense minister, said FLC’s previous management was responsible for the default and that an investigation is now being held to discover “if that was mismanagement or something worse.”
“It’s a specific case, it has nothing to do with all Russian government-owned businesses and I don’t think it will affect Russian bonds,” said Ivanov, 56.
Kirill Baranov, FLC’s deputy chief executive officer, couldn’t be reached for comment.
To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@
Last Updated: March 25, 2009 02:29 EDT
RBC mulls debt restructuring
Renaissance Capital offers a debt restructuring scheme to the cash-strapped media group
Renaissance Capital investment bank said yesterday that it had sent its debt restructuring proposals for RBC Information Systems to the group’s shareholders and creditors. In return for the service, the bank seeks a 65-percent stake in RBC, which would then go to Onexim. Renaissance Capital touted its scheme as the best possible solution, which will also help RBC strengthen its position on the media market.
Under Renaissance’s plan, RBC will issue new shares, leaving Onexim Group with a 65-percent stake in RBC, with another 10 percent going to RBC’s creditors, among them Renaissance itself.
According to Renaissance Capital head Ruben Aganbegyan, Onexim will provide some $35 million, $20 million of which will be used to pay the group’s debts, and the rest will be invested in RBC’s current projects. “We believe that Onexim’s participation will boost the issuer’s credit rating,” Aganbegyan explained. The proposed restructuring would enable RBC to greatly improve its position on the media market, the banker is convinced.
As for RBC’s current debts, which Renaissance estimates at $216 million, each creditor will receive 8 percent of the debt in cash and then get to choose one of the following two options for the remaining amount: to write off 45 percent of the debt and receive the remainder in seven years’ time at an interest rate of 4 percent per annum, or to write off 65 percent and get the rest in three years’ time at the same interest rate.
“The deal is unlikely to have any immediate impact on RBC’s business; the company will continue to work as before,” said Anna Kurbatova, an analyst with UniСredit Securities. “On the other hand, the proposed scheme could be welcomed by the creditors who rejected prior debt restructuring offers. Onexim and Prokhorov will act as guarantors, which improves RBC’s prospects,” she added.
“The Board of Directors will consider the offer and prepare its recommendations, respecting the interests of both shareholders and creditors. Certainly, the company wants to get through the crisis period as quickly as possible to return to stability. With this in mind, we are open to all proposals,” confirmed German Kaplun, chairman of the Board of Directors of RBC Information Systems.
DJ INTERVIEW: VTB expands investment bank ops in Asia, Mideast
24.03.2009 12:59
(Interview with Herbert Moos, CEO of VTB Capital)
HONG KONG, Mar 24 (Dow Jones) -- As its Western rivals cope with the credit crunch and ratchet down their international exposure, the investment banking unit of Russian financial services group VTB Group is looking to expand in Asia and the Middle East as an advisor to Russian companies.
VTB Capital, a 500-strong firm, received US$500 million in new capital early last year from its parent so it could increase its market share in those regions by advising Russian companies on merger opportunities and initial public offerings, as well as facilitating investments into Russia, senior executives said. The firm, which already has a London office, has an Asian office in Singapore and is planning to open one in Dubai later this year - its first in the Middle East.
"Places like Asia are emerging (as an economic powerhouse), and we are here to be part of that capital flow intermediation," VTB Capital PLC's Chief Executive Officer Herbert Moos said in an interview with Dow Jones Newswires. "We are not competing with the local houses - we are selling Russian opportunities," Moos said.
Moos was a 14-year veteran at Lehman Brothers Holdings Inc., most recently as its chief financial officer in Asia Pacific ex-Japan before joining VTB in August 2008.
He said he expects Asian financial and industrial groups, especially out of China, to be "interested in taking assets, setting up joint ventures, and buying stakes in Russian corporates."
China has been active as an acquirer of Asian assets, accounting for 25% of the US$54.5 billion deal flow in the region so far this year, according to data provider mergermarket. As the world's most populous nation makes securing sources of natural resources a priority, resource-rich Russia is a natural destination, Moos said.
China National Petroleum Corp. said earlier this month it will import 15 million metric tons of crude annually for 20 years in exchange for Chinese banks lending $25 billion to Russia's state-owned oil producer OAO Rosneft and pipeline operator Transneft.
Russia's top nickel producer, Norilsk Nickel, has also said it will explore joint venture opportunities with Chinese firms.
