Russia



Russia 090309

Basic Political Developments

• International Women’s Day is celebrated on March 8 and will be officially observed on March 9 this year.

• Lavrov-Clinton meeting showed that Russian-U.S. relations can develop positively - Russian analysts

• Dmitry Medvedev will meet with Hungarian Prime Minister Ferenc Gyurcsany on March 10, 2009.

• China, Russia to strengthen ties - China and Russia plan to strengthen ties by sharing information on energy and technology, China's foreign minister said Saturday.

• PACE co-rapporteurs to visit the Russian Federation

• Russian-Greek relations at excellent level – Greek Foreign Ministry

• Sultan Foundation establishes Arabic center in Moscow

• Russia says Afghan heroin habit threatens security

• Ukraine politics may trigger Russia gas clash

• Ukrainian to sing for Russia in Eurovision - Song written by a Georgian and an Estonian and sung in Russian and Ukrainian

• Russia to disburse USD 500 mln tranche to Belarus

• Norwegian prosecutors suspect Russian captain - The captain of the Russian cargo vessel “Mekhanik Tyulenev” is suspected of having run over and sunk a small Norwegian fishing boat in the Norwegian Sea.

• No one injured in blast in S. Ossetia – source

• Hail bomb of Russian occupants exploded in Akhalgori district

• Russian Oligarchs Warned Bailout Money is Drying Up, WSJ Says

• NT Times: The Last Days of the Oligarchs?

• MT: Berezovsky Still a Top Scientist

• Russia’s First Lady becomes nation’s most successful businesswoman

• Canadian community rallies to help former KGB agent’s family avoid deportation

• Hello I'm Kosmos: Patriotic names in Russian comeback

National Economic Trends

• Russia’s Reserves May Be Halved by Year-End on Ruble, RBC Says

• Inflow of foreign investments in Russia decrease by 14% to $103 bln in 2008

• Fewer investment options for reserve funds

Business, Energy or Environmental regulations or discussions

• Hotel Company uniting 17 hotels formed in Moscow to upgrade efficiency of hotel business

• Dairy productivity gets boost through technology - . Russia is looking to Sweden for advanced technology to make it's dairy sector more efficient. Delaval is already a major presence on the Russian market, supplying technology and operational service to farmers.

Activity in the Oil and Gas sector (including regulatory)

• Russia Refuses to Approve Exxon’s Sakhalin Project, Sankei Says

• Rosneft expects more oil discoveries in Sea of Okhotsk

• Gazprom, Rosneft ponder ordering ships

• Lukoil tallies reserves base - Russian producer Lukoil said its proven reserves fell to 19.3 billion barrels of oil equivalent last year, but added it more than replaced its annual production with new reserves.

Gazprom

• Gas Natural says Gazprom eyeing assets – paper

• Romgaz produces 0.75% less gas in 2008 y/y, seeks Gazprom’s assistance in Roman-Margineni project

• On the outcome of EuroPolGaz Supervisory board meeting - EuroPolGaz Supervisory board held a regular meeting today in Warsaw under the chairmanship of OAO Gazprom Management Committee Deputy Chairman Alexander Medvedev

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Full Text Articles

Basic Political Developments

No service Monday due to public holiday



MOSCOW, Mar 6 (Prime-Tass) -- The Prime-Tass English Language Service will be closed Monday, March 9 due to a public holiday.

International Women’s Day is celebrated on March 8 and will be officially observed on March 9 this year.

Regular service will resume Tuesday, March 10.

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Lavrov-Clinton meeting showed that Russian-U.S. relations can develop positively - Russian analysts



MOSCOW. March 7 (Interfax) - A meeting between Russian Foreign

Minister Sergei Lavrov and U.S. Secretary of State Hillary Clinton in

Geneva has shown that relations between Moscow and Washington can

develop positively, in the view of a number of Russian political

analysts.

"This is a very positive meeting, although it is absolutely obvious

that dialogue between the foreign policy chiefs and even between the

chiefs of state cannot resolve all problems," Vyacheslav Nikonov, the

president of the POLITY Foundation think tank and a member of the

Russian Public Chamber, told Interfax on Saturday.

"The U.S. specialists on the Russian language made quite a symbolic

mistake by writing the word 'peregruzka' [overload] instead of

'perezagruzka' [reload, or reset]," Nikonov said, referring to a

spelling mistake in an inscription in Russian on a souvenir red button

that Clinton presented to Lavrov at the meeting.

"Relations between Russia and the U.S. are truly overloaded with

problems having nothing to do with bilateral relations," he said.

Alexei Makarkin, a deputy director of the Center of Political

Technologies, suggested that the value of meetings between Lavrov and

Clinton is not in the essence of the talks as such as in the atmosphere

of the meeting.

"The main thing in this meeting is intonations, and these

intonations were warm. Intonations and the atmosphere of negotiations

have always been of special significance in relations between Russia and

the U.S.," Makarkin told Interfax.

"The problem of mistrust between Russia and the U.S. remains in

place on both sides. However, with the Democrats coming to power,

changes for a positive reset have been rising. The Barack Obama

administration is willing to discuss issues on which the previous

administration took a very categorical stance," Makarkin said.

The more flexible position of the new U.S. leadership does not mean

that negotiations on all sensitive issues will be easy, Makarkin said.

"Washington has never made unilateral concessions. This concerns

missile defense, NATO's enlargement eastwards, and other issues. But,

while the previous administration was pushing ahead with Ukraine's and

Georgia's integration into NATO, the Democrats are treating this problem

as one for a more distant future and will handle it more carefully," he

said.

The meeting between Lavrov and Clinton should add a friendly note

to the atmosphere in relations between Russia and the U.S. "but the

relationship itself will not become friendlier," he said.

ANNOUNCEMENT.Dmitry Medvedev will meet with Hungarian Prime Minister Ferenc Gyurcsany on March 10, 2009.

March 6, 2009

16:00



Mr Gyurcsany will be in Moscow to take part in Russian-Hungarian intergovernmental consultations.

China, Russia to strengthen ties



Published: March 7, 2009 at 2:41 PM

BEIJING, March 7 (UPI) -- China and Russia plan to strengthen ties by sharing information on energy and technology, China's foreign minister said Saturday.

The increased cooperation will ensure stability in the world, Yang Jiechi said, noting the two countries together "play a great role" as permanent members of the United Nations' Security Council.

China also plans in the coming year to strengthen bonds with Brazil and India by proposing opportunities for joint business development, RIA Novosti reported.

PACE co-rapporteurs to visit the Russian Federation



Strasbourg, 06.03.2009 – Luc Van den Brande (Belgium, EPP/CD) and Theodoros Pangalos (Greece, SOC), co-rapporteurs on Russia for the Monitoring Committee of the Parliamentary Assembly of the Council of Europe (PACE), will make a fact-finding visit to Moscow from 9 to 11 March 2009 to take stock of Russia’s compliance with its obligations and commitments to the Council of Europe, for a forthcoming report.

 

Talks are scheduled notably with Alexei Velichko, Deputy Minister of Justice, Alexander Grushko, Deputy Minister of Foreign Affairs, Vladimir Churov, Chairman of the Central Election Commission, Vasiliy Piskarev, Deputy Head of the Investigation Committee of the Prosecutor General’s Office and Vladimir Grigoriev, Deputy Head of the Federal Service on Oversight in the Field of Communications. They will also meet with members of the Russian Delegation to the PACE, representatives of NGOs and the media.

 

A press conference will take place on 11 March at 1 p.m. at RIA Novosti Press Centre, 4, Zubovsky Bd., Moscow)

Russian-Greek relations at excellent level – Greek Foreign Ministry



ATHENS, March 7 (Itar-Tass) -- Russian-Greek relations are at an excellent level, Greece’s Deputy Foreign Minister Teodoros Kassimis and Russia’s new ambassador to Greece, Vladimir Ckhikvishvili, said at a meeting at the Greek Foreign Ministry on Friday.

In a news release issued afterwards the Greek Foreign Ministry said “the two sides underscored the excellent level of relations between the two countries and exchange opinion of the international economic crisis and the situation in the region.

