Russia



Russia 080508

Basic Political Developments

• Russian parliament approves Putin as prime minister

• Ex-President sees taming inflation as priority

• RF reserves right to bring more peacekeepers to conflict zone

• Russian military threatens to boost Georgia force

• Russia might use military force against Georgia

• Russia reported to join economic sanctions on Iran

• Nuclear industry hails Russia-U.S. pact

• Bush looks forward to 'good relationship' with Medvedev

• Merkel seeks to keep cooperating with Putin in his new capacity

• Medvedev to visit Kazakhstan, China in late May

• Chinese foreign minister to visit Russia on May 14-16

• Medvedev to continue strategic partnership with China

• New London Mayor Told to Lose Russia Barbs

• Internet opens window on WW2 victims

• Russia sends humanitarian aid to cyclone-hit Myanmar

• Kosovo Serbs receive Russian humanitarian aid

• Russian police kill militant planning VE Day attack in N.Caucasus

• Federal university network to be established in Russia - decree

• Russian democracy watchdog opens

• State Duma to allow 40,000 English soccer fans to enter Russia

National Economic Trends

• Is it time to free the rouble?

• Russian international reserves up $4.4 bln in week

• Russian monetary base up $102.9 mln in week to $175.4 bln

• Russian indices lose footing on profit taking

• Russian Stocks Are Cheapest in Europe on Inflation, Oil Taxes

Business, Energy or Environmental regulations or discussions

• State energy firm Naftogaz Ukrainy said Wednesday that it was seeking a 15-year contract from Gazprom that would fix gas import price increases for the next five years.

• Gazprom, Lukoil, Mobile TeleSystems: Russian Equity Preview

• Prosecutors accuse subsoil agency of malpractices

• Severstal buys US facility from ArcelorMittal

• EBRD buys OGK-5 stake from Enel, controls 5.2%

• Russian chemical firm targets 5% global share

Activity in the Oil and Gas sector (including regulatory)

• Ukraine wants 5-year transition period for Russian gas price

• Russia, Kazakhstan agree to double pipeline capacity by 2012

• Caspian Pipe to Be Expanded by 2012

• Octane-Based Excise Taxes on Gasoline Slammed

• New Claims In Rosneft Power Case

Gazprom

• Gazprom to get license for Sakhalin-III block without tender

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Full Text Articles

Basic Political Developments

Russian parliament approves Putin as prime minister



Russia's parliament has overwhelmingly voted to make Vladimir Putin the prime minister.

Putin's confirmation in the State Duma comes a day after he handed the presidency to his protege Dmitry Medvedev.

Thursday's 392-56 vote caps months of maneuvering by the popular leader to maintain influence after stepping down from the presidency due to term limits.

Medvedev nominated Putin shortly after he was sworn in Wednesday. Confirmation was certain because Putin's United Russia party holds more than two-thirds of the Duma's seats.

Russia's president formally has more power than the prime minister, but Putin's unprecedented move has left Russians wondering who will really be in the driver's seat.

Ex-President sees taming inflation as priority



      RBC, 08.05.2008, Moscow 12:44:18.The new government will regard curbing inflation as its priority task, Russia's ex-President and candidate for Prime Minister Vladimir Putin, told the State Duma today. According to Putin, inflation stood at 11.9 percent in 2007 for the country as a whole, and at 14.5 percent for low-income people. Within a few years to come, the government is poised to achieve a one-digit inflation rate. "We will be paying close attention to all aspects of the financial policy, primarily measures to quash inflation," Putin added.

      The ex-President pointed to Russia's growing economic potential and impressive financial reserves as the basis that would enable the country to weather global economic instability.

Russia to outstrip UK by GDP at purchasing power parity

Russia can outstrip Great Britain in terms of GDP at purchasing power parity as early as in 2008, former Russian President Vladimir Putin told a State Duma session, at which his nomination for Prime Minister is being considered. He added that this indicator in Russia already exceeded $2 trillion, while in terms of GDP Russia was seventh in the world. Commenting on prospects of Russia's GDP growth, Putin said the country was already in a position to take a further step upwards this year.

      The PM candidate also indicated that Russia was able to and should within the next 10-15 years become one of the world leaders by household incomes and social security, life expectancy and housing.

|RF reserves right to bring more peacekeepers to conflict zone |

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|08.05.2008, 10.44 |

|MOSCOW, May 8 (Itar-Tass) - The Russian Defence Ministry reserves the right to increase once again the number of peacekeepers in|

|the zone of the Georgian-Abkhazian conflict, sources from the ministry’s department for information and public relations told |

|Tass on Thursday. |

|There are currently about 2,500 military in the conflict zone after a battalion tactical group has been brought in. However, in |

|case of a further escalation of the situation, their number can be increased to 3,000 people, the sources said. |

|“Before the arrival of additional units, the strength of the CIS Collective Peacekeeping Force in the zone of the |

|Georgian-Abkhazian conflict was 1,997 people,” the sources said. Now, there are 2,542 peacekeepers in the conflict zone, they |

|specified. |

|The sources stressed that this is not at variance with the decision “On the use of the Collective Peacekeeping Force in the zone|

|of the Georgian-Abkhazian conflict,” which came into effect on August 22, 1994, and fixed that 2,500 to 3,000 peacekeepers could|

|be deployed in the area. |

Russian military threatens to boost Georgia force



MOSCOW (Reuters)

Russia may further increase troop numbers in the Georgian breakaway region of Abkhazia if Tbilisi builds up its forces near the conflict zone, the Russian defense ministry said on Thursday.

A Georgian government minister said this week Abkhazia was "very close" to war following Russia's announcement it was sending in hundreds of extra peacekeeping troops to counter what it called Tbilisi's plans for an attack.

Georgia's pro-Western government denied any plans to attack and its allies in NATO, the European Union and the United States said Moscow's actions could stoke tension.

The defense ministry said after the reinforcement Russia had 2,542 troops in Abkhazia. The maximum permitted under a 1994 ceasefire agreement is 3,000.

"Further steps by Georgia's security ministries to build up troops in the conflict zone can only lead to ... commensurate action from the Russian side to bring the peacekeeping contingent to the maximum authorized strength," the defense ministry said.

"All this is done for the sake of - preserving peace, preventing bloodshed," the statement said.

Any further escalation in Russian troop numbers is likely to anger Tbilisi, which accuses the Russian peacekeepers of siding with the separatists.

The U.S. weighed in on the side of Georgia on Wednesday.

"Obviously we're very concerned what Russia is doing in Georgia in a series of actions which we have labeled and said are provocative," White House national security adviser Stephen Hadley told reporters during a briefing about U.S. President George W. Bush's forthcoming Middle East trip.

"We think Russia needs to back down from those items," he said.

