Russia
Russia 100217
Basic Political Developments
• Interfax: U.S. could deliver strike on Iran – Russian General Staff (Part 2)
• Interfax: Draft Treaty On Strategic Arms Reductions Is 97% Ready, Talks Continue On Links Between Strategic Offensive And Defensive Weapons – Russian General Staff Chief
• Russia Today: Russian FM hopes Iran will come to its senses
• RBC: Moscow urges Tehran to accept IAEA proposal - Moscow has urged Tehran to "carefully consider all the options" and agree with the International Atomic Energy Agency's (IAEA) proposal on enriching uranium to a higher level outside the country for Iran's research reactor, Russian Foreign Minister Sergei Lavrov announced today.
• RIA: Israeli premier says 'mild' UN sanctions ineffective against Iran - "It is necessary to exert pressure on Iran to try to prevent it from creating nuclear weapons because the obtaining of nuclear weapons by Iran will have a negative effect on the world and the [Middle East] region as a whole," Netanyahu said in an interview with Russian business daily Kommersant published on Wednesday.
• Interfax: Delivery of S-300’s to Iran delayed over technical problems – official
• Reuters: Russia says technical issues delay Iran arms deal
• Ynet: Russia says technical issues delay Iran arms deal
• The Times of India: Russian official says missile delivery to Iran delayed
• News.az: Iran not recognize independence of the so-called South Ossetia, Abkhazia - Tehran is not going to recognize independence of the so-called South Ossetia and Abkhazia, Ambassador of Iran to Russia Seyed Mohammad Reza said in his interview with the Echo of Moscow.
• RIA: Russia, U.S. might sign new arms reduction treaty soon — Lavrov
• RIA: Russia boosts arms sales to Latin America — Lavrov
• M&C: Russia says Latin American arms sales have economic motive
• RIA: Russia, Mexico agree on direct flights
• Interfax: Patriarch Kirill hopes Russia and Greece to jointly protect Orthodox values from modern day threats
• Korea Times: Legacy of 'Nordpolitik' - New Ambassador to Russia Lee Youn-ho reignited talks about a tripartite natural gas pipeline involving North Korea, in a meeting with reporters on the sidelines of an annual conference of mission chiefs abroad in Seoul that ended late last week.
• Bloomberg: Ukraine May Join Russian Customs Union, Kommersant Reports
• Gazeta.kz: Party of Regions does not exclude possibility of joining of Ukraine of Customs Union
• EurasiaNet: Kyrgyzstan: Moscow Withholding Promised Aid To Bishkek
• Georgian Times: Russian DUMA to adopt another document on Abkhazia - Zatulin says the certificate confirms that the Russian empire was protecting Abkhaz people for 200 years
• The Moscow Times: Russia to Ink Deal for Bases in Abkhazia
• Russia Today: Abkhazia won’t beg anyone to recognize it - Abkhazian President
• Expert Club: Abkhazia does not want refugees to return
• The Hindu: India, Russia to step up strategic ties - In a series of high level interactions, Russia and India on Tuesday decided to firm up two major pacts — on nuclear energy and a fifth generation fighter plane — in time for Russian Prime Minister Vladimir Putin’s visit in March. They also resolved to step up trade ties and develop closer cooperation in the energy sector.
• RIA: Russian Army to be equipped with modern weapons - Putin
• Russia Today: Putin sets priorities for military reform - The Russian Prime Minister also talked about the necessity of renovating communication facilities and completing the construction of the new T-50 stealth fighter jet, adding that 70% of army equipment must be modernized by 2020 in line with the current military reform.
• RIA: Medvedev instructed by May to agree a draft law on insider information
• Sys-Con: Development of Saudi Arabia-Russia International Cooperation
• Novinite: Bulgaria Bids for Russian Loan to Keep Building Belene Nuclear Plant
• The Moscow Times: State nuclear holding Rosatom plans to invest more than 27 billion rubles ($897 million) by 2020 in plants to manufacture nuclear fuel for so-called fast reactors, Interfax said Tuesday
• Nuclear Engineering International: Rosatom fleshes out Atomexpo conference - The event, held 7-9 June in Moscow, will feature two plenary sessions on modernisation: the role of nuclear power in modernisation of a country's economy (plenary session 1), and modernisation of the nuclear industry worldwide (session 2)
• MID.ru: Deputy Minister of Foreign Affairs Alexander Grushko Converses with UK Minister of State for Europe Chris Bryant - During the course of the conversation topical problems of the reformation of the European security architecture, including Russian President Medvedev’s initiative to craft and conclude a European Security Treaty, were discussed along with issues in Russia-EU relations and the activities of the Russia-NATO Council. Considerable attention was paid to the state of affairs in the OSCE.
• The Moscow Times: NATO Caught Between Russia and the World - By Fyodor Lukyanov
• Georgian Daily: Moscow’s CSTO Olive Branch to NATO - Bordyuzha advocates multilateral cooperation with NATO in countering terrorism and combating drug trafficking from Afghanistan.
• RFE/RL: Novosibirsk's Deputy Mayor Arrested
• RIA: Jewish Autonomous Region's legislature approves new governor
• RFE/RL: Kremlin Stumbles In Regions As Unrest Mounts - Analysts say the Kremlin is still strong enough to have its way in the regions. But in a worsening economy and with Russia's far-flung provinces becoming increasingly restive, doing so comes at a price.
• The Moscow Times: Russia is seeking assistance from the World Bank to develop its impoverished North Caucasus Federal District, Arkady Dvorkovich, President Dmitry Medvedev’s senior economic adviser, said Tuesday.
• NY Times: In Dagestan, Laugh Track Echoes Across Mountains
• Russia profile: Pulp Fiction - Can Environmentalists Defeat the Combined Interests of a Government Worried About Jobs and an Oligarch Concerned About His Bottom Line?
National Economic Trends
• BarentsObserver: Higher Russian budget deficit
• BarentsObserver: International investments down 38 percent
• Bloomberg: Ruble Strengthens to Two-Week High per Dollar as Oil Tops $77
• Interfax: Ruble bonds might be placed simultaneously on domestic, foreign markets – Pankin
• Bloomberg: Russia Sees First Half as ‘Advantageous’ for Eurobond Sale
• Russia Today: Tax service could put payment terminals out of action
Business, Energy or Environmental regulations or discussions
• Bloomberg: Gazprom Neft, Polyus, Rosneft, Transneft: Russia Stock Preview
• Bloomberg: Russia Options Signal 17% Stock Retreat by May on Oil (Update2)
• The Moscow Times: List of Government IPOs Will Be Announced Soon
• Businessneweurope: Bond market cheer: The Russians are coming! - According to Deputy Finance Minister Dmitry Pankin, the winning banks were chosen because they proposed a more aggressive funding strategy, with Pankin claiming that any new issuance would slash borrowing levels for the sovereign.
• Reuters: FACTBOX-Russian companies line up for IPOs in 2010
• RBC: Rosbank and Societe Generale Vostok likely to merge
• Russia Today: Ebay to launch e-commerce in Russia - Ebay Inc has announced that it will launch a Russian version of it’s website by the end of March, hoping to capitalize on the relatively undeveloped e-commerce market in Russia.
• LA Times blogs: Silicon Valley luminaries become technology ambassadors to Russia
• RenCap: Government officials set to meet metals and mining sector representatives today
• Actmedia: Mechel acquires steel mill in Romania
• Bloomberg; Evraz’s Highveld Steel Unit CEO Walter Ballandino Resigns
• The Moscow Times: IKEA Sues Senator - IKEA is suing Senator Vadim Moshkovich’s company Mashtab over land rental issues at its Mega mall in Tyoply Stan, Kommersant reported Tuesday.
• Reuters: UPDATE 1-EBay adds new Europe, Russia platform to spur buying - In Russia, competition is limited, due to the poorly developed and highly fragmented market. Ebay will compete with Russia's Internet auction site Molotok.ru which serves around 200,000 people a day, offering more than 5 million items on sale.
• Russian Insurers: Who Will Survive Financial Crisis
• The Moscow Times: Sobchak Buys Yevroset Stake
• The Moscow Times: Timchenko Investing in Business Terminal at Sheremetyevo
• The Moscow Times: Ismailov Returns to Invest in Chechnya
• Bloomberg: Billionaire Blavatnik Takes On JPMorgan Over $98 Million Loss
Activity in the Oil and Gas sector (including regulatory)
• The Moscow Times: TNK-BP to Invest $1.3Bln by 2015
• Reuters: Ex-Morgan Stanley exec to oversee TNK-BP strategy
• Oil and Gas Eurasia: TNK-BP Raised the Energy Efficiency of Its Oil Production by 3%
• UpstreamOnline: Novatek plans Arctic LNG cargo
• WSJ: UPDATE: Lukoil Exec: Open To Refinery Expansions Or Acquisitions
• UralSib: Rosneft: Rosneft returns license for East-Shmidt on Sakhalin shelf
Gazprom
• Financiarul: Gazprom Vice Chairman Aleksandr Medvedev arrives in Bucharest on Wednesday
• UpstreamOnline: Scorpion seeks Gazprom arbitration
• Bloomberg: Gazprom, Partners May Shift Shtokman LNG to U.K., Italy, France
• Gazprom: Meeting on gas supply to and gasification of Republic of Buryatia held - Special emphasis was placed on ensuring the environmental safety during energy projects execution in Buryatia. This is mainly related to the necessary preservation of the ecosystem of Lake Baikal.
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Full Text Articles
Basic Political Developments
Interfax: U.S. could deliver strike on Iran – Russian General Staff (Part 2)
MOSCOW. Feb 17 (Interfax-AVN) - The United States could deliver a strike against Iran, Chief of the General Staff of the Russian Armed Forces Gen. Nikolai Makarov said on Wednesday.
"The U.S. is currently conducting two military operations - in Afghanistan and in Iraq. A third one would be a disaster for them. So, as they're tackling their tasks in Iraq and Afghanistan, they could deliver a strike against Iran," the military chief told journalists in Moscow.
"The aftermath of such a strike would be horrible not only for Iran but for the region as a whole," he said.
"Iran is our neighbor and we are closely monitoring the situation. The Russian leadership is taking necessary measures to prevent this," Makarov said.
"The United States has clearly and unambiguously stated that there are plans to deliver strikes against Iran," he said. Chairman of the Joint Chiefs of Staff Adm. Michael Mullen spoke about that, Makarov said.
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Interfax: Draft Treaty On Strategic Arms Reductions Is 97% Ready, Talks Continue On Links Between Strategic Offensive And Defensive Weapons – Russian General Staff Chief
Russia Today: Russian FM hopes Iran will come to its senses
17 February, 2010, 09:27
Russia says it will not rule out sanctions against Iran if the country fails to commit to a peaceful nuclear program.
Earlier Tehran rejected proposals to ship its uranium stockpile to Russia and France to be enriched to fuel-grade level.
Russia’s Foreign Minister Sergey Lavrov says he still has high hopes that Iran will reassess its nuclear plans.
“The decision that Iran must stop uranium enrichment is inherent in the resolutions of the UN Security Council,” Lavrov said.
“Last October, the IAEA – together with the US, Russia and France – came up with a proposal to supply fuel for Iran’s research reactor. This proposal can be implemented, and we are counting on Iran to assess the situation once more.”
RBC: Moscow urges Tehran to accept IAEA proposal
RBC, 17.02.2010, Moscow 10:47:57.Moscow has urged Tehran to "carefully consider all the options" and agree with the International Atomic Energy Agency's (IAEA) proposal on enriching uranium to a higher level outside the country for Iran's research reactor, Russian Foreign Minister Sergei Lavrov announced today.
"The issue of Iran's suspension of uranium enrichment has been finalized in the UN Security Council's decision," the minister stated.
Lavrov indicated that the letter, which was recently submitted to the International Atomic Energy Agency, dealt with fuel supplies for the Iranian research reactor, the Echo of Moscow radio station reported today. He also noted that the agency had developed a fuel replacement scheme. "This proposal is still standing. We hope that Iran thinks it over carefully and agrees with the proposal," he said.
RIA: Israeli premier says 'mild' UN sanctions ineffective against Iran
10:5117/02/2010
Israeli Prime Minister Benjamin Netanyahu said on Wednesday he believes mild sanctions the UN Security Council is considering against Iran over its controversial nuclear program will not work.
"It is necessary to exert pressure on Iran to try to prevent it from creating nuclear weapons because the obtaining of nuclear weapons by Iran will have a negative effect on the world and the [Middle East] region as a whole," Netanyahu said in an interview with Russian business daily Kommersant published on Wednesday.
Netanyahu concluded on Tuesday his visit to Moscow with the goal of persuading Russia to support the introduction of tough additional international sanctions against the Islamic Republic.
The West suspects Iran of pursuing a secret nuclear weapons program, but the Islamic Republic insists it needs nuclear power solely for civilian purposes.
Iran's recent move to begin enriching uranium to 20% drew stinging criticism from the West. U.S. President Barack Obama said last week Washington and its allies would begin drafting "significant" new sanctions against Tehran. Russia, a veto-wielding member of the U.N. Security Council, has a decisive say in the issue.
MOSCOW, February 17 (RIA Novosti)
Interfax: Delivery of S-300’s to Iran delayed over technical problems – official
NEW DELHI. Feb 17 (Interfax-AVN) - Russia will deliver S-300 surface-to-air missiles systems to Iran after the technical flaws uncovered have been fixed, the Federal Military-Technical Cooperation Service's First Deputy Director Alexander Fomin has announced.
"The delay is due to technical problems. The systems will be delivered when these problems have been resolved," Fomin told Interfax-AVN on Wednesday.
Fomin is leader of a Russian delegation to the Defexpo-India arms show.
No details were given on what kind of technical problems are involved, or how long it will take to fix them.
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Reuters: Russia says technical issues delay Iran arms deal
Wed Feb 17, 2010 12:28pm IST
MOSCOW (Reuters) - A Russian arms export official said on Wednesday the delivery of an air defence system to Iran had been delayed because of technical problems, Interfax news agency reported.
"The delivery will be completed when they are solved," Alexander Fomin, first deputy director of the Federal Service for Military and Technical Cooperation, was quoted as saying. The body controls Russian arms exports.
Ynet: Russia says technical issues delay Iran arms deal
|Published: |02.17.10, 09:12 / Israel News |
A Russian arms export official said on Wednesday the delivery of an air defense system to Iran had been delayed because of technical problems, Interfax news agency reported.
"The delivery will be completed when they are solved," Alexander Fomin, first deputy director of the Federal Service for Military and Technical Cooperation, was quoted as saying. The body controls Russian arms exports. (Reuters)
The Times of India: Russian official says missile delivery to Iran delayed
AFP, Feb 17, 2010, 12.21pm IST
MOSCOW: The delivery of advanced Russian-made S-300 air defence missiles to Iran has been delayed for technical reasons, a senior Russian official told the Interfax news agency on Wednesday.