IPOs are another market where Russian companies can make an entry. Alexey Yakovitsky, VTB Capital's general director, said that as the appetite for new issues returns, Hong Kong will likely overtake London as the overseas listing ground of choice for Russian companies.
"Companies don't want to list in a place where the market is affected by its own domestic problems," said Yakovitsky.
London had been the venue of choice for overseas listings by Russian companies in 2006 and 2007, with 16 companies netting a total of US$30 billion, according to data provider Dealogic.
The flow of Russian listings in London has slowed to just one IPO in 2008, raising US$470 million and none so far this year.
But as China's economy continues to weather the downturn, Russian companies are increasingly planning to raise capital closer to the mainland to tap the flush liquidity there and to be closer to users of its products, Moos said.
Molybdenum company Strikeforce Mining & Resources Ltd., one of the world's biggest aluminium producers by output, had planned to raise US$200 million in what would have been the first Russian listing in Hong Kong late last year. It went so far as to appoint BOC International Holdings Ltd. and Morgan Stanley as underwriters, a person familiar with the situation said earlier. But the plan was later shelved as the as the market turned more volatile.
Launched in March 2008 as VTB Bank Europe PLC, the firm was renamed VTB Capital in January. It provides investment banking operations for the VTB Group as well as Russian companies, advising in debt and equity markets, mergers & acquisitions in Russia and internationally, and also has private equity operations, commodities trading and asset management. It ranked sixth in secondary stock trading in the Russian Trading System Stock Exchange in February, with increasing market share as rivals scale back.
"The foreign houses are still there (in Russia) but they don't commit capital. They barely trade, they have cut their personnel and cover Russia out of London, which is the wrong idea if you want to tap local markets," said Yakovitsky.
He said many Russian brokers, on the other hand, have lost money in speculative transactions or had taken on too much leverage.
STX denies Russian shipyard involvement
By Mike Grinter in Hong Kong - Wednesday 25 March 2009
SOUTH Korea’s STX Group told Lloyd’s List that news reports of its involvement in a $1bn shipyard project in Russia’s Far East are premature.
News reports had said that STX would participate in a shipyard project in Primorsk which is being led by Russian investment firm Summa Capital.
The shipyard will be capable of building ships up to 250,000 dwt with tankers, gas carriers and offshore structures targeted for state-run energy companies Gazprom and Rosneft.
Summa Capital is alleged to have first contacted European shipbuilder Aker Yards. When STX took over the company last year the offer still stood. But a spokesperson for STX Group said on Wednesday: “It is true that Summa Capital has made contact with STX, and we might consider some proposals like technical support for the building of a shipbuilding plant. But we have received no details of the project such as the size of shipyard or types of ships which will be built. No agreement between two companies has been made so far.”
Activity in the Oil and Gas sector (including regulatory)
Russia to Be ‘Cautious’ on Reserves, Retain Fifth, Ivanov Says
By Ellen Pinchuk and Emma O’Brien
March 25 (Bloomberg) -- Russia, holder of the world’s third-largest foreign reserves, must safeguard about one-fifth of the stockpile because of uncertainty about when the global crisis will end, Deputy Prime Minister Sergei Ivanov said.
“We have to be cautious and in my personal view try to keep some part of the reserves for the dark days,” Ivanov said in an interview with Bloomberg Television in Moscow yesterday. “We shouldn’t throw all the reserves” at this crisis.
Russia’s reserves have slumped 37 percent since reaching a record in July as the central bank sold dollars and euros to mitigate a 30 percent depreciation of the ruble against the dollar. The nation allowed the managed ruble to devalue as oil prices slumped and the global economy descended into its first recession since World War II.
Russia’s economy will contract by 2.2 percent this year, according to the Economy Ministry.
The stockpile fell $4.4 billion last week to $376.1 billion, according to Bank Rossii data. That amount should be enough to sustain Russia until 2010, Ivanov said.
To contact the reporters on this story: Ellen Pinchuk in Moscow at epinchuk@; Emma O’Brien in Moscow at eobrien6@
Last Updated: March 25, 2009 02:33 EDT
Energy Ministry reveals gas industry development plan
RBC, 25.03.2009, Moscow 10:59:50.The Russian Energy Ministry has introduced a general plan for the country's gas sector development until 2030, the ministry's press office reported today. The plan provides for government support mechanisms for the industry's development.
