Russia - WikiLeaks
Russia 101012
Basic Political Developments
• Oct 13: President Dmitry Medvedev to meet with UK Foreign Secretary William Hague
• Oct 13–14: Parliamentary Assembly of Council of Europe President Mevlut Cavusoglu to visit Moscow
• Oct 14–15: Venezuelan President Hugo Chavez to visit Russia
• Oct 14–25: Population census conducted in Russia
• Iran signals readiness to restart talks with six states – Lavrov
• RUSSIA READY TO PROMOTE CLOSEST POSSIBLE RELATIONS WITH FUTURE KYRGYZ GOVERNMENT – LAVROV
• Russia ready to cooperate with the new Government of Kyrgyzstan and regards the parliamentary elections held – Lavrov
• Russia, Uruguay to scrap visas - Lavrov
• Moscow ready to unfreeze relations with UK – Lavrov
• Lavrov: Russia expects from Britain to move to improve bilateral relations
• Prisoner in spy swap deal urges Hague to take tough line with Moscow
• What are the prospects of Russo-British relations? - The director of the Center for British studies of the Moscow-based Institute of Europe Alexei Gromyko tries to estimate what Russia can expect from Mr. Hague’s visit
• Reports of Georgian visa annulment for North Caucasus residents an act of propaganda – Lavrov
• Trade set to dominate talks as German president begins Russia tour - German President Christian Wulff begins his trip to Russia on Tuesday with a meeting with his counterpart Dimitry Medvedev. Talks are expected to focus on economic ties.
• Russian, German presidents to discuss strategic partnership
• Russia reveals detailed data on defense spending until 2013 - State Duma Defense Committee head Viktor Zavarzin said last week that the country's defense spending, including R&D, would total 487 billion rubles ($16.3 bln) in 2010, 574 bln ($19.2 bln) in 2011, 726 bln ($24.3 bln) in 2012, and 1.16 trillion ($38.8 bln) in 2013. The share of spending on R&D will drop from 22 percent in 2010 to 16 percent in 2013, the lawmaker said.
• Russia to spend $26 million on patriotic propaganda - paper: The Russian government will invest 777 million rubles ($26 mln) in propagating patriotism in the next 15 years in line with a state program aimed at increasing patriotic consciousness, a Russian business daily said on Tuesday.
• Russia calls "absurd" Belarus statement on CIS court decision
• CIS Court Advises Moscow To Remove Duties On Oil For Minsk
• CIS court decision on duties on Russian exports nonbinding
• Date of Caspian Sea states' leaders' summit publicized - A summit of the presidents of the five countries that surround the Caspian Sea - Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan - will be held in Baku on Nov.18, Azerbaijani Deputy Foreign Minister Khalaf Khalafov said at the Caspian states' deputy foreign ministers' meeting in Baku today.
• Karabakh mediators to visit all conflict-affected areas: OSCE Minsk Group co-chairs Igor Popov (Russia), Bernard Fassier (France), Robert Bradtke (USA) and accompanying experts are in Nagorno-Karabakh on a mission to find out the situation in the seven districts around Karabakh occupied by Armenia.
• Commentary: May Armenia and Russia Remain Inseparable - By Hagop Vartivarian
• Schwarzenegger Leads Business Mission To Russia - Schwarzenegger was accompanied on the trip by officials from Internet search firm Google, software-makers Oracle and Microsoft, biotechnology company Amgen, and fuel-cell technology firm Bloom Energy.
• Twitter plans Russian-language interface - Representatives of the micro blogging site Twitter told Russian bloggers at a meeting in San-Francisco that a Russian-language interface will be launched, without specifying when, a Russian blogger said on Tuesday.
• Fight against drug trafficking and terrorism is main goal – UNODC Russia head: Recently appointed head of the UN Office on Drugs and Crime in Russia, Yury Fedotov says he wants to advance the agency’s work in drug control and terrorism prevention through comprehensive strategies.
• Tehran, Moscow economy officials meet in Washington
• Iran, Russia keen to boost energy ties - "With respect to the Iranian engineers' skill and experience in exploration of oil, gas and minerals, the two states can enhance economic relations by supporting the private sector," Hosseini said in a meeting with his Russian counterpart Alexei Kudrin on the sidelines of a World Bank and the International Monetary Fund (IMF) meeting in Washington on Sunday.
Russian culture minister: Moscow keen on expanding cooperation with Tehran
• Russian spies may have used six Irish passports - THE GARDA is investigating how six Irish passports may have been fraudulently used by members of a Russian spy ring uncovered in the US this summer.
• Russian spy ring linked to forged Irish passports - The investigation, which is being carried out by detectives from the Special Branch, is trying to pinpoint where the details were copied and then inserted into the forged documentation.
• Russia steps up fight against cyberterrorism - At a meeting in Moscow, NAK drew up measures to "prevent and put an end to illegal infringement of the activities of information and telecommunications networks that could lead to technological and environmental catastrophes," the statement said.
• Police arrest 3 militants behind Vladikavkaz market attack
• Vladikavkaz terrorist act solved, 3 bandits arrested, 2 killed
• Vladikavkaz terror attack perpetrators named
• Vote rigging claims mar Russian elections
• Yakushev voted to continues as Tyumen region governor
• Moscow ex-mayor Luzhkov says Bank of Moscow unaffected by his dismissal
• Emergency department chief left suicide note before he died
• Senior emergencies ministry official found dead in Russia's Far East
• Russia's chief sanitary doctor lashes out at Procter & Gamble - Russia's top sanitary official accused on Tuesday Procter & Gamble's subsidiary in Russia of violating sanitary regulations at its plants.
• World Congress of Chechen people kicks off in Grozny
• Russian energy shift encourages Swiss firms - Swiss firms could profit from Russia’s drive to upgrade its energy infrastructure and diversify into clean-tech alternatives, a business conference has heard.
• Vladimir Putin to support Russia's 2018 World Cup bid in Zurich – report
• IOC visiting Sochi for check on 2014 Winter Games
• Sochi Games May Not Need State Cash
• RIA Novosti Press Review for Tuesday, October 12, 2010
• Resin Cancels Golf Blueprint - Acting Mayor Vladimir Resin on Monday canceled a decree signed by former Mayor Yury Luzhkov on developing golf in Moscow, a City Hall source told The Moscow Times.
• Russian company-town choking on environmental hazards - Karabash, located in Russia’s southern Chelyabinsk oblast, is home to a large copper smelter. A century of toxic fumes and chemical waste from the plant has left the landscape devastated. And it is the residents who have suffered the brunt of the consequences.
• Russian Officials Preparing for More and Larger Street Clashes Ahead - Until recently, Russian officials and most systemic politicians have played down the risk of massive street clashes and the need to prepare for them, but in the course of the last week, a “Novaya Versiya” commentator notes, members of both groups have expressed concern about this possibility and outlined steps to counter it.
National Economic Trends
• Russia makes it to troika with best economic growth prospects
• Kudrin Sees Moscow Sell-Offs - The Moscow city government could sell shares it holds in a series of companies including banks and airlines, Finance Minister Alexei Kudrin said.
• Bubble Warning as Low Yields Spur Tinkoff Rally: Russia Credit
Business, Energy or Environmental regulations or discussions
• Gazprom, Raspadskaya, RusHydro: Russia Stock Market Preview
• Proposed law to require telecoms operators pay into copyright fund
• Sberbank Plans to Sell Bonds in Swiss Francs, Vedomosti Reports
• Russian government seeks to raise $3bn from the sale of a stake in VTB
• Russian issuers keep close eye on Mail.ru IPO
• UK connection in Russian container - The latest wave of Russian initial public offerings in the UK brings David Hexter, the British former director with the European Bank for Reconstruction and Development, back into his home market.
• FACTBOX-Russian IPO market bursts into autumn life
• Russia plans coal port in Barents Sea -Lavna head
• Severstal Increases Stake in High River Gold Mines
• Severstal to Spend Heavily on Russian Mills, Mines
• Questor share tip: Production worries take the shine off Petropavlovsk
• Polymetal raises $150-mln Raiffeisenbank loan
• Russia Alrosa roadshow for $1 bln Eurobond starts Oct 19
• SISTEMA ANNOUNCES INTENTION TO ACQUIRE UP TO 51% OF JSC NIS
• MegaFon buys fibre-optic operator Metrocom (Russia)
• Counterfeit Wine Problems in Russia
• Alrosa does not plan to sell shares anytime soon, even after the diamond monopoly’s shareholders agreed to change its legal status to allow an IPO, said Finance Minister Alexei Kudrin, who is also chairman of Alrosa’s supervisory board. (Bloomberg)
• Ukraine may buy a stake in a Rosatom plant as the countries consider a joint venture, Kommersant-Ukraine reported Monday, and they may set up a joint venture to enrich uranium for nuclear power plants. (Bloomberg)
• Rustam Tariko, owner of vodka maker Russian Standard, said Monday that his company hoped to complete the purchase of Ukrainian vodka maker Nemiroff in a few weeks. (Bloomberg)
Activity in the Oil and Gas sector (including regulatory)
• Finance Ministry to revise oil industry's taxation system
• Russia's energy ministry proposes 10 pct crude export duty cut - paper
• Russia May Boost Oil Export Taxes in November on Urals Price
• Russia considering more tax on oil products-paper
• RenCap: Russia close to adopting modified oil tax regime
• China will take all gas Russia can supply - Shmatko (repeat)
• Putin urges doubling Russian gas production by 2030
• Russia to invest over $400bln in gas sector by 2030 (Update 1)
• Russia mulls tax breaks to boost LNG, shelf gas
• Russia May Extend Rosneft Tax Breaks at Vankor, Kudrin Says
• TNK-BP shareholders to consider interim dividend
• BRIEF-TNK-BP board recommends $4.16 bln interim dividend
• Novatek reports 3Q10 operating statistics
• Surgutneftegas raises medium-term production targets
Gazprom
• Sakhalin-2 to Pay Russia $1.8 Billion in 4 Years, Vedomosti Says
• Russia's Gazprom says new taxes to cost firm billions
• Russia's Gazprom to be hit with an additional $18bn in tax in 3 years
• Gazprom cleared to build St Petersburg tower
• Gazprom management Committee adopts comprehensive purpose oriented program
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Full Text Articles
Basic Political Developments
Oct 13: President Dmitry Medvedev to meet with UK Foreign Secretary William Hague
Oct 13–14: Parliamentary Assembly of Council of Europe President Mevlut Cavusoglu to visit Moscow
Oct 14–15: Venezuelan President Hugo Chavez to visit Russia
Oct 14–25: Population census conducted in Russia
11:28
Iran signals readiness to restart talks with six states – Lavrov
11:24
RUSSIA READY TO PROMOTE CLOSEST POSSIBLE RELATIONS WITH FUTURE KYRGYZ GOVERNMENT – LAVROV
GOOGLE TRANSLATION
Russia ready to cooperate with the new Government of Kyrgyzstan and regards the parliamentary elections held - Lavrov
12.10.2010 11:55
MOSCOW, October 12. Itar-Tass. Russia ready to cooperate with the new government of Kyrgyzstan, said today Foreign Minister Sergei Lavrov.
"We are ready, once formed the new Kyrgyz government to develop cooperation with them and the closest relations, in view of the base, which has already been created, taking into account the agreements that, in principle, the transitional government of Kyrgyzstan has confirmed" - quoted by ITAR-TASS statement by the Minister.
"We believe - continued Lavrov - that the elections were generally free of any serious destabilizing moments. - Wait for formal evaluations of observers who worked there." According to him, "the first estimates that were made, they say that elections were held now will be difficult work on forming a coalition in parliament." "None of the five parties, which, according to preliminary results, passed in parliament without a majority, allowing it alone to form a government" - recalled the head of the Russian Foreign Ministry.
"We have already voiced fears that a sudden transition to a parliamentary form of government may create difficulties in achieving sustainable development of the Kyrgyz state - he said. - If you manage to avoid complications, we will be happy."
Russia, Uruguay to scrap visas - Lavrov
12:28 12/10/2010
MOSCOW, October 12 (RIA Novosti) - Russia and Uruguay will prepare a number of agreements on scrapping visa requirements between the two countries, Russian Foreign Minister Sergei Lavrov said on Tuesday.
"We have arranged to prepare a list of important bilateral agreements in the near future, including an agreement on scrapping visas for the citizens of both countries who make short-term trips," Lavrov said at a meeting in Moscow with his Uruguayan counterpart Luis Leonardo Almagro Lemes.
Luis Almagro said the agreement would be signed during the visit of Uruguayan President Jose Alberto Mujica Cordano to Moscow next year.
10/12 11:55 Moscow ready to unfreeze relations with UK – Lavrov (Part 2)
GOOGLE TRANSLATION
Lavrov: Russia expects from Britain to move to improve bilateral relations
12/10/2010 11:43
MOSCOW, October 12 - RIA Novosti. Russia expects the United Kingdom steps to improve bilateral relations, said on Tuesday, Russian Foreign Minister Sergey Lavrov at a press briefing in Moscow on the eve of the visit of Foreign Minister of Great Britain, William Hague.
According to Lavrov, in all previous contacts with Haig Russia confirms readiness to make "strong irritants in relations with Britain, made at the initiative of the previous (British) government, have been eliminated."
"In particular, offered to resume the practical work of the intergovernmental agreements on visa facilitation and on the conditions of cultural and information centers. This work has been frozen at the initiative of London. We have to unfreeze it have long been ready. I hope that will hear the specific answers from my colleagues, because that we do not need to reboot on the Russian side. We see the anomalous situation in a relationship, she has developed not at our initiative, so that the forward reaction to our goodwill, "-" Lavrov said.
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Prisoner in spy swap deal urges Hague to take tough line with Moscow
One of Britain's best-known Russian exiles has warned William Hague, the Foreign Secretary, not to shy away from raising difficult human rights issues when he visits Russia this week.
By Andrew Osborn, Moscow correspondent
Published: 12:00AM BST 10 Oct 2010gor Sutyagin, a former academic, was arrested by Russia's FSB security service in 1999 and convicted on what he claims were trumped-up charges of passing military secrets to the United States Photo: CLARA MOLDEN
Igor Sutyagin, who came to the Britain from a prison camp in July as part of the biggest spy swap since the Cold War, said Russia was reverting to its authoritarian past, and increasingly reminded him of George Orwell's novel 1984.
"It is a question of how Britain sees itself. The strong must not pass injustice by," he said in a forthright interview with The Sunday Telegraph. "Maybe it will not help protect human rights but it is worth a try. If you want to sleep soundly and not reproach yourself later then there is a need to act."
Mr Sutyagin, a former academic, was arrested by Russia's FSB security service in 1999 and convicted on what he claims were trumped-up charges of passing military secrets to the United States.
The Kremlin handed over him and three other men convicted of spying in exchange for ten men and women the FBI had accused of being deep-cover Russian agents in the US, including glamorous property agent Anna Chapman.
Fearing he will be rearrested if he returns to Russia despite being pardoned by President Dmitry Medvedev, Mr Sutyagin is now living in London and searching for work. Grateful for Britain's hospitality, he said he had no right as "a guest" to lecture, but said he believed Britain owed it to itself to stand up to the Kremlin.
Mr Hague will make his first visit as foreign secretary to Russia on Wednesday, amid tentative signs that both countries are ready to upgrade relations spoilt by the 2006 murder of former Russian agent Alexander Litvinenko in London.
Russia's outgoing ambassador to Britain, Yuri Fedotov, has said the Kremlin wants to move on from a period of Cold War-style tension, while Mr Hague has also stated that the "door is open" to better relations.
The Foreign Secretary is keen to promote British business interests in Russia, including the oil and gas sector, and will meet Sergey Lavrov, the Russian foreign minister. Mr Sutyagin, who languished in Soviet-style prison camps for eleven years on what he insists were trumped up spying charges, urged Mr Hague to hold his nerve and not gloss over difficult issues. He singled out growing curbs on the freedom of the media.
"Russia today reminds me of the Soviet Union. There were too many lies and I see that those lies have returned. It looks like a deliberate policy," he said.
"A different reality is being created. The same language employed in the Soviet Union is back and the same people with stony faces."
Mr Sutyagin, who hopes in time to return to Russia to be reunited with his wife and two daughters, cited draconian restrictions on freedom of assembly too, quoting Vladimir Putin, the prime minister, who recently said that illegal protestors deserved a good "whack on the head with a baton."
Mr Hague is under pressure to follow in the footsteps of the United States, which has put its own disagreements with the Kremlin to one side and "reset" relations agreeing to cooperate where possible. Hungry for foreign investment, Russia has a long wish list.
It wants Britain to treat its requests to extradite Russian emigres wanted at home on criminal charges more favourably. It also wants to restore systematic cooperation between the two countries' intelligence services that was severed in the wake of the Litvinenko affair and for visa arrangements for Russian officials to be eased. So far, Britain shows no sign of altering its position on the Litvinenko affair. It wants the man it believes fatally poisoned him, former KGB bodyguard Andrei Lugovoi, to be brought here to face trial.
So far, the Kremlin has refused to do so, although Mr Fedotov recently suggested the Kremlin might agree to try him itself on home soil.
Friends of Russian lawyer Sergei Magnitsky, who died in jail last year after being denied medical care, are anxious for Mr Hague to press home calls for a proper investigation, while allies of jailed oligarch Mikhail Khodorkovsky want him to ask the Kremlin about his second trial on charges that they claim are politically motivated.
Mr Sutyagin said Mr Hague would face a rough ride if he did talk tough. "In the short term there will be losses but in the long term it will bring benefits," he said. "I do not want my country to be filled with fear."
What are the prospects of Russo-British relations?
Oct 11, 2010 18:00 Moscow Time
The UK’s Foreign Minister William Hague is coming to Moscow with an official visit on October 13.
Speaking about his coming visit, the Minister said that he plans “to keep the door for better relations with Russia open”.
The director of the Center for British studies of the Moscow-based Institute of Europe Alexei Gromyko tries to estimate what Russia can expect from Mr. Hague’s visit:
"William Hague is an experienced politician who was the leader of the Conservative Party from 1997 to 2001. The end of 2009, as the Shadow Foreign Secretary he paid an unofficial visit to Moscow and held talks with Sergey Lavrov. So, the Conservative Party started to build bridges with Moscow in advance to the General Election in May this year. William Hague is not burdened with the legacy of poor relations between Moscow and London under the Labor government. Just several days ago Hague delivered a speech at London City stating some key points on new approaches in the British Foreign Policy.
One of them is to draw lessons from mistakes made by the Tories’ predecessors, especially with regard to breaches on international law highlighted in Iraq and a scandal around extraordinary rendition. The new British foreign policy will pick up, according to Hague, from lessons of ethic foreign policy tried under Labor at the end of the 1990s, but will infuse it with pragmatism and realism.
At the same time, Hague pointed out that the UK would continue to be a staunch supporter and defender of human rights and democracy all over the world. So, Foreign Office is going to combine values and interests in its work.
Now idealism and realism are supposed to go hand in hand in the British foreign policy. In Moscow, Hague will try to mend fences with Russia against the backdrop of resets in relations between Russia and the US, and quite good and substantial relations between Moscow and other leading European powers. So we can expect some good progress in relations between Moscow and London.