"The delay is due to technical problems. The delivery will be carried out when they are resolved," Alexander Fomin, deputy head of Russia's Federal Service for Military-Technical Cooperation, was quoted as saying.
Russia's contract to sell the S-300s to Iran has raised fears in the United States and Israel, which believe that Tehran could use the sophisticated air defence missiles to defend its nuclear facilities.
Fomin, whose service oversees Russian arms exports, made the comments in an interview with Interfax during a defence exhibition in New Delhi.
News.az: Iran not recognize independence of the so-called South Ossetia, Abkhazia
Wed 17 February 2010 | 06:23 GMT
Iran condemn the Georgian aggression.
Tehran is not going to recognize independence of the so-called South Ossetia and Abkhazia, Ambassador of Iran to Russia Seyed Mohammad Reza said in his interview with the Echo of Moscow.
"We have condemned the Georgian aggression and said we were ready to allocate funds to help South Ossetia and Abkhazia. However, we are not going to recognize their independence", he said.
According to him, the official Tehran assumes recognition of Abkhazia and South Ossetia may stir up wars and bloodshed in other regions too, adding Tehran has not either recognized independence of Kosovo.
Russia, Nicaragua, Venezuela and Nauru have recognized independence of Abkhazia and South Ossetia up to now.
InterPressNews
RIA: Russia, U.S. might sign new arms reduction treaty soon — Lavrov
01:5317/02/2010
A new Russian-U.S. treaty on nuclear arms reduction might be concluded soon on the condition that both sides follow the previously reached agreements, the Russian foreign minister said on Wednesday.
Russia and the United States are in talks to replace the Strategic Arms Reduction Treaty (START 1), the cornerstone of post-Cold War arms control agreement, which expired on December 5, 2009, with a new deal.
"All vital issues of the new treaty on strategic arms were solved in talks between presidents [Dmitry] Medvedev and [Barack] Obama, and in a series of negotiations between the chiefs of the general staffs. We can conclude the treaty very soon if we just follow these agreements," Sergei Lavrov told a news conference in Mexico, without giving an exact date.
Early in the month, U.S. President Barack Obama and Russian leader Dmitry Medvedev ordered a speedy completion of the deal.
Obama and Medvedev pledged at their first meeting in April 2009 to replace the START I treaty as part of broader efforts to "reset" bilateral ties strained in recent years.
The new treaty's outline, as agreed on by the Russian and U.S. leaders, includes cutting nuclear arsenals to 1,500-1,675 operational warheads and delivery vehicles to 500-1,000.
MEXICO, February 17 (RIA Novosti)
RIA: Russia boosts arms sales to Latin America — Lavrov
06:2117/02/2010
Russia has increased its arms sales to Latin American states of late, the Russian foreign minister said on Wednesday after talks with his Mexican counterpart.
"We have recently increased supplies of Russian arms in various regions of the world, including Latin America," Sergei Lavrov said.
He added that Russia's interests in the region were "purely commercial."
Russia sold weapons worth over $8.5 billion last year, including $7.4 billion via state arms exporter Rosobornexport, which is 10% up on the previous year.
In the coming years, the country plans to export $9-$10 billion worth of arms annually.
Russia's main customers for arms were India, Algeria, China, Venezuela, Malaysia and Syria. Vietnam also emerged as a key importer after it signed a deal to buy submarines, aircraft and other military hardware from Russia late last year.
M&C: Russia says Latin American arms sales have economic motive
Feb 16, 2010, 22:24 GMT
Mexico City - The increase in sales of Russian armaments to countries of Latin America is 'purely a question of economics, not of politics,' said Russian Foreign Minister Sergei Lavrov on Tuesday in Mexico.
Lavrov conceded that the increase in defence trade volume between Russia and Latin America had become 'quite important' in recent years, but insisted Russia still 'lagged way behind the United States' in such trade.
He said the growing cooperation in arms trade signified the potential of overall economic cooperation between Russia and Latin America.
Mexico's Foreign Secretary Patricia Espinosa met with Lavrov on the last stop of his travels that included Cuba, Nicaragua and Guatemala.
Mexico has interest in acquiring helicopters to monitor the coast and weapons to combat the country's devastating and expanding drug trade.
Lavrov suggested that other areas of cooperation could include the energy, electronic, metals and construction sectors.
'It is evident that Latin America is becoming a new centre of economic growth,' Lavrov declared.
'The potential of cooperation is going to grow,' he said, adding that Russia wants 'to participate in this process.'
MEXICO, February 17 (RIA Novosti)
RIA: Russia, Mexico agree on direct flights
07:0617/02/2010
Russia and Mexico have agreed to start direct flights between Moscow and Cancun, the Mexican foreign minister said after talks with her Russian counterpart.
"We agreed to establish direct flights between Russia and Cancun," Patricia Espinosa said.
She added that 14-hour flights to the popular Mexican resort are due to begin in May.
MEXICO, February 17 (RIA Novosti)
Interfax: Patriarch Kirill hopes Russia and Greece to jointly protect Orthodox values from modern day threats
Moscow, February 17, Interfax – Patriarch Kirill of Moscow and All Russia pointed out to the importance of Russia-Greece spiritual dialogue and their joint protection of Orthodox basis of their cultures.
“In the epoch of globalization all of us should bother to preserve values and characteristic features of this (Orthodox – IF) civilization. It suggests strengthening cooperation among Orthodox countries,” Patriarch Kirill said at his meeting with Greek Prime Minister Jorgos Papandreou in patriarchal residence in the Chisty Lane in Moscow.
He noted that even in the Soviet Union, where “authorities were very far from the Church,” “Orthodox factor” played a very important role in interstate relations as the Orthodox Church both in Greece and Russia defined “system of people’s values, cultural profile of our nations.”
According to the Patriarch, the Russian Church “approves” of the recent Greek authorities’ refusal to remove icons from courtrooms and cancel oath on the Gospels. The Patriarch recalled the Strasbourg Court decision to ban crucifix in Italian schools and expressed his concerns with the fact that many European countries ruled out Christian values from social sphere.
02-17-2010 17:21
Korea Times: Legacy of 'Nordpolitik'
By Kim Jong-chan
Political Editor
New Ambassador to Russia Lee Youn-ho reignited talks about a tripartite natural gas pipeline involving North Korea, in a meeting with reporters on the sidelines of an annual conference of mission chiefs abroad in Seoul that ended late last week.
A South Korea-Russia agreement to cooperate on building the gas pipeline has yet to be realized due to the current situation on the Korean Peninsula. The agreement came in a summit between Presidents Lee Myung-bak and Dmitry Medvedev in Moscow in September 2008.
The ambassador, who accompanied President Lee on his trip to Moscow in his capacity as knowledge economy minister, expressed his desire to push the contemplated gas pipeline project forward. He is to assume the post on Feb. 28.
If the pipeline comes from Siberia to South Korea via North Korea, it will not only be economically beneficial but also be very meaningful politically. It could be linked to railway and electricity networks in North Korea. Once railways of the two Koreas are connected to the Trans-Siberian Railway, South Koreans can travel to Europe by crossing Siberia by train, not to mention benefits to cargo transportation.
The idea of a South Korea-North Korea-Russia natural gas pipeline came out a decade ago, yet North Korea has given no answer amid chilly inter-Korean relations.
New Russian Ambassador to South Korea Konstantin V. Vnukov also spoke of the project in an interview. His view was that those gas pipeline and railway plans could be incentives for North Korea facing deepening economic trouble, if it decides to scrap its nuclear programs.
The assumption of ambassadorial posts by Vnukov and Lee Youn-ho coincides with events to mark the 20th anniversary of the establishment of diplomatic ties between the two nations.
Following the end of the Cold War decades ago, Nordpolitik (Northern Policy), former President Roh Tae-woo's signature foreign policy, led the nation to reach out to traditional allies of North Korea, including the former Soviet Union and other communist East European-bloc countries.
In February 1989, Hungary became the first East European nation to establish formal ties with South Korea, followed by Poland in November, former Yugoslavia in December of the same year and the Soviet Union in September 1990.
It's hard to see whether the idea of bringing natural gas from Russia via North Korea will be realized or not since North Korea has shown few signs of abandoning its nuclear programs to ensure the security of its regime. Moreover, Russia's clout over North Korea has waned as the North Korean economy depends greatly on China.
But rays of hope may filter down as President Medvedev is expected to visit Seoul for the G-20 Summit in November, and celebrations to mark two decades of Seoul-Moscow ties might also bring Medvedev's predecessor, Vladmir Putin, now prime minister, to South Korea. Betting against the tripartite gas pipeline would not be wise.
jckim@koreatimes.co.kr
Bloomberg: Ukraine May Join Russian Customs Union, Kommersant Reports
By Maria Ermakova
Feb. 17 (Bloomberg) -- President-elect Viktor Yanukovych will seek Ukrainian membership in the customs union Russia has with Belarus and Kazakhstan, Kommersant reported, citing two unidentified Ukrainian government officials.
The leaders of Russia, Kazakhstan and Belarus in November agreed to form a unified customs area as of Jan. 1, the Moscow- based newspaper said today.
To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@
Last Updated: February 17, 2010 00:58 EST
Gazeta.kz: Party of Regions does not exclude possibility of joining of Ukraine of Customs Union
12:04 17.02.2010
text: "Kazakhstan Today"
views: [4]
Almaty. February 17. Kazakhstan Today - The Party of Regions does not exclude possibility of joining of Ukraine of the Customs Union of Belarus, Kazakhstan and Russia. Vice President of the parliamentary fraction of Party of Regions, Alexander Efremov, informed, the agency reports citing the news agency RosBusinessConsulting (RBC).
According to RBC, A. Efremov commented on the statement of the Prime Minister, Yulia Timoshenko, that Victor Yanukovych had already signed the agreement on joining of Ukraine of the Customs Union in exchange of 20 percent decrease of the gas price.
"The Party of Regions does not exclude possibility of joining of Ukraine of the Customs Union of the Russian Federation, Belarus and Kazakhstan. We need to look at benefits and losses for Ukraine and then make decisions," A. Efremov said.
EurasiaNet: Kyrgyzstan: Moscow Withholding Promised Aid To Bishkek
2/16/10
In February of 2009, Kyrgyz President Kurmanbek Bakiyev traveled to Moscow and secured roughly $2.15 billion in economic assistance, apparently in a quid-pro-quo deal in which Kyrgyzstan took action to evict US and NATO forces from an air base outside Bishkek. Twelve months later, American troops are still in Kyrgyzstan, and Moscow is balking at disbursing the bulk of its pledged aid.
The majority of the Russian assistance pledge came in the form of a $1.7 billion credit to fund construction the Kambarata-1 hydropower station on the Naryn River. In addition, Moscow promised a $300 million loan to be used for a state-controlled development fund, and an additional $150 million in cash to cover gaps in social services. The $450 million was delivered last spring. [For background see the Eurasia Insight archive].
Moscow has yet to extend the $1.7-billion in assistance for Kambarata construction. And it doesn’t look like the money is going to be forthcoming anytime soon. That’s because the $450 million Russia already has paid out was "not used according to its purpose," alleged Vitaliy Skrinnik, the first secretary at the Russian Embassy in Bishkek.
Kyrgyz officials used the money, Skrinnik told EurasiaNet, to set up a lending fund "issuing credits to others to make money." He did not specify who controls the fund. "Here we had misuse of the money, of $450 million," he said.
While denying that relations between Russia and Kyrgyzstan had since worsened, Skrinnik stated that Kyrgyzstan was not ready to receive more. "Kyrgyzstan has certain obligations. They must establish a structure and develop a program for this loan," he said, suggesting that the Kremlin was exasperated with Bishkek. Now "the Kyrgyz say ’give us the money.’ But $1.7 billion is a lot of money."
Alexander Knyazev, director of the Bishkek branch of the CIS Institute, said that Russian officials are unsure of how the money already transferred to Bishkek has been used. "When you are given a grant, you have to report to your donor on how you used the money," Knyazev, who is reportedly well connected to the Russian government, told EurasiaNet. "Russia is still waiting for reports in respect to the $150 million grant and the $300 million loan. There are no reports."
Yet another analyst suggested that Moscow is more concerned with upsetting Central Asia’s delicate geopolitical balance than it is with making a bad loan. The Kambarata project has helped focus attention on the volatile water issue in Central Asia. Downstream nations, in particular Uzbekistan, have been outspoken in opposition to projects that could potentially alter water flows. [For background see the Eurasia Insight archive].
"At the moment, it is not the right time for Russia to send the money to Kyrgyzstan due to the water conflicts among Central Asian countries," said Ajdar Kurtov, an analyst at the Russian Institute for Strategic Studies in Moscow. He was referring to Tashkent’s anxiety over Bishkek’s plans to build a dam upstream and thus, theoretically, reduce the supplies available for irrigation in Uzbekistan. "Moscow doesn’t want to take a position and be blamed."
Kyrgyz officials profess to be at a loss to explain why Russian officials are making a fuss. From Bishkek’s vantage point, everything is proceeding as planned as far as the Russian assistance goes, said a representative of Kyrgyzstan’s development fund, which was set up to handle the $300 million Russian loan. "So far, $100 million of the investment credit went to the first unit of the Kambarata-2 hydropower station. The rest of the money will be going to various micro-credit projects, leasing projects and other projects to support the economy," said Aibek Sultankaziev, a press officer at the development fund.
"The rest of the Russian credit of $1.7 billion will be coming to the Joint Stock Company on construction of Kambarata-1 -- the board of which will consist of Russians and Kyrgyz. I don’t know why we haven’t received it yet," Sultankaziev added. "I read the Russian ambassador’s statement that all the agreements regarding the credit are in force."
In late December, Russia’s envoy to Kyrgyzstan, Valentin Vlasov, said that, though there had been "some hesitation" to disperse the money due to the financial crisis in Russia, all agreements on Russian investment in the larger Kambarata-1 project remained valid. "In regard to the loan of $1.7 billion ? all of our arrangements remain in force," the ambassador said, in comments published by the Komsomolskaya Pravda newspaper on December 29.
Soviet engineers began the proposed 1,900-megawatt Kambarata-1 and 360-megawatt Kambarata-2 in the 1980s. By comparison, Kyrgyzstan’s largest existing hydropower plant, at Toktogul, has a production capacity of 1,200 megawatts, supplying 40 percent of the country’s electricity. Bishkek sees Kambarata-1 as enabling the country to become a net exporter of electricity. "In one or two years, our country will not only completely provide itself with electrical energy and obtain electric power independence, but even will start exporting it," the AKIpress news agency quoted President Bakiyev as saying on January 15.
