Russia - WikiLeaks
Russia 090528
Basic Political Developments
• Prime Minister Putin to visit Minsk to discuss Union state construction progress
• At a meeting with Russian Prime Minister Vladimir Putin on Thursday, the Belarussian President Alexander Lukashenko will try to secure further loans from Russia, Kommersant says
• Gazeta daily publishes an interview with the former Pakistani President Pervez Musharraf, who is due to meet Russian Prime Minister Vladimir Putin on a private visit.
• Pervez Musharraf: “We fight for Pakistan” – RT interview
• UPDATE 1-IMF to seek approval for $10 bln bond to Russia
• Russia to buy $10bn of IMF bonds in autumn
• Russia, EU diplomats discuss Caucasus by telephone - - Russian Deputy Foreign Minister Grigory Karasin and Pierre Morel, the EU Special Representative for the crisis in Georgia, on Wednesday discussed by telephone the forthcoming meeting of participants in the mechanism of preventing incidents in the Caucasus slated for May 29, the Russian Foreign Ministry reports.
• NATO, Russia Praise Relations - Russia's ambassador to NATO, Dmitry Rogozin, said a meeting with his 28 NATO counterparts in Brussels agreed to work on a date for a ministerial level meeting Moscow delayed after NATO expelled two Russian diplomats this month.
• Russia, NATO plan ministerial meeting - Russia and NATO may be finally mending their complicated relationship, as a ministerial meeting has been promoted at the latest NATO-Russia Council session Wednesday.
• New air route between Russia and Japan inaugurated - Flights from Yuzhno-Sakhalinsk to Tokyo and back will be made by TU-204 and A-330 airliners of the Vladivostok-Avia Company (VAC)
• Russian Swine Flu Victims Recover – Report
• Top Inspector Defends Ban On U.S. Meat
• First Russian AWACS plane put in service with Indian air force - The first Russian-made A-50 Mainstay AWACS aircraft developed on the basis of Il-76MD military transport plane officially entered service on Thursday with the Indian Air Force (IAF).
• Russia to give military helicopters and other weapons systems to Sri lanka
• Planned military reforms in Russia have been revised. Airborne troop numbers will be strengthened and not cut as was first planned, Nezavisnaya Gazeta writes
• EnergoAtom talking to Rosatom, AECL, KEPCO about reactor design
• Russia to open chemical weapons destruction plant
• Russia blackmailed UN on Abkhazia, Georgia says
• Russia’s Federal Security Service bustling in Abkhazia
• Russia wants to prevent interference of non-Caspian states in ensuring border security in region
• Four militants killed in operation in south Russia's Nalchik
• Police maintain Chechen-Ingush forest hunt for militants
• Dagestanis Seize Power Stations - For the second time this week, a group of angry citizens seized a power station Wednesday in Dagestan after their electricity was shut off because of unpaid municipal debts.
• Ultranationalist race-hate leader awaits verdict - A Moscow court is due to announce its verdict on the activities of nationalist leader Aleksandr Belov who is accused of inciting racial hatred which led to ethnic violence in Russia's Karelia region in 2006.
• Russian gas pipeline explodes northwest of Moscow
• Blast ruptures Moscow gas link
• Most corrupt institutions in Russia named and shamed - Supreme Court Chairman Vyacheslav Lebedev named the "most corrupt" institutions in Russia in a speech to the upper house of parliament on Wednesday May 27. He named the following as the worst offenders: Russia's Interior Ministry, Healthcare Ministry, Education Ministry and tax inspectorate as being the most corrupt amongst Russia's government institutions, reports Interfax.
• Kremlin Takes Small Step to Ease NGO Law - NGO representatives have also expressed bewilderment at Medvedev's decision to name Vladislav Surkov, his first deputy chief of staff, as the head of the working group. Surkov, who held the same post in Putin's Kremlin, is believed to be the man behind the tough NGO law that is now under scrutiny.
• Russia introduces mandatory psychological testing for couples wanting to adopt
• Siberian miners go on strike over wage arrears
• Trade unions losing their ground in Russia – poll
National Economic Trends
• Russia's international reserves surge to $402 bln as of May 25
• Inflation likely softened to 12.5% YoY in May
• Ctrl banker sees refinancing rate cut amid falling inflation
• Russia to Cut Rates Further as Inflation Slows, Ignatiev Says
• Past-due debt of 13% at end 2009 not to create systemic banking sectorthreat - CB
• Russian Central Bank Paying ‘Very Close Attention’ to Bad Loans
• Russian c.bank says to keep cutting rates
• UPDATE 1-Russia dismisses radio report of currency basket change
• CBR buys over $30 bln Feb 1 - May 25, reserves grow to $402 bln
• Russian Ruble Weakens Against Dollar, Advances Versus Euro
• The Fitch special report, entitled "Credit Quality of Russian Subnationals Amid Economic Crisis", is available on the agency's public website, , under International Public Finance/Special reports.
• Troika: Russia Economic Monthly - watching the upturn
Business, Energy or Environmental regulations or discussions
• Russia Suddenly Believes in Fighting Global Warming - Putin wants to increase action against the phenomenon
• Ecologists To Agree On Chukotka Unique Nature Protection
• "Decreasing energy consumption will last 2 years" - Sergey Kirienko, leader of the Russian state nuclear energy company Rosatom believes the decreasing energy consumption in the country will last for another two years.
• InterRAO in talks with RWE about stake in Bulgarian nuclear generator
• Mitsui may take 50 pct of Russia hydro project
• Russia to woo investors with bigger mineral licences - Russia, which earned over $3 billion selling off its mineral resources last year, will group licences into larger blocks to attract cash-strapped investors in 2009, a government minister said on Wednesday.
• Russian state firm eyes Norilsk Nickel stake –report: State conglomerate Russian Technologies is interested in taking 40 percent of Norilsk Nickel should the owners of the world's largest nickel miner fail to repay debts to the state, a newspaper reported.
• Swedish fund to invest in Russian debt collector - Swedish fund Mint Capital said it would invest $5-$15 million to buy 25 percent plus one share in Stolichnoye Kollektorskoye Agentstvo, allowing it to take a seat on the board.
• CBR: Number of Russian banks to drop under 1,000 by end of year
• Preliminary April banking sector data
• Uralsib reports on 2008 financials results under IFRS
• Russia Diamond Monopoly Seeks to Avoid 1990s-Style Market Flood
• Russia can't build world-class car industry on its own - Russia can't build world class car industry on its own, Industry and Trade Minister Viktor Khristenko said during a lecture on Wednesday, and needs to tie up with foreign partners.
• Programme to subsidise car loans gives little support to car manufacturers - According to Kommersant, in April-May around 7,000 loans in Russia (every tenth car loan) were issued under the government programme for subsidising interest rates when purchasing a car assembled in Russia. The price ceiling for cars purchased under the programme was set at RUB 350,000.
• X5 Posts $82 Million First-Quarter Loss on Ruble Drop (Update1)
• Facebook's New Russian Shareholder Planning Its Own IPO
Activity in the Oil and Gas sector (including regulatory)
• Russia to raise oil export duty to over $152 per ton June 1
• Russia seaborne oil exports to fall 3.4 pct in June
• Slowdown signs - Russian fuel and minerals extraction dips by 3.2%
• Transneft requests 4% tariffs hike from 1 July
• Sakhalin II Gears up for Full Production
• Rosneft reveals the effective average interest rate at 5.7% for Chinese US$15bn loan, Transneft's margin is set at 0.001%
• New Field Discovered on One of Blocks of Vankor Group of Fields
• Rosneft Uncovers New Oil and Gas Condensate Field in Taimyr Area
• Oil firm West Siberian Q1 profit rises 10 pct
• Lukoil Expands Its Retail Gas Stations In Croatia
• Fridman Is Acting TNK-BP Chief As CEO Hunt Drags On
• TNK-BP Shareholders Shake Hands over CEO Succession Plan
Gazprom
• Gazprom offers escape route for Sibir investors - Hundreds of private investors caught up in the corporate governance scandal at Aim-listed Sibir Energy have been offered a partial reprieve by Gazprom, the Russian state-controlled gas company.
• Gazprom Neft starts buying up Sibir Energy shares still on the market - Renaissance Securities has announced a new wave of purchasing of shares in Sibir Energy in favor of OJSC Gazprom Neft , through which the Russian company intends to consolidate all Sibir Energy currently in free float, Renaissance said in a statement.
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Full Text Articles
Basic Political Developments
Prime Minister Putin to visit Minsk to discuss Union state construction progress
MOSCOW, May 28 (Itar-Tass) - Russian Prime Minister Vladimir Putin will on Thursday participate in a regular meeting of the Council of Ministers of the Union State of Russia and Belarus, the Russian government press service reports. While staying in Minsk, Putin will also meet Belarusian President Alexander Lukashenko and hold talks with Prime Minister Sergei Sidorsky.
The agenda of the forthcoming meeting includes more than 20 items, the press service goes on to say. Its participants will analyse the implementation of the Joint Action Plan of the governments of Russia and Belarus designed to minimize the consequences of the financial crisis, improve the parameters of the balance of payments and conditions for entrepreneurial activities and mutual trade. The Joint Action Plan was approved at a meeting of the Supreme State Council of the Union State in Moscow on February 3, 2009. The Council of Ministers will also discuss a Plan of actions facilitating the movement of goods and transportation vehicles in the territory of the Union state.
In this context, a number of vital decisions were passed. They concerned the participation of Belarusian companies in state purchases in Russia, including deliveries of agricultural products, metal rolled stock, tractors, combined harvester, machines, refrigerators and trucks.
A number of union programs, including the development and introduction of science-intensive productions and technologies, will also be considered.
The Council of Ministers of the Union State of Russia and Belarus will discuss preparations for the celebration of the 65th anniversary of Belarus’ liberation from fascist occupiers and the 65th anniversary of Victory in the Great Patriotic War.
Two Russian-Belarusian inter-governmental documents – an Agreement for cooperation in the peaceful use of atomic energy and an Agreement on reciprocal transition to private ownership of land allotments and on leasing plots of land.
Putin’s talks with Lukashenko and later with Sidorsky will dwell on urgent issues of Russian-Belarusian relations. The focus will be made on trade and economic subjects, cooperation in the fuel and energy sector and atomic energy, humanitarian and cultural cooperation.
The Russian and Belarusian governments passed a package of measures, which managed to maintain the dynamics of mutual trade and prevented a slide in reciprocal trade turnover caused by the world financial crisis.
The sides are expected to discuss further steps to stimulate positive processes in economic cooperation to complete the already existing decisions, including the provision of equal access to the markets of the two countries and participation in the system of state purchases.
For the purpose of preserving social and economic stability of Belarus, Moscow granted a state credit worth 0.5 billion dollars to Minsk in March. Earlier, in November 2008, received a one-billion-dollar soft credit from Belarus. At present, Russia is considering a possibility of giving additional financial support to Belarus worth one billion dollars.
Moscow and Minsk intend to continue active efforts to create a Customs Union within the framework of the Eurasian Economic Community, which is to begin functioning in 2010. The sides are expected to continue a discussion of issues linked to the formation of the single customs space. The sides will also confirm their course towards deeper bilateral integration and the strengthening of the economic foundation of the Union state.
The expansion of all-round integration cooperation with Belarus continues to be a priority in Russia’s policy in the CIS territory. The ongoing construction of the Union State of Russia and Belarus meeting the interests of the two peoples and is a vital factor of progressive development of the two brethren countries.
The Russian delegation will comprise Igor Shuvalov, the first deputy prime minister of the Russian government, the vice-premier and Finance Minister Alexei Kudrin and the heads of Russian ministries and departments.
kommersant.ru
At a meeting with Russian Prime Minister Vladimir Putin on Thursday, the Belarussian President Alexander Lukashenko will try to secure further loans from Russia, the daily says.
gzt.ru
Gazeta daily publishes an interview with the former Pakistani President Pervez Musharraf, who is due to meet Russian Prime Minister Vladimir Putin on a private visit.
Pervez Musharraf: “We fight for Pakistan”
28 May, 2009, 09:50
One of the most prominent problems of the world is terrorism. RT spoke to a man who is no stranger to the “War on Terror”, ex-president of Pakistan and a man who ruled the country for nine years, Mr. Pervez Musharraf.
RT: To your opinion, what is the role of Russia in the “War on Terror”, and, specifically, in the region of Afghanistan?
Pervez Musharraf: Yes, Russia has been very familiar with the region, and therefore it must have a very positive effective role in stabilizing Afghanistan. What we need to develop in Afghanistan is a homegrown political system which keeps the integrity of Afghanistan intact.
Therefore, Russia must contribute towards that, and develop a homegrown political solution to the situation inside of Afghanistan.
Afghanistan was together for 300 years, more than that, through a term called Missah-ke-Milli. This is a socio-political contract, a national covenant, where all the ethnic groups: the Tajiks, Uzbeks, Khazars, Pakhtuns. They decided to remain intact and accepted the sovereignty of the king.
So we need to know, now that the king is no more there, we have to develop another, homegrown Missa-ke-milli, the same socio-political contract with the ethnic groups, that must ensure the territorial integrity of Afghanistan and decide what kind of government they want. Russia must play a role in that.
RT: Mr. Musharraf, many experts believe that the situation in Pakistan is deteriorating. What’s your opinion on this issue?
P.M.: These bomb blasts should not deter anyone that Pakistan is in danger. Nothing will happen to Pakistan. Pakistan is a country of 170 million people, and very strong armed forces.
It is most unfortunate that innocent people get killed because of a bomb blast. Who is doing this? It is being done by the same terrorists, the terrorists who have come from all over the world. These we call Al-Qaeda. They are foreigners. They are from all over the Muslim world, especially from Saudi Arabia, from the Gulf area and North African countries. They are there. And there are a lot of Uzbeks, and there are Chechens. But more Uzbeks. They are still there. So we need to fight them and defeat them.
And then, with them, it is the Taliban, the militant Taliban who carry out these bomb blasts. So we have to defeat them. But we have to bear the brunt, unfortunately, of innocent people being killed.
RT: Mr. Musharraf, you ruled Pakistan for nine years, almost ten. But many actually blame you that you sympathize with Taliban. What would your reply be to these people?
P.M.: Do you think it is very logical that those people who are trying to kill me, that I will go and shake hands with them? Is it very logical? No, it is not logical, nothing of that sort has happened.
We have to go on a military path. 1,500 soldiers got killed. Do you think we are dealing with them? We have killed hundreds of them! So, how is it possible that this – what you’re saying – that we are dealing with them.
Yes, we are dealing with them to have a political solution. You must deal with them to have a political solution. Otherwise, how will you come to a political solution? So, therefore, it is a three-pronged approach that we have always followed, that I have followed: military, political and socio-economic.
Political – from the position of strength. You use military, show them that you are strong, and then go for a political resolution. Therefore, while we talk, we would like to talk to them. What I have said – “Missah-ke-milli” – “homegrown”. How do you have a homegrown Missah-ke-milli if you don’t talk to them? You must talk to them.
So, we were talking to them, but that it does not mean that we are with them. So, unfortunately, a lot of people have created this misperception.
RT: But still, Mr. Musharraf, what do you think – to what extent did the United States influence, or perhaps even boost Pakistan into the War on Terror’?
P.M.: I don’t think so. American forces are doing action in Afghanistan. Pakistan forces are doing action to protect Pakistan. The Taliban are not want we want in Pakistan. Their views on Islam are not what we want for Pakistan. Therefore, Pakistani armed forces are fighting Taliban in their own interests.