I’m sure both sides are very sincere in their desire to put aside some of the obstacles on the way of rapprochement but at the same time it’s clear that neither Russia nor the UK are ready to start from scratch, that the improvement in the political relations between our countries will be quite half-hearted, will be incremental, will be made step by step, but it seems to me that this and next year we have quite a good prospect for solving at least a couple of important matters which are pending - one of them is lifting visa restrictions, which were imposed by the British side in summer 2007 and at the same time, it seems to me, that both sides will be ready to make progress along the venue of cultural relations.
And there is a good chance that both British Council in Russia and Russian cultural influence in the UK will be strengthened and will get some impetus in the near future."
That was Alexei Gromyko, Director of the Center for British studies of the Institute of Europe, speaking about the prospects of Russo-British relations.
October 12, 2010 11:39
Reports of Georgian visa annulment for North Caucasus residents an act of propaganda – Lavrov
MOSCOW. Oct 12 (Interfax) - Russian Foreign Minister Sergei Lavrov described as an act of propaganda reports about Georgia's decision to introduce visa free travel to Georgia for residents of Russia's North Caucasus republics.
"Such things, within the framework of relations common for civilized partners, ought to be discussed on a mutual basis. The way this is going to be done looks more like a new propaganda step," Lavrov said at a news conference in Moscow on Tuesday.
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Georgia's move to scrap visas for N. Caucasus republics 'propaganda' - Lavrov
12:24 12/10/2010
Georgia's decision to scrap visas for residents of Russia's North Caucasus republics is yet another "propaganda move" by Tbilisi, Russian Foreign Minister Sergei Lavrov said on Tuesday.
The decision has not been discussed with Russia, Lavrov said.
"It looks more like yet another propagandist move," he added.
Georgian Deputy Foreign Minister Nino Kalandadze said on Monday that Georgia was planning to introduce a visa-free regime with Dagestan, Chechnya, Ingushetia, North Ossetia, Kabardino-Balkaria, Karachay-Cherkessia, and Adygeya.
The visa-free regime will come into effect from October 13, the Georgian Foreign Ministry said on Tuesday.
Russians outside the North Caucasus need a visa to enter Georgia.
Tbilisi severed diplomatic ties with Moscow after a five-day war in August 2008 over Georgia's breakaway republic of South Ossetia. Russia recognized South Ossetia and another breakaway republic, Abkhazia, shortly after ceasefire.
MOSCOW, October 12 (RIA Novosti)
12.10.2010
Trade set to dominate talks as German president begins Russia tour
German President Christian Wulff begins his trip to Russia on Tuesday with a meeting with his counterpart Dimitry Medvedev. Talks are expected to focus on economic ties.
German President Christian Wulff begins a four-day state visit to Russia on Tuesday, where he is scheduled to meet with President Dimitry Medvedev in Moscow. The trip marks the first state visit to Russia for a German president in eight years.
In talks with Medvedev, Wulff intends to focus on economic ties between Russia and Germany. A business delegation of 16 is traveling with the president, including representatives from German firms Fresenius, Siemens, Bosch and Eon Ruhrgas.
As part of the talks, Russia is likely to push for more access to the German markets for its businesses. "There is a disproportion. German [firms] have invested a total of about $20 billion (14.5 billion euros) in Russia - Russian [firms] in Germany have invested less," said Medvedev.
"We want to actively participate in the German economy - we have the desire and the money," he added.
The German president plans to meet with Prime Minister Vladimir Putin later in the day, and has also scheduled talks with leaders of the Russian Orthodox Church.
Later in the week, he will travel north to St. Petersburg, the Tver region and the city of Ulyanovsk, 700 kilometers (435 miles) southeast of Moscow, where he will visit German businesses.
Author: Martin Kuebler (AFP/dpa)
Editor: Rob Turner
Russian, German presidents to discuss strategic partnership
12.10.2010, 03.07
MOSCOW, October 12 (Itar-Tass) - Russian President Dmitry Medvedev and his German colleague Christian Wolf will meet in the Kremlin on Tuesday Russian-German strategic partnership and urgent international issues, the presidential press service reports.
Christian Wolf who’s paying a state visit to Russia at the invitation of Russian President Dmitry Medvedev will also meet Prime Minister Vladimir Putin. The German president will travel to Tver, St. Petersburg (where he will visit a German military cemetery in Sologubovka) and Ulyanovsk (with a visit to the Ulyanovsk State University) and will have meetings with German entrepreneurs working in Russia, the press service went on to say.
The Russian-German talks will focus on cooperation in new technologies, the formation of technological alliances of Russian and German companies in energy, automobile building, railway engineering, the atomic industry, energy-saving, scientific and cultural cooperation. The sides will continue a dialogue on new European security, including the Russian initiative to conclude a new European security treaty as well as other urgent questions of international and regional politics.
The high-ranking guest’s visit will last until October 15. This is one of Wolf’s first foreign trips since he was elected German president in June 2010.
His visit is taking place against the background of the general upsurge of bilateral relations. This year Russia and Germany will mark several important dates in their joint history: the 20th anniversary of the Treaty on the Final Settlement with respect to Germany, the 20th anniversary of Germany’s unification, the 55th anniversary of the establishment of diplomatic relations between Russia and Germany and the 20th anniversary of bilateral Treaty on good-neighbourly relations, partnership and cooperation.
Russia reveals detailed data on defense spending until 2013
03:29 12/10/2010
Russia has made public for the first time in many years a detailed account of its defense spending until 2013, the Vedomosti daily said on Tuesday.
State Duma Defense Committee head Viktor Zavarzin said last week that the country's defense spending, including R&D, would total 487 billion rubles ($16.3 bln) in 2010, 574 bln ($19.2 bln) in 2011, 726 bln ($24.3 bln) in 2012, and 1.16 trillion ($38.8 bln) in 2013.
The share of spending on R&D will drop from 22 percent in 2010 to 16 percent in 2013, the lawmaker said.
The spending will focus on procurement of RS-24 intercontinental ballistic missiles and Bulava submarine-launched ballistic missiles, Su-34 Fullback fighter-bombers, Su-35 Flanker-E long-range fighter jets, submarines, corvettes and frigates for the Black Sea Fleet, and battlefield command-and-control systems for the Ground Forces.
The share of spending on modernization of existing weaponry will be spread almost evenly throughout the four-year period - 13 percent in 2010, 15 percent in 2011-2012, and 14 percent in 2013.
MOSCOW, October 12 (RIA Novosti)
Russia to spend $26 million on patriotic propaganda - paper
The Russian government will invest 777 million rubles ($26 mln) in propagating patriotism in the next 15 years in line with a state program aimed at increasing patriotic consciousness, a Russian business daily said on Tuesday.
As the Culture Ministry and Youth Federal Agency are responsible for publishing patriotic books and promoting museums, Russian law enforcement bodies will also contribute to boosting patriotism, Vedomosti daily said.
Russia's Federal Drug Control Service will receive 4 million rubles (about $133,000) for promoting an anti-drug campaign among the youth, Vedomosti said
The federal penitentiary service will also create a museum of the Russian penitentiary system. Young service workers will become familiar with both positive and negative cases in history about prisons and corrective labor camps, Vedomosti cited the spokesman of the federal penitentiary service as saying.
In May, the Russian Communications Ministry asked the government to allocate 500 million rubles (about $16 million) for a $24-million project to produce computer games aimed at boosting patriotism among the youth and promoting Moscow's vision of the "historic truth."
However, Russian presidential aide Arkady Dvorkovich then told Vedomosti though the project was interesting, he was not sure whether it needed government support.
The Kremlin views encouraging patriotism and preventing attempts to distort history, especially about World War Two, as a key element in its efforts to consolidate the nation.
MOSCOW, October 12 (RIA Novosti)
Russia calls "absurd" Belarus statement on CIS court decision
10:42, October 12, 2010
Russia on Monday called "a complete political absurdity" the allegation by a Belarussian minister that Minsk has won a court hearing against Moscow over export duties.
Belarus sued Russia over oil export duties in the economic court of the Commonwealth of Independent States (CIS).
On Friday, the court recommended Russia lift export duties for oil products supplied to Belarus. It also gave the two sides three months to find a reconciliatory decision.
Belorussian Justice Minister Victor Golovanov said by making such an offer the court has shown its interest in the two parties finding a common ground, Moscow's Vedomosti daily reported.
He estimated the damage Russia has incurred to Belarus totaled 7 billion U.S. dollars as a result of 70-percent cut of oil supply in the first half of the year.
However, Deputy Russian Justice Minister, Vasili Likhachev, said it was "incorrect" to interpret that decision as Belarus' victory.
"This is just a technical recommendation. Minsk's statements only politicize and aggravates this process," he said as quoted by the RBC news agency.
Russia levied the duties since January 2010 but they have been suspended pending the court's ruling.
According to Golovanov, Moscow should impose a moratorium on the oil duties until the end of negotiations.
Such a moratorium will accelerate the negotiating process, as over 70 Russian enterprises also suffered loses from the duties, said the Belorussian minister.
Source: Xinhua
12.10.2010
CIS Court Advises Moscow To Remove Duties On Oil For Minsk
The CIS Economic Court has recommended that Moscow remove the duty it has imposed on oil products exported to Belarus, Kommersant reports. According to the newspaper, the court advised imposing the moratorium for three months and noted each month will cost the Russian budget $30 million. However, Moscow is not forced to comply with the court's decision.
Kommersant notes that the court decision strengthens Belarus' position in its spat with Russia: Minsk can appeal in January 2011 if Russia does in fact fail to comply with the court. Moreover, the moratorium will end after the presidential election in Belarus which is scheduled for December 19, Lenta.ru reports.
Copyright 2010, Gazeta.kz. All rights reserved.
CIS court decision on duties on Russian exports nonbinding
The Russian Justice Ministry has said that the CIS Economic Court decision that Russia should lift duties on the oil products it supplies to Belarus is nonbinding.
The Court suggested that the two countries’ governments should consider ways to relieve Russian oil product exports to Belarus of customs duties.
But the Deputy Russian Justice Minister Vassily Likhachev says that Russia as a sovereign state has the right to impose such duties. Russia, he added, will prove this right during the next court meeting.
According to calculations by economists, the Russian budget failed to receive 1 billion dollars when the duty was not collected from Belarus in 2007 to 2009.
Date of Caspian Sea states' leaders' summit publicized (UPDATE)
12.10.2010 10:49
Editor's note: Details were added after the second paragraph
Azerbaijan, Baku, Oct. 12 / Trend M.Aliyev /
A summit of the presidents of the five countries that surround the Caspian Sea - Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan - will be held in Baku on Nov.18, Azerbaijani Deputy Foreign Minister Khalaf Khalafov said at the Caspian states' deputy foreign ministers' meeting in Baku today.
Prior to the Baku summit, Khalafov said, the countries' deputy foreign ministers will meet in Tehran.
Baku launched the meeting of the five Caspian countries' deputy foreign ministers on Monday.
In November 2003, the Caspian countries signed the Framework Convention for the Protection of the Marine Environment of the Caspian Sea.
In July 1998, Russia and Kazakhstan signed an agreement on the delimitation of the northern part of the Caspian Sea in order to exercise sovereign rights for subsoil use.
On Nov. 29, 2001 and Feb.27, 2003, Kazakhstan and Azerbaijan signed an agreement on the delimitation of the Caspian Sea.
Kazakhstan, Azerbaijan and Russia signed an agreement on the delimitation of adjacent sections of the Caspian Sea on May 14, 2003.
Karabakh mediators to visit all conflict-affected areas
Tue 12 October 2010 06:28 GMT | 8:28 Local Time
The assessment mission of the OSCE Minsk Group, mediating a solution to the Karabakh conflict, intends to visit other areas affected by the conflict.
This is what the American co-chair of the OSCE Minsk Group, Robert Bradtke, told reporters in the Karabakh capital, Khankandi, on Monday.
OSCE Minsk Group co-chairs Igor Popov (Russia), Bernard Fassier (France), Robert Bradtke (USA) and accompanying experts are in Nagorno-Karabakh on a mission to find out the situation in the seven districts around Karabakh occupied by Armenia.
Bradtke said that as co-chairs of the OSCE Minsk Group it was important for them to visit all the districts that are affected by the conflict.
"We need to understand the situation in these districts and to hear the voices of the people who live there. And as Mr Fassier said, this is our first, but not last mission. We intend to visit other districts that are affected by this conflict and visit those districts that are of interest to all parties to the conflict," Bradtke said.
(The Armenian side has called on the co-chairs to visit the Azerbaijani district north of Karabakh, Goranboy, which they say is part of Karabakh occupied by Azerbaijan.)
The French co-chair of the OSCE Minsk Group, Bernard Fassier, said yesterday that as the co-chairs acted together, their actions could not be interpreted as “something done in the interests of one party”.
"I want you to understand that we are intermediaries and, as such, we operate independently. And again, as mediators we are not trying to do something in favour of any of the sides. So what we want and what we are concerned about is the achievement of peace," Fassier said.
"The mission is not quite finished, because we will visit another district. After that we will have a lot of information to compare and analyse, and then come to a conclusion, after which we will present it to the parties of the conflict, and then to the media," Fassier said.
He said the field assessment mission would complete its work on 12 October with a visit to Kalbajar (Kelbejer) District.
"This is the first mission for all this time and it was the co-chairs' decision to conduct it. We are doing it in order to familiarize the co-chairs with the current situation. Out of our group of three mediators, I was the only one who had had the opportunity to visit the territory of Nagorno-Karabakh in 2005. And since the American and Russian co-chairs have changed in the past five years, my new colleagues - Bradtke and Popov – had not had the opportunity to visit these areas and get an idea of the situation," Fassier said.
The French co-chairman of the OSCE Minsk Group reported that of the three assistants to the co-chairs, only the Russian assistant had visited these regions.
He said that the mission also included two experts from the United Nations High Commissioner for Refugees.
"These experts have met with many people in the various districts and villages and they will help us to assess the humanitarian needs of those people,” Fassier said.
News-Armenia
Commentary: May Armenia and Russia Remain Inseparable
By Editor on Oct 11, 2010 in Armenia, Opinion
By Hagop Vartivarian
The member states of the Collective Security Treaty Organization (CSTO) — Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and Ukraine — convened an unofficial consultative meeting in Yerevan in the middle of August, attended by the presidents of the aforementioned former Soviet republics, headed, of course, by Russian President Dmitry Medvedev. Armenia’s president, who has faced various difficulties on both the domestic and external fronts, received his counterparts with presidential decorum and treated them most hospitably.
Let me say a priori that the agreement with CSTO will undoubtedly be recorded as a success for President Serge Sargisian in the pages of our history. This is particularly so in these days when Baku, relying on the strength of its oil, is trying to shape public opinion in its favor with regard to the Karabagh conflict; it is wooing the West, on one hand, and Russia, Ukraine and Israel, on the other.
On August 20, at the conclusion of the negotiations that took place between the presidents of Armenia and Russia, Serge Sargisian and Dmitry Medvedev, an agreement was signed, extending the length of operation of the Russian military base in Armenia and expanding its responsibility.
As far as the military bases mentioned in the document signed by the defense ministers of the two friendly countries, Seyran Ohanyan and Anatoly Serdyukov, are concerned, the dispositions of the treaty signed on March 16, 1995 by Levon Ter-Petrosian and Boris Yeltsin underwent certain changes, which serve the interests of Armenia as much as, if not more than, those of Russia. According to Article 25 of the treaty, the Russian military base in Armenia shall remain for at least 49 years, instead of the previous period of 25 years. In addition, it was noted that besides protecting Russia’s interests, the military base must also protect Armenia’s security.
In the first instance, the Armeno-Russian accords extend the presence of Russian military bases in Armenia by 34 years, despite the fact that this might make relations difficult between the government in Yerevan and the West, and particularly NATO. However, on the other hand, Armenia will be able to purchase modern Russian ammunition until 2044 at the very least. Furthermore, if an unprovoked Turkish attack should occur, Russia will be able to centuple its 4,000-man army to defend the border along the Arax River.
Thus, once again, Russia becomes the only real power in the Southern Caucasus, as Ruben Safrastian, director of the Oriental Studies Institute of the Armenian National Academy of Sciences, would say. While the United States, with the help of Georgia, had scored certain successes in its military structures prior to 2008, Russia again has become the master of this region through this agreement. It was important in the post-Soviet years for Russia to reestablish its position in the region containing Armenia, because that would be of great benefit to our homeland, considering its blockade by Turkish-speaking peoples.
If we go back in history, we will see that there were already Russian soldiers in Armenia 182 years ago, based on the Treaty of Turkmenchai signed in 1828 between imperial Russia and Persia. Since then, Armenia’s security has always been entrusted to the Russian army.
Laudable, of course, was Medvedev’s visit to Tsitsernakaberd, where he paid respect to the memory of the victims of the Armenian Genocide and expressed his rapture at the glorious sight of Mt. Ararat. These are two characteristic images, which tell a whole story, and it is those genuine friendly feelings of Russia’s president, which are being recorded these days in the pages of our history.
It is important to single out one of Medvedev’s statements made during that three-day visit, to the effect that Russia treats its confederative obligations and commitments “very seriously.” The amicable president continued, “Russia is ready to continue the mission of mediation in the settlement of the Nagorno-Karabagh conflict, to assist in the process of finding a political solution based on mutual understandings, within the framework of the Minsk Group as well as through bilateral meetings between the presidents of Armenia and Azerbaijan.” In this way, the security of Artsakh’s population will be guaranteed.
In this sense, Gen.-Col. Leonid Ivashov, president of Russia’s Academy on Geopolitical Affairs, considers the Armeno-Russian agreement on the extension of the term of the presence of military bases as a victory of military realism for the two countries. On the other hand, however, he stressed that it is very important to find such a diplomatic path, whereby the treaty with Armenia will not harm the relations between Russia and Azerbaijan. Of course, President Medvedev was aware of the consequences of the step he had taken, and will certainly be ready to offer explanations to Aliyev’s government during his impending visit to Baku.
Also significant is the viewpoint of the friendly republics, expressed during those few days in Yerevan, that there exists a state of “neither peace, nor war” in the region because it will be the Minsk Group’s role to see to it that the “no war” position is finally secured through peace. The existence of an atmosphere of mutual trust was wholly evident during the days of their meeting because the importance of widening cooperation among the presidents of the CSTO countries was generally palpable, based on the national interests of each of them. Russia, however, takes on an additional obligation, based on that spirit: first, to maintain that harmony among the former Soviet republics, and further, to ensure the sovereignty of each domestically.
The interests of the Armenian people are very clear — and not just today but going back to the days of tsarist Russia: having permanent physical security within the borders of Armenia. Clear too are the interests of our great friend to the north, spelled out ever since the days of Peter the Great: to descend via the Armenian Plateau to the warm waters of the south, and, in this case, the oil wells.
Previously, the functions of the military bases were limited just to the external borders of the former Soviet Union (Turkey and Iran). However, now that limitation has been lifted, and Russia has assumed responsibility for Armenia’s military security, as well as cooperation with armed forces, along the internal borders of the Soviet Union (Georgia and Azerbaijan), by securing modern armaments. That is to say, Russia is also committed to the defense of our northern and eastern borders, contrary to the fact that rumors are spreading these days about the delivery of C-300-type missiles to Azerbaijan.