The Greek deputy foreign minister and the Russian ambassador discussed Russian-Greek ties in the economic sphere and pointed to the opportunities of their further development, the news release said.

Sultan Foundation establishes Arabic center in Moscow



Walaa Hawari | Arab News  

|Monday 9 March 2009 (13 Rabi` al-Awwal 1430) |

| |

RIYADH: The Sultan bin Abdulaziz Al-Saud Charitable Foundation has launched an Arabic teaching center at Moscow University for International Relations under the directives of Crown Prince Sultan, the foundation’s supreme chairman.

“This center comes in support of the foundation’s efforts and programs to enhance Arab identity in general, and of the Kingdom in particular,” said Prince Faisal bin Sultan, the foundation’s secretary-general.

Prince Faisal said it was the Kingdom’s mission to support the Arabic language, which is the language of Islam.

“As a part of the foundation’s strategy of giving culture top priority, it has adopted ambitious cultural programs aimed at finding cooperation channels with various research, scientific and educational centers and academies in the world,” said Prince Faisal.

The foundation has been cooperating with the Islamic Educational, Scientific and Cultural Organization (ISESCO) and the University of California since 1997, he added.

The center aims to enrich the teaching of Arabic at Moscow University, work toward creating a means of communication and correcting inaccurate understanding of Islamic and Arab culture, said Prince Faisal.

For his part, the foundation’s Director General Majed Al-Qassabi said the center aims to enhance communication between academicians and people interested in the Arabic language, and strengthen further cultural, intellectual and literary cooperation.

He added that the center would offer its services to students at Moscow University and all those working in governmental and administrative bodies, as well as those who work in the private sector and are interested in Arab countries.

Al-Qassabi said the center would also take interest in editing books and programs relating to the Arabic language.

“The center would offer language, translation, conversation and Arabic literature comprehension courses,” he said.

Abdul Aziz Al-Magushi, the foundation’s deputy general director, said the center would be a distinguished addition to the Kingdom’s international cultural activities.

“Moscow University for International Relations is a school for Russian diplomats, and having a specialized center for teaching Arabic and introducing the Arab culture there will no doubt contribute to bridging the gap between the Russian and Arab cultures,” he said.

Russia says Afghan heroin habit threatens security



Fri Mar 6, 2009 12:58pm EST

* Russia now world No. 1 heroin consumer

* Heroin causes crime wave, population fall

* Russia wants international action on Afghan drug problem

By Dmitry Solovyov

MOSCOW, March 6 (Reuters) - Russia has become the world's biggest heroin consumer and the flood of the drug from Afghanistan poses a threat to national security, Russia's drug enforcement chief said on Friday.

Viktor Ivanov said the international community's failure to uproot poppy plantations in Afghanistan, as envisaged by a 10-year U.N. plan adopted in 1998, had caused heroin to flood into Russia across Central Asia's porous borders.

"In recent years Russia has not just become massively hooked on Afghan opiates, it has also become the world's absolute leader in the opiate trade and the number one heroin consumer," he said in a report made available to reporters.

Ivanov, head of the Federal Drug Control Service, said 90 percent of Russian addicts now took Afghan heroin and the drug was partly to blame for rising crime and a fall in Russia's population.

Russia would press for a tough action plan on Afghanistan at a high-level meeting of the U.N.-sponsored Commission on Narcotic Drugs to be held in Vienna on March 11-12, he said.

"Our people are dying. Some 90 percent of drug addicts in Russia are on Afghan heroin," Ivanov said. "This is a threat to national security and to our country's society."

Health Ministry officials say Russia has up to 2.5 million drug addicts out of a population of some 140 million. Most addicts were aged 18-39 and lived seven years at most after starting to take heroin.

Afghanistan, which produces 93 percent of the world's heroin, has been ravaged by decades of civil war and a U.S.-led international coalition is currently battling Islamist insurgency in the Central Asian state.

In a sign of its concern over Afghanistan, Moscow last month agreed to increase support for resupply shipments for NATO's operations in Afghanistan across its territory, despite differences with the United States over its war with Georgia last summer, NATO expansion eastwards and missile defence.

"It is time the world community got serious about the Afghan drug problem," Ivanov said. Poppy crops should be sprayed with defoliants and farmers offered incentives to cease production.

THREAT TO RUSSIA'S FUTURE

Ivanov, who did not say which country Russia had replaced as the top heroin user, estimated the addiction cost Russia 3 percent of its annual gross domestic product, which in 2008 totalled about $1.7 trillion.

He said it was impossible to control Russia's 7,000-km (4,375-mile) border with Kazakhstan through which drugs arrive. Some 3.5 tonnes (7,700 lb) of heroin was intercepted last year, a 17.5 percent rise on 2007. But in the first two months of this year, 400 kilos (880 lb) were seized, a 70-percent increase on the same year-ago period, he said.

"It is real luck if 20 percent (of total trafficked volumes) are intercepted," he admitted. "Usually it's 10 percent."

"Drug trafficking has become a key negative factor for demography and a blow to our nation's gene pool," said Ivanov.

"This is why the issue of output and heroin smuggling from Afghanistan must be seen today as a challenge to Russia's civilisation."

High mortality and low birth rates were one part of the problem, while fast growing criminality was another, he said.

"Today's situation with Russia's intoxication by Afghan heroin is unprecedented for the last 100 years," Ivanov said. "It can only be compared to the situation in China at the turn of the 19th and 20th centuries."

A century ago, China faced an opium epidemic. In 1906, almost a quarter of Chinese men consumed opium brought by British merchants from India, and some 5 percent of the total Chinese population was addicted. (Editing by Jon Boyle)

Ukraine politics may trigger Russia gas clash



Web posted at: 3/8/2009 8:8:8

Source ::: Reuters

KIEV: An economic crisis in Ukraine compounded by a power struggle between the president and prime minister could trigger a fresh clash over gas with neighbouring Russia and disrupt supplies to European customers.

Tensions rose this week when Ukraine’s elite forces raided the headquarters of Naftogaz, the state energy firm that imports Russian gas and that has in the past had problems paying for the commodity, saying they were pursuing a criminal inquiry.

In Kiev, there was no doubt that the raid, days before Naftogaz had to make a crucial payment to Gazprom for February’s gas supplies, constituted a fresh battle between President Viktor Yushchenko and Prime Minister Yulia Tymoshenko. Naftogaz had settled the bulk of the bill before Russian Prime Minister Vladimir Putin entered the row by threatening supply cuts, and a row like the three-week stand-off in January that cut gas off to millions in Europe was avoided.

Within hours of Putin’s intervention, Gazprom said its neighbour had paid its bill in full and a row was averted.

Ukraine is the main transit route for Russian gas exports to Europe, and a dispute over prices with Russia in January disrupted supplies to many countries at the height of winter.

With the economy in turmoil, Yushchenko and Tymoshenko are expected to fight right up to a presidential election in which both are expected to stand in a year’s time, and gas could once again become the subject of conflict. “Quite obviously it is only a matter of when, rather than if, the dispute flares up again,” said Chris Weafer, chief strategist with UralSib bank.

Gazprom and Naftogaz signed a 10-year contract at the end of January’s dispute, hiking the price Ukraine pays for gas in the first quarter to $360 per 1,000 cubic metres from $179.5.

Tymoshenko said it was the best deal going in Europe, and based on a 20 percent discount to European prices, Ukraine would pay no more than $230 per tcm on average in 2009. But the president disagreed and called the contract a “defeat” for Ukraine.

The raid on Naftogaz centred on 11 billion cubic metres of gas, over 15 percent of Ukraine’s total gas use, claimed by RosUkrEnergo, a gas intermediary despised by Tymoshenko and eliminated from Ukrainian-Russian trade by January’s contract. Tymoshenko, addressing her cabinet, said the security forces were out of control and acting at the behest of the president who said they had acted within the law.

Media portrayed the raid as a tug-of-war between Tymoshenko and Yushchenko, pitting the SBU Security Services responsible to the president against government-controlled Naftogaz, which acquired control of the gas just several days earlier.