Work on the smaller Kambarata-2 continues, with plans to open the first turbine this summer, says Albert Abazbekov, the chairperson of Naryngydroenergostroy, the company behind construction of Kambarata-2. Kyrgyzstan is now hoping to secure Chinese assistance to complete the second and third generators. Local news outlets have reported another official saying the project is $200 million short.
"According to our plan, we are going to launch the second hydroelectric generator at the end of 2011," Abazbekov told EurasiaNet. "But financing installation of the second and third generators has not been solved yet. Today, negotiations are being conducted with China. Chinese specialists have already visited us."
Abazbekov added that work on Kambarata-1 should start in April 2011. "This month, or in March, there will be a Kyrgyz-Russian intergovernmental session where Kambarata-1 construction will be discussed."
But without Moscow’s $1.7 billion, analysts say the larger Kambarata-1 project will remain on the drawing board. With Bishkek looking to Beijing for support, Kurtov concluded that relations with Moscow, while still strong, currently feature a lot "less romance."
Georgian Times: Russian DUMA to adopt another document on Abkhazia
Russian lawmakers will approve the document about the 200 anniversary of Russia and Abkhazia, which has been submitted by the ruling party United Russia. The document says that Russia supports the young republic and is prepared to help it in any sphere.
The author of the statement, senior MP Konstantin Zatulin says that the document is based on the friendship of the two nations, which has the history of 200 years and the first certificate of the emperor Alexander I.
Zatulin says the certificate confirms that the Russian empire was protecting Abkhaz people for 200 years. Rustavi2 2010.02.17 11:36
The Moscow Times: Russia to Ink Deal for Bases in Abkhazia
17 February 2010
By Natalya Krainova
Russia on Wednesday is to sign a deal to build a Russian military base in the breakaway Georgian republic of Abkhazia, officials in the separatist government said, a move likely to further stoke tensions between Moscow and Tbilisi and further strengthen Russia's influence in the region.
Defense Minister Anatoly Serdyukov and his Abkhaz counterpart, Mirab Kishmaria, are to sign an agreement on military and technical cooperation Wednesday in the Kremlin, Lana Agrba, spokeswoman for the rebel region's foreign ministry, said by telephone Tuesday.
Agrba refused to reveal any details of the agreement, but the region's deputy defense minister, Garri Kupalba, told Reuters on Wednesday that it would "allow for one, united military base on Abkhaz territory for Russian land troops."
The new base, which would link several points across Abkhazia and accommodate some 3,000 land troops, including Russian border guard units, would be built "sometime in the near future," Kupalba told Reuters.
The agreement will be signed during a visit by Abkhaz leader, Sergei Bagapsh, a charismatic Abkhaz nationalist who was re-elected as the region's president earlier this month, is to meet with President Dmitry Medvedev for talks in Moscow on Wednesday.
The Russian government was to endorse the deal Tuesday and send it on to Medvedev for approval.
Russia recognized Abkhazia as an independent state in August 2008 after the Russian military crushed Georgian forces attempting to retake another rebel Georgian region, South Ossetia, which Russia also recognized as a sovereign nation. Russia's support of the separatist government in both regions has angered many Western governments. Only three other countries — Nicaragua, Venezuela and the small Pacific island-nation of Nauru — have followed Russia in recognizing the independence of Abkhazia and South Ossetia.
Both Abkhazia and South Ossetia effectively broke away from Georgia in the early 1990s, and most residents in the two regions hold Russian passports.
Nikolai Silayev, a Caucasus specialist at the Moscow State Institute of International Relations, or MGIMO, said Russia needed to build a military base in Abkhazia to counterbalance the presence of NATO forces in the region. Black Sea countries Turkey, Romania and Bulgaria are NATO members, while Georgia and Ukraine — also on the Black Sea — have sought to join the military alliance in recent years.
Russia started negotiations about building military bases in Abkhazia following the August 2008 war. Last year, a deputy head of the General Staff, Anatoly Nogovitsyn, said Russian military bases in Abkhazia and South Ossetia would be built in 2010 and would each host 3,700 Russian troops. A naval base on Abkhazia's Black Sea coast would also be built, Nogovitsyn said.
Georgia, backed by Western powers, opposed the initiative, describing it as a further violation of its sovereignty and territorial integrity.
On Tuesday, Georgian parliamentary speaker David Bakradze told reporters in Tbilisi that plans for the new base are illegal.
"Abkhazia and South Ossetia are Georgian territories, and the deployment of foreign troops on the territory of another country is called an occupation," Bakradze said, Reuters reported. "Since the Russian aggression in 2008, Abkhazia and South Ossetia have become one big military base for Russia."
Senior Russian and Abkhaz officials Wednesday will also sign cooperation agreements concerning transportation, including air transport, said Agrba, of the Abkhaz foreign ministry.
One of the agreements will restore direct flights between Russia and Abkhazia and oblige Russia to help repair the Sukhumi airport, she said.
Paata Davitaia, deputy speaker of the Georgian parliament, called on the Georgian leadership to ask the International Civil Aviation Organization to close Sukhumi's airport, saying an agreement on direct flights between Russia and Abkhazia "violates all international laws," Rosbalt reported.
Bagapsh is scheduled to give a lecture at MGIMO on Wednesday on the history of Russian-Abkhaz relations and meet Patriarch Kirill on Thursday, Agrba said.
Russia Today: Abkhazia won’t beg anyone to recognize it - Abkhazian President
17 February, 2010, 08:43
Abkhazian President Sergey Bagapsh paid an official visit to Moscow at the invitation of Russian President Dmitry Medvedev.
Bagapsh and Medvedev are set to have talks with the participation of official delegation members on Wednesday, February 17.
On August 26, 2008, Russian President Dmitry Medvedev signed a decree recognizing Abkhazia. It followed Georgia's attack against another Caucuses republic, South Ossetia.
The republic was also recognized by Venezuela, Nicaragua and the tiny Republic of Nauru, the world's smallest island nation, in the South Pacific.
However the Georgian government and most of the world powers still consider Abkhazia part of Georgia's territory.
According to Bagapsh, although his republic continues to strive for its recognition, “it’s not going to beg anyone to recognize it.”
“We are going to establish our political situation in the country, our economy and further development, in a way that would leave no questions about whether to recognize us or not,” the Abkhazian President said.
On September 17, 2008 in Moscow, Medvedev and Bagapsh signed a treaty on friendship, cooperation and mutual assistance which laid the foundation for long-term cooperation.
And in September 2009, the sides signed an agreement on military cooperation. In line with that document, Russia has the opportunity to build, use and update military infrastructure and military bases in Abkhazia as well as set up a joint group of forces for times of both war and peace.
Bagapsh said his country can’t allow ethnic Georgian refugees to return from Georgia, as it may lead to war. He also noted that his country will not cooperate with Georgia’s current government.
“We are open to a dialogue with any state,” Bagapsh said. “But I want to underline it straight away, any cooperation, dialogue or economic relations with the current Georgian administration is out of the question.”
Expert Club: Abkhazia does not want refugees to return
17/02/2010 10:26
Abkhazia will not bring back refugees from Georgia, as this would entail a new war. That was announced by the leader of the puppet regime of Abkhazia Sergei Bagapsh when speaking in front of students and professors of MGIMO (Moscow State Institute of International Relations).
"Today ethnic composition of Abkhazia includes 72 nations. These are Abkhazians, Armenians, Georgians, Russians, Estonians, - he reminded - After exhausting war with Georgia, we received refugees who numbered about 55 thousand while the Georgian side received only 5 thousand" - said Bagapsh. Though really it is not known where he found 72 nationalities, because most of them were killed or driven out by Abkhazian and North Caucasian barbarians during the war.
"We consider them as full citizens, who fully participate in the life of the republic, in elections", - said he but failed to mention that only 1% of Georgians in Abkhazia had the right to participate in the so-called elections.
"We consider return of refugees problematic, and today cannot do that, because otherwise tomorrow a war would break out, - he stressed. - We have already been through this ", - said Bagapsh.
The Hindu: India, Russia to step up strategic ties
K. V. Prasad & Sandeep Dikshit
Wednesday, Feb 17, 2010
NEW DELHI: In a series of high level interactions, Russia and India on Tuesday decided to firm up two major pacts — on nuclear energy and a fifth generation fighter plane — in time for Russian Prime Minister Vladimir Putin’s visit in March. They also resolved to step up trade ties and develop closer cooperation in the energy sector.
This emerged during meetings between visiting Russian Deputy Prime Minister and India pointman Sergei Sobyanin with Union Ministers S.M. Krishna, Anand Sharma, Murli Deora, A.K. Antony besides National Security Advisor Shiv Shanker Menon and Principal Secretary to the Prime Minister T.K.K. Nair on Monday and Tuesday.
Mr. Sobyanin also called on Prime Minister Manmohan Singh and gave an overview of Russia’s perspective of bilateral relations with India. The discussions with Dr. Singh and members of his Cabinet were aimed at preparing for Mr. Putin’s forthcoming mid-March official visit , said a Russian Embassy statement.
Both countries expect to reach an agreement on Indian participation in the development and manufacturing of the fifth generation fighter aircraft (FGFA) with stealth characteristics, which made its maiden test flight last month. The two sides will first agree on the technical design which will be followed by discussions on monetary and Indian expertise contribution to by India in the project. Analysts expect the FGFA to give the Indian Air Force an edge in the skies along with the Sukhoi-30 MKI and the soon-to-be-acquired 126 fighters of medium class.
Leading the defence talks, first deputy head of the Federal Service for Military and Technical Cooperation, Alexander Fomin, also touched on the other five Indo-Russian projects in this sector including more supplies of Sukhoi-30 MKI, T-90 tanks and Mig-29 fighters.
Heading the talks in the civil nuclear arena, chief of the Russian Federal Agency for Atomic Energy, Sergei Kirienko, discussed the prospects of further cooperation. Both sides have agreed to set up more nuclear reactors in Kudankulam and discussions are continuing on sourcing more reactors for the existing site and the new site in West Bengal, offered by the Indian government.
The Indo-Russia umbrella nuclear agreement that covers much more ground as compared to pacts signed with other countries, was initialled during Dr. Singh’s visit to Moscow in December last year and the interlocutors are confident of signing it during Mr. Putin’s visit.
RIA: Russian Army to be equipped with modern weapons - Putin
10:4117/02/2010
MOSCOW, February 17 (RIA Novosti) - Russian Prime Minister Vladimir Putin demanded the Russian armed forces be equipped with modern weapons during a government meeting to discuss Russia's 2011-2020 military program late on Tuesday.
"The Army should have at least 30% modern weapons by 2015, and at least 70% by 2020. We are going to put the necessary finances behind this," Putin said, adding that "ineffective expenses" would not be tolerated.
Putin's statement comes after Russian military officials last week revealed plans to bring into service the first batch of its new fifth-generation stealth fighters in 2015.
Russia is currently in talks with France on the possible purchase of a Mistral-class warship, worth 400-500 million euros (around $600-$750 million).
"Essentially, we are talking about the timeframe, and what systems we should use to strengthen the Army and the Navy," Putin said.
"In line with the plan to develop the armed forces, the main emphasis will be laid on nuclear deterrence, space and air defense systems," he added.
Russia Today: Putin sets priorities for military reform
17 February, 2010, 11:02
Chief attention will be given to nuclear nonproliferation, space and air defense in the armed forces reform, said Vladimir Putin on Tuesday while meeting ministers to discuss the future of Russia's defense.
The Russian Prime Minister also talked about the necessity of renovating communication facilities and completing the construction of the new T-50 stealth fighter jet, adding that 70% of army equipment must be modernized by 2020 in line with the current military reform.
Putin also stressed the importance of careful budgeting to avoid over-spending and added that, in the process of placing orders, preferences will be given to the factories that are most efficient in terms of production.
RIA: Medvedev instructed by May to agree a draft law on insider information
Topic: Discussion of the law on insider information
10:38 17/02/2010
MOSCOW, February 17 - RIA Novosti. Russia's President Dmitry Medvedev ordered his administration and the government by May, to resolve issues relating to the law on insider information, the press service of the Kremlin.
"Presidential administration in conjunction with interested federal authorities and the media, made suggestions on the draft federal law" On counteracting misuse of insider information and market manipulation, "a discussion and agree on a draft" - reads the list of orders Medvedev up to the meeting Council under the President on development of financial markets in Russia, which took place on February 9.
Order deadline - May 1, responsible - the head of the presidential administration Sergei Naryshkin, Deputy Prime Minister, Finance Minister Alexei Kudrin.
In addition, the President ordered before April 1 to complete the harmonization of federal laws on clearing and clearing activities, "" On the central depository and on organized exchanges and auctions.
Responsible: Vladimir Putin, "- the document says.
Sys-Con: Development of Saudi Arabia-Russia International Cooperation
MOSCOW, February 17, 2010 /PRNewswire/ -- On February 13, 2010, the following Russian companies participated in the work of the annual Jeddah Economic Forum for the first time, with the support of the St. Petersburg International Economic Forum (SPIEF): Sberbank, Solar Projects (Renova Group), Lommeta (a construction company from Novosibirsk), and Sibstroy (an investment company from Tyumen).
This is evidence of the development of economic ties between our countries and it embodies the points of the Memorandum of Understanding between the St. Petersburg International Economic Forum and the Jeddah Economic Forum (Saudi Arabia), signed in October 2009 (read more about the Memorandum at and ).
A presentation of the St. Petersburg International Economic Forum 2010 (June 17-19, 2010 in St. Petersburg) took place at the Jeddah Economic Forum on February 15. Attending the presentation were Sergey Kuznetsov, General Consul of the Russian Federation in Jeddah; Mustafa Sabri, General Secretary of the Jeddah Chamber of Commerce; Mazen Batterjee and a number of Saudi businessmen; and representatives of the press.
The topics to be discussed at the Forum in St. Petersburg have great significance for the world community. Coordinated actions by the national governments have successfully helped to avoid a financial collapse and the global economy has started on its way towards recovery. The global community must now adopt every measure for economic recovery and initiate necessary and sometimes difficult steps for its restructuring in order to lay the foundation for sustainable, long-term growth and prosperity over the coming decades.
The 2010 St. Petersburg Forum offers top global decision makers an important and timely opportunity to assess post-crisis measures, examine key global macroeconomic trends, and exchange ideas on ways to adjust strategies that will foster stronger economic growth going forward.
In addition to examining the macroeconomic climate, the Forum will address Russia's specific economic and business issues, with emphasis on Russia's global capital allocation, efforts to unlock its investment potential and instituting new frameworks to mitigate risks.
And as is traditionally the case, the Forum allows for a rich cultural experience that St. Petersburg presents to its guests including performances by the world's leading artists, and visits to theaters and museums.