Now, this is a misperception that every one creates that I was fighting because Bush had told me, and now we’re fighting because Obama is saying. No, no. Obama may be interested, or Bush may be interested, or the US may be interested in Afghanistan. Our interest is Pakistan and nobody else. We fight for Pakistan.
RT: What does the future hold for your homeland?
P.M.: The conditions in Pakistan must improve. Pakistan has problems. We must recover from those problems and that causes concern.
RT: Mr. Musharraf, thank you very much for this very interesting interview, and for your very precious time.
P.M.: Thank you.
UPDATE 1-IMF to seek approval for $10 bln bond to Russia
Thu May 28, 2009 3:49am IST
(Adds details, background)
WASHINGTON, May 27 (Reuters) - The head of the International Monetary Fund said on Wednesday he would seek board approval for the issuance of $10 billion in IMF bonds to Russia "as soon as possible."
It will be the first time that the global institution will use its authority to issue bonds to member countries. It is part of efforts by the Group of 20 member nations to raise additional resources for the IMF, as more countries seek its loans to cope with the financial crisis.
It is likely the bonds will be denominated in IMF Special Drawing Rights, the IMF's internal unit of account, and issued directly to central banks.
"I have received a communication from Prime Minister Putin informing me of the Russian Federation's intention," IMF Managing Director Dominique Strauss-Kahn said. " I am very gratified by the Russian Federation's intention to invest in IMF paper."
Russia is the first emerging market country to contribute to the IMF through a bond. Others like China, Brazil and India have expressed interest as a way of increasing their influence in the IMF.
The IMF bonds are attractive to emerging market economies because they would count as foreign exchange reserves and have no budgetary implications nor would it require legislative approval.
Making a loan to the IMF, unlike bonds, could not be counted as international reserves as they would not be liquid or easily converted into hard currencies.
(Reporting by Lesley Wroughton; Editing by Diane Craft)
Russia to buy $10bn of IMF bonds in autumn
bne
May 28, 2009
Russia's Finance Minister Alexei Kudrin says that Russia will buy $10bn of IMF bonds this autumn, reports newswire.
The bonds are a new form of funding of the IMF and will be used to raise money to lend to struggling countries.
The Russian government still wants to see the terms of the bonds which the IMF is expected to draft in June. A final decision will be made after the terms are published.
CBR First Deputy Chairman Alexei Ulyukayev told Interfax that "this would involve investing currency reserves," but the CBR has no objections.
The point of the bonds is to tap into the hard currency reserves of countries to make available cash for other poorer countries, but in such a way as not to undermine the stability of the donor countries.
Ulyukayev did not go into more detail, saying that the terms for the bond issue, their yield or maturity were not yet known.
The Central Bank of Russia will place the funds, Kudrin said. "The reliability, liquidity and probability of repayment are the equal of the most reliable, liquid securities currently on the market," he said. The funds will be used for lending to countries that need it, Kudrin said. Medvedev approved the plan.
Russia, EU diplomats discuss Caucasus by telephone
MOSCOW, May 28 (Itar-Tass) - Russian Deputy Foreign Minister Grigory Karasin and Pierre Morel, the EU Special Representative for the crisis in Georgia, on Wednesday discussed by telephone the forthcoming meeting of participants in the mechanism of preventing incidents in the Caucasus slated for May 29, the Russian Foreign Ministry reports.
The talks dwelt on the Geneva negotiations on security and stability in the Caucasus. The sides discussed preparations for the second working meeting slated to be held on May 29th in a place called Dvani within the framework of joint mechanisms for the prevention of incidents on the Georgian-South Ossetian border and reaction to them.
Grigory Karasin, for his part, emphasized interest in transition to regular and productive work of this important instrument for strengthening security and restoring trust in the region.
NATO, Russia Praise Relations
28 May 2009 Reuters
BRUSSELS — NATO and Russia said Wednesday that the mood between them had warmed since rifts over a spy scandal and Georgia, clearing the way for better cooperation.
Russia's ambassador to NATO, Dmitry Rogozin, said a meeting with his 28 NATO counterparts in Brussels agreed to work on a date for a ministerial level meeting Moscow delayed after NATO expelled two Russian diplomats this month.
Both NATO spokeswoman Carmen Romero and Rogozin described the mood of the meeting as "positive." Romero said it focused on better cooperation on terrorism, piracy and nonproliferation, including North Korea.
Russia, NATO plan ministerial meeting
Today, 10:56 PM
Russia and NATO may be finally mending their complicated relationship, as a ministerial meeting has been promoted at the latest NATO-Russia Council session Wednesday.
NATO deputy spokeswoman Carmen Romero said that ambassadors from NATO's 28 nations and Russia's envoy to the alliance were determined to hold a meeting of foreign ministers "as soon as logistically possible," AP reported.
The ambassadors met on Wednesday within the framework of the NATO-Russia Council, a panel set up to improve cooperation between the former Cold War foes.
Russia's NATO envoy Dmitry Rogozin described the meeting as constructive and forward-looking. "Discussions were focused on giving new stimulus and quality to our joint work," he said.
Moscow and NATO have sought in recent months to improve ties that were frozen after Russia's war with Georgia last August.
A meeting of foreign ministers had been scheduled in April, but tensions soared again over the expulsion of two Russian diplomats for alleged spying and the retaliatory move by Moscow which expelled two NATO officials. Moscow also strongly objected to a NATO military exercise in Georgia, and the planned ministerial talks were called off.
Rogozin said that although both sides were now determined to move forward on issues where they had shared interests — such as Afghanistan, anti-piracy efforts and disarmament — the meeting of foreign ministers was needed to endorse any formal military-to-military cooperation between Russia and NATO.
New air route between Russia and Japan inaugurated
YUZHNO-SAKHALINSK, May 28 (Itar-Tass) - A new air route has been inaugurated between Russia and Japan. Flights from Yuzhno-Sakhalinsk to Tokyo and back will be made by TU-204 and A-330 airliners of the Vladivostok-Avia Company (VAC). The first flight was made on May 26, the VAC press service announced on Thursday.
Airliners from Yuzhno-Sakhalinsk will land at Tokyo's Narita airport. Flights are to be made twice a week. The duration of the flight is two hours.
The VAC also carries out the transportation of people from Russia's Far East to the Japanese cities of Niigata and Narita, China's Beijing and Harbin, and South Korea's Seoul.
Russian Swine Flu Victims Recover – Report
MOSCOW (AFP)--Russia's only two confirmed swine flu victims have recovered from the virus, Interfax news agency quoted the country's public health chief as saying on Wednesday.
"They have recovered. Now their illness is nothing more than a part of history," said Gennady Onishchenko.
Russia reported Sunday its second confirmed case of swine flu, involving a Russian national who had returned from the Dominican Republic.
The country recorded its first case of the deadly A(H1N1) virus on Friday, involving a Russian who had travelled on a flight to Moscow from the United States.
Swine flu has now infected 13,398 people in 48 countries since it was first uncovered last month, the World Health Organisation said Wednesday, while the number of deaths has risen to 95.
Top Inspector Defends Ban On U.S. Meat
28 May 2009 Reuters
The Federal Veterinary Service said it will not yield to U.S. attempts to make it lift health-related import bans on meat imports, saying the measures stem from real safety concerns, not politics.
Service head Sergei Dankvert said in an interview that meat trade issues between Russia and the United States should be resolved by business people and veterinarians, not politicians.
"Strangely enough, we have to argue not with veterinarians, but with officials," Dankvert said Tuesday. "The more the situation is pegged to politics, the worse it becomes."
Russia is the largest export market for the $55 billion U.S. poultry industry and a major importer of pork and beef. It has banned all meat imports from several U.S. states on concerns related to the A/H1N1 flu virus, commonly known as swine flu.
"We are not going to yield to any enforcement," Dankvert said in response to the comments from Washington.
The service, together with the Russian poultry market lobby, plans to discuss issues of U.S. meat safety guarantees with producers and veterinarians at an annual meeting of the World Organization for Animal Health in Paris this week. Several countries have banned meat imports since the outbreak of swine flu even though the virus has not been spread by hogs and pork.
Dankvert said that despite the Russian bans, U.S. meat imports had suffered little damage.
First Russian AWACS plane put in service with Indian air force
NEW DELHI, May 28 (RIA Novosti) - The first Russian-made A-50 Mainstay AWACS aircraft developed on the basis of Il-76MD military transport plane officially entered service on Thursday with the Indian Air Force (IAF).
India ordered three A-50EI variants fitted with Israeli-made Phalcon radar systems in 2001. The first aircraft was scheduled to arrive in 2007-08 but has been subject to delays.
"Today we became one of the few chosen countries to possess this kind of plane [AWACS]," IAF commander, Air Chief Marshal Fali Homi Major said at the commissioning ceremony.
According to some sources, the second of the A-50EI planes is expected to be in India by early 2010, with the third by the end of next year.
The aircraft will be deployed in Agra with the IAF's 50 Squadron under the Allahabad-based Central Air Command but will be assigned tasks directly by Air Headquarters.
In many aspects, the A-50 is comparable to the U.S. Air Force's E-3 Sentry. It is fitted with an aerial refueling system and electronic warfare equipment, and can detect targets up to 400 km (250 miles) away.
The existing Russian-Indian military-technical cooperation program until 2010 includes up to 200 projects worth about $18 billion.
However, bilateral military-technical ties have been overshadowed by recent spats over problems with delivery delays, supplies of spare parts, poor sales support, steep maintenance costs and technology transfer issues.
For instance, India dropped Russia from a $1-bln tender to supply six aerial tankers for the Indian Air Force due to poor after-sales maintenance services and is most likely to look for another manufacturer for future AWACS orders to satisfy its needs for early warning aircraft.
India has recently purchased eight Boeing P-81 long-range maritime reconnaissance (LRMR) aircraft from the United States, and signed a deal with Brazil to jointly integrate domestically developed AWACS systems into three Brazilian-made Embraer-145 aircraft to be later commissioned with the Indian Air Force.
Russia to give military helicopters and other weapons systems to Sri lanka
27 May 2009 06:34 pm
Walter Jayawardhana , SINHALAYA News Agency, Colombo, Sri Lanka : Jane’s Defence Weekly quoted Defence Secretary Gotabhaya Rajapaksa as saying that Russia has agreed to supply military transport helicopters and other weapons systems to Sri Lanka.
The London based magazine in its May 27 issue said that a Ministry of Defence spokesman confirmed to the magazine that the deal had been agreed although he was unable to elaborate on the specific equipment involved.
Jane’s said , as “the war against Liberation Tigers of Tamil Eelam entered its final stages , Moscow had moved to strengthen its ties with Colombo repeatedly voicing its support for the military campaign.”
The magazine said with the money provided in the budget for defence the government, “may be able to devote more funds to procurement programmes now that the active operations are over.”
On May 26 the Presidential office said in a statement that Russian President Dimitri Medvedv told Sri Lankan President over telephone that Russia considered Sri Lanka an old friend and ally and looked forward to continue the warm relations between the two countries.
Under these relations Russia also promised to continue to assist Sri Lanka for the peace and reconstruction of the country. Russia is also expected to help the large number of Internally Displaced Persons.
President Mahinda Rajapaksa also thanked Russia for the considerable support the country gave to Sri Lanka at the UN Security Council and at other UN bodies.
In the telephone conversation initiated by the Russian President it was also revealed that the Foreign Minister of the country Sergey Lavrov will visit Colombo in October this year.
In the aftermath of the war Sri Lanka’s Army Commander General Sarath Fonseka said, the country will increase the number serving in the army to 300,000 by recruiting 100,000 new recruits and make sure that no new insurgency could be started with a terrorist movement like the LTTE. He even said that investigations will start in to the probable sleeper cells of the LTTE established all over the country like suicide bombers hiding in Colombo. (EOM)
ng.ru
Planned military reforms in Russia have been revised. Airborne troop numbers will be strengthened and not cut as was first planned, the daily writes.
EnergoAtom talking to Rosatom, AECL, KEPCO about reactor design
Journal Staff Report
|KIEV, May 27 – EnergoAtom has started consultations with Russia's Rosatom, Canada's Atomic Energy of Canada Limited (AECL) and |
|South Korea's Korea Electric Power Corporation (KEPCO) on the possible use of their designs of reactors for the creation of a |
|project to build them in Ukraine. |
| |
|EnergoAtom President Yuriy Nedashkovsky announced the start of the talks at the Atomexpo-2009 international forum on Tuesday. |
Russia to open chemical weapons destruction plant
By JIM HEINTZ – 15 hours ago
MOSCOW (AP) — The bland buildings in western Siberia contain shelf after shelf of nerve-gas shells — some 2 million in all.
Each could kill tens of thousands of people, if exploded in a tightly packed area. Many are small enough to be spirited away in a briefcase.
Since the 1991 collapse of the Soviet Union left Russia's military underfunded and disorganized, the arsenal in Shchuchye, about 1,600 kilometers (1,000 miles) east of Moscow, has been a top security concern. After years of delays and disputes, a vast facility to destroy the weapons is to formally open there on Friday.
The plant, the size of a small town, was built with a U.S. contribution of more than $1 billion and is seen as a milestone in cooperation on disarmament between Washington and Moscow.
"It's a signal event in terms of arms control," U.S. Senator Richard Lugar told The Associated Press in a telephone interview.
Lugar and former Sen. Sam Nunn authored the Cooperative Threat Reduction program of 1992 under which the U.S. has poured money into eliminating much of the former Soviet Union's weapons of mass destruction and improving security for the stockpiles that remain.
Russia, as a signatory of the international Chemical Weapons Convention, is obliged to eliminate its vast stores of Class I weapons — chemicals that have no use other than in arms. Moscow already has destroyed about 30 percent of its stockpile, according to the Russian Munitions Agency.
But the Shchuchye facility significantly boosts destruction capacity. Russian officials claim it will allow the country to meet its treaty obligations of destroying all chemical weapons by 2012, although Lugar said that goal probably won't be met.
Nonetheless, the opening — which follows preliminary destruction work that began in March — is significant because of the dangers posed by the weapons. Lugar said some of the shells at Shchuchye could kill 80,000 people if deployed in a stadium.
"This is just deadly stuff, in such huge amounts, and obviously, because of the size of it, portable. The dangers to the international community have been evident," he said.
The opening of the plant comes at a symbolically important time, as Russia and the United States take initial steps toward working out a successor to the START nuclear arms reduction treaty that expires at the end of this year.
The opening also comes as both countries tentatively try to repair relations that deteriorated under the presidencies of George Bush and Vladimir Putin.
But while the project can be seen as a model of long-term cooperation, it also underlines the frequent difficulties that the United States runs into with Russia.
Delays in opening the plant came as disagreements arose over the type of munitions to be destroyed and how to eliminate them. The U.S. General Accounting Office says the hunt for a Russian subcontractor to install equipment at a reasonable cost was alone responsible for pushing the project back a year.
The weapons to be destroyed at Shchuchye contain in total about 5,460 metric tons (6,000 short tons) of nerve agent including sarin and VX; in all, that's about 14 percent of the chemical weapons that Russia is committed to destroy. The initial destruction capacity is roughly 850 metric tons (935 short tons) a year, but the figure is expected to double when a second building at the complex comes into operation at the end of they year.
The welded shells are to be drilled, then drained of their deadly agents. The chemicals will be neutralized then turned into bitumen salt mass, a solid waste that is considered mildly dangerous. That waste is to be stored in drums in concrete-lined bunkers situated above the groundwater level.