Georgia says Russia is carrying out a creeping annexation of Abkhazia, which is internationally recognized as part of Georgia but has run its own affairs with Moscow's support since a separatist war in the 1990s.

Tensions in the region increased this year after Moscow established closer ties with the separatists and Tbilisi accused a Russian air force MiG-29 fighter jet of shooting down one of its spy drones over Abkhazia. Moscow denied involvement.

Russia might use military force against Georgia

Kommersant



Russia's Defense Ministry yesterday warned that it would not allow Georgian aircraft to fly over Abkhazia. The Russian Airborne Force has said its paratroopers, who have been dispatched to the republic to reinforce the peacekeeping group there, have been instructed to "react toughly to any possible aggression by Georgian forces."

Lieutenant General Vladimir Shamanov, head of the Russian Armed Forces' main department for military training and service, said: "In the past, Georgia claimed it was not its unmanned aerial vehicles [that overflew Abkhazia]. Now it says that its reconnaissance vehicles will continue to make flights over the conflict zone."

The general added that the command staff of the Russian Defense Ministry is monitoring the situation in the conflict zone and "taking the necessary measures."

More than 400 Russian paratroopers have been dispatched to the conflict zone to reinforce the peacekeeping group in Abkhazia. They have about 30 BMD-2 airborne combat vehicles, as well as artillery guns and air defense systems, including the ZSU-23-2 towed anti-aircraft systems.

A source in the headquarters of the Airborne Force said on condition of anonymity: "The boys have not gone there for the sun and the sea. They have been set the goal of reacting to any acts of aggression by the Georgian forces, and taking adequate and tough measures to repel any attempts to use force against Russian peacekeepers and Russian citizens in Abkhazia."

These harsh statements were made after the Russian Foreign Ministry rejected the Abkhaz authorities' proposal to hand over military control of the republic's territory to Russia to ensure its security.

However, Russian Foreign Minister Sergei Lavrov commented on the initiative of his Abkhaz colleague, Sergei Shamba, by saying that "No proposals have been made on this. I do not think the possibility is being discussed."

Sources in the ministry said the Russian military would closely monitor the situation in Abkhazia at least until May 21, when the parliamentary campaign ends in Georgia.

"We expect tensions to last until the second half of May," said a source in the Foreign Ministry. "This is why the peacekeeping group has been increased to 2,500 and can be further reinforced to 3,000, if necessary. We must prevent a potential Georgian attack against Abkhazia."

Russia reported to join economic sanctions on Iran



MOSCOW (Reuters) - Russia will join economic sanctions against Iran, Interfax news agency quoted a decree from President Dmitry Medvedev as saying on Thursday.

It was unclear from the report which sanctions the decree referred to. A Kremlin spokesman refused immediate comment.

Nuclear industry hails Russia-U.S. pact



A new pact with the United States has been hailed by the head of Russia’s state nuclear corporation, who says it opens huge possibilities for trade. The nuclear pact will allow commercial deals on civilian projects without the express consent of either government.

“Before we had this agreement nothing that has anything to do with nuclear technologies could cross the borders of our two countries,” said Sergey Kirienko, General Director of Russia’s state nuclear corporation Rosatom.

“But this document opens wide opportunity for co-operation on U.S. and Russian soil and even in third party states,” he noted.

 The deal's not passed yet – it ran into immediate trouble on Capitol Hill where two senators said they would try to block it as it could hurt efforts to stop Iran gaining nuclear weapons.

But the Bush administration insists Russia and the U.S. are thinking alike when it comes to nuclear issues, as William Burns, U.S. ambassador to Russia, recently stated.

“The U.S. and Russia were once nuclear rivals. Today, we are nuclear partners with unique capabilities and unique responsibilities for global nuclear leadership,” Burns said.

Bush looks forward to 'good relationship' with Medvedev



WASHINGTON, MAY 8 (RIA Novosti) - U.S. President George Bush expects to have a "good relationship" with new Russian President Dmitry Medvedev, Bush's national security advisor has said.

"The president expects to have a good relationship with President Medvedev, and will talk about areas where we have common interest and will talk very plainly about areas in which we disagree," Stephen Hadley told reporters on Wednesday.

"We expect continuity in Russian foreign policy. That means there will be areas where we agree and there are going to be areas where we disagree," he added.

Medvedev was sworn in as Russian president on Wednesday in a glittering ceremony in Moscow. Shortly after becoming Russia's new head of state, the new Russian leader nominated his predecessor and mentor, Vladimir Putin, as prime minister.

Bush and Medvedev met last month in Russia's Black Sea resort of Sochi. They are expected to renew their acquaintance in July at a meeting of the Group of Eight industrialized nations in Japan.

Areas of disagreement between Moscow and Washington include U.S. plans for a missile shield in Central Europe, NATO expansion, Kosovo's unilateral declaration of independence from Serbia, and the issue of Georgia's breakaway republics of Abkhazia and South Ossetia.

On the last issue, Hadley said, "Obviously we're very concerned what Russia is doing in Georgia in a series of actions which we have labeled and said are provocative. We think Russia needs to back down."

Tensions between Moscow and Tbilisi have escalated rapidly since Putin called for closer ties between Moscow and the breakaway Georgian republics in mid-April. Moscow has also boosted the number of Russian troops in the region in response to what it says are Georgian plans for an invasion of Abkhazia.

White House spokeswoman Dana Perino said that Bush "looks forward" to working with Medvedev.

However, Bush is due to leave office in January 2009, and John McCain, the Republican candidate for the November U.S. presidential elections has said that he would favor a harsher approach to Moscow, including expelling Russia from the G8.

After Medvedev's inauguration, McCain, 71, issued a statement that began, "I sincerely hope the beginning of the Medvedev presidency will also be the beginning of a new era for Russia and for U.S.-Russian relations."

The tone of the statement quickly turned critical, however, and went on to say that, "I hope President Medvedev will soon begin restoring and strengthening the institutions of democracy, including a free press and the rights of a vibrant Russian political opposition to express its views and run for office."

McCain was also critical on the Georgia-Abkhazia issue, stating that he was looking to Medvedev to "take steps to ease tensions with Georgia by reversing recently announced measures that undermine Georgia's internationally-recognized sovereignty."

|Merkel seeks to keep cooperating with Putin in his new capacity |

| |

|FRANKFURT, May 8 (Itar-Tass) - German Chancellor Angela Merkel has wished Russia’s new President Dmitry Medvedev good luck and |

|successful work and expressed a bid to keep closely cooperating with Vladimir Putin in his new capacity as Prime Minister. |

|In an interview with the newspaper Passauer Neue Presse, the chancellor said she enjoyed “very constructive” relations with |

|Vladimir Putin. “I value our cooperation. We both set a high value on our strategic partnership,” she said in the interview. |

|“We shall keep cooperating in his new capacity as Prime Minister,” Merkel stressed. She also emphasized that she was looking |

|forward to future cooperation with Dmitry Medvedev. |

Medvedev to visit Kazakhstan, China in late May

Chinese foreign minister to visit Russia on May 14-16

Medvedev to continue strategic partnership with China



By Zhang Haizhou (China Daily)

Updated: 2008-05-08 06:44

With Dmitry Medvedev sworn in as Russia's president on Wednesday, all eyes will be on how the 42-year-old leads the Kremlin.