Besides this military agreement, it is important to stress that the amount of business with Russia has increased by 20 percent in this critical period for the world’s economy. Russia is the largest foreign investor in Armenia’s economy; i.e., Russia makes 60 percent of the foreign investments in Armenia. There are 1,250 firms with Russian capital officially registered in Armenia. Furthermore, the willingness to build a railway complex and especially the construction of a new nuclear power plant will guarantee the economic progress of our homeland.
A visit to Gumri’s “Patvo Blur” (Hill of Honor) is as significant as a visit by an American president to Arlington National Cemetery near Washington, DC, which is the final resting place for the American soldiers who died on various battlefronts. That hill is where the bodies of the Russian soldiers who lost their lives in the various Russo-Turkish wars are buried. The “Hill of Honor,” which is a military cemetery, was created in 1856 in then-Alexandropol by Nikolay Muravyov, Russian commander in the Caucasus. The remains of 156 officers in the Russian army, who were killed during the Russo-Turkish wars of 1855 and 1878-1879, are buried there. Located there also is a Russian Orthodox chapel, which was closed following the establishment of Soviet rule and remained so until the 1980s.
In the eyes of the US State Department, the signing of a treaty concerning Russian military centers in Gumri wasn’t all that surprising because that issue pertained to two former allied republics, which have signed an agreement dictated by their national interests. But how did the Armenian Diaspora react to this treaty?
The Hunchak (SD) press greeted it with optimism, as we read Vahan Shirkhanian’s statement in the party’s official organ, Ararat: “I unequivocally consider as positive the extension of the term of the military base and the inclusion of changes in the treaty. Not only was the base set up during the period when I was deputy minister but also I personally presented the agreement involving that base and all its addenda for the approval of the National Assembly.”
The Ramgavar (ADL) press expressed cautious optimism. To wit: Edmond Azadian wrote in Azg daily of Armenia that in the final analysis, all the developments serve to weaken Turkey’s pan-Turanian plans, which, in turn, contrary to the wishes of Russia, the European Union and the United States, can spur the improvement of Iran’s strategic position in the region.
The Tashnag (ARF) press considers it a positive development too. Armen Rustamian, representative of the Supreme Bureau of Armenia’s ARF, put it this way: “The treaty elevates the guarantees of our security to a new level of quality, compared with the old, and that is one of the most important criteria.” According to this ARF spokesman, the party’s attitude toward the aforementioned agreement is favorable since there still doesn’t exist another new system ensuring Armenia’s security. According to him, this developed due to the process of establishing Armeno-Turkish relations. The Tashnag press in the diaspora, in turn, also viewed this treaty with optimism in its editorials. For example, Hairenik weekly of Boston concluded the editorial, “Voch Abazinyal…haches abavinyal” (Not Disarmed…for Security’s Sake) in its August 27 issue as follows: “…the Russian military base, as long as it exists within the territory of the Republic of Armenia, and together with Armenia’s armed forces, will ensure the latter’s security, as well as protect Russia’s interests.”
However, the ARF press saw fit, of course, to pass on another point of view. Thus, on the next page of the same issue, it carried the article by Raffi K. Hovannisian, the first foreign minister of Republic of Armenia and currently leader of the Heritage Party, which reflects a psychological state harking back to the days of the Cold War when it persists in saying “The disproportionality in Russo-Armenian relations is revealed especially in the fundamental lack of mutually respectful cooperation with equal rights.” Skepticism still prevails not so much among current ARF leaders, fortunately, as among the likes of Hovannisian who, in the past, were among the ranks of youth belonging to that organization.
Finally, in conclusion, it must be said that all this is already being recorded as an important juncture in our contemporary history. So, the Turk still remains our common enemy, the same Turk, whether the erstwhile Ottoman, Ittihadist or Kemalist, or the present-day successor. On the other hand, our common friend continues to remain the Russian; like the tsarist Russian of yesteryear and the Soviet Russian, so too is today’s Russian of the Russian Federation our friend, starting with the Treaty of Turkmenchai and continuing up to today’s treaty signed in Yerevan.
And laudable in all of this is the fact that today our three traditional political parties have issued similar statements regarding Russia being Armenia’s only friend. So different from the likes of Dro just yesterday…and so consonant with the likes of Kersam Aharonian, more recently!
History shows that today, as well, we should continue our fraternal relations with Russia.
(Hagop Vartivarian is the chairman of the ADL Press Committee. This article was translated by Aris G. Sevag)
Schwarzenegger Leads Business Mission To Russia
October 12, 2010
Governor Arnold Schwarzenegger has been visiting Russia on a mission to boost a campaign backed by President Dmitry Medvedev to develop high-technology industries in Russia.
Schwarzenegger and his delegation of leading California technology executives held talks with Medvedev on October 11.
Speaking to the media outside Moscow, Schwarzenegger praised Medvedev as "one of those great visionaries," and hailed investment opportunities in Russia.
"I know that Russian technology and extraordinary minds of innovation and everything, together with the Californians, I think could really create a great miracle here and a great boom in that industry," Schwarzenegger said.
The U.S. delegation and Medvedev later traveled to the city of Skolkovo, where the Russian president hopes to start a technology hub similar to California's Silicon Valley.
Schwarzenegger was accompanied on the trip by officials from Internet search firm Google, software-makers Oracle and Microsoft, biotechnology company Amgen, and fuel-cell technology firm Bloom Energy.
Schwarzenegger's trip follows Medvedev's visit to California in June, when he met with Schwarzenegger in Silicon Valley to discuss ways to boost Russia's technology sector.
compiled from agency reports
Twitter plans Russian-language interface
10:29 12/10/2010
Representatives of the micro blogging site Twitter told Russian bloggers at a meeting in San-Francisco that a Russian-language interface will be launched, without specifying when, a Russian blogger said on Tuesday.
Twitter is a global service, so creating a Russian interface is naturally among our development plans, one of the Twitter representatives said.
The company also said it had plans to open an office in Asia.
A recent survey, conducted by Russia's Kommersant publishing house and the comScore researcher, placed Twitter fifth in its rating of resources with the fastest growing Russian audience.
According to the survey, the Russian Twitter audience increased six-fold, to 1.78 million users per month, in the period July 2009 - July 2010.
The website's growing popularity among Russians may be due to President Dmitry Medvedev, who opened a Twitter account during his visit to the company's headquarters in Silicon Valley in June. He is among Russia's most popular Twitter users, with more than 90,000 followers, and his example has inspired many Russian officials to create their own Twitter accounts.
MOSCOW, October 12 (RIA Novosti)
Fight against drug trafficking and terrorism is main goal – UNODC Russia head
12 October, 2010, 06:45
Recently appointed head of the UN Office on Drugs and Crime in Russia, Yury Fedotov says he wants to advance the agency’s work in drug control and terrorism prevention through comprehensive strategies.
RT: Mr. Fedotov, thanks for speaking to RT. What targets have you set for the agency?
Yury Fedotov: I took over just 3 weeks ago and I believe that it is possible to give impetus to this work. The UNODC, under my predecessor, has accumulated a wide range of activities, including drugs, crime and prevention of terrorism, but there’s always room for improvement, and after having consulted our major stakeholders, member states, and partners in other international organizations, at some point I will be in a position to come up with solutions how to make our efforts more productive, and more cost effective. Our budget is impressive, composed of contributions from member states. We need to deliver, to produce results felt by the entire international community.
RT: The world’s main opium producer, Afghanistan, halved production this year. Why do you say there’s “no room for false optimism”?
YF: We need to excel, to enlarge our activities, as far as illicit drug trafficking is concerned, we need to set comprehensive programmes for different regions.
In Afghanistan, just last week we issued an Afghan drug report for 2010. It contains both good news and bad news. The good news is that production of opium decreased almost 50%, but that is due only to natural factors, diseases that affected the crop. But the cultivation hasn’t changed and since prices are growing, farmers have additional stimulus to cultivate poppy. So we need to have a comprehensive strategy, which would include everything from eradication to alternative cultures, participation of regional states and extra-regional states, so there should be a comprehensive strategy. The UNODC is doing that, but we believe it could be done even more.
That’s also applicable to other regions such as Central and South America, West Africa and many other parts of the world. They’re quite sophisticated, the main route in terms of opium is Afghanistan, it’s about 90% of all world production and cultivation, and there are 3 major routes, through Iran; Tajikistan Central Asia and Russia; and through Pakistan, to West Europe.
And of course, in terms of cocaine, it’s Central America and particularly South America.
In terms of what is now unfortunately becoming more spread in all parts of the world are synthetic drugs. There are no routes because they can be produced anywhere, any time, by anybody. So the threat is multi-faceted with multi-components, and that’s why the reaction of the international community should also be comprehensive.
RT: Your office has helped prosecute some Somali pirates, but there’s still no globally accepted response. When will we get that?
YF: The problem is that the international community is still unable to come to an agreement on the forms of the prosecution of the pirates. In the absence of such an agreement, we’re helping regional countries like Kenya, Seychelles, and even parts of Somalia, like Somaliland, to organize prosecutions and even to organize jails for convicted pirates. It’s not easy because the regional countries are facing enormous problems, the penitentiaries are overloaded and the jails are overcrowded. In Kenya, for instance, capacity is 5 times more than planned at the beginning, so there’s a great deal of positive response from the neighbouring states, but still there are a lot of practical problems.
RT: You say almost every country in the world plays a part in human slavery and trafficking for sex. That’s a key issue for you?
YF: That is something the UNODC is taking very close to its heart, and we are creating a new global trust fund in New York next month which would assist the victims of trafficking. It’s a good illustration of how international cooperation is informed, because it’s impossible without the cooperation of all countries, upstream and downstream. The UNODC will continue to pay the utmost attention to this.
RT: Transparency International puts Russia in 146th place in corruption next to Sierra Leone and Zimbabwe. You don’t think that’s fair?
YF: There are different assessments, different data. I hope the new mechanisms established within the framework of the international review of corruption will provide a more objective picture of the overall situation. Because it’s fair, it’s balanced, and it could be reliable.
Tehran, Moscow economy officials meet in Washington
Tehran Times Economic Desk
TEHRAN – Economic officials from Iran and Russia met in Washington on the sidelines of the World Bank summit and called for the expansion of economic relations between the two countries.
The Mehr News Agency reported that Iranian Finance and Economic Affairs Minister Seyyed Shamseddin Hosseini, Central Bank Governor Mahmoud Bahmani and Deputy Finance and Economic Affairs Minister Behrouz Alishiri had the meeting with their Russian counterparts.
Hosseini pointed out that Iranian engineers have good experience in the fields of gas, oil and mines and the two countries can foster economic relations by supporting the private sector of the two sides.
Russian Finance Minister Alexei Kudrin applauded the Iranian proposition and stated his country places great importance on expanding economic relations with Iran.
He cited enhancing technology, energy, infrastructure and air transport as the main development priorities of his country
Iran, Russia keen to boost energy ties
Mon Oct 11, 2010 8:51AM
Iran's Minister of Finance and Economic Affairs Shamseddin Hosseini says Tehran and Moscow can develop economic relations in oil, gas and petrochemical sectors.
"With respect to the Iranian engineers' skill and experience in exploration of oil, gas and minerals, the two states can enhance economic relations by supporting the private sector," Hosseini said in a meeting with his Russian counterpart Alexei Kudrin on the sidelines of a World Bank and the International Monetary Fund (IMF) meeting in Washington on Sunday.
"Over the past years, a new environment has been created for the private sector and foreign companies to invest in different Iranian industries," IRNA quoted Hosseini as saying.
The Russian finance minister, for his part, pointed out that enhancement of economic ties with Tehran is of great importance for Moscow.
Kudrin described Iran as a strong nation with huge potential, stressing Russian companies' willingness to invest in the country.
He said technological progress, utilization of potentialities in the energy sector and expansion of infrastructural industries as well as air transport are part of Russia's development priorities.
Russia's industry-driven economy hinges on huge energy resources, particularly natural gas reserves.
Russia's economy, which is the seventh largest in the world, is based on capitalism and privatization.
AO/NN/HRF
Russian culture minister: Moscow keen on expanding cooperation with Tehran
11 October 2010
Moscow -- Russian Culture Minister Alexander Avdeev said on Monday that his country is interested in developing ties with Iran. In a meeting with the head of Islamic Culture and Relations Organization Mehdi Mostafavi, he added that Moscow is keen on expanding cooperation with Tehran, especially about the issues consistent with the Caspian Sea.
Avdeev said that Iran is one of the main countries which significantly contributed to the global civilization, adding that Iran's luminaries are well-known in the world and its cultural heritage are considered invaluable worldwide.
The Russian minister admired the Iranian efforts to safeguard cultural monuments and values and pointed out that Moscow is ready to have a close cooperation with Tehran in the field.
Mostafavi, for his part, said that Tehran is willing to develop bilateral ties, especially in the field of culture with Moscow.
'Cultural commonalities and promising prospects of the mutual cooperation will pave the way for deeper bilateral relations,' he noted.
He added that participation of artists, cineastes and those involved in cultural works in regional and international exhibitions of the two countries indicate their interest in strengthening mutual cooperation.
IRNA reporter in Moscow said that Avdeev will visit Iran in near future.
Mostafavi heading a cultural delegation arrived in Moscow Monday.
© IRNA 2010
The Irish Times - Tuesday, October 12, 2010
Russian spies may have used six Irish passports
MARY FITZGERALD and GERRY MORIARTY
THE GARDA is investigating how six Irish passports may have been fraudulently used by members of a Russian spy ring uncovered in the US this summer.
Minister for Foreign Affairs Micheál Martin yesterday described as “disturbing” allegations that data from several Irish passports had been cloned. But he stressed that the investigation is ongoing. “Any story that involves the compromising and undermining of our passports security . . . and in any shape or form steals the identity of Irish citizens is a matter of deep concern and is disturbing,” Mr Martin said.
“I think we have more work to do to ascertain the exact nature of what has been going on here. Our passport offices are in contact with the gardaí who are obviously receiving information in relation to this and I think from our perspective we want to get more information before we comment further,” he added.
Mr Martin said the Russian embassy was “aware of our concerns” although he would not comment on whether the Government had made direct representations to the embassy. A spokesman for the Russian embassy said it had not been contacted by the Irish authorities about the matter.
A parliamentary question relating to the issue is to be raised in the Dáil today.
A spokesman for the Department of Foreign Affairs said it was made aware of the allegations by a third source, which other sources have confirmed is the US. “Once we have the facts the Minister will report to the Government on this matter,” he said.
The spokesman added that there was no difference between the Government’s approach to these allegations and its approach earlier this year to claims that forged Irish passports were used by suspects in the assassination of a senior Hamas official in Dubai. “Any evidence of abuse would be of the highest level of concern for the Government,” the department spokesman said.
An investigation into the latter case concluded that Israel was likely to have been responsible for cloning the eight Irish passports implicated. An official at the Israeli embassy in Dublin was expelled as a gesture of protest.
US investigators broke up the Russian espionage ring in June with the arrest of 10 people in New York, Boston, New Jersey and Virginia. All 10, who were later deported as part of a spy swap deal with Russia, admitted conspiring to act as unregistered foreign agents.
Garda Commissioner Fachtna Murphy said gardaí were working closely with their US counterparts as part of the investigation, which, he added, has been ongoing for some time.
Last week gardaí informed a female volunteer with the Irish charity To Russia With Love, which works with orphans across Russia, that her passport had been compromised. It is not known how or where the passport was accessed.
Debbie Deegan, the charity’s managing director, has been invited to a meeting with the Russian ambassador today. A spokesman for the Russian embassy said the Russian government held the charity in high esteem. “We confirm our respect for, and very good relations with, Ms Deegan and her organisation,” he told said. “We will continue those very good relations.”
In July, Eunan Gerard Doherty, from Carndonagh, Co Donegal, was interviewed by gardaí after it emerged his passport details had been implicated.
Documents released by the US justice department claim that one of the 10 spies, who used the assumed name Richard Murphy, flew to Rome last February where he was instructed to collect a forged Irish passport in the name of Eunan Gerard Doherty before flying on to Moscow.
Mr Doherty had travelled to Russia on holiday in 2005. It is understood his wife Maureen has been told that her passport may also have been compromised.
Most of the passports being investigated are believed to pre-date the new security-enhanced passport introduced in 2005.
Russian spy ring linked to forged Irish passports
By Tom Brady and Anita Guidera
Tuesday October 12 2010
A GARDA investigation has established that the details of six Irish passports were replicated for use by alleged members of a Russian spy ring.
The investigation, which is being carried out by detectives from the Special Branch, is trying to pinpoint where the details were copied and then inserted into the forged documentation.
The inquiries also involve officials from the Department of Foreign Affairs and the Passport Office and follow a tip-off to the authorities from the FBI.
The fraudulent use of the passports was discovered when the FBI smashed the spy ring, which was based in the US.
But it is not yet confirmed whether all of the forged documentation had been used by the spies.
One of the passports belonged to a volunteer with Irish charity To Russia With Love named as Kathryn Sherry and two others to a married couple in Co Donegal. All had all been granted visas at the Russian Embassy in Dublin.
After gardai have completed a file, it will be studied by senior officials from the Department of Foreign Affairs and, if the Russians are clearly implicated in the forgeries, a decision will be taken on whether diplomatic action should be taken.
Earlier this year, the Irish Government and public were outraged at the use of forged Irish passports by Israeli agents, who were alleged to have murdered Hamas activist Mahmoud al-Mabhouh in a Dubai hotel.
As a result of investigations by the Garda and the findings of police in other countries, the Government concluded that an official Israeli agency had been responsible for the "misuse and, most likely, manufacture of the eight fake Irish passports".
An Israeli diplomat was expelled from Dublin in retaliation for the passport abuses.
In the latest investigation it has been established that the six Irish passport holders had been granted visas at the Russian Embassy in Dublin.
But it is not yet clear how and when the details of the passports were copied and reproduced on the forgeries.
In both Israeli and Russian cases, the passports were of a type produced before the introduction of new design and security standards in 2005.
These included a more secure personal details page, made of a polycarbonate substance, containing the personal details and photograph of the holder.
The polycarbonate makes it virtually impossible to reproduce the page without sophisticated production processes or to alter it without being detected by standard examination techniques.
Garda Commissioner Fachtna Murphy said yesterday that the Garda were working close with US law enforcement agencies in investigating the fraudulent use of a small number of Irish passports.
"In the most recent case it is six, but any misuse of Irish passports is an issue for us and the Government and we take it very seriously."
But he warned that the nature of the investigation made a successful outcome more difficult. Some of the passports had been used internationally, and cross-border involvement created more obstacles for the investigation.
However, he said the changes that had been introduced to passports since 2005 had significantly improved their security.
Justice Minister Dermot Ahern said the new biometric passport was regarded as "the best in the world" and he understood that all of the passports now under investigation related to those issued under the old regime.
Michael Brennan, Analysis
- Tom Brady and Anita Guidera
Irish Independent
Russia steps up fight against cyberterrorism
12:10 12/10/2010
MOSCOW, October 12 (RIA Novosti) - The National Anti-Terror Committee (NAK) is stepping up measures against information technology crimes, NAK said on Tuesday.
At a meeting in Moscow, NAK drew up measures to "prevent and put an end to illegal infringement of the activities of information and telecommunications networks that could lead to technological and environmental catastrophes," the statement said.
Such infringement could put Russia's national security at risk, it added.
