Russia - WikiLeaks



Russia 091215

Basic Political Developments

• ISNA: Iran: good news to be declared on Bushehr N-plant soon - Salehi rejected any obstruction by Russia on launching of Bushehr nuclear plant and said, "everything is being done well, now 2500 Russian experts are working inside the power plant and Iranians will receive good news about the facility soon."

• Itar-Tass: NATO chief to focus on Afghanistan, European security

• RIA: Dmitry Medvedev to talk energy with Vietnamese PM in Moscow

• Itar-Tass: RF, Vietnam PMs to discuss energy, banking projects Tue

• Nhan Dan: Vietnam-Russia Bank opens subsidiary in Russia [pic]

• Reuters: Russia reassures it will not swamp carbon markets

• RIA: Russia restores gas to Armenia after pipeline mined

• OfficialWire: U.S., Russia May Ink START Deal Soon

• Emportal.rs: Mesic, Putin talk South Stream pipeline project

• Focus: Croatia eyes South Stream share – commentaries in Russian press

• RIA: Austria interested in participating in South Stream project - Austria is interested in taking part in the South Stream gas pipeline project, the Austrian foreign minister said.

• RIA: Russia seeks early admission to WTO

• Itar-Tass: Abkhazia, Nauru sign agreement on diplomatic relations

• Itar-Tass: Abkhazia, Nauru sign agreement on diplomatic relations

• Itar-Tass: EU, US refusal to recognize Abkhas polls regrettable – view

• Interfax: Sweden refuses to comment on claims about one of its diplomats in Russia

• GLG: Atomstroyexport Extends India's Nuclear Winter: Huge Delay In Kudankulam 2X1000

• RIA: Contractor takes control of 3 new Glonass satellites

• RIA: Next trial of Russian troubled Bulava missile could be in Jan.

• RBC: Russia to launch public services online portal

• Itar-Tass: E-govt portal to offer 74 “priority services” from Dec 15

• The Georgian Daily: Kremlin Plan to Cut Size of Regional Parliaments Could Trigger Instability in Non-Russian Republics

• Interfax: Muslim clergyman wounded in Dagestan

• Interfax: Muslim clergyman wounded in Dagestan

• RIA: Muslim cleric wounded in drive-by shooting in southern Russia

• Interfax: Muslim clergyman wounded in Dagestan

• RIA: Muslim cleric wounded in drive-by shooting in southern Russia

• Itar-Tass: Death toll from nightclub fire in Perm growing

• Interfax: The Russians have been obliged to insure the house, the head of Emergency Shoigu is convinced

• Itar-Tass: Border guards prevent 450 mln rbl damage to the State

• RIA: Russian drug police seize 11 kg of heroin in Urals city

• : Russian activists visit Oroville, tour dam facilities - A group of Russian environmental activists toured the Lake Oroville Dam facilities and the Feather River Fish Hatchery Monday to learn more about socio-economic, safety, cultural and conservation mitigations for hydroelectric power generation dams.

• Axisglobe: KGB General Kalugin tells how Soviets invaded Afghanistan in 1979

• Russia Today: Chechen baby boom despite financial woes

National Economic Trends

• Bloomberg: Russian Industrial Output Rose for 1st Time in More Than Year

• Bloomberg: Russia Faces Entrenched Deficits, Must Hold Rates, IMF Says

• Interfax: IMF cautions Russia over high public spending risk

• Prime-Tass: Russian official says short-term cap inflow doesn't pose risks

• Bloomberg: Ruble Gains Versus Euro, Little Changed Against Dollar, Basket

• CommodityOnline: Russian central bank to buy 30 tonne gold

• Reuters: Russia confirms to restrict collateral-free loans

Business, Energy or Environmental regulations or discussions

• Interfax: Kazakh Eurasian Bank buying Russian Troika Dialog

• Reuters: UPDATE 1-Kazakh bank Eurasian buys Russia's Troika Dialog

• The Financial: Fitch Affirms Bank of Moscow at 'BBB-'; Outlook Negative

• Bloomberg: Russia May Limit TV Advertisers Share to 35%, Kommersant Says

• Reuters: Sistema may partner Russian govt in Infineon buy

• Bloomberg: Renaissance, Backed by Russia’s Richest Man, to Team With Kotak

• Bloomberg: Cheuvreux to Expand Into Russia, Hire Research Team (Update1)

• Reuters: INTERVIEW - Russian-Indian M&A pact aims at bulge bracket

• Russia Today: Text appeal of Russian market has Webtext looking east

Activity in the Oil and Gas sector (including regulatory)

• Upstreamonline: Russia to cut oil export duty

• Reuters: Russia to cut Jan oil export duty 1.5 pct to $267/T

• Bloomberg: Lukoil Rises in Moscow After Winning Iraq Order, Lukarco Stake

• Reuters: INTERVIEW - Russia LUKOIL bets on oil revolution in Iraq

• Independent.ie: Oil giant seeks repayment of 'tax paid in error' - An Irish subsidiary of Russian oil giant Rosneft is trying to recoup tax handed over to the Revenue Commissioners that the company says it paid in error, accounts for the business reveal.

• CommodityOnline: China, Russia and a possible 'natural gas OPEC' - By Fawzia Sheikh

Gazprom

• RIA: Gazprom restarts gas supplies to N.Ossetia, Ingushetia, Armenia

• The Moscow Times: Gazprom Dismisses Contract Requests

• Bloomberg: Gazprom Neft Says Iraq’s Badra Oilfield Holds 2 Billion Barrels

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Full Text Articles

Basic Political Developments

ISNA: Iran: good news to be declared on Bushehr N-plant soon



ISNA - Tehran

Service: Nuclear Energy

TEHRAN (ISNA)-Atomic Energy Organization of Iran (AEOI) Chief Ali Akbar Salehi promised Iranian nation will receive good news about operation of Bushehr nuclear power plant soon.

"Main tests of Bushehr nuclear power plant have been accomplished successfully," he said in Iran's state TV channel on Tuesday adding another test will be carried out within next months so that we can include nuclear fuel into the power plant's cycle."

He also expressed hope the power plant will be run within next months.

Salehi rejected any obstruction by Russia on launching of Bushehr nuclear plant and said, "everything is being done well, now 2500 Russian experts are working inside the power plant and Iranians will receive good news about the facility soon."

Iran's former ambassador to the IAEA called West's concern on Iran's access to nuclear energy "political" and said, "the important issue is that Iran has got access to the required knowledge for employment of peaceful nuclear energy, although the West and particularly the US feared from Iran's access to the technology."

Meanwhile he blamed the US and West's double standards on global issues and said, they regard themselves as an authority to distinguish right from wrong and they oppose wherever their interests are not served.

He continued, "the US can not put severe pressure on North Korea since the country has close cooperation with South Korea, Russia and China, whereas the IAEA inspectors visit Iran every two weeks and despite of all observations they are doubtful about Iran's nuclear programs."

He added, "massacre has no place in Islamic Republic of Iran's doctrine and we do not want production of nuclear weapons."

End Item

Itar-Tass: NATO chief to focus on Afghanistan, European security



15.12.2009, 04.41

BRUSSELS, December 15 (Itar-Tass) - Afghanistan and European security will be the main subjects of discussion during the upcoming first visit by Anders Fogh Rasmussen to Moscow in his capacity of NATO's Secretary-General. The visit will be also the NATO chief's first trip to Russia since the conflict in South Ossetia, a press service official of the Alliance has told Itar-Tass.

The official emphasized that relations with Russia are among the main priorities of the Alliance. It is very important that a constructive agenda is available. There is already a decision on joint analysis of common threats, a 2010 programme for cooperation, a plan to reform the Russia-NATO Council (RNC), including the setting up of expert thematic working groups inside it.

NATO also hopes that the themes of Afghanistan and Russia-NATO cooperation will be an important element of the talks in Moscow, the official added.

At the same time, Rasmusse himself said differences still remain in Russia-NATO relations. However, they must not be allowed to cloud the entire spectrum of bilateral relations.

Ambassador Dmitry Rogozin, Russia's Permanent Representative at NATO, has told Itar-Tass in comment on the forthcoming visit that this visit will be made "within the political context of the initiative proposed by US President Barack Obama to increase US military presence in Afghanistan". The US earlier announced an increase in its military contingent there by 30,000 troopers. Other NATO countries and partners for ISAF are to increase the numerical strength of their troops there by 7,000 men.

Rogozin pointed out, "The purpose of all NATO efforts concerning Afghanistan can be only to establish an efficient regime in Kabul that would be ready to assume the entire responsibility for what happens in that country as a whole".

"In this respect our positions fully coincide. The more so as Russia as no one else is aware that no foreign country, however big, will be able to settle all problems for the people of Afghanistan," he stressed.

Sources say Russia and NATO currently discuss the possibility of delivery of Russian weapons to Afghanistan for the Afghan army and security forces, as well as the possibility of modernization and servicing of the Russian equipment, primarily helicopters that are in service with the Eastern European member-countries of NATO. Although both sides are interested in this kind of interaction, a whole lot of unfixed matters still remain: the point is whether new weapons will be supplied or those from the Defence Ministry depots; whether deliveries will be carried out on a commercial basis or by way of assistance to Afghanistan, etc. Rogozin refrained from comment on the theme of military-technical cooperation, pointing out that he "would not like to forestall the outcome of the talks in Moscow".

Rogozin also said that the 2010 Russia-NATO cooperation programme, endorsed on December 4 at the RNC meeting at Foreign ministers' level, "pointed out the need to resume contacts on anti-ballistic missile (ABM) defence problems".

"Moreover, a separate working group on ABM will be set up within the RNC's reformed structure," he added. At the same time NATO "is not a priority organization with which we cooperate on this issue. These matters are being tackled to a larger extent within the scope of Russian-US relations".

Rogozin pointed out that the Treaty on Conventional Forces in Europe "will also figure among points of discussion at meetings in Moscow". "We are interested primarily in unravelments of the problems of flank limitations," he said.

Rogozin said the Moscow talks will also deal with efforts to combat sea piracy, and with dialogue on NATO's new strategic concept. In particular, Rogozin said "A group of experts of NATO's Council of Wise Persons is to visit Moscow early in February next. The group will be led by Madeleine Albright who is in charge of the elaboration of a new strategic concept of the Alliance".

RIA: Dmitry Medvedev to talk energy with Vietnamese PM in Moscow



00:5115/12/2009

MOSCOW, December 15 (RIA Novosti) - Russian President Dmitry Medvedev will meet in Moscow on Tuesday with Vietnamese Prime Minister Nguyen Tan Dung to discuss energy cooperation, a source in the Kremlin said.

Russia plans to step up cooperation with Vietnam primarily in oil and gas production, trade, as well as in arms sales.

"The meeting will be focused on the development of bilateral political dialogue at all levels," the source said adding that perspectives for the cooperation in energy sector will be also in the focus of the meeting.

Last week Russian energy giant Gazprom announced plans to invest 9.43 billion rubles ($319 million) in oil and gas offshore development in Vietnam in 2010, under PSA projects.

The Vedomosti business daily recently reported that the countries are close to signing deals on the purchase of six Russian Kilo class diesel-electric submarines and 12 Su-30MK2 Flanker-C multirole fighters.

According to Russian estimates, trade between the two countries in 2007 exceeded $1.5 billion.

Itar-Tass: RF, Vietnam PMs to discuss energy, banking projects Tue



15.12.2009, 01.09

MOSCOW, December 15 (Itar-Tass) - The Prime Ministers of the Russian Federation (RF) and Vietnam, Vladimir Putin and Nguyen Tan Dung, are to hold talks here on Tuesday "to discuss matters of current importance concerning bilateral cooperation in the fields of politics, trade, economics, energy, military-technical cooperation, science, education, and culture," an RF government press service official has announced.

It is expected that "as a result of the (upcoming) meeting the sides will sign a number of bilateral documents, including an agreement on strategic partnership between Gazprom and the Petrovietnam oil and gas corporation, the press service official specified.

Besides, the INTER RAO UES intends to sign a memorandum with Petrovietnam in the field of electric power while a VTB will sign a memorandum on the establishment of an investment fund with Vietnam's Bank for Investment and Development.

The RF government official pointed out, "Russo-Vietnamese trade and economic contacts develop successfully on the whole". Thus, "despite the world's financial and economic downturn, bilateral trade turnover continuously grows: over the first nine months of 2009 it increased by 4.1 percent to run at $1,160 million". "Stronger bilateral cooperation is being also promoted by joint measures to refine credit-and-financial mechanisms," the government official emphasized. In particular, the joint Vietnamese- Russian Bank (VRB) began to operate in November 2006; a VRB representative office opened in Hanoi in October 2008, and a subsidiary branch is now preparing to open in Moscow.

Russia and Vietnam "implement joint projects in such branches as the development of deposits of economic minerals, metallurgy, telecommunications, machine building, the agri-industrial sector, transport, communications, and financial-and-banking sphere. Military-technical cooperation gains in scope as well," the source pointed out.

"Energy cooperation plays a tangible role in Russo-Vietnamese relations", the source said. Thus, the Vietsovpetro joint-venture (JV) enterprise, which has been operating since1981, accounts for over a half of the entire amount of oil produced in Vietnam. "The net profit of the Russian participant in the JV -- the Zarubezhneft Company -- amounted to about $7,000 million over the period from 1996 to 2008," the RF government press service official said.

The government official recalled, "In accordance with the understandings reached at top level, the Vietsovpetro will transform into a limited liability company on January 1, 2011 (the equity share of Zarubezhneft will be 49 percent and that of PetroVietnam -- 51 percent).

