Russia



Russia 101008

Basic Political Developments

• Russia deputy finmin says BRICs have currency concerns - "The position of BRIC is that it is not as much and not only the problem of the exchange rates of currencies," Pankin told journalists after the meeting of deputy finance ministers late on Thursday.

• BRICs Oppose U.S. on Currency Controls, Russia Says (Update1) - Russia’s Finance Ministry said the four BRIC countries are united in opposing U.S. efforts to weaken or eliminate mechanisms to control currency fluctuations.

• Georgia says will not obstruct Russia from joining WTO - The WTO rules require transparent customs and border checkpoints, he said, noting, however, that two of the three such checkpoints between Russia and Georgia "have no transparency."

- PM: 'Georgia Supports Russia's WTO Bid, but with One Condition' -"We support Russia's membership to WTO, but with one condition, that all the rules of WTO should be followed and part of the rules of WTO is that customs checkpoints between two countries must be transparent.

- Georgia: No Link Between Russian Pullout And WTO Vote

• Medvedev visit: Tax deal will ensure ‘clean investments’ - THE tax treaty signed between Cyprus and Russia yesterday is expected to boost bilateral business ties and reaffirm the island’s status as the primary source of foreign investment to Russia.

- Medvedev visit: Bilateral agreements signed:

- JOINT Action Program for 2010-2013

- JOINT declaration on the 65th anniversary of the victory against fascism.

- PROTOCOL amending the agreement between Cyprus and the Russian Federation for the avoidance of double taxation (income tax and capital gains tax).

- MEMORANDUM of Understanding between the Cyprus Foreign Ministry and the Diplomatic Academy of the Foreign Ministry of the Russian Federation.

- MEMORANDUM of Cooperation between Cyprus Communications Ministry and the Russian Federation’s Ministry of Culture on preventing the theft, illegal excavation, and illegal import and export of items of a cultural value.

- MEMORANDUM of Understanding between the Cyprus Commerce Ministry and the Russian Federation’s Ministry of Energy on cooperation in the areas of energy efficiency and renewable sources of energy.

- MEMORANDUM of Understanding between the Ministry of Communications and the Russian Federation’s Ministry of Transport.

- JOINT ACTION Programme for the period 2011-2012 on the implementation of an existing agreement between the two governments in the area of tourism.

- DECLARATION of Cooperation between the two countries regarding the modernization of the economy.

- COOPERATION Agreement between the Cyprus Chamber of Commerce and Industry and the Russian Federation’s Chamber of Commerce and Industry.

- MEMORANDUM of Understanding between the Cyprus Institute of Neurology and Genetics and Russia’s state Pirogov Medical University on cooperation in the areas of health care services, research and training in the field of Neurology, Genetics and Biomedical Science.

- MEMORANDUM of Understanding between the Cyprus Stock Exchange and the Russian Trading System stock market.

- IMPLEMENTATION protocol for the May 25, 2006 agreement between the European Union and Russia regarding the readmission of foreigners

- SEPARATE agreements between the Trade and Industry Ministry and the Cyprus Chamber of Commerce and Industry with the Russian Justice Ministry regarding the accreditation of foreign companies and company employees.

• Church can contribute to Russian-Cyprus relations – Medvedev

• Russia's Zubkov to meet with National Development Minister - Viktor Zubkov, Russian First Deputy Prime Minister and the co-chairman of the Hungarian Russian Intergovernmental Committee for Economic Partnership, will meet with the committee's Hungarian co-chair, National Development Minister Tamas Fellegi, in Budapest on Friday, the National Development Ministry said on Thursday.

• Tender announced to prospect gold in Kuril Islands - The 21 square-kilometer Kastrikumsky sector is in Urup Island of the Kuril Range, with no populated areas or infrastructure. The predicted resources are estimated at 89.7 tonnes according to the P3 category.

• Deputy Minister of Foreign Affairs/State Secretary Grigory Karasin Holds Consultations with Moldovan Deputy Minister of Foreign Affairs and European Integration Andrei Popov - Separately the parties touched on the situation in the Transnistrian settlement process, with emphasis on the need to further intensify efforts of the parties in conflict to provide the conditions for the promotion of confidence building measures and elaboration of mutually acceptable compromises.

• Forum of Russian, Armenian governors in Yerevan - Andranik Nikoghosyan, head of the department on relations between Russian and Armenian regions of Rossotrudnichestvo representative office in Armenia, presented a proposal in Moscow to hold a forum of governors of Russia and Armenia in early 2011in Yerevan to discuss issues of interregional practical cooperation.

• Foreign Policy: Moscow appears unhappy with Armenia-Belarus relations - By Aris Ghazinyan

• 15 years of cooperation with Russia - The Information Office of the Nordic Council of Ministers, which was opened in Saint Petersburg 15 years ago, celebrates its anniversary.

• Sozyuz TMA-20 launch may be put off until 2011 - The launch of the Soyuz TMA-20 manned spacecraft may be postponed until 2011 due to a transportation accident, a source said on Friday.

- Soyuz launch with next ISS crew not to be postponed to 2011 -“The launch will be made in December 2010,” President and Designer General of the Aerospace Corporation Energia Vitaly Lopota told Itar-Tass by phone on Friday.

• Russian-U.S. crew heads for space station - Alexander Kaleri, Oleg Skripochka and Scott Kelly are to join three other crew members on the orbital station after a two-day trip from Earth aboard the Soyuz TMA-01M, an upgraded model of a Soviet-designed standby.

- Russia's Soyuz TMA-M spacecraft blasts for ISS from Baikonur (Update-1) - The docking of the spacecraft with the ISS is scheduled for October 10 at 4:02 Moscow time (0:02 GMT).

- Soyuz spacecraft placed in orbit - Docking with the ISS is scheduled for Sunday. The new crew will join existing Expedition 25 comprising station commander Doug Wheelock of NASA and flight engineers Fyodor Yurchikhin of Russia and Shannon Walker of NASA.

• Russian spy waves off cosmonauts - Russian spy Anna Chapman made a rare public appearance on Friday to bid farewell to astronauts who blasted off from Russia's Baikonur cosmodrome in Kazakhstan.

• Two of 16 arrested Russians sentenced for cyber crime in US - Two of the 16 Russians arrested for cyber crimes in the United States have pleaded guilty of money laundering and were sentenced to prison terms and fines, according to Russian Vice-Consul in New York Alexander Otchainov.

• The Iranian delegation visits the Investment Agency of Dagestan - The delegation of the Province of Giljan (Islamic Republic Iran) led by the Governor General of the province Mr. Gahramani Chaboka Ruhollaha visited the Investment and Trade Agency of the Republic of Dagestan.

• Bomb found in a medical facility in the Sverdlovsk region - A large police force was deployed to the hospital - 350 people, members of the FSB

• Russia enters final day of 10.10.10 election campaign - Russia is entering the final day of regional and municipal election campaign on Friday. A total of 7800 elections will be held in 77 regions of the country on 10.10.10. The number of candidates exceeded 100 thousand making the campaign a record one for Russia.

• Hearts Burn Ahead of Elections - All but seven regions across the country will hold various elections this Sunday after a campaign tarnished by fraud allegations — which some underdogs even tried to counter with German heavy metal.

• Baturina's brother seeks payback from wife of Moscow's ex-mayor - The brother of the wife of ousted Moscow mayor Yury Luzhkov has called on Russia's investigative committee to probe the "criminal activity" of Yelena Baturina.

• CORRUPTION WATCH: Economic crimes cost budget over RUB1 trillion - Corruption and graft costs the Russian budget over RUB1 trillion ($33bn) a year, the Interior Minister Rashid Nurgaliyev said on Thursday.

Medvedev signs bill to boost copyright protection

• Arctic expedition en route to year-long stay on ice floe

• PRESS DIGEST - Russia - Oct 8

- The Russian government will this year launch a Post bank aimed to compete with Russia's largest lender Sberbank (SBER03.MM: Quote, Profile, Research, Stock Buzz), the paper writes.

- Russia's Orthodox Church will launch its own channel on video web site YouTube, hoping to draw the attention of the youth to the religion, the daily says.

- The Israeli coffee shop chain Red Espresso Bar plans to invest $75-150 million in Russia. Starbucks (SBUX.O: Quote, Profile, Research, Stock Buzz) is the currrent leader of Russia's coffee business, having a 12.3 percent of the market, the paper says.

- The index of consumer trust in Russia dropped in the third quarter of 2010 for the first time since the financial crisis peaked. Twenty-four percent of Russians expect the economic situation to worsen, the daily reports.

- During Russian regional parliamentary elections, to be held on Oct. 10, electronic ballot boxes will be installed in more than 1100 polling stations across Russia, except for the volatile Dagestan region, the daily writes.

- The Russian government will raise electricity rates by up to 10 percent in 2011 and heating will be increased by up to 14 percent, the paper writes.

- Communists in Nizhny Novgorod claim the ruling United Russia party organises unfair voting by paying off people to vote for a particular candidate, the daily says.

- Between 33 and 42 percent of Russians will abandon commuter trains rides in the event that fares are raised, the daily writes.

• RIA Novosti Press Review for Friday, October 8, 2010

• Russia 50 years behind the times in science, Nobel laureate says - Co-winner of prize says he has no interest in returning to his homeland

• Chernov’s choice - The Rally for the Preservation of St. Petersburg will be held on Pionerskaya Ploshchad, near the Theater of Young Spectators (TYuZ), at 1 p.m. Saturday.

• Chavez’ Visit to Russia: Infected by ‘VIRUS’? - Some observers nastily called the alliance of Venezuela, Iran and Russia “VIRUS.” The question is, whether the VIRUS has already spread, or is likely to spread, to Bolivia, Cuba, Ecuador, Nicaragua, North Korea, and possibly China.

National Economic Trends

• Russia Corporate Debt ‘Bubble’ May Be Forming, Pankin Says

• Russia May Sell First Bonds in Euros Next Year, Pankin Says

• UPDATE 1-Russia may offer $5.5 bln in euro bonds in 2011 –Pankin

• Russian monetary base down 51.6 bln rubles to 5163.3 bln rubles

• Russian consumer confidence falls for the first time in 18 months

Business, Energy or Environmental regulations or discussions

• Russia Stocks Drop for Second Day on Lower Oil, Copper, Zinc

• Russian markets -- Factors to Watch on Oct 8

o Russia's state-owned oil giant, Rosneft (ROSN.MM: Quote, Profile, Research) is losing its head of exploration and production, Mikhail Stavsky, the top manager told Kommersant. Last month Rosneft's long-time president Sergey Bogdanchikov also left the company, and Kommersant said the new president had begun to "refresh the team."

• AvtoVAZ, Mobile TeleSystems, Polyus Gold: Russia Equity Preview

• Bond Yields Lowest to Stocks Revive IPO Market: Russia Credit

• Record lows for bond yields to fuel an equity boom

• Bank of Moscow's president gives an interview to Kommersant: resignation of Mayor Yuri Luzhkov does not affect the bank's business - intends to develop insurance business further - the bank is not planning an IPO in the next 1-1.5 years

• Russia's VTB says Eurobond three times oversubscribed

• Russian Railways sets aside $3.3 mn for new logistics company

• Stolichnaya Signs Accord to Sponsor New Nets Arena in Brooklyn

• Petropavlovsk's IRC halves HK IPO size

• FTS adopts electricity and heat tariff growth limitations for households

• Leonid Fedun, deputy chief executive of LUKoil, may increase his stake in the oil producer to 10 percent by acquiring a 0.7 percent share from ConocoPhillips or on the open market, Kommersant said Thursday. (Bloomberg)

• [pic]Croatian hotelier Andjelko Leko is discussing selling his majority stakes in several Zagreb hotels, valued at 50 million euros ($69.7 million), to Russia’s Mirax Group, the Globus weekly reported Thursday. (Bloomberg)

• [pic]Comstar said Thursday that its majority-owned subsidiary, the Moscow City Telephone Network, would invest 13 billion rubles by the end of 2013 in upgrades to its network. (Bloomberg)

• [pic]The government will let residential electricity prices increase an average of 10 percent next year, RIA-Novosti reported Thursday. (Bloomberg)

• Former Moscow Mayor Yury Luzhkov approved a privatization program before his ouster two weeks ago, Kommersant reported Thursday, to include selling the city’s 50 percent stake in the Radisson Slavyanskaya hotel and 20 percent of the Swissotel. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)

• Russia Eases Payment Restrictions On Crude Exporters - Conscientious oil and gas exporters will be able to make deliveries without providing customs officials with providing the customs service with previsionary payments, Russian Economic Development representative Andrey Tochin said, according to a report in Vedomosti.

• Rosneft vice president quits, more to follow - Kommersant quoted Vice President Mikhail Stavsky as saying that he was leaving the company, Russia's largest oil firm, from Monday to start a new job. He declined to say why he was quitting Rosneft, where he had worked for four years and was responsible for production activities.

• Vice president for production at Rosneft may leave the company

• French Company to Make Gas in Nizhny - French industrial gas producer Air Liquide said Thursday that it planned to start construction of an air separation unit worth 60 million euros ($84 million) in the Nizhny Novgorod region and that it would increase investments in Russia over the next five years.