“Tymoshenko needs to take this gas whatever it takes, otherwise she can’t claim the average yearly price is $228,” said Petr Grishin, chief credit analyst at Renaissance Capital.

“Yushchenko will do whatever it takes to ensure that this gas is not taken by Naftogaz. This political mess in Ukraine is really the number one risk,” he said.

The political elite has to deal with an economy that shrank by up to 20 percent and industrial output that fell almost 35 percent in January. This means less tax revenues, and unless Tymoshenko’s policies change, more social expenditure.

But with a $16.4bn IMF loan programme still on hold due to unresolved issues surrounding a large budget deficit, the government’s resources are dwindling.

The government has always had to spend billions supporting Naftogaz as the price it pays for Russian gas has for years been higher than that at which it sells to most of its consumers.

And those that pay more than the wholesale price, the industry, have slashed consumption. Naftogaz says utilities have racked up huge debts to it and the hryvnia currency plummeted making it more expensive to pay for dollar-denominated gas.

“The risk is of course is that over the course of the year, Naftogaz will find it increasingly difficult to make timely payments,” said Tanya Costello, Director, Europe and Eurasia at the Eurasia Group think-tank.

“This is an issue of their ability to acquire dollars on time and to gather payments domestically.”

A good sign may be an apparent change in Gazprom’s attitude, as it deals with a global fall in demand and prices. Gazprom has allowed Naftogaz to pay for the amount of gas it actually took in February and not the contracted amount, a far higher figure.

Naftogaz officials have also indicated that Gazprom would agree to reduce the amount of gas sold to Ukraine this year to 33 bcm from 40 bcm that had been pencilled into the contract.

And analysts agree, after Yushchenko slammed the Russians for their war in Georgia last year, Moscow would far rather deal with Tymoshenko, whose statements on the war were milder.

As the election approaches, Yushchenko could bring up a number of issues that irk Russia—a 1930s engineered famine which he calls genocide, and NATO membership. But if she keeps ties with Moscow unstrained, she may be the winner.

“It is extremely likely that some day this year Naftogaz won’t pay on time,” Grishin said. “Then it’s down to what the political situation is at the time. If it is problematic, the Russians will use it again to first do something bad, and then to portray Tymoshenko as a saviour.”

Ukrainian to sing for Russia in Eurovision



09 March, 2009, 03:51

Russia's picked a Ukrainian Anastasiya Prikhodko to perform its entry in this year's Eurovision Song Contest. Never before has a foreigner sung for Russia in this competition.

The song itself, called “Mamo”, is a real international mix. It’s written by a Georgian and an Estonian and sung in Russian and Ukrainian.

Prikhodko, who won a recent Russian TV talent show, the Star Factory, says she didn’t expect to win but she is thankful to those who made her victory possible:

“The same people who voted for me at the Star Factory supported me this time. And I will do my best to represent Russia.”

Anastasiya, 25, got more than a quarter of the nationwide vote, beating Russian-born pop-star Valeria into second place.

Her producer and husband, Iosif Prigozhin, is infuriated and is demanding a re-run.

“It is strange to me that a Ukrainian won. Do we lack our own singers? In such case let’s make Dynamo Kiev football club play for Russia. I think it wasn’t fair play and the votes were rigged,” Prigozhin said.

But many believe the Eurovision contest is politicised. Prikhodko’s nomination is seen as something of a bridge between the two countries which are going through a tense time politically.

Anastasya Prikhodko earlier tried and failed to represent Ukraine. Controversially she accused the jury of being biased and even filed a lawsuit against the organisers. Having given up on Ukraine she decided to try her luck in Russia and struck gold.

On the streets of Kiev reaction to her success has been mixed but the singer's fans are ecstatic. Her website is littered with posts, with many saying it doesn't matter who she represents just that her talent will be on display in Moscow in May.

The rules of the Eurovision song contest prohibit Ukraine from voting for themselves. Previously on several occasions they’ve given maximum points to Russia. Now with their countrywoman singing for Moscow, many believe that Russia has already got twelve points in the bag

Russia to disburse USD 500 mln tranche to Belarus



MOSCOW, March 7 (Itar-Tass) -- Russia will disburse a new 500 million U.S. dollar tranche of a two billion U.S. dollar loan to Belarus under the agreement reached by Moscow and Minsk in November 2008.

The agreement was signed by Russian Vice Prime Minister and Finance Minister Alexei Kudrin and his Belarusian counterpart Andrei Kharkovsky, a Foreign Ministry official told Itar-Tass on Saturday.

One billion U.S. dollars from the stabilisation loan to Belarus were disbursed in November of last year.

Under the inter-governmental agreement, the remaining tranche of 500 million U.S. dollars will be made available to Minsk before the end of this year.

Norwegian prosecutors suspect Russian captain



2009-03-06

The captain of the Russian cargo vessel “Mekhanik Tyulenev” is suspected of having run over and sunk a small Norwegian fishing boat in the Norwegian Sea.

The fishing boat “Marina” and its captain has been missing since Monday this week. The boat has been detected on the sea bottom.

Police suspect that the “Mekhanik Tyulenev” run over the fishing boat. Damage in the ship hull indicates that a collision has taken place. Ship sailing identification systems also show that the “Mekhanik Tyulenev” on Monday made a sudden and sharp turn in the area where the “Marina” has been detected.

-The captain has status as suspect, Police spokesman Kjetil Voldstad says to NRK.no. If found guilty, the captain will be charged for having violated navigation regulations.

No one injured in blast in S. Ossetia – source



TSKHINVALI. March 8 (Interfax) - Preliminary reports indicate that

no one was killed or injured in an explosion in South Ossetia's

Leningori district, a source with the command of the Russian military

contingent told Interfax on Sunday.

The scene of the blast was encircled, and an operative group has

continued working on there.

According to earlier reports, several cars caught fire and an

ammunition load exploded as a result of the explosion.

Hail bomb of Russian occupants exploded in Akhalgori district



08.03.09 18:00

Hail bomb of Russian occupants has exploded in Garubani village, Akhalgori district. Soldiers of the occupational troops have been wounded, several of them have died. Exact number of the casualties has not been specified. The fire that broke out in consequence of the explosion, spread to a gunpowder storehouse later. Sound of the explosion was being heard during an hour in several villages of the district. EU monitors visited Akhmada village close to Akhalgori as well.

Tamar Charoeva, the teacher of the 3rd secondary school of Akhalgori district and Givi Chigoevi, the chair of the district council of the local administration have been remained in imprisonment so far. They were detained with accusation of `high treason`. Tamar Charoeva was detained by `boeviks` right during a lesson, in front of schoolchildren.

The Kokoity regime is implementing repressions towards all the Ossetians, who participated in the alternative presidential elections of `South Ossetia` in 2006.

Russian Oligarchs Warned Bailout Money is Drying Up, WSJ Says



By Chris Peterson

March 9 (Bloomberg) -- Russian business tycoons, known as oligarchs, will find that they have to sell assets to survive as government funds to bail them out are drying up, the Wall Street Journal reported, citing an interview with Arkady Dvorkovich, a presidential economic adviser.

Dvorkovich said the reality of the global economic situation hadn't set in for the businessmen and some Russian officials; state aid already provided to some oligarchs wouldn't be repeated, the Journal reported.

There would be no return to the ``easy existence'' where because of oil and gas revenues flooding into the country ``you could throw money around,'' the newspaper quoted him as saying.

Last Updated: March 9, 2009 01:49 EDT

March 8, 2009

The Last Days of the Oligarchs?



By ANDREW E. KRAMER

MOSCOW

THEY are larger-than-life figures at home and abroad, men who saw themselves as the Carnegies or Rockefellers of Russia. They are known as oligarchs, and they may soon be thrown into the dustbin of history by the economic crisis.

Brash, young and wealthy, those insiders of post-Soviet business who escaped nationalization — to say nothing of exile or prison — under Vladimir V. Putin went on to make ever greater fortunes in the commodity boom of recent years. But few businessmen anywhere have fallen as hard or as fast in recent months.