The Russian company Silovyye Mashiny (Power Machines) develop also operates on the dynamically developing market of electric power. The hydropower station Sesan-3 (with a power of 274 megawatts) was built with its assistance. Work has been completed on the whole on the Avuong HPS (210 mgwt) and Buonkuop (280 mgwt/; the supply of equipment is being continued for the Pleikrong HPS (110 mgwt) while start-up and adjustment operations are under way at the Wongby thermal and electric power plant (300 mgwt), the RF government official pointed out.

Nhan Dan: Vietnam - Russia Bank opens subsidiary in Russia [pic]



The Vietnam-Russia Joint Venture Bank (VRB) yesterday opened a subsidiary bank in Moscow to help Vietnamese exporters operating in Russia and Eastern Europe.

Speaking at a seminar entitled ‘Supporting Vietnamese exports to Russia’ held in Hanoi the same day, Pham Van Minh, the Deputy General Director of VRB’s Transaction Exchange said that opening a bank in Moscow had made it easier and safer to make payments between the business communities of both countries.

The VRB’s representative added that his bank also plans to expand its area of operations by opening branches in former Soviet Union countries and other countries around Europe.

At the seminar, the Vice President of the Business Systems Development Audit-Consulting Group (RBS) Andrei Maximov pledged to support Vietnamese companies that export to Russia.

He stressed that Vietnam is a developing country with great potential and has a real demand for economic development in various fields. This is the reason why RBS, one of Russia’s leading financial and consulting companies, is present in Vietnam, he added.

According to Vietnam’s Chamber of Commerce and Industry (VCCI), two-way trade between Vietnam and Russia reached a record US$1.5 billion in 2008 and is expected to increase to US$2 billion this year.

Vietnam mainly exports seafood, garments, rubber and footwear to Russia while it imports coal, steel, fertiliser and petrol.

After starting its operations in late 2006, VRB has become one of Vietnam’s leading joint venture banks with its branches in Hanoi, Ho Chi Minh City, Da Nang, Ba Ria-Vung Tau and Khanh Hoa. The bank plans to open a branch in Hai Phong early next year. (VNA)

Reuters: Russia reassures it will not swamp carbon markets



Tue Dec 15, 2009 8:22am IST

COPENHAGEN (Reuters) - Russia will not sell significant amounts of surplus carbon permits if doing so would undermine carbon markets, but will resist moves to cap such sales, a Russian government official said on Monday.

Under the Kyoto Protocol, which expires in 2012, nations that are comfortably below their greenhouse gas emissions targets can sell excess emissions rights called Assigned Amount Units (AAUs) to countries struggling to meet their own targets.

Russia has billions of dollars worth left over after its economy collapsed in the wake of communism.

Talks this week in Copenhagen to find a replacement for Kyoto have shed little light on the future of surplus AAUs, which analysts fear will swamp the carbon market and dent prices.

"I don't think we'll sell really huge amounts after 2012 or before 2012," Oleg Pluzhnikov of Russia's ministry of economy told reporters. "But why should we think about limits on sales?"

Analysts estimate Russia and the Ukraine, the two countries with the largest AAU inventory, could have around 6.5 billion tonnes available for sale from the 2008-2012 Kyoto period.

This is more than three times the annual CO2 emitted by European Union industry under the EU's Emissions Trading Scheme and nearly six times the estimated global demand for AAUs.

The $126 billion global carbon market, supported by private sector investment, is haunted by the spectre of prolonged AAU trading, which threatens the long-term price stability companies need to make major investment decisions.

Some countries want the threat eliminated through an agreement in Copenhagen to scrap all surplus AAUs, but Pluzhnikov sought to ease concerns about their possible impact.

"Russian Assigned Amounts, whether they be transferred to the next period or not, will not be used to undermine the carbon market," he said.

Up to now, the murky AAU market has consisted of a handful of deals, both confirmed and unofficial, totalling between 125 million and 320 million tonnes of carbon dioxide.

"I have not heard that these deals undermined the market... so I suppose if we talk about similar figures from Russia, we can assume that also will not undermine the market," said Pluzhnikov.

Most transactions are done at a substantial discount to the EU carbon price or Kyoto offset price , and feature eastern EU member states like Poland, Hungary and the Czech Republic as the sellers and Japan, its Kyoto emissions targets firmly out of reach, as the buyer.

(Reporting by Pete Harrison; Editing by Dominic Evans)

RIA: Russia restores gas to Armenia after pipeline mined



Tue Dec 15, 2009 4:50am IST

By Conor Humphries

MOSCOW (Reuters) - Russian gas supplies to ally Armenia were restored on Monday after being severed for a day when bombs were found under a pipeline in the volatile southern region of Ingushetia.

Armenia gets around 2 billion cubic metres of gas annually from Russia, but customers were not affected, said Shushanik Sardaryan, a spokeswoman for ArmRosGazprom, a subsidiary of Russian gas monopoly Gazprom.

"The supply of gas to Armenia has now restarted," she said on Monday.

Russian police defused two bombs and searched the area for other explosive devices, after the Mozdok-Tbilisi pipeline was shut down on Sunday, a police official in Ingushetia told Reuters.

Officials then worked to restore the flow of gas in the pipeline which also serves customers in Russia's North Ossetia and Ingushetia regions, an official for local gas firm Ingushneftegaz said.

Supplies of Russian gas to its ex-Soviet neighbours have been disrupted at various times in recent years by security scares and by political disputes.

Russia cut supplies to parts of the European Union last winter during a pricing dispute with Ukraine. Gazprom stopped buying gas from Turkmenistan in April after a pipeline explosion sparked a broader diplomatic row over gas.

The mainly Muslim region of Ingushetia, which borders Chechnya, has seen a surge in attacks in recent months blamed on Islamist rebels who have promised to attack economic targets.

Georgia, which also receives gas from the pipeline, has not been affected by the cut, a spokeswoman for the Georgian Oil and Gas Corporation told Interfax news agency.

OfficialWire: U.S., Russia May Ink START Deal Soon



|Published on December 15, 2009 |

| |

|by EU News Network |

| |

|( and OfficialWire) |

| |

|MOSCOW, RUSSIA |

Russia and the United States seemed to be edging towards the signing of a new nuclear weapons treaty later this month, officials in Moscow said.

"Intense work is under way on the strategic arms cut treaty," Kremlin aide Arkady Dvorkovich was quoted saying by the Interfax news agency. "We intend to finish these negotiations [in the month]."

The announcement was made after officials from both countries confirmed that U.S. President Barack Obama and his Russian counterpart Dmitry Medvedev spoke by telephone over the weekend about the negotiations.

Both leaders agreed to extend the talks, but officials refused to elaborate. The Strategic Arms Reduction Treaty expired Dec. 5.

Obama and Medvedev agreed in July to reduce each of their countries' deployed strategic nuclear arsenal to between 1,500 and 1,675 weapons within a span of seven years, as part of a revised agreement being hammered out by both sides.

The expired treaty, signed by Soviet President Mikhail Gorbachev and U.S. President George H.W. Bush, required each side to reduce their nuclear warheads by about 6,000 and proceed with cross verifications to confirm that both sides were adhering to the agreement.

Interfax agency quoted a Russian military-cum-diplomatic source as saying that the agreement would be signed by the two leaders at a European capital in the latter part of December.

The ratification of the new treaty will take about a year. During that period, a bilateral commission is set to be established to resolve disputes that may emerge, Interfax reported, citing the military-cum-diplomatic source.

In their weekend telephone call, the two leaders "continued a detailed exchange of opinion about the results achieved and the prospects of completing work on a document that is of vital importance for strategic stability in the world," a Kremlin statement said.

The two presidents "noted with satisfaction that the work of the delegations of both countries ... has an intense and purposeful character that makes it possible to speak of substantial progress in the negotiation process," it added.

Reports suggest that the areas of contention are likely to focus around terms for confirming both sides' compliance with the deal and how many warhead delivery vehicles would be allowed on each side.

Medvedev will travel to Copenhagen for the final stages of the U.N. climate talks on Thursday and Friday, when the U.S. president is due to arrive to attend the conference.

Delegations in Geneva have been working on the revised treaty for months. Despite the intention to limit their arsenal, analysts say each country will retain enough firepower to destroy the world several times over.

Emportal.rs: Mesic, Putin talk South Stream pipeline project



15. December 2009. | 08:08

Source: RadioNET

Croatia missed the chance for the South Stream gas pipeline project to cross its territory and now the extent to which it could still link up is a matter of further negotiation, Croatian President Stjepan Mesic said in Moscow on Monday after talks with Russian Prime Minister Vladimir Putin.

The South Stream route has already been agreed. It is a matter of negotiation how much Croatia could join in that, but it seems to me the chances are not big. We missed this discussion when there was time, Mesic said in reference to the fact that in 2007, when the South Stream route was being negotiated, then Russian president Putin offered that Croatia participate in the project, but the then Croatian government refused.

Croatia is still believed to have a chance to get a link-up to the pipeline, which depends on Russia's good will, since Russia, as Mesic said after the talks with Putin, has met its requirements.

Mesic said Croatia had an advantage in its bid, the fact that it already had oil pipeline corridors so it would not have to buy land.

Mesic and Putin also talked about contentious issues regarding relations with the Serbian oil company NIS, which is owned by Russia and considers some real estate in Croatia its property, which Croatia disputes.

A Russian company bought NIS and listed among its base stock part-ownership of our section of the oil pipeline and claims from us some filling stations, holiday establishments and some facilities, Mesic said, reiterating this was part of a dispute and that Croatia would take an official position.

Putin wished Mesic the best for his upcoming birthday, and said Russian-Croatian economic cooperation had grown in recent years to US$ 2 billion, but dropped by one-third this year, which can also be due to the global crisis.

The two officials also discussed cooperation in the manufacturing and distribution of drugs, in the power industry and construction.

We are interested in the construction of several big bridges, said Mesic, adding he and Putin also talked about some failed Russian investments in Croatia.

The Russians have complaints about our administration, as one Russian company bought the Haludovo hotel complex on the island of Krk, but someone sold part of it to a private owner, so the deal cannot go through, Mesic said, adding it was important to investigate what happened, so that Russians could have a motive to invest in Croatia.

Today, Mesic will wrap up his visit to Russia with a dinner with President Dmitry Medvedev. He has announced they will talk about intensifying economic cooperation between the two countries.

Focus: Croatia eyes South Stream share – commentaries in Russian press



15 December 2009 | 10:43 | FOCUS News Agency

Moscow. In the frames of his visit to Moscow Croatian President Stjepan Mesic discussed with the Russian state leadership the possibility for Zagreb to join the South Stream gas pipeline project, Russian government daily newspaper Rossiyskaya Gazeta writes.

An intergovernmental agreement is being worked out at the moment, a Russian high-ranking state official informed. During his visit to Moscow, President Mesic talked to his Russian counterpart and prime minister.

The two presidents stressed on the tendency for activation of the bilateral political contacts between the two countries. It is not by chance that this was Mesic’s fifth visit to Russia during his term in office.

Croatian President Stjepan Mesic was on a visit to Moscow, Kommersant reads.

The major issue tabled for discussion with Russian counterpart Dmitry Medvedev and PM Vladimir Putin was Croatia’s joining into the South Stream project.

According to information of the newspaper, this issue has been already solved. Zagreb is interested in boosting Russian gas deliveries, while Moscow makes it clear that this is possible only through the South Stream.

Croatian President Stjepan Mesic was on a visit to Moscow on Monday, RBC Daily writes.

In the end of his long political career, Mesic arrived in Moscow to lobby for the energy projects of his country, which expects believe to be more important to Croatia then to Russia. South Stream is pointed as the biggest project that could be realized between the two countries.

RIA: Austria interested in participating in South Stream project



03:3915/12/2009

VIENNA, December 15 (RIA Novosti) - Austria is interested in taking part in the South Stream gas pipeline project, the Austrian foreign minister said.

Russian gas monopoly Gazprom and Italy's energy giant Eni currently hold equal stakes in South Stream AG, the operator of the gas pipeline, scheduled to be completed by 2015.

"If we take a look into the future we will see that this project will play a significant part in gas supplies," Michael Spindelegger said.

The South Stream project will provide Russian gas to South and Central Europe and will have a maximum capacity of 63 billion cubic meters of gas per year. The project is part of Russia's efforts to cut dependence on transit nations. It is a rival project to the EU-backed Nabucco, which would bypass Russia.

Spindelegger said Austria decided to join its partners in the construction of the Nabucco pipeline "with the only aim of diversifying natural gas supplies."

"However, we are also interested in the South Stream project, which is viewed as another possibility of diversification," the top Austrian diplomat said.

France also expressed its interest in the project and in early December Gazprom and Eni signed a memo of understanding to include France's EDF into the South Stream gas pipeline project.

RIA: Russia seeks early admission to WTO



20:1614/12/2009

The Russian government on Monday ordered the federal agencies concerned to intensify efforts to join the World Trade Organization (WTO).

A joint session of the government commissions on economic integration and WTO admission issued orders to increase work to create a unified economic space (with Kazakhstan and Belarus) and secure admission to the WTO at the earliest possible date, according to a press release posted on the government's website.

It offered no timeframe.

Kremlin economic aide Arkady Dvorkovich said last Tuesday Russia would decide whether to join the WTO individually or as part of a customs union after completing talks with the U.S. in 2010.

The presidents of Belarus, Kazakhstan and Russia signed a package of deals on November 27 to create a customs union with common tariffs, paving the way for a single economic space.

Russia has been attempting to enter the WTO for over 16 years. Russia is the only major economically sustainable country that has so far not received membership. Other countries such as Cuba and some ex-Soviet states are already members.