• Lukoil considers Caspian shipping options; Kazakhstan raises KTK quota

• Alliance Oil: Seasonally strong 3Q10 operational update

• Russian Oil Firms Complain over Access to Fields

Gazprom

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Full Text Articles

Basic Political Developments

Russia deputy finmin says BRICs have currency concerns



2:08am EDT

WASHINGTON, Oct 8 (Reuters) - Brazil, China, India and Russia see the current moves in emerging markets currencies as a deeper problem that cannot be solved through a free float, Russia Deputy Finance Minister Dmitry Pankin said.

"The position of BRIC is that it is not as much and not only the problem of the exchange rates of currencies," Pankin told journalists after the meeting of deputy finance ministers late on Thursday.

"Exchange rates are already a result of deeper processes: the propensity to savings, investment, the investment climate in a country, level of demand."

He also said that allowing free float of BRIC currencies is not going to solve all problems.

"Free float is not an exit prescription, it's not a prescription for all illnesses," he said.

Pankin also said that BRIC countries have already offered a maximum compromise on the shift of IMF quotas, but it is unlikely there will be a compromise achieved with European countries during the meetings this weekend.

"Maximum compromise has already been done by agreeing to the increase in emerging markets quotas by 5 percent," Pankin said.

Developing countries are demanding representation commensurate with their increasing economic clout, but in a deadlock over giving emerging market economies more say at the IMF, Europeans do not want to lose seats on the IMF's executive board and the U.S. does not want to give up its veto power.

A member nation's quota at the IMF determines its share of votes. The top five members also have the power to appoint Executive Board directors.

(Reporting and writing by Lidia Kelly)

BRICs Oppose U.S. on Currency Controls, Russia Says (Update1)



By Paul Abelsky and Maria Levitov

Oct. 8 (Bloomberg) -- Russia’s Finance Ministry said the four BRIC countries are united in opposing U.S. efforts to weaken or eliminate mechanisms to control currency fluctuations.

Brazil, Russia, India and China will put up “rather strong resistance” to attempts to make “any harsh appraisal” of currency controls at the annual meeting of the International Monetary Fund and World Bank, Deputy Finance Minister Dmitry Pankin told reporters in Washington.

The BRIC countries “have agreed on a position that exchange rates aren’t themselves a problem,” Pankin said. “Rather they are a consequence of deeper processes, such as tendencies to save, to invest, of the investment climate.”

Russia’s central bank has pledged to shift its policy regime to target inflation and make the ruble a free-floating currency. Bank Rossii currently buys and sells currency on the market to steer the ruble’s value against a basket of euros and dollars to smooth “excessive volatility” of the currency’s exchange rate.

The central bank has “made serious progress in liberalizing the exchange rate,” selling $1.3 billion in September compared with interventions earlier this year that exceeded $10 billion a month, Alexei Ulyukayev, first deputy chairman of Bank Rossii, said in Moscow on Oct. 5.

‘Dangerous Policy’

The central bank’s shift to a free floating ruble is a “dangerous policy for the economy,” because a more flexible exchange rate may undercut the country’s competitiveness, Deputy Economy Minister Andrei Klepach said on Oct. 6. “Russia isn’t fully ready” for the free-float regime now, he said.

Sharp currency-exchange “fluctuations” act as a hurdle to growth, Pankin said. “From the point of view of any economic process or an investment project, it’s impossible to work in a situation when the exchange rate jumps 20 percent in 4 months,” he said.

“‘A free floating exchange rate isn’t itself a cure for all ills,” Pankin said.

To contact the reporters on this story: Paul Abelsky in Washington at pabelsky@; Maria Levitov in Moscow at mlevitov@

To contact the editor responsible for this story: Willy Morris at wmorris@

Last Updated: October 8, 2010 02:42 EDT

October 08, 2010 10:38

Georgia says will not obstruct Russia from joining WTO



WASHINGTON. Oct 8 (Interfax) - Georgia will not make attempts to block Russia's accession to the World Trade Organization (WTO), Georgian Prime Minster Nika Gilauri said in Washington on Thursday.

"The WTO is an organization that sets the rules of conduct. Russia's membership of the WTO could make Russia a more civilized country," Gilauri said at the Atlantic Council, an American think tank.

Georgia will continue pressing for the end of occupation of its territories, but it will not link Russia's membership of the WTO to troop withdrawal from Abkhazia and South Ossetia, he said.

The WTO rules require transparent customs and border checkpoints, he said, noting, however, that two of the three such checkpoints between Russia and Georgia "have no transparency."

Georgia has been a member of the WTO since June 2000.

On Georgia's membership of NATO, Gilauri said that this issue "remains on the table," but needs to be negotiated with many countries. "Most of Georgia's citizens want Georgia to be a member of NATO," he said.

Gilauri announced that Georgia would take part in NATO's Lisbon summit next month.

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|PM: 'Georgia Supports Russia's WTO Bid, but with One Condition' |

| |

|Civil Georgia, Tbilisi / 8 Oct.'10 / 01:18 |

Georgian PM Nika Gilauri reiterated on October 7 Tbilisi's position that it would support Russia's WTO membership if Moscow allows to make customs checkpoints located in Abkhazia and South Ossetia, two breakaway regions which Russia has recognized as independent states, "transparent". 

"We support Russia's membership to WTO, but with one condition, that all the rules of WTO should be followed and part of the rules of WTO is that customs checkpoints between two countries must be transparent. Unfortunately, right now because of occupied territories of Abkhazia and South Ossetia these two customs checkpoints [one in Abkhazia and another one in South Ossetia] are not transparent and we are requesting only one thing and this [condition] is to follow WTO rules," PM Gilauri, who is visiting Washington, said in an interview with CNBC.

The White House announced last week that the U.S. and Russia made the "substantial progress" in resolving bilateral issues related and that Russia had taken "significant steps" toward joining WTO.

"President Obama pledged to support Russia's efforts to complete remaining steps in multilateral negotiations so that Russia could join the WTO as soon as possible," the White House said in a statement after a phone conversation between the Russian and U.S. Presidents on October 1.

PM Gilauri, who leads the Georgian delegation of senior officials in Washington for the meeting of U.S.-Georgia Strategic Partnership Commission, met with Secretary of State Hillary Clinton on October 6. The Georgian PM told CNBC that Secretary Clinton's remarks at the meeting held in frames of the strategic partnership charter between the two countries on October 6, was "excellent." 

"All the right points were made about occupied territories - these are not breakaway regions, these are occupied territories - she demanded Russian troops to leave Georgian territory and actually she promised additional support - political, as well as economic," he said.  

 

Speaking on Georgia's economy, PM Gilauri said that after "difficult year" of 2009, which saw 3.9% contraction, economy was expected to grow 5 to 6% this year.

Georgia's real GDP grew 6.6% in the first half of 2010 year-on-year to nominal GEL 9.201 billion, according to preliminary figures, released by the state statistic office last month.

He said that foreign direct investment was also increasing and Georgia was becoming "kind of investment hub" with investors basing thier businesses in the country to then expand into the Caucasus, Central Asia, Ukraine and Turkey.

Although FDI inflow grew 11% year-on-year in second quarter of 2010 to USD 196.9 million, an overall FDI in the first half was still down by 6.38% year-on-year, according to the preliminary figures released by the Georgian state statistics office.

Georgian Finance Minister, Kakha Baindurashvili, said this week that the government expected USD 1 billion FDI in 2010.

"Next year won't be an absolute breakthrough, of course, in attracting investment, but I think it will be a turn towards real growth," he told Reuters.

Georgia: No Link Between Russian Pullout And WTO Vote



October 08, 2010

By RFE/RL

Georgia's Vice President Nika Gilauri has said Tbilisi's demand for Russian forces to end their occupation of Abkhazia and South Ossetia is not tied to how Georgia will vote on Moscow's application to join the World Trade Organization.

In remarks at Washington, D.C.'s Atlantic Council, Gilauri said Georgia will continue to press for Russian troops to end their occupation of Georgian territory, but that it "has nothing to do" with the WTO vote.

He said Georgia will support Moscow's bid if it makes customs checkpoints in the two breakaway regions transparent, as required under WTO rules.

Gilauri is in Washington this week with a delegation of senior Georgian officials for a meeting of the U.S.-Georgia Strategic Partnership Commission. 

He met with Secretary of State Hillary Clinton on October 6.

Medvedev visit: Tax deal will ensure ‘clean investments’



Published on October 8, 2010

THE tax treaty signed between Cyprus and Russia yesterday is expected to boost bilateral business ties and reaffirm the island’s status as the primary source of foreign investment to Russia.

During his brief visit, Russian President Dmitry Medvedev, led a delegation which signed pacts ranging from an accord on avoiding double taxation to technology, health and tourism agreements.

"Our economic cooperation is developing very strongly, and it is not a one-way street," Medvedev told reporters after a meeting with President Demetris Christofias.

Cyprus has a long history of links with Russia, and the former Soviet Union before that. Trade, which at one time involved bartering Cypriot wine exports for Russian tractors, is

now worth billions of dollars.

With one of the lowest corporate tax rates in the European Union, Cyprus is now an important springboard for investments into Russia. Some 20.5 per cent of the $262.6 billion invested there since the collapse of the Soviet Union has been via Cyprus.

Thousands of offshore companies registered on the island are Russian, which re-invest profits back into Russia.

The island has about 60,000 Russian speakers and the EU's only communist head of state, Soviet Union-educated Christofias, a fluent Russian speaker.

“We worked jointly so that any possibilities of casting shadows, regarding the origin of the money, are dispelled,” Christofias said.

He said the conditions were now there for clean investments and financial and other transactions without problems.

“Our relations are as clear as the sky of Cyprus almost year-round,” Christofias said.

The tax deal effectively takes Cyprus off a Russian ‘blacklist’ of jurisdictions where authorities failed to adequately cooperate with Russian tax collectors.

The agreement replaces an existing one – signed in 1998 -- and seeks to curb any potential loophole in Russia's attempts to tackle tax evasion.

Most of the money invested from Cyprus had left Russia in the turmoil of the 1990s.

"Cyprus is perceived by our businessmen as a very convenient platform to make investments," Medvedev said.

"The amendments to the agreement on avoiding double taxation that have just been signed are aimed at making this area more predictable, transparent and understandable for the authorities regulating it."

The deal ensures that companies registered in Cyprus but with activities in Russia do not have to pay tax in both jurisdictions, and calls for enhanced exchange of information

between tax authorities of both countries.

 

Medvedev visit: Bilateral agreements signed:

* JOINT Action Program for 2010-2013

* JOINT declaration on the 65th anniversary of the victory against fascism.

* PROTOCOL amending the agreement between Cyprus and the Russian Federation for the avoidance of double taxation (income tax and capital gains tax).

* MEMORANDUM of Understanding between the Cyprus Foreign Ministry and the Diplomatic Academy of the Foreign Ministry of the Russian Federation.

* MEMORANDUM of Cooperation between Cyprus Communications Ministry and the Russian Federation’s Ministry of Culture on preventing the theft, illegal excavation, and illegal import and export of items of a cultural value.

* MEMORANDUM of Understanding between the Cyprus Commerce Ministry and the Russian Federation’s Ministry of Energy on cooperation in the areas of energy efficiency and renewable sources of energy.

* MEMORANDUM of Understanding between the Ministry of Communications and the Russian Federation’s Ministry of Transport.

* JOINT ACTION Programme for the period 2011-2012 on the implementation of an existing agreement between the two governments in the area of tourism.

* DECLARATION of Cooperation between the two countries regarding the modernization of the economy.

* COOPERATION Agreement between the Cyprus Chamber of Commerce and Industry and the Russian Federation’s Chamber of Commerce and Industry.

* MEMORANDUM of Understanding between the Cyprus Institute of Neurology and Genetics and Russia’s state Pirogov Medical University on cooperation in the areas of health care services, research and training in the field of Neurology, Genetics and Biomedical Science.

* MEMORANDUM of Understanding between the Cyprus Stock Exchange and the Russian Trading System stock market.

* IMPLEMENTATION protocol for the May 25, 2006 agreement between the European Union and Russia regarding the readmission of foreigners

* SEPARATE agreements between the Trade and Industry Ministry and the Cyprus Chamber of Commerce and Industry with the Russian Justice Ministry regarding the accreditation of foreign companies and company employees.

08 October 2010, 10:04

Church can contribute to Russian-Cyprus relations – Medvedev



Nicosia, October 8, Interfax - Russia and Cyprus must strengthen their relations by using both state tools and the Church, Russian President Dmitry Medvedev said at a meeting with Chrysostomos II, archbishop of Nea Justiniana and All Cyprus in Nicosia on Thursday.

Russia supports Cyprus, including "on the idea of re-unification of the parts of the island," he said.

This is a special period in the history of Russian-Cypriot relations that have existed for 100 years. Pilgrims and tourists from Russia often visit Cyprus, however "the head of state has never been here before," Medvedev said.

For his part Chrysostomos II thanked Russia for the support it has always given to Cyprus. After the visit by the Russian head of state "we are expecting a visit by Patriarch Kirill," he said.

The invitation is still open and the Patriarch can "choose a convenient time for his visit," the archbishop said.

"God save you in all of your endeavors and in all of your deeds," Chrysostomos II said.

The archbishop then said they still had some time and asked the president what he would like to have. "Coffee, fresh carrot juice or, as we know, Russians like tea a lot." "Coffee then," Medvedev said.