The complex, which sprawls across some 250 acres (100 acres) is about 16 kilometers (10 miles) from the buildings where the shells are stored. The weapons will be transported there on a specially built railroad.
Douglas Birch in Moscow contributed to this report
Russia blackmailed UN on Abkhazia, Georgia says
Today, 12:02 PM
The latest United Nations report on Abkhazia has angered Georgia enough to claim that Russia blackmailed UN Secretary General Ban Ki-moon into regarding the Caucasus state as an independent country.
Ban, on May 18, outlined the present security situation and recommendations for keeping the fragile peace between the former Soviet republic of Georgia and its two breakaway regions, Abkhazia and South Ossetia, Reuters reports Wednesday.
However, in a departure from past practice of referring to Abkhazia as part of Georgia, there was no such formulation in Ban's latest report to the UN Security Council. Abkhazia objects to any implication it is under Tbilisi's control, a position Russia has vehemently defended.
While the dispute is over the wording of a UN report, it highlights the intense animosity that remains between NATO-aspirant Georgia and its former master Russia, which invaded its southern neighbor during a war last August.
"It is very unfortunate (and) alarming that the (UN) Secretariat submitted to the Russian blackmail," Georgia's UN Ambassador, Alexander Lomaia, told Reuters.
Ban's report proposed a compromise that has allowed Russia and the two regions to rejoin talks in Geneva over security arrangements. Representatives of Russia and South Ossetia had walked out of those talks in sympathy with Abkhazia.
"We are troubled by the fact that the last round (of) Geneva talks were used by Russia to manipulate ... both the title and content of the report," Lomaia said.
Tbilisi sees this as an erosion of its sovereignty and territorial integrity. Only Russia and Nicaragua have recognized the sovereignty of Abkhazia and South Ossetia, which declared independence last year.
Georgia and Russia's brief war was fought over the breakaway region South Ossetia. It drew intense interest from Western states as the fighting put in jeopardy a key transit route for Caspian oil and gas, which bypasses Russia.
The UN mission of 129 military observers and 16 police advisors in Abkhazia expires on June 15. The Security Council must renew its mandate with a fresh resolution or pull out.
"They told him (Ban) that we (Russia) will veto the resolution," Lomaia told Reuters, citing a source in Ban's office. He declined to identify the source.
Russia rejected Lomaia's assertions. "We dismiss these false accusations that do not have anything to do with the real state of things," a spokesman for the Russian mission said.
Ban's office, in response to a question from Reuters, cited the UN charter that states it cannot seek or receive instructions from any government.
"It was the Secretary-General's own decision to rename the report," a UN official said. "His concern was to find a neutral title that would be acceptable or least offensive to the parties involved."
Russia’s Federal Security Service bustling in Abkhazia
27.05.2009
The Russian Border Guard Service, which is under the Federal Security Service subordination, said it would complete structural formation of its unit in Abkhazia by the end of this month, online paper Civil.Ge reports.
Two departments will be created – one in charge of land border with headquarters in the Gali district and another one in charge of maritime perimeter with headquarters in Gagra. Total of twenty border crossing points will operate, according to the statement released by the Russian Border Guard Service unit in charge of Abkhazia, Apsnipress news agency reported. As soon as the process of structural arrangement is over the Russian border guards will start performing duties at the border with Georgia alongside with the Abkhaz forces, according to the statement.
Meanwhile, about 800 Russian border guards are taking positions on the 160 kilometer Abkhaz “state border” with Georgia in accordance to the April 30 treaty with Russia, Civil.Ge notes.
The Russian media sources reported that 33 medics from the Russian Federal Security Service’s Central Hospital arrived in Abkhazia on May 17 “to provide medical service to the local population of Gali, Ochamchire and Tkvarcheli districts.” Another group of Russian medics are expected to arrive in Abkhazia on May 23, according to the same report, Civil. Ge adds.
Russia wants to prevent interference of non-Caspian states in ensuring border security in region
27.05.2009
Russia will prevent interference of non-Caspian states in ensuring the border security in the Caspian Sea, despite such attempts by some states, online paper Today.Az reports.
The online media refers to remarks of Vladimir Ulyanov, first deputy chief of department of international relations of the Russian Federal Security Service (FSB), who spoke in Moscow, as reported by Interfax-Azerbaijan news agency. "We have noticed the intention of the non-Caspian states to interfere in the process of forming a system of border security in the Caspian Sea. This will not happen." Ulyanov did not specify the countries that demonstrate such intentions.
The Federal Security Service official reminded that a decision to ensure the border security in the Caspian Sea was adopted by the leaders of the Caspian littoral states (Russia, Azerbaijan, Iran, Kazakhstan and Turkmenistan) in Tehran. The security system must be established by the end of 2009, Today.Az adds
Interfax-Azerbaijan says the meeting of the Russian FSB Border Guard administration with journalists was held in Moscow and was devoted to the upcoming celebration of the Day of Border Guard. The Decree of the Board of the People's Commissars to establish the RSFSR Border Guard was adopted on May 28 of 1918.
Four militants killed in operation in south Russia's Nalchik
NALCHIK, May 28 (RIA Novosti) - Four militants, holed up in an apartment, were killed during a special operation in Nalchik, capital of Russia's southern republic of Kabardino-Balkaria, on Thursday, a police official said citing preliminary reports.
"The number of gunmen and their identities will be established when the apartment has been searched," the source said adding that police were searching the premises for explosives.
At least four gunmen were earlier reported to have barricaded themselves inside an apartment after offering armed resistance to police who tried to arrest them.
In 2005, militants believed to be linked to Chechnya's separatists staged an assault on Nalchik targeting the city's main army, police and security bodies. Some 140 people, both militants and security officers, were killed in the attacks, official reports said.
Police maintain Chechen-Ingush forest hunt for militants
28 May, 2009, 09:54
Police in Russia's Republics of Chechnya and Ingushetia are continuing with their efforts to flush out the remaining militants hiding in forests along the Republics' border.
After eleven days, the President of Chechnya says he's determined to press on with the operation until the area is completely safe. However, Chechen policemen themselves have been wary of hunting for the militants in the forest, where the fugitives have the advantage.
“We went to their very nest, to the place where no one has ever been able to get,” said Chechen President Ramzan Kadyrov.
“After ten days of special operations 21 evil-doers were killed. Among them were Georgians, Azeris, Ingush, and Chechens. But bandits don’t have nationalities,” Kadyrov added.
A month after the ten-year long counter-terrorist operation was lifted in Chechnya a suicide bomb attack killed four people in the centre of Chechen capital Grozny. This prompted a joint anti-terrorist mission on the border between Chechnya and Ingushetia.
As well as the police, the two interior ministers are working out a joint plan of attack and they're confident of success.
“We will cut the ground from under them. The bandits will have no rest either in Chechnya or in Ingushetia while we are after them,” promised Chechen Interior Minister Ruslan Alkhanov.
Officials say the militant’s leader Doku Umarov, one of the most wanted terrorists in Russia, managed to flee, though the pursuit continues regardless.
Umarov is believed to be behind the Beslan school siege in 2004 that claimed more than 300 lives. Police say they know his whereabouts and will catch him soon.
The gunmen are reportedly more active on the Ingush side of the border. The Interior Ministry says that they have found nearly 30 well-equipped military bases belonging to the militants over the last month. Security forces are searching the forest around the clock, but no one knows when the mission will be accomplished, which means the Chechen police are dealing with a very well-organized enemy.
Dagestanis Seize Power Stations
28 May 2009 The Moscow Times
For the second time this week, a group of angry citizens seized a power station Wednesday in Dagestan after their electricity was shut off because of unpaid municipal debts.
Electricity to the Dagestani capital, Makhachkala, and its suburbs was cut by 20 percent last Thursday because of the city's 998 million ruble ($32 million) debt, the Interregional Distribution Grid Company, which supplies electricity in the North Caucasus, said in a statement.
About 50 people broke into the power station in the village of Uchkhoz on Wednesday morning, the Dagestani Power Supply Company said in a statement, RIA-Novosti reported.
The people kicked out an employee on duty at the station, switched the distribution feeders back on and surrounded the station to protest the electricity shortages, the statement said.
It was the second such incident this week in Dagestan.
At about 1:30 p.m. Tuesday, a group of 60 to 70 people, most of them women, stormed a power substation in Sulak, switched the distribution feeders back on and secured the station with their own locks, the Interregional Distribution Grid Company said in a statement, RIA-Novosti reported.
Law enforcement officers and local officials looked on silently as the group switched the power back on, RIA-Novosti said.
On Tuesday, Makhachkala residents cordoned off several streets in the city to protest electricity shortages, Ekho Moskvy radio reported.
Full supply to Makhachkala and its suburbs will not be resumed until the city pays its debt, the Interregional Distribution Grid Company said.
Ultranationalist race-hate leader awaits verdict
28 May, 2009, 08:47
A Moscow court is due to announce its verdict on the activities of nationalist leader Aleksandr Belov who is accused of inciting racial hatred which led to ethnic violence in Russia's Karelia region in 2006.
The former leader of the nationalist Movement Against Illegal Immigration (known by the acronym DPNI in Russian) Aleksandr Potkin, better known by his alias Aleksandr Belov, is the face of Russia's ultra right.
Today he faces over a year behind bars if found guilty of charges of incitement of ethnic or racial hatred. The charges are based on statements Belov made in November 2007 at a march to celebrate Russia's Day of National Unity.
It led to his resignation as leader of the DPNI, The 33-year-old says he's innocent, but migrants’ rights activists disagree.
“They committed a crime. The main thing to mention is of course the Kondopoga riots. We were the first to announce that it was Aleksandr Belov-Potkin who gathered his followers from all over Russia inciting them to come to Kondopoga and attack the immigrants,” said activist Kanildzan Kalandarov.
Founded in 2002, the DPNI quickly became the leading nationalist movement. It survived while other ultranationalist parties had been banned or dissolved.
Belov himself is famous for his actions at the Kondopoga race riots in September 2006. The unrest started after a brawl in a restaurant between Chechens and Slavic nationals that left three Russians dead.
The week-long interethnic conflict in the small northern city left a deep and lasting scar across the country. Aleksandr Belov was accused of being a key participant in the turmoil.
The issue of racial hatred remains a major problem on the streets of Russia.
Umed, a migrant from Tajikistan, was attacked when he was walking with his wife and son.
“Unfortunately cases like mine do happen in Russia. People get attacked, injured and even murdered sometimes. I think more should be done to protect innocent people,” he said.
Russian gas pipeline explodes northwest of Moscow
Thu May 28, 2009 3:18am EDT
MOSCOW, May 28 (Reuters) - A trunk pipeline carrying natural gas exploded in the Russian region of Tver on Thursday, the Emergencies Ministry said, the latest in a series of pipe blasts testifying to Russia's antiquated energy infrastructure.
The explosion on the Torzhok-Ukhta-2 trunk pipeline, which provides gas to Russia's northern regions, occured at around 0935 Moscow time (0535 GMT). No injuries have been reported, a ministry spokesman said.
"We have extinguished the resulting fire. Efforts to replace the damaged section of the pipeline are now under way," the spokesman said.
Russian gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz), which controls the trunk pipelines, declined to comment on the incident.
On May 10, a gas pipe explosion in Moscow sent flames 100 metres into the air and set buildings and cars ablaze, highlighting the need for Russia to renew infrastructure largely inherited from the Soviet Union. (Reporting by Lyudmila Danilova and Tanya Mosolova, writing by Simon Shuster; editing by James Jukwey)
Blast ruptures Moscow gas link
News wires
Firefighters have doused a blaze caused by an explosion on a gas trunkline to the north of Moscow, Russia's Emergencies Ministry said.
The explosion on the Torzhok-Ukhta-2 trunk pipeline, which provides gas to Russia's northern regions, occured at around 0535 GMT. No injuries have been reported, a ministry spokesman said.
"We have extinguished the resulting fire. Efforts to replace the damaged section of the pipeline are now under way," he told Reuters.
Russian gas giant Gazprom, which operates the country's gas links, declined to comment.
The extent of the damage to the pipeline is not yet known, nor the extent of the disruption the incident may have on Gazprom's domestic gas deliveries.
Thursday, 28 May, 2009, 07:42 GMT | last updated: Thursday, 28 May, 2009, 07:42 GMT
Most corrupt institutions in Russia named and shamed
bne
May 28, 2009
If there was any doubt that Russian president Dmitry Medvedev is serious about his low key corruption campaign then those doubts must be dispelled now after the supreme court released a list of Russia's most corrupt institutions and policemen were told they will have to declare their incomes this week.
Supreme Court Chairman Vyacheslav Lebedev named the "most corrupt" institutions in Russia in a speech to the upper house of parliament on Wednesday May 27. He named the following as the worst offenders: Russia's Interior Ministry, Healthcare Ministry, Education Ministry and tax inspectorate as being the most corrupt amongst Russia's government institutions, reports Interfax.
"Bribery and corruption-related cases are widespread in our country. Persons working in the system of the Interior Ministry, the Healthcare Ministry, the Education Ministry, the tax inspectorate and Rospozharnadzor [the firefighting supervision service] receive the greatest number of bribes," Lebedev said.
Most of the bribes are small, but 7% of them are related to large bribes and bribes received by an organized group, Lebedev said.
Kremlin Takes Small Step to Ease NGO Law
28 May 2009 By Nikolaus von Twickel / The Moscow Times
Russia's stifling NGO law has been labeled a hallmark of former President Vladimir Putin's heavy-handed approach to civil liberties. Likewise, President Dmitry Medvedev's recent promise to review the law has been praised as a sign of his liberalism.
But when the first details of that reform emerged this week, nongovernmental organizations said Medvedev's liberalization turned out to be top-down, leaving them with little extra room to maneuver.
Medvedev promised to enact changes after listening to NGO leaders' complaints at a Kremlin meeting last month, and he set up a nine-member working group to chart the reforms.
The working group -- composed of representatives of the presidential administration, the Justice Ministry, the State Duma, the Federation Council and civil society -- has agreed on two key changes: to ease the registration process and to simplify accounting requirements, said Yury Dzhibladze, a member of the group.
Dzhibladze, director of the Center for the Development of Democracy and Human Rights, told The Moscow Times that the results were far from what he had hoped to achieve but that they were a "reasonable compromise" given constraints set by Medvedev.
Medvedev on May 8 ordered the group to draw up legislation by this Friday so the Duma could consider it before adjourning for its summer recess.
"The deadline, of course, makes work difficult, because agreeing with the other side takes time," Dzhibladze said.
The proposed changes are meager and won't make life much easier for NGOs, said Jens Siegert, head of the Moscow branch of the Boell Foundation, a political think tank affiliated with Germany's Green party.
The only really positive change would affect the registration process, he said. Under the proposal, registrations and re-registrations will no longer be canceled if deemed incomplete or incorrect but just suspended until missing or corrected documents are handed in.
"Until now, applications were rejected for just one wrong comma or too many blank spaces between words," Siegert said in e-mailed comments.
NGO representatives have also expressed bewilderment at Medvedev's decision to name Vladislav Surkov, his first deputy chief of staff, as the head of the working group. Surkov, who held the same post in Putin's Kremlin, is believed to be the man behind the tough NGO law that is now under scrutiny.
"This made me wonder how difficult [the review] would be, given that Surkov was essentially the key person responsible for policy changes throughout Putin's presidency," Dzhibladze said.