In June 2009, the heads of governments of Russia, Kazakhstan and Belarus notified the WTO of their intention to join the world trade club as a customs union. The three ex-Soviet republics suspended their bilateral negotiations on the WTO entry to hold consultations on a common position on the customs union.

In October 2009, Russia, Kazakhstan and Belarus announced they would resume talks on WTO accession separately, but on synchronized positions.

MOSCOW, December 14 (RIA Novosti) 

Itar-Tass: Abkhazia, Nauru sign agreement on diplomatic relations



15.12.2009, 12.11

SUKHUM, December 15 (Itar-Tass) - The Foreign Ministries of the Republic of Abkhazia and Republic of Nauru signed an agreement here on Tuesday on the establishment of bilateral diplomatic relations. Abkhazian Foreign Minister Sergei Shamba and Minister of Foreign Affairs, Foreign Trade and Finances Kieren Keke signed the document.

Nauru is a republic within the Commonwealth headed by Great Britain. Nauru Island is located in the southwest of the Pacific.

Nauru is a small, oval-shaped island in the south-western Pacific Ocean, 42 km (26 miles) south of the Equator. The island is surrounded by a coral reef, which is exposed at low tide and dotted with pinnacles. The reef is bound seaward by deep water, and on the inside by a sandy beach. The presence of the reef has prevented the establishment of a seaport, although 16 artificial channels have been made in the reef to allow small boats to access the island. A 150 to 300 meter (about 500 to 1000 ft.) wide fertile coastal strip lies inland from the beach. Coral cliffs surround Nauru's central plateau, which is known as “Topside.” The highest point of the plateau, called the Command Ridge, is 71 meters above sea level. The only fertile areas on Nauru are the narrow coastal belt, where coconut palms flourish. The land surrounding Buada Lagoon supports bananas, pineapples, vegetables, pandanus trees, and indigenous hardwoods such as the tomano tree. The population of Nauru is concentrated in the coastal belt and around Buada Lagoon.

Following independence in 1968, Nauru joined the Commonwealth of Nations as a Special Member, and it became a full member in 2000. Nauru was admitted to the Asian Development Bank in 1991 and to the United Nations in 1999. Nauru is a member of the Pacific Islands Forum, the South Pacific Regional Environmental Programme, the South Pacific Commission, and the South Pacific Applied Geoscience Commission. The American Atmospheric Radiation Measurement Programme operates a climate-monitoring facility on Nauru.

Itar-Tass: EU, US refusal to recognize Abkhas polls regrettable – view



15.12.2009, 06.13

MOSCOW, December 15 (Itar-Tass) - The refusal of the European Union (EU) and the United States to recognize the legitimacy of the presidential elections in Abkhazia and of their results can evoke only regret, emphasized Leonid Slutsky, First Deputy Chairman of the Committee on International Affairs of the State Duma lower house of the Russian parliament.

"The elections, held in Abkhazia on December 12, and as a result of which Sergei Bagapsh was re-elected the republic's president, are first of all an evidence of stable development of society. The non-recognition of the election results is an attempt at depriving the Abkhas people of their right to freedom and democracy," the House member said.

The Deputy Chairman of the Committee recalled a precedent for the recognition of Kosovo's independence, the legitimacy of which is currently disputed at the Hague court on the strength of a suit filed by Serbia.

"Facts concerning the formation of government bodies, including executive ones, have become part of the plan suggested by Maarti Ahtisaari for the separation of Kosovo from Serbia, which was subsequently recognized by most of EU countries. At that time they kept mum about territorial integrity," Slutsky said.

He pointed out that the elections in Abkhazia had been monitored by observers not only from Russia but from Europe as well. "No serious infractions in voting procedures were revealed and monitors pointed out that the polls were held completely in accordance with the due international electoral standards," the House member said.

On Monday, Sweden, the EU's current presiding country, circulated a statement pointing out that the EU had taken note of the 'presidential elections' held in Abkhazia on December 12 and that the EU does not recognize the constitutional and legal framework, within which the elections were held.

A similar stand was also taken up by the United States. A brief written statement, circulated by State Department spokesman Ian Kelly, pointed out that the Obama administration does not recognize either the legitimacy or the outcome of the voting held in Abkhazia.

Just as the EU, the US again stated support for the sovereignty and territorial integrity of Georgia within its internationally recognized borders.

Earlier in the day, the Central Electoral Commission of Abkhazia made public the final official data on the elections, according to which the present president of the republic, Sergei Bagapsh, gained an absolute majority of votes -- 61.16 percent, with 62,231 people voting for him. Voter turnout was 73 percent.

Interfax: Sweden refuses to comment on claims about one of its diplomats in Russia



MOSCOW. Dec 15 (Interfax) - The Swedish Foreign Ministry has declined to comment on reports that the first secretary of the trade and business department of Sweden's embassy in Moscow, Andres Martin Fors, left Russia in a hurry allegedly due to a scandal surrounding his illegitimate business operations on Russian territory.

"We will not offer any comments on the issue," a spokesman for the Swedish embassy told Interfax.

According to a number of media reports, the Swedish diplomat, 35, was engaged in delivering low-price tights and socks from Belarus to Russia using his diplomatic immunity.

GLG: Atomstroyexport Extends India's Nuclear Winter: Huge Delay In Kudankulam 2X1000



December 15, 2009

• Analysis by: Himadri Banerji

• Analysis of: Indo-Russian N-plant faces supply hurdle

• Published at:

Summary

The Russian nuclear reactor supplier Atomstroyexport had won the contract for India's showcase Nuclear Power Corporation of India Ltd’s (NPCIL) $3 Billion  2,000-mw nuclear power project at Kudankulam in Tamil Nadu. But even after seven years, the plant is a nonstarter casting shadows on the Indo-Russian nuclear deal, signed by Prime Minister Manmohan Singh in Moscow to scale up India's nuclear power plans which gave Atomstroyexport a deal for a further 2X1000MW at the same site.

Analysis

NPCIL's project is just one of the many projects that are behind schedule. Even after spending over 95 % of the total approved project cost and after missing several milestone is hobbling along. Russia is building two 1,000-megawatt reactors at Kudankulam as part of a deal signed in 1988. Russia and India under the deal agreed in January 2008 to build four more reactors at the site.

India has however a track record in delayed project execution. By June 2009, 474 out of 951 central sector projects (over Rs 20 crore) were delayed. The delays have triggered a cost over run of 13.52% over the original cost of these projects—Rs 3,10,178 crore. In terms of value, the delayed projects constitute more than half of the 951 projects, whose original cost estimate was Rs 6,07,188 crore.

There are now concerns of serious lapses anticipated in the 11th Plan capacity addition program and unless actions are taken to immediately nail down any likely causes and fix responsibilities for delays in the nuclear power projects, there are genuine concerns that India's nuclear winter will be prolonged.

RIA: Contractor takes control of 3 new Glonass satellites



12:1015/12/2009

The operator of the Glonass satellite navigation project has taken control of three newly orbited satellites, Russia's leading satellite manufacturer said on Tuesday.

The satellites are being operated from the Glonass mission control in the town of Krasnoznamensk, near Moscow.

"The first communication sessions have been carried out with all satellites. All systems of the spacecrafts operate in normal mode," Reshetnev Information Satellite Systems, which is a technical partner in the project, said in a statement.

The three satellites, which bring the total number of Glonass satellites in orbit to 22, were launched from the Baikonur space center on Monday.

MOSCOW, December 15 (RIA Novosti

RIA: Next trial of Russian troubled Bulava missile could be in Jan.



09:4615/12/2009

The next test launch of Russia's troubled Bulava intercontinental missile could take place in January, an unidentified Defense Ministry official said on Friday.

The latest launch of the missile, which Russia hopes will be a key element of its nuclear forces, from a submarine in the White Sea ended in failure on Wednesday. Only five of 12 Bulava launches have been officially reported as being successful.

"The exact date of the next trial has not been fixed yet, but trials will continue next year. We could still make a launch in January or in the summer, after the White Sea is already free from ice," the official said.

The official said a state commission is to analyze the whole process of developing the missile, which includes some 650 defense sector enterprises.

The further development of the Bulava has been questioned by some lawmakers and defense industry experts, who have suggested that all efforts should be focused on the existing Sineva SLBM.

But the military has insisted there is no alternative to the Bulava and pledged to continue testing the missile until it is ready to be put in service with the Navy.

The Bulava (SS-NX-30) SLBM carries up to 10 MIRV warheads and has a range of over 8,000 kilometers (5,000 miles). The three-stage solid-propellant ballistic missile is designed for deployment on Borey class nuclear-powered submarines.

The Bulava, along with Topol-M land-based ballistic missiles, is expected to become the core of Russia's nuclear triad.

MOSCOW, December 15 (RIA Novosti)

RBC: Russia to launch public services online portal



      RBC, 15.12.2009, Moscow 11:13:43.The Russian Communications and Mass Media Industry plans to launch an Internet government services portal. So far, the first part of the portal will be introduced, featuring information about public services.

      Furthermore, a pilot text messaging service will be launched in some regions of Russia, presenting information about public services and government functions. The ministry also plans to open a call center, to which people will be able to call to find out about the unified public services portal. In the future, the call center will provide information about the actual public services.

      In mid-October, the government approved the plan for the federal executive bodies' transition to the provision of public services and carrying out government functions in the electronic format.

Itar-Tass: E-govt portal to offer 74 “priority services” from Dec 15



14.12.2009, 23.00

MOSCOW, December 14 (Itar-Tass) --The e-Government portal will start providing 74 priority electronic public services from December 15, Minister of Mass Communications Igor Shchegolev said.

“The portal the way it is going to be launched on December 15 is only the first step. To begin with, these are not all the services. There will be 74 priority services. But with time it will regularly be updated to offer more and more functions,” the minister told Komsomolskaya Pravda radio on Monday.

“Starting December 15, one can only find out which services are provided and where and what documents are needed in order to receive them. But starting next year, one will be able to print out forms for the majority of them and even fill them out at the portal,” Shchegolev said.

The portal will be accessible through the Internet. “But in the future, as we work on the portal, we will provide additional services through mobile phones and regular phones, and there will appear information kiosks (booths) … and multi-functional centres in regions where operators will help citizens who don’t know how to use the Internet,” he said.

“This is a single portal for the whole country. People don’t have to think which body or region provides which services,” the minister added.

He said the portal would help the government fight bribes.

“Bribes are one of the goals, I would even say one of the targets,” Shchegolev said.

He said the use of the portal would save time. “We have used the term ‘going to government bodies’, i.e. how many times we have to visit government bodies in order to receive the documents we need. By the roughest estimates, more than 300 million times a year – this are physical inquiries. Since the introduction of public services will go through five stages, each of them will reduce such visits by 20 percent,” the minister said.

There are many websites and portals on the Internet that provide electronic services, but “no such nationwide one-stop shop has ever existed before”.

“We understand that we can’t make it perfect at once. So there will be a special box. If you notice a mistake or if something does not work, send us a message. And we will try to detect such things promptly, too,” Shchegolev said.

He expressed hope that this will become “the people’s website” that “people will help make better”.

The minister estimated the cost of the project at several dozen billion roubles. “We think that if this sum is divided by the visits and inconveniencies our people have experienced, it will justify itself quite quickly. This is one of those budget investments that produce an immediate visible effect,” he said.

The public services portal went on a trial run at the end of November.

“We have launched the programme in a trial-run mode,” he said. “We worked on the programme for a long time, specifically on a list of information services to be provided to our citizens.”

“Authorities proposed the services for which they were best prepared, but did not always match what was wanted by the population,” the minister said. “As a result, we changed the ideology and drew up a list of our services in accordance with the criteria that used to assess electronic preparedness in European countries.”

“We revised the schedule of service commissioning and over 70 public services will be available at the portal by the end of the year,” he added.

“The unified portal of public services will be commissioned at the end of the year. Seventy-four services included in the shortlist are being prepared on a priority basis and made available at the portal,” Shchegolev said.

“The provision of mass public services will improve the quality of service to Russians and rid them of bureaucratic procrastination and exactions,” he said.

In 2010, Russian people will be able to receive about 300 federal services through the single Internet portal (forms and information for obtaining a passport, social allowances, vouchers, and pension). It will contain information on a person’s taxes. For example, the transport, land and property taxes. We also plan to post information about traffic fines so that one knows that he has no penalties or overdue debts and can travel abroad,” Shchegolev said.

According to Shchegolev, the Russian programme of a public services portal is “an ambitious task and it would be useful to take into account the achievements and mistakes of those who have been treading the path of ‘electonisation’ for almost 30 years … With all the difference in the size of our countries, we will launch the portal of public services at the end of the year. In the initial stage it will provide information, but in the next three to four years we will not only increase the number of online public services, but we will also complete the remaining three stages to make them fully electronic,” the minister said.

The Georgian Daily: Kremlin Plan to Cut Size of Regional Parliaments Could Trigger Instability in Non-Russian Republics



December 14, 2009

Paul Goble

A Kremlin plan to reduce the size of regional parliaments could lead to a new round of instability in non-Russian regions not only by destroying the often carefully worked-out balance of ethnic representation in them but also by causing some politicians forced from office to link up with extra-systemic opponents of Moscow.

The dangers of such a step have already been demonstrated in Daghestan, where Vladimir Putin’s decision to eliminate Lebanon-style ethnic quotas in the government and parliament has transformed that hitherto remarkably stable republic into the most violent place in the entire North Caucasus.

And today, given the growing tensions in both formally bi-national republics like Karachayevo-Cherkessia and Kabardino-Balkaria and others like Tatarstan, Bashkortostan and the Altai where the ethnic mix of the population is changing, this plan, if the Duma as expected goes along with it, could contribute to even more tension in even more places.