Russia's Zubkov to meet with National Development Minister



Friday 9:29, October 8th, 2010

Viktor Zubkov, Russian First Deputy Prime Minister and the co-chairman of the Hungarian Russian Intergovernmental Committee for Economic Partnership, will meet with the committee's Hungarian co-chair, National Development Minister Tamas Fellegi, in Budapest on Friday, the National Development Ministry said on Thursday.

The meeting is a continuation of talks started in Moscow on August 27.

Hungary's national carrier Malév, in which Russian state-owned Vnesheconombank (VEB) owns a stake, could be discussed at the talks, as could Russian oil and gas company Surgutneftegas's 21.1% stake in Hungarian peer MOL.

Zubkov will also meet with Prime Minister Viktor Orbán, the ministry said. (MTI-Econews)

October 08, 2010 11:47

Tender announced to prospect gold in Kuril Islands



YUZHNO-SAKHALINSK. Oct 8 (Interfax) - Russia's Natural Resources Ministry has announced a tender to do the geological assessment for vein gold of the Kastrikumsky sector of the Kuril district of Sakhalin region.

"The geological assessment will be done at the license holder's expense. The license to develop and mine gold will be given for five years, if gold is found," a local representative of the federal subsoil agency Rosnedra told Interfax.

The 21 square-kilometer Kastrikumsky sector is in Urup Island of the Kuril Range, with no populated areas or infrastructure. The predicted resources are estimated at 89.7 tonnes according to the P3 category.

"Bids will be accepted until November 19 2010, inclusive. If one bid s filed, the license will go to the sole bidder. If several bids arrive, an auction will be held," the source said

The Natural Resources Ministry may also announce a tender for a license to assess the Sheltingskoye sector with a predicted reserve of platinum group metals in the central part of Sakhalin, away from populated areas. This sector is in an undistributed stock of mineral resources. The predicted resources are 8 tonnes in the P3 category.

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Deputy Minister of Foreign Affairs/State Secretary Grigory Karasin Holds Consultations with Moldovan Deputy Minister of Foreign Affairs and European Integration Andrei Popov



1392-07-10-2010

Russian Deputy Minister of Foreign Affairs/State Secretary Grigory Karasin held consultations with Deputy Minister of Foreign Affairs and European Integration of the Republic of Moldova Andrei Popov on October 7 at the Russian Foreign Ministry premises.

A keen exchange of views took place on a wide range of issues concerning the development of bilateral political dialogue and mutually beneficial economic, commercial and humanitarian cooperation. Attention was paid to the problems of the expansion of cooperation within the CIS.

Separately the parties touched on the situation in the Transnistrian settlement process, with emphasis on the need to further intensify efforts of the parties in conflict to provide the conditions for the promotion of confidence building measures and elaboration of mutually acceptable compromises.

The consultations were attended by the Ambassador of the Republic of Moldova to Moscow, Andrei Neguta.

Forum of Russian, Armenian governors in Yerevan



Friday, October 08

Andranik Nikoghosyan, head of the department on relations between Russian and Armenian regions of Rossotrudnichestvo representative office in Armenia, presented a proposal in Moscow to hold a forum of governors of Russia and Armenia in early 2011in Yerevan to discuss issues of interregional practical cooperation.

According to the spokesman for the head of the department on relations between Russian and Armenian regions of Rossotrudnichestvo representative office in Armenia, Nikoghosyan presented the proposal at a conference under the title of “On contribution of compatriots to Russia’s modernization. Opportunities of development of partner relations.” According to the head of department, first-ever Russian-Armenian interregional exhibition of industrial innovations is due in early 2011 in Yerevan, within the framework of which the forum can be held.

Analysis | 08.10.10 | 10:23

Foreign Policy: Moscow appears unhappy with Armenia-Belarus relations



By Aris Ghazinyan

ArmeniaNow reporter

Three months prior to the presidential elections in Belarus, the relations between Moscow and Minks have deteriorated. Russian President Dmitry Medvedev stated that the leader of Belarus Alexander Lukashenko's election campaign is based on anti-Russia rhetoric mindless of the $4 billion worth preferential delivery of oil and gas every year.

He also stressed that Lukashenko broke his publicly made promise to recognize the independence of Abkhazia and South Ossetia, demonstrating “dishonest” behavior. A strong emphasis was put on Moscow's intentions to communicate with all the political forces of Belarus.

The conflict between the two strategic partners, which signed an agreement in April of 1997 on founding “Belarus and Russia Union”, to some extent, concerns Armenia's interests as well. Not only both countries are members of the same military-strategic block with Armenia (CSTO), but are also considered to be Yerevan's most reliable partners in that alliance.

On the other hand, Turkic CSTO member-states – Kazakhstan, Kyrgyzstan, Uzbekistan – have always supported Azerbaijan's initiatives against Armenia, and by that violated the charter of the organization - a fact openly recognized by Moscow. For example, in 2004, within the framework of the 59th General Assembly of the United Nations, Kazakhstan and Kyrgyzstan supported Azerbaijan's initiative of including on the agenda of discussions an issue on “The Situation in the Occupied Territories of Azerbaijan”.

Consequently, Armenia has only Russia and Belarus to rely on as loyal strategic partners in this alliance.

The President of Belarus, and leader of Prosperous Armenia, Armenia's second most powerful coalition party leader, tycoon Gagik Tsarukyan, have become close friends; Tsarukyan recently built an Armenian-Belarusian trade house in Yerevan.

When visiting Yerevan this August to participate in the unofficial summit of CSTO member country leaders, president Lukashenko qualified Tsarukyan as a “man of principle” and proposed building an Armenian Brandy company in Belarus.

Immediately after the Yerevan meetings Russian press started circulating reports on 'Moscow’s utter discontent' with the warm reception shown to Belarus President Lukashenko by the leader of one of Armenia's ruling parties.

A subtle warning against cozy relations, had an impact not only Tsarukyan, but on his companions-in-arms as well, who hope that the Kremlin's support against the will of Armenian authorities could help Prosperous Armenia to secure sizeable mandates during the parliamentary elections, reports Irates De-Facto.

The Ambassador of Belarus in Armenia Stepan Sukharenko stated, on October 6, that Minsk is not for any of the parties in the Nagorno Karabakh issue and will support any solution that would satisfy both sides. In response to the question whether Belarus would support Armenia in case of military aggression by Azerbaijan, considering the fact that Azerbaijan is a member of CSTO too, the ambassador said that such cases are controlled by CSTO regulations, according to which CSTO calls the board of presidents to make an appropriate decision.

15 years of cooperation with Russia



2010-10-08

The Information Office of the Nordic Council of Ministers, which was opened in Saint Petersburg 15 years ago, celebrates its anniversary.

“Russia is our neighbour. We have things to share and things to offer each other” – says Mika Boedeker, Director of the Information Office of the Nordic Council of Ministers in Saint Petersburg.

Over a thousand projects in many fields have been implemented and almost one million people have participated in various joint Russian-Nordic initiatives since 1995. As reports, the Nordic countries arranged the Nordic Week in St. Petersburg this year for the first time to highlight long-standing commitment to cooperation.

The programme included over 20 events contributed by each of five countries, united under some of the main themes – innovation, education, ecology and culture.

Sozyuz TMA-20 launch may be put off until 2011



10:37 08/10/2010

The launch of the Soyuz TMA-20 manned spacecraft may be postponed until 2011 due to a transportation accident, a source said on Friday.

The spacecraft's descent vehicle was damaged while being transported to the Baikonur Space Center in Kazakhstan. It will be replaced with a new one, the source said.

The Soyuz TMA-20 was to deliver Dmitry Kondratyev, Catherine Coleman and Paolo Nespoli to the International Space Station (ISS) from Baikonur in December.

BAIKONUR SPACE CENTER (KAZAKHSTAN), October 8 (RIA Novosti)

Soyuz launch with next ISS crew not to be postponed to 2011



08.10.2010, 11.42

MOSCOW, October 8 (Itar-Tass) -- The president of the Russian Aerospace Corporation Energia denied some media reports that a launch of the manned spaceship Soyuz TMA-20 with the next ISS crew will not be postponed to 2011.

“The launch will be made in December 2010,” President and Designer General of the Aerospace Corporation Energia Vitaly Lopota told Itar-Tass by phone on Friday. He together with the Roskosmos leadership was watching the successful launch of the first manned spaceship Soyuz with the digital control system from the Baikonur spaceport overnight to Friday.

The piloted spaceship Soyuz TMA-20, which is to bring to the ISS Russian cosmonaut Dmitry Kondratyev, US astronaut Catherine Coleman and Italian astronaut Paolo Nespoli in the middle of December, sustained damages during the delivery to the Baikonur spaceport this week, he confirmed. “Problems emerged during the delivery of the spaceship; therefore, a descent capsule was to be replaced. We do not conceal that the descent capsule (for the ISS crew to be brought back to the Earth – Itar-Tass) will be replaced,” the Energia president pointed out.

According to him, despite the fact that during the examination of the spaceship “neither external deformations nor dents” were found, the Energia leadership decided to bring the descent capsule back to the producer in order to replace it with another one from a next spaceship, which is passing preparation for a launch in spring 2011. Since during the delivery “some breakdowns were exposed, we should check all thoroughly - something could have twisted, the state of locks and other things” in order to guarantee the safety of the flight and the descent to the Earth, Lopota pointed out.

Roskosmos chief Anatoly Perminov also confirmed that Soyuz TMA-20 was damaged during the delivery to the Baikonur spaceport. “Two component parts (of the spaceship) shifted two millimeters due to violated delivery rules,” he remarked. “If we have to bring the spaceship back to the plant, a delay of several days will take place,” the Roskosmos chief said, noting that “this will not break the flight schedule.”

The committee, which was set up to find the causes for Soyuz damages, is to complete its work before October 20. In November the Energia and Roskosmos leadership will set the exact date for the launch of a next ISS expedition.

Russian-U.S. crew heads for space station



MOSCOW | Fri Oct 8, 2010 5:36am IST

(Reuters) - A Russian spacecraft carrying two cosmonauts and a U.S. astronaut to the international space station lifted off early on Friday from Russia's launch site in Kazakhstan.

Alexander Kaleri, Oleg Skripochka and Scott Kelly are to join three other crew members on the orbital station after a two-day trip from Earth aboard the Soyuz TMA-01M, an upgraded model of a Soviet-designed standby.

In live footage on Russian state television, the rocket blasted off on schedule at 0511 local time (2311 GMT Thursday) from its launch pad at the Baikonur facility.

"Everything is in order on board," veteran cosmonaut Kaleri, strapped in with his two crewmates, reported to Russian Mission Control a few minutes into the flight as rocket stages dropped off. The craft soon entered orbit.

"I wish you every success," Russian space agency chief Anatoly Perminov told the crew.

Kaleri is on his fifth space flight and Skripochka his first. Kelly has visited the international space station twice on U.S. shuttle missions.

They are to spend six months aboard the station, a $100 billion project of 16 nations that has been under construction about 220 miles above Earth since 1998.

The growing orbital complex, a mix of mostly Russian and American-built modules, can now accommodate a six-member crew at all times. Cosmonaut Fyodor Yurchikhin and NASA astronauts Doug Wheelock and Shannon Walker have been aboard since June.

Construction of the orbital outpost will be finished following U.S. space shuttle missions in November and February. Single-use Soyuz craft will have to ferry all crews to the station after the U.S. space agency NASA retires its shuttle fleet next year.

(Reporting by Steve Gutterman; editing by David Stamp)

Russia's Soyuz TMA-M spacecraft blasts for ISS from Baikonur (Update-1)



03:43 08/10/2010

MISSION CONTROL, October 8 (RIA Novosti) - Russia's Soyuz TMA-M spacecraft blasted off on Friday for the International Space Station (ISS) from the Baikonur space center in Kazakhstan.

The spacecraft has three crewmembers on board who are Russian cosmonauts Alexander Kaleri and Oleg Skripochka and U.S. astronaut Scott Kelly.

The docking of the spacecraft with the ISS is scheduled for October 10 at 4:02 Moscow time (0:02 GMT).

Soyuz TMA-M is a new model and was designed to replace Soyuz TMA spacecraft currently in use. The new spacecraft has newly equipped in-flight measurement systems, new guidance, navigation and control equipment.

The weight of the spacecraft has been reduced by 70 kg (154 lbs) and its construction has been improved to make it easier to manufacture.

Soyuz spacecraft placed in orbit



08.10.2010, 03.24

BAIKONUR, October 8 (Itar-Tass) -- The Russian Soyuz spacecraft which blasted off overnight from Baikonur Cosmodrome in Kazakhstan carrying two Russians and an American to the International Space Station (ISS), reached the designated orbit, a Baikonur spokesman said.

NASA astronaut Scott Kelly and cosmonauts Alexander Kaleri and Oleg Skripochka are set to take up long-term posts as members of the station's Expedition 25 crew.

The new model of the Russian Soyuz spacecraft, the TMA-01M, which features new guidance, navigation, control and data processing systems, and an improved cooling device for the electronics, lifted off as scheduled at 03:11 hours Moscow time (2311 GMT).

Docking with the ISS is scheduled for Sunday. The new crew will join existing Expedition 25 comprising station commander Doug Wheelock of NASA and flight engineers Fyodor Yurchikhin of Russia and Shannon Walker of NASA.

Russian spy waves off cosmonauts



(AFP) – 56 minutes ago

BAIKONUR, Kazakhstan — Russian spy Anna Chapman made a rare public appearance on Friday to bid farewell to astronauts who blasted off from Russia's Baikonur cosmodrome in Kazakhstan.