The general plan also defines parameters for natural gas production, transportation, and storage, as well as for the processing of gas and gas condensate. Furthermore, it stipulates the required capital investments in the reconstruction and development of production facilities. The ministry has outlined the main problems hindering the industry's development and assessed investment risks. The plan also estimates gas consumption, which is expected to depend on the price changes for fuel and energy resources, an expansion of gas trade on mercantile exchanges, and a decrease in the share of gas sales at regulated prices.
Oil Markets Pay Scant Attention to Russia
MARCH 24, 2009, 9:27 P.M. ET
Top Producers Cut Output, Spending; Higher Prices Ahead?
By JACOB GRONHOLT-PEDERSEN
MOSCOW – Oil markets may not be pricing in the extent of dwindling output in the world's biggest producer, Russia, a factor that could buoy prices later this year, traders and analysts said.
Last week, the Russian government predicted 2009 oil output of 9.68 million barrels a day, a 1.1% annual drop. But a Dow Jones Newswires survey of 12 analysts puts the decline at more than twice that rate, with the most pessimistic predicting a slump of 7%.
Having plunged to a third of last summer's peak, oil prices have stabilized lately. They remained strong in the past week despite a March 15 decision by the Organization of Petroleum Exporting Countries to leave production quotas unchanged until at least May.
The market is focused on the possibility that slumping economic growth will hit demand for energy in the world's biggest oil consumers, the U.S. and China.
But little attention is being given to Russia, where crude-oil output fell last year after a decade of increases. Russian producers pay high taxes, which leave them with limited cash to spend on maintaining fields and bringing new production online. Meanwhile, tight credit markets are slowing the flow of loans to the sector.
"We believe [Russia] will add to the growing global supply curtailment by the end of 2009, a factor which isn't fully appreciated by the market," said Oswald Clint, an analyst at Sanford C. Bernstein in London.
This month, the brokerage cut its forecast for Russia's crude production this year to 9.1 million barrels a day, a 7% drop from last year.
While the Russian government, whose coffers rely on oil revenue, has eased the tax burden somewhat in a bid to stabilize output, it is unlikely to do anything more, despite producer pleas, as the federal budget looks set to post its first deficit in 10 years.
In early January, Russia's five biggest producers -- OAO Rosneft, OAO Lukoil Holdings, TNK-BP Ltd., OAO Surgutneftegas and OAO Gazprom Neft -- announced an average annual reduction in capital spending of 15% for 2009.
But analysts said the industry may cut more spending, crimping new production capacity.
Officials agree that the situation is bleak.
Producers "may lack funds to support production levels at mature oil fields in West Siberia or to open up new fields in East Siberia and Timan Pechora [in Northern Russia] while also having to deal with the current tax burden," the government said in a statement last week.
Since 2000, oil companies ramped up production at fields in West Siberia -- the source of most of Russia's oil -- by bringing in new technology.
But as output from those fields declines, big investments are required to tap new deposits in more difficult-to-access areas.
Moscow-based Alfa Bank reckons the annual rate of decline in production at Russian oil fields already in operation totals 15% to 17%, compared with a rate of 7% in 1998. The higher rate implies producers would need to bring 1.5 million barrels a day in new output on stream just for production to stay flat.
"That's just not going to happen," said Alfa's head of research, Ron Smith.
OPEC also remains unclear about the future of Russian production.
"The uncertainty over Russian oil supply remains high," OPEC said last week in a statement. At present, the cartel forecasts Russia's daily oil production at 9.65 million barrels in 2009, a notch below the government's official estimate.
While Russia is responsible for about 20% of non-OPEC oil supply, falling output from other exporters could also influence prices, traders said.
Last week, the International Energy Agency lowered its forecast for 2009 non-OPEC supply growth to zero, largely due to production problems in the Caspian state of Azerbaijan.
Merrill Lynch said in a research note that the combination of OPEC's cutting output in recent months and the worsening outlook for non-OPEC production from Russia, Azerbaijan and Norway suggests that "supply availability will be significantly reduced in the second half of the year."
On Tuesday, crude oil for May delivery on the New York Mercantile Exchange rose $0.18 per barrel, or 0.3%, to $53.98, marking a second consecutive day of gains. It was the highest settlement price since Nov. 28.