More information on the St. Petersburg International Economic Forum -
Novinite: Bulgaria Bids for Russian Loan to Keep Building Belene Nuclear Plant
Energy | February 16, 2010, Tuesday
Bulgaria’s government of PM Boyko Borisov would like to complete the Belene Nuclear Power Plant because a lot of money has been invested in the project so far.
This has been declared by Bulgaria’s Minister of Economy, Energy, and Tourism, Traicho Traikov, as cited by BTA.
“The government’s strategy from now on will be to get as much economic benefit as possible from every single lev invested in the project for the construction of the Belene Nuclear Power Plant. We are going to offer funding methods that will be attractive to foreign investors,” Traikov stated.
He announced that the Bulgarian government was going to hold talks with representatives of the Russian State Atomic Energy Corporation “ROSATOM.”
Sergei Kiriyenko, CEO of the Russian state company Rosatom, is going to arrive in Sofia on Friday for talks over granting Bulgaria a EUR 2 B loan for the building of the Belene Nuclear Plant.
According to Traikov, Bulgaria is going to seek a loan of about EUR 2 B from the Russian company ROSATOM so that the construction works on the site in the Danube town of Belene could continue in 2010 and 2011.
He noted that Bulgaria is going to seek a loan from the Russians but that it was still unclear in what form and parameters it could be allocated.
“We are keeping in mind the money that has been poured already into the construction of the second nuclear plant at Belene but it is impossible to complete the project the way it had been structured so far,” Traikov declared
Bulgaria’s Economy Minister has not ruled out the possibility that the Russian government might acquire a share of 20-30% of the future nuclear power plant Belene.
“Russia will not be granted a share at any price. In exchange for the loan, the Russian side may receive a guarantee that it will participate as a shareholder in the new project company together with the Bulgarian Energy Holding and the National Electric Company NEK,” Traikov said.
Bulgaria’s government of Sergey Stanishev was refusing to get a Russian loan for the construction of Belene until April 2009 when it finally requested it as it failed to find any private banks that would grant credits for the NPP project without state guarantees.
He added that the government was seeking ways together with the foreign companies involved in the project to restructure it so that it could become transparent and feasible for Bulgaria.
The Minister also restated his position that it was economically justified to build a new (seventh) nuclear reactor at the Kozloduy nuclear power plant independent of the Belene project.
He mentioned that the National Electric Company NEK has accrued debts primarily from two projects under construction – the Belene NPP and the Tsankov Kamak hydro power plant.
The Stanishev government has selected the Russian company Atomstroyexport to construct the Belene NPP, with a 51% government-owned share in the future plant.
The other 49% were supposed to be sold to the German company RWE in exchange for about EUR 2 B. However, RWE pulled out of the project in fall of 2009, and the Borisov government said it could reduce the government share in the future plant down to 20% in order to attract greater private funding.
While the Stanishev government estimated the entire project to cost about EUR 4 B, and even negotiated a loan for that amount from the Russian government, the Borisov Cabinet estimates range about EUR 10 B, partly as a result of the global economic crisis.
The Moscow Times: State nuclear holding Rosatom plans to invest more than 27 billion rubles ($897 million) by 2020 in plants to manufacture nuclear fuel for so-called fast reactors, Interfax said Tuesday. (Bloomberg)
|Nuclear Engineering International: Rosatom fleshes out Atomexpo conference |
| |
|16 February 2010 |
An initial programme has been published for Russia's Atomexpo 2010 conference.
The event, held 7-9 June in Moscow, will feature two plenary sessions on modernisation: the role of nuclear power in modernisation of a country's economy (plenary session 1), and modernisation of the nuclear industry worldwide (session 2).
In addition, roundtable sessions will cover project management, IT, fusion research, international fuel cycle collaboraten, engineering, VVER performance, closed fuel cycle, human capital, international nuclear law.
The conference is organised by Rosatom.
MID.ru: Deputy Minister of Foreign Affairs Alexander Grushko Converses with UK Minister of State for Europe Chris Bryant
182-16-02-2010
Deputy Minister of Foreign Affairs of the Russian Federation, Alexander Grushko, received on February 16 Britain’s Minister of State for Europe, Chris Bryant.
During the course of the conversation topical problems of the reformation of the European security architecture, including Russian President Medvedev’s initiative to craft and conclude a European Security Treaty, were discussed along with issues in Russia-EU relations and the activities of the Russia-NATO Council. Considerable attention was paid to the state of affairs in the OSCE.
February 16, 2010
The Moscow Times: NATO Caught Between Russia and the World
17 February 2010
By Fyodor Lukyanov
Russia’s new military doctrine starts with a list of “military dangers” that includes NATO’s attempt to bring its military infrastructure closer to Russia’s borders and to add new members.
In contrast to the 2000 military doctrine, which referred vaguely to “the expansion of military blocs and unions to the detriment of Russia’s security,” the 2010 doctrine was more specific. On the other hand, in 2000, NATO expansion was seen as an unequivocal threat, whereas in the 2010 doctrine the alliance is no longer described as a “threat” but as a “danger” that “under certain conditions” could lead to the “appearance of a military threat.”
Nonetheless, the reaction from the West was clear: Russia clings to its NATO-phobia and has no interest in “resetting” relations with the West. It would have seemed that the alliance had done everything possible to convince Moscow of its benevolent intentions. The alliance has stopped courting Georgia and Ukraine — at least for the time being. The crisis over the Russia-Georgia war has passed, and NATO-Russian relations have been fully restored, including close cooperation in Afghanistan. What’s more, NATO makes every effort to consider Russia’s opinion when developing its strategic doctrines. A group of 12 NATO dignitaries, headed by former U.S. Secretary of State Madeleine Albright, visited Moscow last week to help boost NATO-Russian relations. So what’s the problem?
Moscow is concerned that NATO will transform itself into a global force operating outside its traditional theater, assuming the right to act at its own discretion. Those fears are linked to ambitions the alliance held several years ago, at the end of the 20th and start of the 21st centuries. But that period has ended. It became clear almost immediately that NATO would be unable to become a “global gendarme,” and there is no longer any talk of that happening.
Optimists such as NATO Secretary-General Anders Fogh Rasmussen speak of NATO playing the role of an international security “think tank.” According to that model, the alliance would coordinate its activities with other international organizations and regional alliances, including the Collective Security Treaty Organization and the Shanghai Cooperation Organization, to accomplish its goals. Former U.S. National Security Adviser Zbigniew Brzezinski, who proposed this model last year, acknowledged that the United States cannot rely on its European allies alone to address problems in distant locations around the globe.
Skeptics don’t believe that NATO will ever be able to form an alliance with the CSTO, SCO or other rival alliances. They think that NATO will most likely return to its roots — as a regional organization with the primary goal of guaranteeing the security of its member states in the European-Atlantic region. The bolder analysts claim that the war in Afghanistan — the first full-fledged NATO military campaign outside the alliance’s zone of operations — will also be its last. Now, the argument goes, the alliance will focus on its responsibility to uphold Article 5 of its charter, which obliges all NATO members to defend against an outside attack on another member. This is the most important feature of NATO membership for Central European and Baltic member states. After all, they joined the alliance above all to protect themselves from Russia.
Expanding NATO’s zone of operations beyond Europe would take the focus off Russia. But if NATO does, in fact, return to its “roots” as a strictly European-Atlantic alliance, it would effectively mean that it will return to its previous foundation — one largely based on defending against “the Russian threat.” It would be interesting to ask how President Dmitry Medvedev’s earlier proposal for a pan-European security pact would be received in such a situation. On one hand, a return by NATO to its “regional status” would mean that the alliance positions itself as the main European security organization, excluding the need for any other. On the other hand, countries such as Ukraine that are left on the sidelines would require some other form of security guarantee, and that leads back to Medvedev’s proposal.
Neither does NATO fully see Russia as it really is. Many recent Western publications suggest that the United States and other leading countries made a mistake in not appreciating how important it is for Russia to have prestige and a global status in the aftermath of the collapse of the Soviet Union. That blunder should be corrected by demonstrating the readiness of the West to listen to Russia and to offer it more or less equal partnership. This may have been one of the reasons why the NATO dignitaries visited Moscow and the renewed discussion of the desirability of inviting Russia into NATO. Perhaps this is how Washington imagines that it will compensate for the offenses that it committed in the 1990s and 2000s, and at the same time bring Russia into the U.S.-centered system of collective security.
Had those ideas been tried seven or eight years ago, we might have had an interesting dialogue. The Kremlin really has been obsessed with prestige and status, and Vladimir Putin spent much of his presidency knocking on various doors. But now that proposal is hanging in limbo because the overall international framework has changed. The West is having obvious trouble convincing the world that it is still the predominant global leader, particularly against the backdrop of the rise of China and other Asian states and the multiplying number of regional conflicts. And now the invitation to cooperate looks more like a desire to foist some of the burden on Russia that the United States and NATO cannot bear alone — whether it pertains to operations in Afghanistan or the need to contain China’s growing influence. The argument that Russia also has a stake in maintaining stability in Afghanistan and finding a counterweight to China’s rapid rise does not completely hold water. Yes, Russia is concerned about those issues, but at this point it is not at all clear that the United States and NATO would be the optimal partners for accomplishing those goals.
NATO will present a new strategic concept at its November summit. The document will probably be a compromise between the “globalists” who refuse to reject a global mission for NATO and the “regionalists,” the benign, defensive “union of democracies.” Whatever decision is reached, it will be only temporary. It is worth noting that the changes in the world that had such a large influence on NATO began almost immediately after the alliance adopted its last strategic concept in 1999. For that matter, the same can be said of Russia’s military doctrine.
Fyodor Lukyanov is editor of Russia in Global Affairs.
Georgian Daily: Moscow’s CSTO Olive Branch to NATO
Roger McDermott
One year after the “reset” policy was announced by the Obama administration, aimed at improving relations with Russia, the negative characterization of NATO continues to feature prominently in the thinking and statements of senior Russian officials. During a recent interview with the Tajik weekly newspaper Vecherny Dushanbe, Nikolai Bordyuzha, the Secretary-General of the Collective Security Treaty Organization (CSTO), confirmed that the organization has no official contact with the Alliance. “We have offered interaction many times, in particular, on such pressing problems as Afghan drug trafficking and terrorism. Hopefully, the new administration of the Alliance will change this attitude toward NATO-CSTO contacts,” Bordyuzha said. He juxtaposed this with the development of closer ties between the CSTO, UN and OSCE in relation to counter-terrorism, drug trafficking and organized crime (Interfax, February 4).
Bordyuzha advocates multilateral cooperation with NATO in countering terrorism and combating drug trafficking from Afghanistan. In his view, such cooperation might prove possible, but it largely depends on the political willingness within the Alliance to pursue closer relations with the CSTO. He points to the leaders of the CSTO being “gravely concerned” over the situation in Afghanistan, which he characterizes as “extremely critical and explosive and is catastrophically deteriorating,” which impacts on the security situation in Central Asia (ITAR-TASS, February 4).
Such political frustration is becoming sharper in the context of what Moscow views as its “successful” activation of the CSTO, ranging from forming the Collective Operational Reaction Forces (CORF) to its attempts to develop peace support capabilities within the organization and extend into other areas such as migration. Yet, Tashkent refuses to participate in the new force, and Moscow’s much hailed effort to open an additional “CSTO” base in southern Kyrgyzstan has been put on the backburner. While making every effort to portray the CSTO as a multilateral organization that is rooted in principles such as consensus, Moscow is aware that by pressing too hard on enhancing its military footprint in the region, it risks an open split with Tashkent (Interfax, January 27).
Other CSTO members may want closer relations with NATO, but are guided and influenced in their security thinking by Moscow. Bordyuzha believes that other members of the CSTO should follow the eagerness and compliance demonstrated by Kazakhstan, which has become the first Central Asian state to ratify the agreement on establishing the CORF. “It is symbolic that Kazakhstan, which initiated and hosted the signing of the agreement at the informal meeting of CSTO presidents in December 2008, was the first member country of the organization to ratify it,” Bordyuzha explained. These arguments appear unconvincing in Tashkent (Interfax, February 4).
On January 29, interior ministry officials from the CSTO member states agreed to conduct joint operations later this year that will target illegal migration and human trafficking. Following the formulation of a concept aimed at tackling illegal migration on a collective basis up to 2012, Illegal Immigrant 2010 is intended to demonstrate the seriousness the CSTO attaches to the issue. The coordinating council on illegal migration was formed in October 2007, and was designed to facilitate and improve the fight against the phenomenon and related crimes (ITAR-TASS, January 29).
On February 8, Bordyuzha said that the new Russian military doctrine, signed by President Dmitry Medvedev three days earlier, underscored the importance that Moscow attaches to the CSTO. The military doctrine, in his view, reaffirms Moscow’s readiness to come to the aid of any CSTO member subjected to a military attack. “The doctrine also envisages Russia’s participation in all components of the CSTO collective security system: the CORF and peacekeeping forces,” Bordyuzha said (ITAR-TASS, February 8).
While officials such as Bordyuzha present an image of Moscow desperately seeking stronger relations with the Alliance, NATO officials are regularly subjected to the erratic outbursts of the Russian Ambassador Dmitry Ragozin. His modus operandi is to attend meetings, then call a press conference predicated on telling journalists how effectively he corrected NATO officials. Ragozin’s latest outburst followed the announcement on February 5 that Romania will begin hosting US Ballistic Missile Defense interceptors in 2015. Commenting on US and Romanian officials going out of their way to assure Moscow that the interceptors posed no threat to Russia, Ragozin diagnosed: “It seems to be in line with Freud’s theory –it means they have some thoughts that the system could be targeted against Russia, otherwise why would they dissuade us about something we never asked about?” (Interfax, February 6).
Nevertheless, despite the various appeals for the Alliance to enter cooperative arrangements with the CSTO, it is politically difficult to disassociate the Moscow-led organization with Medvedev’s foreign policy aspirations for the West to recognize that Russia has a “sphere of privileged interests,” which predisposes some members of NATO to caution against such seemingly positive developments. The US Senate Select Committee on Intelligence held an open hearing on February 2, on the “Current and Projected Threats to the United States,” during which Dennis Blair, the Director of National Intelligence gave testimony. While noting an improvement in US-Russian relations, Blair said:
“I remain concerned, however, that Russia looks at relations with its neighbors in the former Soviet space –an area characterized by President Medvedev as Russia’s “zone of privileged interests”– largely in zero-sum terms, vis-a-vis the United States, potentially undermining the US-Russian bilateral relationship. Moscow, moreover, has made it clear it expects to be consulted closely on missile defense plans and other European security issues” ().