But what is likely to remain is his predecessor Vladimir Putin's grand foreign policy strategy in the next four years, including Moscow's stance toward China, Chinese analysts have said.

Like Putin, Medvedev will prioritize Moscow's ties with Beijing - the new Russian leader said recently that China would be among the destinations of his first state visit.

"As I promised on the night of the (presidential) election, I will first go to Kazakhstan And from there to China. This will be my first international journey (as president)," Medvedev said in an interview with Russian weekly Argumenty i Fakty on April 29.

Medvedev is giving priority to China in Russia's foreign relations with major powers," Professor Xu Tao of the China Institute of Contemporary International Relations told China Daily.

"It also means that Medvedev will continue the foreign policy course charted by Mr Putin," he said.

The two countries established a strategic partnership during the Putin administration in 2001.

Medvedev has long been involved in promoting this partnership during the Putin administration and his tenure will bring more confidence to the future of bilateral ties, he said.

"Putin initiated the grand strategy, that Russia should enjoy a sound relationship with China. But a noteworthy point is that Medvedev was the one who did the concrete work to implement Putin's strategy," Xu said.

As the new president comes to the fore, the changing role of Putin is also being watched closely - he was nominated as Russia's new prime minister soon after Medvedev's inauguration ceremony.

Many have questioned the Medvedev-Putin partnership, on who would be the real leader.

The New York Times said "there was no doubt that Medvedev was taking charge of a portfolio and a position more difficult than the celebrations will suggest".

The Independent newspaper also questioned Medvedev's power. "Putin is expected to continue wielding enormous power in an expanded prime ministerial role," the London-based paper said.

The reports reflected the West's fear of the uncertainty of Russia's future as the country grows in strength, Chinese analysts have said.

"Russia is much stronger than it was eight years ago. The behavior of the country is closely related to the interest of the West as Moscow is on a much better position in dealing with the two most important problems - food and oil - than the West," Professor Xia Yishan of the China Institute of International Studies was quoted as saying by the Global Times, a Beijing-based p

New London Mayor Told to Lose Russia Barbs



08 May 2008By Max Delany / Staff Writer

His name may be Boris and he might claim to be descended from a slave born in southern Russia, but that doesn't necessarily mean that Boris Johnson, who was elected the new Mayor of London last week, will do more to boost London's Russian links than his predecessor, Ken Livingstone.

As London's Russian-speaking community has soared to over 200,000, high-profile initiatives spearheaded by Livingstone and his Moscow counterpart, Yury Luzhkov, have sought to bolster ties between the two capitals.

Now every Jan 14 — Old Russian New Year's — up to 100,000 revelers flood London's iconic Trafalgar Square to watch Russian pop stars and army choirs celebrate the Russian Winter Festival, while billions of dollars of investment flow between the two cities.

But since the fatal 2006 poisoning of former FSB agent Alexander Litvinenko in central London, ties between the cities have been affected by the strained relations between their national governments.

British authorities are demanding the extradition of former security officer Andrei Lugovoi on charges of murdering Litvinenko, while Russian officials point to the refusal to hand over London residents Boris Berezovsky and Akhmed Zakayev, who have both been granted asylum in Britain.

As part of the fallout from the dispute, senior Russian officials stayed away from last year's Russian Economic Forum in London, raising doubts about future Russian participation in the biggest such gathering for Russian and British business leaders. Livingstone has been a regular speaker at the forum.

But Johnson, regarded in the opposition Conservative Party as something of a loose cannon, could yet upset things. Known for his striking mop of unruly blond hair, upper class background and susceptibility to verbal faux pas, including alleged derogatory comments about people as far afield as Liverpool and Papua New Guinea, the new London mayor has not shied away from attacking Russia and the Kremlin.

In a May 2007 column for right-wing British newspaper The Daily Telegraph, Johnson expressed outrage at the "horrific murder" of Litvinenko, who had been granted British citizenship.

In the article Johnson portrayed Moscow as a place where people can be assassinated "in coffee lounges, just because they have been mildly disobliging to the regime" and lambasted the then-Russian president, writing: "Don't irritate Mr. Putin … or your children could find polonium-210 on their cornflakes."

The conclusion to Johnson's literary broadside, however, was mellower. "With 200,000 Russians in London and oil oligarchs owning our football clubs, and with Russian voices regularly audible on the Tube this is not going to be a new Cold War," he wrote.

"I think that this view is an exaggeration of what things are really like in Moscow," said Alexander Pogorelov, a spokesman for Moscow city government's foreign economic relations department, in a reaction to Johnson's article.

"We hope that Boris Johnson will come to Moscow soon … and see with his own eyes what a vibrant and fast-developing city Moscow really is," Pogorelov said.

A spokeswoman for the strategy department at the London Mayor's Office said Wednesday that it was too soon to say definitively what Johnson's policy toward Moscow would be.

Livingstone and Luzhkov have been working together closely as members of the informal M4 group of Europe's most influential mayors, which Luzhkov set up, Pogorelov said.

"Moscow and London are two major cities that have problems in common and need to work together to share [our] experience and solve them," he said. In particular, Moscow could learn from London's radical moves to cut city-center traffic, he said.

"We don't only think relations with London can get even better — they must get even better," Pogorelov said.

Luzhkov's personal relations with Livingstone suffered after the former London Mayor criticized him for banning gay pride marches here.

Livingstone last year sent a letter to Luzhkov, who has called homosexuality "satanic," urging him to lift the ban after a number of prominent British gay rights campaigners were beaten up in Moscow during an unsanctioned protest.

After saying Moscow's relations with London would carry on being "dazzling," a spokesman for the Moscow city government asked, "Is [Johnson] as friendly with the gays as the former mayor?"

The answer is that Luzhkov may find Johnson's views more in keeping with his own. Johnson has previously referred to gay marriage as "a ludicrous parody of the real thing."

Johnson's relationship with Luzhkov may, however, be relatively short-lived. Speculation has swirled in Moscow over the past few months that Luzhkov, 71, one of the few high-profile politicians to hold on to his job throughout the Yeltsin and Putin eras, could soon step down.