Many of Russia’s richest men were highly leveraged going into the financial crisis and were unable to roll over loans from Western banks. The Kremlin bailed them out with short-term credits last year, not wanting the assets to fall into foreign hands. Those state loans will be coming due by the end of the year, on top of additional foreign loans.

The mountain of debt is so huge — the Central Bank calculates that corporations and banks in Russia must repay $128 billion this year alone — that many oligarchs will be unable to repay the loans, bankers say. Only a fraction of this debt, about $7 billion, is corporate bonds. The rest is bank loans to companies predominantly owned by the oligarchs or the state.

“Those who are left will be swept away in the crisis,” said Olga V. Kryshtanovskaya, a sociologist who studies the Russian elite at the national Academy of Sciences. “The Kremlin has all the levers. If they want to help, they will help. If they do not want to help, they will say, ‘We are liberalizing now; market relations will determine which of you survive.’ ”

Some oligarchs are so desperate that a group of metal executives made a pilgrimage to the Kremlin in January to make what once would have been an unthinkable proposal. Meeting with President Dmitri A. Medvedev, they proposed merging their assets, which include some of Russia’s largest mines and factories, into a state-controlled conglomerate. In exchange, the government would refinance billions in Western bank debt.

In other words, they were voluntarily proposing to reverse the contentious loans-for-shares privatizations that birthed the oligarchs in the mid-1990s.

“They’ve all been racing to see who can be the first to do a deal with the government,” said Rob Edwards, a metals analyst at Renaissance Capital in Moscow. Access to Russia’s hard currency reserves, he said, is the oligarchs’ “get-out-of-jail-free card.”

Unfortunately for many oligarchs, and the Western banks who lent them money, that card may no longer be drawn. In a paradoxical twist, the government that had supported nationalization in oil and other industries is now strapped for funds to support the ruble and prop up the budget, and seems wary of investing in troubled industries.

Once-invincible oligarchs now look extremely vulnerable. With or without state aid, the government is likely to gain more control of their operations. If they get no help, many could go into bankruptcy, with nationalization of one form or another likely to follow. And any new bailout would probably mean larger equity stakes for the government.

ALREADY, bankers say, the crisis has touched a lifestyle of megayachts, private jets and spacious residences in Britain and France.

“Today’s crisis is merciless for raw-materials producers,” Alisher B. Usmanov, an iron and steel tycoon, and one of those at the Kremlin meeting, said in an interview. “It will take back everything we accumulated yesterday.”

In the initial collapse of the Russian stock market from May to October last year, Bloomberg News has calculated, the richest 25 people on the Forbes magazine list for Russia lost a collective $230 billion. Some of those unable to win state bailouts put up planes, yachts and mansions on the Côte d’Azur as collateral for loans, said Oleg V. Vyugin, the director of MDM Bank.

Mr. Vyugin’s bank has many tycoons as customers; he declined to discuss any specific properties he has claimed lately, but he says he meets often with the rich to sign such deals. “Industrial assets are worth so little now,” he explained with a shrug.

But more than the garish sparkle of post-Soviet wealth is at stake. As the Kremlin meeting makes clear, the future ownership of a pivotal global mining and metals industry, needed to restore supplies in any economic recovery, is on the line.

In addition to Mr. Usmanov, other oligarchs at the meeting were Oleg V. Deripaska, a nuclear physicist turned post-Soviet corporate raider; Mikhail D. Prokhorov, a metals investor known as the bachelor billionaire; Vladimir O. Potanin, an industrialist and early beneficiary of privatization; and Viktor F. Vekselberg, an oil magnate who recently donated a $100 million collection of Fabergé eggs (some of which he bought from the family of Malcolm Forbes) to a Russian museum.

Together, they own the world’s largest aluminum and nickel producers. At first blush, the oligarchs’ proposal looks similar to what governments worldwide are considering: taking stakes in collapsing companies. But Russia is different. Even before the crisis, the government had been consolidating industry in state hands; a takeover here in the midst of crisis would look less like a measured policy response and more like yet another pretext for an ever-expanding role for the government in business.

The talks are under way in a typically opaque Russian style: those with money and power are maneuvering in the palace corridors. “What matters in Russia,” said Masha Lipman, a researcher at the Carnegie Center in Moscow, “is personalities.”

For Western bankers, determining which of the big industrialists is up or down has become a post-Soviet twist on Kremlinology. Industry players were disturbed to learn that Mr. Deripaska, considered the consummate insider, was recently left waiting in the hallway outside a minister’s office, according to one adviser to the metals industry who did not want to be cited discussing its business publicly. “The ministers are not eager to see him,” the adviser said.

FOR tycoons who compared their heady rise to riches and hard-charging expansion in the 1990s to that of the robber barons of American capitalism at the turn of the previous century, bankruptcy or nationalization is not the fade into philanthropy and family legacy that the analogy suggests.

In the best case, the Russians may be reduced to running their businesses as divisions of state conglomerates. More darkly, exile or prison are also within recent Russian tradition. Some of the richest from the 1990s who fell from favor with Mr. Putin, such as Boris A. Berezovsky, once known as the Gray Cardinal of the Kremlin, and Vladimir A. Gusinksy, a banking and media executive, are in self-imposed exile.

Last week, Mikhail B. Khodorkovsky, the former Yukos Oil owner who has served six years in prison for tax evasion and fraud, was on trial again on charges of money laundering and embezzlement. His supporters called the first trial a maneuver by Mr. Putin to eliminate a potential political rival. The new charges could add 22 years to his sentence.

Mr. Deripaska, who is married to the step-granddaughter of former President Boris N. Yeltsin, is no longer seen as the richest man in Russia. The business magazine Finans reported in February that he had fallen to eighth place after the value of his assets fell 90 percent, to $4.9 billion, in the market crash that began in Russia last spring. Finans listed Mr. Prokhorov as the richest man, with an estimated worth of $14.9 billion.

Mr. Prohkorov may be reveling in schadenfreude: Mr. Putin’s team forced him to sell his stake in Norilsk Nickel to Mr. Deripaska last April, near the peak of the market. Mr. Prohkorov is now cash-rich, while Mr. Deripaska is left with billions in debt.

Others are similarly diminished. The oil and real estate tycoon Shalva P. Chigirinsky has promised in a filing to shareholders to sell a jet and homes in France and Britain to repay debt.

So confident was another developer, Sergei Y. Polonsky, in his bets on a new high-rise district in Moscow that last year he named his son, Mirax, after his company, the Mirax Group Corporation. Mr. Polonsky recently held a news conference to refute rumors that Mirax was bankrupt.

Mikhail M. Fridman, a deft and boyish-looking billionaire, was compelled to ask Deutsche Bank executives last fall for a gentlemen’s agreement not to foreclose on one of his prize assets, a 44 percent share in VimpelCom, a cellphone company. After the chat, Mr. Fridman was able to secure a $2 billion Kremlin bailout to repay Deutsche Bank.

Grasping at straws, other oligarchs followed Mr. Fridman in turning to the government.

Before the crash, Mr. Putin’s government forcefully reversed post-Soviet privatizations in some oil and other companies. Citing tax arrears, the state seized and dismantled Yukos beginning in 2003. In 2006, Shell Oil was compelled to sell half its Sakhalin 2 development to Gazprom. Aircraft makers, car companies and other industries were rolled into giant state holdings, not always voluntarily.

(In what now looks prescient, one former oligarch who was close to Mr. Putin, Roman A. Abramovich, sold his Sibneft oil company to the state giant Gazprom in 2005 for $13 billion and left Russia for London.)

Several dozen such conglomerates arose, often under the control of former K.G.B. colleagues of Mr. Putin’s. These companies and their former secret-agent directors, sometimes viewed as a new generation of oligarchs that arose under Mr. Putin, are not now seen as in danger of default.

In one sign that the metals industry might have been headed toward a forced consolidation, Vladimir Strzhalkovsky, who served in the Leningrad K.G.B. in the 1980s, was appointed chief executive of Norilsk Nickel, the company at the core of the proposed merger, last summer.