Rosneft to purchase 5.5% in VCNG for RUB 1.5 billion
Interfax reported that Rosneft has made an offer to East Siberian Gas Company to purchase a 5.48% stake in Verkhnechonskneftegaz for RUB 1.5 billion.
The offer is valid until April 5th. The main shareholders in VCNG are TNK-BP with 68.51%, Rosneft - 25.94% and VSGK - 5.5%.
Rosneft, TNK-BP, VSGK and VCNG all declined to comment on this report.
VSGK earlier held 11.2% in VCNG. However, in 2007, it was decided that this share packet be divided between TNK-BP and Rosneft. TNK-BP purchased its shares but Rosneft did not implement the transaction on time. Later the arbitration court of Irkutsk accepted a lawsuit from the region's administration demanding an annulment of the VSGK board's decision to sell TNK-BP the share packet. Provisional measures were taken in regards to the 5.48% stake in VCNG.
A governmental commission for the oversight of foreign investment put off the review of TNK-BP's application to acquire 5.48% in VCNG owing to the implementation of the aforementioned measures.
In mid-February it was reported that TNK-BP and the Irkutsk administration settled the dispute regarding the 5.48% stake in VCNG and agreed to keep the packet on VSGK's balance sheet. In addition, the fourth arbitration appeals court, based in Chita, made a decision to delay a review of an appeal petition from the Irkutsk Region's property relations agency regarding the earlier decision to cancel the administration's lawsuit owing to "ongoing bi-lateral negotiations for reaching a compromise in relation to the disputed object and preparations for a settlement agreement."
Verkhnechonskneftegaz holds licenses for the Verkhnechonsk oil and gas condensate field, which is located in the Katangsk municipality of the Irkutsk region. The field's recoverable C1+C2 oil and condensate reserves are put at 201 million tonnes of oil and 3.36 million tonnes of condensate. Balanced natural gas reserves come to 95.5 billion cubic meters.
Russia and Kazakhstan to provide oil for Burgas – Alexandroupolis project
[pic][pic][pic]24 March 2009 | 20:50 | FOCUS News Agency [pic][pic][pic]
Sofia. Russia and Kazakhstan will provide the necessary volumes of oil for Burgas – Alexandroupolis project, Transneft President Nikolay Tokarev confirmed at a press conference in Sofia on Tuesday, Focus News Agency reported.
Out of all 35 million tons of oil necessary for filing up the capacity of pipeline, 18 million tons will be provided by Rosneft and Gazprom Neft. Other Russian companies will be able to participate as well.
The remaining 17 million tons will be provided by Kazakhstan through the Caspian pipeline consortium.
Nikolay Tokarev said that all participants in the project agreed with the figures.
TNK-BP upgrades 2009 production outlook
VTB Capital
March 25, 2009
According to Interfax, TNK-BP Holding expects its crude production to be flat YoY in 2009, which looks better than its previous guidance of a 1% decline.
The company expects 1Q09 to be profitable.
We believe that TNK-BP may well see a shortfall in production that exceeds its current guidance, and are sticking to our forecast of a 1.8% decline in output in 2009. However, we see this as a general industry trend, largely expected by the market, and therefore neutral for the stock.
Alternative gas suppliers face overproduction in Russia – analysis
Tuesday 11:30, March 24th, 2009
Russia’s independent natural gas producers (IGPs) account for a growing share of domestic output, but they are now facing turbulent times amid the global financial crisis and the subsequent domestic economic downturn, as well as problems with sales and gas transit.
The role of independent gas producers in Russia has increased over the past decade. Novatek and others have begun contributing significant volumes to the domestic market. In addition to the gas monopoly Gazprom, some 30 Russian companies produce more than 10 million cubic meters (mcm) a year. Russia’s second-largest gas producer, Novatek, and the oil companies Rosneft, LUKoil, TNK-BP, and Surgutneftegaz, produce some 80% of the total IGP output.
Independent producers are thought to control nearly a third of Russia’s gas reserves or some 14,000 billion cubic meters (bcm), according to the Union of Independent Gas Producers (Soyuzgaz). The independent gas producers’ share of Russia’s total output has risen from 6.4% in 1999 to some 15% now, according to the organization.
Last year Novatek reported an increasing gas output. In 2008 it produced 31 bcm of gas or 8.3% more than the year before. Nonetheless, on March 12 Novatek announced losses of RUB 3.6 billion ($103 million) in 2008, mainly in the Q4. Novatek also said that in the Q4 domestic gas condensate prices were 50% below the previous quarter (Interfax, March 12). Furthermore, in early March Novatek’s daily gas production was 19% down from the February level.