The Russian government has named the fight against terrorism one of its key priorities, following a growing increase in militant attacks in the volatile North Caucasus region.
Police arrest 3 militants behind Vladikavkaz market attack
Police in Russia's volatile North Caucasus region have arrested three militants in connection with the bombing of a market in the city of Vladikavkaz in September, the National Antiterrorism Committee (NAK) said on Tuesday.
The militants, who are believed to be connected to Chechnya's most wanted terrorist leader Doku Umarov, are also thought to be behind the bombing of a highway checkpoint in the same region.
"The direct executors of the bombs are the active gang members Daurbek, Latirov and his brother and ringleader Hashagulgova. They have been arrested," the report said.
The market bombing in the center of the capital of the republic of North Ossetia, killed 17 people and injured over 200.
NAK reported on Tuesday that it had killed 301 millitants and arrested 468 more in the North Caucasus region since the beginning of the year.
The committe estimated that it has prevented 61 terrorist attacks in the region.
The report said anti-terrorist operations would continue in the region.
"The measures we have taken have allowed us to reduce terrorist activity in the region by 12 percent compared to the same period in 2009," the report said.
MOSCOW, October 12 (RIA Novosti)
Vladikavkaz terrorist act solved, 3 bandits arrested, 2 killed
12.10.2010, 11.07
MOSCOW, October 12 (Itar-Tass) -- A dreadful terrorist act at the major marketplace in Vladikavkaz is solved, three terrorists were arrested, another two were killed, Federal Security Service Director Alexander Bortnikov said at a meeting of the National Anti-Terrorist Committee here on Tuesday.
Doku Umarov’s close accomplice Khashagulgov masterminded the terrorist act, his gang is also involved in more than ten blasts in Ingushetia.
“The terrorist acts in North Ossetia were solved. They were committed in August-September 2010 at the major marketplace in Vladikavkaz and at a police post on the Caucasus federal highway on the administrative border with Ingushetia,” Bortnikov noted.
“During the search operation a terrorist group, which masterminded and committed the foresaid crimes and involved in numerous murders of law enforcers, servicemen and more than ten blasts of homemade explosive devices, was spotted,” the FSB director said.
“The detectives found out that the terrorist acts were masterminded by Doku Umarov’s close accomplice Isa Khashagulgov, who also coordinated the criminal activities of all gangs in Ingushetia,” he said.
“The direct perpetrators of the blasts were active members of the gang Daurbekov, Latyrov and the brother of warlord Khashagulgov. They are arrested and are being kept at the detention center,” Bortnikov said.
Other two accomplices in the terrorist acts put up armed resistance and were killed, the FSB director added.
The Russian Investigation Committee and the FSB Investigation Department are investigating the terrorist acts.
On September 9, at the gates to the Vladikavkaz major marketplace a suicide bomb attacker detonated an explosive device hidden in the luggage compartment of a Volga car. The tragedy claimed the lives of 19 people, 14 of them died instantaneously. About 200 people received various injuries. Seventeen injured people were brought to Moscow for treatment.
The detainees testified about the ties “with major groups involved in the terrorist acts,” Deputy Prime Minister and presidential plenipotentiary representative in the North Caucasus Federal District Alexander Khloponin told reporters earlier.
October 12, 2010 10:48
Vladikavkaz terror attack perpetrators named
MOSCOW. Oct 12 (Interfax) - The terror attack, carried out on the central market in Vladikavkaz in September 2010, has been cleared up, Federal Security Service head Alexander Bortnikov has announced.
"The terror attacks, carried out in the Republic of North Ossetia - on the central market of Vladikavkaz and at a police checkpoint on the Kavkaz federal highway at the border with Ingushetia in August and September - have been cleared up," Bortnikov told the 26th meeting of the National Anti-Terrorism, Committee on Tuesday.
A subversive-terrorist group, which had masterminded these terror attacks and which was involved in numerous killings of law enforcement officials and federal servicemen, and in at least ten blasts of improvised bombs in Ingushetia, has been tracked down, he also said.
"It has been established and confirmed in corresponding procedures, that these terror attacks were organized by [Chechen warlord] Doku Umarov's nearest associate Isa Khashagulgov, who coordinated all criminal armed groups in Ingushetia," Bortnikov said.
sd dp
Vote rigging claims mar Russian elections
By Charles Clover in Moscow
Published: October 11 2010 23:18 | Last updated: October 11 2010 23:18
The ruling United Russia party swept to victory in regional elections held on Sunday, but the results were marred by charges of vote rigging.
According to preliminary totals, the party received an average of 60 per cent of votes across six provinces where legislatures were being elected, though votes were still being counted in thousands of mayoral and local elections across Russia. United Russia’s preliminary results were up slightly from the last round of regional elections, held in March, which were judged to be comparatively clean by observers. The party then got about 50 per cent.
On Sunday, however, opposition leaders claimed that United Russia – headed by Vladimir Putin, the prime minister, and known informally as the “party of bureaucrats” for its ties to the establishment – had employed dirty tactics.
On Monday, the head of the central election committee in Chuvashia province resigned, saying she was put under political pressure during the election.
“In 15 years of working in this election system I have always been certain that in Chuvashia the election commission system does not fall under someone’s influence, and works in accordance with the law . . . These last elections have made me doubt this,” Lyudmila Linik said at a press conference. She added the election commission had been “guided by certain political forces”.
A central election commission official in Moscow responded that Ms Linik was “tired”.
A front-page headline in the establishment Kommersant newspaper warned that “Voting day may set a record for scandals”. In Dagestan, in the war-torn north Caucasus, a village mayor was shot dead in a scuffle after 4,600 ballots went missing, police said.
Vladimir Zhirinovsky, head of the rightwing opposition Liberal Democratic party, criticised Sunday’s vote. “There was everything: bribery, blackmail and threats. United Russia will always have it all. [It] is a new modification of the Soviet Communist party,” he told the Interfax news agency.
Last year opposition parties walked out of the State Duma, the lower house of parliament, in protest at what they said was blatant vote fraud in a similar round of regional elections.
United Russia’s showing was being watched carefully for signs that recent missteps by the government would tarnish the party’s reputation. Party hierarchs had feared that popular anger over the government’s handling of devastating forest fires in August would rub off on them.
While there was little chance that the party would lose any major elections held on Sunday, which were conducted in 77 of 89 provinces, its victory margins were carefully scrutinised. With a year to go before nationwide parliamentary elections – and 18 months before a presidential campaign – United Russia needed to show it could maintain electoral hegemony in Russia’s regions.
The sacking of Yuri Luzhkov, Moscow mayor, on September 28 also looked set to damage party unity. On Monday, the Kremlin said it would choose a new mayor from a list of four candidates submitted by United Russia.
Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from and redistribute by email or post to the web.
Yakushev voted to continues as Tyumen region governor
12.10.2010, 11.36
TYUMEN, October 12 (Itar-Tass) -- Lawmakers of Russia’s Siberian Tyumen region on Tuesday vested Vladimir Yakushev with gubernatorial powers for his second term.
Yakushev’s candidature was submitted to the regional legislature on October 2 by Russian President Dmitry Medvedev, who had chosen him from among three candidates nominated by the United Russia party as a party holding the majority of seats in the regional parliament. Apart from Yakushev, the list of nominees included Russia’s Deputy Minister of Regional Development Yuri Osintsev and member of the Russian State Duma, the lower house of the national parliament, Alexander Sarychev.
Yakushev’s inauguration ceremony will be held on November 24, when his first term in office expires.
Vladimir Yakushev was born on June 14, 1968 in the town of Neftekamsk, Bashkir ASSR. He graduated from the Tyumen State University, majoring in law in 1993, and majoring in finance and credit in 1997. He holds the academic title of Ph.D. in economics. Yakushev began his career in 1993 as a lawyer at the Yamal-Nenets office of West-Siberian Commercial Bank and worked in the banking sector till 2001. In June 2001, he was appointed deputy governor of the Tyumen region. From March to November 2005, he was acting mayor of the city of Tyumen and since November 2005, he has been governor of the Tyumen region. He is married with two children.
Moscow ex-mayor Luzhkov says Bank of Moscow unaffected by his dismissal
11:24 12/10/2010
Moscow ex-mayor Yuri Luzhkov, who was sacked late in September for losing the trust of the Russian president, said on Tuesday that the Bank of Moscow, the core bank of the city administration, would be unaffected by changes in the Moscow government.
"I do not think that anything will change. The bank operates independently and is not engaged in politics," Luzhkov told RIA Novosti in Vienna, where he is on holiday with his wife.
Luzhkov said the Bank of Moscow, as "a good, serious and conservative bank," should continue its operations as usual.
However, experts said the bank could fall victim to political risks following Luzhkov's dismissal.
VIENNA, Oct 12 (RIA Novosti)
Emergency department chief left suicide note before he died
12.10.2010, 07.38
VLADIVOSTOK, October 12 (Itar-Tass) - Major-General Nikolai Timoshenko, the head of the Russian Emergencies Ministry department for the Primorye territory, has been found dead with signs of a gunshot wound tonight.
“His body was found in a fire-escape on the 7th floor of an apartment building in Vladivostok in which he lived. A pre-investigation check into the incident has gotten under way,” said Avrora Rimskaya, senior assistant to the head of the investigative department under the prosecutor’s office of the Primorye territory. She added that Timoshenko had left a suicide note and that a rifle had been found at the scene of the accident.
Though investigators are working on several theories, suicide is considered to be the most probable cause of Timoshenko’s death.
Rimskaya said that in order to establish all the circumstances of Timoshenko’s death his body would undergo forensic examination and a ballistic test.
Nikolai Timoshenko, 52, was born in the Bryansk region. From August 1997 to December 27, 2004 he headed rescue teams in Kamchatka and was later promoted to the head of the Russian Emergencies Ministry department for the Primorye territory.
Senior emergencies ministry official found dead in Russia's Far East
04:26 12/10/2010
The head of the main directorate of the Russian emergencies ministry in Russia's Far Eastern Primorye Territory was found dead on a stairwell of his apartment building, a local police source said on Tuesday.
"The body of Major-General Nikolai Timoshenko was found on the seventh floor stairwell. Investigators believe it to be a suicide," the source said.
Another police official later said the general died from an apparently self-inflicted shot from a hunting rifle, which was found at the scene, and confirmed the existence of evidence pointing out at a suicide.
"Police found a suicide note in Nikolai Timoshenko's apartment, where he says farewell to relatives and friends. This supports the existing assumption that he committed suicide," the official said.
Timoshenko, 53, served as the head of the main directorate since 2005.
VLADIVOSTOK, October 12 (RIA Novosti)
Russia's chief sanitary doctor lashes out at Procter & Gamble
02:23 12/10/2010
Russia's top sanitary official accused on Tuesday Procter & Gamble's subsidiary in Russia of violating sanitary regulations at its plants.
Operating in Russia since 1991, P&G Russia is one of the fastest developing subsidiaries of the Procter & Gamble Company. It has a solid portfolio of over 70 P&G brands in the country.
"We are very concerned about the activities of this company because about 51 percent of the employees at its plants [in Russia] are working in hazardous conditions," Gennady Onishchenko said.
The official cited excessive noise levels, poor lighting, untimely clean-up of working premises and violations in the use of personal protective equipment.
He also said employees at Procter & Gamble - Novomoskovsk plant in Tula often took prolonged sick leaves - an average of nine days, which is 11 percent more than in 2009.
About 23 percent of workers at the Capella plant in Nizhny Novgorod Region did not pass a single medical check this year, Onishchenko added.
RIA Novosti has not yet been able to get a comment from the Procter & Gamble officials.
MOSCOW, October 12 (RIA Novosti)
World Congress of Chechen people kicks off in Grozny
12.10.2010, 03.43
GROZNY, October 12 (Itar-Tass) - The World Congress of the Chechen people will open in the Chechen capital on Tuesday, the press service of the head of the Chechen Republic told Itar-Tass.
The theme of the two-day forum is: “The Chechen People in Contemporary World: Political, Economic and Cultural Processes.” The meeting will be held with an aim to analyse the adaptation processes of the Chechen Diaspora residing abroad, coordination of activities of state bodies of power and assistance in the integration of Chechens into societies and cultures of countries of residence, the press service went on to say.
Oct 11, 2010 - 13:30
Russian energy shift encourages Swiss firms
by Matthew Allen, swissinfo.ch
Swiss firms could profit from Russia’s drive to upgrade its energy infrastructure and diversify into clean-tech alternatives, a business conference has heard.
Russia has embarked on a push to upgrade its electricity grid and its oil- and gas-dependent energy infrastructure. The 2014 Winter Olympics project and the creation of a Silicon Valley near Moscow could also offer lucrative contracts.
Trade between Russia and Switzerland has nearly tripled in the past five years, reaching SFr2.8 billion ($2.9 billion) in 2009. The two countries signed a new three-year trade deal in August to boost economic links.
Business Network Switzerland (Osec), the government organisation that promotes Swiss exports, brought together Swiss and Russian business leaders in Zurich on Thursday.
Uwe Krüger, president of Osec’s Cleantech Switzerland export platform, believes Switzerland’s cutting-edge technology in the field of alternative energies, particularly photovoltaics, will be in high demand.
“There is an enormous drive currently to invest more in clean technology, specifically in the high-tech segment. Swiss companies – big and small – can make a significant contribution in a wide range of technologies,” he told swissinfo.ch.
Energy demands
Demand for electricity in Russia is expected to grow by 30 per cent in the next decade, according to Russian energy consultancy group Abercade. To help meet this need, and to lower emissions, Russia plans to increase the share of alternative energies from one per cent to 4.5 per cent by 2030.
Large Swiss companies, such as energy infrastructure specialist ABB, have been actively present in Russia for some time. But Osec also wants more small and medium-sized enterprises (SMEs) to enter the market.
Such companies would benefit from collaborations with Russian counterparts to negotiate a path through Russia’s bureaucratic hurdles, Krüger believed.
Photovoltaic specialist Oerlikon has made rapid strides in the Russian market since it was taken over by Renova, the giant Russian group owned by billionaire Viktor Vekselberg. But other firms could benefit from other kinds of collaboration.
“Any kind of joint venture structure that is mutually beneficial for both partners helps a lot to overcome typical hurdles – such as language and bureaucracy – when trying to do business in Russia,” Krüger said.
Political hurdle
Perhaps a greater obstacle to smaller Swiss firms entering the Russian market is a political system that often engenders mistrust in Western Europe. The sacking of Moscow mayor Yuri Luzhkov by Russian President Dmitri Medvedev last month would hardly have dampened such suspicions.
But Krüger is adamant that Russia is still a stable place to do business. “As an entrepreneur, you can adapt to any framework as long as it is predictable and stable,” he said.
“If you compare stability in Russia with a lot of countries, there might be some things that could be criticised within the country, but when it comes to reliability of framework conditions there is a very good environment.”
Switzerland is already very much involved in an ambitious project to create a new Silicon Valley in Skolkovo, near Moscow. The project, expected to cost $5.5 billion (SFr5.31 billion) over the next five years aims to build a research and educational campus for 14,000 students, researchers and other staff.
Learning from the Swiss
The venture is also attracting international companies and educational institutions with a view to developing cutting-edge research programmes, postgraduate courses and nurturing promising start-ups to help them launch into the private sector.
The Skolkovo Foundation overseeing the project is co-chaired by Vekselberg and has already signed up prestigious names such as MIT, Boeing, Cisco and Siemens as partners.
The Swiss Federal Institute of Technology is also being pursued while Zurich’s Technopark, which fosters Swiss start-ups, has signed a memorandum of understanding to participate in the venture.
“Technopark is unique and an international success story,” Ulrich Kunz, a Swiss consultant who advises Vekselberg on the Moscow project, told swissinfo.ch.
“We are interested in their success stories and history. We want to utilise their process of incubating start-ups and transfer it to our environment.”
Matthew Allen, swissinfo.ch
Vladimir Putin to support Russia's 2018 World Cup bid in Zurich – report
11 Oct 2010 17:23:00
Russia’s prime minister Vladimir Putin has confirmed will travel to Zurich, Switzerland on December 2 when FIFA are set to announce the winning bid to host the 2018 World Cup, according to a report on .
Russia are considered one of the favourites to be awarded the pinnacle event, along with England.
Joint bids from Spain/Portugal and Belgium/the Netherlands, as well as the USA are among the candidates to host the tournament as well.
Putin reportedly revealed his plans in a conversation with the head of Russia’s Republic of Tatarstan, Rustam Minnikhanov.
"Prime Minister Vladimir Putin has promised to be there on December 2, when FIFA's executive committee makes its final decision,” the official website of the Asian Football Confederation cited Minnikhanov as saying.
Putin previously attended the International Olympic Committee’s session in Guatemala in 2007. The attendance of Putin was believed to be one of the factors that helped Russia win the bid for the 2014 Winter Games.
IOC visiting Sochi for check on 2014 Winter Games
Posted 12h 20m ago
By Stephen Wilson, AP Sports Writer
LONDON — With a little over three years until the opening ceremony, International Olympic Committee officials are heading back to Russia for a check on preparations for the 2014 Winter Games in Sochi.
The IOC's coordination commission will be in the Black Sea resort for a three-day visit starting Tuesday to review the state of venue construction, funding, environmental safeguards, security and other issues.
It's the fourth time the IOC panel has visited Sochi since Russia was awarded its first Winter Olympics in 2007. Organizers are building virtually all venues from scratch in one of the biggest construction projects in Europe.
"We're well on track not only in construction, where we are even ahead in some areas, but also on time and on budget," Sochi organizing committee head Dmitry Chernyshenko told The Associated Press by telephone Monday. "We will have plenty of things to submit and share with the IOC."
The IOC team will tour the Olympic Park, where Chernyshenko said the venues are "going up like mushrooms." The roof of the ice hockey venue is being installed, and the external structure of the figure skating arena is almost complete, he said.
IOC President Jacques Rogge, who was in Sochi in June, said the committee is "definitely happy" with the pace of preparations.
"I saw the progress. You can't believe how well and how fast they build," he told the AP in a recent interview. "We are dealing with a country that is legitimately considered one of the three world powers. You're not discussing with a second-tier country."
The first sports test event for the games will be held in February, a European Cup Alpine skiing competition in the Krasnaya Polyana mountains outside Sochi.
Gian Franco Kasper, head of FIS, the international ski federation, said Sochi organizers are "more or less ready" with the Alpine courses but the cross-country and biathlon venues still have a long way to go.
"Two, three, four years before, you have the feeling that it will never finish," he said. "But the power that Russia has, and also the financial power, that is almost a guarantee that everything will be fine within the years we will have."
The visit also comes as Sochi organizers ramp up efforts to recruit 25,000 volunteers, a major challenge in a country with little tradition of volunteerism. Chernyshenko said the program is now well under way, with a number of volunteers trained last week during a gathering in Sochi of Generations for Peace, an outreach group headed by Prince Faisal Al-Hussein of Jordan.
"We are using the preparation for the games as a catalyst for the volunteer program," Chernyshenko said. "We think the program will snowball."
Sochi has faced criticism on the environmental front, with a recent Russian audit claiming the situation was "close to critical" because of a lack of authorized landfills in the area for waste disposal. Some environmentalists have also protested that the Olympic project could damage the unique landscape of the North Caucasus.