At the Kremlin meeting in January, however, President Medvedev was noncommittal; he asked the tycoons to agree among themselves and return with a merger plan all could accept. That was not easy.

On Feb. 26, Mr. Potanin and Mr. Deripaska met with Mr. Medvedev again; this time, Mr. Medvedev said Norilsk would not be included in a merger. Once a cornerstone of state policy, gaining control of an industry in crisis is now viewed skeptically by the Kremlin.

The idea of merging with a state corporation, however, is not dead. Mr. Usmanov has said he would pursue a merger of his Ural Mountain iron ore and coal company with Russian Technologies, a weapons and manufacturing conglomerate run by a former K.G.B. agent, Sergei V. Chemezov, who served with Mr. Putin in Dresden, in the former East Germany, in the 1980s.

Mr. Deripaska, meanwhile, has been playing down his need for additional state assistance after receiving $4.5 billion last fall to repay a syndicated loan from banks including Merrill Lynch, Royal Bank of Scotland and BNP Paribas. Before the policy shift this year, the Kremlin had disbursed only about $11.8 billion of $50 billion set aside in the initial plan for refinancing foreign debt.

“We do not need financial aid from the state,” Mr. Deripaska said in an interview with Vesti Russian television on Feb. 28. “It is the other way around; we are trying to be as quick as possible to repay the debt to it.”

WESTERN banks, though, are on edge. Among the most exposed to Mr. Deripaska is Raiffeisen bank in Austria, which last fall refinanced a 500 million euro Deutsche Bank loan to rescue Mr. Deripaska from a margin call on his construction business. Now Mr. Deripaska says he is seeking a moratorium on payments to all creditors. On Friday, his aluminum company, Rusal, said bankers had agreed to a two-month reprieve while a longer-term agreement on restructuring debt is negotiated.

Mr. Usmanov said Russian mining companies would surely need state support.

What remains, he said, is to negotiate a viable model for the state to again take a role in the great mining and metallurgy works built by the Soviets. “The crisis determined the situation,” he said. “I don’t see anything shameful in this.”

Berezovsky Still a Top Scientist



06 March 2009

By Alexandra Odynova / Staff Writer

Self-exiled businessman and fervent Kremlin critic Boris Berezovsky has been vilified in almost ever corner of Russian officialdom.

But there is at least one venerable state-backed organization that has yet to sever ties with Berezovsky, who has accused Prime Minister Vladimir Putin of everything from money laundering to murder -- the Russian Academy of Sciences.

Berezovsky, 63, has been a member of the academy since December 1991, shortly after then-President Boris Yeltsin signed a decree establishing it on the basis of the Soviet Academy of Sciences as Russia's "supreme scientific institution."

In fact, Berezovsky told The Moscow Times that he believes that he is still receiving his monthly stipend from the state-funded academy, which was originally founded by Peter the Great in 1724. "As far as I know, they continue paying me money. Not me directly, but my office in Moscow," Berezovsky said by telephone from London, where he lives as a political refugee. "I haven't heard anything about their stopping payments."

The academy's web site lists Berezovsky as a corresponding member, meaning that he is entitled to a monthly stipend of 25,000 rubles ($690).

Berezovsky, who holds a doctorate in applied mathematics, worked as an engineer at a Soviet meteorological research center and was appointed head of a laboratory at the Soviet Academy of Sciences' Institute of Management Problems in 1987.

Berezovsky's continued membership has reportedly rankled some in the academy, which has shown an independent streak unusual for state-funded organizations. Last May, geophysicist Vladimir Strakhov proposed amending the academy's charter to allow Berezovsky's expulsion on the grounds that criminal charges had been brought against him.

The academy leadership rejected the proposal, however, with Yury Osipov, head of the academy, saying it could become an unwelcome precedent. All academy members are elected for life, and no one has ever been expelled. Soviet physicist and dissident Andrei Sakharov, who was sent into internal exile for protesting the Soviet invasion of Afghanistan, was also never expelled from the Soviet academy.

Since his election to the academy, Berezovsky has managed to become the country's most politically influential oligarch; he has served as a deputy chairman of the Security Council, controlled the largest national television network and reportedly played a key role in Putin's political ascent.

He fled the country in 2001 after being accused of fraud and received political asylum in Britain, which issued him a passport under the name Platon Yelenin. British authorities have repeatedly rejected requests by Russian prosecutors to extradite Berezovsky.

Irina Presnyakova, a spokeswoman for the Russian Academy of Sciences, said there were never any plans to expel Berezovsky. She disputed the businessman's claim, however, that he was still receiving his stipend.

"Members who have lived outside Russia for more than six months do not get their stipends because they earn money abroad," Presnyakova told The Moscow Times.

Berezovsky is a member of the academy's branch for nanotechnology and IT, though his colleague in the branch, Stanislav Vlasov, said he and his fellow researchers had not heard from the businessman in quite a while.

"It's not a unique case," Vlasov said. "Several other members who left Russia have lost their connection with the academy."

Berezovsky said that while he cannot attend conferences, he stays in touch with some of his colleagues. "But I wouldn't like to mention their names," he said.

Academy rules require members to write research papers and attend meetings, though there is not a single listing under the "projects" or "publications" sections on Berezovsky's page on the academy's web site.

It is, nonetheless, virtually impossible to kick Berezovsky out of the academy, Vlasov told The Moscow Times. "There is just no existing rule regulating the expulsion of a member," he said.

Berezovsky said he has turned his focus to political science, having completed a project about Ukraine titled, appropriately, "Ukraine." He said he is also interested in writing a Russian-language schoolbook for children.

Russia’s First Lady becomes nation’s most successful businesswoman



06.03.2009

The wife of Russian President Dmitry Medvedev, Svetlana Medvedev, topped the list of most successful businesswomen in Russia, the Institute for Politics and Business said.

Fifteen experts of Russia’s leading analytical agencies made up the list of 25 women to evaluate the results of their activities, their level of political influence, their reputation, charisma, their authority in the business environment and their creativity in administrative decisions.

“Like Michelle Obama, Svetlana Medvedev used her character and intellect to become a very influential political figure, which showed a considerable influence in the making of highly important political decisions,” the experts said.

St. Petersburg governor Valentina Matviyenko took the second place on the list of Russia’s 25 most successful women. Experts named her one of the most influential governors of Russia, who made significant contributions to many decisions of state importance.

Lyudmila Verbitskaya, the president of the St. Petersburg State University, known as Putin’s favorite teacher, was ranked third.

Olga Belyavtseva, a businesswoman, demonstrated her outstanding qualities of a crisis manager when she sold her mineral water and juice-making company to PepsiCo. As a result, Belyavtseva became Russia’s second richest woman after Moscow mayor’s wife Elena Baturina. The latter takes the eighth position on the list.

The list also includes Russia’s Minister for Economic Development and Trade Elvira Nabiullina (7th), the Minister for Healthcare and Social Development, Tatiana Golikova (9th), a member of Vneshtorgbank’s administration Olga Dergunova (13th), first Vice Speaker of the Russian Parliament, Lyubov Sliska (18th) and others.

Canadian community rallies to help former KGB agent’s family avoid deportation



08.03.2009

AIA have also previously reported that the Lennikovs—Mikhail, his wife Irina and their 17-year-old son Dmitri—have lived in Canada 11 years and have been facing deportation to their native Russia since last fall. They are still awaiting news of their removal after having a bid to stay in Canada turned down by the federal public safety minister last week, according to a Burnaby newspaper. The Canadian government has rejected Lennikov's bid for permanent residence, arguing that his KGB background makes him a security risk.

According to the national daily Globe and Mail, the Lennikovs arrived in Canada in 1997, when Mikhail Lennikov was enrolled in a master's program in Japanese literature at the University of British Columbia. Two years later, when the family applied for permanent residence in Canada, Mikhail was open about his past. The problem is that former members of agencies that have spied against democratic governments are not eligible for permanent residency in Canada.