Novatek had planned to produce 105 mcm of gas per day in 2009, but then the plan was reduced to 85 mcm a day, with output expected to go down to 50 mcm later this year (Interfax, Vedomosti, March 6). Novatek’s output cuts were understood to be caused by Gazprom’s policy of limiting domestic supply. On March 3 Gazprom said it could reduce its gas offtake from independent producers as demand fell.
Novatek subsequently conceded that it was forced to reduce output significantly (Interfax, March 3). Nonetheless, Novatek apparently remained keen on maintaining good relations with Russia’s gas monopoly. On March 16 Russian news agencies reported that Novatek was still considering a joint project with Gazprom to invest in Gazpromneft (AK&M, March 16). Despite adverse economic conditions, another leading IGP, Rosneft, pledged to develop its Kharampurskoye gas field in Western Siberia, as well as the Sakhalin gas projects.
LUKoil also said that the company had no plans to cut investments in gas projects. In the meantime, Russian IGPs now face interruptions in the operations of their major sales venue, Gazprom’s Mezhregiongaz (MRG) auctions. In September 2006 the Russian government allowed MRG auctions to operate in a testing phase.
In 2008 MRG auctions sold 6.1 bcm, including 3 bcm from independent producers. In June 2008 the MRG price was 34% higher than the average gas price established by the Russian Federal Service for Tariffs (FST). But in November and December 2008, Russian domestic gas demand went down owing to unusually warm temperatures and sluggish industrial demand caused by the economic crisis.
Therefore, the Russian gas sector was understood to be significantly overproducing, and last December MRG auction prices dropped to a virtual parity with the regulated FST prices for the first time since the auctions started. On December 15 MRG halted its auctions for the months ahead. In January Rosneft reportedly requested the government to restart MRG auctions. Rosneft CEO Sergei Bogdanchikov wrote a letter to Deputy Prime Minister Igor Sechin, suggesting a resumption of the MRG auctions, according to the Russian business daily Kommersant. Rosneft reportedly claimed that MRG auctions were blocked by Gazprom (Kommersant, January 23).
In 2009 the government was supposed to approve MRG auctions on permanent basis. In February Alexander Petrov, the head of MRG’s gas market department, said that the auctions were unlikely to recommence before the Q3 of 2009 (Interfax, February 24). MRG’s website keeps announcing that the auctions will remain suspended, awaiting approval of the governmental decree on exchange-based and electronic gas trade. Meanwhile, MRG’s subsidiaries have reportedly started limiting gas supplies to domestic consumers because of crisis-related nonpayment (Kommersant, March 17).
Gazprom currently buys gas from the independents at regulated domestic prices and sells it for export at higher international prices. Last year, Russia’s Federal Anti-Monopoly Service (FAS) planned to draft amendments to the gas export law that would allow independent gas producers to participate in natural gas exports. FAS was to submit the draft document to the government in May 2008 and then on to parliament for approval in June.
However, the draft has not yet been approved. Independent gas producers have long needed better access to Russia’s ESG gas transportation system to unlock the value of Russian gas associated with oil production. In January 2009 Prime Minister Vladimir Putin pledged to grant independent gas producers better access to the Gazprom-controlled pipeline system (Interfax, January 15).
It is believed that the IGPs are forced to burn off significant volumes of associated oil gas because of their limited access to Gazprom-controlled pipelines. Russia is thought to burn up to 50 bcm a year of associated oil gas, according to estimates by the World Bank, while official Russian statistics put the amount at 24 bcm per year.
A decree signed by Prime Minister Putin on January 8 stipulates that from 2012, oil companies will not be allowed to burn more than 5% of their total associated oil gas production. This year major gas producers may also expect direct government support. In December 2008 the Russian government approved a list of 295 „strategic” companies eligible for state support. Apart from state-controlled energy giants Gazprom and Rosneft, the list also included Sibur, LUKoil, TNK-BP and Surgutneftegaz. Although inclusion on the list does not guarantee state financial support, the government pledged to secure the sustainability of “strategic” companies by restructuring back taxes, state orders, and subsidized interest rates.