In reality, therefore, the CSTO remains a comparatively young organization, regarded even by its members as Moscow-dominated, which lends credibility to suspicions beyond the region that it serves predominantly as a foreign policy tool for Russia. In this context, while sharing concerns notably over Iran and Afghanistan, as well as transnational security threats, the Alliance prefers to deal with Russia directly. While its political leadership clings to neo-colonial aspirations, characterized as Russia’s aim to become a regional superpower, packaged as a “sphere of privileged interests,” and engage in the zero-sum game there can be little practical possibility that a new relationship will emerge anytime soon between NATO and the CSTO.
RFE/RL: Novosibirsk's Deputy Mayor Arrested
February 17, 2010
NOVOSIBIRSK, Russia -- Police have arrested the deputy mayor of the central Russian city of Novosibirsk, RFE/RL's Russian Service reports.
Aleksandr Solodkin and his father are suspected of belonging to an organized criminal group.
The investigative committee of the local prosecutor's office said the Solodkins are thought to have been members of a criminal group that killed people in
Novosibirsk between 1990 and 2009.
Police have arrested eight suspects who are also accused of extortion and other crimes.
RIA: Jewish Autonomous Region's legislature approves new governor
05:4917/02/2010
Lawmakers of Russia's Far Eastern Jewish Autonomous Region approved on Wednesday the nomination of Alexander Vinnikov to the post of the region's governor.
Of the 16 lawmakers, three voted against and 13 supported the candidacy of Vinnikov, the former mayor of the regional capital, Birobidzhan.
Since 2004, the heads of Russia's regions have been nominated by the president and approved by the regional legislature. Prior to this, open elections were held to determine regional governors.
BIROBIDZHAN, February 17 (RIA Novosti)
RFE/RL: Kremlin Stumbles In Regions As Unrest Mounts
February 16, 2010
By Brian Whitmore
There was tension in the air when Kremlin envoy Nikolai Vinnichenko stepped behind the podium at the Khanty-Mansiisk legislature to introduce President Dmitry Medvedev's candidate to replace the region's highly popular governor.
Addressing a room full of deeply skeptical lawmakers, Vinnichenko stressed that Natalya Komarova, a State Duma deputy from the ruling United Russia party who has no ties whatsoever to Khanty-Mansiisk, would nevertheless bring a "new dynamic" to the energy-rich Siberian region.
As he left the rostrum to take his seat, Vinnichenko stumbled, tripped, and nearly fell over. After safely navigating her own way up to the podium, Komarova tried to ease the strain in the room, remarking that "the path to power is very steep."
The Khanty-Mansiisk Duma unanimously confirmed Komarova as governor on February 15, and she is due to be inaugurated on March 1. But it has been an unexpectedly messy appointment -- one that sparked howls of protest from locals, who objected to their long-standing governor, Aleksandr Filipenko, being replaced by an outsider, as part of Medvedev's stated attempt to bring fresh faces to the gubernatorial corps.
Analysts say the Kremlin is still strong enough to have its way in the regions. But in a worsening economy and with Russia's far-flung provinces becoming increasingly restive, doing so comes at a price.
"Especially in times of crisis, it's no longer possible for the Kremlin to make such moves without taking into account the interests of the incumbent governor himself and those of the regional political elite and the population," says Nikolai Petrov, a specialist on Russia's regions at the Moscow Carnegie Center.
Voicing Opposition
When the Kremlin announced last week that Komarova would replace the popular Filipenko, widely seen as one of Russia's most effective regional leaders, the locals staged a mini-rebellion. An influential local newspaper editor penned an open letter to Medvedev expressing his opposition, and local residents held demonstrations.
The unexpected opposition in Khanty-Mansiisk came on the heels of massive protests in the northwestern exclave of Kaliningrad earlier this month, which saw approximately 10,000 come out to protest a tax hike and demand the resignation of their governor, Grigory Boos, and of Prime Minister Vladimir Putin
The two cases offer mirror images of each other. In economically distressed Kaliningrad, people were calling for the removal of a deeply unpopular governor who was brought in from Moscow and, in the opinion of many residents, treated the region like a colony. In prosperous Khanty-Mansiisk, by contrast, locals are angry that the Kremlin sought to remove a popular leader with deep roots in the region.
But in both cases, analysts say, a deep and festering anger with Moscow was evident and is only likely to grow.
"The population was passive as long as living standards were rising," Petrov says. "Now the government is no longer in a position to fulfill its obligations. That is why sooner or later this political passivity will be over and the population will become more active. This is especially dangerous when the governor is sent by Moscow from someplace else and is considered to be a stranger" by people in the region.
Bring Back Elections
The rising regional discontent also comes as Russians are becoming increasingly disenchanted with the Kremlin's policy of appointing regional leaders. A new poll released by the independent Levada Center this week showed that for the first time, a strong majority of Russian citizens, 54 percent, favor a return to the direct election of governors.
In 2005, Putin, then Russia's president, scrapped the direct election of governors on the pretext of imposing order in the wake of the September 2004 Beslan hostage siege. Under the system Putin installed, the Kremlin nominates governors who are then confirmed by regional legislatures, a process seen as a rubber-stamp exercise willingly carried out by the United Russia lawmakers that dominate regional parliaments.
At the time, Putin argued that the move was necessary to prevent further terrorist attacks. Critics say, however, that it was part of a strategy to bring the regions more tightly under Moscow's control.
"An absolute majority of Russian citizens favor the return of the direct election of governors," says Aleksei Levinson, a sociologist with the Levada Center, adding that the sentiment is especially strong among the young and highly educated.
"It is important to point out that governors represent one of the most important levels of authority. They are closer to ordinary Russians than the federal authorities, and therefore much depends on them. The idea of being able to elect them is attractive to Russians."
In recent weeks, momentum has been building to return to direct elections. A recent report by the Institute of Contemporary Development, a think tank associated with Medvedev, recommended they be restored.
Analysts say an unintended consequence of having appointed governors was that the Kremlin lost a crucial line of defense in the regions when things go bad. Under the old system, troubles in any given region were the responsibility of elected governors. But now, with appointed governors, the Kremlin owns any problems that arise.
An increasing number of analysts say that given the current political dynamics, it likely only a matter of time before direct elections are restored.
"In my opinion, this is inevitable -- and the sooner the Kremlin realizes this, the better," Petrov says. "Five years ago, when they switched to this new system, they didn't fully realize that in taking power, they are also taking responsibility. Now that the balance between power and responsibility is clearly favoring responsibility, it's stupid to have this system and have the president and prime minister become the targets in case of any local trouble."
Fresh Faces
In the meantime, Medvedev is in the process of appointing a new cadre of governors as part of a stated effort to modernize Russia's political system. The president is focusing on appointing younger leaders, who he says will infuse fresh blood into the elite.
Critics say, however, that an added benefit for the Kremlin will be that younger governors who are less entrenched in their regions will be easier to manipulate.
The past year has already seen a series of long-serving governors step aside.
Last March, Oryol Oblast's Yegor Stroyev and Murmansk Oblast's Yury Yevdokimov were replaced. Longtime Sverdlovsk Oblast Governor Eduard Rossel retired in November. Volgograd Governor Nikolai Maksyuta stepped down in January after 13 years in power, followed by Tatarstan's President Mintimer Shaimiyev, who steps down in March.
Moscow's powerful Mayor Yury Luzhkov and Baskortostan's President Murtaza Rakhimov are widely believed to also be in the Kremlin's crosshairs -- although Kremlin-watchers say they will be among the most difficult to remove.
Meanwhile, speculation has been rampant about the real reason Medvedev wanted to replace the popular Filipenko in Khanty-Mansiisk. The daily "Vedomosti" quoted unidentified Kremlin officials as saying Komarova is being sent on a mission to unify Khanty-Mansiisk with two other Siberian regions, Yamalo-Nenets and Tyumen, perhaps to consolidate Kremlin authority in the region.
Others have pointed out the role of Russia's powerful oil and gas industry, which is seeking to protect its interests in energy-rich regions like Khanty-Mansiisk.
Moscow-based political analyst Dmitry Oreshkin notes that Komarova, who headed the State Duma's Natural Resources Committee, has close ties to Russia's energy industry, which made her an attractive candidate to lead Khanty-Mansiisk.
"The new governor is close to the interests of Gazprom. And since Khanty-Mansiisk is an oil and gas region, it's understandable that Gazprom wants to have its own person in place there," Oreshkin says.
In his speech to the Khanty-Mansiisk legislature, Kremlin envoy Vinnichenko praised outgoing Governor Filipenko and stressed that he will be honored with a state award. He is also expected to be given an unspecified federal post.
But the unexpected and vocal opposition to Filipenko's ouster, analysts say, resulted from the Kremlin's failure to prepare the regional elite and population for the replacement of a popular governor. Analysts say Russia is likely to see similar instances of pushback in the future.
"Moscow obviously didn't evaluate the situation [in Khanty-Mansiisk] and didn't make an agreement with the local political elite," Petrov says. "It is unlikely that the outbreaks of emotion we saw in Khanty-Mansiisk were spontaneous. They were most likely a product of the fact that the local elite was not pleased with the president's decision [to replace Filipenko]."
RFE/RL's Russian Service contributed to this report
The Moscow Times: Russia is seeking assistance from the World Bank to develop its impoverished North Caucasus Federal District, Arkady Dvorkovich, President Dmitry Medvedev’s senior economic adviser, said Tuesday. (Bloomberg)
February 17, 2010
Makhachkala Journal
NY Times: In Dagestan, Laugh Track Echoes Across Mountains
By ELLEN BARRY
MAKHACHKALA, Russia — A funny thing happened to Magomedkhan M. Magomedkhanov, an ethnographer from the Russian republic of Dagestan, on a recent visit to the United States. Surrounded by distinguished colleagues at Harvard University and sensing that there was only one way to put everyone at ease, he dusted off a favorite joke about a Jew in a pit full of wild animals.
As the silence congealed into something approximating hostility, Mr. Magomedkhanov was reminded that he was no longer in Dagestan.
He grew up among the Archi, a 1,200-member ethnic group that speaks a language of unknown origin and, for at least seven centuries, was connected to the outside world only by rugged mountain paths. This is fairly typical of Dagestan, a collection of 14 major and several dozen minor ethnic groups that formed in tide pools and cul-de-sacs off one of humankind’s great migration streams.
All this has proven exceptionally fertile ground for ethnic humor. Dagestanis can tell ethnic jokes for hours, returning to beloved themes like the muscle-bound denseness of the Avars, the naked commercialism of the Dargins, the bookish pusillanimity of the Lezgins, the slyness of Lakhs and so on. And that’s not counting jokes about especially dumb villages.
One example: An Avar is carrying a wounded Dargin off the battlefield. The Dargin entreats his friend to leave him behind, lest they both be killed, and asks the one favor of shooting him so he does not suffer. The Avar, finally convinced, pulls out his firearm but finds he has no ammunition. The Dargin roots in his pockets and pulls out a bullet. “I’ll sell it to you,” he says.
Or this one: An Avar is driving through Makhachkala with a Lakh in the passenger seat. Spotting a red light, he pumps the accelerator and speeds through it. “You just ran a red light!” the Lakh says. “Avars don’t stop for red lights,” the Avar explains, and speeds through another. In a few minutes, they come to a green light, and the Avar stops. “Why did you stop?” the Lakh asks. “You can’t be too careful,” his friend says, “an Avar might be coming the other way.”
Some say the joke-telling tradition grew out of topography. Before the Soviets connected village groupings, or jamaats, with paved roads, bards would hike from one to another, singing ditties about the neighbors’ peculiar clothes or mannerisms, said Enver F. Kisriev, a Dagestani sociologist at the Russian Academy of Sciences. Jamaats were so wildly differentiated — for example, Tsovkra, the village of tightrope-walkers, or Kharbuk, the village of dagger makers — that for centuries they had no choice but to trade across linguistic and ethnic barriers. This bred a bone-deep tolerance, he said.
“In Dagestan, everyone knows there are people who think in a completely different way,” Mr. Kisriev said. “A Russian person who lives deep in the countryside and has never seen a Caucasian person — for him, everything is unexpected and alien. In Dagestan, that feeling doesn’t exist. We are never surprised at the way people act.”
If Dagestanis feel relaxed joking about their nationalities, from the distance of Moscow they look like a minefield. Soviets bureaucrats managed Dagestan by painstakingly distributing influence between important clans, and to this day, upsetting that equilibrium can lead to disaster. Lezgins, for example, traditionally led the region’s federal tax service, and when Moscow appointed a Russian to the post last year, they protested in such numbers that the police persuaded his motorcade to turn around at the republic’s border.
When Vladimir Radchenko, the appointee, was able to show up for work, he was abducted — briefly, but long enough to convince decision makers in Moscow that the best candidate for the job was a Lezgin, after all. The appointment was quietly repealed. This complexity may explain why Russia’s president, Dmitri A. Medvedev, hesitated for months before announcing his choice for the republic’s next president (his nominee, a Dargin, will replace an Avar).
Nationalities historically meant very little to Dagestanis, Mr. Kisriev said, but they flared up in the vacuum left by the Soviet collapse, as local clans built political forces along ethnic lines.
“Traditionally, you turn to the authorities or to the police for protection,” he said. “But if that power comes crashing down, people begin returning to their traditional networks” — in this case the jamaat, or village structure, which, starting in the 1990s, would send buses of armed men to protect a member in trouble, he said.
In this atmosphere, ethnic jokes serve as a safety valve; failure to enjoy them is viewed as “a shortcoming in a man’s character,” said Mr. Magomedkhanov, whose scholarly works include “Tattooed Mountain Women and Spoon Boxes of Dagestan.”
One anecdote has a guy approaching his neighbor Gitya, an Avar. He says, “Gitya, I heard a great joke the other day, but it’s about Avars. I don’t want to offend you, so I’ll tell it about Azeris.” He tells the joke, and Gitya laughs so hard that tears stream down his face. “Man,” Gitya gasps, catching his breath. “Those Azeris sure are idiots!”
There are, of course, limitations on the practice. One is that not one joke mocks a woman; in fact, it would be considered a monstrous offense even to ask a Dagestani if his wife was in good health. And if you are thinking of offending a Dagestani, consider that full-on brawls are so common that some restaurants in Makhachkala list the cost of replacing chairs and tables on their menus.
Magomed Sagatov, 52, who lives in the village of Gunib, gave a dry little smile when asked about humor. Standing on his balcony, he could point to the four or five nearest villages through the mist on the snow-covered hills.
“When you’ve had to live 1,000 years with your neighbors,” he said, “you learn not to make offensive jokes.”
February 16, 2010
Russia profile: Pulp Fiction
By Tom Balmforth
Russia Profile
Can Environmentalists Defeat the Combined Interests of a Government Worried About Jobs and an Oligarch Concerned About His Bottom Line?