"All the time we are suffering criticism, but we are doing positive things," Chernyshenko said. "We are really committed to protect and enhance the environment. We are ready to respond to any criticism."
Rogge backed Sochi's efforts.
"They are very keen to have as clean a policy as possible in terms of environment," he said. "Building in a mountain area is always prone to have issues in terms of environment. They're doing a good effort and willing to listen to the NGOs and the experts."
AP Sports Writer Graham Dunbar in Geneva contributed to this report.
Sochi Games May Not Need State Cash
12 October 2010
Reuters
BERLIN — The Sochi 2014 Winter Olympics may not need help from state funds because sponsorship plans have exceeded expectations, games chief Dmitry Chernyshenko said Monday.
The Black Sea resort has an organizing budget of some $2 billion that does not include infrastructure construction and improvement, worth several more billion dollars.
Sponsorship revenues have topped $1 billion, making Sochi by far the most successful Winter Games organizing committee in that respect, and look likely to surpass Beijing's $1.2 billion domestic sponsorship revenue mark for its much bigger 2008 Summer Games.
"It is true we have exceeded our [sponsorship] plans, but we have now established new plans," Chernyshenko said in an interview a day before the start of an International Olympic Committee coordination commission visit to monitor progress.
"We want to run the games without attracting public funds or government money," he said, days after organizers signed up Russian insurance company Ingosstrakh as their latest partner.
Sochi will also have revenues from tickets, the licensing plan and broadcasting rights.
Chernyshenko said more sponsorship deals were expected. "There are some more contracts in the pipeline, and we will have news on that soon," he said. "The licensing program has started, and we recently signed the contract for the post, stamps and coins."
Chernyshenko, a Sochi native who also led the successful bid, said construction was not a concern, despite the need to build almost all venues from scratch.
"From the construction perspective, the coordination commission will visit the Olympic park and see the growing number of venues," he said.
Construction in Sochi, which has been named Europe's biggest building site, has been a matter of concern for some time with the IOC urging organizers to stick to the timetable.
Chernyshenko said all venues would be completed by 2013 as planned and several, including the ice hockey stadium, were ahead of schedule.
International Ski Federation chief Gian Franco Kasper warned last week of possible "white elephants," saying Sochi had to make sure that there was a use for all the venues after the games.
Chernyshenko said Sochi was bidding to become a regional winter sports hub, investing far more than needed to just host the Olympics.
The biggest challenge for organizers lay in having the right personnel in place for such a big event, he said. "The major challenge is the people," he said. "We have to understand we are creating a new city with extended infrastructure and the proper workforce to maintain and operate. It is not only the competitions but also the hotels and so on."
RIA Novosti Press Review for Tuesday, October 12, 2010
09:01 12/10/2010
A brief look at what is in the Russian papers today
POLITICS
Russia's ruling United Russia on Monday claimed a landslide victory in regional elections, held on Sunday in 77 regions, while rivals accused the party of staging the dirtiest election campaign in its history. (The Moscow Times, Vremya Novostei, Kommersant)
Kyrgyzstan announced on Monday preliminary results of its parliamentary elections, which were held on Sunday. The nationalist Ata-Zhurt party leads with 8.88 percent of the vote. Parties that sided with the interim government showed dismal results, while ex-premier Felix Kulov is considered a key candidate for the head of the new government. (Kommersant)
ECONOMY
The Russian government is preparing a taxation reform for the oil industry. The Energy Ministry plans to propose shifting the tax burden from raw oil to refined oil products in order to increase profits from exports. (Vedomosti)
An Organization of Economic Cooperation and Development report said that Russia, Germany and Japan were showing signs of continued economic expansion, although a slowdown in economic growth in developed countries looks likely. (Vedemosti)
OIL AND GAS
Russia will receive $1.8 billion in the next four years in dividends from the Sakhalin-2 oil-and gas project. The government will continue receiving dividends until 2041 as a holder of one share in the Sakhalin Energy consortium. (Vedomosti)
Russian Prime Minister Vladimir Putin held on Monday a meeting with local authorities in New Urengoy, northern Siberia, which focused on the construction of a liquefied natural gas (LNG) plant on Siberia's Yamal peninsula. (Vremya Novostei)
Telecoms & IT
Russian Internet holding Mail.ru Group (former DST) announced its preparations for an IPO on the London Stock Exchange (LSE). The holding plans to earn at least $500-750 million from the offering. (Kommersant)
FINANCE
Russia's Central Bank bought 100 tons of gold on the domestic market in 2010. As a result, the reserves of monetary gold in the country grew by 15.1 percent year-on-year to 734 metric tons. (Nezavisimaya Gazeta)
Russian bank VTB is considering buying the Central Moscow Depository, whose license the Federal Service for Financial Markets will cancel in three months time. The VTB board will consider the feasibility of the purchase on Tuesday. Experts say they will be surprised if VTB decides to buy the depository, which is rapidly losing clients. (Kommersant, Vedemosti)
SOCIETY
Russia will spend 777 million rubles ($26 mln) in the next 15 years on propagating patriotism in line with a state program adopted by the government on October 5. (Vedomosti)
DEFENSE
Russia's State Duma Defense Committee has made public for the first time detailed data on Russia's defense spending for the next three years. The share of spending on R&D will decrease, while procurement of new weaponry will increase. (Vedomosti)
SPORTS
The Russian national football team on Tuesday will face Macedonia in this year's last qualifying game for the Euro 2012. (Rossiiskaya Gazeta)
SCIENCE AND INNOVATION
Russian President Dmitry Medvedev discussed with California Governor Arnold Schwarzenegger and U.S. business representatives on Monday the prospects for cooperation in the creation of Russia's Skolkovo research hub. The head of the Russian Nanotechnology Cooperation, Rusnano, estimated the financial potential of U.S. investment for Rusnano alone at $1 billion. (Kommersant)
Resin Cancels Golf Blueprint
12 October 2010
By Irina Filatova
Acting Mayor Vladimir Resin on Monday canceled a decree signed by former Mayor Yury Luzhkov on developing golf in Moscow, a City Hall source told The Moscow Times.
The decision is unlikely to significantly affect the future development of golf in Moscow because the sport was included in a list of Olympic sports last year, and golf infrastructure has already started developing, said Nikolai Afanasyev, director of a Moscow golf school.
“If [the decree] has been cancelled, I'm of course disappointed to some extent,” he said, but added that new golf courses were likely to be built anyway.
“I don't think there will be any fundamental changes. Everything will take its course,” he said.
Another City Hall source told Interfax that the decree would be replaced by a new program for building sports infrastructure in the capital through 2025, in accordance with the urban planning code and the General Plan for Moscow's development.
Luzhkov signed the decree in 2006 to support building golf courses and clubs from 2007 through 2012.
City Hall planned to identify plots of land to build golf facilities and to use budget funds to create a blueprint of where to locate them. Investors would have financed construction and would have been selected via tenders, the source told Interfax.
The first “municipal” nine-hole golf course, whose construction was financed by City Hall, opened recently in the district of Kurkino, Afanasyev said.
He also said his school, which is funded by City Hall, was functioning successfully, with about 600 children attending classes for free.
But cancellation of the decree may affect plans by construction company Inteko, owned by Luzhkov's wife, Yelena Baturina, to build a golf club near Ulitsa Nizhniye Mnyovniki in western Moscow. Last year, the company acquired a 35-hectare plot to build the club, which may be designed by U.S. golf legend Jack Nicklaus.
Inteko intends to build a clubhouse and an 18-hole golf course on the territory. A company spokesman told Interfax last month that the design would be completed next spring.
The company has declined to comment on the size of its investment in the project.
Real estate consultants said many companies that plan to build golf clubs in Moscow or the surrounding Moscow region would not lose money by the cancellation of the decree.
“Such investors will be able to develop the land in other ways,” said Natalya Kats, managing director of Usadba, an elite real estate agency.
She said developers would be able to start new, more profitable projects instead of the planned golf clubs.
"If an investor has an alternative, it would be more profitable to build a multi-functional complex, a mall or homes on the plot," she said, adding that such plots of land were a valuable asset.
The average plot size needed to build a golf course is 30 hectares. Market analysts value the plot of land acquired by Inteko at $175 million to $250 million, according to Vedomosti.
An Inteko spokesman told Vedomosti last month that the company had no plans to build any housing on the plot.
"There cannot be any housing on the property. Given the landscape, it's an optimal place to put a golf course," the spokesman said.
A company spokesperson was unavailable for comment Monday.
Kats said Russian golf courses are operational for less than half the year.
“Golf courses are not in high demand in a country where it rains or snows for nine months of the year,” Kats said.
There are currently only four golf clubs with 18-hole courses in the Moscow region: Nakhabino, Pestovo, Tseleevo and Agalarov Estate.
Both Baturina and Luzhkov have said they enjoy golfing. Inteko owns a golf course in Austria, Vedomosti reported.
Luzhkov was a consistent supporter of sports development. He said in 2006 that City Hall planned to build at least 10 golf courses in Moscow.
Earlier this year, he said that making Moscow an international finance center would be impossible without developing golf.
Russian company-town choking on environmental hazards
12 October, 2010, 05:04
A bleak sight greets visitors when arriving in the small Russian town of Karabash. A legacy of environmental destruction once earned it the reputation as one of the most polluted towns in the world.
Karabash, located in Russia’s southern Chelyabinsk oblast, is home to a large copper smelter. A century of toxic fumes and chemical waste from the plant has left the landscape devastated. And it is the residents who have suffered the brunt of the consequences.
“Residents here suffer from cardiovascular diseases; respiratory diseases, digestive system diseases and the level of oncological diseases here is rather high,” said Aleksey Mironov, deputy chief physician at the Karabash Town Hospital.
Under new ownership since 2003, the plant has taken on the task of minimizing past and current damages, but progress has been slow.
“We immediately began renovation,” said Alexey Baikin, chief metallurgist at the Russian Copper Company. “You can see for yourself the problems that our company has inherited. We’re doing a lot to preserve and develop Karabash but, of course, a lot still remains to be done.”
The smelter was founded to explore the region’s rich copper and has contributed to the economic progress in Russia over the last 20 years.
However, the cost of the economic gains has been enormous, with the social and environmental scars clearly visible.
Tall hills of black industrial waste surround the residents of Karabash and the air quality is extremely poor.
“Today, the wind is blowing a different way. Usually, you can’t see your own outstretched arm because of gas concentrations. People are being literally poisoned,” said Karabash resident Dmitry Smolnikov.
However, the plant is the town’s lifeblood, so removing it is not an option. Back in 1987, after the town was branded an ‘environmental disaster zone,” the factory was shut down, which quickly nudged the area into poverty.
It was a relief to the people of Karabash when the plant reopened some ten years later. Even though residents knew what to expect – pollution and unhealthy working conditions – they were at least able to provide for their families.
“We have a very tough employment situation here,” said Mr. Smolnikov. “I worked at those purification units [at the copper factory – ed.]. for a while. But they’re insufficient and can’t keep up).
“This industry is really dangerous, it erodes everything,” said Mr. Smolnikov. “The units [designed to absorb pollution – ed.] often fail, and all the impurities come back to the town. On the other hand, things did use to be much worse, so there have been some improvements.”
Despite millions in investment to modernize the plant, its working conditions still seem inadequate. At times it is hard to breathe. Yet many of the staff wear no breathing equipment.
There have, however, been some successes in Karabash. Waste is no longer disposed of using public water canals and the company says they are working hard to cut emissions. And with further investment plans, Karabash could one day hope for a cleaner future.
“We aren’t done with the plant yet. We are going to turn the plant into a modern European-type factory. So, everything you see around the plant will soon become history,” Mr. Baikin promised.
However, for the residents of Karabash the mistakes of the past remain as palpable as ever in the present.
|Russian Officials Preparing for More and Larger Street Clashes Ahead | | |
| | | |
|October 11, 2010 |
Paul Goble
Vienna, October 11 – Until recently, Russian officials and most systemic politicians have played down the risk of massive street clashes and the need to prepare for them, but in the course of the last week, a “Novaya Versiya” commentator notes, members of both groups have expressed concern about this possibility and outlined steps to counter it.
In recent months, Mikhail Sukhodolsky, the first deputy minister of internal affairs, said last week, the number of crimes connected with popular clashes and disorders “has markedly increased, and for objective reasons, [such crimes and the milieu from which they spring] are generating a serious social response (versia.ru/articles/2010/oct/11/massovie_besporyadki)
In the past, “Novaya Versiya” analyst Ruslan Gorevoy says, officials had been restrained in making any such assessment, but “now they are speaking about [this problem] openly,” apparently because “it is becoming ever more complicated to rein in protest attitudes by bloodless means” and law enforcement bodies want to justify in advance the use of force
The powers that be, Gorevoy says, have been preparing for just such a possibility. On the one hand, both the central and regional offices of the MVD have set up special “rapid reaction” forces to disperse street demonstrations, and perhaps more important, the Duma has passed a law denying those charged in such cases of the right to a jury trial
Moreover, he continues, the belief that “in the near future mass disorders are inevitable” appears to be shared “not only by representatives of ‘the extra systemic opposition [who may have a vested interest in making such predictions] … but also by those whose responsibilities include not allowing such excesses to occur and in the worst case to suppress them.”
“Militia officers, court officials, and legislators as one firmly declare about the inevitability of force actions,” Gorevoy notes, although their explanations for this possibility vary. Militia officers blame the failure of the courts to punish those who have taken part, judges blame shortcomings in legislation and politicians blame “irresponsible opposition figures.”
For example, Sergey Markov, a political scientist and Duma member, says that “disorders like those which we observed not long ago in Riga and Sofia today can occur in all countries of the world except those where there is a socially oriented economy. They can even break out in Russia.”
Indeed, Markov said, “there are already elements of a pre-revolutionary situation in Russia” but “there are only elements” and they are more social-economic than political because of the resources of the existing regime and the absence of credible alternative political leaders who could exploit such “elements.”
One measure of the spread of such concerns is the increasing popularity of insurance policies against the consequences of mass violence, Gorevoy says. When such policies were offered two years ago, only five firms bought them. Now, they are far more popular, with one in every four firms insuring itself against such problems
More significant, however, the “Novaya versiya” analyst continues, is that the formation of the MVD special units was completed in August, a development that prompted the deputy minister of internal affairs to talk about the ability of his institution to cope with anything that might happen.
Sukhodolsky said that “the crime-generating situation can deepen with the growth of protest attitudes called forth by dissatisfaction of the labor capable population of the country as a result of the non-payment of wages, threats of firings, and also unpopular measures taken in the framework of the anti-crisis program.”
Because of that risk, he continued, MVD units must give “heightened attention” to the risks of street violence and be ready to counter it before it spreads.
More junior MVD officials speaking on condition of anonymity told Gorevoy that the organs knew how to disperse street actions even in Soviet times, “and after the Moscow events of 2002 … our people developed detailed instructions literally minute by minute on how to effectively and quickly disperse any group, even one numbering in the thousands.”
Not long ago, these officials said, they had received from MVD officers in Moscow and Moscow oblast a special “circular” in which “were enumerated ‘the structures destabilizing the social structure’ which could be involved in the initiation of massive street clashes” – including nationalists and extreme right groups especially in certain regions.
That document and other officials and analysts stressed that all these clashes are local and have not yet come together in any country-wide fashion. Consequently, they believe, Gorevoy continues, that there is no basis for particular concern. But he asks rhetorically, is that in fact the case?
If it is, then why did Sukhodolsky feel compelled to talk about “the heightened aggression of certain citizens of Russia toward the militia” and take note of “the growing aggression and wildness in behavior of certain groups of citizens”? Perhaps he wants a change in the rules of engagement or to prepare the leadership for harsher actions.
But if that is the case, then the increasing frequency and size of such clashes does represent a real threat, perhaps not of a revolution but certainly of a problem that the powers that be are now far more worried about than they were only a few months ago and are thus getting ready to defend themselves.
National Economic Trends
Russia makes it to troika with best economic growth prospects
Oct 12, 2010 10:21 Moscow Time
Russia has made it to the troika that boasts best economic growth prospects.
This follows from a report by the Organization for Economic Cooperation and Development.
The troika also comprises Germany and Japan, which also have the world’s best economic growth situation.
In the United States, the report points out, economic growth has reached its peak values and will start slowing down shortly.
Meanwhile the Euro-zone is living through a period of stagnation.
Kudrin Sees Moscow Sell-Offs
12 October 2010
The Moscow Times
The Moscow city government could sell shares it holds in a series of companies including banks and airlines, Finance Minister Alexei Kudrin said.
“We're not talking about small money here. It's billions of dollars a year that could be reallocated to other areas,” Kudrin said on the Rossia television channel, Interfax reported.
Some of the city's biggest assets include Bank of Moscow, in which the Moscow property department holds a 46.48 percent stake, and the Atlant-Soyuz airline, in which it holds a controlling share.
Kudrin's comments Saturday come after mounting criticism of the Moscow city administration's finances in the wake of the ouster of Mayor Yury Luzhkov last month.
A spokeswoman for Bank of Moscow said Monday that she had no current information about a proposed sale of the city's stake.
The Fitch rating agency changed Bank of Moscow's long-term rating to negative immediately after Luzhkov's firing. Last week, the bank's president, Andrei Borodin, moved to allay concerns about the company's future in a wide-ranging interview with Kommersant.
But financial analysts said the move would be in line with a broad program of privatization adopted by the federal government for the coming years.
“It's inevitably going to be seen through the prism of the change of mayor, but there's nothing new in the privatization idea,” said Roland Nash, chief strategist at Renaissance Capital.
The government is expected to divest itself of about $10 billion in shares a year for five years starting in 2011, but the list of companies involved has not yet been finalized.
Bubble Warning as Low Yields Spur Tinkoff Rally: Russia Credit
By Denis Maternovsky and Jason Corcoran
Oct. 12 (Bloomberg) -- The biggest surge in ruble bond sales is sparking government warnings of a “bubble” as record- low yields drive investors to seek higher returns.
The combination of a 12 percent increase in Russian corporate debt sales from last year and gains in the JPMorgan Chase & Co. Russian corporate bonds index that sent yields down 160 basis points in 2010 to a record low 5.35 percent is feeding concerns the market may reverse. Notes selling like “hot cakes” signal “investors aren’t being as vigilant with the quality of the company,” Deputy Finance Minister Dmitry Pankin told reporters in Washington on Oct. 8.
The strength of the bond market is creating a “danger that bubbles will form again” after the global credit crisis, Pankin said, echoing warnings last week from Brazilian central bank President Henrique Meirelles and Nobel Prize-winning economist Joseph Stiglitz that emerging-market asset prices may be rising too far.
“In many ways bonds worldwide are overheated,” Elena Kolchina, the head of fixed income products at Renaissance Asset Managers in Moscow, which has $1.5 billion in assets under management, said by e-mail on Oct. 8. “In markets like this investors should indeed be very careful and better analyze what they buy and at what price.”
The lowest-ever return on two-year and five-year U.S. Treasuries and investor demand for higher-yielding emerging- market assets have helped spur $538 billion of bond sales so far this year by developing nations, a record for the period and up 5 percent from the same time in 2009, according to data compiled by Bloomberg. The yield paid by emerging-market borrowers fell to 5.3 percent yesterday, the lowest for the JPMorgan Chase & Co. EMBI+ Index.