Dressed in a scarlet peacoat, Chapman made a brief appearance before the launch, but was swiftly led away by a guard after she was spotted by journalists.

The glamorous Chapman was at the centre of the biggest spy scandal between the United States and Russia since the Cold War as one of the US-based "sleeper" agents who in July were exchanged in a dramatic spy swap.

She has since kept a low profile back in Russia while making tentative moves to reinvent herself as a showbusiness figure.

In August she posed for a photo shoot published in weekly gossip magazine Zhara, modelling an assortment of clingy cocktail dresses at a hotel in central Moscow.

Last month, she attended a party at a Moscow nightclub organised by the Russian edition of Maxim magazine after she was nominated as one of Russia's 100 sexiest women.

A Soyuz rocket carrying two Russians and an American to the International Space Station took off at 3:11 am Friday (23:11 GMT Thursday) from Baikonur.

Two of 16 arrested Russians sentenced for cyber crime in US



08.10.2010, 07.02

NEW YORK, October 8 (Itar-Tass) -- Two of the 16 Russians arrested for cyber crimes in the United States have pleaded guilty of money laundering and were sentenced to prison terms and fines, according to Russian Vice-Consul in New York Alexander Otchainov.

He told Tass on Thursday Anton Yuferitsin was sentenced to 10 months in prison and a fine of 38.413 dollars yet in June. Another accused, Alexander Sorokin, was sentenced to six months and a fine of 100 dollars. Sorokin, who was released on bail, did not appear in court and Otchainov believes he has fled to Russia.

The third accused who also confessed, Alexander Fedorov, will be likely tried on January 5.

U.S. authorities accused 37 foreigners of stealing up to three million dollars from a hundred bank accounts through fraud. Twenty-one of them are listed as Russian nationals. Sixteen have been arrested and five are on the wanted list – Artem Semenov, Almira Rakhmatulina, Yulia Shpirko, Nikolai Garifulin, and Ilya Karasev.

However Otchainov said official notifications have been received only about twelve arrested Russian nationals. The consulate general requested the State Department and the FBI to clarify the situation. Otchainov recalled there are a lot of Russian names among the accused, but their nationality has not been identified.

The diplomat said the arrested are kept in a Manhattan prison. “There were no complaints from them, except for the quality of food,” he said.

The Iranian delegation visits the Investment Agency of Dagestan



07.10.2010 , 15:04

Makhachkala, October, 7, 2010. The delegation of the Province of Giljan (Islamic Republic Iran) led by the Governor General of the province Mr. Gahramani Chaboka Ruhollaha visited the Investment and Trade Agency of the Republic of Dagestan.

Gahramani Chabok Ruhollah noted that after acquainting himself with Dagestan, its inhabitants, he had a desire and determination to develop cooperation. He underlined that Giljan takes the leading position on volume of foreign investments.

On October, 5, during a meeting with the President of the Republic of Dagestan Magomedsalam Magomedov, the Agreement between the Government of the Republic of Dagestan and the governorship of the Province of Giljan of the Islamic Republic Iran about trade and economic, scientific and technical, cultural and humanitarian cooperation was signed.

In 2001 the contract on bases of mutual relation and cooperation principles between two states was signed between the Russian Federation and the Islamic Republic Iran. The given contract allows regions of the Russian Federation and Iran to enter into cooperation at different levels.



Bomb found in a medical facility in the Sverdlovsk region

Lifenews | 10:12:53

        In the Sverdlovsk region in the medical unit closed campus Atomic Forest found an explosive device and a note with threats. Suspicious object found keeper and promptly called the police.

        "The place went operational group with kynologist. The dog confirmed the presence of explosives. A large police force was deployed to the hospital - 350 people, members of the FSB" - told reporters the spokesperson of the police department of the Sverdlovsk region Valery Gorelykh.

        The city launched a special operation "Fortress". Around the medical unit in a 200 m evacuated all the people. In the nearest school № 71, stopped the lessons. All students withdrew to a safe place.

Russia enters final day of 10.10.10 election campaign



08.10.2010, 06.00

MOSCOW, October 8 (Itar-Tass) -- Russia is entering the final day of regional and municipal election campaign on Friday. A total of 7800 elections will be held in 77 regions of the country on 10.10.10. The number of candidates exceeded 100 thousand making the campaign a record one for Russia.

All seven registered political parties campaign for seats in regional and municipal legislatures. The four parliamentary parties – United Russia, Fair Russia, the Communists, and LDPR of Vladimir Zhirinovsky - run in all the six regional elections. All the seven parties run only in Chelyabinsk region. Patriots of Russia also run in Tuva, Belgorod, and Magadan, the Right Cause – also in Magadan, and Yabloko – only in Chelyabinsk which developed into a nationwide test range with 10.3 candidates per seat.

The United Russia has a total of 48.372 candidates at the elections of all levels, followed by independent candidates (39.854), the Communists (6122), LDPR (4504), and Fair Russia (4190).

The United Russia claimed it will get over 50 percent of votes in all the regions and Zhirinovsky promised to get factions in all the six regional parliaments.

The Communists blamed United Russia for using the “administrative resource” and unlawfully campaigning on the “day of silence” on Saturday when it is scheduled to announce candidates for the post of the Moscow mayor. Fair Russia leader Sergei Mironov fears the elections can repeat last year scandal in Moscow when all parties, except for United Russia, were denied seats in the city legislature. They stormed out of the State Duma in protest and President Dmitry Medvedev had to interfere.

Mayors and city councils of Makhachkala (Dagestan) and Samara on the Volga are to be elected, as well as legislatures of regional capital cities of Izhevsk, Kazan, Krasnodar, Kaluga, Kostroma, Magadan, Nizhni Novgorod, Orenburg, Rostov-on-Don, Tambov, Tomsk, and Cheboksary.

Hearts Burn Ahead of Elections



08 October 2010

By Alexandra Odynova

All but seven regions across the country will hold various elections this Sunday after a campaign tarnished by fraud allegations — which some underdogs even tried to counter with German heavy metal.

A total of 7,865 polls will be held in 77 of Russia's 84 regions, with about 100,000 candidates running. The count includes votes for six regional legislatures as well as mayoral elections in the regional capitals Samara and Makhachkala.

“The situation is complicated everywhere,” Lilia Shibanova, head of Golos, Russia's only independent electoral monitoring watchdog, said by telephone Thursday.

She said the ruling United Russia party has done “everything possible” to secure votes during the campaign, which makes direct vote fraud unnecessary.

About 30 million voters are expected to come to the polls, Central Elections Commission head Alexander Churov said Thursday.

Some 300 polling stations will be equipped with surveillance cameras that will broadcast the voting process online, Churov said. More than half of the cameras will be installed in Dagestan, where about 1,000 polls are to be held.

President Dmitry Medvedev signed a bill Thursday ordering local authorities to provide equal access to the media for all parties, and the Interior Ministry said it would deploy 100,000 police officers to maintain peace during the elections.

But opposition supporters and independent observers remained skeptical about the authorities' pledges of fair play.

The dirtiest campaigns so far have taken place in Samara and Krasnodar, and bitter struggles are expected to intensify in Novosibirsk, Tomsk and Chelyabinsk, Shibanova said.

In Krasnodar, 31 candidates from the Communist Party withdrew from city legislature elections after four party members were denied registration. Another four party nominees ignored the boycott.

Thousands of residents rallied in Samara late last month after no opposition candidates were allowed to register for mayoral elections in the only big city nationwide not controlled by United Russia.

“The elections really resemble last year's October vote,” Shibanova said, referring to fraud-tainted elections that saw United Russia sweep votes in Moscow and many other locations amid a loud outcry from rivals.

A Just Russia spokesman Anton Orlov said the party expected “the most fierce” competition in the Novosibirsk region, where the regional legislature and some three dozens municipal bodies are to be elected.

“We expect a fight in all six regions" with legislative elections, Dmitry Shlyapin, a senior official with the Liberal Democratic Party, said by telephone.

United Russia said Monday that it plans to get majorities in every poll.

Communists in Nizhny Novgorod have managed to fend off attempts to ban them from elections for using heavy metal music from German band Rammstein in a 17-second campaign video.

The Right Cause party, widely seen as a Kremlin pet project, asked a court to remove the Communists from the ballot for purported copyright infringement with their use of excepts from the song “Mein Herz Brennt” (My Heart Burns).

But a Nizhny Novgorod court dismissed the lawsuit this week, ruling that the Volga television company that had produced the clip had selected the soundtrack, not the Communists, local Communist member Alexander Perov said Thursday.

“The Volga television company has an agreement with that band; it was their decision,” Perov told The Moscow Times.

The clip, which urged voters not to cast ballots for United Russia, showed a brown bear — United Russia's symbol — behind bars.

The Communist Party has also accused United Russia of trying to capitalize even on the ouster of Moscow's mayor, using it as a pretext to get additional media coverage. United Russia plans to release a list of its candidates for Moscow mayorship on Saturday — a time when no direct campaigning will be permitted.

“It's well-known that no agitation is allowed on Saturday. But by announcing the candidates for the position of Moscow mayor the ruling party will have all Internet media, television and radio stations reporting that United Russia has proposed Moscow mayorship candidates,” senior Communist Party member Ivan Melnikov said in a statement.

But Churov of the Central Elections Commission dismissed the allegations Thursday, saying United Russia is just doing its job, Interfax reported.

Baturina's brother seeks payback from wife of Moscow's ex-mayor



10:06 08/10/2010

The brother of the wife of ousted Moscow mayor Yury Luzhkov has called on Russia's investigative committee to probe the "criminal activity" of Yelena Baturina.

Businessman Viktor Baturin says his sister's construction company, Inteko, owes him 3.5 billion rubles ($117 million), Kommersant daily reported on Friday, adding that some experts believe he is looking to settle old scores.

The siblings founded Inteko as a plastics company in 1991, but Baturin pulled out in 2007 after two years of legal wrangling. Inteko's securities were divided, landing him with $500 million worth of its "non-Moscow assets."

In a letter to lead investigator Alexander Bastrykin, Baturin called for a "thorough investigation" of Baturina, who he accuses of taking his 24 percent share of Inteko. He also alleges that the company has failed to pay his salary.

"There is no point in commenting on the ramblings of a madman," Inteko's press service was quoted as saying by Kommersant.

Baturin said he decided to make his accusations following the dismissal of Luzhkov, Kommersant reported. Critics of the couple say Baturina made her billions because her marriage to the Moscow mayor gave her unparalleled access to the city's lucrative construction sector.

President Medvedev fired Luzhkov last week over "loss of confidence" after weeks of backbiting between the Kremlin and Moscow City Hall.

Luzhkov and Baturina are facing possible criminal prosecution as investigators have launched a probe into a property deal involving Inteko.

MOSCOW, October 8 (RIA Novosti)

CORRUPTION WATCH: Economic crimes cost budget over RUB1 trillion



bne

October 8, 2010

Corruption and graft costs the Russian budget over RUB1 trillion ($33bn) a year, the Interior Minister Rashid Nurgaliyev said on Thursday.

The ministry uncovered over 200,000 economic crimes over the first eight months of this year, Nurgaliyev said.

"In the first eight months of the year, 225,000 economic crimes were registered, and half of them have already been solved tentatively," Nurgaliyev said reports Interfax.

Medvedev signs bill to boost copyright protection



bne

October 8, 2010

Russian President Dmitry Medvedev signed off on a bill that will improve copy right protection and intellectual property rigths on Thursday that brings the Russian into line with WTO norms.

The bill limits copying material to personal use only in case of necessity.

Pirating of every type of content is rampant in Russia.

Under the new bill copyright holders would get 40% of the fees from users of the material, while artists would receive 30%, and audio and video record producers would also get 30%.

Arctic expedition en route to year-long stay on ice floe



08 October, 2010, 10:31

Russian scientists will spend one year drifting on an ice floe in an epic expedition to the Arctic. It is the latest in a series of trips to study the area and support Russia's claim to the region's territory.

The ice floe that the expedition will pick for its base will "voyage" a long distance in a year, which means scientists will be able to a do research work on a vast territory of the Arctic.

The research team will study underwater shelves, estimate solar radiation and take water and ice probes in different parts of Arctic

Fanfares at the top of the world are nothing new for the likes of Arctic veteran, Russia’s Artur Chilingarov. He has lost count of the times he has traveled to both poles.

For others, a new, lonely, cold, possibly dangerous adventure on North Pole-38 expedition lies ahead.

For the team, two weeks aboard an icebreaker is their last chance to have fun and get to know new colleagues. As soon as they get to their final destination, it will be hard work and survival.

“This diary is a present from my girlfriend,” said a 25-year-old expedition member, oceanologist Andrey Balakin. “It is handmade, stylized as an old traveler’s book, with drawings and layers of papyrus paper. She wants me to write down my impressions, interesting stories.”

Andrey is one of a 15-strong team who will be left to fend for themselves for a year. Whatever food, medicine, equipment or clothes they need has to go with them now, because they will be out of reach. Scientists will have to keep an eye on ice cracks, dangerous storms, and polar bears on the hunt.

Also heading north on the ship is veteran Galiy Kumyshev from the sunny Russian republic of Kabardino-Balkaria. He says his family are not exactly happy with his career choice.

“My parents were against the expedition,” he said. “To worsen relations with parents in the Caucasus is a serious thing.”