Surkov has established the reputation of being the Kremlin's top ideologue and chief architect of the concept of "sovereign democracy," which is widely seen in the West as a set of measures that undermine democracy.
Surkov's office did not respond to an interview request sent by fax Tuesday.
But Alexei Mukhin, an analyst with the Center for Political Information, said the mere fact that Surkov heads the working group does not rule out the possibility that the law will be liberalized. "Surkov is an opportunist who will consider the interests of both presidents," he said.
Mukhin said Medvedev's order to review the law might be a reflection of his liberal slant or might just reflect pragmatic politics.
The tough NGO law was passed amid government fears that NGOs might be used to mount a serious challenge to the ruling regime in the 2007 Duma elections and the presidential vote in 2008. Fueling those worries was the fact that NGOs played a key role in peacefully toppling the governments of Georgia in 2003 and Ukraine in 2004.
The next Duma elections are scheduled for December 2011.
"Given its current levels of control, the government takes little risk in demonstrating some liberalism," Mukhin said.
The main point, Mukhin said, is that any liberal changes enacted today can be taken away tomorrow.
Sergei Markov, a Duma deputy with United Russia and a long-standing advocate of the NGO law, said the review of the law had nothing to do with a policy change and had been planned since the law's inception in 2006.
"It was clear from the beginning that we would look at how the law works and then improve it," Markov said in a telephone interview. "Setting up that working group was decided when the law was enacted."
He conceded that reform was necessary to remove bureaucratic burdens for NGOs but was adamant that this was not a sign that Medvedev is more liberal than Putin. "It is a sign of both Dmitry Medvedev's and Vladimir Putin's liberalism," he said.
NGOs said the proposed changes should only be a first step. "They should not stop with the working group," said Mathew Schaaf, an NGO expert with the Moscow office of Human Rights Watch.
He said that next on the list should be the powers of auditors who regularly inspect NGOs on their compliance to the law. "They are allowed to demand practically any document. These are really broad and invasive powers that need to be addressed," he said.
The Boell Foundation's Siegert said that in order to make the law really liberal, the vaguely defined reasons for refusing to register or for closing an organization needed to be changed.
He said, though, that he had little hope that this would be addressed. "Definitions like 'Endangering the sovereignty and national character of Russia' are probably too convenient ... to be discarded," Siegert said.
Russia introduces mandatory psychological testing for couples wanting to adopt
Today, 12:37 PM
Russia’s Ministry of Education and Science has announced that all Russian citizens who want to become a guardians or adoptive parents will have to pass psychological tests and undertake special educational programs, Russian website Gazeta.ru reports.
Russian Prime Minister Vladimir Putin signed an agreement with Russian government concerning issues of adoption and custody of children under 14 on May 18.
“Before the agreement was signed, these psychological tests and pedagogic programs for foster parents were voluntary. Now these inspections will be mandatory for all Russian citizens.” spokeswoman for the ministry Alina Levitskaya said.
“The number of adopted children returned to orphanages rises every year. We are trying to do our best to stop this increase.” Alina Levitskaya added.
Siberian miners go on strike over wage arrears
KRASNOYARSK, May 28 (RIA Novosti) - Thirty-five miners in southern Siberia went on strike on Thursday to demand the payment of some $657,000 in wage arrears, a local trade union head said.
The owners of the Yenisseiskaya mine in the Russian republic of Khakassia are planning to suspend operations at the mine and dismiss some 190 workers.
"The strikers are demanding the payment of wages for April and May... Total arrears for wages and benefits stand at some 20.5 million rubles," Alexander Atyukov said.
He said trade unionists had met earlier on Thursday with the republic's prime minister, Viktor Zimin, who "has pledged assistance."
Atyukov added that the owners of the mine had already promised to pay arrears of 3.9 million rubles ($125,000) for April.
The mine's management committee has yet to comment.
Trade unions losing their ground in Russia – poll
27 May, 06:02 PM
60 percent of Russians from 140 towns and villages in 42 regions throughout the country do not consider trade unions to be of any real influence in Russia, the most recent opinion poll conducted by the All-Russia Opinion Research Center (VTSIOM) has revealed, Russian website Regions.ru reports. 64 percent out of them are non-trade union members.
Assessing the role trade unions play in their lives, only 17 percent of respondents (34 percent out of them being trade union members) describe it as positive rather than negative, with their number having grown from 12 to 17 percent for the past 15 years.
Asked about who they think is safeguarding their professional interests and protects their rights at work, 43 percent of Russian respondents said “no one”, with only 8 percent believing that the trade union organization is taking care of their problems.
Discussing the most favored pattern of relationship between employees and employers, 39 percent of those polled preferred a paternalistic pattern of such a relationship (with the number having grown by 4% throughout this year). The second popular pattern of relationship among the polled Russians appears to be a libertarian model chosen by 26 percent of employees who prefer settling disputable issues directly with their employers. Another 14 percent of respondents preferred a less popular arrangement by which the leading role belongs to the trade unions; and finally, only 10 percent of respondents preferred a social-liberal pattern, with an employer playing a decisive role in conflict settlements, with the state providing minimal guarantees to employees.
19 percent of those polled named their company’s administration as the main advocate, while 14 percent think their rights are protected by their immediate chiefs; 6 percent allotted this role to the council of their labor collective; 3 percent indicated a specially chosen work force spokesperson and labor inspection, and another 3 percent - state technical supervision and public health authorities.
It is worth noting that trade union members have outnumbered their non-trade union counterparts in relying on the trade unions and their company’s administration for their rights protection - 22 against 8 percent, and 21 against 18 percent respectively.
Like in previous years, 56 percent of Russians have not resorted to any means to protect their rights. Out of those who have, 19 percent appealed to their immediate authorities at work, 6 percent changed jobs, and only 5 percent turned to the trade unions for help, or – another 5 percent – filed court complaints, or used personal means – also 5 percent.
Only 1 percent of the Russian population, respectively, took part in mass protests, rallies or strikes, or resorted to forceful means of solving their labor conflicts and bribes.
44 percent of Russians having filed any kind of appeals to protection their rights, are reported to have succeeded, as a rule. It is noteworthy, that the success rate is even higher among trade union members, reaching 55 percent.
25 percent of complainants, though, have failed to achieve a positive result, with 27 percent among them being non-trade union members.
As to the main reason for not trying to do anything to fight for their rights, 54 percent of respondents have named lack of the need for any action, with 66 percent our of them belonging to trade unions.
22 percent of respondents believe such attempts are futile (23 percent out of them non-trade union members).
Only 5 percent of respondents mentioned fear of worsening their situation at work as the reason for their non- action. 4 percent of respondents admitted they did not know where to file their complaints to.
The opinion poll conducted by VTSIOM on 16-17 May 2009 embraced 140 towns and villages in 42 regions throughout the country, with over 1600 respondents taking part. The statistical error does not exceed 3.4 percent, Russian website Regions.ru reports.
National Economic Trends
Russia's international reserves surge to $402 bln as of May 25
MOSCOW, May 28 (RIA Novosti) - Russia's international reserves, which include foreign exchange and gold, have grown to $402 billion as of May 25, the Central Bank chief said on Thursday.
Sergei Ignatyev told an international banking forum in St. Petersburg that the country's monetary regulator had acquired $30 billion dollars on the domestic market between February 1 and May 25, while international reserves grew from $387 billion to $402 billion over the period.
"Such a small increase in reserves is explained by a considerable reduction in the balances of banks' foreign currency-denominated accounts with the Central Bank," Ignatyev said.
International reserves are highly liquid financial assets managed by the Central Bank of Russia. Apart from foreign currency and gold, Russia's international reserves are also composed of special drawing rights (SDRs), a reserve position in the International Monetary Fund (IMF) and other assets.
The global financial crisis has forced Russia, which receives a large part of its revenues from oil exports, to gradually devalue the ruble amid capital flight and a fall in global oil prices, which declined from their peak of $147 per barrel in July 2008 to around $40 per barrel, before climbing back in recent weeks to above $60.
Inflation likely softened to 12.5% YoY in May
VTB Capital
May 28, 2009
The CPI increased 0.2% WoW in the week ending 25 May. Rosstat's preliminary estimate for May inflation was 0.7% MoM, similar to April. President Dmitry Medvedev mentioned yesterday that inflation in 2009 might be lower than officially expected (the current official forecast is 13% YoY).
The Rosstat estimate came out lower than the latest CBR guidance of 0.8% MoM and the CBR's initial expectations of 1% MoM. We calculate that 0.7% MoM would translate into 12.5% YoY, implying a further moderation in inflation in May (from 13.2% YoY in April).
Ctrl banker sees refinancing rate cut amid falling inflation
ST. PETERSBURG, May 28 (Prime-Tass) -- The rate of consumer price inflation in Russia is expected to fall later this year, thus allowing the Central Bank of Russia (CBR) to further cut its refinancing rate, CBR Chairman Sergei Ignatyev said at a banking conference Thursday.
"Inflation is very likely to keep falling in the upcoming months," he said. "This will allow the central bank to keep cutting the refinancing rate, which will subsequently lead to lower rates on bank loans."
Earlier this year, the CBR cut its refinancing rate from 13% to 12.5% and then to 12%.
Consumer price inflation in Russia amounted to 6.8% in the period from January 1 through Monday, the Federal State Statistics Service said earlier.
Russia to Cut Rates Further as Inflation Slows, Ignatiev Says
By Alex Nicholson
May 28 (Bloomberg) -- Russia plans to cut interest rates further if inflation continues to slow as expected, increasing credit to an economy contracting for the first time in a decade, central bank Chairman Sergey Ignatiev said.
“It is very likely that inflation will slow in the coming months,” Ignatiev said at a conference in St. Petersburg today. “This will allow the central bank to reduce the refinancing rate further, which will reduce interest charged by commercial banks on loans.”
Bank Rossii last month cut its key refinancing and repurchase rates for the first time since 2007 and lowered them again May 13 as the pace of consumer-price growth ebbed. The refinancing rate, seen as the limit for borrowing, now stands at 12 percent while the repurchase rate charged on central bank loans is at 11 percent.
Russia’s inflation rate has averaged more than 14 percent a year since the 1998 sovereign default on $40 billion of domestic debt. The rate for the year through May 25 fell to 6.8 percent from 7.5 percent in the same period last year, the Federal Statistics Service said yesterday.
Ignatiev’s decision on April 23 to start reducing the cost of money marked the end of a series of increases that were designed to arrest a 30 percent drop in the ruble after August that was spurred by falling oil prices and capital flight to less risky markets.
‘Vicious Circle’
The economy of world’s largest energy supplier is contracting for the first since 1998, when oil prices dropped below $10 a barrel. The economy shrank 9.5 percent in the first quarter after averaging growth of about 7 percent since 1999. Gross domestic product may decline as much as 8 percent, Economy Minister Elvira Nabiullina said in an interview last week.
At the same time, inflation may slow this year to 11 percent, beating the official target, 13 percent, “for the first time in our new history” Alexei Ulyukayev, Ignatiev’s deputy, said in an interview this month.
Cheaper loans will help both companies and individuals refinance debt as the amount of bad loans rise. Non-performing loans rose to 4 percent of outstanding credit on May 1 from 1 percent on Sept. 1, according to the central bank.
“We are paying very close attention to this,” Ignatiev said. “The situation is complicated, but far from critical,” he said, adding that banks have reacted “adequately” by increasing capital ratios to 18 percent from 14.5 percent in eight months.
“Of course the problem of bad debts is not just a problem of banking sector but the real sector as well,” Ignatiev said. “A vicious circle has formed: Banks don’t lend to the real economy because borrowers are in a poor financial state.”
To contact the reporter on this story: Alexander Nicholson in Moscow at anicholson6@
Last Updated: May 28, 2009 02:59 EDT
| |
Past-due debt of 13% at end 2009 not to create systemic banking sectorthreat - CB (Part 2)
ST. PETERSBURG. May 28 (Interfax) - The Russian banking sector
should be able to withstand an increase in past-due debt levels to 13%
by the end of the year, CB First Deputy Chairman Gennady Melikian told a
banking forum in St Petersburg.
"We think past-due of 13% on loans to the non-financial sector by
the end of the year would not pose a systemic threat to the banking
sector," Melikian said.
But Melikian said the CB was not expecting past-due to rise to more
than 10% by the end of the year. "We know the figures well enough, and I
can't see anything dreadful just yet," he said.
Russian Central Bank Paying ‘Very Close Attention’ to Bad Loans
By Alexander Nicholson
May 28 (Bloomberg) -- Russia’s central bank is paying “very close attention” to the increasing amount of non- performing loans at commercial banks, Bank Rossii Chairman Sergei Ignatiev said at a conference in St. Petersburg today.
To contact the reporter on this story: Alexander Nicholson in Moscow at anicholson6@
Last Updated: May 28, 2009 01:56 EDT
Russian c.bank says to keep cutting rates
Reuters, Thursday May 28 2009
* Cbank to continue cutting rates as inflation slows
* Volatility supports switch to free-float at some point
* Banking sector bad loans still under control
By Dmitry Sergeyev and Oksana Kobzeva
ST PETERSBURG, Russia, May 28 (Reuters) - Russia's central bank will continue cutting interest rates as inflationary pressure eases, after lowering the main refinancing rate to 12 percent from 13 since the end of April, its head said on Thursday.
"It is very likely that inflation will slow further in the next months of this year which will allow the central bank to further cut the refinancing rate and other rates," Sergei Ignatyev told a banking congress.
Iganatyev also said the regulator had bought over $30 billion on the forex market since the beginning of February to curb the appreciation of the rouble amid rising oil prices.
"We are keeping the upper range of the dual currency basket at 41 rouble ... The volatility of the currency rate has risen significantly. This is in line with our target to switch to a rouble free-float and inflation targeting," Ignatyev said.
The central bank controls the rouble rate through interventions and it has widened the corridor sharply late last year and at the beginning of this year to allow the rouble to weaken to adjust it to lower oil prices.
In January, the currency briefly touched the upper end of the corridor of 41 per basket , made of 0.55 dollars and 0.45 euro, but then began to appreciate after a recovery in oil prices.
It traded at 36.72 to the basket on Thursday.
Ignatyev also said the situation with non-performing loans was not at a stage when it could lead to a collapse of Russia's entire banking system.
"The situation with bad loans is difficult but not critical. The share of non-performing loans in banks' credit portfolio has risen to four percent as of May 1 from one percent as of September 1," he said.
"Despite (bad loan) provisions the banking sector capital adequacy remain on a pretty high level -- it was 14.5 percent as of the September 1 and it is 18 percent as of May 1, according to preliminary estimates," he added. (Reporting by Dmitry Sergeyev, writing by Dmitry Zhdannikov, editing by Mike Peacock)
UPDATE 1-Russia dismisses radio report of currency basket change
05.27.09, 01:11 PM EDT
By Oksana Kobzeva
ST PETERSBURG, Russia, May 27 (Reuters) - The board of Russia's central bank has not discussed changes to its euro/dollar currency basket, a senior official said on Wednesday, dismissing a report that such a move was planned.
Moscow's Business FM radio station quoted an unnamed source in the central bank as saying the share of euros in the basket, which is used to guide rouble exchange rate policy, would be increased to 55 percent in October and 60 percent in December from the current 45 percent.
'The central bank's management is unaware of it. The board of directors has not discussed such an issue,' First Deputy Chairman of the central bank Gennady Melikyan, responsible for the banking supervision, told a news conference.