During his campaign for mayor, Eton-educated Johnson repeatedly highlighted his multiethnic background to deflect criticism away from the claim that he is out of touch with the average Londoner. Among his ancestors Johnson claims a minister in the government of the Ottoman Empire and a Circassian slave from southern Russia.

At a time when London and Moscow are looking to mend bridges, however, Johnson's record for offensiveness the could come back to haunt him.

He has variously referred to black Africans as "flag-waving pickaninnies," apologized to inhabitants of Papua New Guinea after saying they engaged in "cannibalism and chief-killing" and even had to beg forgiveness from the people of Liverpool after accusing them of "wallowing" in their "victim status."

Whether Moscow ends up as the next stop on what Johnson has ruefully termed his "global itinerary of apology," only time will tell.

Internet opens window on WW2 victims



A database is being set up to help Russians discover the fate of their family members after WW2. Information on thousands of those who died during WW2 – their military ranks, dates and causes of death, and burial places – is now free on the Internet.

While exact figures vary, at least 30 million Russians died in WW2 – the largest number of casualties from any nation.

A lot of data about the war dead was lost or became classified and many people still don’t know what happened to their relatives.

“Before this database existed, the archive would receive up to a million enquiries a year. But an archive's job is to store data, not to do research. So they could answer the simple queries, but the more complicated ones yielded no results. Now, all this has changed, though our work is never complete,” Andrey Taranov, Deputy Chief of the War Memorial Centre of the Russian Army, said.

The records collected in the Unified Database ‘Memorial’ are not new, but for decades it was difficult or impossible to gain access to them. It took thousands of hours and more than $ US 10 million to develop this unique project.

Now information is free access on the Internet, and relatives can see scanned copies of the documents from archives containing information about their loved ones.

Russia sends humanitarian aid to cyclone-hit Myanmar



MOSCOW, May 8 (RIA Novosti) - Two Russian Il-76 airplanes are to deliver 60 metric tons of humanitarian aid to Myanmar on Thursday, as the Southeast Asian country attempts to recover from a cyclone that has left some 100,000 people dead and thousands homeless, an emergencies spokesperson said.

Cyclone Nargis hit Myanmar on Saturday, devastating large parts of the country. The death toll is likely to rise further as rescue workers struggle to reach remote settlements, while the nationwide number of displaced people could reach millions.

"The planes will carry tents, blankets, generators, medical supplies, including disinfectants and bandages, as well as food," the spokesperson said.

The humanitarian aid will be delivered to Myanmar's largest city of Yangon.

A state of emergency has been introduced in the five worst-hit areas - the Irrawaddy delta, the cities of Yangon and Pegu, and the states of Karen and Mon. Most of the deaths came in the low-lying Irrawaddy delta region.

Kosovo Serbs receive Russian humanitarian aid



Serbs in one of Kosovo's regions have started receiving Russian aid which was sent at the request of the Serbian government. Thousands of people in the area live on the brink of poverty, and it seems the situation hasn’t improved since Kosovo declared independence in February.

Since the beginning of last month, 140 tonnes of humanitarian aid have arrived in Kosovo from Moscow.  The canned food, medicine and medical equipment are distributed by the local Red Cross to Serbian refugee camps.

They’ve been cut off from Belgrade since Kosovo’s unilateral declaration of independence, which some argue has made the humanitarian situation worse.

At the request of Belgrade, Moscow is doing its best to help - but the unstable political situation and growing unemployment is making things difficult.

On Sunday, Serbs go the polls in what many are describing as a watershed election. One of the issues they’ll be voting on is Kosovo. That’s why almost all the Serbs who live in Kosovo plan to have their say.

However, while they’ll be voting for political change, very few expect the humanitarian situation on the ground to change any time soon.

Russian police kill militant planning VE Day attack in N.Caucasus



NAZRAN, May 8 (RIA Novosti) - Russian police killed early on Thursday a militant who was reported to have been planning an attack during the upcoming May 9 Victory Day celebrations in the North Caucasus republic of Ingushetia, a local police spokesman said.

The militant was killed in a shootout in the Kantishevo village near the republic's largest city of Nazran.

Ingushetia has seen a sharp increase in attacks by militants on police and members of the armed forces of late.

A Victory Day bomb in neighboring Chechnya killed the republic's pro-Moscow president, Akhmad Kadyrov, in 2004. Around 15 other people died in the attack.

Victory Day marks the final surrender by Nazi Germany to the U.S.S.R. in WWII, often referred to as the Great Patriotic War in Russia and other states in the former Soviet Union.

Federal university network to be established in Russia - decree



MOSCOW, May 7 (RIA Novosti) - Russia's newly sworn-in President Dmitry Medvedev has signed a decree to establish a network of federal universities aimed at modernizing the education system, the Kremlin said on Wednesday.

The decree will "contribute to the systemic modernization of higher professional education on the basis of integrating science, education, production and training qualified personnel to provide for the long-term demands of an innovative economy."

The cabinet will develop and submit to the lower house of parliament a draft federal law in two months' time outlining the procedure for setting up the federal universities and their function, including regulatory and administration methods to integrate their educational and scientific-research activity.

Russia currently has the Southern and the Siberian federal universities, established through the reorganization of several local universities.

Russian democracy watchdog opens



A Russian think-tank aimed at offering a "fresh" perspective on international human rights and democracy is being set up in New York and Paris.

Natalya Narochnitskaya, from the Institute of Democracy and Co-operation, says that it will offer a view on human rights that "is not hostage to the political agenda of Western governments".

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She said: "American policy, under the flag of democracy and human rights, in actual fact is a Trotskyist permanent revolution which serves the aim of giving [political] mastery.

 "There is a double standard in that some countries are declared without sin or are surrounded by a wall of immunity.

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But if the issue is with Russia or [Moscow's former Soviet ally] Belarus then here you will have a full hue and cry."

Narochnitskaya said the institute was up and running and would move into its Paris premises in the next few weeks.  

'Imperfect' record

The initiative coincides with a growing frustration among senior Kremlin officials who believe Western governments are using human rights as a weapon to prevent Russia from reclaiming its place as a world power.

 Human rights groups and Western governments have alleged that Russian elections are not free and fair, that media freedom is being suppressed and opposition activists persecuted.

 Vladimir Putin, who has stepped down as Russia's president, but is staying on as prime minister, has acknowledged his country's record is imperfect but says no country is blameless.

 He has pointed to the treatment of detainees at the US-run Abu Ghraib detention centre in Iraq and Guantanamo Bay in Cuba, as well as what Moscow calls official discrimination against ethnic Russians living inside the European Union.

 But political observers noted a slightly different tone on the subject in Dimitry Medvedev's presidential inaugration address on Wednesday morning.