”I came back home for six months to build a house for my sons and moved to St Petersburg. For me, the Nordic climate is better. Now I fall ill in the warm,” he says.

Galiy has been looking forward to reuniting with his best friends. While he has been on leave, huskies Dina and Dick spent a year on the island of Vise in the Arctic Ocean, most of it outdoors. Scientists tell stories of how they fearlessly chase bears into the sea.

Galiy has seen them grow from puppies into courageous explorers, but they can never head south to warmer climes. The biggest threat to husky dogs lies not within the Arctic, but outside it.

Born in the North, which is almost clean of viruses, these dogs would not survive in the cities. That is why they are moved from one station to another, in other words, they are anchored to the north for the rest of their lives.

The reunion between Galiy and his best friends was a happy one.

“Today is a special day for me. I can not express it with words. I am overjoyed!” he said. “I took a puppy from these two to the city and it died. I would have been less upset if my wife had fallen sick, than when my dog died. I could not eat and sleep for a week.”

Now the dogs are up and ready for a new polar journey. You need all the friends you can get alone in the Arctic.

PRESS DIGEST - Russia - Oct 8



3:57am EDT

MOSCOW, Oct 8 (Reuters) - The following are some of the leading stories in Russia's newspapers on Friday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT

kommersant.ru

- The Russian government will this year launch a Post bank aimed to compete with Russia's largest lender Sberbank (SBER03.MM: Quote, Profile, Research, Stock Buzz), the paper writes.

- Russia's Orthodox Church will launch its own channel on video web site YouTube, hoping to draw the attention of the youth to the religion, the daily says.

- The Israeli coffee shop chain Red Espresso Bar plans to invest $75-150 million in Russia. Starbucks (SBUX.O: Quote, Profile, Research, Stock Buzz) is the currrent leader of Russia's coffee business, having a 12.3 percent of the market, the paper says.

VEDOMOSTI

vedomosti.ru

- The index of consumer trust in Russia dropped in the third quarter of 2010 for the first time since the financial crisis peaked. Twenty-four percent of Russians expect the economic situation to worsen, the daily reports.

- During Russian regional parliamentary elections, to be held on Oct. 10, electronic ballot boxes will be installed in more than 1100 polling stations across Russia, except for the volatile Dagestan region, the daily writes.

NEZAVISIMAYA GAZETA

ng.ru

- The Russian government will raise electricity rates by up to 10 percent in 2011 and heating will be increased by up to 14 percent, the paper writes.

- Communists in Nizhny Novgorod claim the ruling United Russia party organises unfair voting by paying off people to vote for a particular candidate, the daily says.

TRUD

trud.ru

- Between 33 and 42 percent of Russians will abandon commuter trains rides in the event that fares are raised, the daily writes.

RIA Novosti Press Review for Friday, October 8, 2010



08:48 08/10/2010

POLITICS

Former Mayor of Moscow Yury Luzhkov gave an interview to CNN after he was discharged from his post by President Dmitry Medvedev. Luzhkov says there is less democracy in Russia nowadays as there used to be during the presidency of Boris Yeltsin. (Kommersant)

The State Duma, the lower house of the Russian parliament, is set to debate on a bill that envisages higher penalties for violations of fire safety in forests. An unprecedented heat wave hit European Russia this summer, sparking wildfires and severe droughts in many regions. More than 50 people died in the fires, which destroyed over 2,000 homes. (Vremya Novostei)

ECONOMY

The president of Cyprus has agreed to make investments in Russia more transparent. Russian President Dmitry Medvedev currently pays an official visit to Cyprus (Vremya Novostei, Kommersant, Rossiiskaya Gazeta)

Investment firm Troika Dialog wants to swap its share in Russia's largest car producer AvtoVAZ with Renault or Nissan. The talks have been held for a year already but the partners seem not be ready for such deal. (Vedomosti)

U.S. lawmakers may block the purchase by ARMZ, a subsidiary of Russian state nuclear corporation Rozatom, of a controlling stake in Canada's Uranium One. The Canadian miner has a license to develop a uranium deposit in Wyoming through its subsidiary Uranium One USA. (Kommersant, Vedomosti)

SOCIETY

Moscow schools need classes that teach lessons of interethnic tolerance. Mikhail Solomentsev, the head of the City Hall’s department on interethnic relations, says people of more than 170 nationalities are currently residing in the Russian capital and the number might grow further (Nezavisimaya Gazeta)

The government has introduced a bill to the State Duma that stipulates an obligatory medical examination of all detainees before sending them to prisons or pre-detention wards. The reason for such step is a significant number of deaths after detainees were sentenced to prisons. (Rossiiskaya Gazeta)

MEDICINE

New regulations concerning imports of medicine in Russia are coming into force on Friday. (Rossiiskaya Gazeta)

REAL ESTATE

Over 1,600 new houses must be turned to owners, who lost their houses in wildfires this summer, by the end of October (Rossiiskaya Gazeta)

DEFENSE

A test warhead from a Bulava submarine-launched ballistic missile successfully hit its target on the Kura test range in Russia's Far East Kamchatka region. Bulava test launches were put on hold after a failed launch on December 9, 2009, which was caused by a defective engine nozzle. (Rossiiskaya Gazeta, Vremya Novostei, Novaya Gazeta)

SPORT

The Russian national football team will clash on Friday with Ireland in a qualifying match for Euro 2012. (Sport Express, Kommersant)

Russia 50 years behind the times in science, Nobel laureate says



Co-winner of prize says he has no interest in returning to his homeland

 

Agence France-Presse October 8, 2010 12:12 AM

 

The sciences in Russia need at least 50 years of heavy investment to match international levels, Russian-born Nobel Laureate Andre Geim said Thursday, dismissing an invitation to return.

"If two to three per cent of the budget go to the sciences, it will reach adequate levels in 50 years' time," Geim, who won the Nobel Prize for physics with his research partner Konstantin Novoselov this week, told the Echo of Moscow radio.

"For things to change in the Russian sciences, the infrastructure needs to be changed, which cannot be done in five to 10 years," he said.

"You need a long investment program to create wonderful conditions for science."

Geim, a Dutch citizen who now works at Britain's University of Manchester, added that while nothing was stopping Russian science from again becoming competitive on the world stage, he had no interest in returning to Russia.

"I don't have a Russian passport, I am a citizen of Holland. Have people over there lost their minds?," he said of an offer to join the new project Skolkovo, promoted by President Dmitry Medvedev to develop Russian science and technology.

"Do they think that if they offer a bag of gold then they can invite anybody?" Geim said to another station, the Russian News Service radio.

A representative of the Kremlin-backed Skolkovo foundation had Wednesday invited Geim and Novoselov to participate in plans to create the cutting-edge centre for innovation in Russia.

But Geim slammed the invitation: "It is stupid to import big names, one needs to grow their own," he told the Echo of Moscow radio.

Geim and Novoselov were awarded the Nobel Prize on Wednesday for pioneering work on graphene, an ultrathin material that could become the future of electronics.

Both have worked in Manchester since 2001, though Geim left Russia for the Netherlands in the early 1990s.

Medvedev lamented on Wednesday that the scientists had left Russia before making their discovery, calling the government efforts to improve research facilities a "huge failure."

Chernov’s choice



Barto, the Moscow electro-punk band whose song has been under investigation for “extremism” after being performed at a rally, will showcase its new album with a concert at Tantsy on Saturday.

For the album, which is called “Intelligence, Conscience and Honor,” the band recorded a new version of the song, featuring Alexei Nikonov of the St. Petersburg band P.T.V.P. reciting his poetry, but the track will not be released on CD. Instead, it will only be available on the Internet version of the album, Barto vocalist Maria Lyubicheva said Thursday.

According to Lyubicheva, it was the label that took the decision to exclude the song — called “Ready” (“Gotov”) — from the finished album. “I can understand them; it’s not that they’re afraid of criminal prosecution, but some inspectors could be sent to them who would want money,” she said.

The song, which features the lyrics “Are you ready to set fire to police cars at night” became the subject of attention from Center E, the law-enforcement agency that was created by Putin to “counter extremism,” after Lyubicheva recited it into a megaphone at a rally in defense of the Khimki Forest in Moscow in August.

Lyubicheva said the investigation is now over, with experts employed by Center E having found “extremism” in the song.

“I will have to go to the prosecutor’s office in mid-October; I was called by my lawyer who said that they were deciding whether to open a criminal case or not,” she said.

She said she received calls from several prominent philologists who said they were ready to produce their own independent analyses of the song’s lyrics in defense of the band.

Lyubicheva described the new album, whose title has been culled from Lenin’s quote “The Party is our era’s intelligence, honor, and conscience,” as more “lyrical” than previous work.

She said that Barto invited Nikonov to recite his poetry on “Ready” because they felt that the work of his politically-conscious band PTVP was close to what Barto did.

Meanwhile, St. Petersburg’s very own rally — to protest the destruction of the historic center and city gardens, infill construction and plans to build a 403-meter-tall skyscraper for Gazprom that would dominate the city’s protected skyline — has been supported by a number of musicians including DDT frontman Yury Shevchuk, who is expected to take part.

Vadim Kurylyov, the frontman of the rock band Electric Guerillas, and Mikhail Novitsky of SP Babai will also perform.

The Rally for the Preservation of St. Petersburg will be held on Pionerskaya Ploshchad, near the Theater of Young Spectators (TYuZ), at 1 p.m. Saturday.

Kurylyov, who wrote a song titled “Be Against the Skyscraper,” will perform with his full band at Orlandina on Thursday.

— By Sergey Chernov

Chavez’ Visit to Russia: Infected by ‘VIRUS’?



Posted October 7th, 2010 at 11:00am in American Leadership

According to international press reports, Venezuelan President Hugo Chavez is planning to visit Russia, Belarus, and Iran later next week. In Moscow, he will sign a series of agreements on trade and technology.

The Obama Administration needs to let its Moscow counterparts know that unbridled support of a mercurial Latin American politician, including weapons and dual use technology transfer, may threaten the “reset” policy between U.S. and Russia.

Yet, Moscow has much to gain from its flourishing relationship with Caracas.

First, when the Venezuelan leader last visited Moscow in September 2009, he announced that his country recognized the independence of the former Georgian republics of South Ossetia and Abkhazia—a big boon for the Kremlin’s policy re-establishing a “zone of privileged interests” in the “near abroad.” The old Soviet ally Nicaragua and a broke island nation of Nauru were the only other nations to also recognize the two breakaway republics’ respective independence.

Second, Moscow and Caracas have a booming military cooperation, including Russian arms sales to Venezuela. So far, Caracas has purchased $4 billion in arms, including fighter jets, Mi-17 helicopters, 100,000 Kalashnikov rifles, and a Kalashnikov factory—all in the last five years. And Venezuela is scheduled to buy $5 billion more in Russian weaponry.

Third, the two states and their energy companies cooperate on energy. The key player in these bilateral relations is the Russian energy giant Gazprom, which recently received access to two of Venezuela’s gas fields in the Caribbean. Besides this, a joint venture with Russian companies in the Orinoco belt—Rosneft and LUKOIL—will begin producing 50,000 barrels a day by the end of this year. Through the Venezuelan national oil company PDVSA, which owns CITGO, some of this fuel will reach U.S. markets.

Onward and upward: when Russian Prime Minister Vladimir Putin met with Chávez in April of this year, the two leaders discussed a satellite launch site, to begin Venezuela’s space program, a joint venture on oil exploration in eastern Venezuela, and the construction of a nuclear power plant.

And Roger Noriega, the former U.S. Assistant Secretary of State for Western Hemisphere recently disclosed that Chávez is running a secret nuclear program in partnership with Tehran’s ayatollahs, including mining and enriching uranium by Iranian companies on Venezuelan soil. The Venezuelan nuclear and space program may eventually pose a threat to the non-proliferation regimes in Latin America; neighboring Columbia and Brazil have reasons to worry.

Russia-Venezuela cooperation follows the path of the Russia-Iran relationship, boosting an anti-American, authoritarian, and anti-status quo actor, only this time in the Latin America. Chávez also allows Iran to expand its influence in Latin America. To compete, Brazil is reaching out to the Islamic Republic. Both Brazil and Venezuela, together with Turkey, have already expressed their support to Iran by opposing the U.N. Security Council’s anti-Iranian sanctions, which, ironically, Russia supported.

Some observers nastily called the alliance of Venezuela, Iran and Russia “VIRUS.” The question is, whether the VIRUS has already spread, or is likely to spread, to Bolivia, Cuba, Ecuador, Nicaragua, North Korea, and possibly China.

Domestically, the most important question is whether association with authoritarian and violent regimes is helping Russia to modernize, to improve the rule of law, and to attract Western capital.

So far, it looks like Russia-Venezuelan cooperation is at least partially aimed at poking a finger in the America’s eye, rather than economic modernization. In what a move that seems like a blast from the (Soviet) past, Russia obviously wants to prove its strength in America’s backyard. Nevertheless, if Russia cares about modernization and integration in the global economy, it should pursue such goals without being infected with the VIRUS.

National Economic Trends

Russia Corporate Debt ‘Bubble’ May Be Forming, Pankin Says



By Paul Abelsky

Oct. 8 (Bloomberg) -- Russia’s Finance Ministry said a “bubble” may be forming in the country’s financial markets after a rally in company bonds.