Lennikov even gave a debriefing to the Canadian Security Intelligence Service. He said he never had a choice about his career path in the former Soviet Union, The Globe and Mail marks. The paper expands on Lennikov’s KGB past. It was 1981 and he had just completed graduate work in Oriental Studies in Vladivostok in Russia's Far East. A KGB officer approached the 22-year-old on the street and told him he had been selected to join the secret police service. Mikhail resisted at first and even told the recruiter that he didn't think he was a suitable candidate. Lennikov believes he was selected because he was fluent in Japanese, the paper adds. At first, he worked as a junior clerk translating Japanese documents in the Vladivostok office of the KGB. Later, he provided information to his boss on Soviet students and visiting Japanese business officials. Lennikov said these reports didn't include sensitive information.

“Mr. Lennikov is inadmissible to Canada under the Immigration and Refugee Protection Act on security grounds. This is a decision upheld by both the Immigration Division of the Immigration and Refugee Board of Canada and the Federal Court,” said Public Safety Minister Peter Van Loan in an e-mailed statement to the NewsLeader. Lennikov has argued that he was coerced into joining the KGB as a and quit six years later after writing a letter of resignation saying he didn't belong in the organization. The family left Russia after learning he was marked as a traitor and faced retribution.

Burnaby-New Westminster MP Peter Julian points out that the minister has the power to make exceptions to the rule, just as the government did during the Cold War to accommodate KGB defectors. Julian raised the Lennikov case in the House of Commons last week. Julian believes the Lennikovs have a compelling case, particularly with the strong community support behind them. Meanwhile, the Lennikov family has also applied to Citizenship and Immigration Canada for permanent residency on humanitarian and compassionate grounds. Mikhail Lennikov said they were encouraged to do so by the immigration minister a few days before receiving the public safety minister’s decision.

Hello I'm Kosmos: Patriotic names in Russian comeback



30 minutes ago

MOSCOW (AFP) — Where might you find someone named Kosmos (Space), Vyborina (Election) or Volya (Will)?

Why, in Russia, of course, where in Soviet days the use of names such as Elem (a combination of Lenin-Marx), Mirtruda (World of Workers) or even Dazdraperma (Long Live the First of May) were encouraged.

Sociologists say that in the post-Soviet modern Russia of strongman Prime Minister Vladimir Putin the use of such politicised patriotic names is making a slight comeback -- albeit with a twist.

From the early years of Communist rule in the 1920s, the Bolsheviks promoted the use of names marking Soviet achievements, often employing dazzling wordplay to squeeze a socialist concept into a single name.

Even today it is still possible in Russia to meet women named Stalina, after the wartime dictator Joseph Stalin, or Ninel (Lenin's named spelled backwards). Or men named Rem after the Russian words for revolution and peace.

While Russian parents may be reluctant now to give their children such obviously Communist names, in Putin's increasingly assertive Russia there is every incentive to go through life proudly bearing a patriotic name.

"There is surely something in the air even if these are isolated cases. But little by little these politicised names are appearing on our registers," Moscow registry office spokeswoman Evgenia Smirnova told AFP.

On occasion, the use of such names has reached an extreme -- in the Urals town of Nizhny Tagil, a baby was recently reported to have been christened Privatizatsia (Privatisation).

For psychologist Olga Makhovskaya, "the state is seen by people as a symbol and the people want to associate themselves with it and be part of it."

"The choice of names currently shows that Russians are positive about their lives," said Alexei Makarkin, an analyst at the Centre for Political Technology in Moscow. "But this is all going to change with the economic crisis."

After the collapse of the Soviet Union and the economic humiliation of the 1990s, "the country started to rebuild itself and this unleashed a wave of patriotism," he said.

Until the economic crisis, Russia enjoyed almost a decade of stellar growth under Putin, an increasingly assertive foreign policy and also sporting successes.

But the use of patriotic names has not always been applauded in Russia.

The practice was famously mocked by the great Soviet writer Mikhail Bulgakov in his hilarious novella Heart of a Dog (Sobachye Serdtse) which was written in 1925 but could only be published in the Soviet Union in 1987.

In the book, a dog given human organs by a misguided doctor takes on increasingly loutish proletarian characteristics, which include taking on the absurd name Poligraf Poligrafovich (Printer, Son of Printer).

The Bolsheviks in the 1920s had carried out secular "Red Baptisms" where children were given names like Traktor (Tractor) and Oktyabrina (after the October Revolution) by a commissar against a hammer-and-sickle flag.

However it is said that the owners of such names subsequently did everything possible to have themselves called something more ordinary.

But Russians are keen to use newly-coined names, in a country with a notoriously short supply of common first names where it sometimes seems difficult to find a man who is not called Vladimir or Sergei.

Over the last year, names such as Sever (North), Veter (Wind) and Luna (Moon) have been recorded. There was even a Viagra, in recognition of the drug the parents thanked as the cause for the birth.

The severity of the economic crisis could also push Russians towards exotic names in the hope that this will help their children stand out from the crowd, said psychologist Sergei Stepanov.

"They think that while Pyotr and Ivan may not have much of a chance in life then maybe Kosmos or Privatisation will get there."

But Alexandra Superanskaya, author of the anthology "Russian Names", has a stern warning for parents seeking to name their children something exotic.

"Scientists have proven that people with bizarre names on average live five years less than other people."

National Economic Trends

Russia’s Reserves May Be Halved by Year-End on Ruble, RBC Says



By Emma O’Brien

March 8 (Bloomberg) -- Russia’s reserves could be almost halved by the end of the year as continued deterioration of the country’s economy forces the central bank to use its “cash cushion” to defend the ruble, RBC Capital Markets analysts said.

Russia’s foreign-currency stockpile, the world’s third- largest after China’s and Japan’s, could drop to as low as $200 billion by the end of 2009 as Bank Rossii is “forced” to sell dollars and euros to prevent further devaluation of the country’s currency, the analysts led by Nick Chamie, head of emerging markets research in Toronto, wrote in a March 6 research note.

The nation’s reserves increased by $2.4 billion to $384.3 billion in the week to Feb. 27, the central bank said last week. Bank Rossii has pledged to prevent the ruble from weakening below 41 against its dollar-euro basket by raising interest rates, curbing bank refinancing and pledging reserves. The ruble was little changed at 40.0378 to the basket on March 6.

The ruble could weaken to 38 per dollar by the end of the second quarter, according to the RBC note. The currency added 0.4 percent to 35.7676 per dollar at the end of last week. The basket consists of about 55 percent dollars and the rest euros, and is used to limit fluctuations that disadvantage Russian exporters.

To contact the reporter on this story: Emma O’Brien in Moscow at eobrien6@

Last Updated: March 8, 2009 11:32 EDT

Inflow of foreign investments in Russia decrease by 14% to $103 bln in 2008



MOSCOW, March 8 (Itar-Tass) -- Inflow of foreign investments in the Russian economy in 2008 decreased by 14.2 percent, as compared to 2007, and amounted to 103.77 billion U.S. dollars, the Prime Tass economic news agency said, quoting a report of the Federal State Statistics Service.

In 2008, direct investments went down by 2.8 percent, as compared to 2007, and totalled 27.027 billion U.S. dollars, Prime Tass said, adding that indirect investments made up only 33.7 percent of the previous year’s index and amounted to 1.415 billion U.S. dollars.

Other investments were 15.3 percent less than in 2007 and neared 75.33 billion U.S. dollars, Prime Tass said.

Therefore, in the total structure of foreign investments in the Russian economy in 2008 the share of direct investments amounted to 26 percent, the share of indirect investments was 1.4 percent, and the rest of investments reached 72.6 percent, Prime Tass said.

In the reporting period, the amount of redeemed investments, which Russia received from foreign countries earlier, was 16.3 percent more than in 2007 and reached 68 billion U.S. dollars, Prime Tass said.

The overall amount of accumulated investments in the Russian economy reached 264.499 billion U.S. dollars by the end of 2008, which was 19.9 percent more than in 2007, Prime Tass said.