 Medvedev, who was hand-picked by Putin, said the development of "civil and economic freedom" would be the key issues covered during his term.

 Medvedev said he would aim to create "new and wide opportunities of self-fulfilment for citizens, citizens who are free and responsible both for their own success and the flourishing of the entire country".

 Highlighting his background as a lawyer, the president said that he would work to ensure that Russian laws are applied fairly.

 Kremlin approval

At an EU-Russia summit in Portugal in October last year, Putin said he wanted to set up a Russian human rights watchdog that would operate in Europe.

 Narochnitskaya said her project had no links to the government, though it was met with "a certain approval" in the Kremlin and it planned to apply for a government grant.

 She said that for now the institute had modest funding from a Russian company, which she declined to name.

 One of the institute's first projects was to publish a book which argues that bloodless revolutions in Georgia and Ukraine which installed pro-Western leaders were plotted and financed by the West.

 Narochnitskaya said another project in development was to "monitor the monitors" who pass judgment on the fairness of elections.

 Moscow has accused monitors from European democracy watchdogs of having a political agenda.

 She said the institute also planned to send a fact-finding mission to Kosovo to assess if the rights of the Serb minority there are being respected.

 Russia backed its ally Belgrade in opposing independence for Kosovo.

State Duma to allow 40,000 English soccer fans to enter Russia

Kommersant



On Thursday, the State Duma, the lower house of parliament, will pass amendments to the country's exit-entry law and will allow the president to introduce simplified entry regulations for foreign citizens.

The rush is motivated by a desire to help the 40,000 English soccer fans coming to Moscow for the Champions League final.

The bill, stipulating exit-entry regulations in line with federal legislation, international agreements and presidential decrees, was submitted to the Duma in the evening of May 5.

On Wednesday, the Duma council was expected to discuss the upcoming May 8 plenary meeting that will approve Vladimir Putin's candidacy for prime minister.

Mikhail Grishankov, chairman of the Duma's security committee and the bill's co-author, said the house would pass the bill's three versions on May 8.

On Tuesday, the Federation Council, the upper house of parliament, decided to approve the amendments on May 12.

The president will therefore have time to sign and publish the new law and the simplified entry regulations decree by May 21.

Boris Nadezhdin, member of the SPS (Union of Right Forces) federal political council and law chair head at the Moscow Engineering and Physical Institute, said this law making trend had manifested itself in the last five years.

He said the Duma opposition had tried to pass detailed bills in the past, and that the lower house was now leaving all the details to the president or the government.

According to Nadezhdin, this matches Putin's "manual-control" concept based on practicality, rather than regulations.

The Russian Embassy in London has already notified English fans that they can enter Moscow on May 17-25 without a visa, and that they need English passports, match tickets and Russian migration cards.

The Federal Security Service's Border Service said it was pointless to comment on the bill's mechanism pending its enactment because nobody wanted to lose their jobs.

National Economic Trends

Is it time to free the rouble?



The appreciating rouble is an attractive asset for international investors. However to become a real reserve currency the rouble has to break free from Central Bank control. President Medvedev previously voiced his support for the move, but experts doubt the time for it has yet come.

The rouble is becoming more attractive to investors, both Russian and foreign. The dollar remains weak and analysts suspect the euro's bull run may be nearing an end.

The rouble has a managed exchange rate. The Central Bank of Russia allows the rouble to gain only gradually against the dollar-euro currency basket and it has even intervened to hold the rouble down.

“I think the rouble’s stability itself is a good symbol of how strong the Russian economy is,” believes Matthew Vogel, managing director at Barclays Capital.

However, the Central Bank of Russia is against any rapid appreciation in the currency - at least for the moment.

“What we know for sure is that from the macroeconomic view, rouble appreciation is quite reasonable now, mainly to knock off inflation - especially as the moment is favourable regarding capital inflow into Russia. But Russia's Central Bank is against this policy,” explains Nikolay Kashcheev, VTB's head of treasury research.

President Medvedev has talked about freeing the rouble from Central Bank control. A free float would be one step on the way to making the rouble a reserve currency.

But analysts say that's a long way off. A stronger rouble would attract speculative capital, creating asset bubbles and destabilising the economy.

For now, analysts say, the most likely policy is for the Central Bank to let the rouble appreciate, but only in the order of, say 2 per cent, over the next six months.

Russian international reserves up $4.4 bln in week



MOSCOW, May 8 (RIA Novosti) - Russia's gold and foreign currency reserves increased by $4.4 billion, to $533.9 billion, in the week of April 25 - May 5, the Central Bank of Russia said Thursday.

Russian monetary base up $102.9 mln in week to $175.4 bln



MOSCOW, May 8 (RIA Novosti) - Russia's Central Bank said Thursday the country's narrowly defined money supply (M1) was 4 trillion 165 billion rubles ($175.4 billion at the current exchange rate) as of May 4, up 2.4 billion rubles ($102.9 million) in the week since April 28.

According to the Bank, M1 money supply consists of the currency issued by the bank, including cash in vaults of credit institutions, and required reserves balances on ruble deposits with the Central Bank.

Russian indices lose footing on profit taking



      RBC, 08.05.2008, Moscow 11:34:21.The Russian stock market was hit by profit taking at the opening today after a day of solid growth on Wednesday. On May 7, the rise in most highly liquid securities pushed the RTS index 2.2 percent higher to break beyond a resistance level of 2,200 points, while the MICEX index climbed 2.6 percent to 1,739.26 points. Most stocks opened lower today, with Gazprom giving back 0.5 percent of yesterday's impressive 4 percent gain, VTB dropping 2 percent, and Sberbank retreating 1 percent. The RTS index slid below 2,200 points within the first few minutes of trade.

      Experts attribute the correction to profit taking after an upbeat trading day and ahead of a long Victory Day weekend in Russia. The advance is likely to continue next week, driven by rising oil prices, although news from western exchanges could balance it out.

Russian Stocks Are Cheapest in Europe on Inflation, Oil Taxes



By William Mauldin

May 8 (Bloomberg) -- Russia's stock market is telling Dmitry Medvedev that investors are losing confidence as inflation accelerates and taxes curb profits at the nation's biggest oil producers.

Russia's RTS Index is off to its worst start to a year since 1998, when the government's $40 billion default sent equities around the world tumbling. The 50 companies in the RTS, dominated by energy producers, trade at an average 9.52 times estimated earnings, the lowest among Europe's 10 biggest stock markets and a 29 percent discount to the MSCI Emerging Markets Index, according to data compiled by Bloomberg.

The combination of the fastest inflation in five years and a 45 percent increase in oil taxes spurred the benchmark RTS index's 3.9 percent decline this year. While former President Vladimir Putin presided over eight years of economic growth and a 14-fold increase in the RTS, Medvedev, his handpicked successor, inherits a stock market that's performing worse than Brazil, Mexico, Taiwan, and South Africa.