To all appearances, it was victory for Baikal’s jobseekers and bitter defeat for its ecologists, as
officials said the Baikalsk Paper and Pulp Mill would be back on line by the end of February, once again dumping waste into the pristine waters of Lake Baikal. Activists on Sunday took to the streets in defense of the freshwater lake and some demanded the resignation of Prime Minister Vladimir Putin, who in January signed off on a resolution allowing the mill to reopen, ostensibly to create jobs. But a director for WWF Russia painted a very different picture, arguing that business interests were really shaping the future of the UNESCO-protected lake and using job-making as a pretext.
The dispute over the paper mill at Lake Baikal has a long history and on February 14, the day before it was scheduled to reopen, the depth of feeling on both sides was on full display. A thousand environmental activists gathered in the town of Baikalsk in central Siberia to protest the reopening of the paper and pulp mill on the lake’s shores. Meanwhile, down the road a similar number of hopeful jobseekers rallied in support of the reopening. The former demanded Putin’s resignation, while the latter brandished United Russia banners supporting their prime minister.
The dispute surrounding the mill at Baikal goes back to the early Soviet perestroika era, when an public movements challenged the state-owned mill over its dumping of waste which was destroying the ecological balance of the world’s largest freshwater lake. The campaign is often lauded as one the Glasnost period’s great symbolic victories. So is this a rehearsal of the same of debate?
The mill has been out of action for fourteen months since a ban was finally pushed through outlawing paper, pulp and cardboard production due the effect its waste by-product has on Baikal, which accounts for a fifth of the world’s freshwater. This ban, however, was overturned on January 13, when Putin – not for the first time casting himself as the savior of Russia’s unemployed - passed a resolution to legalize their production in order to create jobs.
And in spite of a huge outcry from environmentalists, the mill is now set to reopen, albeit later than expected. “Production of sample brown pulp consignments is underway – full production will start in February,” the mill’s spokesman told the RIA Novosti new agency.
Environmentalists then upped the ante by submitting an open letter to Russia’s leadership demanding Putin’s resolution be repealed, before it causes an “ecological catastrophe.” The letter has so far collected more than 31,000 signatures. “The decision by the government of the Russian Federation, which gives its blessing to the reestablishment of the work at the mill and to the construction of new mills surrounding Lake Baikal must be repealed!” reads the open letter.
But so far it doesn’t look like much will give. The majority stake holder of the mill, aluminum magnate Oleg Deripaska, has tried to placate environmentalists, saying he will install technology which within three years will see the mill functioning in an environmentally friendly way. Deripaska also said Friday that his company, Continental Management, will hand over its 51 percent stake in the mill to the city as soon as it becomes profitable, The Moscow Times reported.
But Evgenny Schwartz, the director for conservation policy at WWF Russia, said Baikalsk’s self-styled benefactor had no such intention, and had exploited his connections in the government in order to change legislation so he could switch some of his assets to a more lucrative (and previously banned) industry – paper and pulp production. “Because Deripaska has access to the prime minister, he was able to lobby for amendments to the list of banned products according to the law of 1999,” said Schwarz.
According to Schwarz, Deripaska exploited the idea of creating jobs “as a key with which to change the terms of the ban in order to fit his own needs.” In actual fact, he continued, “from the 1,500 people fired at the [mill’s 2008 closure], only 700 are still looking for employment and all of the most qualified workers have left the region.” This means that people are actually being brought in from outside the region to staff the mill, he said, which raises a question mark over the argument that opening it will create employment for the single-industry town’s 16,000-strong population.
Further, Schwarz said it was simply a “lie” that the mill had ever employed as many as 17,000 (the number claimed by pro-factory protesters on Saturday’s demonstration). “The mill never employed more than 2,300 people,” he said.
Schwarz said it was clear that the Russian government, which holds a 49 percent stake in the mill, had no intention of upgrading its environmental technology because it would be too expensive. He said it would be considerably cheaper to support Baikalsk’s people without the mill at a cost of an estimated $6 million per year, than employ a fraction of the population at the expense of $33.5 million – the price of making the mill environmentally friendly.
Whatever the motives behind the reopening, what does all this mean for Lake Baikal? Nikolai Petrov, an expert on regional politics at the Carnegie Moscow Center, reckons the government will actually cave in to environmental protests. “I think it is almost inevitable that the Kremlin will repeal the decision. If you bear in mind that very little can be done by the government in order to pacify the protestors, and if you look at the history of the protest of the oil pipeline – they were a constant headache for the Kremlin,” said Petrov.
Baikial environmental activism has had its share of past success. In 2008, environmentalists apparently outmuscled Russia’s oil men when they protested against a pipeline connecting Eastern Siberia to the Pacific which would have crossed the surrounding Buryatia region. Putin – this time casting himself as the savior of Russia’s wildlife – ordered the route moved 40 kilometers north of the lake.
“Irkutsk is a special region – civil society is pretty active there. And if they managed to get 1,000 people during winter, then the crowd will be much bigger in spring,” said Petrov.
And demonstrations connected with Baikal will have the government worried, said Petrov. The lake is important not only for the people of Irkutsk, but for Russians everywhere. “Protests like this could spread to other places – even Moscow,” he said.
National Economic Trends
BarentsObserver: Higher Russian budget deficit
2010-02-17
Russia will in 2010 have a budget deficit of 7,2 percent, the country’s Deputy Finance Minister said.
The 7,2 percent deficit is higher than previous estimates. Russian authorities earlier maintained that the deficit would amount to 6,8 percent, Rossiiskaya Gazeta reports.
Russia will use money from the Russian Reserve Fund and from the Fund of National Wealth to cover up for the deficit, Deputy Finance Minister Tatiana Nesterenko told Rossiiskaya Gazeta. The Reserve Fund will consequently be totally emptied, the Finance Ministry confirms.
BarentsObserver: International investments down 38 percent
2010-02-17
Direct foreign investments in Russia in 2009 declined by 38,4 percent.
A total of 44.9 billion USD was last year invested in Russia, which is a decline of 38,4 percent compared with 2008, figures from the Russian Ministry of Economic Development read.
The investments did however show a positive tendency in the last quarter of the year. In Q4, direct investments were 15 percent higher than in Q3 and 16 percent higher than in the last quarter of 2008, Rossiiskaya Gazeta reports.
Russian experts believe an investment level of 70 billion USD per year can be restored within 2-3 years, the newspaper writes.
Bloomberg: Ruble Strengthens to Two-Week High per Dollar as Oil Tops $77
February 17, 2010, 03:39 AM EST
By Denis Maternovsky
Feb. 17 (Bloomberg) -- The ruble strengthened to a two-week high against the dollar after oil, Russia’s biggest export, traded above $77 a barrel.
The Russian currency added 0.5 percent to 29.9847 per dollar by 10:41 a.m. in Moscow, heading for its strongest close since Feb. 3. It weakened 0.2 percent to 41.2535 per euro.
Oil prices have risen from as low as $33.98 a barrel in February 2009 to as high as $83.18 on Jan. 6, boosting the revenue prospects for the world’s biggest energy exporter. Crude for March delivery traded at $77.07 in New York after gaining 3.9 percent yesterday, the biggest daily gain since Sept. 30.
Investors pared bets that the ruble will weaken further, with non-deliverable forwards showing the currency at 30.34 per dollar in three months compared with an NDF of 30.39 on Feb. 16. The contracts are a guide to expectations of currency movements as they allow foreign investors and companies to fix the exchange rate at a particular level in the future.
The movements against the dollar and the euro left the ruble at 35.0600 against the central bank’s target currency basket, which is used to manage swings that hurt Russian exporters.
The basket is calculated by multiplying the dollar’s rate to the ruble by 0.55, the euro to ruble rate by 0.45, then adding them together. The ruble remains within the 26 to 41 band the central bank pledged Jan. 22 to defend.
--Editors: Stephen Kirkland, Alex Nicholson
To contact the reporter on this story: Denis Maternovsky in Moscow at +7-495-771-7721 or dmaternovsky@
To contact the editor responsible for this story: Gavin Serkin at +44 20-7673-2467 or gserkin@
Interfax: Ruble bonds might be placed simultaneously on domestic, foreign markets – Pankin
MOSCOW. Feb 17 (Interfax) - Russian Eurobonds denominated in rubles will quite probably be placed on domestic and foreign markets simultaneously, Deputy Finance Minister Dmitry Pankin said.
"We have not made a final decision, but there are substantial arguments in favor of going to domestic and foreign markets simultaneously," Pankin told Vesti 24 television on Tuesday.
Bank and investment analysts all say that the first half of 2010 "is a very convenient window for borrowing on international financial markets," he said.
The situation in the second half of the year will be less favorable, since U.S. interest rates might already begin to rise and many corporate and sovereign borrowers in Europe will be placing securities.
"That is, the window will exist in the first half of 2010. But at the same time the markets are highly volatile and the challenge is to catch the right moment," he said.
An advantage for Russia is that "we can choose the time when we go to market. We don't have a pressing need to borrow in April, May or June. We have sufficient reserves, the Reserve Fund, the National Welfare Fund. We can use them."
"We can make our move at the exact moment when we consider conditions are most favorable for foreign borrowing," Pankin said.
The Finance Ministry deliberately selected those banks for the placement that proposed the most aggressive strategy for a placement on the foreign market, who saw opportunities to place the bonds at prices below those quoted currently, he said.
It's still too early to specify the maturities of the bonds and where and on what basis they will be registered.
One goal of the borrowing is to lower the interest rate benchmark for Russian corporate borrowers so that companies are able to raise money more cheaply.
Russia must take care to space out offerings on the foreign market, so that it is not trying to place sovereign debt a week after several of the big state companies have placed bonds, he said.
Pankin noted that there are other borrowing options. "If we are offered attractive interest rates and the loans are not accompanied by the conditions that normally attach to loans from the World Bank, for example, we may examine that option as well," he said.
"We believe that we are no longer in a position where we have to borrow from the international organizations and meet some kind of provisions. We are now able to borrow on purely market principles. Investors trust us and we hope demand for Russian bonds will be very high," Pankin said.
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Bloomberg: Russia Sees First Half as ‘Advantageous’ for Eurobond Sale
February 17, 2010, 03:22 AM EST
By Paul Abelsky and Denis Maternovsky
Feb. 17 (Bloomberg) -- Russia needs to “seize the moment” in the first half of the year for its first international bond sale since the country’s 1998 default, Deputy Finance Minister Dmitry Pankin said.
“The first half of 2010 is seen by all banks and investment analysts as more advantageous for borrowers than the second half,” Pankin told Rossiya 24 television late yesterday. “It is expected that the second half of 2010 will be more difficult because the U.S. and Europe may start raising interest rates. The window will be there in the first half and we must seize the moment.”
Russia hired Barclays Capital, Citigroup Inc., Credit Suisse Group AG and VTB Capital as co-organizers of the initial installment of a planned Eurobond issue. The Russian government is seeking to raise as much as $17.8 billion through the debt sale, which will be in several tranches through 2010, to cover a budget deficit that may widen to 7.2 percent of gross domestic product.
Russia “can pick the time when it enters the market, we have no dire need to borrow precisely in April, May or June, we have enough reserves,” Pankin said.
The government may also sell ruble-denominated bonds simultaneously in Russia and abroad, he said, adding that the issue would be “one of the steps aimed at promoting the ruble as a reserve currency.”
--Editor: Tasneem Brogger.
To contact the reporters on this story: Paul Abelsky in Moscow at +7-495-771-7738 or pabelsky@. Denis Maternovsky in Moscow at +7-495-771-7721 or dmaternovsky@.
To contact the editor responsible for this story: Chris Kirkham at +44-20-7673-2464 or ckirkham@
Russia Today: Tax service could put payment terminals out of action
16 February, 2010, 17:45
Starting in April, automatic payment terminals in Russia could be halted as the Federal Tax Service will refuse to register them unless specific data is given by their owners, reports Vedomosti.
The terminals, which are used all over Russia for payments from telephone to utilities, could be paralyzed by the tax service as it seeks to receive information regarding lease contracts for the premises where they are located and electronic keys which provide information about transactions made and phone numbers and other details of individuals using the terminals.
Boris Kim, Chairman of the Committee on Payment Systems of the National Association of E-commerce, says there is no legal requirment to do this. Kim says the authorities are using intra-departmental instructions, and that their actions contradict the law on the activity of individuals in receiving payment, and the instructions of the Finance Ministry.
The General Director of OSMP (Joint System of Instant Payments), Vladimir Lopatin, says that giving tax authorities electronic keys could lead to a number of problems.
“First, terminal owners will have to take on additional expenses and second, this is fraught with hacker interference, unauthorized money transfers and information leaks. If the issue with the FTS is not resolved, from April 1, OSMP and other payment systems will have to cease taking payments.”
Earlier in the month, Vladislav Reznik, head of the Financial Markets committee in the State Duma, put the issue before the Ministry of Finance. The Ministry agreed and said that there is no obligation to provide the Tax Service with complete access to the terminals.
Eldar Nazutdinov, head of the legal department of Avangard Asset Management says the FTS actions can be appealed in court.
“Providing information on payments and receivers is possible only if this is indicated in public law and regulations, but not by departmental acts.”
Business, Energy or Environmental regulations or discussions
Bloomberg: Gazprom Neft, Polyus, Rosneft, Transneft: Russia Stock Preview
By Lucian Kim
Feb. 17 (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 rose 3.2 percent to 1,361.49. The dollar-denominated RTS Index advanced 3.1 percent to 1,418.16.
OAO Gazprom Neft (SIBN RX): OAO Gazprom’s oil arm and TNK- BP plan to invest $13.6 billion in their joint Messoyakha project, Interfax reported. Gazprom Neft jumped 3.8 percent to 142.45 rubles.
OAO Polyus Gold (PLZL RX): Gold rose the most in three months on speculation that concern over Greece’s sovereign debt will spur demand for the metal as an alternative to holding currency. Shares in Russia’s largest gold miner increased 2 percent to 1,452.71 rubles.
OAO Rosneft: (ROSN RX): Crude oil rose the most in more than four months as the dollar declined against the euro. Shares in Russia’s largest oil company rose 3.3 percent to 233.50 rubles.
OAO Transneft (TRNFP RX): Russia’s oil pipeline monopoly said it plans to issue seven bonds totaling 119 billion rubles ($4 billion). Transneft preferred shares advanced 5.5 percent to 24,696.30 rubles.
To contact the reporter on this story: Lucian Kim in Moscow at lkim3@
Last Updated: February 16, 2010 22:00 EST
Bloomberg: Russia Options Signal 17% Stock Retreat by May on Oil (Update2)
February 16, 2010, 06:32 PM EST
(Updates with closing prices in fourth, fifth and eighth paragraphs.)
By Jeff Kearns and Whitney Kisling
Feb. 16 (Bloomberg) -- Options traders are making the most bets in 14 months that Russian stocks will drop on concern demand for commodities from China and Europe will weaken.