On that amount, direct investments reached to 122.39 billion U.S. dollars (46.3-percent increase), indirect investments – 5.63 billion U.S. dollars, and other investments - 136.58 billion U.S. dollars, Prime Tass said.

Fewer investment options for reserve funds



The Finance Ministry outlaws risky investment for reserve funds

Russia’s Finance Ministry has banned the Reserve Fund and National Wealth Fund from investing their funds in foreign mortgage agencies and foreign deposits. The decree, signed by Finance Ministry Alexei Kudrin, has been published on the ministry’s website. The assets will be invested in the most reliable and liquid government bonds of the United States and Europe. This is a more flexible investment strategy, allowing more freedom of maneuver for covering budget holes.

The funds’ assets are recorded in the Central Bank’s treasury accounts: 45 percent in U.S. dollars, 45 percent in euros and 10 percent in British pounds. Earlier, the investment portfolio looked as follows: 80 percent was invested in sovereign bonds, 15 percent – in the bonds issued by national agencies and central banks, and 5 percent – in the debt obligations of international financial organizations.

Now, the Finance Ministry has limited investment options to sovereign debt obligations - 100 percent for the National Wealth Fund and 95 percent for the Reserve Fund, allowing the Reserve Fund to invest the remaining 5 percent in the debt obligations issued by international financial organizations. Currently, 5 percent of the Reserve Fund’s money is kept with the International Monetary Fund as Russia’s reserve position – after repaying its debt to the IMF, Russia became a creditor itself and has to keep a reserve, Finance Ministry officials explained.

The Finance Ministry’s move to restrict the investment options for the reserve funds is perfectly in line with the funds’ goals: in 2009, the Reserve Fund’s assets will be needed to cover the budget deficit, and the National Wealth Fund’s assets will be used to co-finance voluntary pension savings and to cover the Pension Fund’s deficit. “There is a risk to lose on non-conservative investment. Many investors prefer more reliable even if less profitable instruments in order to save their money,” the sources said.

The allowed investment instruments are the most liquid and reliable, including sovereign obligations of the United States and European countries. “It is too risky to invest in the mortgage bonds of national agencies, in which some reserve funds had been kept earlier,” they explained. What is important today is to preserve the money and return it quickly as soon as needed, agrees Evgeny Gavrilenkov, chief economist at Troika Dialog. Currently, returns on U.S. treasury bonds are close to zero. With exchange rates highly volatile, it is advisable to keep half of the investment in U.S. dollars and half in euros.

Business, Energy or Environmental regulations or discussions

Hotel Company uniting 17 hotels formed in Moscow to upgrade efficiency of hotel business



MOSCOW, March 8 (Itar-Tass) -- The Hotel Company, which unites 17 operating and unfinished hotels, has been formed in Moscow. The company will supervise such extensive facilities as the Metropol, the Moskva, the Tourist, the Baikal and the Altai.

The city government will have a 49% stake in the company, and the investors will hold the rest. “Our investors are Western companies,” a source at the city administration told Itar-Tass.

The Hotel Company is bound “to upgrade material and technical support to hotels and build up the efficiency of the hotel business with stock market mechanisms,” the source said.

In the future, the company may control the Budapest and National hotels and two prospective hotel locations at 18/1, Olympiisky Avenue and 2, Europe Square.

A minor decline in hotel charges is possible in the future but it won’ t be large due to the scarcity of accommodation.

Dairy productivity gets boost through technology



09 March, 2009, 10:02

Russia is one of the world's fastest growing dairy markets but declining cattle numbers are starting to limit further growth. That means the Russian dairy industry is turning to technology to boost productivity.

Half of Russia’s milk is produced on small farms and private households. Most government support for the dairy industry has been focused on larger players – with more than 2000 cows. But increasingly its being realized that with a little technology small can be beautiful, according to First Deputy Prime Minister, Viktor Zubkov.

“We need to have standard projects for small farms and private households. It can be a small project of 20,30 or 100 cows. We need new technology, and we are ordering that here in Sweden at Delaval.”

The Delaval company has over 130 years of history specializing in high technology for the dairy sector. A computerized system shows key milk data, and enables every last cow to be monitored.

With a declining dairy herd, Russia needs to increase the productivity of every cow to maintain the total production levels. Russia is looking to Sweden for advanced technology to make it's dairy sector more efficient. Delaval is already a major presence on the Russian market, supplying technology and operational service to farmers.

Now the assembly will be located at the Kirovsky plant in St. Petersburg with more parts being produced locally, according to Elena Skrynnik, General Director of Rosagroleasing.

“We are investing over $16 million and Rosagroleasing will supply the production to Russian farms."

Agriculture is one of the few sectors of the Russian economy which showed growth in January. With imports being priced out of reach of consumers, raising Russian production is essential. And more technology being brought into Russian dairying will mean it can step into the gap 

Activity in the Oil and Gas sector (including regulatory)

Russia Refuses to Approve Exxon’s Sakhalin Project, Sankei Says



By Shigeru Sato

March 9 (Bloomberg) -- Russia’s government refused to approve a budget proposal for the Sakhalin-1 oil and natural gas project led by Exxon Mobil Corp. and a Japanese venture, the Sankei newspaper reported, citing unnamed officials.

The project partners were unable to start development work on two of three fields near Sakhalin island that would be the main production sources for its natural gas, Sankei said in the report on its Web site.

Russia has called on Sakhalin-1 investors to sell all natural gas from the project to Russian gas export monopoly OAO Gazprom at prices lower than domestic market levels, the report said. Exxon Mobil, the project operator, had planned to construct an export pipeline to China.

Exxon owns 30 percent of the Sakhalin-1 project as does Japan’s Sakhalin Oil & Gas Development Co., or Sodeco. OAO Rosneft, Russia’s largest oil producer, and India’s ONGC Videsh Ltd. each own a 20 percent stake.

To contact the reporter on this story: Shigeru Sato in Tokyo at ssato10@.

Last Updated: March 8, 2009 20:38 EDT

Rosneft expects more oil discoveries in Sea of Okhotsk



Saturday, 07 Mar 2009

Interfax citing Mr Lev Brodsky the general director of RN-Shelf-Far East as saying that over the next five years Rosneft could discover fields in the Sea of Okhotsk containing 500 million tonnes of oil equivalent.

Mr Brodsky said "We anticipate we will find 500 million tonne of commercial reserves on the Sea of Okhotsk shelf in the coming five years. He said that Rosneft expects to conduct geological study of over 12 licensed properties by 2020 with the aim of discovering commercial reserves in excess of 1 billion toe, which is very important for us. He added that Total hydrocarbons in place on the Sea of Okhotsk shelf are estimated at over 12 billion toe. That is why we must intensively bring new licensed blocks on that shelf on-stream."

Mr Brodsky said "Almost 100,000 square kilometers of the continental shelf in the Sea of Okhotsk has been studied, and new horizons have been discovered in new types of collectors for the region. But more exploration is needed for subsequent development of those fields. He said that work will continue on evaluating the outlook for developing the fields that are discovered. He added that exploration of the shelf, particularly the Far Eastern shelf, is a long and difficult process. As a rule it takes 10 years from the start of exploration to the start of production.”

Mr Brodsky said "It's a huge investment and a huge risk. But without that, it would be impossible to discover new projects. He said that the prospects for the Sakhalin shelf and the Far Eastern seas are huge. We and the residents of Sakhalin region want the development of new projects to continue."

Gazprom, Rosneft ponder ordering ships



      RBC, 06.03.2009, St. Petersburg 17:18:29.Gazprom and Rosneft plan to order 307 ships from the recently established United Shipbuilding Corporation until 2030, Prime Minister Vladimir Putin said during a meeting on the development of non-military sea equipment in St. Petersburg today. He noted that the corporation had already drafted a preliminary production plan. The PM stressed that the program must be designed to meet effective demand, adding that the funds earmarked under federal target programs and natural monopolies' investment programs must only be used to buy domestic equipment. He also reiterated that all arrangements for setting up the United Shipbuilding Corporation must be completed by April 1.