``For the new Medvedev-Putin administration, inflation is the biggest challenge,'' said Ian Hague, founding partner at Firebird Management LLC in New York, which has $1.5 billion of its $3.5 billion in emerging-market assets in Russian equities. ``And those who think that by buying Russian oil stocks they're going to capture the oil windfall are kidding themselves.''

The index rose 2.2 percent yesterday as Medvedev, 42, took over the presidency.

Cheaper Than U.K.

The RTS trades at a 17 percent discount to the U.K.'s FTSE 100 Index, which is valued at 11.5 times estimated profit. France's CAC 40 trades at 11.3 times and Germany's DAX at 11.8.

OAO Rosneft, Russia's largest oil producer, has underperformed the MSCI Emerging Markets Energy Index by 41 percentage points since it went public in 2006. The Moscow-based company trades at 11.8 times profit, compared with a ratio of 13.3 for Beijing-based Cnooc Ltd., China's largest offshore oil producer.

Rosneft has been hurt by inflation because of rising equipment, infrastructure and wage costs, Peter O'Brien, the company's chief financial officer, said in an interview last month in Moscow.

OAO Lukoil, Russia's second-biggest oil producer, trades at 7.32 times estimated profits after underperforming the MSCI Emerging Markets Energy Index by 41 percentage points in the past two years. The Moscow-based company is valued at a 34 percent discount to the 11.1 price-to-estimated earnings ratio for MSCI's gauge of oil and gas producers in developing markets.

In addition to inflation-related expenses for energy companies, the export duty on oil has risen 45 percent this year and will be set at $398.10 a metric ton, or about $54 a barrel, on June 1.

Russia's Third President

Medvedev pledged yesterday to fight inflation as he was sworn in as Russia's third president. The government may formulate a plan in two months for tax cuts on oil companies to overcome production ``stagnation,'' Energy and Industry Minister Viktor Khristenko said in an interview in April.

Societe Generale Asset Management bought Lukoil and Rosneft this year because they may benefit from tax reductions and are cheap. Goldman Sachs Group Inc. raised Lukoil to ``buy'' this week because of the possibility that oil prices will rise to between $150 and $200 a barrel within two years.

`At the Beginning'

A tax reduction on oil is ``more likely to happen earlier rather than later,'' said Nerea Heras, who managed the $280 million eastern Europe fund at Societe Generale in London before leaving in April for Madrid to help oversee Banco Santander SA investments in eastern Europe and other emerging markets. ``You have to do it at the beginning of a new term.''

Medvedev may increase taxes on other commodity producers to compensate for lower oil revenue. That probably would mean earnings at Moscow-based OAO GMK Norilsk Nickel, Berezniki, Russia-based OAO Uralkali and Solikamsk, Ural Mountains-based OAO Silvinit would suffer, according to Alexei Zabotkin, chief investment officer at United Capital Partners in Moscow.

``There will be redistribution of taxation in the commodity sector away from oil and toward other resources,'' said Zabotkin, whose firm manages $1.5 billion in Russian stocks and private equity.

Norilsk, Russia's biggest mining company and the supplier of everything from nickel and palladium to platinum and copper, is valued at 6.79 times estimated earnings, compared with 12.7 times for the MSCI Emerging Markets Materials Index.

Soybeans, Alfalfa

Uralkali, the Russian company developing the world's second-largest deposit of potash -- used to fertilize corn, wheat, soybeans and alfalfa -- and Silvinit, Russia's biggest potash producer, are trading at more expensive valuations as global shortages cause food prices to soar. Uralkali is valued at 25.5 times estimated profit, while Silvinit has a ratio of 53.4.

At the same time, OAO RusHydro, the world's second-biggest hydroelectric generator, may be ``impacted negatively'' as the government debates whether to let utilities raise domestic power prices at the risk of spurring inflation, Credit Suisse Group, Switzerland's second-largest bank, said in a note this week.

RusHydro, based in Moscow, trades at 13.1 times earnings, according to data compiled by Bloomberg, compared with 14.6 times earnings for the MSCI Emerging Markets Utilities Index.

Business, Energy or Environmental regulations or discussions

State energy firm Naftogaz Ukrainy said Wednesday that it was seeking a 15-year contract from Gazprom that would fix gas import price increases for the next five years. (Reuters)



Gazprom, Lukoil, Mobile TeleSystems: Russian Equity Preview



By Lyubov Pronina

May 8 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses, and share prices are from the previous close.

Russia's Micex Index rose to the highest since Jan. 18, gaining 2.7 percent to 1,739.26 in Moscow. The dollar-denominated RTS Index increased 2.2 percent to 2,201.47, its biggest advance in almost two months.

OAO Gazprom Neft (SIBN RX): The oil arm of Russia's natural- gas monopoly OAO Gazprom plans to borrow $1 billion in a syndicated loan, Interfax reported, citing unidentified bankers. The loan is for three to five years, the Russian news agency said. The shares rose 0.2 percent to 146.56 rubles in Moscow.

OAO Lukoil (LKOH RX): Crude oil may reach $125 a barrel this week because of concern over a supply shortage before the peak U.S. summer driving season, Ghanem, who heads Libya's National Oil Corp., said by phone. Shares of Lukoil, Russia's second- biggest oil producer, rose 3.4 percent to 2239.11 rubles in Moscow.

OAO Mobile TeleSystems (MTSI RX): Russia's largest mobile- phone operator said it will boost a compensation program for 420 top- and mid-level managers. The company will offer 10.2 million phantom and actual American depositary receipts under a program that will run through 2011. Mobile TeleSystems rose 1.8 percent to 294.14 rubles in Moscow.

Prosecutors accuse subsoil agency of malpractices

Gazeta.ru



The Prosecutor General's Office has accused the Federal Subsoil Resources Agency, Rosnedra, of malpractices during the issuing of licenses. Analysts explain the conflict by the interference of Gazprom, which has an old score to settle with the agency.

Natural Resources Minister Yuri Trutnev and head of Rosnedra Alexander Ledovskikh have been advised to punish several senior officials at the agency. Trutnev promised to conduct his own inspection.

The conflict goes back several years. In late 2006, the Prosecutor General's Office warned the head of Rosnedra that violations during the issue and registration of licenses were not permissible.

Experts explain the current dispute by pressure put on Ledovskikh, above all by major companies.

Dmitry Abzalov, an expert with the Moscow-based Center for Current Politics, said: "Alexander Ledovskikh and Gazprom have been quarrelling for years. The head of Rosnedra wanted to consolidate gas service companies under his agency, but they were made subordinate to the gas monopoly. At the same time, the Prosecutor General's Office has close relations with Gazprom, and so it is most probably Gazprom that is trying to take a blow at Rosnedra."