In today’s “Nezavisimaya gazeta,” journalist Elina Bilevskaya reports that the Kremlin will be sending to the Duma “before the end of the year” a draft law that would divide the regions and republics into four groups depending on population size and direct each of them to have a specific size of legislature (ng.ru/politics/2009-12-14/1_parlamenty.html).

For the smallest republics and regions, legislatures would have only 15 deputies, while the largest could have as many as 110. But according to Bilevskaya’s sources, “almost all the national republics will have to reduce [and in some cases significantly] the number of the deputies in their legislative assemblies.”

The appearance of this proposal is not entirely unexpected. In his message to the Federal Assembly, President Dmitry Medvedev said that the arrangements for the legislative assemblies in the regions needed to “be put in order” because “the number of deputies in the subjects of the Federation” had been set “in an arbitrary fashion.”

Moscow, with its enormous population, has only 35 deputies, while tiny and largely mono-ethnic Tyva has 162. Under the new rules, Moscow would have to boost the number of deputies – tensions between the Kremlin and Moscow Mayor Yuri Luzhkov may in fact be behind this legislation ---and Tyva would have to cut the size of its legislative assembly.”

Bilevskaya reports that “the size of the deputy corps will have to change in approximately 20 subjects of the Federation,” with some, as in Moscow, increased, and others, most non-Russian republics, cut. North Ossetia, for example, would see its legislature reduced by at least 20 deputies to meet the draft law’s requirements.

Given the obvious problems this will create for some of the deputies, the draft calls for phasing in its provisions over several years, with the new rules “not applying to existing parliamentarians,” although it is unclear how the size of legislative assemblies could be reduced if that provision in fact goes into force.

Elena Dubrovina of the Central Election Commission, told “Nezavisimaya” that she did not think it was a good idea to drag things out. “If the law goes into effect, let us assume in two years, then in the course of this period will be elected almost all regional parliaments.” And that means that in reality, the law “in the best case” would not take full effect for seven years.

But some political activists are already opposed to the law as such. Boris Nadezhdin of the “Right Task” group said that he opposed this measure for the North Caucasus. “I do not understand why Tyva needs 162 deputies given its ethnic homogeneity. But in the Caucasus, with a large number of languages and nationalities “it would be much better not to cut.”

Curiously, and likely exceptionally, some from that region say they favor the idea on financial grounds. Gariy Kuchiyev, a deputy of the North Ossetian parliament, said he thought it would be a good thing because then the people would not have to pay so much in taxes to support so many deputies.

Interfax: Muslim clergyman wounded in Dagestan



Makhachkala, December 15, Interfax - A Muslim clergyman has been wounded by unidentified attackers in Khasavyurt, Dagestan, a spokesman for the republic's Interior Ministry told Interfax on Tuesday.

"The as yet of yet unidentified criminals traveling in a VAZ-21703 car fired several times at the imam of a mosque located in Pobeda Street. The clergyman sustained a perforating wound to his shoulder and was hospitalized," the spokesman said.

The incident occurred at an intersection of Khasavyurt's Kazbekov and Datuyev Streets at around 6:20 p.m. Moscow time on Monday, he said.

RIA: Muslim cleric wounded in drive-by shooting in southern Russia



12:1015/12/2009

MAKHACHKALA, December 15 (RIA Novosti) - The imam of a mosque in the southern republic of Dagestan has been wounded in a drive-by shooting in the city of Khasavurt, a local police spokesman said on Tuesday.

According to the spokesman, the unknown assailants opened fire at the cleric as they passed by in a car at around 6:20 p.m. Moscow time (15:20 GMT) on Monday.

"Imam Tayfur Eldarkharov, born in 1952, was admitted to a city hospital with a shoulder exit wound," the spokesman said.

An investigation is ongoing.

Russia's North Caucasus republics, in particular Chechnya, Dagestan and Ingushetia, have seen frequent attacks on police and officials this year.

Itar-Tass: Death toll from nightclub fire in Perm growing



15.12.2009, 09.16

PERM, December 15 (Itar-Tass) - The death toll from the fire at the nightclub “Khromaya Loshad” (Lame Horse) in Perm occurred overnight to December 5 keeps growing.

As ITAR-TASS learnt at the Perm region’s department of the Russian Ministry for Emergency Situations, two 37- and 29-year-old women died in Moscow and St. Petersburg, brining the death toll to 148 people.

A total of 81 fire victims are still staying in hospitals of four cities.

15.12.09 11:09

Interfax: The Russians have been obliged to insure the house, the head of Emergency Shoigu is convinced



December 15. Interfax-Russia.ru - The head of Russia Ministry of Emergency Situations Sergei Shoigu need to introduce compulsory insurance of residential sector.

"We need to implement the insurance is not only at the sites of small and medium-sized businesses with the mass stay of people, but we must move on accommodation. Nothing else, more perfect, humanity has not yet invented," - said Sergey Shoigu on Tuesday after visiting a factory ZIL which produce new fire trucks.

According to him, "until we take a systemic, yet through the institute of insurance will not oblige, and businesses, and homeowners to think about security, we will not succeed."

"Today is a day in fires killed 56 people. 90 per cent - a fire in the apartments. What the prime minister said, involves everyone," - said S. Shoigu.

He noted that the Ministry of Emergency Situations of Russia does not stand still and introduces a new technique, "but you cannot rely only on modern technologies."

Itar-Tass: Border guards prevent 450 mln rbl damage to the State



15.12.2009, 06.44

YUZHNO-SAKHALINSK, December 15 (Itar-Tass) - In 2009, the border guards, who draw duty on the Sakhalin Island, released 530 tonnes of live crabs and sea-urchins, confiscated from poachers, back into their natural habitat, thereby preventing a 450-million-rouble damage to the State, Major-General Andrei Burlaka, chief of the Sakhalin border guarding department (SBGD), told a news conference here on Tuesday.

Eighty-eight fishing boats, among them 51 foreign-flagged ones, were detained for poaching in the course of this year. According to data given by General Burlaka, under an agreement with the Coast Guard services of Japan and the Republic of Korea (RK), Russian border guards began to receive information from those countries on facts of poaching. The fishing schooners Punto negro and Okhotsk, which engaged in unlawful harvesting of marine bioresources within the Russian zone, were detained with direct participation of Japanese patrol boats and aircraft.

Andrei Burlaka pointed out that two sea exercises had been held in 2009 off the Sakhalin shores with the participation of the ships of Japan and the RK to drill operations to combat poaching and rescue shipwreck victims. Similar exercises are to be held in Japan and the RK in 2010, with SBGD ships participating.

The border guarding fleet is being replenished. A patrol boat, built at the Baltic Sea, is now heading for Sakhalin. A patrol boat of ice-breaking class may be also added to the SBGD fleet in 2010.

RIA: Russian drug police seize 11 kg of heroin in Urals city



11:2215/12/2009

More than 11 kilograms of heroin have been seized from five people in an operation in Russia's Urals city, local drug police said on Tuesday.

Drug and special police forces arrested five men, one Russian national and four citizens of the Central Asian republic of Tajikistan, in Yekaterinburg on Saturday in an operation they said had been prepared for four months.

"We had to track the people involved and the channel through which drugs have been supplied to the region from Tajikistan," a police statement said.

The heroin was found in the trunk and under the hood of one of the men's cars. The 19 packets weighed a total 18.5 kg but had been diluted with a cutting agent. The police statement said there was 11.6 kg of pure heroin, and the drugs had a street value of 5.5 million rubles ($180,000).

If convicted on illicit drug production and trafficking charges, the detainees face up to 20 years in prison.

Russia's Urals region is a major transit point for heroin from Afghanistan. Most of the drugs are sold in Moscow and St. Petersburg and other large Russian cities, or shipped on to Europe.

The director of Russia's state antidrug committee said on Tuesday that illicit drug flows into Russia, mainly from Afghanistan, have almost doubled in the past year. Viktor Ivanov said this has led to a rise in violence in the North Caucasus.

YEKATERINBURG, December 15 (RIA Novosti)

: Russian activists visit Oroville, tour dam facilities



BY MARY WESTON - Staff Writer

Posted: 12/15/2009 12:00:00 AM PST

OROVILLE -- A group of Russian environmental activists toured the Lake Oroville Dam facilities and the Feather River Fish Hatchery Monday to learn more about socio-economic, safety, cultural and conservation mitigations for hydroelectric power generation dams.

Russia's plan to double its hydropower by 2020 sparked the activism, along with plans to build two of the largest hydroelectric power generation dams in the world.

Last August, an accident at the largest hydroelectric plant, Sayano-Shushenskaya in Siberia, that killed 78 workers fueled the activists' efforts.

Pacific Environment, an international environmental Non Governmental Organization based in San Francisco, hosted the Russian tours of hydroelectric dams and talks with indigenous people impacted by dams in California.

Audrey Wood, of Pacific Environment, acted as interpreter Monday.

Wood said although the Russians can't go home and implement all of the collaborative efforts by various state, local and federal agencies during the renewal of the license to generate electricity at the Lake Oroville Dam, they can learn from the California Department of Water Resources' collaborative approach and mitigation efforts.

"It wouldn't be realistic to expect they would go home and implement this relicensing," Wood said.

However, she said they can educate and rally locals in Russia to push for public participation and a collaborative effort by state and local agencies to oversee the planning and building of hydroelectric facilities.

The activists also could push for government transparency on environmental documents and for governmental enforcement of building, safety and environmental regulations already on the books, but often ignored, she said.

The tours were scheduled to train the Russians about environmental and economic issues of major infrastructure projects, communication and principles of hydropower reform.

Oroville Dam was chosen in part because of the recent collaborative relicensing, as well as the environmental, fish and wildlife mitigations and the negotiations for mitigations with local tribes. The Russians were also interested in the socio-economic mitigations with the local community.

The Russians asked many questions, including if DWR had planned mitigations for the dam because nature and the surrounding habitat hadn't yet adapted to the dam.

Companies in Russia had told them nature would eventually adapt to anything, including dams.

Rick Ramirez, an engineer for the DWR division in Sacramento who participated in the local relicensing since 1999, looked a little puzzled by the question.

"I couldn't tell you that surrounding nature and habitat has adapted to the dam," Ramirez said.

Ramirez said the dam is operated by the state with oversight from state and federal agencies including the Federal Energy Regulatory Commission, which ensures certain levels of mitigation for hydroelectric dams.

Ramirez said a state agency was more likely than a business to implement dam mitigation measures.

DWR and the State Water Contractors estimate the relicensing process will cost $80 billion for studies and implementation of recreation, environmental, cultural and socio-economic mitigations over 50 years of the license, Ramirez said.

The state also negotiated separately with five local tribes. Ramirez said negotiations didn't come out to perfect satisfaction of the tribes, but talks are still going on.

One mitigation was to set aside land where local American Indians could grow the medicinal plants and herbs they used to gather in the valley that is now under water.

Ramirez said DWR had learned during relicensing that the socio-economic issues related to the dam were greater than anticipated. This was in part because the recreation facilities that came with the dam hadn't sparked as much economic benefit to local communities as anticipated, Ramirez said.

On the tour, Aleksei Kolpakov, chair of the anti-hydro-dam organization Plotina, said the companies that build dams tout hydroelectric power as a sustainable energy that doesn't impact the environment. However, the impacts of dams on the environment, habitat, rivers, fish, wildlife and indigenous populations can be disastrous, he said.

Dams and accidents such as the one that happened in Siberia can impact the environment and people hundreds of thousands of times over, he said.

The issues and impacts are the same for large hydroelectric generation plants whether they are in the United State or Russia, said Aleksandr Kolotov, executive director of Plotina, which means dam.

A big problem with hydroelectric dams in Russia is getting the large companies that are building the facilities to mitigate the environmental and socio-economic impacts created by the facilities, Kolotov said.

"To a business, the most important thing is profit," Kolotov said. "They are not going to take on these mitigations to benefit the community."

Kolotov said negotiations are going on, but what is being offered is paltry compared to the huge impacts.

One large dam called Evenkia with a projected capacity of 8 gigawatts to 12 gigawatts would be one of the largest hydropower stations in the world, and it could displace up to 7,000 Evenks, one of 40 indigenous groups in Siberia, according to an article from the Moscow Times, written by Maria Antonova, who was part of the Russian group.

The hydro projects can also impact reindeer, salmon and other abundant wildlife and nomadic tribes in Russia.

Evenk Svetlana Egorova, a math teacher in Russia, helps protect the interests of indigenous groups at the state level and through Aldan Region Evenk Association. She sees her participation in the exchange as a way to network and share experiences with counterpart groups in California.

Pacific Environment hopes that upon returning to Russia, participants will use their experience to promote a collaborative approach to water resource management in their regions that incorporates the communities' economic, environmental and social interests while meeting power generation needs, according to Nicole Catalano, communications manager, in an e-mail.

Wednesday, the exchange group will go more in depth into the relicensing with the DWR Sacramento division.

Staff writer Mary Weston can be reached at 533-3135 or mweston@.

Axisglobe: KGB General Kalugin tells how Soviets invaded Afghanistan in 1979



14.12.2009

General Oleg Kalugin was the head of the Soviet KGB's foreign counterintelligence branch when the Soviet Union invaded Afghanistan on December 24, 1979. Online magazine Foreign Policy publishes his article devoted to some developments of preparation for the Soviet invasion connected with the KGB thirty years ago this month. Kalugin tells the inside story of how the decision was made.

He says Moscow had not been overjoyed by news of the coup when late in 1978, pro-Communist coup headed by Noor Mohammad Taraki had overthrown the government of Mohammad Daoud, killing him and his family as Daoud was a stable ally and the Kremlin had relative peace along its southern border.