“There’s a danger that bubbles will form again on the financial markets,” Deputy Finance Minister Dmitry Pankin told reporters in Washington, where he’s attending the annual conference of the International Monetary Fund and World Bank. In Russia, corporate bonds are selling like “hot cakes,” he said.

“Corporations may be finding it easier to borrow and investors aren’t being as vigilant with the quality of company itself,” Pankin said.

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

To contact the editor responsible for this story: Brad Cook in Moscow at Bcook7@

Last Updated: October 8, 2010 02:00 EDT

Russia May Sell First Bonds in Euros Next Year, Pankin Says



By Paul Abelsky

Oct. 8 (Bloomberg) -- Russia may sell its first bonds denominated in euros next year as the government seeks to set a “benchmark” to help domestic companies borrow in the common European currency, Deputy Finance Minister Dmitry Pankin said.

“As part of our debt strategy, we think it would be appropriate,” Pankin told reporters in Washington, where he’s attending the annual conference of the International Monetary Fund and World Bank.

Mexico’s recent success in selling so-called century notes shows that “demand is high for long-term paper,” Pankin said. “It would be interesting to take advantage of that.” Mexico this week sold $1 billion of bonds due in 100 years in the longest-maturity debt issued by a Latin American country.

Russia in April sold its first international bonds since defaulting on domestic debt in 1998, raising $5.5 billion. If the government decides to sell bonds in euros it may seek a similar amount, though the priority continues to be selling ruble debt to help cover the budget deficit, Pankin said.

Russia’s government is stepping up domestic borrowing to help cover a 2010 fiscal shortfall forecast at 5.3 percent of gross domestic product. The world’s biggest energy supplier posted a deficit of 5.9 percent of GDP last year, its first since 1999.

Russia borrowed a record 293 billion rubles ($9.7 billion) in the third quarter and will seek to raise 300 billion rubles in the last three months of this year to help finance its budget deficit after the worst economic slump on record last year.

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

To contact the editor responsible for this story: Brad Cook in Moscow at Bcook7@

Last Updated: October 8, 2010 02:00 EDT

UPDATE 1-Russia may offer $5.5 bln in euro bonds in 2011 –Pankin



2:00am EDT

* Euro Eurobond 2011 issue size similar to $5.5 bln dlr bond

* Russia priced $5.5 bln 5-yr, 10-yr paper in April, 2010 (adds details)

By Lidia Kelly

WASHINGTON, Oct 8 (Reuters) - Russia may place sovereign euro-denominated Eurobonds next year with volume matching the $5.5 billion the country issued in dollar debt in April, Deputy Finance Minister Dmitry Pankin said late on Thursday.

"In our debt strategy we noted that after we will have established a benchmark in dollars, it would be desirable to have such an issue also in euros," Pankin told journalists on the sidelines of the World Bank/International Monetary Fund meetings in the U.S. capital.

He said that the exact volume of the offering will be determined by market conditions, but it should more or less correspond to the dollar placement.

Russia priced $5.5 billion in five-year and 10-year papers in April, tapping the international debt markets for the first time since 1998 to cover budget deficit that came as a result of the country's worst recession in more than a decade.

(Writing by Lidia Kelly; Editing by Tomasz Janowski)

October 08, 2010 10:01

Russian monetary base down 51.6 bln rubles to 5163.3 bln rubles



MOSCOW. Oct 8 (Interfax) - The narrow monetary base in Russia stood at 5163.3 bln rubles on October 4 down from 5214.9 bln rubles on September 27, the Central Bank reported on Friday.

The narrow monetary base includes cash in circulation (including cash held at credit institutions), and balances on banks' mandatory local-currency-deposit reserve accounts with the Central Bank.

of

Russian consumer confidence falls for the first time in 18 months



bne

October 8, 2010

Having bourn the blow of the crisis well, Russians are becoming impatient for the benefits of the recovery as consumer confidence falls for the first time since the nadir of the crisis 18 months ago, Federal State Statistics Service (Rosstat) says.

Russian consumer confidence fell in the third quarter of this year down 4% quarter-on-quarter to negative 11%. Confidence levels fell to a ten-year low at the start of 2009, Rosstat said.

The decline mainly resulted from the "worsened subjective opinion of the population regarding expected and actual changes in the economy, as well as expected changes in their personal financial situation," according to the statement.

Business, Energy or Environmental regulations or discussions

Russia Stocks Drop for Second Day on Lower Oil, Copper, Zinc



By Jason Corcoran

Oct. 8 (Bloomberg) -- Russian stocks fell for a second day as crude and metals dropped, dimming earnings prospects for raw materials producers.

VTB Group, Russia’s second-largest bank, dropped 0.9 percent. OAO Rosneft, the country’s largest oil producer, lost 0.5 percent, helping to push the Micex Index of 30 stocks lower by 0.4 percent to 1,462.88 at 11:53 a.m. in Moscow.

Oil, Russia’s main export, fell as much as 0.7 percent to $81.11 a barrel. Copper, zinc and nickel all fell on the London Metals Exchange. GMK Norilsk Nickel, the world’s largest producer of the metal, retreated 0.5 percent to 5,327.59 rubles.

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

To contact the editor responsible for this story: Gavin Serkin at gserkin@

Last Updated: October 8, 2010 04:15 EDT

Russian markets -- Factors to Watch on Oct 8



11:45am IST

MOSCOW, Oct 8 (Reuters) - Here are events and news stories

that could move Russian markets on Friday.

You can reach us on: +7 495 775 1242

STOCKS CALL (Contributions to moscow.newsroom@):

Uralsib: Equities and the rouble will have little guidance

from international markets this morning. China markets are

strong as they catch-up from a long holiday closure while other

Asian markets are flat or slightly weaker. Alcoa's 3rd Qtr

numbers were better than analysts had expected so that will

provide some relief to nervous investors.

EVENTS [RU-DIA] (All times GMT):

MOSCOW - Deputy Foreign Minister meets Japanese counterpart

IN THE PAPERS [PRESS/RU]:

Russia's state-owned oil giant, Rosneft (ROSN.MM: Quote, Profile, Research) is losing its head of exploration and production, Mikhail Stavsky, the top manager told Kommersant. Last month Rosneft's long-time president Sergey Bogdanchikov also left the company, and Kommersant said the new president had begun to "refresh the team."

TOP STORIES IN RUSSIA AND THE CIS [RU-NEWS]:

TOP NEWS:

Russia may place $5.5 bln in euro Eurobonds '11 [ID:nLDE69701U]

Russian-U.S. crew heads for space station [ID:nLDE6962ER]

COMPANIES/MARKETS:

AvtoVAZ hopes Nissan will buy Troika shares [ID:nLDE696282]

Vimpelcom in talks with Algeria over Djezzy [ID:nLDE69621W]

Mostotrest value at $2-2.55 bln pre-IPO-sources [ID:nLDE6961WZ]

Otkritie lures RenCap defectors, plots IPO [ID:nLDE6961NG]

Sberbank to add to 2017 Eurobond issue-source [ID:nLDE6961NL]

Daimler to increase stake in truckmaker Kamaz [ID:nLDE69610Q]

ECONOMY/POLITICS:

Russia to return Iran $167 mln over missiles [ID:nLDE6961R8]

Rouble rise halts near 5-mth highs [ID:nLDE6960EO]

MARKETS CLOSE/LATEST:

RTS .IRTS 1,582.23 -0.13 pct

MSCI Russia .MIRU00000PUS 837.64 -0.38 pct

MSCI Emerging Markets .MSCIEF 1,100.83 -0.18 pct

Russia 30-year EurobondRU011428878= yield: 4.156/4.128 pct

EMBI+ Russia 11EMJ 223 basis points over

Rouble/dollar RUBUTSTN=MCX 29.8900

Rouble/euro EURRUBTN=MCX 41.4050

NYMEX crude CLc1 $81.62 -$0.05

ICE Brent crude LCOc1 $83.41 -$0.02

For Russian company news, double click on [E-RU]

Treasury news [M-RU] Corporate debt [D-RU]

Russian stocks [.ME] Russia country guide RUSSIA

All Russian news [RU] Scrolling stocks news [STXNEWS/EU]

Emerging markets top news [TOP/EMRG]

Top deals [TOP/DEALS] European companies [TOP/EQE]

AvtoVAZ, Mobile TeleSystems, Polyus Gold: Russia Equity Preview



By Henry Meyer

Oct. 8 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.

The 30-stock Micex Index declined 0.5 percent to 1,468.31. The dollar-denominated RTS Index rose 0.4 percent to 1,584.29.

OAO AvtoVAZ (AVAZ RX): The Russian automaker part-owned by France’s Renault SA will end the year with a profit of around 1 billion rubles ($33.5 million) after a loss last year, as the economy starts to recover and the government offers incentives to encourage new car sales, board Chairman Sergei Chemezov said. The company’s share price fell 2.3 percent to 27.42 rubles.

OAO Mobile TeleSystems (MTSI RX): Russia’s largest mobile- phone company said it acquired 9 percent of shares in its Comstar unit, taking its stake to 71 percent. MTS is seeking full control to cut costs and sell television and broadband offerings to tap growing demand for Internet services in eastern Europe. MTS stock fell 0.3 percent to 253.31 rubles.

OAO Polyus Gold (PLZL RX): Gold futures fell from their record high of $1,366 an ounce to $1,343.50 per ounce. Russia’s largest gold miner added 7.4 percent to 1,538.86 rubles.

OAO Rosneft (ROSN RX): Crude oil slipped from a five-month high after U.S. equities fluctuated and the dollar pared losses versus the euro. Russia’s biggest oil company declined 0.9 percent to 208.7 rubles.

To contact the reporter on this story: Henry Meyer in Moscow at hmeyer4@

To contact the editor responsible for this story: Amanda Jordan at ajordan11@

Last Updated: October 7, 2010 22:00 EDT

Bond Yields Lowest to Stocks Revive IPO Market: Russia Credit



By Denis Maternovsky and Jason Corcoran

Oct. 8 (Bloomberg) -- The lowest-ever yields on Russian bonds compared with stocks are spurring the biggest wave of initial public offerings since before the credit crisis as investors seek higher returns from equities.

Dollar bonds sold by Russian companies yielded 5.41 percent yesterday, an all-time low, down from an average of 20.4 percent in October 2008, according to JPMorgan Chase & Co.’s EMBI+ index. The 30 stocks in the Micex Index provided an 11.3 percent equity yield, or 2.2 times the level from bonds, the highest ratio in the eight years since Bloomberg began compiling the data. The multiple was 0.7 times in December 2009.

The relative value gap, which is twice the ratio in Brazil and three times that in China, may help make equities more attractive to investors. Companies from steelmaker OAO Severstal to retailer O’Key Group plan as much as $2.5 billion of share sales by yearend, the biggest quarter for Russian stock offerings since 2007.

“There has been too much of a brainless rush into fixed income,” said Eric Kraus, the head of strategy at Otkritie Financial Corp. in Moscow. “The market is at a crossover. At some point you have to think about equities.”

Record-low interest rates globally and rising commodity prices have helped spur demand for fixed-income assets from the world’s biggest energy exporter. Russian corporate bonds in dollars gained 14.6 percent this year, beating the 14.5 percent advance for JPMorgan’s Corporate EMBI Index.

Equities Lag

Equities have lagged behind other emerging markets. Russia’s Micex Index, which tumbled 9.7 percent in the second quarter, is down 4 percent from this year’s high on April 15. The index’s 7.2 percent gain this year trails the 11 percent advance for the MSCI Emerging Markets index.

“The problem has been that international investors view Russia as a derivative of global growth,” said Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow.

The Micex has the highest earnings yield among the largest emerging markets, or the so-called BRIC nations of Brazil, Russia, India and China. Russian stocks trade at a 44 percent discount to the MSCI China Index and Brazil’s Bovespa Index, 57 percent below India’s Bombay Stock Exchange Sensitive Index and 42 percent less than the MSCI Emerging Markets index, data compiled by Bloomberg show.

Share Sales

Food retailer O’Key expects to raise as much as $500 million from a London IPO by the end of the year, according to a banker involved in the deal for the Moscow-based company, Vedomosti reported Oct. 6. London-based Petropavlovsk Plc, Russia’s third-largest gold producer, plans to raise about $300 million by selling shares in its iron-ore unit in Hong Kong this month, Chairman Peter Hambro said on Oct. 5.

Severstal, Russia’s largest steelmaker, is considering selling shares this year in its gold unit, the company said in a statement. The listing could be worth about $1 billion, according to a banker with knowledge of the transaction.

Severstal has an estimated earnings yield of 9.5 percent, based on the average of 10 analysts’ forecasts for 2011 earnings tracked by Bloomberg. That compares with a yield of 5.3 percent on the Moscow-based company’s dollar debt due July 2013.

OAO Mostotrest, the Moscow-based bridge builder, is selling shares equal to about 25 percent of the company, it said in a statement Oct. 6. The company is valued at $2.1 billion to $2.5 billion, Interfax reported, citing TKB Capital, which is helping organize the offering.

‘Upside’

“Investors may be looking at equities more because they no longer see any upside for debt instruments,” said Nikolai Podguzov, head of fixed-income strategies at VTB Capital in Moscow. “The liquidity we are seeing on the market could feed into these new IPOs.”

Mostotrest’s decision to offer shares rather than bonds was a “logical step in the company’s development,” Chief Executive Officer Vladimir Vlasov said in a telephone interview. The company expects to complete the share sale to Russian and European investors in November, he said. “The crisis is to blame for the fact that we haven’t done it earlier,” Vlasov said. “Now the markets have recovered and we think this is a timely proposal.”