Ledovskikh personally has nothing to fear, Abzalov said.

"Many attacks have been directed against him, none of them successfully. Ledovskikh is rumored to have contacts in the government, and so he has nothing to fear this time," the political analyst said.

According to Abzalov, the latest blow has been made to weaken the stance of Ledovskikh and his agency during the formation of a new government.

"Such attacks like the complaint by the Prosecutor General's Office are designed to torpedo Rosnedra projects in the government, and this goal will be most likely attained," Abzalov said. "People will be wary of projects proposed by an agency that has been accused of malpractices."

Severstal buys US facility from ArcelorMittal



      RBC, 08.05.2008, Moscow 11:58:14.Severstal has completed the acquisition of the US-based company Sparrows Point from ArcelorMittal, the Russian steelmaker said in a press statement. The deal has received all required approvals from the US authorities, including the Department of Justice and the Committee on Foreign Investment in the United States.

      As reported earlier, ArcelorMittal was forced to surrender the US-based facility due to monopoly charges. Sparrows Point's capacity amounts to 3.6m tonnes of steel a year. This acquisition opens up a strategic opportunity for Severstal to strengthen its foothold in the US. It is expected that the facility would interact with Severstal's other enterprises located in Dearborn (Michigan) and Columbus (Mississippi). In addition, the new acquisition located near Baltimore (Maryland) enables direct ocean transportation and is within easy reach of major road and rail communications in the US.

EBRD buys OGK-5 stake from Enel, controls 5.2%



MOSCOW, May 7 (RIA Novosti) - The European Bank for Reconstruction and Development (EBRD) bought a 4.1% stake in OGK-5 from a subsidiary of Italy's Enel on Wednesday and will now control 5.2% of the Russian wholesale generating company.

Enel Investment Holding B.V. (EIH, a wholly-owned Dutch subsidiary of Enel S.p.A.) will sell the minority stake to the EBRD, which bought a 1.1% stake in OGK-5 in November 2006, "for a consideration of about 175 million euros at the current euro/ruble exchange rate," Enel said on its website.

The EBRD said the purchase was one of its largest investments in a Russian power company.

After the deal, EIH will retain about 55.8% of OGK-5's share capital, "sufficient to ensure effective control over the company through the power to nominate the majority of the members of its board of directors," Enel said.

The parties also signed an agreement under which EIH will transfer to OGK-5 advanced international practices in environmental protection and introduce corporate governance principles to protect the rights of OGK-5's minority shareholders.

OGK-5 has four subsidiaries, and produces a total of 8,672MW of electricity. The Russian government holds a 26.43% stake in the company.

Russian chemical firm targets 5% global share



A Russian chemicals giant is aiming for a 5% share of the world production market of a resin best known for its use in laminates and plastics. EvroChem will pioneer the manufacture of melamine in partnership with the German company Lurgi – and believes it can bring costs down in Russia.

Russia's advantage is that natural gas is an essential part of melamine production. But so far it's been selling gas to Europe while countries like Austria and Poland produce melamine and sell it back to Russia.

EvroChem is ready to change that, cutting the price of the product from the current level of more than 3,000 dollars per tonne.

Melamine is a product with a huge number of uses - from some plastic wood and table tops, to fabrics, glues and household products. It’s also commonly used in flat-pack furniture.

 An upgraded plant will see EvroChem make melamine under licence from Casale of Switzerland. Production is tightly controlled, so the contract represents a coup for the Russians.

"Only a limited number of companies which hold a special licence can produce melamine," said EuroChem General Director, Dmitry Strezhnev. "We will buy the technology and manufacture this product ourselves. About one million tonnes of melamine are produced annually. After launching this project we aim to have about five per cent of the global market."

The alliance with Lurgi, which will equip the EvroChem plant, may bear fruit in other sectors.

"We are working with partners from Russia for bio-ethanol plants," said Lurgi Senior Vice-President, Ludolf Plass.

Russia seems to be entering a new phase of growth in its chemical and bio-ethanol industries.

And with its resources of land and minerals, experts say the country stands to become a leading competitor.

Activity in the Oil and Gas sector (including regulatory)

|Ukraine wants 5-year transition period for Russian gas price |

| |

|KIEV, May 8 (Itar-Tass) -- The government of Ukraine wants to sign 15-year gas supply contracts with Russia’s Gazprom and would |

|work to ensure a five-year transition period from the current gas price to the European level. |

|Naftogaz Ukrainy CEO Oleg Dubina told reporters on Wednesday the government instructed his company to conclude 15-year contracts|

|with Gazprom. |

|“We would like to have the European price for natural gas in five years, and during the transition period we want to agree on a |

|fixed indexation of the existing price of 179.5 dollars per thousand cubic meters,” he said. |

|“We anticipate a price growth, but I will say how big it may be only after the talks,” Dubina said, specifying two long-term |

|contracts – on gas supplies and transit to Europe – will be discussed. |

|He said his company had already drafted direct contracts with Gazprom that envisage no intermediaries. |

|The price of Russian gas for Ukraine rose to 179.5 dollars in 2008 from 130 in 2007 and 95 in 2006. The European transit tariff |

|upped from 1.6 to 1.7 dollars for 1000 cubic meters per 100 kilometers this year. |

Russia, Kazakhstan agree to double pipeline capacity by 2012



MOSCOW, May 7 (RIA Novosti) - Russia and Kazakhstan have agreed to double the capacity of the Caspian Pipeline Consortium (CPC) by 2012, the Russian Industry and Energy Ministry said on Wednesday.

The decision was agreed during a visit to the ex-Soviet republic by Industry and Energy Minister Viktor Khristenko on May 6 and 7.

"It [the expansion] should take place in two stages by 2012. As a result the pipeline's capacity will be increased from 32 million to 67 million metric tons of oil," the ministry said in a statement.

The parties also agreed to supply an extra 17 million metric tons of Kazakh oil through the Burgas-Alexandroupolis pipeline. The trans-Balkan oil pipeline, being built by Russia, Bulgaria, and Greece, will pump 35 million metric tons of oil a year (257.25 million bbl), a volume that could eventually be increased to 50 million metric tons (367.5 million bbl).

The Caspian Pipeline Consortium (CPC), designed to carry Kazakh and Russian crude to a terminal on the Black Sea, was commissioned in October 2001. Its capacity currently stands at around 30 million metric tons of oil a year.

Ten pumping stations, six oil tanks for 100,000 cubic meters each and another tanker facility will have to be built for the pipeline to reach its full capacity.