Reports soon began to filter back to KGB headquarters in Moscow of growing Islamic opposition in Afghanistan to the new Taraki regime. Kalugin and his KGB colleague Vladimir Kryuchkov were sent to Kabul in autumn 1978 on a fact-finding mission. Our objectives included signing a cooperation agreement between the Soviet and Afghan intelligence services.

The man who eventually would depose Taraki, Hafizullah Amin, was the shrewdest and most literate of the officials Kalugin met in Afghanistan, they both had studied in New York at Columbia University. The following year, KGB special-task forces troops gunned down Amin at the presidential palace as Soviet troops took over the city.

In several meetings during the visit, Kalugin spoke with top officers from the Afghan police and state security, instructing them on how to fight the growing CIA presence in Kabul and throughout the country. After the trip, he returned to Moscow, where on the orders of KGB chief Yuri Andropov, Kalugin drew up a plan of active measures and general strategy for Afghanistan.

KGB officers on the ground warned that if Moscow did not intervene more aggressively, Amin would surely be overthrown and an Islamic government installed. Kalugin heard at a meeting of KGB intelligence and Soviet military intelligence in which the GRU chief, General Ivashutin, argued for an invasion. Andropov remained against the introduction of troops, however, under pressure from Defense Minister Dimitri Ustinov did he reluctantly come around to the view that the Soviet military would have to invade.

The KGB officials began filtering out bad news, telling then-general secretary of the Communist party Leonid Brezhnev and the Politburo what they wanted to hear, Kalugin marks. All intelligence information, from the GRU, the KGB, and the Foreign Ministry, had to be funneled through KGB intelligence before being presented to the Politburo in Moscow, he marks.

Russia Today: Chechen baby boom despite financial woes



15 December, 2009, 11:28

Russia's republic of Chechnya is seeing a rise in the birth-rate with more than seven thousand babies born this year. Maternity clinics are constantly full and doctors are struggling to cope.

There is a baby-boom in Chechnya. Maternity hospitals are so full many women about to give birth have to wait in the corridors. 35-year-old Patimat Masalayeva from a remote mountainous village has just given birth to her eighth child. After seven sons, it is a baby girl at last.

Not all of the women here plan their pregnancies. 37-year-old Aidima Suleimanova says four of her seven children were born in the neighboring republic of Dagestan, where the family fled while the fighting was going on in Chechnya.

“None of my pregnancies were planned. But my husband wanted us to keep them all and he is able to support us financially – so we are happy,” she said.

Doctors in the clinic are working non-stop. More than seven thousand babies have been born here this year, compared with five thousand last year. And the birth rate is increasing.

“The living conditions have improved, and women receive a maternity allowance,” said a head doctor of the maternity clinic, Madina Eldarova. “That's why we now have so many pregnant women. We do not even have enough places for them.”

Another kindergarten has recently been opened in the capital’s suburbs. For many parents it is not just a place to entrust their kids but an opportunity to get a job. Unemployment is still very high in Chechnya.

Malika Avtorkhanova was lucky to secure her three-year-old son Akhmed a place in the kindergarten, but could not get job there. The family, with six children, has to survive on unemployment benefit – less than a hundred dollars a month.

“The crisis has hit not only the country but our family too. I don't know how we will make it through this. Maybe God will help,” she said.

Malika says the bad memories of the wars have helped her survive. At least there is a relative peace in the republic now, she says.

Chechen families are traditionally large. It is not unusual to have eight or more children. So the age of women giving birth ranges from sixteen to forty-five. There has also been a large number of twins born, most often twin boys.

RT was filming in one of the maternity hospital for three hours. In that period of time, four boys and three girls were born. Doctors say, it is just the beginning – normally up to twenty babies arrive here daily.

[pic]

National Economic Trends

Bloomberg: Russian Industrial Output Rose for 1st Time in More Than Year



By Paul Abelsky

Dec. 15 (Bloomberg) -- Russian industrial production expanded last month for the first time since October 2008 as the global economic recovery spurred demand for commodity exports and companies rebuilt stocks.

Output at factories, mines and utilities rose 1.5 percent from a year earlier after tumbling 11.2 percent in October, the Federal Statistics Service in Moscow said via e-mail today. Production rose a non-seasonally adjusted 2 percent on the month. The median estimate in a Bloomberg survey of 16 economists was for an annual drop of 0.6 percent and a 1.1 percent drop on the month.

“The country’s economy is showing definite signs of revival in recent months,” Economy Minister Elvira Nabiullinatold President Dmitry Medvedev on Dec. 14, adding that output grew on a seasonally-adjusted basis last month from October.

The industrial contraction was in single digits in September for the first time this year as prices for crude, Russia’s main export, gained on improved prospects for an economic recovery and metals and coal producers sought to meet reviving demand.

The budget received 1.8 trillion rubles ($60 billion) from exports of energy resources as of Dec. 14, which is 31 percent more than planned, Deputy Prime Minister Igor Sechin said that day. Energy products make up about 70 percent of exports.

‘Already Visible’

Oil output will probably rise 1 percent this year to 493 million metric tons, while crude exports may advance 1.8 percent from 2008, Sechin said. Coal output may slide 10 percent and natural-gas production may fall an annual 13 percent, he said.

“Strong recovery in industrial production and manufacturing is already very visible for two quarters,” Clemens Grafe, chief economist at UBS AG in Moscow, said during a presentation in Moscow last week. “Consumption will follow as it always does. Employment is stable, wages are rising and households’ deleveraging is over.”

OAO Russian Railways, the country’s rail monopoly whose sales made up 2.5 percent of gross domestic product last year, said cargo shipments rose 5.5 percent in November, the first monthly increase this year. Railroads account for about 85 percent of Russia’s cargo transport, excluding pipelines.

The central bank has cut the refinancing rate to a record- low 9 percent to help free credit flows and curtail a contraction that saw the economy slump a record 10.9 percent in the second quarter and 9.4 percent in the third.

Abating

The economic decline abated in the third quarter as GDP fell 8.9 percent from a year earlier and grew a non-seasonally adjusted 13.8 percent on the quarter. The government deployed 784 billion rubles in stimulus spending in the first 10 months.

Industrial production began shrinking in November 2008 for the first time since a new methodology was introduced in 2003, plunging at the steepest clip since output collapsed in the wake of the 1998 default.

The Economy Ministry expects output to shrink 11.5 percent, Nabiullina told Prime Minister Vladimir Putin on Dec. 2. Export- oriented industries have helped production stabilize even as the pace of growth recently slowed, Nabiullina said.

Forecasts of an export-led recovery may be premature, according to VTB Capital’s Purchasing Managers’ Index published Dec. 1. The gauge fell last month for the first time this year to 49.1 from 49.6 in October.

“Export markets remained a key source of weakness, as new export orders declined for the 14th month running and at the fastest rate since August,” the bank said in the report.

-- With assistance from Zoya Shilova in Moscow. Editor: Chris Kirkham

To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@.

Last Updated: December 15, 2009 04:00 EST

Bloomberg: Russia Faces Entrenched Deficits, Must Hold Rates, IMF Says



By Chris Kirkham

Dec. 14 (Bloomberg) -- The International Monetary Fund called on Russia to scale back spending and put interest-rate cuts on hold to avoid entrenching wider deficits, a weaker ruble and faster inflation.

At the end of a staff visit to Moscow, the IMF said economic and financial conditions have improved and forecast expansion next year of 3.5 percent. Still, the IMF mission warned of threats to the recovery in the near term.

“Our main concern is that the higher spending contained in the 2009 and 2010 budgets will become entrenched,” the IMF team said in the statement. “This points to the risk that the sizeable fiscal expansion will not be reversed, eventually leading to a highly pro-cyclical fiscal stance, inflation, rapid real ruble appreciation and increased dependence on oil.”

The IMF urged the central bank to be more “ambitious” in reducing inflation and welcomed “increased exchange-rate flexibility.”

The budget deficit will be at 6.9 percent of gross domestic product in 2009, Interfax reported today, citing Finance Minister Alexei Kudrin. Kudrin said the deficit will be at 7.3 percent of GDP, taking into account subordinated loans.

The Washington-based lender warned that “in the near term, the monetization of large fiscal deficits will significantly circumscribe monetary policy” and “with banks still reluctant to extend credits on a substantial scale, significant excess liquidity will build up, eventually putting pressure on the ruble to depreciate and pushing up inflation.”

‘Temporary’

The IMF said recent upward pressure on the ruble was “likely to be temporary” and called on the central bank to put “further cuts in policy interest rates on hold until the monetary implications of the very large end-year liquidity injection associated with the fiscal deficit become clear.”

The bank has lowered the refinancing rate to 9 percent from 13 percent since April after the world’s biggest energy exporter slid into its deepest economic decline on record, contracting 10.9 percent in the second quarter and 8.9 percent in the third. The bank has indicated it will use rate cuts to stem speculative capital inflows and avoid ruble volatility.

The Russian banking system has stabilized, the IMF report said, though “generous liquidity support is likely to be masking more severe underlying problems.” The IMF said it is concerned that “significant problems in the banking system could emerge once a normalization of cyclical conditions forces the central bank to tighten monetary policy.”

Given these concerns, the IMF said the central bank “should take advantage of the current stable environment to restore more stringent regulatory requirements” and “determine the appropriate means for dealing with undercapitalized or insolvent banks --- be it through merger, recapitalization, restructuring, or closure.”

Last Updated: December 14, 2009 12:30 EST

Interfax: IMF cautions Russia over high public spending risk



Today at 09:58 | Interfax-Ukraine

Washington, December 15 (Interfax) - The International Monetary Fund (IMF) in its latest review of the Russian economy expressed its concern over the high public spending planned in 2009 and 2010 and cautioned that the imbalance between spending and revenue could turn into a long-term tendency.

"Compared to six months ago, economic and financial conditions in both the global economy and Russia have improved, but recovery is expected to be sluggish," the IMF said following a staff visit.

"The global economy has returned to positive growth. Nonetheless, the pace of recovery is likely to be gradual, particularly in the advanced economies where balance sheet adjustment presents a continuing drag on growth," the IMF said.

"In Russia, growth is expected to stage a modest recovery in 2010, reaching 3.5%. However, this largely reflects base effects and a turn in the inventory cycle. Despite relatively high oil prices, underlying domestic demand is likely to be subdued as bad loans in the banking system are expected to weigh on credit growth."

"The Russian authorities have continued to manage the fallout of the global financial crisis well. The Central Bank of Russia (CBR) has maintained a more flexible exchange rate policy and has appropriately taken advantage of the notably lower inflationary pressures to reduce policy interest rates. The fiscal authorities have rightly undertaken a countercyclical fiscal expansion, but concerns remain about the size and reversibility of expenditures. Financial sector policies have not been as forceful as needed, but the expansion of deposit guarantees and other confidence-building measures undertaken last year were successful in stabilizing the financial system and preventing a full-scale banking crisis."

"The task now is to develop exit strategies that appropriately balance Russia's short- and medium-term objectives."

"On fiscal policy, our main concern is that the higher spending contained in the 2009 and 2010 budgets will become entrenched. Expenditures are set to rise by 7 percentage points of GDP compared with 2007 levels-half of which represent increased statutory obligations. This points to the risk that the sizeable fiscal expansion will not be reversed, eventually leading to a highly procyclical fiscal stance, inflation, rapid real ruble appreciation and increased dependence on oil. Given these concerns, fiscal policy should strike a better balance between short- and medium-term fiscal considerations by further reducing spending in 2010. Expenditure on items deemed to have low fiscal multipliers-particularly subsidies to enterprises and inefficient projects suffering from significant waste-should be scaled back first. Indeed, cross-country comparisons suggest that Russia has scope to achieve significant budgetary savings by improving expenditure efficiency. Over the medium term, a sustainable reduction in the non-oil deficit would require a reinvigoration of much-needed structural reforms, including in the health and education sectors as well as public administration."

"The CBR should be more ambitious in reducing inflation. With inflation already running at 6% at an annualized rate, the CBR's current objective for 2010 is unambitious, especially as it entails no further decline compared to current levels. We believe that the CBR should take advantage of the current disinflationary environment to reduce inflation to below 5% by end-2010. In this regard, the increased exchange rate flexibility represents a welcome strengthening of policies."

"In the near term, the monetization of large fiscal deficits will significantly circumscribe monetary policy. Monetization raises risks that, with banks still reluctant to extend credits on a substantial scale, significant excess liquidity will build up, eventually putting pressure on the ruble to depreciate and pushing up inflation. While Russia's ample foreign reserves would provide scope to cushion sharp movements in the exchange rate, liquidity conditions would need to gradually be tightened through the placement of CBR paper or other means. Given this, we believe that the recent upward pressures on the ruble associated with capital inflows are likely to be temporary. Thus, further cuts in policy interest rates should be put on hold until the monetary implications of the very large end-year liquidity injection associated with the fiscal deficit become clear," the statement said.

Prime-Tass: Russian official says short-term cap inflow doesn't pose risks



MOSCOW, Dec 14 (PRIME-TASS) -- Arkady Dvorkovich, a Russian presidential adviser, said on Monday that he believed short-term capital inflow into the country did not pose any considerable risks.

"I don't think we have an excessive inflow of short-term capital into Russia," he said.

He also said proposals to impose taxes in order to restrict capital inflow were not relevant now.

Bloomberg: Ruble Gains Versus Euro, Little Changed Against Dollar, Basket



By Denis Maternovsky

Dec. 15 (Bloomberg) -- The ruble gained against the euro for a third day, heading for a seven-day high, and was little changed versus the dollar as oil, Russia’s chief export, traded above $70 a barrel.