The Russian government voiced its expectations that alternative producers would raise their combined output even further. The government’s Energy Strategy till 2020 envisages raising the IGP’s share of total production to 17% by 2010 and 20% by 2020; but now Russia’s independent gas producers are facing adverse macroeconomic conditions, falling demand, and sales and gas transit hurdles. It is too early to know whether the promised state support can help Novatek and other IGPs deliver on their pledges to raise gas output. (Eurasia Daily Monitor)
Gazprom
Gazprom Neft Surges 30% on Report Gazprom Will Buy Eni Stake
By William Mauldin
March 25 (Bloomberg) -- OAO Gazprom Neft, the oil unit of gas giant OAO Gazprom, climbed the most in four months after a newspaper reported that Gazprom will acquire Eni SpA’s stake.
Gazprom will buy the Italian oil company’s 20 percent stake in Gazprom Neft for about $4 billion under an option that expires in April, Vedomosti said today, citing unidentified people close to the energy companies.
Gazprom Neft climbed as much as 30 percent to 112 rubles on the Micex Stock Exchange in Moscow, its biggest intraday gain since November 5. The crude producer traded at 104.90 rubles as of 10:43 a.m.
“Based on the Russian law, if Gazprom’s direct stake in Gazprom Neft exceeds 95 percent, it must make a buyout offer to minorities,” JPMorgan Chase & Co. analysts Nadia Kazakova and Andrey Gromadin in Moscow said in a note today. “At the same time, we believe Gazprom is likely to avoid a buyout offer to minorities” by structuring the deal indirectly.
Gazprom plans to announce the transaction during a visit to Moscow by Italian Prime Minister Silvio Berlusconi that starts on April 6. Sergei Kupriyanov, Gazprom’s spokesman, didn’t answer his mobile phone when called today.
To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@
Last Updated: March 25, 2009 03:53 EDT
Eni backs Russia on new EU gas links
Wire services
Russian gas giant Gazprom said that it had the full support of Italiy's Eni to build new gas links to bypass Ukraine following meetings that coincided with a new row between Moscow and Kiev.
Gazprom said its head Alexei Miller and Eni chief executive Paolo Scaroni met in Moscow to discuss their joint project, the South Stream gas pipeline, which will take Russian gas from under the Black Sea to Europe, bypassing Ukraine.
"Taking into account that the EU understands the importance of the diversification routes from Russia, the issue of quickly implementing this project is becoming especially pressing," Gazprom said in a statement, referring to the link.
The meetings came as Russia broke off talks with Ukraine after Kiev angered the Kremlin by asking the EU to modernise its pipeline network.
Gazprom supplies Europe with a quarter of its gas. Around 80% of this comes through Ukraine's Soviet-era pipelines.
The Russian gas giant did not mention a looming deadline to exercise a call option on a 20% stake in Gazpromneft, the oil wing of Gazprom, held by Eni and valued at about $4.3 billion.
The call option expires in early April.
Scaroni also met Russian Deputy Prime Minister Igor Sechin yesterday, who is also the chairman of Russian state oil giant Rosneft and a trusted adviser on energy issues to Russian Prime Minister Vladimir Putin.
Sechin later said the two had discussed energy security, which could only be achieved through "cooperation between consumers, suppliers and transit states", Russian media quoted him as saying, a Reuters report said.
Wednesday, 25 March, 2009, 02:15 GMT | last updated: Wednesday, 25 March, 2009, 07:42 GMT
UPDATE 1-Gazprom to exercise ENI buyback option early April
Wed Mar 25, 2009 6:23am GMT
* Gazprom to buy back 20 pct of Gazprom Neft -industry sources
* Gazprom will also buy back Russian gas assets
* Exercising option could cost $5.5 billion, talks ongoing (Adds background on buyback option)
MOSCOW, March 25 (Reuters) - Russia's Gazprom (GAZP.MM: Quote, Profile, Research) plans to exercise an option to buy back 20 percent of its oil arm Gazprom Neft (SIBN.MM: Quote, Profile, Research) and Russian gas assets from Italy's ENI (ENI.MI: Quote, Profile, Research) in early April, industry sources told Reuters.
"It's going to be part of (Italian Prime Minister Silvio) Berlusconi's visit to Moscow," one of the sources said on Wednesday.
Industry sources added that Gazprom was currently talking to a number of Russian state banks to raise financing to exercise the option, which could cost up to $5.5 billion.