Yield Spread
The extra yield demanded to hold Russian debt rather than U.S. Treasuries fell by nine basis points to 215, according to JPMorgan indexes on Oct. 11. Russia is rated Baa1 by Moody’s Investors Service, its third-lowest investment grade ranking. The yield spread for similar-rated Mexican bonds is 152, and the difference is 193 for Brazil, whose debt is rated two steps lower at Baa3 by Moody’s. The spread on Russian securities is 47 basis points less than the average for emerging markets, down from a 15-month high of 105 in February, according to JPMorgan indexes.
Rising Sales
Russian company debt sales surged 12 percent this year from the same period in 2009 to 580 billion rubles ($19 billion), according to data compiled by Bloomberg. Tinkoff Credit Systems, a Moscow-based lender rated six levels below investment grade, offered a 20 percent annual interest rate on 1.4 billion rubles of three-year bonds in July. The yield fell to 16 percent from a peak of 21.97 percent on Aug. 2, according to data compiled by Bloomberg.
“The bond’s rise in secondary trading is obviously a result of investors looking for more profitable paper,” Oleg Anisimov, Tinkoff’s marketing vice-president, said in a telephone interview yesterday. The bank offered a higher interest rate because smaller private companies and banks rarely sell securities with a three-year maturity and no put option, he said. A put option gives the bondholder the right to sell the security back to the issuer.
Tinkoff
Tinkoff, which is rated B3 by Moody’s, six steps below investment grade, sold 1.6 billion rubles of three-year notes on Sept. 24. The yield dropped to 15.4 percent on Oct. 11 from 16.8 percent on Sept. 30. The company may sell more ruble debt by the end of the year depending on the market, Anisimov said.
UTair Aviation, Russia’s fifth-largest airline, sold 1.5 billion rubles of bonds of three-year securities on March 30. The yield declined to 11.5 percent from 12.5 percent since March. The debt isn’t rated by Moody’s, Standard & Poor’s or Fitch Ratings, according to data compiled by Bloomberg. Yury Mushikhin, the airline’s spokesman in Tyumen, Russia, didn’t answer his mobile telephone or respond to messages seeking comment on Oct. 11.
The yield on Russia’s dollar bonds due in 2020 fell seven basis points, or 0.07 percentage point, to 4.299 percent yesterday, the lowest level since they were sold in April. Gains in the country’s ruble notes due August 2016 reduced the yield one basis point to 7.16 percent. The yield on Moscow-based OAO Gazprom’s ruble bonds due in June 2014 has narrowed 13 basis points to 6.99 percent since the start of August and is down 205 basis points this year.
‘Changing’ Situation
“I would not say there is a bubble, but the situation is definitely changing,” Pavel Sokolov, co-head of debt capital markets at Moscow-based Troika Dialog, Russia’s oldest investment bank. “Now that yields have fallen so far for top borrowers and investors are trying to find something more attractive, they are going to have to accept heightened risk.” It was “impossible” for companies rated B or lower to issue debt a year ago, he said.
The ruble gained 0.4 percent to 29.8725 per dollar yesterday. Non-deliverable forwards, or NDFs, which provide a guide to expectations of currency movements and interest rate differentials and allow companies to hedge against currency movements, show the ruble at 30.1353 per dollar in three months.
In the two years after the collapse of Lehman Brothers Holdings Inc. in September 2008 cut access to global funding, Russian companies defaulted on 260 billion rubles of debt, according to data compiled by Trust Investment Bank in Moscow. Bank Rossii, the nation’s central bank, has lowered borrowing costs 14 times since April 2009 to help spur economic recovery and shore up corporate balance sheets in Russia, the world’s largest energy supplier. The refinance rate is now at 7.75 percent.
Default
International Industrial Bank, the lender controlled by lawmaker Sergei Pugachyov, defaulted on 200 million euros ($274 million) of bonds in July in the first major Russian bank default since the 1998 debt crisis. The bank was rated B1 by Moody’s, four levels below investment grade, before the default. Bank Rossii revoked the lender’s license last week.
Any Russian company with no credit rating “is potentially a suicide note,” said Eric Kraus, the head of strategy at Otkritie Financial Corp. in Moscow, said in an interview on Oct. 8. “There is no procedure for orderly workouts, creditors’ committees, etc. In a bankruptcy, favored creditors will get anything of value with the bondholders left for last.”
The cost of protecting Russian debt against non-payment for five years using credit-default swaps declined three basis points to 141 yesterday, down from this year’s peak of 217 on May 7, according to data provider CMA. The contracts, which decline as the perception of creditworthiness improve, traded at a record low of 37 in June 2007 before the credit crisis.
Default swaps for Russia cost 0.8 basis point more than contracts for Turkey, which is rated four levels lower at Ba2. Russia swaps cost as much as 40 basis points less on April 20. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
“Credit-default swap levels are still wider than pre- crisis so should the U.S Treasury yields and oil prices remain supportive, this bond rally might continue for some time,” Marina Vlasenko, a credit analyst at Commerzbank AG in London, said by e-mail on Oct. 8.
-- With assistance from Paul Abelsky in Washington, Jason Webb in London and Ekaterina Shatalova in Moscow. Editors: Alex Nicholson, Stephen Kirkland.
To contact the reporters on this story: Denis Maternovsky in Moscow at dmaternovsky@; Jason Corcoran at Jcorcoran13@
To contact the editor responsible for this story: Gavin Serkin at gserkin@
Last Updated: October 11, 2010 16:20 EDT
Business, Energy or Environmental regulations or discussions
Gazprom, Raspadskaya, RusHydro: Russia Stock Market Preview
By Yuriy Humber
Oct. 12 (Bloomberg) -- The following companies may have unusual price changes in Russia trading. Stock symbols are in parentheses and share prices are from the previous close.
Russia’s 30-stock Micex Index added 1.2 percent to 1,482.11 at the close in Moscow, its biggest advance in almost two weeks, and the highest level since April 26. The dollar-denominated RTS Index gained 0.3 percent to 1,571.41.
OAO Gazprom (GAZP RX): The world’s largest producer of natural gas said its tax burden may rise by 200 billion rubles ($6.69 billion) in the next three years, even as Prime Minister Vladimir Putin pushes for increased output. A 61 percent increase in the gas extraction tax, which the government has sent to parliament, will add 48 billion rubles to Gazprom’s payments in 2011, and proposed higher property taxes may further raise costs, Chief Executive Officer Alexei Miller said. Gazprom rose 1.1 percent to 164.95 rubles on the Micex Stock Exchange.
OAO Raspadskaya (RASP RX): The Russian coking coal miner is due to report second-quarter financial results today. Raspadskaya rose 2.1 percent to 173.28 rubles on the Micex Stock Exchange.
OAO RusHydro (HYDR RX): Moody’s rated the hydropower utility’s ruble-denominated Eurobonds as Ba1 with a stable outlook. RusHydro rose 1.1 percent to 1.602 rubles on the Micex Stock Exchange.
To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@
To contact the editor responsible for this story: Amanda Jordan at ajordan11@.
Last Updated: October 11, 2010 22:00 EDT
Proposed law to require telecoms operators pay into copyright fund
Unicredit
October 12, 2010
Topic: Several State Duma deputies have submitted amendments to the telecommunications law proposing that telecoms operators contribute 2% of their content-linked revenue to a special fund that would pay royalties to copyright holders, who now suffer from piracy and illegal downloads, Vedomosti reported.
Our view: If the amendments are adopted, they would clearly be negative for MTS and Vimpelcom, in our view. With content revenue at about 33% of VAS, which makes up some 20% of the top line, we estimate the potential downside to revenue at 0.7%, which would translate into some 2.5% downside to our current TPs.
Conclusion: We rate MTS and Vimpelcom Buy, with 12M TPs of USD 34.8 and USD 28.8.
Sberbank Plans to Sell Bonds in Swiss Francs, Vedomosti Reports
By Ilya Arkhipov
Oct. 12 (Bloomberg) -- OAO Sberbank, Russia’s largest lender, plans to sell bonds in Swiss francs to diversify risk and attract new investors, Vedomosti reported, citing board member Andrey Golikov.
Sberbank would follow Bank of Moscow, OAO Gazprom and VTB Group in selling notes denominated in the Swiss currency, the Moscow-based newspaper said today.
Click here for web link
To contact the reporter on this story: Ilya Arkhipov at iarkhipov@
To contact the editor responsible for this story: Brad Cook at bcook7@
Last Updated: October 12, 2010 00:53 EDT
Russian government seeks to raise $3bn from the sale of a stake in VTB
Renaissance Capital, Russia
Tuesday, October 12, 2010
Event: Yesterday (11 Oct), in interview with Dow Jones, VTB CEO Andrei Kostin laid out some key points about the planned sale of a 10% stake in VTB to a group of investors led by US private equity firm TPG Inc. Our takeaways are as follows:
The Russian government is seeking to raise about $3bn from the sale of a 10% stake in VTB.
The selling price will imply a discount to VTB's current share price, in exchange for a lock-up period.
TPG has a mandate to gather a group of 8-10 investors, who will each take 1-1.5% of the company's shares. The potential investors are primarily sovereign funds from Asia and the Middle East.
The negotiations with investors led by TPG have been taking place for months. The biggest hurdle is reassuring investors who have not previously invested in companies controlled by the Russian government.
The sale process is expected to be finalised not later than the middle of next year.
Action: Neutral for VTB, in our view Rationale: The $3bn price mentioned above indicates that the investor consortium would pay a slight discount to the market price (which is logical in such deals), and in return would agree to a lock-up period. Although Kostin did not specify the duration of the lock-up period, we believe this is welcome news for the stock, as it would reduce overhang risks by preventing the new major shareholders from immediately flooding the market with shares.
Armen Gasparyan
Russian issuers keep close eye on Mail.ru IPO
By Courtney Weaver
Published: October 11 2010 20:22 | Last updated: October 11 2010 20:22
Mail.ru, the Russian internet group, on Monday started marketing its forthcoming London flotation to potential investors. Other Russian issuers – and the bankers advising them – will be watching its progress closely.
Mail.ru is the first of a group of four companies expected to seek a London listing in the coming months. Many will be hoping for a repeat of 2007, when PIK Group and VTB both successfully floated with valuations well in excess of $1bn.
The part of Mail.ru that will be listed is a collection of Russian internet businesses and also owns a 2.5 per cent stake in Facebook. It is expected to be valued at about $5bn (£3.1bn), making it the biggest Russian listing in London since 2007.
It represents a shift in the types of Russian companies tapping capital markets.
“For a Russian market that is dominated by energy, materials and financials, this is a different type of asset to get exposure to one of the largest consumer markets in Europe,” says Edward Conroy, co-manager of the HSBC GIF Russia Equity fund. “You talk to Russian people and they are users of these services. Mail.ru has online gaming, online advertising and social networking together, which makes it a unique asset in Russia.”
As one senior banker says, a successful Mail.ru offering may “open the door for more companies that would not necessarily get in”.
“Russia is like this enormous locomotive,” he says. “When you get the coal in the engine and start chugging away, you get momentum.”
Transcontainer, a subsidiary of Russian Railways, will announce on Tuesday plans to raise about $400m in an upcoming London listing, while O’Key, the St Petersburg-based grocer, said last week it would float in London before the end of the year.
Meanwhile, SeverStal, the Russian steel company, is preparing its gold unit for a London listing that is expected to value the business at about $4bn.
People working on Russian listings say the City is once again hungry for emerging market offerings. Yet London investors warn that Russian issuers will have to settle for lower valuations than they might have been hoping for earlier in the year.
“The chances for disappointment and a sour after-performance are far greater than one deal [such as the Mail.ru listing] changing the minds of investors.”
While 2010 promised a deluge of capital raisings from Russian companies looking to tap foreign capital markets for the first time since 2008, most potential issuers have so far walked away disappointed.
Prof Media, the Russian media group, cancelled an expected $1bn offering in April when it found it could get cheaper financing in the form of a loan from state-controlled Sberbank, while Uralchem, the Russian fertiliser producer, was forced to cancel its planned $600m raising at the 11th hour when market problems intensified in Greece and Europe.
Market participants say Russian issuers’ attractiveness has not been helped by the $2.2bn January listing of Russian aluminium producer UC Rusal in Hong Kong.
Shares in the company plunged more than 30 per cent in the first few months of trading, while other Russia-based IPOs have also performed poorly.
“IPOs conducted earlier this year have kind of contaminated Russia,” says one London-based investor.
Russian companies have a reputation with some investors for pricing their flotations too aggressively, but many are expecting market conditions to force them to take a more realistic view of valuations.
“[Before the crisis] people got it into their heads that the stock market was the place where smart Russian business owners could get free money from stupid western investors. It worked at the time but it doesn’t work anymore,” says Steven Dashevsky, a founding partner of Dashevsky & Partners, a Moscow-based investment fund, says.
The companies that have realised this are even starting to approach the mandate process differently, says the senior banker.
“Before there was this whole practice of giving the mandate to the bank that gave the highest valuation ... Now a certain degree of maturity has evolved,” he says.
He says he is confident that the handful of Russian deals that his bank is involved in will all make it to market in the four-week window that ends in mid-November. However, according to another banker, conditions still remain less than ideal.
While oil has bounced back to $84 a barrel, Russian markets are still trading sideways compared with emerging market peers and capital inflows into the country remain relatively low.
“The reality is the markets are not there,” the second banker says.
IRC, the iron ore unit of London-listed Petropavlovsk, was last week forced to cut the size of its initial Hong Kong offering, reducing the number of shares on offer by a fifth and pricing the remaining shares nearly 20 per cent below the bottom of its initial indicative range.
The second banker says he expects only about half of the seven deals he is working on to make it to market before the end of the year.
“I am confident we can do deals,” he says. “But whether we can do deals with valuations that are acceptable to the shareholders of the company is another story.”
Additional reporting by Miles Johnson
UK connection in Russian container
By Emiliya Mychasuk
Published: October 12 2010 04:00 | Last updated: October 12 2010 04:00
David Hexter, TransContainer
The latest wave of Russian initial public offerings in the UK brings David Hexter, the British former director with the European Bank for Reconstruction and Development, back into his home market.
The 61-year-old Mr Hexter is a director of Russia’s largest container group, TransContainer, which is seeking to list in London.
A Citigroup veteran, he joined the EBRD in 1992, setting up its financial institutions practice, which grew to a sizeable chunk of its business. He became its director of Russia and central Asia in 1999.
Mr Hexter represented its investments on the boards of groups across Hungary, Poland and Russia as the pace of privatisation accelerated. In his time, he has taken on businessmen such as Roman Abramovich, over an EBRD loan, and supervised stakes in everything from Russian telco Vimpelcom to Latvian banks.
On leaving the EBRD in 2004, he stayed immersed in the region as a director of several banks and investment groups in Russia, Kazakhstan and Denmark.
In 2008 he joined the board of TransContainer, in which EBRD had a stake.
An Oxford graduate in philosophy, politics and economics, he went straight to Citibank in New York in 1970 and worked for the bank over the next 22 years in Luxembourg, Greece and South Africa.
When he took the EBRD job he said he was attracted to it “because the brief is a much broader and more difficult one”.
people@
FACTBOX-Russian IPO market bursts into autumn life
Mon, Oct 11 2010
DELAYED
* SUEK, Russia's largest steam coal producer, delayed for at
least a year eagerly awaited plans to list its shares in London.
[ID:nLDE66F0AP]
The group had hoped to raise about $1 billion via a 10
percent flotation in Q2 2010. [ID:nLDE60K2A4]
* Agricultural group Rusagro postponed a $300 million IPO in
May, citing market volatility. [ID:nLDE64C05V]
* Fertiliser maker Uralchem delayed a $642 million IPO as
the Greek debt crisis shook market confidence and the Icelandic
volcanic ash cloud grounded plans for a roadshow in late April.
[ID:nLDE63T0GB]
* Mining company SMR, owned by oligarch Oleg Deripaska,
delayed plans for a Hong Kong listing. [ID:nTOE648003]
IN THE PIPELINE
ISSUER PROCEEDS TIMING
===================================================
EuroSibEnergo up to $2 bln Autumn
Debt-laden tycoon Oleg Deripaska is planning a Hong Kong IPO
of 25 percent of the power firm, also known as En+ Power, which
operates 14 power stations with total capacity of 19,500
megawatts. [ID:nLDE67A1XG]
Freight One TBC 2010/2011
Russian Railways, the state-owned operator of Russia's rail
network, is seeking to offload assets to raise cash and could
float significant stakes in multi-billion-dollar division
Freight One in Moscow or Hong Kong as well as Transcontainer.
[ID:nLDE63M1RZ]
LenspecSMU $500 mln spring 2011
The construction group is planning a spring IPO in a bid to
raise $500 million. [ID:nLDE65N0M3]
Kamchatka Gold TBC 2011
Tycoon Viktor Vekselberg, a key RUSAL shareholder, is
targeting Hong Kong for an IPO of his Kamchatka Gold mining firm
as the project is dependent on Chinese demand.
Vekselberg in July postponed the float until at least 2011,
but insisted it would still go ahead. [ID:nLDE61E1PX]
[ID:nLDE66E0AB]
Gazprom electricity TBC TBC
Gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) said it planned to combine
numerous electricity assets into a single entity and pursue a
stock market flotation, although plans are at an early stage.
[ID:nLDE68511U]
Transaero $200 mln autumn
Russia's second-biggest airline said in May it was planning
a $200 million IPO in the autumn of 2010. [ID:nLDE64K1DD]
Koks $400 mln Q3-Q4
The coking coal miner said in May it could raise about $400
million in an IPO this autumn, but there has since been no sign
of movement. [ID:nLDE64C1CU]
EkoNiva TBC Feb 2011
The Russian-German agricultural group is planning an IPO in
Frankfurt next year, Russian business daily Vedomosti reported.
The company declined to comment.
Kopeika $300-$500 mln 2010/2011
The retailer is considering raising $300-$500 million via a
share placement at the end of 2010 or early in 2011 to pay down
debt, but sources said it could also be bought by X5 (PJPq.L: Quote, Profile, Research, Stock Buzz) or
Wal-Mart (WMT.N: Quote, Profile, Research, Stock Buzz). [ID:nLDE67M1NZ]
Metalloinvest up to $2 bln TBC
The Russian iron and steel firm half-owned by Alisher
Usmanov could raise $1 billion-$2 billion some time next year,
but says a decision would depend on market conditions.
[ID:nLDE60O27T] [ID:nLDE61G2B1]
Phosagro $1 bln late 2011-early 2012
The fertiliser company plans to raise around $1 billion via
an IPO in late 2011 or early 2012, taking advantage of soaring
demand for agricultural products. Rival EuroChem said it would
follow suit some time before 2014. [ID:nLDE63P1VR] [ID:nLE17425]
OTKRITIE TBC 2012
The fast-growing lender is planning an IPO in around two
years depending on market conditions, senior directors have told
Reuters. [ID:nLDE6961NG]
Victoria TBC TBC
The grocery chain is considering an initial public offering
or a stake sale and has hired Goldman Sachs and Renaissance
Capital as advisers, but has yet to state a final decision.