The Russian currency added 0.2 percent to 43.9757 per euro by 11:01 a.m. in Moscow, poised for its strongest close since Dec. 4. It was little changed at 30.1113 versus the dollar.

Oil prices have more than doubled since February, boosting the earnings outlook for the world’s biggest energy exporter and supporting the ruble. Crude for January delivery gained as much as 0.6 percent to $69.91 a barrel in New York, rising from a two-month low. The contract fell for a ninth day, the longest losing streak since July 2001, to $69.51 yesterday.

The movements against the dollar and the euro left the ruble at 36.3439, the strongest level since Dec. 4, against the central bank’s target currency basket, which is used to manage swings that hurt Russian exporters.

The basket is calculated by multiplying the dollar’s rate to the ruble by 0.55, the euro to ruble rate by 0.45, then adding them together. The ruble remains within the 26 to 41 band the central bank pledged Jan. 22 to defend.

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@

Last Updated: December 15, 2009 03:16 EST

CommodityOnline: Russian central bank to buy 30 tonne gold



2009-12-15 15:05:00

MOSCOW (Commodity Online): After India and Sri Lanka, it is the turn of Russia’s central bank to swell its gold reserves as it has decided to buy 30 tonnes of gold worth $1 billion from the state repository.

Central banks worldwide are building up their gold reserves as the metal trades near record highs. Gokhran, the Russian repository, cancelled plans to sell the gold on the open market after information about the sale leaked.

The primary aim is to make sure this gold doesn’t hit the market and influence prices, said Olga Okuneva, metals and mining analyst at Deutsche Bank in Moscow.

Russia had planned to sell between 20 and 50 tonnes on the open market to help plug a budget deficit incurred during its first recession in a decade. The economy has since shown some signs of early recovery, in line with a rebound in oil prices.

With gold trading at record highs of $1,226.10 per ounce last week, boosted by a weaker dollar, analysts said Russia would be reluctant to sell the metal abroad or to push prices down by releasing a large quantity to the market.

Thirty tonnes, or 964,522 ounces, is equivalent to 16 per cent of Russia’s gold production last year or up to 1.25 per cent of global consumption of the metal.

Russian President Dmitry Medvedev signed a decree on December 7 approving the sale. Finance Minister Alexei Kudrin first announced the sale on November 18, saying Gokhran would sell at market price and use some of the proceeds to buy diamonds from state-run miner Alrosa.

Russia holds the world’s third-largest gold and foreign exchange reserves — $451.2 billion. It is also the world’s fifth-largest gold miner, ranking between Australia and Peru, with an 8 per cent share of global production.

Reserve Bank of India had purchased 200 tonnes of gold at record prices from the IMF in November.

Reuters: Russia confirms to restrict collateral-free loans



MOSCOW, Dec 14 (Reuters) - Russia's central bank is sticking by its plans to tighten the rules for collateral-free lending from February, effectively banning 70 banks from taking part, its first deputy chairman Alexei Ulyukayev said on Monday.

The loans were introduced last autumn, to see banks through the worst of the economic crisis and global credit crunch.

With the situation in the economy and the financial markets improving, the central bank wants to reduce exposure to the risky tool and has said it will tighten the rules from February, making 70 banks no longer eligible. [ID:nLG29393] [ID:nLG10087]

The longer-term auctions, to which only the best banks are admitted, already fail to attract any bids [ID:nGEE5B60QO].

But demand for shorter-term collateral-free funds, for which more lenders are eligible, often outstrips supply [ID:nGEE5AT19L] and some industry experts have argued that it is too soon to unwind crisis-time support measures for the sector.

A source close to the central bank told reporters that the decision to tighten the collateral-free loan rules could be reconsidered, as it had been taken with a majority of just one vote at a board meeting from which several members were absent.

"I want to disprove this information. The Bank of Russia does not propose scrapping the decision about restricting access to collateral-free loans," Ulyukayev told Reuters. "The Bank of Russia does not intend to return to this issue." (Reporting by Yelena Fabrichnaya and Oksana Kobzeva; Writing by Toni Vorobyova; Editing by Ron Askew)

Business, Energy or Environmental regulations or discussions

Interfax: Kazakh Eurasian Bank buying Russian Troika Dialog



ALMATY. Dec 15 (Interfax) - Kazakhstan's Eurasian Bank is purchasing the Russian bank OJSC Troika Dialog.

"On December 14 in Moscow, Eurasian Bank concluded an agreement for the purchase of stock in the CJSC Investment Company Troika Dialog (RTS: TROY) pertaining to the acquisition of 100% of the commercial bank OJSC Troika Dialog Bank's stock," a Eurasian Bank press release says.

The sole shareholder of Eurasian Bank, Eurasian Financial Company, is the nominal buyer and will acquire for the bank 1 share of Troika Bank stock, or 100% of its charter capital.

Eurasian Bank ended 2008 in 74th place by asset size among CIS bans and 9th place among 37 Kazakh banks on the Interfax-1000: CIS Banks ranking.

Reuters: UPDATE 1-Kazakh bank Eurasian buys Russia's Troika Dialog



Tue Dec 15, 2009 1:07pm IST

* Price undisclosed

* Eurasian seeks Russian market share

(Adds detail)

ALMATY, Dec 15 (Reuters) - Kazakh bank Eurasian EUBN.KZ said on Tuesday it was buying Russia's Troika Dialog Bank for an undisclosed sum as part of its expansion strategy.

"This marks an important transaction for Eurasian Bank as it expands (its) regional footprint and platform," chief executive Michael Eggleton said in a statement.

"The acquisition will enable the Bank to benefit from the cross-border trade and investment flows between Russia and Kazakhstan."

The deal was signed in Moscow on Dec. 14, Eurasian said, adding the sale was expected to be completed in the first quarter of 2010 and was subject to regulatory approvals.

Eurasian is owned by the key shareholders of mining company ENRC (ENRC.L: Quote, Profile, Research). (Writing by Olzhas Auyezov; Editing by Dan Lalor)

|The Financial: Fitch Affirms Bank of Moscow at 'BBB-'; Outlook Negative |

| |

|15/12/2009 11:42 (01:41 minutes ago) |

|The FINANCIAL -- Fitch ratings has on December 14 affirmed the ratings of Bank of MOSCOW , including the Long-term Issuer Default|

|Rating (IDRs) at 'BBB-' with a Negative Outlook. A full list of rating actions is provided at the end of this commentary. |

The ratings reflect Fitch's view of the high probability of support from the City of MOSCOW if necessary given BOM's ties to the city, the city's majority ownership, albeit partly indirect, in BOM, and its strong ability to provide support, as indicated by its IDR of 'BBB'/Negative. The bank's Long-Term IDR is dependant on the city's ownership, its financial position and its propensity to support the bank. Any major changes in the relationship between the city and the bank, for example, as a result of the potential change in the city's mayor at end-2011, could also impact the ratings.

BOM's Individual Rating of 'D' is under downward pressure mainly from asset quality deterioration. Reported non-performing loans (over 90 days overdue) were at 3% of the loan book at end-Q309, while rolled-over loans represented a further 4%, which is below the peer average. Asset quality numbers are supported by the relatively good quality of many of the largest borrowers (most of the 20 largest borrowers are large industrial companies, with some being state-owned or state-related), but also by bullet repayments of principal in some of the loans.

The bullet repayments in particular apply to four groups of borrowers (among the 20 largest), which represent riskier construction exposure totalling RUB38bn or 8% of total loans (overall reported construction exposure was about 15% of total loans at end-Q309). These loans are reasonably well collateralised, while several projects have some backing from the City of MOSCOW , including them being subject to the city's property buyout programmes, Fitch was informed. Although interest is currently being paid on all of the aforementioned construction loans, some of them (maturing in 2010) will likely be rolled-over. The quality of the retail portfolio (16% of total loans) has deteriorated to what Fitch estimates to be near the break-even level.

The liquidity position is reasonable (cash and liquid securities amounted to USD3.5bn at the end of October 2009). Although funding from the Central Bank of Russia and the City of MOSCOW is quite high (25% of liabilities), significant unutilised capacity exists. In this context, refinancing needs from Q409 through to 2010 are moderate, at USD1.8bn. However, this excludes a short-term deposit of USD1.8bn from a single counterparty, which is expected to be extended; this depositor has placed money with the bank since 2006.

Capitalisation has been supported by RUB20bn of new equity in Q309 and strong pre-impairment profit. BOM is planning another RUB20bn share issue in H110, which would raise loan loss absorption capacity to a significant 19% from the currently moderate 14%. The city's ownership (both direct and indirect) in BOM should not change materially as a result of the planned share issue, as both the city and Capital Insurance Group (see below), are expected to participate in it, Fitch was informed.

BOM is one of Russia's five largest banks. It is controlled by the city, which owns 48.11% directly and controls a further 15.28% through Capital Insurance Group. The latter is 25% owned by BOM, while the city has a 25%+1 share.

The rating actions are as follows:

Bank of MOSCOW

Long-term IDR: affirmed at 'BBB-'; Outlook Negative

Senior unsecured debt: affirmed at 'BBB-'

Subordinated debt: affirmed at 'BB+'

Short-term IDR: affirmed at 'F3'

Individual Rating: affirmed at 'D'

Support Rating: affirmed at '2'

National Long-term Rating: affirmed at 'AA+(rus) '; Outlook Stable

In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs.

Bloomberg: Russia May Limit TV Advertisers Share to 35%, Kommersant Says



By Maria Ermakova

Dec. 15 (Bloomberg) -- Russian legislators have submitted a bill to parliament to limit the market share of television advertising agencies to 35 percent to boost competition, Kommersant reported, citing lawmaker Irina Yarovaya.

Video International controls about 60 percent of television ad sales in Russia and OAO Gazprom’s Gazprom-media, in partnership with Alkasar agency, has more than 30 percent, according to the newspaper.

To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@

Last Updated: December 15, 2009 01:02 EST

Reuters: Sistema may partner Russian govt in Infineon buy



Tue Dec 15, 2009 11:49am IST

MOSCOW, Dec 15 (Reuters) - Russian holding company Sistema (SSAq.L: Quote, Profile, Research) is in talks over becoming a partner in the Russian state's possible acquisition of a stake in Germany's largest chip maker, Infineon (IFXGn.DE: Quote, Profile, Research), Sistema's president said. Russia wants to diversify its economy away from natural resources, and high technology is one of its priorities. Russian President Dmitry Medvedev said in the summer the state was considering investment in Infineon [nLE496105].

For its part, telecoms-to-oil conglomerate Sistema said in September it had considered buying into Infineon's additional share issue but had decided against it, and was no longer planning to buy its assets. [nMOS005536]

But Sistema president Leonid Melamed told Kommersant business daily in an interview on Tuesday his company was still in talks over Infineon "as a potential partner of the state, which has industrial expertise".

"Will (Sistema's IT subsidiary) Sitronics (SITRIq.L: Quote, Profile, Research) invest itself? Today I would not give a definitive negative reply, but we understand that in any case, if the project is realised, the state will take on the main share of investments," he said.

He declined to say what size stake was being discussed.

Melamed also said Sistema had no plan to sell its remaining stake in developer Sistema-Hals (HALSq.L: Quote, Profile, Research) despite ceding control to bank VTB (VTBR.MM: Quote, Profile, Research) and it would be interested in taking part in future privatisations in the telecoms sector. [nWLA9717]

(Writing by Toni Vorobyova; Editing by Dan Lalor)

((antonina.vorobyova@; Tel: +7495 7751242, Reuters Messaging: antonina.vorobyova.@)) Keywords: SISTEMA/INFINEON

(C) Reuters 2009. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nLDE5BE02C

Bloomberg: Renaissance, Backed by Russia’s Richest Man, to Team With Kotak



By Pooja Thakur and Denis Maternovsky

Dec. 15 (Bloomberg) -- Renaissance Capital, the investment bank backed by Russia’s richest man, said it will work with the former Indian partner of Goldman Sachs Group Inc. to advise clients on takeovers in emerging markets.

Renaissance, based in Moscow and half-owned by Russian billionaire Mikhail Prokhorov, and Kotak Mahindra Bank Ltd.’s investment banking unit will advise companies on cross-border investments and mergers and acquisitions in India, Africa and the Commonwealth of Independent States, the two companies said in a statement today.

Takeovers will climb as Indian companies aim to buy energy and mining assets in the former Soviet Union and Africa, and overseas companies seek to enter India, said Renaissance Group head Stephen Jennings. Indian billionaire Uday Kotak, who is betting acquisitions will accelerate within 12 months after the slowest year in five, in February agreed to work with Japan’s GCA Savvian Group Corp. on deals between the two nations.

“In 2010 and beyond, we anticipate unprecedented cross- border deal flow among the emerging markets, and this prominently includes transactions between Indian and Russian companies as well as between Indian and African companies,” Jennings said in the statement.

The value of takeovers in India declined to $17.8 billion this year from $49.2 billion in 2008, according to data compiled by Bloomberg. Kotak, 50, is founder and managing director of Mumbai-based Kotak Mahindra Bank, owner of the nation’s third- ranked takeover adviser.

Sale to Prokhorov

Jennings started Renaissance Capital in 1995, and sold 50 percent minus one share to Prokhorov in September 2008 for $500 million in cash as the credit squeeze deepened. The New Zealand native had previously helped Russia sell state-owned assets from 1992 to 1995 when he was co-head of Credit Suisse First Boston in Russia.

Russian banks, including state-owned OAO Sberbank and VTB Group, the country’s two largest lenders, and Troika Dialog, its oldest investment bank, are expanding abroad or forming partnerships with companies in other emerging markets as they seek to tap clients outside the former Soviet Union.