Russia, which holds the world's third largest gold and forex reserves, has expressed concerns over the dollar's role as the world's top reserve currency, and pushed for a creation of a new global currency instead.
However, the central bank has said the basket roughly corresponds to the structure of Russia's foreign trade as well as the composition of the reserves.
Business FM has many listeners among Russian market professionals and officials, most of whom drive to work in the morning. The report quickly spread among traders but has failed to move the market.
'When I first heard about it, I immediately called my superiors -- no-one was aware of it,' Melikyan said.
First Deputy Chairman Alexei Ulyukayev, who oversees exchange rate policy at the central bank, also told Interfax news agency the central bank did not plan to change the currency basket structure.
SOONER RATHER THAN LATER
The report did not say what the central bank would achieve through such a change. The central bank intervenes on the market when the basket's rate reaches a certain level.
The rouble strengthened by 30 kopecks to 36.66 to the basket on Wednesday, tracking the oil price, with the central bank staying away from the market.
Russia's central bank introduced the basket on Feb. 1, 2005. It was initially made up of 0.1 euros and 0.9 dollars. The euro's share was gradually increased to reach 0.45 euros to 0.55 dollars on Feb. 8, 2007..
The rumour follows confusion over the composition of Russia's gold and currency reserves earlier this month when the central bank's annual report prompted speculation that Russia was trying to limit its exposure to the dollar.
Ulyukayev said the speculation was a result of a misunderstanding of the central bank's calculation methodology and the dollar was still a top reserve currency with a 47 percent share compared with 41 percent euros.
The central bank plans to eventually move to an inflation targeting regime which requires a freely floating exchange rate.
'At that date, which we think is sooner rather than later, the discussion over the weighting of the rouble basket will be redundant,' said Timothy Ash, emerging markets analyst at the Royal Bank of Scotland ( RBS - news - people ).
(Reporting by Oksana Kobzeva, writing by Gleb Bryanski; Editing by Ruth Pitchford) Keywords: RUSSIA BASKET/
(gleb.bryanski@ ; +7 495 775 1242; Reuters Messaging: gleb.bryanski.@ )
CBR buys over $30 bln Feb 1 - May 25, reserves grow to $402 bln
MOSCOW, May 28 (Itar-Tass) - The Central Bank of Russia (CBR) in the period from February 1 to May 25 bought more than 30 billion US dollars, Russia’s gold and foreign currency reserves grew up to 402 billion US dollars, CBR chief Sergei Ignatyev said on Thursday, Prime-Tass reported.
Russian Ruble Weakens Against Dollar, Advances Versus Euro
By Denis Maternovsky
May 28 (Bloomberg) -- Russia’s ruble weakened against the dollar and rose versus the euro, leaving it little changed to the central bank’s currency basket.
The currency declined 0.2 percent to 31.3200 per dollar by 10:28 a.m. in Moscow. The ruble strengthened 0.2 percent to 43.3456 per euro, leaving it less than 0.1 percent stronger at 36.7278 against its target dollar-euro basket.
The basket, made up of about 55 percent dollars and the rest euros, is used to limit currency swings that hurt Russian exporters. The ruble remains within the 26 to 41 band the central bank pledged Jan. 22 to defend.
To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@
Last Updated: May 28, 2009 02:59 EDT
Fiscal Revenue Volatility and Refinancing Needs The Main Challenges for Russian Subnationals
Fitch Ratings
May 27 2009
Fitch Ratings says in a special report published yesterday that Russia's general economic downturn is expected to negatively affect the credit quality of local and regional governments (LRGs), although the extent of the impact will vary among LRGs.
"Fitch expects there will be more pressure on Russian LRGs' ratings in 2009, especially for regions with a high proportion of short-term liabilities and refinancing needs from large bullet repayments in 2009," says Vladimir Redkin, Director in Fitch's International Public Finance team. "The agency would expect negative rating actions to be taken on LRGs that demonstrate poor management quality and fail to adjust budget expenditure to the decline in fiscal revenue, as these factors could cause a deterioration in the overall credit quality of those issuers."
Fitch's expectations for a deterioration of LRGs' tax revenue proceeds, especially corporate income tax (CIT), which dropped by 35%, were confirmed in Q109. However, the sharp CIT decline was mitigated by a relatively stable result for personal income tax - another important revenue source - and increased transfers from the federal budget. At the same time, the present system of intergovernmental relations lacks automatic internal adjustment instruments in the face of sharp declines in tax revenue.
Nevertheless in Q109, most LRGs demonstrated a rapid expenditure adjustment, so most expenditure, except socially related subsidies and staff expenditure, has come under tight control. This has helped LRGs maintain a positive budget balance for the consolidated regional budget in Q109, and limited their debt increase. The debt burden is not a key concern for Russian subnationals at present as most LRGs practice conservative debt policies. However, the reduced liquidity in the financial markets and scarcity of financial resources may create some refinancing problems.
Fitch believes that financial aid from the federal budget and adequate management decisions are the main supporting factors which could help counterbalance potential tax revenue volatility and refinancing needs. The agency notes that long-term economic stagnation in Russia may lead to a fiscal deterioration at the national level and a potential shrinking of federal support to subnationals. These factors could lead to a further deterioration in the budget performance of LRGs, and may trigger negative rating actions for Russian regions beyond 2009.
The special report, entitled "Credit Quality of Russian Subnationals Amid Economic Crisis", is available on the agency's public website, , under International Public Finance/Special reports.
Russia Economic Monthly - watching the upturn
Troika, Russia
Thursday, May 28, 2009
_ Domestic demand bounces m o m in April. In April, investment was down 16.2% y o y, bringing the 4m09 tally to -15.8%. However, the seasonally adjusted figure indicates that the local bottom of investment activity was reached in January and that recovery took place in February April. The construction sector's revival was rather rapid in April, the y o y figure totaling -16.3%, being better than the -19.3% reported in 1Q09. Thus, in m o m terms, construction grew even faster that month than a year earlier. Retail sales were down 5.3% y o y in April (down 2.2% over 4m09). Formally, this was the worst result in y o y terms since September 1999. But again in m o m terms, seasonally adjusted retail sales stopped falling and even rebounded slightly that month. Importantly, real disposable income remained effectively unchanged y o y in February April, and we thus expect retail sales to continue recovering gradually.
_ Inflation slows radically. Between May 1 and 18, the CPI rose by only 0.4%, compared with 0.8% a year earlier. We expect the monthly figure to be below 1.0%, while inflation was at 1.4% in May 2008. YTD inflation was at 6.6% as of May 18, well below the 7.2% observed a year earlier. Inflation continues to decelerate, reflecting the recovery in the financial sphere. Annualized inflation is falling into single digits and the Central Bank is expected to reduce basic interest rates in the near future.
_ Central Bank reduces basic interest rates. In mid May, the Central Bank lowered basic interest rates by a further 0.5 pp. This is the second reduction in the past month.
The refinancing rate now stands at 12%, while the fixed repo rate is 11%. This move was prompted by decelerating inflation. We expect the Central Bank to continue lowering interest rates, which will stimulate increased lending to the real sector and encourage economic activity.
Since macroeconomic performance in April was in line with our expectations, we are not changing our forecasts of basic macroeconomic indicators for this year. For more detail see our June 2009 Russia Economic Monthly.
Evgeny Gavrilenkov
Business, Energy or Environmental regulations or discussions
Russia Suddenly Believes in Fighting Global Warming
Putin wants to increase action against the phenomenon
In late April, the Russian Federation surprised everyone by accepting the fact that humans were, in fact, responsible for global warming, and recognizing that it had to do something to prevent any further degradation of the environment. While many consider the decision a radical shift in view from Prime Minister Vladimir Putin, this nevertheless doesn't change the good news. Outlined more like a principle statement, the new doctrine also mentions some of the actions that the largest country in the world could undertake in order to address the pressing issues.
“Russia's diplomatic approach to Copenhagen was until now just one big silence. This is a totally surprising move. There were no hearings, no stakeholder discussion, no public debate – just nothing,” Kristin Jorgensen said of the recent decisions. She runs the Russian policy group, a part of the Oslo-based Environmental watchdog Bellona, Nature News reports. Until now, experts in Russia have advised the government to remain skeptical about what they've termed the “suspicious” scientific basis of global warming, and about the predictions based on them as well. However, the new doctrine is a 180-degree turn on the part of the Russians, who left many perplexed.
“The absence of an economic adaptation system to climate change leads to decrease of Gross Domestic Product by 2–5%. It is absolutely obvious that development of measures for adapting our country's economy to climate changes must involve every Ministry and Department,” Russia Minister for Environmental Resources Yuri Turtnev told on April 23rd, during a presentation for the Russian cabinet. He added that, at the moment, the country lost about 60 billion roubles (US$1.91 billion) every year in damages to floods, droughts and storms, and that the situation might grow a lot worse if the government continued to refuse to take any type of action.
According to Russian sources, Prime Minister Vladimir Putin decided to order the creation of a national plan, outlining the possible directions of development for the nation in the long run. He added that energy efficiency should be a priority, but did not promise any substantial cuts, or give any time frame for when the measures might be implemented. However, Russian bureaucracy is a real power in the state, and the initiative may suffer the same faith as others, when it gets tangled up between various agencies and groups.
Ecologists To Agree On Chukotka Unique Nature Protection
Climate change effects are significant today
VLADIVOSTOK, April 28, A group of ecologists arrived in Chukotka to agree on the region’s unique nature protection under global climate change, Chukotka Autonomous Okrug Administration press service reported to RIA PrimaMedia.
The group of experts includes Viktoria ELIAS, WWF Russia Chief Executive for Conservation, Dmitriy ZAMOLODCHIKOV, Moscow University Professor, and Olga KREVER, an expert in nature reserve management. According to Viktoria ELIAS, this visit to Chukotka is a part of WWF Arctic Program.
Climate change effects can be seen everywhere today, including Chukotka. Ice-free sea, disappearing lakes, and melting permafrost disturb the balance of nature. Animals and birds from southern regions migrate to Chukotka, while the number of the Arctic inhabitants reduces.
People face problems, too – houses sink in, sea occupies land, and coastline is being destroyed. WWF intends to develop a plan of adaptation to the present and predicted changes, and is ready to accept offers from the partners.
"Decreasing energy consumption will last 2 years"
2009-05-28
Leader of the Russian state nuclear energy company Rosatom believes the decreasing energy consumption in the country will last for another two years.
Sergey Kirienko in this week’s Atomexpo forum said that Rosatom considers to postpone several new project following the lower energy consumption. He called today’s negative trend a “consumption collapse” which will last for two years, Oil.ru reports with reference to Rbc.ru.
However, there are also positive trends, Mr. Kirienko said, noting that energy consumption in the southern parts of the country already shows growth tendency.
InterRAO in talks with RWE about stake in Bulgarian nuclear generator
Rencap, Russia
Thursday, May 28, 2009
Reuters reported yesterday (27 May) that Germany-based utility RWE is in talks with InterRAO on sharing a 49% shareholding stake in the Belene nuclear power plant under construction in Bulgaria. The 2,000 MW plant is due to be commissioned in 2014-2015. In Dec 2008, RWE acquired 49% of Belene from the Bulgarian state, paying EUR1,275mn ($1,785mn). Action: Positive for InterRAO, in our view.
If InterRAO and RWE reach an agreement, we assume InterRAO will be acquiring Belene for the same $1,820/MW price paid by RWE, which we estimate may be around as little as 50% of the replacement cost. As Bulgaria is a member of UCTE, the pan-European transmission system, InterRAO would also gain a toehold in European electricity markets. The deal would be consistent with InterRAO's (and the Russian government's) aspirations of expanding the international electricity business and funding would seem to be covered by a planned new share issue in favour of Vnesheconombank. Vladimir Sklyar
Mitsui may take 50 pct of Russia hydro project
Thu May 28, 2009 2:01pm IST
MOSCOW, May 28 (Reuters) - Japanese trading company Mitsui (8031.T: Quote, Profile, Research) may take a 50 percent stake in a Russian hydroelectric power plant project being led by RusHydro (HYDR.MM: Quote, Profile, Research), Mitsui's representative in Russia said on Thursday.
"We are currently studying the viability of the project," Natalia Derevtsova told reporters, referring to the construction of the Nizhne-Bureysky hydro-power plant in the Amur region of Russia's far east.
"If the project turns out to be profitable, we will become an equal partner with RusHydro, meaning RusHydro and Mitsui would each take 50 percent in the Nizhne-Bureysky plant," she said at the signing of a cooperation agreement between RusHydro and the Amur region.
Mitsui did not sign the agreement, but Derevtsova, its representative in Moscow, attended the signing ceremony.
Vasily Zubakin, acting chairman of RusHydro, told Reuters at the event that Mitsui is highly likely to take part in the project, which is expected to cost around 22 billion roubles ($707.2 million) to complete.
State-controlled RusHydro, the world's second-largest hydroelectricity producer after Hydro Quebec, expects to begin construction of the plant in 2010. It is to have a generating capacity of 320 megawatts.
Mitsui is already active on the Russian energy market. It is one of three foreign partners of gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research) in developing the Sakhalin-2 deposit, which shipped Russia's first liquefied natural gas to Japan at the end of March. [ID:nLT632133] ($1=31.11 Rouble) (Reporting by Tanya Yegorova, writing by Simon Shuster; Editing by Hans Peters)
Russia to woo investors with bigger mineral licences
Wed May 27, 2009 10:38pm IST
By Vladimir Soldatkin
MOSCOW, May 27 (Reuters) - Russia, which earned over $3 billion selling off its mineral resources last year, will group licences into larger blocks to attract cash-strapped investors in 2009, a government minister said on Wednesday.
Natural Resources Minister Yuri Trutnev said the global credit crunch had dampened interest among investors in untapped oil, gas and metals deposits and that Russia should take steps to attract companies.
"If we sell a bigger block and combine it with several smaller fields in one lot, this lot will be more attractive for investors," Trutnev told reporters.
Russia, the world's largest gas producer and second-largest oil exporter, last year pulled in record proceeds of 90 billion roubles from the sale of the rights to develop its natural resouces.
The lion's share, 56 billion roubles, came from auctioning off parts of the Verkhnekamskoye potassium-magnesium salts deposit in the Ural mountains. Fertiliser firms Silvinit (SILV.MM: Quote, Profile, Research), Acron (AKRN.MM: Quote, Profile, Research) and Eurochem won the auctions.
Billionaire Alisher Usmanov's iron and steel firm Metalloinvest also won the rights to the enormous Udokan copper field in eastern Siberia. [ID:nLA452086]
Several huge, undeveloped mineral fields remain under state control, including the Titov and Trebs oilfields in the Timan-Pechora oil region in northwest Russia as well as Sukhoi Log, the country's largest gold deposit.
Trutnev did not say which deposits the state expected to sell this year.
Analysts have said the financial crisis is not the only factor behind the decrease in appetite for Russia's natural resources.
Foreign investors have also been scared off by war in Georgia last August, the declining value of the rouble and government interference in the running of some major companies.
The slump in commodities prices has also had a negative impact on the ability of investors to pay for access to Russia's reserves. (Editing by Robin Paxton)
Russian state firm eyes Norilsk Nickel stake –report
05.28.09, 03:48 AM EDT
MOSCOW, May 28 (Reuters) - State conglomerate Russian Technologies is interested in taking 40 percent of Norilsk Nickel should the owners of the world's largest nickel miner fail to repay debts to the state, a newspaper reported.