[ID:nLDE60Q2GK]
(Compiled by John Bowker and Maria Kiselyova; editing by
Michael Shields and David Holmes)
Russia plans coal port in Barents Sea -Lavna head
Mon, Oct 11 2010
* Eyes shipments of 18 mln tonnes, 3-phase construction plan
* First phase to be completed in H2 2014
By Denis Pinchuk
ST PETERSBURG, Russia, Oct 11 (Reuters) - Russia is set to build a new export terminal worth $300-$500 million and capable of shipping 18 million tonnes of coal a year via the Barents Sea, the head of the Lavna Trading Port Company told Reuters.
The new port is expected to provide a cheaper path to Europe and beyond for Kuzbassrazrezugol (KZRUI.RTS: Quote, Profile, Research), Russia's second-largest steam coal miner, commonly known as KRU.
"The Lavna sea trading port has all the documents required for the construction of the port," Sergey Kropotov said, adding that the new terminal would serve Europe, the United States and Canada.
Should there be a need in the future, Lavna could eventually increase shipments to 36 million tonnes per year, he added.
Construction of the three-phase project will start in 2012, and the first phase, shipping 6 million tonnes of coal, will be completed by the end of 2014, said Igor Rusu, head of state agency Rosmorport. He did not give a target date for the 18 million tonnes.
KRU and the Siberian Business Union, a transport-to-radio conglomerate, each hold 50 percent of the Lavna project.
The terminal will be built in the Kolskiy bay of the Barents Sea -- itself an arm of the Arctic Ocean, which lies to the north of Russia and Norway.
The bay is deep and does not freeze, meaning that there will be no restrictions on the size of ships, Kropotov said.
"Thus the terminal in Lavna will allow a saving of $2 to $4 dollar per tonne of coal on the shipments, compared with all other north-western ports in Russia and the former Soviet Union," he added.
Currently, the shipment of coal from Murmansk costs exporters around $11-14 per tonne, sources say. Murmansk currently works only with Russian companies SUEK and Mechel (MTL.N: Quote, Profile, Research), as well as Italy's Coeclerici.
KRU, which has said it expects to export 24 million tonnes of coal this year, declined to comment on the port plans.
In 2009, KRU exported about 5.5 million tonnes of coal via Vostochny port on the Pacific, and another 12.6 million tonnes through the Baltic ports of Ust-Luga, Riga and Tallinn.
The company exported another 5.8 million tonnes of coal through the Black Sea ports of Taganarog, Tuapse and Yuzhny.
(Writing by Toni Vorobyova, editing by Jane Baird)
Severstal Increases Stake in High River Gold Mines
Nord Gold N.V. (previously – Severstal Gold N.V.) ("Nord Gold"), a subsidiary of OAO Severstal ("Severstal") (LSE:SVST)(RT:CHMF), announced today that it entered into an agreement to acquire 19,000,000 common shares ("Common Shares") of High River Gold Mines Ltd. ("High River") at a price of CAD$1.05 per share on October 8, 2010 (the "Transaction"). The closing of the Transaction is expected to occur by October 18, 2010. The securities to be acquired pursuant to the Transaction represent ownership and control of approximately 2.26% of the issued and outstanding Common Shares as at the date hereof.
Following the Transaction, Severstal will have beneficial ownership and control over 610,362,172 Common Shares, representing approximately 72.64% of the issued and outstanding Common Shares as at the date hereof. The additional acquisition of Common Shares will occur in a private transaction outside of Canada from a non-Canadian seller.
The additional acquisition of Common Shares was effected to increase Severstal's ownership position. Severstal controlled High River prior to the Transaction and will continue to control High River. Severstal may in the future increase or decrease its ownership of securities of High River from time to time depending on such factors as the business and prospects of High River and future market conditions.
This press release is issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, which requires a report to be filed on SEDAR () containing additional information with respect to the foregoing matters. A copy of this report may be obtained by contacting Sergey Loktionov, Public Relations, OAO Severstal at +7 495 9810910 ext. 6446#, sergey.loktionov@
OCTOBER 12, 2010, 2:49 A.M. ET
Severstal to Spend Heavily on Russian Mills, Mines
By ALEXANDER KOLYANDR
MOSCOW—Russian steel producer OAO Severstal is planning to spend $6.4 billion on capital expenditure, excluding maintenance, through 2014, of which about 68% will be invested in Russian mills, and about 12.3% in U.S.-based mills, according to a document.
Severstal said in a preliminary prospectus for a $3 billion loan participation that its capex will be focused on the brownfield expansion of its mining businesses in Russia, Africa and the U.S., and on expanding its share of the Russian domestic steel products market, particularly the construction sector.
Severstal said that out of $6.4 billion of capex, only $786 million, or about 12.3%, will be invested in the company's mills in the U.S. Severstal's U.S. mills contributed 39% of all the company's steel revenue in the first half of 2010.
The company, which had acquired steel assets in the U.S. prior to the slump in demand for the alloy in 2008, is the U.S.'s third-largest steel producer by volume. Severstal intends to spend the vast majority of its capex in the U.S. on two mills in Columbus, Miss., and Dearborn, Mich.
The Columbus capital expenditure program is aimed at the completion of Phase II of its mill expansion plan, scheduled to be completed at the beginning of 2012, while the Dearborn mill will receive investment in its pickling line and tandem cold mill. Capex in the U.S. assets is expected to peak in 2011 at $545.8 million and fall to $900,000 in 2013 and 2014.
Severstal's Investment in Russia-based mills is expected to peak in 2013 at $1.26 billion and remain almost flat the following year, according to the prospectus. Severstal said in February it aims to spend $1.4 billion on capex in 2010, and then later this year said that it has already spent $523.8 million in the first half of 2010. The company plans to spend most of its capex invested in the mining division on the development of gold assets around the globe.
Moscow-based Gazprombank said in a note that it "isn't worried by the planned increase in capex, as the company is returning to pre-crisis levels of expenditures, which correspond with recovery of production and cash flows".
Severstal said, in the document dated Oct. 5, the outlook for 2010 continues to "improve as economic growth in emerging markets and a gradual recovery of demand in mature markets accelerates".
The company also said in the prospectus it is considering growth opportunities in Africa, specifically in Liberia, Congo, Burkina Faso, Guinea and Gabon and other emerging markets.
Severstal said it "plans to continue to focus on optimizing the size of its labor force, particularly in Russia," as part of its drive to cut costs. The company declined to comment on whether it plans any job cuts.
Aggregate annual capex on maintenance for the company is expected to be approximately $450 million in 2010, and to gradually increase to about $650 million in 2014.
Write to Alexander Kolyandr at Alexander.Kolyandr@
Questor share tip: Production worries take the shine off Petropavlovsk
There have been a couple of pieces of disappointing news from Russian miner Petropavlovsk over the last week – and the shares have been hit hard.
Garry White
Published: 7:00AM BST 12 Oct 2010
Questor says HOLD
First, a delay in receiving digging equipment has put its full-year production targets at risk. In fact, many analysts in the City now expect that the group’s full-year target will not be met.
On Friday, the company said it was “striving” to meet its target of 636,500 to 670,000 ounces of gold. This target was already reduced in August from 760,000 to 670,000. Of course, equipment delays are par for the course in developing any mine – and there are bound to be hiccups along the way – but this is disappointing after the target was cut in August.
Petropavlovsk produced about 140,000 ounces of gold in the third quarter, bringing total production in the first nine months to 305,000 ounces. It is clear that meeting the lower end of its target of 670,000 in the final three months will be a challenge. Nevertheless, the company remains Russia’s third-largest gold producer.
The second disappointment from the company relates to the Hong Kong listing of its iron ore unit, which used to be listed in the UK as Aircom. The Hong Kong listed company will be known as IRC.
Last week, IRC cut the size of its Hong Kong initial public offering (IPO) by half to $249m (£156m). Demand for the shares was not as strong as the company had hoped.
“The Hong Kong retail offer was over-subscribed. The total demand from investors exceeded IRC’s minimum requirements for the shares to be issued by it, but did not meet the company’s highest expectations,” Petropavlovsk said on Friday.
It is expected the company will now raise $240m and price its shares about 20pc below the lower end of the expected range. The company was originally expected to raise in excess of $500m, but the amount raised should still be ahead of the
$220m the group paid for Aricom when it brought it back into the group in February last year.
All of this means the listing, which had been scheduled for October 14, will be delayed slightly. It is now expected on October 19.
Questor is surprised by the lack of institutional demand – because the iron ore business appears to have a sound future. It should be a low-cost producer and is located close to steel mills across the Chinese border with Russia. However, institutions may have been put off by the fact that IRC is not yet profitable and there has been a raft of IPOs competing for money of late.
Of course, the production problems and the delay in the IPO of the iron ore unit are disappointing. However, Questor still sees long-term value in the shares. As JP Morgan said in a note to clients last week: “Even if we were to factor in a complete failure to hit its growth targets, Petropavlovsk’s multiples would still be compelling.”
Of the 19 analysts covering the shares and monitored by Bloomberg, 12 have buy ratings on the shares, six hold and one sell. The average price target is £14.95 a share.
The shares are trading on a December 2010 earnings multiple of 13.7, falling to just 9.8 next year. This is a substantial discount to other precious metals producers. The shares have fallen sharply over the past month, having been tipped as a buy as high as £12.62 in June. However, once production starts to ramp up, the market should be more confident with its prospects and recent falls should be reversed.
The shares were first tipped as a buy on July 21 last year at 626.2p and are up 60pc compared with a market up 27pc from then.
Questor is upbeat on long-term prospects for the group, but until the production situation becomes clearer the shares are now a hold.
October 12, 2010 10:13
Polymetal raises $150-mln Raiffeisenbank loan
MOSCOW. Oct 12 (Interfax) - Polymetal (RTS: PMTL) has arranged a $150-million credit facility with Raiffeisenbank at three-month LIBOR+3.5% to refinance debt and fund routine operations by its subsidiaries, the Russian silver miner said in a statement.
The facility is open until September 30, 2015.
Pr
Russia Alrosa roadshow for $1 bln Eurobond starts Oct 19
Tue Oct 12, 2010 8:12am GMT
MOSCOW Oct 12 (Reuters) - Russian state-owned diamond miner Alrosa will start a roadshow for a planned $1 billion 10-year Eurobond issue on Oct. 19, chief financial officer Igor Kulichik said on Tuesday.
He added that the company expects to conclude the deal by the end of the month and that its debt will be between $3.15-$3.20 billion at the end of the year.
The Eurobond is being organised by JP Morgan, UBS and VTB Capital. (Reporting by Polina Devitt, writing by Alfred Kueppers)
SISTEMA ANNOUNCES INTENTION TO ACQUIRE UP TO 51% OF JSC NIS
Moscow, Russia – October 12, 2010 – Sistema JSFC (LSE: SSA), the largest diversified public financial corporation in Russia and the CIS, which invests in, and is a major shareholder of, companies operating in different industries, today announced the intention to acquire up to 51% of JSC NIS – 25.5% from the Concern RTI Systems and 25.5% from JSC SITRONICS, with the Russian government retaining its 49% stake. As approved by Sistema’s Board of Directors, the consideration of the transaction may total up to RUB 484 million. Although completion of the transaction is expected in the fourth quarter of 2010, it remains subject to the execution of binding documentation and the satisfaction of all conditions precedent, including receipt of the approval of the Russian Federal Antimonopoly Service.
JSC NIS is the federal operator of satellite navigation services responsible for commercialization of the GLONASS system. This transaction is in pursuance of Sistema’s policy to invest in GLONASS-related projects and in line with Sistema’s strategy to participate in promising private-public partnerships.
MegaFon buys fibre-optic operator Metrocom (Russia)
On 10.12.10, In Mobile, By Editor
Russian mobile operator MegaFon has agreed to acquire 100% stake of Metrocom, a St Petersburg-based regional operator in a deal worth US$67 million.
MegaFon will acquire 55% stake of Metrocom from the government and 45% stake from Russian company MCT, which is owned by the son of St Petersburg governor Sergei Matvienk.
The stake in Metrocom was auctioned by the Russian state property fund; competitor telcos Mobile TeleSystems (MTS) and Rostelecom ruled themselves out of the auction, citing that US$67 million is too expensive.
Metrocom owns a 1,500km fibre-optic network and is presently the sole operator in St Petersburg with metro cables in place. The company is employed in providing telephone services, Internet, data transmission, as well as rent a wide range of communication channels.
Counterfeit Wine Problems in Russia
2010-10-12 01:24
Russia imports 250 million liters of wine every year, and yet 30% is counterfeit. This is the verdict of market experts. One reason for this is that there is no definition of a “natural product.”
[Oleg Nazarov, Moskachestvo Enterprise Vice CEO]:
“When indicators are not clearly formulated, there is no proof that this product is in reality wine, made from grapes and with the use of all needed technological methods”.
Many aromatic wines are counterfeited, such as “Muscat” and “Isabella”. They are the most popular. The counterfeit beverages are sold as wine. Suppliers also label their counterfeit products as wine, to reduce custom taxes.
The Russian Organization for Regulating Alcohol is in the process of developing methods to ensure that wine and counterfeits are correctly labeled.
[Marina Sagaracy, Russian Alcohol Regulation Organization]:
“Now we are carrying out work on developing these methods, to improve the Russian market. By the end of November these methods will be assessed. After that, all the labs will be able to ensure quality control and product safety.”
For now the quality of wine relies upon the conscience of producers and suppliers. The state is able to verify only the safety of the product to the customer. Trade chains are just the middlemen. So the customers have to find their own way to save themselves from counterfeits.
“If I buy the wine, I try to buy it only in specialized shops.”
“I always pay attention to the bottle form, cork and the label, license marks.”
Here’s “cheers” for a good quality wine.
NTD, Moscow, Russia
For the Record
12 October 2010
Alrosa does not plan to sell shares anytime soon, even after the diamond monopoly’s shareholders agreed to change its legal status to allow an IPO, said Finance Minister Alexei Kudrin, who is also chairman of Alrosa’s supervisory board. (Bloomberg)
Ukraine may buy a stake in a Rosatom plant as the countries consider a joint venture, Kommersant-Ukraine reported Monday, and they may set up a joint venture to enrich uranium for nuclear power plants. (Bloomberg)
Rustam Tariko, owner of vodka maker Russian Standard, said Monday that his company hoped to complete the purchase of Ukrainian vodka maker Nemiroff in a few weeks. (Bloomberg)
Activity in the Oil and Gas sector (including regulatory)
Finance Ministry to revise oil industry's taxation system
RBC, 12.10.2010, Moscow 11:45:25.The major Russian oil companies have managed to convince the Finance Ministry of the need to decrease the aggregate level of tax burden in the industry, the RBC Daily newspaper reported today. The ministry, along with representatives of oil companies, has developed a new taxation scheme, according to which the government will no longer use the regional principal of providing incentives, but instead work out a single taxation base system. Specifically, companies may be exempt from taxes on new oil deposits - with the exception of the payment of a minor oil export duty -until they receive return on their investments in the exploration of such deposits. According to a source from the ministry, the document provides for an increase in the revenue tax in exchange for a reduction or complete abolition of the export duty and the mining tax.
Meanwhile, representatives of Lukoil, Rosneft, and TNK-BP confirmed that their companies were actively involved in the development of a new taxation system for the oil industry.
Russia's energy ministry proposes 10 pct crude export duty cut - paper
11:38 12/10/2010
Russia's Energy Ministry has proposed cutting the maximum crude oil export duty from the current 65 percent to 55 percent to shift the tax burden from oil production to oil refining, a Russian business daily reported on Tuesday, citing a ministerial source.
The 10 percent cut in the maximum oil export duty will boost profits from crude exports and increase crude oil prices on the domestic market, which in turn will reduce profit margins on refining the product, Vedomosti said.
Analysts at Swiss bank UBS concluded in late 2008 that it was more profitable for Russia to export crude oil than petroleum products, as crude exports could yield higher revenues both for state coffers and oil companies, the paper said.
If the new system is introduced from 2012, budget revenues from the oil sector will amount to 43.32 trillion rubles over 10 years, even though they will fall by 68 billion rubles during the first year. Without this new system, Russia will fall short of 8.55 trillion rubles over the 10-year period, the paper sad, referring to the ministry's calculations.
Russia's current taxation and customs regime provides incentives for oil refining to the detriment of crude oil production, with export duties on petroleum products considerably lower than those on crude oil, the paper said.
MOSCOW, Oct 12 (RIA Novosti)
Russia May Boost Oil Export Taxes in November on Urals Price
By Stephen Bierman
Oct. 12 (Bloomberg) -- Russia may raise its duty on regular crude exports by as much as 9.6 percent and on exports with a discounted rate by as much as 22 percent on Nov. 1 after Urals prices rose.
The standard tax rate is likely to rise to $288.90 a metric ton to $292.20 a ton from $266.50 a ton ($36.36 a barrel) in October, according to Bloomberg calculations based on Finance Ministry data. The discounted rate on oil pumped via Russia’s East Siberian-Pacific Ocean pipeline to Asia may jump to $97.60 a ton to $99.90 a ton from $82.10 a ton.
Russia sets the duty based on the average Urals price from the 15th day of each month to the 14th day of the next. Urals, Russia’s benchmark export blend, may average from $79.74 to $80.43 a barrel during the current monitoring period, Alexander Sakovich, a Finance Ministry adviser, said by phone today.
The export tax on light oil products may rise to $206.90 to $209.20 a ton from $191.80. The duty on heavy products may increase to $111.50 to $112.70 a ton from $103.30.
To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@.
To contact the editor responsible for this story: Will Kennedy at wkennedy3@.
Last Updated: October 12, 2010 03:00 EDT
Russia considering more tax on oil products-paper
10:41am IST
MOSCOW, Oct 12 (Reuters) - Russia's Energy Ministry has proposed raising tax on oil products and reducing duties on crude oil, potentially earning an extra 8.55 trillion roubles ($286 billion) for the state over 10 years, Vedomosti reported.
The ministry has suggested reducing the maximum level of oil export duties -- a key expense for producers -- to 55 percent from 65 percent, according to documents obtained by the paper.
For new fields -- which Russia seeks to develop to keep production levels as older deposits are used up -- the current minerals extraction tax could be replaced with a 27 percent excess profit levy, Vedomosti said in its Tuesday edition.
It did not say by how much duties for oil products would be increased, but said the Energy Ministry's proposals -- due to be discussed at a meeting with the Finance Ministry officials -- would boost the budget coffers by 8.55 trillion roubles over 10 years if they are introduced from 2012.
The Finance Ministry however may not agree to lower revenues in the short-term in exchange for more gains in the future as it is determined to eliminate Russia's budget deficit by 2015.
Vedomosti also said that by shifting the tax burden more towards oil products and away from crude, the proposals also contradict the government's ambition to stimulate exports of goods with a higher added value. (Writing by Toni Vorobyova; Editing by Tomasz Janowski)
Russia close to adopting modified oil tax regime
Renaissance Capital, Russia
Tuesday, October 12, 2010
Event: Vedomosti reported this morning (12 Oct) that the government has moved closer to a new taxation system for the Russian oil sector. According to the newspaper, the Ministry of Energy is proposing to reduce the profitability of downstream operations and increase the profitability of the upstream segment. The ministry's proposal anticipates a reduction in the maximum incremental export duty level to 55% from the current 65%, while for new fields MET is proposed to be replaced by an excess profit tax of 27%. According to the ministry's estimates, budget revenue would be higher in the long term due to higher crude output as a result of these incentives for greenfield investment. The government has not reached a final decision yet, and the views of the Ministry of Finance and other institutions will be important here, according to various media reports.