VTB Capital, an investment bank set up in 2008, opened an office in Dubai in June to add to its branches in Moscow, London and Singapore, and said it may expand to Hong Kong and New York.

OAO Sberbank, the country’s biggest lender, opened a branch in India and a representative office in China earlier this year. In March, Johannesburg-based Standard Bank Group Ltd. paid $200 million for a 33 percent stake in Troika and combined the local operations with Russia’s oldest investment bank.

Goldman Sachs, which broke with 126 years of tradition to form a joint venture with Kotak Mahindra for Indian operations in 1995, sold its 25 percent stakes in the local investment banking and brokerage units in 2006 to start its own financial services firm in the South Asian country.

To contact the reporters on this story: Pooja Thakur in Mumbai at pthakur@; Denis Maternovsky in Moscow at dmaternovsky@

Last Updated: December 15, 2009 01:31 EST

Bloomberg: Cheuvreux to Expand Into Russia, Hire Research Team (Update1)



By Jason Corcoran

Dec. 14 (Bloomberg) -- Credit Agricole Cheuvreux SA, the European brokerage arm of Credit Agricole SA, will expand into Russia next year driven by demand from its clients for more emerging market coverage. The brokerage firm will hire at least 25 sales and research staff in London to cover the region.

“A number of global players are retrenching in Russia while some of the Russian brokers are not what they used to be,” said Francois Simon, chairman and chief executive officer of Cheuvreux, in a telephone interview three days ago. “We are trying to take a slot there.”

Cheuvreux hired Ronald Smith, former head of research at privately-owned Alfa Bank in Moscow, to lead the broker’s Europe Middle East and Africa research team, according to two industry sources that declined to be identified. Smith joins Cheuvreux in January. Cheuvreux may also hire 10 senior and three junior analysts as well as a similar number of sales and distribution staff to cover the region from London, said Simon.

“We need to find new stories for our clients and that’s what led us to dip our toe in Turkey by opening an office a year ago,” said Simon. “We also set up in Dubai and used our office in Vienna to cover central Europe but we have quickly realized that without Russia we were missing a large part of commission and were not maximally serving the needs of our clients.”

EMEA Coverage

From next year, Cheuvreux aims to cover 150 stocks in the EMEA region, with Russian companies making up a third. Cheuvreux may open an office in Moscow if the new business goes well, said Simon. Parent Credit Agricole has had a presence in Moscow since 1991 through its ownership of Calyon Rusbank.

Rival French bank Societe Generale last week posted a 58 percent decline in profit from international retail banking to 108 million euros ($158 million) in the third quarter, hurt by losses in Russia, one of its main markets outside France. Societe Generale closed 47 branches in Russia during the quarter.

The 30-stock Micex Index rose 1.2 percent to 1,317.33 in Moscow, heading for its highest close in a week. The dollar-denominated RTS Index gained 1.1 percent to 1,381.91.

To contact the reporter on this story: Jason Corcoran at Jcorcoran13@

Last Updated: December 14, 2009 11:04 EST

Reuters: INTERVIEW - Russian-Indian M&A pact aims at bulge bracket



Tue Dec 15, 2009 12:06pm IST

By Michael Stott

MOSCOW (Reuters) - A Kazakh resources company wants to buy African mining assets. Where does it go for advice - London, New York or Hong Kong?

None of the above, if Hasnen Varawalla has his way.

Varawalla is head of corporate finance at Renaissance Capital, Russia's biggest home-grown investment bank, which has forged an exclusive co-operation agreement for cross-border mergers and acquisitions with Kotak Investment Banking, a unit of Kotak Mahindra Bank.

The alliance, unveiled in Mumbai on Tuesday, aims to use Renaissance's franchise in Russia, the former Soviet Union and Africa and Kotak's Indian experience to help big companies from those countries buy into each other's markets.

"It's an idea whose time has come," said Varawalla, who left Credit Suisse to join Renaissance in Moscow three years ago, adding the alliance will rival global "bulge bracket" investment banks, who already have a strong presence in the same markets.

Citing a string of recent deals, such as Russian conglomerate Sistema's purchase of Indian telecom player Shyam, Gazprom's oil well development in the Bay of Bengal or Indian player ONGC's takeover of Imperial Energy for its Russian and Kazakh energy assets, Varawalla says the hunger by big developing world companies to buy into each other's markets is growing.

"Companies from this part of the world specialise in low-cost business models," he explains. "They know how to run things on a shoestring. For expansion into Africa, companies from the emerging world are that much stronger."

And the old model whereby acquisitive and ambitious emerging market companies automatically looked only to big Western banks for help is already history, he says.

Multinational banks are "less and less the only source of cross-border investment and M&A within emerging markets", he said.

"Increasingly this flow is between emerging markets," he said adding the Renaissance-Kotak combination will appeal because clients will appreciate what he says is the local players' deeper knowledge of their markets and better coordination.

Varawalla believes that resources are the most obvious sector for such cross-emerging market deals "but by no means the only one".

He suggests telecommunications, the defence industry, construction, IT outsourcing, infrastructure and the banking sector as other promising areas for Indian, Russian and African players to seek assets and tie-ups.

"Indian financial companies have been active in Africa for the last 60 or 70 years," he said. "There is now an opportunity for them to grow and expand."

In the resources sector, Indian companies have some catching up to do in Africa, where Varawalla says they are well behind the Chinese, who have announced deals valued at $20 billion in the continent in the last 12-18 months.

No equity is changing hands for the co-operation deal between Renaissance and Kotak and fees will be split in proportion to their contributions to transactions they make.

Varawalla declined to specify targets for how much business the venture, which has no dedicated employees, is meant to bring in during its first years.

Wearing his corporate finance hat, he also sees a wave of new equity offerings from the markets Renaissance serves over the next year as the global appetite for risk returns.

"A lot of companies who had plans on hold will come to market next year," he said. "I suspect 2010 will be a strong year."

(Editing by David Cowell)

Russia Today: Text appeal of Russian market has Webtext looking east



15 December, 2009, 11:15

The economic crisis is prompting more text and less talk, with the Russian SMS text market expected to be worth more then €1bn this year. That has specialist providers looking to move in.

Research by J’son and Partners Consulting shows that for 2008, SMS texting was responsible for half of all value-added telecommunications services revenue in Russia, with the sector dominated by the big 3 mobile firms VimpelCom, MTS and MegaFon. But the text appeal of the largest mobile telecoms market in Europe is now attracting attention from specialist text providers in the field, with Anthony Cahill, CEO of specialist SMS service-provider saying its growth and size made it impossible to ignore.

“There is no other market to compare with Russia, given its size – and the growth in sms texting makes it an attractive proposition, as both customers and operators seek new ways of using technology to maximise information flow. From these studies, sms texting alone is expected to be worth over €1bn this year in Russia.”

Despite putting a dent in the market for communications in general, the economic downturn which has swept across Europe has provided a boost for text messaging, with companies in particular looking to use texting to keep in touch with employees and customers. That comes on top of the general public looking to cut costs.

“Ironically, much of this is being driven by the current economic downturn. Our experience in Ireland is that while the crisis has been biting, sms texting has been rising. Psychologically, people are tending to text more to save money instead of talking, but this means that for mobile phone operators, sms texting is now a key generator of revenue. This pattern is being repeated in Russia too, where similar behavioural patterns have emerged in the economic crisis, as we’ve seen from a continuation in sms growth.”

Webtext is planning enter the Russian market with specifically-developed software enabling mass SMS text messaging online, sent from a PC to a database of numbers with no limit at cheaper rates than by using the telecom operator directly.

Activity in the Oil and Gas sector (including regulatory)

Upstreamonline: Russia to cut oil export duty



Russia will slightly cut its oil export duty by around 1.5% to $267 a tonne from 1 January 2010, reflecting a fall in oil prices, according to calculations.

News wires  Tuesday, 15 December, 2009, 08:10 GMT

The duty was based on the monitoring of international prices for Russia's benchmark Urals crude blend between 15 November and 14 December.

The duty, which plays a big role in the financial results of Russia's oil companies, was set at $271 a tonne for December.

Finance Ministry official Alexander Sakovich said the average price of Urals in the latest monitoring period was $75.13 a barrel, which works out at around $550.7 a tonne.

According to Reuters calculations, based on customs tariffs regulations and the average oil price estimates, the January oil export duty is likely to be set at $267.07 per tonne.

The January duty was in line with the $266 to $268 range forecast by the ministry on 11 December, three days before the end of the monitoring period.

Export duties on light refined products such as gasoline and gas oil will total $192.2 a tonne, compared with the current level of $194.9 a tonne.

On heavy refined products such as fuel oil, the January tariff will be set at $103.5 against $105 a tonne this month.

The government will officially announce January duties at the end of December.

Published: 15 December 2009  | Last updated:  15 December 2009

Reuters: Russia to cut Jan oil export duty 1.5 pct to $267/T



Tue Dec 15, 2009 1:03pm IST

MOSCOW, Dec 15 (Reuters) - Russia will slightly cut its oil export duty by around 1.5 percent to $267 a tonne from Jan. 1 2010, reflecting a fall in oil prices, Finance Ministry and Reuters calculations showed on Tuesday.

The duty was based on the monitoring of international prices for Russia's benchmark Urals crude blend URL-E between Nov. 15 and Dec. 14.

The duty, which plays a big role in the financial results of Russia's oil companies, was set at $271 a tonne for December.

Finance Ministry official Alexander Sakovich said the average price of Urals in the latest monitoring period was $75.13 a barrel, which works out at around $550.7 a tonne.

According to Reuters calculations, based on customs tariffs regulations and the average oil price estimates, the January oil export duty is likely to be set at $267.07 per tonne.

The January duty was in line with the $266-$268 range forecast by the ministry on Dec. 11, three days before the end of the monitoring period. [ID:nGEE5BA0BS]

Export duties on light refined products such as gasoline and gas oil will total $192.2 a tonne, compared with the current level of $194.9 a tonne.

On heavy refined products such as fuel oil, the January tariff will be set at $103.5 against $105 a tonne this month.

The government will officially announce January duties at the end of December.

(Reporting by Katya Golubkova, writing by Vladimir Soldatkin, editing by Sue Thomas)

Bloomberg: Lukoil Rises in Moscow After Winning Iraq Order, Lukarco Stake



By Anna Shiryaevskaya

Dec. 14 (Bloomberg) -- OAO Lukoil, the Russian oil company with the most assets abroad, rose the most in a week in Moscow trading after winning a contract in Iraq and buying a stake in a Kazakh venture from BP Plc.

Lukoil advanced as much as 1.7 percent to 1,627 rubles, the biggest jump since Dec. 4. The stock traded at 1,614.72 rubles as of 1:58 p.m. local time, extending its gain this year to 68 percent.

The Moscow-based company won a contract to develop Iraq’s “super giant” West Qurna-2 oilfield, the largest offered to foreign investors in a bidding round on Dec. 12. A day earlier, BP said it divested its interest in Kazakhstan’s Tengiz field by selling its 46 percent stake in Lukarco BV to Lukoil for $1.6 billion in cash.

Lukoil is adding assets overseas as Siberian fields go into decline. As well as Central Asian and Gulf acquisitions, it’s seeking concessions in West Africa, Deputy Chief Executive Officer Leonid Fedun said Dec. 8. The company, which expressed interest in buying BP out of Lukarco last year, joins Chevron Corp., Eni SpA and BG Group Plc in expanding projects in Kazakhstan, which holds 3.2 percent of the world’s oil.

Lukoil, which won the West Qurna-2 contract with Norwegian partner Statoil ASA, has said it will raise output at the field to 1.8 million barrels a day for a fee of $1.15 a barrel.

“Lukoil does have unique geological insight to West Qurna’s geology which will be beneficial, but it appears to us that the lower the fee and the higher the promised output, the greater the chance of winning, which points to value destruction,” said analysts at Sanford C. Bernstein & Co.

Lukarco owns a 5 percent interest in TengizChevroil LLP, Kazakhstan’s biggest crude producer, as well as a 12.5 percent stake in the Caspian Pipeline Consortium.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@

Last Updated: December 14, 2009 06:11 EST

Reuters: INTERVIEW - Russia LUKOIL bets on oil revolution in Iraq



Tue Dec 15, 2009 2:30am IST

By Robin Paxton and Katya Golubkova

MOSCOW (Reuters) - LUKOIL, the big Russian winner at Iraq's weekend oil auctions, expects a "revolution" in world oil markets when enough crude to add 20 percent to global supply starts to flow from the country's supergiant fields.

Billionaire LUKOIL shareholder Leonid Fedun told Reuters on Monday he expected a fivefold rise in Iraqi production to cap oil price growth, while also deterring investors from pursuing more difficult and costly projects in other parts of the world.

"A top manager at a leading Western firm said the modern history of the oil business will be split into the pre-Iraq and post-Iraq periods. I agree," Fedun said in an interview.

"We're witnessing a revolution in oil production."

Iraq, emerging from the shadows of war, has deals on the table to raise oil capacity to 12 million barrels per day from 2.5 million bpd today, a level that would eclipse second-ranked Russia and leave the country behind only Saudi Arabia.

LUKOIL, frustrated by the loss of a Saddam Hussein-era contract, finally realised its ambition of developing Iraqi oil when its partnership with StatoilHydro won the rights to develop the West Qurna Phase Two field.

"Investment will be in the billions of dollars. The project is colossal," said Fedun, a vice-president of LUKOIL whom Forbes magazine this year ranked Russia's eighth-richest businessman.

The LUKOIL-led consortium proposed a remuneration fee of $1.15 per barrel and output of 1.8 million barrels per day at West Qurna Phase Two, an eventual target roughly equal to the entire output of LUKOIL's fields in Russia.