'I will say it openly: we are interested in this asset,' Russian Technologies Chief Executive Sergei Chemezov told business daily Vedomosti in an interview published on Thursday.
UC RUSAL, the world's largest aluminium producer, controlled by tycoon Oleg Deripaska, holds a stake of around 25 percent in Norilsk. Another wealthy businessman, Vladimir Potanin, holds a similar stake.
'Potanin himself made this suggestion,' Chemezov told Vedomosti, referring to a proposal made during a meeting with President Dmitry Medvedev in January.
A spokeswoman for Potanin declined to comment on the report.
In October, UC RUSAL took a $4.5 billion loan from state bank VEB in order to pay back other debt, putting its 25 percent of Norilsk Nickel down as collateral.
Potanin has meanwhile secured $3 billion from another state-controlled bank, VTB, by putting his 16.7 percent stake in Norilsk as collateral.
Chemezov said Russian Technologies was now waiting for a decision by Norilsk's owners on their debt repayment.
We are patient people. We are not in a hurry,' he said.
UC RUSAL told Reuters this month it hoped soon to reach an agreement to extend its debt repayment to Russian banks, including VEB..
Chemezov said Russian Technologies supported a plan of creating a global mining major on the basis of Norilsk and Russia's top iron ore firm, Metalloinvest, whose founder Alisher Usmanov owns a 5 percent stake in Norilsk.
He said Russian Technologies could contribute the world's top titanium maker, VSMPO-Avisma, and special steels producer RusSpetsStal if a decision to merge is taken.
Chemezov also said Russian Technologies was seeking a seat on Norilsk's board and that VTB and VEB were trying to persuade Norisk's shareholders to approve this.
(Reporting by Aleksandras Budrys, editing by Will Waterman) Keywords: NORILSK/
Swedish fund to invest in Russian debt collector
Wed May 27, 2009 12:49pm EDT
MOSCOW (Reuters) - A Swedish private equity fund is to buy a big stake in a Russian debt collection agency, the fund said on Wednesday, the first foreign move in the sector since the onset of the economic crisis and a spike in bad loans.
Bad debts have emerged as one of the key problems for the Russian economy as it enters its first recession in a decade. The level of bad loans is expected to soar to as much as 20 percent in 2010, potentially erasing the profits of the entire banking sector.
Debt collection agencies are set to benefit, and banks and companies have already started auctioning off packages of non-performing loans.
On Wednesday, Swedish fund Mint Capital said it would invest $5-$15 million to buy 25 percent plus one share in Stolichnoye Kollektorskoye Agentstvo, allowing it to take a seat on the board.
"Negotiations began before the onset of the financial crisis and were completed successfully regardless of the falling valuations due to the crisis," Vladimir Zaluzhsky, Mint Capital's investor relations manager, told Reuters.
He said the agency has $320 million worth of assets under management, making it Russia's third largest player. The agency was not immediately available for comments.
"The agency's portfolio is wholly individual debt although there are plans to move into the non-banking sectors -- cellular communication companies, utilities companies, communal services companies, insurance companies etc," he added.
(Writing by Dmitry Zhdannikov, Editing by John Stonestreet)
CBR: Number of Russian banks to drop under 1,000 by end of year
bne
May 28, 2009
The CBR believes the number of banks in Russia should fall to under 1,000 by the end of this year for the first time since 1991, reports Prime Tass.
The number of banks has been falling steady since its peak in the 1990s of over 2,500. During the crisis some 400 banks have close leaving 1,041 banks in Russia as of the start of May.
Analysts are expecting the CBR to use the crisis to reduce the number of banks dramatically. The final number is not clear. The CBR is belived to favour a sector with no more than 300 banks, however, in the short-term 800 is believed to be the goal.
Preliminary April banking sector data
Troika, Russia
Thursday, May 28, 2009
Central Bank representatives yesterday gave some preliminary banking sector figures for April that add to recent tentative signs of sector stabilization.
_ Overdue loans reach 3.8% of loan book as of May 1. Alexei Simanovsky added to this that the monthly increase in overdue loans was 12% in April, which is generally in line with last month's trends, when we saw the first signs of slowing NPL growth following 18 19% m o m jumps in overdue loans at the start of the year.
_ Easing loan provisioning rules saved banks about R100bn ($3bn). This is some 10% of total provisions, Gennady Melikyan estimates, though not all banks applied the new provisioning rules introduced in early 2009. Overall, Central Bank officials see the current provisioning level as generally adequate.
_ NPL reporting rules under RAS to be changed to more common practice.
Interestingly, Simanovsky mentioned that the Central Bank plans to change the rules for reporting NPLs under RAS in a few months, effectively converging them with IFRS practices. The Central Bank currently classifies overdue loans as overdue portions of loans that have not been repaid, and the figures under RAS do not usually include the full loan principal amount, which has been criticized for some time for being unrepresentative and not reflecting an adequate picture of a bank's asset quality.
_ April sees positive deposit trends. Retail deposits grew 1.6% m o m in April, according to Melikyan, while the share of forex deposits in total decreased from 32.9% at end March to 31.5% at end April.
Andrew Keeley
Uralsib reports on 2008 financials results under IFRS
Press release
May 28, 2009
Moscow, May 28, 2009. BANK URALSIB (URALSIB or Bank) (RTS: USBN) reports on financial results under IFRS for the twelve-month period ended December 31, 2008.
Key 2008 achievements
• modification of product line, fee and interest policy in accordance with new business environment
• preservation of corporate and retail customer base and market share
• focus on business efficiency and expenses control
• risk-management strengthening
Financial results Net income of the Bank amounted to 1.2 bln rubles in 2008 vs net income of 2.3 bln rubles in 2007. Pre-tax income reached 2.1 bln rubles vs 3.7 bln rubles in 2007.
Considerable impairment of interest earning assets caused the decrease of net income in 2008. Worsening of the economic situation in IIH2008 and as its consequence the growing fall of payment discipline of the Bank's borrowers resulted in the growth of the allowances for impairment for loan losses by 8.4 times to 10.1 bln rubles. At that the specified rate of income before tax and impairment of interest earning assets increased by 2.5 times in 2008 vs 2007 (12.3 bln rubles vs 4.9 bln rubles correspondingly).
Positive financial result for the 12-month period 2008 was achieved due to the considerable increase of the core banking income1 and qualitative change of operating income structure, which resulted in lowering dependence on net gains from volatile financial instruments.
During the reporting period the core banking income kept on growing progressively by 47.6% up to 32.0 bln rubles. Net interest income grew by 57.9% up to 26.3 bln rubles in 2008 vs 2007. That dynamics was secured first of all by the income increase throughout the whole lending products line, as well as by the inter-bank lending operations and investments in finance leases.
Net fee and commission income during 12-month period of 2008 amounted to 5.6 bln rubles vs 5.0 bln y-o-y 2007. The rise of net fee and commission income by 13.1% was caused by growth of net gains from cash operations, guarantees and letters of credit, as well as by underwriting.
Outrunning growth of net interest income in total operating income structure allowed to improve the core banking income/ operating and administrative expenses ratio up to 172.3% during the reporting period vs 128.0% in 2007.
Considerable worsening of juncture at world financial markets in the IIH2008 led to net losses from securities in the amount of 3.1 bln rubles vs net loss of 2.5 bln rubles in 2007. During the reporting period net gains from foreign currencies, derivatives and operations with precious metals amounted to 1.1 bln rubles vs 1.5 bln rubles last year. At that net gain from foreign currencies increased by 3.6 times in 2008 vs 2007.
Thus net operating income before impairment of interest earning assets reached 30.8 bln rubles, demonstrating 41.1% growth vs 2007.
Expenses control Operating expenses amounted to 18.6 bln rubles in 2008, exceeding insignificantly similar indicator of 16.9 bln rubles in 2007 (9.6% growth that is lower than inflation rate). At that personnel expenses shrank by 5.0% from 9.5 bln rubles to 9.0 bln rubles during 12 months of the reporting period. The share of personnel expenses in operating expenses fell to 48.6% in 2008 vs 56.1% in 2007. In particular the growth of administrative and operating expenses was caused by the completion of some investment projects aimed at creating new sales points in Moscow and in other RF regions with corresponding increase of rental payments, expenses on IT etc.
Due to advanced sharp growth of core banking income and to insignificant increase of personnel and administrative expenses, Cost-to-Income ratio (C/I) decreased to 60.2% in 2008 vs 77.5% in 2007.
Change in assets structure, credit portfolio and customer accounts growth The Bank's total assets increased to 446.3 bln rubles by the end of the reporting period (by 19.1% up y-t-d). The increase of credit portfolio, net investments in finance leases and highly liquid assets became the key drivers for assets growth.
The Bank credit portfolio2 grew up by 16.1% to 278.0 bln rubles as of 31.12.2008. Loans to individuals were up to 84.6 bln rubles by the end 2008 (by 32.6% up y-t-d), corporate loans - to 193.4 bln rubles (10.1% growth).
Net investments in finance leases increased by 55.7% to 31.9 bln rubles as of 31.12.2008. The share of credit and leasing portfolio in assets structure remained almost at the same level - 65.9%, while the share of securities portfolio decreased from 12.6% as of 31.12.2007 to 9.3% as of 31.12.2008 and the share of liquid assets increased from 12.8% to 16.1% correspondingly. Liquid assets, introduced mainly by current accounts in Central Bank of Russia, grew up by 50.4% to 72.0 bln rubles during 2008.
The share of loans to micro and small business remained high - 58% as of 31.12.2008. The share of SME customers in corporate customer base amounts to almost 95%.
Residential mortgages and consumer loans still prevailed in retail loan portfolio - 48.6% and 24.4% respectively. The share of retail loan portfolio in total loan portfolio structure reached 30%, and total share of loans to individuals and loans to SME approximated to 70%.
Customer accounts increased by 5.3% to 226.4 bln rubles for 12 months of 2008, mainly, owing to the growth of corporate deposits - by 11.9% to 161.6 bln rubles. The positive dynamics was secured mainly by increase of term deposits (corporate deposits - 24.9% growth and individual deposits - 4.6% growth).
Individual accounts shrank to 64.8 bln rubles by the end of 2008 (8.3% vs as of 31.12.2007), that was caused by partial reduction of amounts due to individuals in October-November 2008 triggered by the cautious attitude of the population towards the stability of the whole banking system in general. The share of customers' current and term deposits in foreign currencies increased to 26.5% by the end of the year vs 14.6% y-t-d that was caused by ruble devaluation.
Loan portfolio coverage by customer accounts amounted to 81.4%, the share of customer accounts in liabilities amounted to 56.9% as of 31.12.2008.
In 2008 the equity securities volume and share of equity securities in the assets structure kept on falling down to practically non-material. Total securities portfolio4 amounted to 41.3 bln rubles as of 31.12.2008 (12.8% down), investments in shares reduced by more than 3.7 times to 2.9 bln rubles. The shares in securities portfolio shrank to 7.1% as of 31.12.2008; in assets structure - to 0.7%.
In the reporting period the Bank reclassified its securities by different types of portfolios that allowed partially smoothing the influence of stock market environment on securities revaluation results. In particular trading securities5 amounted to 60.6%, available-for-sale securities - 24.3% and held-to-maturity securities - 15.1% of the total securities portfolio.
Total equity reached 48.2 bln rubles by the end of reporting 2008, remaining almost at the same level. In the reporting period of 2008 RoA amounted to 0.3%, RoE - 2.5%. The Bank improved
capital adequacy ratio under Russian standards (N1) from 11.9% as of 31.12.2007 to 12.8% as of 31.12.2008, as well as under the Bank for International Settlements (BIS) methodology from 13.6% to 14.3% correspondingly.
Accounting standards The Bank presented early application of segment reporting IFRS-8 in relation to operating results and balance sheet figures by business lines, while preparing financial reporting under IFRS for the twelve months period ended 31 December, 2008. This standard is based on management accounting, which is a key basis for management decisions. According to the segment reporting, net income of the Bank in 2008 was generated mainly by corporate and retail banking. Leasing, treasury operations and corporate investments were also profitable segments in the reporting period.
Russia Diamond Monopoly Seeks to Avoid 1990s-Style Market Flood
By Maria Kolesnikova and Ellen Pinchuk
May 28 (Bloomberg) -- Russia will avoid flooding the world diamond market, as it did in the 1990s, with the stocks it has been building up since demand slumped last year, the nation’s monopoly producer ZAO Alrosa said.
“The situation is completely different and the mentality changed a lot,” Chief Executive Officer Sergei Vybornov said in an interview. “Nobody wants to destroy the market.”
More than a decade ago, Russia began offloading rough, or uncut, diamonds as its need for hard currency became acute, leading to a rift with distributor De Beers. This time, the state and Alrosa will coordinate to avoid a repetition of events that “crushed the market for a very long time,” Vybornov said.
Polished gem values have fallen by an average 31 percent since peaking in August, according to , as the global economic slowdown prompts consumers to curb spending on luxury goods. Gem Diamonds Ltd., the operator of the Letseng mine in Lesotho, said this month that first-quarter diamond prices collapsed 52 percent from a year earlier.
State-owned Alrosa suspended sales to the market last year, instead shipping gems to government depository Gokhran, Vybornov said on May 26. As a result, the company pared output by about 4 percent, he said, in contrast with De Beers’s 91 percent cut in the first quarter. This year, in a sign of improving conditions, it plans to offer about two-thirds of production to the state.
Other producers are also anticipating a rebound.
De Beers, the world’s biggest diamond producer, has resumed operations at a joint venture in Botswana that produces a fifth of global supply after suspending output in February. Gem Diamonds CEO Clifford Elphick said prices rose by “low single- digit percentages” at recent sales, while Petra Diamonds Ltd. chief Johan Dippenaar said declines had stopped.
Resuming Sales
Alrosa is resuming sales of rough diamonds to the market this month, Vybornov said, with as much as $1 billion going to 15 companies in Antwerp by the end of the year.
That may spur a turnaround at the Belgian city, which handles most of the world’s diamonds, after imports tumbled 45 percent in the first four months. Exports also fell 30 percent, according to the Antwerp World Diamond Centre trade group.
More than 1,500 international diamond companies have their headquarters in Antwerp in an area called the Diamond Square Mile, which has four diamond bourses.
Alrosa may gain influence over the diamond market as a result of Russia’s increased holdings of gems, and buy mining companies that aren’t able to survive independently, including some that may be listed in London and Toronto, Vybornov said.
“It would be a good time for sure to look at possible mergers and acquisitions, but we need first to get a clear vision for the sales,” he said.
“We will have these stocks, huge stocks, after the crisis,” he added. “We will play a definitely much more important role than before.”
To contact the reporters on this story: Maria Kolesnikova in Moscow at mkolesnikova@ Ellen Pinchuk in Moscow at epinchuk@.
Last Updated: May 27, 2009 19:01 EDT
Russia can't build world-class car industry on its own
bne
May 28, 2009
Russia can't build world class car industry on its own, Industry and Trade Minister Viktor Khristenko said during a lecture on Wednesday, and needs to tie up with foreign partners.
While much has been written about the strategic investment law that limits foreign investment into some 40 sectors of national security importance, the Kremlin's policy to non-strategic sectors is to bring in foreign companies to boost competition and most important transfer technology to Russia. No sector has been opened more than the automotive, however, government officials have never been as explicit in naming this policy as Khristenko was in his speech.