The two countries will hold expert consultations on the issue later in May. The feasibility study for the pipeline project expires in September 2008.

Russia's pipeline operator Transneft is a beneficial owner of a 24% stake in the CPC, and Kazakhstan holds 19%.

Caspian Pipe to Be Expanded by 2012



08 May 2008Bloomberg

Russia and Kazakhstan agreed to expand the Chevron-led Caspian Pipeline Consortium to carry as much as 67 million tons of oil by 2012, from 32 million tons currently, the Industry and Energy Ministry said in an e-mailed statement Thursday.

The countries "formed a unified position" on expanding the pipeline in two stages during meetings between Industry and Energy Minister Viktor Khristenko and his Kazakh counterpart, Sauat Mynbayev, in Astana the past two days, according to the statement.

Chevron is the largest corporate owner of the Caspian Pipeline Consortium with a 15 percent stake. Russia, the single largest shareholder in the project with 24 percent, has withheld approval for the link's expansion in a dispute over transportation prices. The government of Kazakhstan owns 19 percent.

Octane-Based Excise Taxes on Gasoline Slammed



08 May 2008Reuters

A government plan to differentiate gasoline excise taxes based on fuel quality will raise the tax burden for the country's oil companies, benefiting only a few firms owning sophisticated refineries, analysts said.

Troika Dialog brokerage said the Finance Ministry's proposal could raise the tax burden for the oil industry next year to $4.9 billion, or $260 million more than it would otherwise pay. By 2010, the industry may end up paying an extra $1 billion.

"The Finance Ministry seems either to be living in a dream world or is not supportive of the oil industry to propose such measures," Troika said in a research note.

The ministry has proposed reducing the excise tax on high-octane gasoline of Euro 4 and 5 standard by 12.6 percent, while increasing the tax by 7.5 percent on Euro 3 standard gasoline from 2010, Interfax reported Tuesday.

It said the ministry proposed raising the tax for gasoline with lower octane numbers of 92 and 80 by 7.5 percent and 46.8 percent, respectively, from 2009.

The current rates, introduced in January 2005, are $153 per a ton of high-octane gasoline and $112 per ton of low-octane gasoline.

"With current prices at the pump, we very much doubt that oil companies will be able (or allowed, for that matter) to pass the tax increase on to the end consumer, especially agricultural ones that use mainly low-octane gasoline," Troika said.

Analysts at Deutsche Bank and UniCredit said the measure, designed to stimulate the production of more value-added and environmentally friendly oil products, could be positive for companies with more sophisticated refineries.

"We expect the changes to have a positive effect on those companies which have already modernized their refineries, such as LUKoil, TNK-BP and Gazprom Neft," Deutsche Bank said in a research note.

"But other companies ... will have to make investments to improve the quality of refined products that they produce."

Alfa Bank said the suggested proposals, which are likely to have a negative short-term impact on oil firms, might be positive in the medium and long term.

New Claims In Rosneft Power Case



08 May 2008By Nadia Popova / Staff Writer

A Rosneft subsidiary filed new claims against TGK-11 in a Moscow court on Wednesday, saying the vote to create the utility was invalid because the shareholders' ballots were miscounted.

The claim came as a surprise after Anatoly Chubais, CEO of Unified Energy System, TGK-11's parent company, said last month that then-First Deputy Prime Minister Dmitry Medvedev had stepped in to mediate the dispute between the state-owned companies.

The fight revolves around the creation last year of TGK-11, one of western Siberia's largest electricity generators. Rosneft unit Neft-Aktiv filed a suit in February saying it did not receive a ballot for an August shareholders meeting in absentia, where Tomskenergo, in which it had a minority stake, was merged into TGK-11. The moved diluted Neft-Aktiv's stake. TGK-11 rejected the complaint, saying Neft-Aktiv received the documents in time.

On Wednesday, Neft-Aktiv lawyers said at a preliminary hearing in Moscow Arbitration Court that the vote was invalid because of procedural violations.

"The ballots were counted by one person, even though there had to be a commission of three, and the ballots were miscounted," head lawyer Dmitry Chernyakov said.

Chernyakov also said TGK-11 had violated its charter by not announcing the meeting in the Krasnoye Znamya newspaper. His team read all 11 newspapers published in the country under that name and found nothing, he said.

Instead, the notification was discovered in Tomsk newspaper Vykhodnoi, he said. It was buried between the horoscopes and the crossword puzzle.

TGK-11 lawyer Anna Kaflevskaya declined to comment on the claims, saying she had to read them more closely.

The next hearing will be May 30.

Dmitry Terekhov, a utilities analyst at the Metropol brokerage, said Wednesday that only a political decision would bring a quick resolution to the dispute.

"Medvedev didn't seem to have much time to deal with the case before his inauguration, but he may pay more attention to the dispute sometime soon," Terekhov said.

Gazprom

Gazprom to get license for Sakhalin-III block without tender

RBC Daily



Gazprom has succeeded in its efforts to get a license for strategic shelf deposits without a tender. At a meeting with the prime minister on May 6, 2008, the decision was taken to prepare documents for the issuance of a license for the Kirinsky block of the Sakhalin-III project, for which Gazprom has long competed with Rosneft, to the gas monopoly within a month.

The estimated resources of the Kirinsky block are 453 million metric tons of oil and 930 billion cubic meters of gas.

Officials from the ministries and departments concerned told RBC Daily that Rosneft had agreed with this decision. One of the officials explained that the decision on the license for this block could be taken only after Vladimir Putin signed the law on foreign investments in strategic sectors on May 6, in accordance with which only state-controlled companies can develop the shelf. It was decided that Gazprom should mostly deal with gas resources and Rosneft with oil resources.

A source close to the gas monopoly has confirmed that the license will go to Gazprom. The manager thinks that the government's decision is quite logical because the Kirinsky block has mostly gas resources. He indicated that the gas monopoly could start seismic exploration on the block this year in order to start gas deliveries from it in 2014. In his opinion, the company will be able to explore the shelf with the help of its subsidiaries, without any foreign help.

Extra money and shelf technology will surely come in handy, and there are more than enough foreign companies wishing to provide them. Earlier, some Japanese companies, India's ONGC, Korea's Kogas or KNOC, and China's Sinopec displayed an interest in the Kirinsky block. They were ready to assume geological and financial risks.

Valery Nesterov of the Troika Dialog investment company believes that Japanese companies have the greatest chance of becoming Gazprom's partners in the Sakhalin-II project. They are followed by India and China and then European companies, such as BP and Shell. U.S. companies ExxonMobil and Chevron are the "outsiders."

Mikhail Subbotin, head of the SRP-Expertiza consulting company, thinks that Gazprom could set up a consortium, such as in the Shtokman project, and attract several participants by selling them shares of the project company.

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