However, the sources said the two sides have yet to reach an agreement on the final price.
ENI acquired the stake in Gazprom Neft at a state auction of bankrupt oil firm YUKOS in April 2007 and immediately agreed to sell the stake to Gazprom within two years.
Gazprom, Russia's gas export monopoly, currently owns 75 percent of Gazprom Neft. (Reporting by Dmitry Zhdannikov; Editing by Michael Urquhart)
Gazprom to Buy Eni’s 20% of Oil Arm in April, Vedomosti Says
By Torrey Clark
March 25 (Bloomberg) -- OAO Gazprom will buy Eni SpA’s 20 percent stake in OAO Gazprom Neft for about $4 billion under an option that runs out in April, Vedomosti said, citing unidentified people close to the energy companies.
OAO Sberbank, OAO Gazprombank and Russian Agricultural Bank, known as Rosselkhozbank, have agreed to lend Gazprom 3.2 million euros ($4.3 billion), Vedomosti said. The loan will also help Gazprom pay $1.5 billion for control of gas producers that Eni and Enel SpA bought in OAO Yukos Oil Co. auctions in 2007, the Moscow-based newspaper said.
Gazprom plans to announce the agreement when Italian Prime Minister Silvio Berlusconi visits Moscow on April 6 and 7, the newspaper said.
To contact the reporter on this story: Torrey Clark in Moscow at tclark8@.
Last Updated: March 25, 2009 01:44 EDT
Gazprom, ENI urge South Stream pipeline project
25 March 2009, 00:02 CET
(MOSCOW) - Chief executives of Russia's gas giant Gazprom and Italy's ENI on Tuesday called for speeding up the South Stream gas pipeline project, as Ukraine clinched a gas network agreement with the European Union, prompting Moscow's fury.
"Alexei Miller and Paolo Scaroni discussed the realisation of the South Stream project," which involves Russia and several south European countries, including Italy, Gazprom said in a statement.
"Considering the importance that the European Union attaches to diversifying ways of delivery from Russia, the earliest possible realisation of this project takes on particular urgency," Gazprom said.
Ukraine on Monday signed an agreement with the European Commission to pave the way for much-needed foreign investment in its gas pipeline network, seeking to boost its pipelines' capacity by 60 billion cubic metres per year.
However, this plan to overhaul of Ukraine's Soviet-era pipeline network has drawn immediate fire from Moscow and revived fears of a repeat of a January gas dispute which left a dozen EU countries without energy supplies.
Analysts suggested that Moscow's ire was sparked by fear that its South Stream project would be threatened by investment in Ukrainian pipeline network.
Gazprom Buys 50% Of A2A Beta To Seal Gas Deal With A2A, Iride
MARCH 24, 2009, 7:40 P.M. ET
DOW JONES NEWSWIRES
ZMB GmbH, a unit of Russia's OAO Gapzrom (GAZP.RS), has acquired Tuesday a 50% stake in A2A Beta SpA through a capital increase.
A2A Beta is controlled by A2A Alfa, in which Italian utility A2A SpA (A2A.MI) has a 70% holding and Iride SpA (IRD.MI) holds the remaining 30%.
In a joint filing to the Italian stock exchange, the companies said the acquisition seals the completion of a gas supply agreement between Gazprom and Italian utilities A2A and Iride for the sale of natural gas in the Italian market.
Exchange Web site: borsaitaliana.it
-By Enza Tedesco, Dow Jones Newswires; enza.tedesco@
Polish gas firm PGNiG in talks with Gazprom Export on legal details of gas supplies in 2009
Yesterday, 17:19 | Interfax-Ukraine
WARSAW - Polish gas monopolist PGNiG is negotiating legal details with Russia's Gazprom Export concerning natural gas supplies from Russia to Poland in 2009, PGNiG's spokeswoman Joanna Zakrzewska told Interfax on Tuesday.
"The parties are working on the legal aspects of replacing PGNiG's contract signed with RosUkrEnergo with a contract signed with Gazprom Export, which would supply gas in 2009," Zakrzewska said.
In a Tuesday interview with daily The Wall Street Journal Polska, PGNiG's CEO Michal Szubski said that the general framework of the contract with Gazprom Export has been drafted, but some business arrangements still need to be worked out before the signing of the deal.