Action: We think this news of some eventual clarity on oil taxation will be welcomed by investors.
Rationale: We have been expecting a transition to a more efficient tax system that would take the profitability of individual fields into account, as we see the current regulatory regime, based on benefits for individual companies, as unsustainable. We are cautious, though, towards companies with very high exposure to the refining segment, such as Gazprom neft and Alliance Oil, whose profitability may suffer as a result of taxation reform.
Ildar Davletshin
October 12, 2010 08:48
China will take all gas Russia can supply - Shmatko (repeat)
Shanghai. October 12. INTERFAX-CHINA - China will accept all the gas that Russia can supply it, Russian Energy Minister Sergei Shmatko said at a meeting to a draft a framework for the development of Russia's gas industry up to 2030.
"We are proceeding on the basis that China will take any amount of gas that we are able to send there," Shmatko said.
Experts estimate gas consumption in China has increased by 8.5 percent on an annual basis over the last nine years, and that China will need 200 billion cubic meters of gas per year by 2015. From 2018 to 2020 the pace of consumption will start to drop, but demand for liquefied natural gas (LNG) will be on the upswing.
At the end of September, Gazprom and China National Petroleum Corp. (CNPC) inked a document titled "Expanding the main conditions for delivering natural gas from Russia to China." This document is legally binding and covers key commercial aspects of shipments of Russian gas to the Chinese market, including volumes and timeframe, level of take or pay during the period in which shipments are growing, and level of payment guarantees.
The signing of an export contract is expected mid-2011, and shipments are slated to begin end-2015. This will be a 30-year contract for annual delivery of 30 billion cubic meters.
Putin urges doubling Russian gas production by 2030
10:50, October 12, 2010
Prime Minister Vladimir Putin called on Monday to nearly double Russia's natural gas output by 2030 during a meeting on developing the gas sector.
"Our producers must satisfy growing demand for gas, guarantee a steady supply to Russian consumers, maintain and increase its presence on the global energy market," said Putin as quoted by the Interfax news agency.
"In order to do that, production must rise from the current 650 billion cubic meters to 1 trillion cubic meters a year," he said.
"That is practically a 50 percent increase in production. And we have every opportunity to do that," he said.
During the meeting Putin also confirmed that his country would carry out the Shtokman project on which the city of Murmansk depends for its electricity supply.
In addition, the prime minister has instructed ministries of finance and economic development to draw up proposals on discounts for new shelf gas projects and projects for liquefied natural gas.
Russia currently needs another 25,000 kilometers of trunk gas pipelines, and the domestic market remained the priority for gas companies, said Putin.
"We have a lot of progress to make with the country's gasification," he said.
Putin added that gasification should average at 86 percent by 2030 and approach 90 percent in towns and cities, compared with the current 69.8 percent.
Latest figures from Russia's Energy Ministry showed that the country's gas output and exports in the first nine months have grown tremendously, compared with those of the same period last year.
During this period, gas output surged 15.6 percent, reaching around 469 billion cubic meters. The figure rose over 4 percent in September alone. Gas exports headed for a nearly 20-percent jump before falling a bit short.
Source: Xinhua
Russia to invest over $400bln in gas sector by 2030 (Update 1)
21:00 11/10/201
Russia will invest over $400 billion in the development of its gas sector by 2030, Energy Minister Sergei Shmatko said on Monday.
"In general, the volume of investment until 2030 is estimated at 12.3 trillion - 14.7 trillion rubles [$412 bln-$493 bln] in fixed prices as of January 1, 2010," Shmatko told a meeting on gas industry development until 2030.
He also said that under a general gas sector development plan, Russia's annual gas production would increase to one trillion cubic meters from 650 billion by 2030.
Prime Minister Vladimir Putin confirmed at the conference that Russia can increase its gas production to one trillion cubic meters per year from 650 billion cubic meters.
"We are to increase gas output to one trillion cubic meters per year from the current 650 bcm, a nearly 50% growth. We have all the possibilities to do so," Putin told the meeting without mentioning the timeframe.
Russian energy giant Gazprom CEO Alexei Miller said the prospect of increasing the gas production to 1 tcm by 2030 is quite real.
"The market potential is huge, and we are convinced of the gas prospects. The figure is absolutely real," he said.
Putin ordered the government on Monday to consider privileges for gas companies working on the sea shelf and in the liquefied natural gas (LNG) sphere.
"We should think about tax privileges for companies, which are engaged in new gas projects. For example, companies working on the shelf and in the LNG sphere cannot do without such privileges," the premier said.
"I have just signed an order to the Finance Ministry and the Economic Development Ministry to make corresponding proposals. The mechanism of granting the privileges is formulated there."
Shmatko also said Gazprom will consider cutting transportation costs.
"Cutting transportation costs is a key issue in Gazprom's competitiveness. To secure Russian gas competitiveness, we must work seriously, otherwise it would be difficult for us to supply gas further than Germany," he told Putin.
"There was such an order and we are preparing documents, which we will consider at a Gazprom board of directors' meeting," Shmatko said.
Shmatko said Russia's gas exports may increase to 455-520 bcm by 2030.
"Under our general plan, gas exports may amount to 455-520 bcm by 2030," Shmatko said, adding that now gas exports stood at about 226 bcm per year.
Miller said at the gas meeting that Gazprom thinks it is necessary to cancel the mineral extraction tax and cut export duties on gas extracted in East Siberia, the Yamal Peninsula and on the shelf.
"As for the gas extracted in Yamal, East Siberia and on the shelf, I think it is appropriate both to cancel the mineral extraction tax and to cut export duties for the gas produced in these regions," Miller said.
Tax privileges now cover exhausted fields and fields of the Black Sea and the Sea of Okhotsk, while export duty benefits cover East Siberian fields.
Deputy Finance Minister Sergei Shatalov said the ministry had supported the idea of canceling the tax on gas extracted in Yamal, which would be used for the production of liquefied natural gas until the fields reach a 16-17% margin level.
Russia has not increased the mineral extraction tax on gas since 2006. The government plans to increase it by 61% in 2011, by 6% in 2012 and by 5.4% in 2013.
Miller also said Gazprom has contracted 216 billion cubic meters of gas annually up to 2030, with 172 bcm contracted under take-or-pay terms.
"172 billion cubic meters of gas are under take-or-pay terms, while 216 billion cubic meters are the overall annual contracted volumes of gas. Consumers may not buy less than 172 billion cubic meters," he said.
"Gazprom will maintain such supply volumes up to 2030," Miller said.
Deputy Prime Minister Igor Sechin, in charge of the fuel and energy sector, told journalists that a master plan to develop the gas industry until 2030 will soon be adopted.
"There are no differences on the general plan. The basic parameters have been agreed," he said.
NOVY URENGOI, October 11 (RIA Novosti)
Russia mulls tax breaks to boost LNG, shelf gas
Mon, Oct 11 2010
* Putin says LNG, shelf gas projects a priority
* Russia has 5 pct of global LNG market, wants more
* Gazprom, officials lobby for tax breaks on gas extraction
By Gleb Bryanski and Jessica Bachman
NOVY URENGOY, Russia, Oct 11 (Reuters) - Russia is considering giving tax breaks to operators of offshore and liquefied natural gas (LNG) gas projects in the Arctic as the country aims to produce 1 trillion cubic metres of gas by 2030.
"We may think of tax breaks for gas, for offshore and LNG," Prime Minister Vladimir Putin told journalists after launching the third production phase at gas firm Novatek's (NOTK.MM: Quote, Profile, Research) Arctic Yurkharovskoye field on Monday. [ID:nLDE69A0Y6]
"New projects are in the pipeline. First of all, we are talking about large-scale LNG production on Yamal," he added.
Novatek, Russia's largest independent gas producer, is gearing up to develop the giant South Tambey fields in the remote Yamal-Nenets region to supply its LNG project, which would produce 16 million tonnes of LNG per year.
Putin also said Russian production from the Gazprom-led (GAZP.MM: Quote, Profile, Research) Sakhalin-2 LNG project accounts for 5 percent of the global LNG market but that the market would double by 2015.
"We need to take this trend into account," he said, adding that companies might raise output to 1 trillion cubic metres by 2030 from today's level of 650 billion cubic metres.
In line with this strategic vision, Putin has ordered that the licence for the Kharasavei gas field, also on the remote Yamal peninsula, be transferred to Gazprom, said Igor Sechin, Russia's top energy official.
But Putin's vision of the country's growing production potential depends largely on a recovery in global demand and the extent to which shale gas and other unconventional gas developments make inroads in Russia's export markets.
Gas sales to Europe, Russia's historical export market, are seen staying flat at best in the near-to-mid term, and more countries are demanding a higher degree of spot-pricing elements in their contracts. [ID:LDE68S013]
Meanwhile, energy-hungry China, which will receive 30 bcm of gas from its northern neighbour for 30 years beginning in 2015, may also start tapping domestic shale gas reserves, which analysts say could supply a quarter of its gas needs by 2030. [ID:nLDE68R0M9]
MORE TAX ON GAS
Russian gas producers say their investment programmes will be hampered in the future by a proposed 61 percent increase in the mineral extraction tax for gas and the introduction of taxes on state-owned infrastructure, including pipelines. [ID:nLDE67I1P4]
Gazprom Chief Executive Alexei Miller said on Monday during the meeting on Russia's 2030 gas strategy that taken together the tax hikes would cost the firm 200 billion roubles ($6.7 billion) over the next three years.
"I believe it would be a timely and correct decision to set the mineral extraction tax to zero for gas extraction in Yamal, and, by the looks of it, for deposits in East Siberia, the Far-East and on the shelf," Miller said.
"We should also be considering lowering the export duty on gas produced from these regions."
Miller said the government proposal to apply a property tax to state-owned infrastructure such as pipelines would cost Gazprom an extra 29 billion roubles in 2012 and 57 billion roubles in 2013.
Russia's Finance Ministry, battling a 5.9 budget deficit and inflation of around 7-8 percent, drafted a bill in August that would require natural monopolies to pay a 1.1 percent property tax from 2012, raising it to 2.2 percent in 2013.
(Reporting by Gleb Bryanski and Jessica Bachman; editing by Jane Baird)
Russia May Extend Rosneft Tax Breaks at Vankor, Kudrin Says
October 11, 2010, 5:42 PM EDT
By Paul Abelsky and Stephen Bierman
Oct. 11 (Bloomberg) -- The Russian government may extend tax breaks for state-run OAO Rosneft at the Vankor field, the country’s largest new oil development, possibly saving the company $4 billion a year.
The Finance Ministry will review a request from Deputy Prime Minister Igor Sechin, who is also Rosneft’s chairman, to prolong the reduced tax rates at Vankor beyond this year after costs rose, Finance Minister Alexei Kudrin said.
“Right now we are concentrating only on Vankor because there is a proposal on Vankor in particular to extend breaks for a little bit longer,” Kudrin told reporters this weekend in Washington, where he took part in the International Monetary Fund’s annual meeting.
Rosneft, Russia’s biggest oil producer, has lobbied for tax relief for Vankor, one of a new generation of remote Siberian deposits, saying it needs longer breaks on the export duty to boost output and supply a pipeline being built to supply the Asia and Pacific regions. A select number of deposits in eastern and northern Siberia enjoy lower tax rates.
“If they do get longer breaks on the export duty, at current oil prices, they could save about $4 billion a year,” Artem Konchin, an oil and gas analyst at UniCredit SpA in Moscow, said today by telephone.
Rosneft shares rose as much as 2.4 percent in Moscow, headed for the biggest gain since Oct. 1, and traded up 2.1 percent at 212.40 rubles at 11:58 a.m.
OAO Lukoil, Russia’s second largest oil producer, will receive export tax breaks for Caspian Sea oil similar to those given to deposits supplying the East Siberian-Pacific Ocean pipe, Kudrin said.
“The discount rate will be exactly like eastern Siberia, only their duration will be somehow fixed,” Kudrin said.
Lukoil began production at Russia’s first large oil project in the Caspian Sea earlier this year.
--Editor: Torrey Clark, John Buckley
To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@; Stephen Bierman in Moscow sbierman1@.
To contact the editor on this story: Will Kennedy at wkennedy3@
TNK-BP shareholders to consider interim dividend
RBC, 12.10.2010, Moscow 10:55:30.The board of directors of TNK-BP Holding has recommended that its shareholders approve a payment of nine-month dividend in the amount of RUB 8.04 (approx. USD 0.27) per ordinary and preferred share, the Russian-British oil company announced in a press release today. Considering this, the company will allocate RUB 124.2bn (approx. USD 4.16bn). The shareholders are scheduled to hold an extraordinary meeting on November 18.
The company specified that if the decision to pay dividends was in fact passed, the payments would be made in monetary funds in an amount proportionate to the number of shares owned by shareholders within six months from the date of the decision.
BRIEF-TNK-BP board recommends $4.16 bln interim dividend
11:14am IST
MOSCOW, Oct 12 (Reuters) - TNK-BP (TNBPI.RTS: Quote, Profile, Research):
* Board recommends interim dividend at 8.04 roubles per one common and one preference share for 9 months of 2010
* The total recommended dividend amount is 124.2 billion roubles ($4.16 billion)
* Shareholders EGM on Nov. 18 to vote on the proposed payout
(Writing by Toni Vorobyova)
Novatek reports 3Q10 operating statistics
Renaissance Capital, Russia
Tuesday, October 12, 2010
Event: Novatek reported 3Q10 operating statistics yesterday (11 Oct). In 3Q10, gross production totalled 8.50bcm of natural gas and 893kt of liquids (gas condensate and crude oil), representing YoY growth rates of 8.0% and 20.5%, respectively. During the quarter, 812kt of unstable gas condensate was processed at Novatek's Purovsky Gas Condensate Processing Plant.
Ytd, Novatek increased production of natural gas by 13.0% to 26.89bcm and liquids by 19.2% to 2,640kt.
Action: We retain our HOLD rating on Novatek.
Rationale: The industry's production statistics (including those of Novatek) are reported monthly by CDU TEK; therefore, these latest statistics provide no new information to the market.
Ildar Davletshin
Surgutneftegas raises medium-term production targets
Renaissance Capital, Russia
Tuesday, October 12, 2010
Event: According to Prime-TASS, Surgutneftegas CEO Vladimir Bogdanov announced yesterday (11 Oct) that he expects the company's production to reach 59.5-60mnt of crude in 2010 and to grow to 61mnt in 2011. No further details on the sources of growth or required capex were provided. He was asked by journalists about a potential partnership with the winner of the auction for the Titov and Trebs fields, but he refused to comment.
Action: We reiterate our BUY rating on the stock.
Rationale: The announced guidance is broadly in line with our 2010 estimate of 59.3mnt of crude, but is 7% higher than our estimate for 2011 of 57mnt. Recent monthly statistics published by CDU TEK show that Surgutneftegas has started to reverse its production decline with two consecutive months of growth. The main drivers for this growth are the ramping up of production at Talakan and a slower rate of decline for production in West Siberia, on our estimates. However, our overall positive investment stance on the company is based on our expectation of corporate changes that would fully reveal the company's ownership and balance sheet structure. Such changes could come as a result of M&A or potentially from the long-awaited adoption of international reporting standards in Russia, which would force all Russian companies to become more transparent.
Ildar Davletshin
Gazprom
Sakhalin-2 to Pay Russia $1.8 Billion in 4 Years, Vedomosti Says
By Stephen Bierman
Oct. 12 (Bloomberg) -- Sakhalin Energy, the OAO Gazprom-led venture that operates Russia’s first liquefied natural gas plant, will pay the government $1.8 billion in dividends for 2010 through 2013, Vedomosti said, citing two state officials.
Russia will get dividends for the life of the Sakhalin-2 project to 2041, the newspaper said.
Royal Dutch Shell Plc, Mitsui & Co. and Mitsubishi Corp. sold control of the venture to Gazprom in 2007, and the Russian government received one share.
To contact the reporter on this story: Stephen Bierman at sbierman1@
To contact the editor responsible for this story: Torrey Clark at tclark8@
Last Updated: October 12, 2010 02:07 EDT
Russia's Gazprom says new taxes to cost firm billions
Mon Oct 11, 2010 2:22pm GMT
NOVY URENGOY, Russia Oct 11 (Reuters) - Russia's state-owned energy giant, Gazprom (GAZP.MM), says the planned hike in the mineral extraction tax for gas will cost the firm 200 billion roubles ($6.7 billion) over the next three years.
Speaking at a government meeting on Russia's gas strategy up to 2030, Gazprom CEO Alexei Miller on Monday said the company would also have to pay out an extra 29 billion in 2012 when the government applies a property tax to its pipeline system.
Miller also said that in 2015 Gazprom will sell 172 billion cubic metres (bcm) of gas under take-or-pay contracts.
The company plans to export around 145 bcm by the end of this year, most of it going to Europe.
(Reporting by Gleb Bryanski; writing by Jessica Bachman; editing by Alfred Kueppers)
Russia's Gazprom to be hit with an additional $18bn in tax in 3 years
$18bn-in-tax-in-3-years.html
Written by Saif Bonar on Monday, 11 October 2010 17:06 | Published in Oil & Gas
Alexei Miller, CEO of Russia's gas giant Gazprom has told government officials that new tax proposals will cost the Russian gas company over $18bn in the next three years. The revelation came at a meeting focused on Russia's gas strategy until 2030 and was attended by senior government ministers and representatives from major stakeholders in the nations gas supply network.
The Gazprom CEO said the recently proposed mineral tax would cost the company $6.7Bn over 3 years and the property tax to be applied to its pipeline network in 2012 would cost it an additional $12bn.
Source: Reuters Africa.
Gazprom cleared to build St Petersburg tower
Mon Oct 11, 2010 1:39pm GMT
ST PETERSBURG, Russia Oct 11 (Reuters) - Gazprom (GAZP.MM) said it has been cleared by Russian authorities to build a tower in the historic heart of St Petersburg despite a wide campaign to defend the unique skyline of Russia's second-biggest city.
"According to a conclusion by GlavGosExperetiza (the Russian state appraisals department), the project's documentation complies with all requirements and standards," a Gazprom unit in charge of the construction said in a statement.
The U.N. cultural organisation UNESCO earlier warned Russia it could exclude St Petersburg from its list of world heritage sites if the tower is built, as it would dominate the canals and baroque houses of the city founded by Tsar Peter the Great in 1703 as Russia's window on Europe. [ID:nLDE64K03F]
Dubai's Arabtec Holding (ARTC.DU), which won the contract to build the first stage of the tower in April 2008, saw its shares rally on the news.
Construction is expected to begin in spring 2011 and finish in 2016. (Reporting by Denis Pinchuk; writing by Maria Kiselyova; Editing by Hans Peters)
Gazprom management Committee adopts comprehensive purpose oriented program
Tuesday, 12 Oct 2010
The Company Management Committee adopted a Comprehensive Purpose-Oriented Program for retrofitting, reconstruction and development of automated process control systems at Gazprom’s facilities for 2011-2015.
Specialized subdivisions were charged to use the Program as a framework for forming annual and mid term investment programs related to construction, reconstruction and retrofitting of the automated process control systems at Gazprom facilities.
The Management Committee also ordered to carry out the annual analysis of the program implementation and, if necessary to formulate proposals on its adjustment.
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