Lukoil tallies reserves base



By Upstream staff 

Russian producer Lukoil said its proven reserves fell to 19.3 billion barrels of oil equivalent last year, but added it more than replaced its annual production with new reserves.

Lukoil said in a statement its proven hydrocarbon reserves as of 1 January 2009 included 14.5 billion barrels of oil and 29.3 trillion cubic feet of gas. Total hydrocarbon reserves fell from 20.4 billion boe a year earlier.

The company recorded an 875 million boe increment in proven reserves last year, equivalent to 107% of annual production.

The increase comprised 601 million boe from geological exploration and production drilling and 274 million boe from acquisitions, the company said.

The evaluation was in compliance with Petroleum Resources Management System requirements.

"The evaluation was done under conditions characterised by a sharply deteriorating situation on the global commodities and raw material markets," Lukoil said.

It said a drop in the Urals oil price to $34.8 per barrel as of Dec. 31, 2008 from $93.7 per barrel a year earlier affected the economic feasibility of a portion of the company's reserves.

Friday, 06 March, 2009, 13:28 GMT  | last updated: Friday, 06 March, 2009, 13:28 GMT

Gazprom

Gas Natural says Gazprom eyeing assets – paper



Sun Mar 8, 2009 1:57pm GMT

MADRID, March 8 (Reuters) - Russian Gazprom (GAZP.MM: Quote, Profile, Research) is among 10 groups interested in assets Gas Natural (GAS.MC: Quote, Profile, Research) has to sell as part of its takeover of Union Fenosa, the Spanish utility's chairman said in a newspaper interview on Sunday.

Salvador Gabarro told El Pais the sale of 2,000 megawatts of installed capacity ordered by Spanish competition authority CNC as part of Gas Natural's purchase of electricity generator Fenosa (UNF.MC: Quote, Profile, Research) would not be difficult.

"Already many people have approached us with interest and people with a lot of money," he told the paper.

"Gazprom is one of the operators that have shown an interest for our combined cycle (gas) power stations. But I can't give more names ... There are up to 10 interested."

Gabarro said greater ties with Gazprom would lessen Gas Natural's reliance on Algeria, which will supply 50 percent of Spain's gas when a new pipeline between the two countries is finished.

Gazprom chief executive Alexei Miller said during a visit to Spain last week his company planned to sign a gas swap deal with Gas Natural to bring Russian gas to Spain. [ID:nL3578889]

MERGER LIKELY

Having bought out Fenosa's main shareholder, Spanish builder ACS, GasNat has launched a full 16.7 billion euro ($21 billion) offer for the company and Gabarro said the two companies would probably be rolled into one.

"It will probably be a merger. We are looking at a very easy integration. The companies are complementary" he said. "It will not be a long integration." Gabarro said Gas Natural chief executive Rafael Villaseca would become CEO of Fenosa, taking over from Honorato Lopez Isla, who became Fenosa chairman last week.

He said many directors would leave the enlarged company, "above all those of a certain age", a move that would mean the end of a separate board for Fenosa. However the 72-year old said his continued presence as chairman depended on GasNat shareholders and regional savings bank La Caixa.

COMFORTABLE WITH ENI, COOL ON SUEZ

Gabarro said he was happy with Fenosa's gas joint venture with Italian energy firm ENI (ENI.MI: Quote, Profile, Research) -- a stake the competition watchdog has allowed it to keep -- even though ENI said in February it was looking into EU rules to challenge GasNat's takeover of Fenosa.

But he was much cooler towards France's GDF Suez SA (GSZ.PA: Quote, Profile, Research), which owns just over 8 percent of GasNat, and which has called for collaboration between the two companies.

"They are competitors. And Gas Natural does not have a calling to be a gas subsidiary of Suez," he said. "Why are they in (the shareholding of) Gas Natural? I don't know."

Gabarro told El Pais that after building debt close to 20 billion euros through the purchase of Fenosa, Gas Natural would take a conservative line on future acquisitions . (Reporting by Ben Harding; Editing by Dan Lalor) ($1 = 0.7909 euro)

Romgaz produces 0.75% less gas in 2008 y/y, seeks Gazprom’s assistance in Roman-Margineni project



State-run gas supplier Romgaz produced last year 5.850 billion cubic meters of gas, 0.75 percent less than in the previous year and is now trying to draw the interest of the Russian giant Gazprom for the Roman-Margineni gas deposit feasibility study, informed the company.

The gas production stood in at 5.894 billion cubic meters in 2007 and the estimate for 2009 is of 5.770 billion, 1.27 percent down from last year.

The country’s second largest natural gas producer Petrom recorded last year a 3 percent decrease in production versus 2007, of 5.553 billion cubic meters. The hold back was put down to limitations of the transportation network, to temporary shut downs of industrial consumers but also to the few new gassers dug.

Romgaz and Petrom together produce annually about two thirds of the country’s required gas.

Petrom is controlled by the Austrian OMV Group. It explores, produces, refines and sales natural gas and oil reserves and operates 550 gas stations nationwide.

Romania used last year 17.3 billion cubic meters of gas, 1 billion more than in the previous year, according to the data provided by the power market watchdog ANRE at the beginning of January.

Romgaz is currently also trying to involve Gazprom’s specialty planner in defining some stages of the feasibility study for the Roman-Margineni gas deposit, in order to make the project more attractive for investors.

The matter was brought up during the visit carried out by the Gazprom officials in Bucharest at the end of 2007 and talks are said to be on-going, with the Romanian party hoping for a partnership with the world’s largest gas provider.

In accordance to the results of the bid held last summer however, the winning company that should be charged with the study is Petrostar Ploiesti. The contract has not so far been signed, although Romgaz officials promised the deal is still on and will be completed by the end of April.

Romgaz estimates that the investments in this deposit could amount to 500 million euros, while its capacity could reach 2 billion cubic meters. 

Romgaz is mainly owned by the Ministry of Economy and deals with extracting and depositing natural gas. Romgaz produces annually about a third of the country’s required gas.

08 martie 2009 13:22

reporter Gloria Saboff

editor Oana Dan

March 6 2009 17:50

Moscow

On the outcome of EuroPolGaz Supervisory board meeting



EuroPolGaz Supervisory board held a regular meeting today in Warsaw under the chairmanship of OAO Gazprom Management Committee Deputy Chairman Alexander Medvedev.

From the Russian side the meeting was attended by Management Committee member and head of the legal department Nikolai Dubik, head of the foreign economic activity department Stanislav Tsygankov, and First Deputy Director General of OOO Gazprom export Sergei Yemelyanov. The Polish side was represented by PGNiG President of the Management Board Michal Szubski and Management Board Vice-presidents Miroslaw Dobrut, Slawomir Hinc, and Radoslaw Dudzinski.

The meeting considered joint venture operations. In particular, the parties discussed the submission of a tariff application for 2009 for the transportation by EuroPolGaz of natural gas across the Polish territory, the completion of the construction of a fiber-optic communications line of the Yamal – Europe gas pipeline, as well as several issues of current business activities.

It has been agreed to hold the next meeting of EuroPolGaz Supervisory Board in Gdansk.

In the framework of the visit Deputy CEO Alexander Medvedev also had a meeting with Polish Deputy Prime Minister and Economic Minister Waldemar Pawlak to discuss bilateral cooperation in the gas industry.

Background:

Joint-stock company Transit Gas Pipeline System EuroPolGaz was founded in September 1993. The company was created in the framework of the intergovernmental agreement On the construction of a system of gas pipelines for transit of Russian gas through the territory of Poland and deliveries of Russian gas to Poland of August 25, 1993. EuroPolGaz basic activity guidelines comprise design, construction and operation of the Polish section of the Yamal – Europe gas pipeline.

EuroPolGaz owns the 684-kilometer long Yamal – Europe pipeline section running across the Polish territory, as well as five compressor stations. The annual carrying capacity of the pipeline comprises close to 30 billion cubic meters provided simultaneous operation of the five compressor stations.

Gazprom and PGNiG SA are the main shareholders of EuroPolGaz.

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