Russian companies sold a record 577 billion rubles ($19.4 billion) of domestic debt and $16.6 billion of international securities this year, compared with $4.7 billion in new share issuance, UralSib’s Weafer said. Weafer, who had predicted Russian companies may raise $20 billion from share sales this year before scaling back his forecast to $10 billion in June, now estimates the total at $7.5 billion.

Balance Sheets

While companies “need to raise equity to repair their stretched balance sheets,” investors will be more cautious after losses from IPOs so far this year, Weafer said.

OAO Protek, the Moscow-based drug wholesaler, has dropped 45 percent since its April IPO. OAO Russian Sea Group raised $90 million in its IPO in April, less than the $174 million initially intended, after setting its price at the bottom of the $6 to $8 per share range. The Moscow-based company’s shares have tumbled 58 percent since the offering.

“Theoretically most of the market should be switching out of fixed income based on the implied yields, which is many times higher than the bond market,” said Michael Kart, who helps manage about $1 billion in stocks at Marshall Spectrum Ltd. in Moscow, including about $100 million of Russian equities in Russia and the former Soviet Union. “The appetite for Russian equities is still relatively low. You have to be highly selective about investing in Russia IPOs and do a lot of due diligence. Some people lost a packet of money in IPOs earlier this year.”

Ruble Gains

The yield on Russia’s dollar bonds due in 2020 fell seven basis points, or 0.07 percentage point, to 4.299 percent yesterday, the lowest level since they were sold in April. Gains in the country’s ruble notes due August 2016 reduced the yield 14 basis points to 7.16 percent.

Investors cut the extra yield demanded on Russian debt over U.S. Treasuries by two basis points to 221, according to JPMorgan EMBI+ indexes. The difference compares with 159 for debt of similarly rated Mexico and 200 for Brazil, which is rated two steps lower at Baa3 by Moody’s.

The yieldspread on Russian bonds is 52 basis points below the average for emerging markets, down from a 15-month high of 105 in February, according to JPMorgan indexes.

The cost of protecting Russian debt against non-payment for five years using credit-default swaps declined 0.7 basis point to 145.5 yesterday, according to data provider CMA. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.

Default Swaps

Credit-default swaps for Russia, rated Baa1 by Moody’s Investors Service, its third-lowest investment grade rating, cost 0.8 basis point more than contracts for Turkey, which is rated four levels lower at Ba2. Russia swaps cost as much as 40 basis points less on April 20.

The ruble gained 0.7 percent to 29.6850 per dollar yesterday, its strongest level since May 4. Non-deliverable forwards, or NDFs, which provide a guide to expectations of currency movements and interest rate differentials and allow companies to hedge against currency movements, show the ruble at 30.0026 per dollar in three months.

“There are a large number of companies waiting in the wings and all the drivers for IPOs which were there last year continue to hold true, said Moscow-based Hasnen Varawalla, the head of corporate finance at Renaissance Capital, in an interview.

To contact the reporters on this story: Denis Maternovsky in Moscow at dmaternovsky@; Jason Corcoran at Jcorcoran13@

To contact the editor responsible for this story: Gavin Serkin at gserkin@

Last Updated: October 7, 2010 17:03 EDT

Record lows for bond yields to fuel an equity boom



bne

October 8, 2010

Russia's bond yields hit a record low on Thursday and yields are now so low that companies and investors are turning to their equity to find value that should soon fuel a rise in equity valuations.

Dollar bonds sold by Russian companies yielded 5.41 percent yesterday, an all-time low, down from an average of 20.4 percent in October 2008, according to JPMorgan Chase & Co.'s EMBI+ index, reports Bloomberg.

The 30 stocks in the Micex Index provided an 11.3 percent equity yield, or 2.2 times the level from bonds, the highest ratio in the eight years since Bloomberg began compiling the data. The multiple was 0.7 times in December 2009, says the newswire.

This gap between the value of bonds and equities is now twice that in Brazil and three times that in China.

What is happening is that Russia looks completely different from the outside to bond and equity investors.

For the bond investors Russia looks like a rock in a global sea of pain. The hard currency reserves added another $6bn this week bring the total to just shy of $500bn. In other words Russia has clawed back more than half of the $260bn it spent during the crisis supporting companies, bailing out banks ($66bn alone) and in a controlled 30% devaluation of the ruble at the start of 2009. The hard currency reserves fell from a peak $600bn to a low of $340bn last spring. Add to this the 7% of GDP government debt and approximately 5% budget deficit in the face of about 4.5% growth and Russia looks to be in relatively robust economic health compared to the rest of the world.

From the equity traders view Russia looks rubbish. Corporate governance abuses have returned, most notably in the fight leading fund manager Prosperity Capital Management is having with power station TGK-2 to get some $300m out of the company from a mandatory buyout the utility was obliged to make in the summer of 2008, but reneged on after the crisis hit. The international press continues to make hay from the Kremlin's poor image and inept PR. And the government is making a lot of promises about change, but there has been little in the way of concrete action.

However, this situation cant last forever as although the p/e on stock prices remains stuck at 8% -- where it has been almost since the market strarted trading in the mid 1990s - the RTS index still rose by 760% over the last decade simply on the back of rising earnings.

The outlook for earnings in 2011 is also good and so the leading RTS index, which has been trading sideways at about 1500 for most of the summer, will rise again soon simply because companies are earning profits.

Dedicated Russia investors are yearning for a re-rating where the p/e ratios start to move towards those of India (19%) and China (16%) but it wont happen until the Kremlin does something radical to improve Russia's image. And with Duma and Presidential elections slated for 2011 and 2012 respectively that is highly unlikely. Still, as bond yields usually go in the inverse direction to equity yields, tension is clearly building in the equity market for an earnings based upward correction that must come soon.

Bank of Moscow's president gives an interview to Kommersant



VTB Capital, Russia

Friday, October 8, 2010

resignation of Mayor Yuri Luzhkov does not affect the bank's business - intends to develop insurance business further - the bank is not planning an IPO in the next 1-1.5 years - neutral

News: Today, Kommersant has published an interview with Andrei Borodin, President of Bank of Moscow. The key takeaways from what he had to say are as follows.

• The recent resignation of City of Mayor Yuri Luzhkov has no material effect on the bank's operations, as Bank of Moscow has a well diversified business (50% of loans are granted to borrowers in regions) and resource base.

• The bank aims to integrate Spasskie Vorota insurance company into its insurance assets so as to develop this business further.

• Currently, the bank is well capitalised, with CAR of 18%, and so it sees no need for an IPO in the next 12-18 months.

Our View: Borodin mostly reiterated previous statements from the bank's management about developing Bank of Moscow and therefore this interview is neutral for the stock. It also chimes with our view that the changes in Moscow City Hall will not affect Bank of Moscow's business. And we have mentioned before that the bank might consider an IPO in the medium term should the support of the local authorities be insufficient to expand the business. However, the uncertainty around the appointment of the new Mayor and the new policy at City Hall will, in our view, have a negative effect on investor sentiment and we are reiterating our Hold recommendation.

Back to top Dmitry Dmitriev

Russia's VTB says Eurobond three times oversubscribed



2:18am EDT

MOSCOW, Oct 8 (Reuters) - Russia's second biggest bank VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz) said on Friday its new ten year $1 billion Eurobond had been three times oversubscribed and saw demand from U.S. and European investors.

The bank launched the Eurobond at 410 basis points over mid-swaps, it said in a statement. [ID:nLDE6951S8]

(Reporting by John Bowker; Editing by Alfred Kueppers)

Russian Railways sets aside $3.3 mn for new logistics company

$33-mn-for-new-logistics-company.html

Written by Editor on Thursday, 07 October 2010 08:00

Since its founding seven years ago this week, RZD, the Russian rail company, has moved an astonishing 10.4 billion tons of cargo. Despite the demise of communism the firm is fully nationalised with the state owning 100% of the company. Operating independently the company has gradually seen its market share grow, standing at 42.4% of all rail freight shipped in the country so far this year. RZD now plans to expand into the broader logistics market with €3.3 million set aside to form a new company. Russian Railways Logistics will provide freight forwarding, warehouse / terminal, and customs / brokerage services, and also manage delivery chains acquired from both domestic and external service providers.

 Speaking on the recovery since the severe downturn which affected all logistics sectors, and referring to the companies final 2009 year on year figures, Russian Railways Senior Vice President Vadim Mikhailov said:

“The year 2009 proved to be a resilience test for Russian Railways. Due to the decline in freight, earnings fell somewhat. By year end, the group managed to substantially reduce the size of its operational spending, by 8.2% to around €25 billion. Labour costs shrunk by 13.0%, materials and spending on repairs and servicing down 24.5% and fuel down 32.5%. As a result, EBITDA returned to its pre-crisis level.”

The group have been in talks with SNCF regarding both passenger and freight services, the parties announced readiness to cooperate in developing goods transport and terminals as part of the Europe – Asia transport corridor, and their intention of improving standards, to attract larger freight volumes.

The Trans Siberian market was thriving with the total volume of large-tonnage containers up by 23%, of which shipping international freight grew 45%. an agreement was reached on stepping up the work of the Trans-Siberian Intermodal Operators Association of Japan (TSIOAJ), the Korea International Freight Forwarders Association(KIFFA), and the European Transsiberian Operators’ Association (GETO) to attract additional freight flows to theTrans-Siberian Railway from Japan and South Korea to Europe, and in the opposite direction.

A regular container train service has now been launched on the China – Europe – China route, in order attract additional container freight. TransContainer, a partially privatised RZD subsidiary, is involved in this project as an operator, providing container transport services on the Russian, Ukrainian, and Belarusian rail networks.

The Trans-Eurasia Logistics Company (a joint venture between Deutsche Bahn Mobility, Polzug and Kombiferker) is continuing its work organising container freight services on international routes. Since June 2010, the joint venture has been working, with the support of TransContainer and DB Intermodal, to provide regular container freight services between Duisburg (Germany) and Moscow.

Mr Mikhailov also spoke about the Second Freight Company, owned 99% by Russian railways (the non-profit organization Zheldorreform holds one share) and that organisations intention to invest €3.5 billion in purchasing and upgrading rail wagons. The formation of a competitive sector in rail freight services through the creation of operators using their own rolling stock is part of the Programme for Structural Reform of Rail Transport and the target model of the rail-freight services market.

The total number of carriages the Second Freight Company intends to operate will be 180,142 (including 23,728 carriages leased by Russian Railways) and they are aiming at a 22% share of the country’s rail freight market by 2015.

Stolichnaya Signs Accord to Sponsor New Nets Arena in Brooklyn



By Nancy Kercheval

Oct. 8 (Bloomberg) -- Stolichnaya signed a five-year accord to become the official vodka of the Barclays Center, which will be the home of the Russian-owned New Jersey Nets from 2012.

Stolichnaya, owned by the Moscow-based SPI Group, will have exclusive branding around the Brooklyn facility and in the arena’s six bars, an e-mailed statement from Brooklyn Sports & Entertainment said yesterday. Financial terms weren’t disclosed.

“This partnership represents Stoli’s first long-term foray into professional sports,” said Andrey Skurikhin, a partner at SPI Group.

Brooklyn Sports & Entertainment plans to open the venue in 2012 for the Nets, whose purchase by Mikhail Prokhorov was approved by National Basketball Association owners in May.

To contact the reporter on this story: Nancy Kercheval in Washington at nkercheval@

To contact the editor responsible for this story: Michael Sillup at msillup@

Last Updated: October 8, 2010 00:01 EDT

Petropavlovsk's IRC halves HK IPO size



Oct. 8, 2010 (China Knowledge) - IRC Ltd, a non-precious metal unit of Russian gold miner Petropavlovsk PLC, has reduced the size of its initial public offering in Hong Kong by half to US$249 million, Reuters reported.

IRC, which explores, develops and operates industrial commodities projects in the Russian Far East and Northeastern China, has lowered its IPO price at HK$1.80 apiece and cancelled sales of secondary shares owned by parent Petropavlovsk.

IRC originally planned to raise up to US$513 million by selling 1.325 billion shares at between HK$2.2 and HK$3 per share.

According to the new plan, the company will sell about 1.07 billion new shares.

IRC said in August that it expected to book a loss of up to US$95 million by the end of 2010. Underwriter UBS estimated that the firm will make a net profit of US$168 million in 2013.

FTS adopts electricity and heat tariff growth limitations for households



Troika, Russia

Friday, October 8, 2010

The Federal Tariff Service (FTS) has adopted limitations for the average electricity and heat tariff growth for households in 2011, Interfax reported yesterday. The caps were set at 10% for electricity and 14% for heat.

Households account for just 11% of total electricity consumption in Russia, according to the Market Council. Their tariffs will be regulated for three more years, we expect.

The end user tariff consists of the generation component (including the electricity price and capacity payment), distribution (MRSKs), transmission (Federal Grid Company, or FGC) and a supply mark up. In our view, the growth limitations should be generally neutral for almost all members of the end user tariff chain.