The open interest, or number of existing contracts, for options speculating on a retreat in the Market Vectors Russia exchange-traded fund rose 65 percent last week to 60,608, or 2.42 times the number of bullish wagers, according to data compiled by Bloomberg. The most-popular options bet pays in the event of a 17 percent decline from the last close to $25 by May in the ETF, which holds shares of Russian companies and trades on U.S. exchanges.
“There’s definitely an inordinate amount of interest in the May $25 puts and we’re seeing steady open interest increases,” Noah Warsaw, an exchange-traded fund options trader at Group One Trading in Chicago. “These are mostly commodities companies and they rely on European demand so any worries about Europe would certainly affect Russia.”
The country’s benchmark Micex Index slumped 8.3 percent from a 17-month high in January through today on speculation that falling oil prices, higher interest rates in China and growing budget deficits for Greece, Portugal and Spain will dent earnings prospects for companies in Russia, the world’s largest energy supplier.
Crude oil futures have dropped 3 percent this year to settle at $77.01 a barrel today on the New York Mercantile Exchange after supplies climbed to the highest level in two months and China moved to cool its economic expansion.
‘Sweet Spot’
“People see a downside in energy, which would take the whole commodity complex lower, and this ETF is in the sweet spot of that,” said Jim Strugger, an options strategist at MKM Partners LP in Greenwich, Connecticut. “There’s going to be a lot more interest on the put side.”
A rally in oil today helped spur a 3.2 percent gain in Russia’s Micex index, among the biggest advances worldwide.
Traders boosted open interest in the ETF’s May $25 puts last week 35-fold to 16,189 contracts, the largest among all options on the ETF and almost a fifth of all outstanding contracts. Open interest for all puts giving the right to sell the ETF has risen to 60,608 before today, the highest since December 2008 and more than double the 25,089 existing calls to buy shares. The ETF, which hasn’t closed below $25 since September, rose 4.2 percent to $31.52 in New York.
Largest Holdings
Commodity producers make up most of the largest holdings of the ETF, which tracks 37 companies, according to the fund’s Web site. OAO Gazprom, the world’s biggest natural-gas company, OAO Lukoil, Russia’s second-largest oil company, OAO Sberbank, the country’s biggest bank, are the three largest. Other top holdings include OAO Rosneft, the nation’s biggest oil company, OAO Surgutneftegaz, the fourth-largest, and OAO GMK Norilsk Nickel, Russia’s biggest producer of the metal.
“We’ve noticed protective buying consistently over the past week,” said Chris Jacobson, chief options strategist at Susquehanna Financial Group LLP in Bala Cynwyd, Pennsylvania. “You have a lot of concerns around sovereign debt, particularly in Europe.”
--With assistance from Michael Patterson in London and Maria Levitov and Paul Abelsky in Moscow. Editor: Stephen Kirkland, Stephen Kleege
To contact the reporters on this story: Jeff Kearns in New York at +1-212-617-8138 or jkearns3@; Whitney Kisling in New York at +1-212-617-7904 or wkisling@.
To contact the editors responsible for this story: Nick Baker at +1-212-617-5919 or nbaker7@, David Papadopoulos at +1-212-617-5105 or Papadopoulos@
The Moscow Times: List of Government IPOs Will Be Announced Soon
17 February 2010
By Alex Anishyuk
A list of state-owned companies set to be privatized will be announced within a few weeks, but the government will wait until the economy returns to full health before carrying out any of the sales, presidential aide Arkady Dvorkovich said Tuesday.
“We’re currently preparing the list, and … the priority will be given to transportation, logistics, shipping companies, as well as airports and seaports,” he said Tuesday at the Economist's Russia Business Roundtable. “Be patient, wait for another few weeks, and you will have the list - we believe the first quarter is not the right time.”
In order to ensure that the government can make money on the sale and investors can generate the necessary returns, a fair price must be reached on the privatizations.
"This compromise is hard to reach during the crisis, especially since it was difficult to sell these assets at their pre-recession prices,” he said.
But Dvorkovich sees hope for the flagging economy, just as he sees hope for the poorly performing Russian Olympic team.
“I spend a lot of time watching the Olympic games, and unfortunately, the Russian team is not doing very well, but I hope we will catch up soon,” he said.
“The same I hope will happen with the Russian economy,” he said, adding that he was watching the Olympics on television until late each night, which has affected his working schedule.
Dvorkovich said a large-scale sell-off of state assets is necessary in order for the country to modernize. Modernization has become the motto of President Dmitry Medvedev, who hopes to kick Russia's dependence on fossil fuels and develop a high-tech economy.
Last December, Finance Minister Alexei Kudrin said the government would sell off most of the state enterprises slated for privatization through an initial public offering,
The government said last year that it planned to sell stakes in 14 strategic companies this year, as well as 435 other state-owned enterprises, for a total of 77 billion rubles ($2.5 billion).
But President Dmitry Medvedev last week ordered the Cabinet to sell off more government stakes in major strategic companies to private investors over the next two years and come up with a list of assets to sell by March 15.
The assets floated for sale last year contain such potentially attractive companies as the airline Aeroflot, television company Channel One, telecoms operator Svyazinvest, oil producer Zarubezhneft and oil pipeline monopoly Transneft.
Dvorkovich called on businessmen to support the government’s push to modernize the economy, saying the cooperation could be mutually fruitful.
“The government should share the risk with business. It has some resources,” he said. “We will share these with the companies that work in industries that we deem priorities, and we may reduce taxes for them. Which in its turn will improve the balance sheets of these companies and incite banks to participate more actively [by lending more].”
Businessneweurope: Bond market cheer: The Russians are coming!
Guy Norton in London
February 17, 2010
In the world of investment banking it seems there are winners and… maybe future winners.
After a hotly contested process involving more than 20 investment banks, the authorities in Moscow have mandated Barclays Capital, Citigroup, Credit Suisse and VTB Capital to lead manage Russia's return to the international bond markets after an absence of more than a decade. While there's some disappointment at the banks that failed to make the grade this time around, there's also the expectation that the Kremlin will shuffle its lead manager pack when it comes to mandating future issues. Meanwhile, the winning quartet can bask in their glory before the hard work of actually bringing a deal to market begins.
While Barclays, Citigroup and Credit Suisse are all acknowledged emerging market veterans with top-notch sovereign bond franchises, the appointment of VTB Capital marks a noteworthy coup for the Russian investment bank, which was only set up in 2007. The bank fought off competition from local rivals Troika Dialog, Renaissance Capital and Sberbank to secure the sole berth reserved for a Russian bank. Commenting on the bank's mandate win, VTB's president, Yuri Soloviev, says: "We are extremely pleased that VTB Capital has been selected as the only Russian bank to act as a bookrunner in this deal. I am certain that this placement will prove strategically important for our international debt capital markets business."
Though VTB lacks a pedigree in the sovereign bond business, it does boast a strong corporate bond franchise. According to Russian fixed-income portal Cbonds.ru, in 2009 VTBC was the leading arranger of Eurobond and local bond issues in Russia and the rest of the Commonwealth of Independent States. "Despite international finance market turmoil, VTB Capital has succeeded in attracting investments into the Russian economy and helping companies get resources for further development," says Soloviev.
Winning strategy
According to Deputy Finance Minister Dmitry Pankin, the winning banks were chosen because they proposed a more aggressive funding strategy, with Pankin claiming that any new issuance would slash borrowing levels for the sovereign. "We are not talking about [lowering the yield from current market levels] by 2-3 basis points [bps], but by several tens of basis points," he said at a press conference to announce the mandate in February.
Russia's current benchmark Eurobond is the $19.9bn, 7.5% March 2030 Eurobond, which in February was trading at a mid-market yield of around 5.5% or a spread of roughly 215 bps over US Treasuries. While keen to debunk speculation that Russia would need to raise the $18bn figure mentioned in the 2010 budget, Pankin said it will certainly seek to highlight its competitive advantages over other economies by issuing at least one benchmark-sized bond in the international markets this year and would not be put off issuing by the bond market jitters over highly indebted Western European sovereigns such as Portugal and Greece. Whilst acknowledging that concerns over the debt repayment problems faced by Portugal and Greece would no doubt have an influence on the pricing of Russia's first overseas bond issue since 1998, he said the marketing roadshow for the issue would give the Russian government the opportunity to highlight the country's economic strengths. "Our aim is to competently position Russia... to explain our advantages, that we are different from Greece and Portugal, that our budget situation is different, that our macroeconomics is much better than of that of many countries with a comparable rating level."
Given the need to correctly position the Russian sovereign story, the finance ministry is unlikely to rush to market, with any international issue unlikely to be launched before the end of March at the earliest. At this point there is little concrete detail about the likely terms or conditions of the issue, with Pankin merely saying it would be denominated in either dollars or euros. Market speculation, however, suggests that any deal will be at least $3bn equivalent in size, possibly have split five- and 10-year tranches, and will most likely be in dollars rather than euros. "Despite lacking details on the issue, we foresee substantial demand for Russia's Eurobond from institutional investors. The issue will create a new benchmark on Russia's sovereign curve and… create a more fluid market for Russia's Eurobonds in the future," says one fixed-income analyst.
According to a report by Alexander Kudrin, head of fixed-income research at Troika Dialog in Moscow, in order for Russia to optimize the funding costs of any new issue, the finance ministry should look to utilize a global bond form and also re-register some of its existing debt in the same format. Previous foreign bond issuance by Russia has been in either Rule 144A or Reg S Eurobond formats, which though involving less arduous financial disclosure requirements, places restrictions on distribution to US institutional investors in particular.
Kudrin argues that the global bond format would enable Russia to tap the widest possible spread of investors, thus enabling it to achieve tighter pricing levels. Furthermore, he says that given their almost universal appeal, global bonds feature in all the key bond indices such as Barclay's Capital Global Aggregate Bond Index, which are widely followed by all major fixed-income funds and not just emerging market specialists. In order to fully leverage the benefits of the global bond format, Kudrin argues that the benchmark 2030 Eurobond should be re-registered as a global bond ahead of any new issue so as to help tighten the sovereign yield curve. "In the event that sovereign Eurobonds are issued, we believe that the format of global bonds would reduce their yield by 40-60 bps relative to the current level on the secondary market."
Reuters: FACTBOX-Russian companies line up for IPOs in 2010
Tue, Feb 16 2010
Feb 16 (Reuters) - Russian companies are planning dozens of initial and secondary share offerings in 2010 as the global economy recovers and investors seek risk again.
UC RUSAL , the world's biggest aluminium producer, has just raised $2.2 billion -- or roughly 75 percent of the $3 billion that Russian companies got from equity market in 2009 -- in an initial public offering in Hong Kong. [ID:nTOE60Q02O]
Following are initial public offerings in the pipeline for companies in Russia and former Soviet republics:
ISSUER PROCEEDS TIME ====================================================
TransContainer TBC end of 2010
Russian Railways, the world's largest infrastructure company, plans to sell 35 percent minus one share in its cargo unit TransContainer. The IPO may take place at the end of this year or early next year; a listing in Hong Kong is an option [ID:nLDE61F1T6]
Kamchatka Gold TBC Q4
Russian tycoon Viktor Vekselberg, a key RUSAL shareholder, targets Hong Kong for an IPO of his Kamchatka Gold miner as the project is a very logistical development with Chinese participation [ID:nLDE61E1PX]
EN+ Power up to $1 bln Summer
Debt-laden Russian tycoon Oleg Deripaska is planning to list power firm En+ Power, which operates 14 power stations with total capacity of 19,500 megawatts, in Hong Kong. [ID:nLDE61E0NB]
Uralchem up to $600 mln March-April
Russian fertiliser producer Uralchem is seeking an urgent share placement to help pay down a mammoth debt-pile. The company plans to raise $400-600 million via the sale of 20 to 30 percent of its shares. [ID:nLDE6190JZ]
SUEK up to $1.5 bln Q2
SUEK, a leading coal producer, plans to list its shares in London later this year, possibly in the second quarter. The group would raise about $1 billion via a 10 percent flotation. [ID:nLDE60K2A4]
Kuzbass Fuel Company $300 mln Q1
Kuzbass , Russia's seventh largest steam coal miner, could raise about $300 million via an additional share sale in the first quarter. [ID:nLDE60Q2EP]
Metalloinvest up to $2 bln TBC
The Russian iron and steel firm half-owned by Alisher Usmanov could raise $1-$2 billion and may take a decision on the IPO at the end of the first quarter. [ID:nLDE60O27T]
ProfMedia $500 mln April 2010
The media group plans to float up to 40 percent of its shares in an initial public offering in April. Bank of America Merrill Lynch and Credit Suisse are the bookrunners for the planned $500 million listing. [ID:nWLA1949]
Polymetal $300 mln TBC
The Russian precious metals miner plans to raise some $300 million via a placing of up to 10 percent of its shares. [ID:nLS732489]
LSR up to $600 mln TBC
The real estate company could carry out a secondary placement this year in Moscow and London. The company may raise $300-$600 million. [ID:nLDE60Q2C9]
Victoria TBC TBC
The medium-sized Russian grocery chain is considering an initial public offering and has hired Goldman Sachs and Renaissance Capital as advisors. [ID:nLDE60Q2GK] (Compiled by Dmitry Sergeyev; Editing by Louise Heavens)
RBC: Rosbank and Societe Generale Vostok likely to merge
RBC, 17.02.2010, Moscow 11:57:36.Rosbank and Societe Generale Vostok are likely to announce a merger before the end of the week, the RBC Daily newspaper reported today.
According to the publication, the new lending institution will bear the Rosbank brand and may be named Rosbank - Societe Generale. After the merger, Societe Generale (SG) is poised to pass a decision on integrating its Russian subsidiaries in the new structure. The announcement will most likely be made on February 18, since Societe Generale is scheduled to publish its financial statement for 2009 and plans for 2010 on this day.
Russia Today: Ebay to launch e-commerce in Russia
17 February, 2010, 11:44
Ebay Inc has announced that it will launch a Russian version of it’s website by the end of March, hoping to capitalize on the relatively undeveloped e-commerce market in Russia.
“Ebay will be launched with the Russian-language interface in the middle or closer to the end of March,” said Vsevolod Denisov from the Edelman PR agency to Reuters.
Denisov said that payments would be made using credit cards through the PayPal system which has also been reformatted into Russian. Boris Boris Kim, chairman on the Committee on Payment systems of the National Association of E-commerce, says this gives Ebay some clear advantages.
“Paypal already takes credit cards from Russian banks as well as virtual ones issues by them specially designed for internet payments.”
Kim said that wide choice in goods listed as well as a lack of counterfeit and fake listings will help the company.
“The introduction of the Russian service had been lacking and is an important step in Ebay becoming the leader in e-commerce in Russia.”