The deal, which gives LUKOIL access to 12.9 billion barrels in oil reserves, was more than a service contract, Fedun said.

"It's a hybrid between a service contract and a production sharing agreement," he said. "There is a remuneration fee and we could potentially book a portion of the reserves, although we don't yet know how much.

"As soon as the contract comes into force, we will move quickly toward its realisation. Within three to four years we will launch the first phase, and then the second."

QUESTIONS OVER PRICE

Fedun said the ministry's target of reaching 12 million bpd was realistic and that, as these plans are realised, the effects on the world market would be widespread.

"World oil supplies will rise by a minimum 20 percent and demand won't increase at the same rate over the same period. This raises questions over the long-term oil price," he said.

It also raises questions over investment elsewhere, he said.

"A whole host of projects that were under consideration now seem uncompetitive," Fedun said.

"Does the industry need to invest in the development of difficult oil deposits, such as oil sands, or in deep drilling in the Gulf of Mexico, West Africa or the Brazilian shelf?

"Do we really need the second phase of the East Siberia-Pacific Ocean pipeline?" he said, referring to Russia's landmark project to deliver East Siberian oil to Asian markets.

LUKOIL is alone among Russia's top four oil producers in not having launched a major East Siberian oil deposit.

Fedun said the potential rewards in Iraq -- low production costs, low transport costs and the promise of access to other lucrative fields -- made the inherent risks worthwhile.

"Despite terrorist acts, the country is politically stable. Yes, there are risks, but the regions where the big companies are working are comparatively stable and located not far from the export infrastructure."

LUKOIL had no immediate plans to invite its 20 percent shareholder, ConocoPhillips, to join its Iraqi project. But Fedun denied U.S. majors had performed poorly in auctions dominated by Russian, Chinese and other firms.

"ExxonMobil were successful," he said. The U.S. major led a group including Royal Dutch Shell to win the West Qurna Phase One field in the first round of auctions.

(Writing by Robin Paxton; editing by Sue Thomas)

Independent.ie: Oil giant seeks repayment of 'tax paid in error'



By John Mulligan

Tuesday December 15 2009

An Irish subsidiary of Russian oil giant Rosneft is trying to recoup tax handed over to the Revenue Commissioners that the company says it paid in error, accounts for the business reveal.

Rosneft International, which is one of two Ireland-based arms of Russia's largest oil and gas company, was hit for tax and penalties amounting to just over $5.5m (€3.7m) in Russia after what it described as "recognition of operating activities derived through the Russian Federation and the company's representative office in Moscow".

It added that the tax settlement related to the years 2006 to 2008, but that efforts will be made to have tax paid in Ireland during the period returned.

"The directors anticipate the recovery of tax paid in Ireland in respect of prior periods, but have not recognised a credit for this refund as recovery is currently uncertain," the accounts note.

Rosneft International paid a total of almost $9m (€6.1m) in tax here and in Russia during 2008, up from $5.2m in 2007. Last year it paid nearly $4.3m in corporation tax in Ireland, while it also stumped up an additional Russian tax charge of $1.2m and recorded negative "adjustments to its tax charge in respect of previous periods" of $2.1m.

Facilitate

Rosneft International is used by the parent company to facilitate investment activity.

That typically involves providing finance to Rosneft's various projects, while the Irish arm is also holding company for the firm's other operations, including oil trading and the provision of air transportation services for Rosneft executives.

From 2006 to the end of 2008, Rosneft International has paid a total of almost $9.8m (€6.7m) in corporation tax in Ireland at the 25pc rate applicable to non-trading income.

The company incurred an operating loss of $5.6m last year as its operating expenses soared from $1.5m to $6m. Its pre-tax profit was $17.1m after it received interest income of $28.3m. Its fixed assets are listed as nearly $206m of investments.

The firm says it employs just one person in an administration role, and the remuneration for 2008 was $466,000, down from $603,000 in 2007.

Its directors include Anton Kozhinov, who is Rosneft's chief financial officer.

- John Mulligan

CommodityOnline: China, Russia and a possible 'natural gas OPEC'



2009-12-15 14:15:00

By Fawzia Sheikh

China’s completion of an historic natural gas pipeline with Kazakhstan bypassing Russia this week tightens the Asian behemoth’s grip on energy resources needed to fuel a burgeoning economy, a desire also forcing it on a quest for oil and gas wealth in other corners of the globe.

China is not alone in this scramble for energy security. Hungry for oil and gas, world powers like Russia and the United States are also relying on different strategies to grab resource treasures but their efforts have raised questions about conflicts down the road.

The U.S. Energy Information Administration describes China as the second largest energy consumer behind the United States. Taking advantage of the world’s financial crisis, the Asian powerhouse has tapped currency reserves to invest in both Russia and Central Asia, helping to construct power plants and other domestic infrastructure in return for long-term oil and gas supplies, said Ben Montalbano, a senior research analyst at the Washington-based Energy Policy Research Foundation.

Lacking energy reserves, China has been “working hard to lock in” investments in Africa, Central Asia and Venezuela, Montalbano told . The country has also sought natural gas to satisfy increasing consumption and built many liquefied natural gas receiving terminals over the last year, he added.

“Cut off from African natural resources . . . China’s growth stops,” warned Peter Pham, director of the Africa Project at the New York-based National Committee on American Foreign Policy and an associate professor at James Madison University in Harrisonburg, Virginia.

This intensive bid for energy, however, has caused friction with the world community. Under an investment strategy in Africa, China “wins over very easily governing elites but doesn’t necessarily win over the populace,” Pham charged.

Chinese state-owned companies tend not to invest in exploration but prefer to offer “inducements,” he said. China’s offer of multibillion-dollar credit facilities to Angola was pivotal for the African nation to get “off the hook” from negotiating with the International Monetary Fund and the World Bank to meet “serious reform and certain conditions” before the organizations granted such facilities, he argued. China then bought stakes from the Angolan state oil company, he said.

China, moreover, has helped the Khartoum government to evade United Nations sanctions by assisting in the building of at least three weapons factories in Sudan, he said.

Not to be outdone, Russia has returned to Africa in “considerable force” pursuing natural resources in part to recover its “great power status,” said Pham. Russian firms are trying to “lock in partnerships” with resource producers to form, for example, the “stream of a natural gas OPEC,” he said.

Russia holds the world's largest natural gas reserves and the eighth largest oil reserves, according to the U.S. Energy Information Administration. Next year, its federal budget will be nearly 50 percent derived from oil and gas exports, emphasizing a reliance on gas exports to “feed the budget,” Montalbano of the Energy Policy Research Foundation told . To some extent, China and Russia have worked together in the oil and gas domain. Earlier this year, China announced a $25-billion loan to Russian firms in return for a 20-year supply of crude oil.

Russia is not the “behemoth of financial reserves” it was two years ago and has a “fairly weak” banking system and industry, Montalbano maintained. While the country is discussing certain projects with Iran and potentially with Iraq, it is mainly concerned with opening up huge Arctic gas fields because its existing fields are declining, he noted.

Russia and other northern countries have increasingly turned to the melting Arctic but the region is “still up for delineation,” said Boyko Nitzov, director of the Eurasia Energy Center at the Atlantic Council in Washington. “The Arctic is still fairly off limits for large-scale production of oil and gas” and difficult to access especially during the winter, Nitzov explained.

For American oil companies, an over-reliance on the Middle East for energy needs has shifted its attention to Africa, a major energy supplier over the last several years edging out the Persian Gulf in energy imports to the United States, Pham explained. U.S. firms tend to forge production-sharing agreements or explore resource development, but lack carte blanche in their pursuit of oil riches in places like Africa due to U.S. government sanctions and public pressure, he said. This puts the United States at “a slight disadvantage” relative to Russia and China, he added.

Competition for energy assets will probably not lead to open conflict but rather to increasing political tension, predicted Africa expert Pham. Leading African organizations, Europe and the United States never recognized Guinea’s military coup last year, which led to a subsequent massacre of opposition members. Yet China signed a deal with the military junta, risking a perception as a “rogue operator in the single-minded pursuit of resources,” he warned.

Although Russia and China, meanwhile, have both benefited from joint oil and gas investments, making conflict doubtful in the forseeable future, “10, 20 years down the road, who knows,” Montalbano added.

This article was written by Fawzia Sheikh of who focus on Fossil Fuels, Alternative Energy, Metals

Gazprom

RIA: Gazprom restarts gas supplies to N.Ossetia, Ingushetia, Armenia



11:0015/12/2009

MOSCOW, December 15 (RIA Novosti) - Gazprom has resumed gas supplies to Armenia and Russia's North Caucasus republics of North Ossetia and Ingushetia following a bomb scare, the Russian energy giant said on Tuesday.

"By 19.25 Moscow time [14:25 GMT] on Monday gas supplies, halted after an explosive device had been found on the gas transit network in Ingushetia, resumed in full," Gazprom's press service said.

Gazprom confirmed late on Sunday that a bomb had been found on the pipeline running from Mozdok in the Russian republic of North Ossetia to Georgia. Several gas transit facilities were temporarily shut down.

Bomb technicians deactivated on Monday two explosive devices planted on the pipeline.

Russia's mainly Muslim and ethnically diverse North Caucasus republics have been wracked by violence this year, with hundreds of people killed in militant attacks and skirmishes between security forces and gunmen.

The Moscow Times: Gazprom Dismisses Contract Requests



15 December 2009

By Anatoly Medetsky

Gazprom rejected all requests from its European customers to be more flexible about gas contracts, even as the economic downturn reduced demand, analysts said Monday, after a meeting with Alexander Medvedev, the company’s deputy chief executive.

Take-or-pay clauses in Gazprom’s long-term export contracts require European utility companies such as Ruhrgas and GDF Suez to pay for a set amount of gas every year even if they don’t need that much. Medvedev, who oversees exports, indicated at the Sunday meeting that the world’s biggest gas company didn’t relent on the terms as the year is ending.

“Medvedev said Gazprom had rejected all requests to change the existing take-or-pay principle with its European customers and does not plan to materially alter the terms of any of its contracts,” Renaissance Capital’s analyst Alexander Burgansky said in a note for investors.

Gazprom’s deputy chief of exports, Sergei Chelpanov, said early last month that 8 billion to 9 billion cubic meters of gas would fall under the take-or-pay clauses this year.

Gazprom exports will probably fall 10 percent to 170.6 bcm as demand flagged, Deputy Prime Minister Igor Sechin said at a meeting with President Dmitry Medvedev, giving the latest estimates on energy trade. Exports in the last few months of the year are higher than they were this time last year, Sechin said.

The way that Gazprom prices its gas will also remain unchanged, as it will keep the cost pegged to a basket of oil products, Medvedev said. European Union energy officials have been displeased with the peg.

“The pricing mechanism is not subject to negotiations,” VTB Capital’s analysts Lev Snykov and Svetlana Grizan wrote in a note to investors that listed the key takeaways from the meeting.

Medvedev estimated that next year gas in Europe would sell for $325 per 1,000 cubic meters on average, in line with Renaissance Capital’s expectations, Burgansky said. This year, Gazprom expects the average price to be $280 per 1,000 cubic meters.

Gas sales on the European spot market, which severely undermined Gazprom’s exports this year because of lower prices, account for 15 percent of total sales, Burgansky cited Medvedev as saying.

Medvedev took a dig at shale gas, which experts believe can shatter the prospects for traditional producers by offering a cheaper alternative, VTB Capital said. The break-even price for shale projects is as high as $200 per 1,000 cubic meters, he said without giving comparative figures for Gazprom’s output.

Shale gas supply could decline next year because drilling on these projects lost momentum this year, the VTB Capital analysts cited Medvedev as saying.

Gas talks with China might take another two years, with the pricing being the key stumbling block, he said.

Bloomberg: Gazprom Neft Says Iraq’s Badra Oilfield Holds 2 Billion Barrels



By Anna Shiryaevskaya

Dec. 14 (Bloomberg) -- OAO Gazprom Neft, the crude arm of Russia’s gas export monopoly, estimates Iraq’s Badra field has reserves of 2 billion barrels of oil equivalent and expects to consolidate the field’s future output in its reporting.

Gazprom Neft will operate the deposit and plans to start work at the field next year, it said in an e-mailed statement today. The Moscow-based company will have a 30 percent stake in the venture, it said.

Gazprom Neft led the only group bidding for rights to develop Badra as the Middle Eastern crude producer held its second bidding round last week. The group pledged to raise output to 170,000 barrels of oil a day at a fee of $5.50 a barrel. The field has reserves of about 100 million barrels of oil, according to U.S. Energy Department estimates.

“Despite the fact that we got a service contract, we expect that with certain provisions, we will be able to consolidate Badra’s production in our reports,” Gazprom Neft said. “This achievement is a significant step in implementing our strategy to strengthen our positions on foreign markets.”

Russia’s fifth-largest oil company plans to double annual crude output to 100 million tons by 2020 even as domestic production has hit a plateau because of aging fields and soaring costs. It aims to get at least 10 percent of its oil from outside Russia by 2020, Deputy Chief Executive Officer Boris Zilbermints said in the August-September issue of the in-house magazine.

Gazprom Neft and partners lowered the proposed remuneration at the bidding round from $6 a barrel to meet Iraq’s maximum allowable fee. The group includes Turkish Petroleum Corp., known as TPAO, Korea Gas Corp., known as Kogas, and Petroliam Nasional Bhd, known as Petronas

Kogas will hold 22.5 percent in the venture, Petronas 15 percent, TPAO 7.5 percent and the Iraqi government will hold 25 percent.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@

Last Updated: December 14, 2009 07:30 EST

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