"Can we build a global company? This is an illusion. It is impossible to do this. We will have to unite with these [foreign companies], and it's important that in doing so we not end up as minority shareholders that would look like a strange kind of financial investor offering its market," he said report Interfax.
Khristenko said no more than ten global auto companies would remain after the crisis, which will accelerate this consolidation process.
"The crisis will help us do this more quickly. I have information and an understanding on this issue," he said.
Not only have the the foreigners been let in but the Russians giants in the sector are also entering into partnerships with foreign manufacturers.
Russia's largest carmaker AvtoVAZ plans to start producing minivans based on French auto producer Renault's R90 platform by the end of 2010, AvtoVAZ President Boris Alyoshin said Wednesday, ITAR-TASS reported.
"I presume that our next new car will be R90 minivan," Alyoshin said.
Programme to subsidise car loans gives little support to car manufacturers
VTB Capital
May 28, 2009
According to Kommersant, in April-May around 7,000 loans in Russia (every tenth car loan) were issued under the government programme for subsidising interest rates when purchasing a car assembled in Russia. The price ceiling for cars purchased under the programme was set at RUB 350,000.
However, over 90% of the loans were taken to purchase Ladas, and 80% of the total was for outdated classic models.
The figures demonstrate that the programme has not been very effective. The vast majority of loans were taken for the cheapest Ladas, making AvtoVAZ the only beneficiary of the programme, while other car producers received almost no support. There was also less borrower activity than expected and unless it increases significantly, the annual benchmark of 150,000 loans will not be achieved. This target might be met were the price ceiling to be raised to RUB 600,000 (as suggested by the Ministry of Industry and Trade) which would then mean that the programme covered popular brands such as Ford and VW. However, it would still be meaningless for national automakers.
X5 Posts $82 Million First-Quarter Loss on Ruble Drop (Update1)
By Maria Ermakova
May 28 (Bloomberg) -- X5 Retail Group NV, Russia’s largest food-store operator, said it had a first-quarter loss because of the ruble’s decline against the dollar.
The net loss totaled $82.1 million, Moscow-based X5 said in a Regulatory News Service statement today, compared with $83.3 million in the same period a year earlier on a so-called pro forma basis. That was less than the predicted loss of $87 million, the median estimate of seven analysts surveyed by Bloomberg News. Sales fell 8 percent to $1.87 billion on a pro- forma basis, matching the analysts’ estimate.
The ruble lost 14 percent against the U.S. currency in the first quarter, leading to a revaluation of X5’s dollar- denominated debt. The ruble’s decline against the dollar has also hurt revenue, the company said in the statement.
“X5’s solid operational performance in the first quarter benefited from our discounters’ leading price position, which drove strong growth in customer traffic and like-for-like sales,” Chief Executive Officer Lev Khasis said in the statement.
The pro-forma basis assumes the Carousel chain of superstores acquired in June was part of the company in 2008.
Earnings before interest, taxes, depreciation and amortization fell 7.9 percent to $163 million on a pro-forma basis, beating the $155.8 million analysts’ estimate in a survey.
To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@
Last Updated: May 28, 2009 03:02 EDT
Facebook's New Russian Shareholder Planning Its Own IPO
Thu May 28, 2009 8:59am EDT
Facebook may not be rushing to go public, but Digital Sky Technologies, the Russian investment fund that just paid $200 million for 1.96 percent of the social network, does plan to float.
CEO, co-founder and former Mail.ru chief Yuri Milner tells Slon.ru (via Yakov): “Our model ... is to exit via IPO ... An IPO’s timing is dependent on the state of world markets and the willingness of Digital Sky Technologies for the event ... I think it will happen within the next three years.” No info on this point, but it’s quite possible DST would float in London rather than Moscow.
DST was already a major-league online investor before buying part of Facebook, holding big interests in Russia’s leading portal Mail.ru, its top social nets Odnoklassniki.ru and Vkontakte.ru (a Facebook clone), dating site Mamba, link exchange Sape.ru plus Poland’s Nasza-Klasa.pl. Does its latest buy make a Facebook IPO more or less likely? Consider the case of Mail.ru, whose own likely IPO was called off last year when DST upped its stake to a majority.
DST’s own shareholders include Arsenal football club shareholder Alisher Usmanov, Renaissance Partners, Tiger Global and Goldman Sachs, plus partners Miler, London-based Alexander Tamas and ex hedge fund boss Gregory Finger. Usmanov bumped his stake up by another two percent to 32 percent this week. Russia’s internet audience is Europe’s fourth largest, behind Germany, the UK and France, April figures from comScore said Wednesday.
Related: Interview: Facebook Investor Tamas: ‘People Are Obsessed With IPOs’ Updated: Facebook Gets $200 Million Investment From Digital Sky; Zuckerberg Calls It “A Cushion” Arsenal Oligarch Usmanov Looks For Yandex Investment
Activity in the Oil and Gas sector (including regulatory)
Russia to raise oil export duty to over $152 per ton June 1
12:2828/05/2009
MOSCOW, May 28 (RIA Novosti) - Russia will increase oil export duty from the current $137.7 to $152.8 per metric ton from June 1, following trends on global oil markets, an official government newspaper said on Thursday.
The government's resolution on raising the oil export duty was published in the Rossiiskaya Gazeta.
As of June 1, the duty on light petroleum products will rise to $115.2 from the current $105.1 per metric ton and on heavy petroleum products to $62.1 from the current $56.6 per ton, the paper said.
Last year, the government abandoned its previously accepted bimonthly adjustments of export duties based on the price of the Urals blend on global oil markets, and from December 1 switched to setting duties for oil and oil products on a monthly basis to respond more swiftly to changes in world oil prices.
The global financial crisis has forced Russia, which receives a large part of its revenues from oil exports, to gradually devalue the ruble amid capital flight and a fall in global oil prices, which declined from their peak of $147 per barrel in July 2008 to around $40 per barrel, before climbing back in recent weeks to above $60.
Russia seaborne oil exports to fall 3.4 pct in June
Thu May 28, 2009 2:09pm IST
MOSCOW, May 28 (Reuters) - Russian seaborne oil exports in June will fall by 3.4 percent versus May on lower shipments from the Black Sea ports of Novorossiisk, Yuzhny and Odessa, a final export schedule showed.
The schedule, obtained by Reuters, showed Urals exports from Black Sea ports URL-E will decline by 203,000 barrels per day, or 16.5 percent, versus May, due to maintenance work on the pipeline to Novorossiisk and lower shipments from Odessa and Yuzhny.
Total seaborne exports are expected to reach 11.2 million tonnes, or 2.74 million barrels per day (bpd), down by 98,000 bpd versus May and by 218,000 bpd versus the same month last year.
In the Mediterranean, Urals values reached their highest for more than seven years amid a tightening of supply and higher official selling prices of rival crudes, while traders expected Urals exports in June to fall versus May. [ID:nLQ957789]
Urals exports from Primorsk URL-NWE-E will be up by 7.4 percent versus May, while loadings in the Polish port of Gdansk will reach 330,000 tonnes.
Reuters compares the final seaborne export schedules on a month-to-month basis, as oil pipeline monopoly Transneft (TRNF_p.RTS: Quote, Profile, Research) often revises export schedules throughout the month.
Following is a final export schedule for June in millions of tonnes. (Reuters uses a rate of 7.33 to convert 1 tonne of Urals crude into barrels):
June May April March Feb Jan Novorossiisk 3.337 3.872 3.240 3.547 3.261 3.830 Primorsk 6.341 6.100 6.100 6.305 5.500 6.100 Yuzhny 0.671 0.960 0.885 0.650 0.980 0.824 Tuapse 0.332 0.362 0.332 0.322 0.286 0.368 Gdansk 0.330 0.330 0.290 0.000 0.000 0.000 Odessa 0.193 0.367 0.340 0.322 0.230 0.255 TOTAL 11.204 11.991 11.187 11.146 10.257 11.377 (Reporting by Gleb Gorodyankin)
Slowdown signs - Russian fuel and minerals extraction dips by 3.2%
Thursday, 28 May 2009
Prime-Tass reported that index of fuel recourses production in Russia in January to April 2009 made 96.8 % of January to April 2008. Index of recourses production except fuel made 92.8 %.
According to the report, oil and gas condensate extraction volume in Russia in January to April 2009 decreased by 0.5 %YoY comparing to the similar period of 2008. In particular in April 2009, 40.5 million tonnes of oil were produced which was by 1.9 % more than in April 2008 and by 2.1 % less than in March 2009.
Natural gas extraction volume in Russia in January to April 2009 decrease by 17 %YoY comparing with similar period of last year. In particular, in April 2009 43.8 billion square meters of natural gas were produced which was by 24.3 % less than in April 2008 and by 10.3 % less than in March 2009. Gas condensate extraction volume in January to April 2009 decrease by 9%.
Coal production volume in Russia in January-April 2009 decreased by 17.3 %, in particular, black coal production decreased by 16.1 %, and brown coal down by 20.5 %. In April 2009 22.4 million tonnes of coal were extracted, including 17.4 million tonnes of black coal and 5 million tonnes of brown coal. Coals concentrate extraction volume in 4 months of 2009 decreased by 22.7 %. Iron ore extraction volume in Russia in January to April 2009 decreased by 24.7 % YoY. In April 2009 7.4 million tonnes of iron ore were extracted which was by 18.2 % less than in the similar period of 2008 and by 0.7 % less than in March 2009.
(Source: Prime-Tass)
Transneft requests 4% tariffs hike from 1 July
Citibank, Russia
May 28, 2009
Federal Tariffs Service representative Anna Martynova said yesterday that Trasneft has requested a 4% tariffs hike again, from 1 July. Earlier, Trasneft requested a 4% hike from 1 May but the decision was not made. Martynova said that it is unclear yet whether the request would be approved and when. We do not forecast tariff hikes this year but note that the possible rise in tariffs could be driven by higher-than-expected operating and capital expenditures.
Sakhalin II Gears up for Full Production
Wednesday, May 27, 2009
The last major offshore gas well is being completed at the Lunskoye platform in Russia’s sub-Arctic Sea of Okhotsk preparing the way for full production capacity of liquefied natural gas (LNG) at Sakhalin II, one of the world’s largest integrated oil and gas projects. Production at Sakhalin II’s first LNG unit got under way in March 2009 with a flawless start-up programme. Completion of the final gas well - Russia’s largest - is a vital step towards starting operations at its second LNG unit. Full capacity of 9.6 million tonnes a year is expected to be reached in 2010.
Sakhalin II is one of the most challenging engineering feats ever achieved. It operates amid some of the world’s harshest conditions in Russia’s far east, an area prone to earthquakes.
The project on Sakhalin Island exports LNG and oil to the fast-growing energy markets in the Asia-Pacific region and the west coast of North America. It will meet nearly 8% of Japan’s gas needs and 5% of South Korea’s. The first Sakhalin II LNG cargo delivered arrived in Japan’s Tokyo Bay in April 2009, the first time Russia has exported gas from its eastern borders and the first time it has supplied gas to Japan. Shell is a partner and lead technical adviser to the project’s operator, Sakhalin Energy.
Sakhalin II has total resources of some four billion barrels of oil equivalent. At full capacity, the LNG plant would add up to 5% to the world’s current LNG capacity.
Offshore platforms in an icy sea
The platforms that produce Russia’s first offshore oil and gas, 15 kilometres off Sakhalin Island, stand in water up to 50 metres deep in the stormy Sea of Okhotsk. They are the Piltun-Astokhskoye A platform (also known as “Molikpaq”), Piltun-Astokhskoye B and Lunskoye A platforms.
In this region, temperatures can drop to -45 degrees Celsius (-49°Fahrenheit) in winter. Arctic winds combine with high humidity for a wind-chill factor of -70°C (-94°F). At such temperatures, people can work outside only in short shifts despite steel cladding on the outer sides of the platforms that breaks the wind, offering some protection.
Frozen seas and earthquake zone
Ice poses serious technical challenges too. From December to May, a thick layer of ice surrounds the platforms in the Sea of Okhotsk, preventing tankers from reaching them to load oil and gas. Instead, a 300-kilometre network of underwater pipelines takes the hydrocarbons ashore year-round.
Two major earthquakes of 6.4 and 7.6 on the Richter scale have struck the Sakhalin region in the past 15 years. The platforms are designed therefore to resist the kind of enormous earthquake that occurs perhaps once in 3,000 years. The topsides, or upper parts, of two of the platforms are connected to their concrete legs by sliding joints. If an earthquake strikes, they can move independently from the legs in a pendulum motion, preventing damage.
Ridges of compressed ice can carve deep gashes in the seabed and could damage pipelines. A thick concrete coating protects them, however, and they are buried five metres beneath the seabed wherever the sea is less than 30 metres deep. As an extra safeguard, electronic leak-detection systems including valves halt the flow of oil and gas if the pressure drops.
Protecting western gray whales Western gray whales, a species brought to near extinction by commercial whaling early in the twentieth century, feed in the waters off Sakhalin Island. Sakhalin Energy re-routed the offshore pipelines 20 kilometres to the south to avoid the feeding grounds following advice from an independent panel of scientists set up under the International Union for Conservation of Nature (IUCN). In recognition of its western gray whale protection programme, Sakhalin Energy won the 2008 Environmental Project of the Year award from Russia’s Ministry of Environment and Natural Resources.
To protect the whales, sound levels in the area are constantly monitored and work such as drilling and pipe laying is suspended when the noise exceeds levels recommended by scientists. Buoys with acoustic monitors positioned along the edge of the feeding grounds track sound levels. The large-scale research programme is jointly financed by Sakhalin Energy and ExxonMobil, the operator of the Sakhalin I project.
Pipelines crossing seismic faults and salmon rivers
Once the hydrocarbons are pumped ashore, a processing plant treats gas and condensate, a natural gas liquid, from the Lunskoye-A platform, along with oil and some gas produced by the Molikpaq and Piltun Astokhskoye-B platforms. From there, the gas is sent through two parallel 800-kilometre pipelines to the Prigorodnoye complex at Aniva Bay in the south of the island, which includes an LNG plant, an oil export terminal and a port which is virtually ice-free during winter.
As long as the distance from Paris to Berlin, the pipelines cross seismic faultlines at 19 places and more than 1,000 of Sakhalin Island’s 60,000 rivers and streams. The 8,000 construction workers who built them could only start work after unexploded munitions from World War Two had been cleared.
Engineers planned the onshore pipeline route to avoid most of the active faults where even low levels of seismic activity could cause ruptures. If no alternative route existed, they used pipeline segments made of steel that can bend up to four metres without breaking.
Sakhalin Energy planned the route to create the least disturbance to vulnerable species, such as the Steller’s sea-eagle and Siberian spruce grouse, and to the island’s rich vegetation. Laying the pipelines beneath streams where salmon spawn - a highly sensitive operation — mainly took place in winter when the water was frozen.
Harnessing the cold to produce LNG
The gas arrives at Prigorodnoye port after a day-long journey from the platforms. There Sakhalin Energy has built Russia’s first LNG plant, designed to produce 9.6 million tonnes a year of LNG. That is enough to generate electricity for around 24 million European homes. Almost all the production capacity is committed in long-term contracts to supply customers in Japan, Korea and North America.
Shell developed an energy-saving process for sub-Arctic conditions that takes advantage of the low ambient temperatures to cool the gas and turn it into a liquid.