_ Gencos. There should not be any significant impact on gencos' financials, as the gas tariff will grow 15% next year and the coal price hike will be less, we expect. The price caps on existing capacity will be introduced in 2011, which will limit tariff growth, and we already model this, though not all free capacity flow zones (FCFZ) will be capped (26 out of 29). Gencos' volumes sold to industry represent almost 90% of their total on average, and these volumes will be 100% liberalized from January 1, 2011. Moreover, we believe that gencos will try to cover any tariff shortfalls on the free market. So, average regulated tariff growth of 10% for households, although lowish, should cover most of the cost growth, we expect.

_ FGC. FGC's tariff should not suffer, as its share in the total end user tariff pie is very small at around 6 7%, and the new regulated rates of return recently approved by the FTS for a five year period are also included in our model already.

_ MRSKs. For discos, this could imply some downward pressure on tariffs in 2011.

However, we note again that the share of households in total consumption is moderate in Russia, and the last mile contracts were earlier prolonged by President Dmitri Medvedev until January 1, 2014, which should ensure that industry continues to assume some of the tariff growth burden, enabling slower growth for household tariffs.

As for heat, the tariff growth of 14% is largely in line with our expectations. In our models, we assume that heat tariffs will increase with fuel costs. As we expect the gas tariff to be 15% higher in 2011 and coal prices to grow less, the heat growth limitation should be neutral for heat producers (TGKs) as well.

On a separate note, the Market Council does not expect capacity prices at the 2011 capacity auction to differ much from the price cap levels, Interfax reported yesterday.

This is fully in line with our current assumptions. Capacity price offers will be collected by November 5 and the results of the auction should be ready within a month.

Alexander Kotikov

For the Record

08 October 2010

Leonid Fedun, deputy chief executive of LUKoil, may increase his stake in the oil producer to 10 percent by acquiring a 0.7 percent share from ConocoPhillips or on the open market, Kommersant said Thursday. (Bloomberg)

[pic]Croatian hotelier Andjelko Leko is discussing selling his majority stakes in several Zagreb hotels, valued at 50 million euros ($69.7 million), to Russia’s Mirax Group, the Globus weekly reported Thursday. (Bloomberg)

[pic]Comstar said Thursday that its majority-owned subsidiary, the Moscow City Telephone Network, would invest 13 billion rubles by the end of 2013 in upgrades to its network. (Bloomberg)

[pic]The government will let residential electricity prices increase an average of 10 percent next year, RIA-Novosti reported Thursday. (Bloomberg)

Former Moscow Mayor Yury Luzhkov approved a privatization program before his ouster two weeks ago, Kommersant reported Thursday, to include selling the city’s 50 percent stake in the Radisson Slavyanskaya hotel and 20 percent of the Swissotel. (Bloomberg)

Activity in the Oil and Gas sector (including regulatory)

08.10.2010

Russia Eases Payment Restrictions On Crude Exporters



Conscientious oil and gas exporters will be able to make deliveries without providing customs officials with providing the customs service with previsionary payments, Russian Economic Development representative Andrey Tochin said, according to a report in Vedomosti.

A norm to this effect is contained in the bill on customs regulations which is to be debated in parliament on October 22. Companies exporting crude by pipeline will be able to make use of the new rules.

Tochin said the law could be passed by January 1, 2011.

Copyright 2010, Oil and Gas Information Agency. All rights reserved.

Rosneft vice president quits, more to follow



11:46 08/10/2010

MOSCOW, October 8 (RIA Novosti) - Rosneft's Vice President Mikhail Stavsky is quitting and more resignations among management are to follow, Kommersant business daily said on Friday.

The firm's President, Sergei Bogdanchikov, was replaced about a month ago.

Kommersant quoted Vice President Mikhail Stavsky as saying that he was leaving the company, Russia's largest oil firm, from Monday to start a new job. He declined to say why he was quitting Rosneft, where he had worked for four years and was responsible for production activities.

Rosneft declined to comment.

Kommersant quoted a Rosneft source saying Stavsky had a serious conflict with new President Eduard Khudainatov, although another Rosneft source said that Stavsky had just decided not to prolong this contract.

The paper said Oil Production Department head Gani Gilayev would take over Stavsky's duties.

Kommersant also said that other top managers could quit Rosneft in the near future, including Vice President Peter O'Brien, who organized the company's initial public offering in 2006.

Vice president for production at Rosneft may leave the company



Renaissance Capital, Russia

Friday, October 8, 2010

Event: Kommersant reported today (8 Oct) that Mikhail Stavsky, vice president for production at Rosneft, may leave the company following the appointment of Eduard Khudainatov as CEO. The newspaper suggests that Stavsky could be replaced by acting vice president for production Gani Gilayev, who is currently a deputy vice president. According to Kommersant, some other top managers may be leaving the company, including vice president for finance Peter O'Brien, who was previously in charge of investor relations. Action: We think the market could react negatively to this news. Rationale: Stavsky joined Rosneft in 2006 from Sibneft, and has been in charge of various projects, including Vankor. O'Brien came to Rosneft from Morgan Stanley and oversaw Rosneft's successful IPO. We think that in the short term, there could be some uncertainty regarding new top management positions at Rosneft, which could be perceived negatively by investors. However, fundamentally Rosneft remains one of the most efficient in the industry and it has the full support of the government, which explains our overall positive investment stance on the company. Ildar Davletshin

French Company to Make Gas in Nizhny



08 October 2010

By Irina Filatova

French industrial gas producer Air Liquide said Thursday that it planned to start construction of an air separation unit worth 60 million euros ($84 million) in the Nizhny Novgorod region and that it would increase investments in Russia over the next five years.

The plant, whose opening is scheduled for 2012, will supply oxygen, nitrogen and dry compressed air to RusVinyl, a joint venture of Sibur and Belgian polyvinyl chloride producer SolVin, and will also supply liquid gases to other industrial customers in the region.

“The industry modernization in Russia is part of the modernization of the country,” Benoit Potier, chief executive and chairman of Air Liquide, told journalists. “I personally consider Russia as a very interesting market for us. The time for investment is good. … We are investing for the long term in Russia.”

The plant will be located in the town of Kstovo, 30 kilometers southeast of Nizhny Novgorod, and will produce 350 tons of oxygen per day.

Potier said the company had invested a total of 150 million euros in Russia in the past five years and planned to invest another 150 million euros by the end of this year. He also said Air Liquide’s total investment in Russia might reach 1 billion euros by the end of 2015.

Analysts said the company’s ambitious plans were likely to be realized because Russia’s industrial gas market has excellent potential for growth.

Russia’s industrial gas market, which had moderate growth until 2009, is likely to grow by 15 percent to 20 percent this year, said Konstantin Yuminov, an oil and gas analyst at Rye, Man & Gor Securities. “The growth rates will be high over the coming five years, on the one hand, and it’s the right time now to come to the market, because the market is young and the number of competitors is small,” he said.

He said Air Liquide had a good chance of getting the bigger share of Russia’s market compared with its rivals, Air Products and Linde Gas, because of its good customer portfolio and bigger investment volumes.

Yuminov said many industrial producers in segments like oil and gas, metals and chemicals plan to build additional facilities and to revamp old ones over the coming five years to remain competitive. “And this indicates that the growth rates of Russia’s industrial gas market will be higher than the growth rates of the world market,” he said.

Potier said signing a supply agreement with RusVinyl was “a very important new step” after the company’s deal with Severstal. Air Liquide, which launched an air separation unit at Severstal’s steel mill in Cherepovets in 2007, signed an agreement with the company earlier this year to build another similar unit at the plant.

The company’s plant in Kstovo will deliver more than half of its gas to RusVinyl through a pipeline, and Air Liquide may build another pipeline if it finds more big customers in the Nizhny Novgorod region to “set up a sort of network of pipelines for five or six customers,” Potier said.

Lukoil considers Caspian shipping options; Kazakhstan raises KTK quota



By Kapiza Nurtazina and Stan Rogers

For

2010-10-07

ASTANA – Russia’s Lukoil is considering shipping Kazakhstani oil through the partly Kazakhstani-owned Caspian Pipeline Consortium (CPC), rbcdaily.ru reported October 5.

Lukoil is considering four routes: the CPC, oil tankers to the Lukoil Volgograd refinery, the Baku-Novorossiysk pipeline, and the Baku-Tbilisi-Ceyhan (BTC) pipeline.

Kazakhstan has refused an offer to ship oil through the BTC line, considering it disadvantageous, Russian oil consultant Mikhail Krutikhin told rbcdaily.ru. Kazakhstan instead will increase the annual quota for oil shipment through the CPC from 27m tonnes to 52.5m tonnes starting next year, Kazakhstani Oil and Gas Minister Sauat Mynbayev said October 4.

In other news, the state oil and gas monopoly Kazmunaigaz has decided against holding an initial public stock offering, lenta.ru reported October 7. Instead, it plans to finance a US $20 billion investment programme by selling euro bonds and borrowing domestically.

Alliance Oil: Seasonally strong 3Q10 operational update



Renaissance Capital, Russia

Friday, October 8, 2010

Event: Yesterday (7 Oct) Alliance Oil (AOIL) published 3Q10 operational results. Total crude output amounted to 4.3mn bbls (up 10% YoY and 12% QoQ), which was 2% above our estimate of 4.2mn bbls. The key driver for crude output was a 31% increase in Timan Pechora crude production, which resulted from increased drilling activity, with 17 new wells drilled in 3Q10. Refining volumes at the Khabarovsk refinery were up 10% YoY and 9% QoQ to 6.5mn bbls (21% above our estimate). The key reason for the strong performance in the downstream segment was a seasonal pick-up in demand for oil products, which led to full utilisation of refining capacity. According to the company, refining margins also improved as the reforming unit became fully operational. The company confirmed earlier guidance for FY10 of 17.0mn bbls of crude output and over 22mn bbls of refining volumes. Action: The results are neutral, in our view. Rationale: Although the results were stronger than expected, leading to a share-price jump of 5.9% yesterday, we believe they were driven more by seasonal factors than by improving fundamentals in the business. Besides, management reiterated its previous guidance for FY10, so there was nothing new for the market. As we highlighted in our report Alliance Oil Company - Reasons to remain cautious , dated 4 Mar 2010 (click here to read), AOIL's business model - with high exposure to downstream - is very sensitive to likely future regulatory changes. At the same time, its low levels of own crude coverage, high crude transportation costs, and the low current complexity of its Khabarovsk refinery mean that AOIL has a much lower quality of earnings than blue-chip Russian oil producers. It is this combination of lower-quality earnings and higher regulatory risk that defines our cautious outlook for AOIL's share-price performance in the medium term. Ildar Davletshin

Russian Oil Firms Complain over Access to Fields

by  Jacob Gronholt-Pederson

Dow Jones Newswires 10/7/2010

URL:

MOSCOW (Dow Jones Newswires), Oct. 7, 2010

Russia's decision to restrict access to the first major oil and gas field tender in five years has caused outrage among the country's industry titans, who say the Kremlin's claimed push for transparency and fair access to the country's energy reserves is going nowhere.

Russia has tightened its control of the oil and gas sector in recent years, making it harder for foreign or non-state companies to get access to strategic reserves and causing output to stagnate, and senior government officials have recently argued more private money is needed in the sector to keep up production after investments dropped sharply during the financial crisis.

The highly-anticipated auction of two Siberian oil fields, Trebs and Titov, due in the beginning of December, is seen as a test of the government's new rhetoric, as industry majors including Russia's biggest independent Lukoil Holdings and BP's Russian joint venture TNK-BP were expected to be participating.

Last week, however, Russia's Ministry of Natural Resources said their applications hadn't been filed correctly and excluded them from the list of bidders, leaving Surgutneftegaz and Bashneft--both considered to have close ties to the Kremlin--as only bidders.

No one at Surgutneftegaz or Bashneft were available for comment.

Lukoil was seen as the lead contender for the auction, as the company already has infrastructure in the area. The company's Vice President Leonid Fedun accused the government of unfair treatment and said "resource nationalism" was to blame for difficulties getting with access to reserves.

Analysts say that if the government was truly concerned about maximizing its payoff from these fields, it would have made sense to pick Lukoil.

"It's important to understand that decisions in Russia aren't always driven by pure economic factors," said Artem Konchin, analyst at UniCredit. "Instead, political issues are often decisive."

Lukoil says it is cutting down on investments in Russia, due to lack of clear rules from the government.

"Because we have limited access to reserves inside Russia, we are now focusing on expanding abroad," Fedun said this week at an investor conference in Moscow. "All we want is clear guidelines, so that companies understand the rules of the game."

The comments came a day after Prime Minister Vladimir Putin rolled out the red carpet for foreign investors at the same conference, talking of the government's efforts to create a more investor-friendly environment.

In its shift of focus, Lukoil has taken on development of Iraq's West Qurna-2 projects--one of the biggest oil fields in the world--in partnership with Norway's Statoil, and is drilling deepwater wells off the coast of Ghana and Ivory Coast in West Africa.

TNK-BP--Russia's third biggest oil producer--said last week it would challenge the decision to exclude them from the Trebs and Titov auction. TNK-BP is continuing investments in Russia, but like Lukoil is also actively seeking to expand abroad. The company is in talks to buy BP's assets in Vietnam and Algeria and is also seeking projects in Iraq and Venezuela.

Russia is the world's biggest oil producer, but output has stagnated around 10 million barrels a day as production from fields in West Siberia--the country's main production area developed during Soviet times--is falling, while few new fields are being developed.

"Only after the government sees a significant drop in output from West Siberia, the necessary measures will be taken," said Lukoil's Fedun.

Gazprom

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