In early March, Szubski said that he hopes to soon sign a contract on natural gas supplies to replace the contract with RosUkrEnergo in 2009. PGNiG would like to begin supplies in late April or early May, as this is the last moment to begin preparations for the next heating season.
In May the company should start filling its storage facilities in preparation for the next winter season.
In late January, Swiss-registered RosUkrEnergo stopped delivering natural gas to Poland via Ukraine after the resolution of the Russian-Ukrainian gas conflict left the company with no access to Central Asian gas. The company supplied 2.5 bln cubic meters of gas a year.
GAZPROM SQUEEZED BY CENTRAL ASIAN CONTRACTS
3/24/09
What seemed like sweet deals with Central Asian energy producers just about a year ago is turning into albatross contracts for Gazprom, Russia’s suddenly embattled natural gas conglomerate.
Political considerations seemed to play a role in state-controlled Gazprom’s decision to commit to paying top dollar for natural gas from Kazakhstan, Turkmenistan and Uzbekistan. [For background see the Eurasia Insight archive]. The Central Asian states are at the center of a geopolitical tussle between Russia and the United States over control of energy export routes in the Caspian Basin. During the spring of 2008, it made sense for the Kremlin to pay a premium for Central Asian energy in order to retain a dominating energy position in the region. In the intervening year, however, the Russian economy has fallen off a cliff, pushed by the global financial slump. [For background see the Eurasia Insight archive].
Gazprom, which just a short time ago acted as the Kremlin’s cash cow, now finds itself increasingly stressed. According to Ministry of Energy figures, Gazprom production during the March 17-22 this year was down 25 percent over the same period in 2008. The company recently downwardly revised its price forecast for the sale price of gas to Europe to $257.9 per thousand cubic meters (tcm) of gas. Just weeks earlier, the company was projecting the price at $280/tcm. In 2008, Gazprom sold gas to Europe at a price of $409/tcm, the Russian newspaper Vedomosti reported March 23. "With an average price of $260/tcm, [2009] revenues [are projected to be] $44 billion, instead of last year’s $73 billion," the report noted.
Dmitry Alexandrov, an analyst with Financial Bridge Investment Company, said Gazprom’s need to fulfill its Central Asian obligations will cost the firm dearly -- to the tune of about $3.5 billion in losses. "This is a fee for its monopoly position in the exporting of fuels from these countries," Alexandrov was quoted as saying in a March 24 report published by the Russian daily Nezavisimaya Gazeta.
Gazprom currently buys about 50 billion cubic meters (bcm) of Turkmen gas, 15 bcm of Kazakh gas, and 7 bcm of Uzbek gas, amounting to about 14 percent of the company’s total production in 2008, according to the Nezavisimaya Gazeta report. Rising transit costs and falling consumer demand in Europe and Russia mean that the company’s operating costs in Central Asia are becoming a big burden. The company has already scaled back development plans for the region.
Gazprom officially acknowledged in early March that gas production in 2009 may decrease by 7 percent this year. But analysts say the cut in output could likely to be much higher.
"In the worst case scenario, Gazprom could see gas production drop by 20 percent by the end of the year," RusEnergy analyst Mikhail Krutikhin told Nezavisimaya Gazeta. He added that Gazprom could barely afford to buy Central Asian gas at European prices.
"It’s not very profitable, but a contract is a contract and [Gazprom] will have to comply even at the expense of production," he said.
Gazprom: More needed to help Ukraine
Published: March 24, 2009 at 10:13 AM
MOSCOW, March 24 (UPI) -- Upgrades to the Ukrainian gas transit system may cost five times as much as European ministers anticipate, the deputy chief of Russian gas giant Gazprom said.
Ukrainian officials agreed to the economic demands of Europe in exchange for billions in aid to upgrade its crumbling gas transit system.
The European Commission said the cost for upgrades to the Ukrainian gas pipeline network would be around $3.4 billion.
Gazprom Deputy Chairman Valery Golubev said from Brussels on Monday following the Ukrainian decision that Ukraine needed about $16 billion to effectively overhaul its gas pipelines, RIA Novosti reports.
"Three billion dollars is just the initial figure," he said.
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
Related searches
- 10 facts about russia s history
- facts about russia for kids
- videos about russia for kids
- learn about russia for kids
- map of russia for kids
- russia kids learning tube
- russia for kids printables
- information about russia for kids
- russia and central asia map
- german soldiers in russia ww2
- china and russia warn us
- iran china russia news