The new oil export terminal next to the LNG plant has the capacity to store 1.2 million barrels of oil — six days of pipeline supply. Heating elements fitted inside the roofs of the storage tanks ensure that snow in winter does not build up into a heavy load. Instead, it melts and slides off. A pipeline on the seabed takes the crude oil to tankers waiting to be loaded at an offshore installation 4.5 kilometres from Prigorodnoye.
“Sakhalin II will be a model for future projects,” says Sakhalin Energy Chief Executive Officer Ian Craig. “We benefited hugely from working as partners in the joint venture - Gazprom with its expertise in pipelines, Shell with its offshore and technological expertise, and Mitsui and Mitsubishi with their knowledge of LNG markets.”
Thousands of men and women worked together to overcome huge technical and environmental challenges and make Sakhalin II a reality. At the peak of construction, 25,000 people were helping to build Russia’s largest privately financed project.
Sakhalin Energy was set up in 1994 to implement the project, in which Gazprom has a 50% stake plus one share. Partners Royal Dutch Shell, Mitsui & Co. Ltd. and Mitsubishi Corporation hold stakes of 27.5% minus one share, 12.5% and 10% respectively.
Rosneft reveals the effective average interest rate at 5.7% for Chinese US$15bn loan, Transneft's margin is set at 0.001%
Citibank, Russia
May 28, 2009
The rate is linked to 6 month LIBOR and adjusted by margin that changes from 3.25% (when LIBOR is less than 2%) to 0.6% (when LIBOR is over 4.5%). Within the interval when LIBOR increases by 0.5% the margin drops by the same rate. Further, Rosneft revealed that Transneft's margin on supplies crude oil was set at 0.001%. As a reminder, to back its US$10bn loan from China, Transneft will export 6mtpa of crude oil as a part of 20-year supply agreement between Rosneft and China. Thus, Transneft's annual margin in the next 20 years could reach US$27mn assuming US$60/bbl oil price, compared to expected FY09E total EBITDA of US$6.6bn.
New Field Discovered on One of Blocks of Vankor Group of Fields
Wednesday, May 27, 2009
New oil and gas condensate field was discovered on Baikalovskiy License Block in the Taimyr Autonomous Area, Krasnoyarsk Territory.
The field was discovered by geologists of Vankorneft, a subsidiary of Rosneft, which develops Vankor oil and gas condensate field in the Turukhansk District.
Baikalovskiy Block is located 80 km. north of Dudinka and is one of 14 blocks adjacent to Vankor for which Rosneft holds the license.
According to Vladimir Krinin, Deputy Director for Geology and Geophysics of Vankorneft, testing of well #1 on Baikalovskiy Block resulted in natural flow production of hydrocarbons from 2000-2700 m interval with daily gas production over 60 000 cubic meters and daily oil and condensate production over 25 cubic meters what proved the discovery of a new field.
Tests are currently continued and, according to preliminary estimates of geologists, field’s minimum oil reserves are 55 mln tonnes and minimum gas reserves are 99 bcm. Application documents are now prepared to register the discovery.
In accordance with the Purchase and Sale Agreement with China National Petroleum Corporation, Rosneft will repay the loan with a part of proceeds from oil supplies.
Rosneft Uncovers New Oil and Gas Condensate Field in Taimyr Area
Rosneft 5/27/2009
URL:
A new oil and gas condensate field was discovered on Baikalovskiy License Block in the Taimyr Autonomous Area, Krasnoyarsk Territory.
The field was discovered by geologists of Vankorneft, a subsidiary of Rosneft, which develops the Vankor oil and gas condensate field in the Turukhansk District.
The Baikalovskiy Block is located 80 kilometers north of Dudinka and is one of 14 blocks adjacent to Vankor for which Rosneft holds the license.
According to Vladimir Krinin, Deputy Director for Geology and Geophysics of Vankorneft, testing of well #1 on Baikalovskiy Block resulted in a natural flow production of hydrocarbons from 2000-2700 m interval with daily gas production over 60,000 cubic meters and daily oil and condensate production over 25 cubic meters, all of which proved the discovery of a new field.
Tests are currently under way and, according to preliminary estimates by geologists, the new field's minimum oil reserves are 55 million tonnes and minimum gas reserves are 99 bcm. Application documents are now being prepared to register the discovery.
In accordance with the Purchase and Sale Agreement with China National Petroleum Corporation, Rosneft will repay the loan with a part of proceeds from oil supplies.
Oil firm West Siberian Q1 profit rises 10 pct
Thu May 28, 2009 1:13pm IST
MOSCOW, May 28 (Reuters) - Oil producer West Siberian Resources (WSIBsdb.ST: Quote, Profile, Research) said net profit rose 10 pct from a year earlier, reversing a fourth quarter 2008 loss as prices increased and demand for its products recovered.
The Russia-focused company said on Thursday that net profit amounted to $50.5 million in the first quarter, up 10 percent year on year. This followed a $290.9 million loss in the fourth quarter of 2008, which included an impairment charge for oil and gas properties. West Siberian Resources, listed in Stockholm, completed its merger with Alliance Oil Company on April 10, 2008, and pending shareholder approval at a meeting on Thursday will change its name to Alliance Oil Company Ltd.
Managing Director Arsen Idrisov said the company was on track to produce 16 million barrels of crude oil in 2009 and to refine and market 21 million barrels of oil products.
Oil production is currently at a level of 45,000 barrels a day and refining volumes 58,000 barrels per day.
West Siberian said in a statement first-quarter revenues were $327.6 million, down 40 percent year-on-year.
Earnings before interest, taxation, depreciation and amortisation (EBITDA) totalled $99.8 million, a 20 percent year-on-year increase and up from $6.2 million in the preceding quarter. West Siberian's total debt fell 27 percent in the first quarter to $629 million from $864 million at the end of 2008. Net debt was $525 million at the end of the first quarter.
Total oil production in the first quarter was 4.2 million barrels and the company's upstream operations returned to profit as crude oil netbacks stabilised.
Downstream, the Khabarovsk refinery produced 5.2 million barrels and downstream sales totalled 4.8 million barrels.
"We benefited from low domestic crude oil prices early in the year, resulting in lower refinery input costs and better margins on processed oil products," Idrisov said. (Reporting by Robin Paxton; Editing by Hans Peters)
PRESS-RELEASE 27.05.2009 [pic]
|Lukoil Expands Its Retail Gas Stations In Croatia |
| |
Today in Zagreb (Croatia) Vadim Vorobyev, Vice-President of OAO LUKOIL, participated in the official ceremony of commissioning the first gas filling station constructed by the Company on the land plot acquired under the agreement with EUROPA-MIL.
The ceremony was also attended by Branimir Khorachek, Deputy Economy Minister of Croatia, and Milan Bandich, Mayor of the City of Zagreb.
As was reported earlier, LUKOIL Europe Holdings B.V. (a 100% subsidiary of OAO LUKOIL) closed a deal in April 2008 to acquire EUROPA-MIL (Croatia).
LUKOIL acquired 9 retail outlets in Zagreb and Split, 5 land plots for construction of filling stations and an oil products river-and-railway hub with the capacity of 8,000 cubic meters on the Danube River, the city of Vukovar at the Croatian-Serbian border. Petroleum products will be supplied to the retail outlets by the Company’s refineries located in Bulgaria and Romania. The assets are managed by LUKOIL Croatia d.o.o. established in 2007.
LUKOIL re-branded the acquired assets in accordance with its corporate style in 2008.
At present, LUKOIL sells petroleum products through 17 retail outlets (owned or leased).
Fridman Is Acting TNK-BP Chief As CEO Hunt Drags On
by James Herron
Dow Jones Newswires 5/27/2009
URL:
LONDON (Dow Jones Newswires), May 27, 2009
Mikhail Fridman, one of the powerful Russian billionaires partnered in BP PLC's (BP) Russian joint venture TNK-BP, will become the company's acting Chief Executive as the hunt for a permanent CEO continues almost six months beyond the original deadline, the company said Wednesday.
Fridman, who played a key role in a bitter dispute with BP last year over control of the company, could remain as chief executive until the end of the year while two new executives appointed Wednesday are vetted to replace him permanently in the position, BP said in a statement.
The new executives are Pavel Skitovich, a former executive at private investment firm Interros and Polyus Gold (PLZL.RS) and Maxim Barsky, a board member at West Siberia Resources. "Each has the credentials to become a new CEO," BP said.
"I am happy to help in the interim and comfortable that day-to-day operations will remain in the capable hands of the current management team," Fridman said. BP Chief Executive Tony Hayward said he is also very pleased with the transition plan.
Fridman is one of the partners in the Alfa-Access-Renova consortium, which holds 50% of TNK-BP, along with Viktor Vekselberg, Len Blavatnik and German Khan.
During last year's dispute, BP staff at the joint venture came under intense pressure. Former Chief Executive Robert Dudley and 148 BP staff on secondment were forced to leave Russia in July, claiming sustained harassment from Russian authorities after running into visa difficulties. Chief Financial Officer James Owen quit soon after, citing difficult working conditions.
The dispute ended when Dudley agreed to step down in September. Chief Operating Officer Tim Summers has been acting CEO since then and will now return to that role.
Fridman's appointment shows TNK-BP is an unequal partnership, said Oppenheimer analyst Fadel Gheit. "BP has very little choice, they own 50% but the Russians hold the keys," he said.
"There is no love lost," between BP and its Russian partners, but they have to coexist and BP Chief Executive Tony Hayward is doing his best to preserve shareholder value, Gheit added.
The change may be less of a power struggle than it appears, said ING analyst Jason Kenney. "Acting CEO (Tim Summers) was a BP guy, so it's time for a change of guard," he said. "The medium term aim is to get an independent CEO and in the interim you still need some guidance at the top," he added.
At 1518 GMT, BP shares were unchanged at 505 pence.
TNK-BP Shareholders Shake Hands over CEO Succession Plan
BP plc 5/27/2009
URL:
BP and the Alfa-Access-Renova (AAR) consortium have agreed on a succession plan to appoint a new independent chief executive officer (CEO) of TNK-BP by the end of the year.
The TNK-BP board of directors unanimously supported the appointment of two experienced executives to senior positions in TNK-BP. Each has the credentials to become the new CEO.
The first is Pavel Skitovich, formerly a member of the executive board of Russian private investment firm, Interros and former general director of Polyus Gold Mining Group. The second, Maxim Barsky, will join TNK-BP from West Siberia Resources where until 2008 he served as a managing director and is currently a board member.
At the request of BP, and to observe the requirement of the revised shareholder agreement signed in January that the CEO be a Russian speaker with extensive Russian business experience, Mikhail Fridman, Chairman of the TNK-BP Board of Directors has agreed to serve as the interim CEO and executive chairman of the board during this period.
Tim Summers, who has been acting CEO since January, will resume his role as chief operating officer (COO) responsible for the day-to-day operations of the company. Both sets of shareholders acknowledged TNK-BP's strong performance in the six months Tim Summers has been interim CEO.
Commenting on the plan, Mikhail Fridman said, "I am very pleased that we have recruited two such talented executives to TNK-BP. Both Mr. Skitovich and Mr. Barsky bring valuable experience to our company, and AAR believes that they are both excellent candidates for the CEO position."
"I am happy to help in the interim and comfortable that day-to-day operations will remain in the capable hands of the current management team," Fridman added.
BP Group CEO Tony Hayward said that he was pleased all the shareholders had agreed the transition plan: "I am also very pleased that in the interim the existing management team, which has delivered such exceptional performance, will remain in place."
The revised shareholder agreement, signed by BP and AAR in January 2009, provides mechanisms to maintain a balance of authority within TNK-BP to protect the interests of all shareholders.
Gazprom
Gazprom offers escape route for Sibir investors
Hundreds of private investors caught up in the corporate governance scandal at Aim-listed Sibir Energy have been offered a partial reprieve by Gazprom, the Russian state-controlled gas company.
By Helia Ebrahimi
Last Updated: 12:29AM BST 27 May 2009
Shareholders are being offered 500p a share for their investments in the Siberian oil-field operator, valuing the company at £1.9bn. The UK-listed company’s shares have been suspended since a corporate governance scandal broke in February.
Gazprom had already bought up much of the remaining stake held by institutional investors, including Blackrock and M&G, by the close of trading last Friday as it increased its stake from 16pc to 27.5pc.
Over the weekend Sibir and its advisers, Strand Partners and JP Morgan Cazenove, agreed a deal which secured the offer for small shareholders. The deal gives Gazprom a waiver on normal UK takeover rules requiring it to make a full approach for their holdings.
A source close to the situation said that the eleventh-hour agreement had “averted a disaster for minority shareholders”, who are believed to own just over 5pc of the company. The rest of Sibir’s shares are thought to be owned by Russian investors.
However, despite the huge premium to the 174¾p suspension price, the deal still falls short of last June’s trading peak of 814p and saw investors angry at the demise of what was once the biggest company listed on Aim.
Sibir’s shares have not traded since its founder Henry Cameron stepped down and was later dismissed over controversial “unauthorised payments” relating to property deals with Chalva Tchigirinski, a major shareholder in the company.
It emerged Mr Tchigirinski had borrowed $325m (£203m) from Sibir, rather than $115m originally disclosed. He sold real estate assets to the company in return for the money, but that deal later fell apart and Sibir is now suing the oligarch to return the cash he received.
Sibir has been able to pay down $80m of the outstanding debt after an additional shareholding held by Mr Tchigirinski was uncovered by advisers and sold to Gazprom.
When the scandal first broke, commentators cited it as an example of the sometimes dangerous and erratic nature of doing business in Russia. Major energy giants such as BP have been hit by political machinations in the country which have affected their business.
The success of Sibir meant it had become an example for a raft of Russian oil, gas and mining companies which used the lightly regulated Aim market to raise funds.
Gazprom’s offer, made through its Neft oil arm, has been recommended by the board of Sibir, which is due to report annual results on Friday.
Neft bought 16pc of Sibir in April after trumping rival TNK-BP, which had offered to buy the company in a £2.3bn deal last year.
Sibir produces oil at the Salym field in western Siberia in a joint venture with Shell and operates a refinery in Moscow alongside Neft. If investors take up Gazprom’s offer for their holdings, the deal would give Gazprom’s operation control of the 200,000 barrels per day produced through the refinery.
Mr Tchigirinski is understood to have fled Russia.
Gazprom Neft starts buying up Sibir Energy shares still on the market
MOSCOW. May 28 (Interfax) - Renaissance Securities has announced a
new wave of purchasing of shares in Sibir Energy in favor of OJSC
Gazprom Neft (RTS: SIBN), through which the Russian company intends to
consolidate all Sibir Energy currently in free float, Renaissance said
in a statement.
The minority shareholders in Sibir Energy can now present their
stock for purchase at an earlier set price of 500 pence per share.
In addition, Gazprom Neft, or companies affiliated with it, could
acquire Sibir Energy shares that were not included in the aforementioned
offer. These include stakes held by Bennfield (46.7%), the Moscow
government, through OJSC Central Fuel Company (18.03%), and the Bank of
Moscow (RTS: MMBM) (BOM) (put at 1.3% according to unofficial reports).
At the same time, the price and terms for possible transactions
could differ from the offer presented to minority shareholders. However,
Gazprom Neft has yet to produce direct or indirect confirmation that it
will purchase these shares.
Earlier this week, Gazprom Neft and Sibir Energy signed a framework
agreement, through which the former company would put up an offer for
all of the latter company's shares, both those already issue and those
that would be issued in future. The agreement foresees a fixed price of
500 pence per share.
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