Ebay’s main competitor will be Russian internet auction site Molotok.ru. According to the company they see traffic of around 200 thousand people a day with more than 5 million active listings. Molotok.ru general director, Igor Karpachev welcomes the competition but remains confident his company will not yield to Ebay.
“We hope that this will definitely happen on March 16. The arrival of a strong player is always interesting, this promotes market growth,’ and then adding “A few serious innovations are planned for 2010 and will allow us to remain leaders on the e-commerce market in Russia.”
According to Finam financial company, internet auctions saw a 30% growth last year up to $30-40 million.
However, Tatyana Menkova, an analyst at Finam, says that while the new Russian interface is important, the payment system is the real issue.
“Even active users have a relatively low level of trust in using bank cards for internet transactions. And a majority of the population uses cards that are unsuitable for internet payments.”
Finam predicts that the quantity of listing on Ebay from Russia could increase by 20-30% but will mostly be sellers. They predict that buyers will increase by only 10-15%.
LA Times blogs: Silicon Valley luminaries become technology ambassadors to Russia
February 16, 2010 | 12:39 pm
Silicon Valley is playing a much larger role in international diplomacy in the Obama administration than in the Bush administration. That’s in large part thanks to Jared Cohen, who has played a role in both.
Cohen joined Condoleezza Rice’s State Department policy planning staff as its youngest member in 2006. A Stanford University graduate who won a Rhodes Scholarship and earned a master’s degree in international relations at Oxford, Cohen advised the State Department on youth and education, particularly in the Muslim world. He gained notice for his book: “Children of Jihad: A Young American’s Travels Among the Youth of the Middle East,” which was based on his travels there. He advised Rice on how to reach young people in the Middle East who were increasingly using social media tools.
Now Cohen is on Secretary of State Hillary Clinton’s team and helped with her speech on Internet freedom. I spoke with him while he was waiting at the airport to board a flight for Moscow. He’s part of an effort that Secretary Clinton calls “21st Century Statecraft.” In January, Clinton held a dinner in Washington to explore how to use technology to promote diplomacy.
“Statecraft as much about building connections as it is about negotiating,” Cohen said.
That’s what Cohen will be doing for the next five days. He has teamed with Howard Solomon of the National Security Council and White House Chief Technology Officer Aneesh Chopra to lead an all-star U.S. delegation to Russia to see how technology can mutually benefit both countries.
The State Department has always sent business delegations to other countries. But sending technology delegations is something new. Last year, a tech delegation traveled to Iraq and Mexico. After the Iraq trip, the government there set up a YouTube channel and tech companies helped set up a website to catalog arts and artifacts in the national museum that was looted after the U.S. invasion. After the Mexico trip, the country set up an SMS hotline to report crimes anonymously.
Cohen's contention: The U.S. can open doors to other countries and cultures through its technology sector that produces many of the tools that young people around the world use to connect with one another.
Among the luminaries headed to Russia with Cohen are actor Ashton Kutcher; EBay CEO John Donahoe; Shervin Pishevar, executive chairman and founder of Social Gaming Network; Twitter co-founder and Square founder Jack Dorsey; Mozilla Foundation chair Mitchell Baker; and Cisco System CTO Padmasree Warrior. They will meet with Russian ministers of health and education, advisors to President Dimitry Medvedev, leaders of technology companies and more. They will tackle issues such as encouraging entrepreneurship and e-government initiatives and combating child trafficking and corruption.
The participants were chosen because they represent a microcosm of the technology industry and they make efforts to do social good. Kutcher, and his actress wife Demi Moore, for example, have a foundation that works on trafficking issues. Kutcher is also active in social media.
“They are taking off their CEO and commercial hats and putting on their expert hats,” Cohen said
-- Jessica Guynn
RenCap: Government officials set to meet metals and mining sector representatives today
Renaissance Capital, Russia
Wednesday, February 17, 2010
Event: Russia's Deputy Prime Minister Igor Sechin is due to hold a meeting with metals and mining sector representatives today (17 Feb), to discuss possible measures to support growth capex in the sector. Items on the agenda include the introduction of tax concessions on the portion of net profit reinvested in innovative projects and support measures for metal-intensive sectors including construction and machinery (power equipment manufacturing in particular). Oil and gas pipe producers are interested in introducing special quotas for domestically produced pipe used in major oil and gas pipeline projects which may be equivalent to the share of the state in these projects. Specific support measures for speciality steel producers, including Mechel assets (ChMK and Izhstal) and state holding company Rosspetsstal, may also be on the agenda.
Action: Positive for the Russian metals and mining sector, in our view.
Rationale: We have previously noted that open dialogue with the government and official state support are vitally important for the development of the Russian metals and mining sector. Companies' individual projects focused on developing high value-added products, energy-efficiency, modernising the production process and environmental considerations should find official state support. For example, the installation of pulverised-coal injection systems on blast furnaces (BF) enables producers to reduce the consumption of natural gas in BF production by 70%. On the other hand, support for metal-intensive sectors is a top priority as high valued-added steel products are primarily sold on the domestic market.
Boris Krasnojenov
Actmedia: Mechel acquires steel mill in Romania
Date: 17-02-2010
Mechel, one of the leading Russian mining and steel groups, will soon add the Romanian steel mill Laminorul Braila to its East European Steel Division, as its Cypriot subsidiary Zoneline Limited nears the completion of the acquisition of the Austrian metal trader Donau Commodities, which owns an 87.81 percent stake in Laminorul. The transaction, the cost of which is expected to amount to $20 million, is currently being examined by the Romanian Competition Council.
According to the Russian newspaper Kommersant, the acquisition of Laminorul Braila will allow Mechel to significantly extend its product range and to achieve synergy with its other Romanian subsidiaries, namely, Mechel Targoviste, Mechel Campia Turzii, Ductil Steel Buzau and Otelu Rosu, which are specialized in the production of longs and hardware. However, steel demand in Europe, the main market for the products of Mechel's Romanian subsidiaries, is showing a slower recovery than in Russia or the US, with consumption in Europe at just 60 percent of the pre-crisis levels.
The Laminorul Braila steel mill was established in 1923 and is the only Romanian producer of flat bulb steel, which is used in shipbuilding. The plant also produces section steel, including I-beams, U-channels, unequal angles and equal angles and railway sections. Laminorul has two rolling mills, and also carries out cold and hot stamping. Its total rolling capacity amounts to about 400,000 mt per year. About 60 percent of Laminorul's products are exported.
Bloomberg; Evraz’s Highveld Steel Unit CEO Walter Ballandino Resigns
By Alastair Reed
Feb. 17 (Bloomberg) -- Highveld Steel and Vanadium Corp. Ltd., controlled by Evraz Group SA, said Chief Executive Officer Walter Ballandino has resigned with immediate effect.
Last Updated: February 17, 2010 02:03 EST
The Moscow Times: IKEA Sues Senator
17 February 2010
IKEA is suing Senator Vadim Moshkovich’s company Mashtab over land rental issues at its Mega mall in Tyoply Stan, Kommersant reported Tuesday.
The Swedish company had signed a rental contract for 49 years in 1999 with the previous landowner, but when Mashtab acquired the land, IKEA refused to renegotiate the agreement.
IKEA had planned to expand its Tyoply Stan store, but could not resolve the land issues, and the dispute went to court.
Reuters: UPDATE 1-EBay adds new Europe, Russia platform to spur buying
* eBay to launch in Europe, Russia by end-March
* Aims to drive cross-border, native-language retail (Recasts to add detail, background, updates with eBay statement, adds dateline)
MOSCOW/SAN FRANCISCO, Feb 16 (Reuters) - EBay Inc (EBAY.O) will launch a new online retail platform in five European countries and Russia by the end of March, spurring cross-border transactions and allowing buyers to navigate purchases in their native languages.
The move comes as eBay seeks to increase transactions on its sites by making them more user-friendly and reliable. It has been emphasizing fixed-price goods, rather than auctions, to encourage more buyers.
Online shoppers in Russia, Greece, the Czech Republic, Norway, Denmark and Sweden will now be able to buy online in their native tongues. Those countries were chosen based on demand, eBay said.
The company will also offer PayPal, its online payments system, to these customers to facilitate transactions across borders.
"EBay continues to look at ways to provide online consumers with access to the wide range of products on sale on eBay, even if there is no eBay platform in their market," the e-commerce company said in a statement.
Vsevolod Denisov from the Edelman public relations agency told Reuters the Russian-language interface would be launched by mid- or late-March.
Previously, consumers in those six countries had to navigate eBay's branded marketplaces in a different language than their own. EBay currently operates some 20 eBay-branded marketplaces.
Under the new platform, buyers will only be allowed to purchase fixed-price items, as opposed to those sold in an auctions format.
In Russia, competition is limited, due to the poorly developed and highly fragmented market. Ebay will compete with Russia's Internet auction site Molotok.ru which serves around 200,000 people a day, offering more than 5 million items on sale.
(Reporting by Anastasia Teterevleva and Alexandria Sage; writing by Maria Kiselyova and Alexandria Sage; Editing by Louise Heavens, Bernard Orr)
Russian Insurers: Who Will Survive Financial Crisis
15.02.2010 — Analysis
Russian insurance market is expecting another blow from economic crisis. In contrast with industrial enterprises and banks which are beginning to recover after the spot of financial turbulence the situation of many insurers in 2010 may take a turn for the worse. According to expert estimates around a hundred organizations will leave the market. The RusBusinessNews correspondent has been finding out which companies fall into the "risk zone" category and what the clients of companies going bankrupt should do.
Survival school
The previous year has been hard for Russian insurers. The market manifested significant reduction; the drop in amounts of premiums collected had already started in the end of 2008 and has been getting worse during the whole of 2009. According to the Federal Service for Insurance Supervision in January-March insurers collected premiums totalling 139.1 billion roubles (not counting mandatory medical insurance), in the second quarter - 132.7 billion, and still less in the third - 121.3 billion. The results of the last three months have not yet been published by the FSIS while experts are not expecting the indicators to improve as the liquidity shortage problems are still a concern for the majority of insurance market players.
The crisis also has dealt a shattering blow to the Urals Federal District. While the fall in premiums averaged at 9% in Russia compared to the same period of 2008 in the Urals the amount of premiums collected in 9 months of 2009 has reduced by 23%. Moreover, six insurers in the Urals Federal District have not managed to survive in current economic conditions. Uralros, Belaya Bashnya (later rebranded as Yubileynaya), Koltso Urala, Neftegaz-Strakhovaniye, and Ural-AIL-Zhizn have left the market. FSIS has revoked licenses of 101 Russian insurance companies in the previous year, this included 25 organisations which ceased operating voluntarily.
According to Aleksandr Koval, the Head of FSIS, at least another hundred companies will go in 2010. Starting from January 1-2 companies lose their licenses each week and this trend is here to stay. All insurers who showed reduction in premiums collected last year are at risk. As of the end of 2009 there were 722 insurance companies registered in Russia, 60% of them showed the reduction of revenues.
The majority of them are small regional companies. During the crisis legal entities have been buying less of insurance products as insurance budgets in the majority of companies have been cut down. Many Russians who were laid off or had their wages cut down had to stop paying for insurance. In this situation only big players working at the federal level still managed to get profits, all the rest, even if still surviving, carried massive losses.
Who is to blame and what should be done?
Hundreds of thousands of Russians may fall victim to bankruptcies. "The situation does cause concerns. Our market is not transparent, many companies carry losses while keeping appearances of successful work. The problems, however, like a pregnancy, can not stay concealed forever, sooner or later they become public knowledge and it seems 2010 will become the time of such lamentable discoveries," reckons Konstantin Selyanin, a stock exchange analyst from the Mid Urals.
Every month there are more and more clients complaining of insurers defaulting on their obligations. In the first 9 months of 2009 1700 people came to the Insurance Supervision Inspectorate of the Urals Federal District with complaints while in the same period of 2008 there had been 800 complaints. The key complaint is that insurers delay claim settlements. In 80% of these complaints rulings have been made against insurers.
Clients of bankrupted insurers find themselves in the most difficult position. "According to the law insurers are obliged to establish a certain reserve so as to be able to fulfil their obligations before clients in any situation, however, in the conditions of non-transparent market it is very difficult to assess whether a company has enough assets. As a result when many of them go bankrupt it turns out that people have nothing to rely on, organisations have no own property and the sum total of their assets is, in fact, tiny," Mr Selyanin explains.
So far holders of compulsory car insurance policies can rest assured that they would receive their payouts. In case of an insurance company's bankruptcy the client involved in RTA will have their claim settled by the Russian Automotive Insurers Union. The 2009 results show that the RAIU has paid out 3.2 billion roubles to clients of companies which went bankrupt. Experts are concerned, however, that the Union's money may run out by mid-2010.
"Very large sums of money are paid out. To date we paid about 52 million roubles just to clients of the bankrupt Uralros. Around 2,000 people received payments. But the process does not end there, clients of this company keep coming to us," Oleg Tsypulin, the Manager of the RAIU in the Urals Federal District, told RusBusinessNews.
In order not to allow the complete exhaustion of funds the RAIU is undertaking extreme measures.
There were two funds in the Union before, one for settlements of claims of compulsory car insurance when the insurer went bankrupt and the other for paying out compensations to victims when the accident culprit is unknown. The total sum of money in the funds amounts to 10 billion roubles and only 3.3 billion out of this is allocated for when players leave the market. Since in 2009 3.2 billion roubles have been paid out of the first fund there is virtually no money left in it. This is why a decision has been made to join these funds by 2011.
"I think that thanks to these amendments in 2010 we will be able to cover the losses suffered by all clients of companies which left the market. So far the issue of the lack of money has been off the agenda but everything will depend on how the situation develops in the insurance market," Mr Tsypulin points out.
Russian citizens who insured property or health in companies which went bankrupt have virtually nothing to count on. "It is very likely that there is no chance of getting money if you claim or even get back some of the premiums paid in when cancelling the policy. Bankrupt companies either have no assets at all or not enough to fulfil their obligations," reckons Ilya Zakharov, the Director of the Ekaterinburg Branch of Alpha Insurance.
The only chance of getting anything at all is to take the matter to court. The servants of Themis, however, will not necessarily always be able to help in these situations. "As a rule claims from individuals are considered the last which is why chances to receive payment in full are not high," Alexey Mishin, the Manager of the Car Insurance Department of the Mezhregiongarant Insurance Group points out.
According to him you can only protect yourself against the non-payment by the correct choice of insurer. "Now it is a very hard time for the insurance sector and many assessment instruments which used to objective do not work any more. For instance, the position of the company in terms of the premiums collected does not mean much today and definitely does not help to choose a company that fulfils its obligations entirely. It used to be possible to rely on experiences of people you knew personally, if a company paid out than you could go ahead and buy your insurance there. This no longer works as many insurers made their payout procedures much more rigorous; if some time ago the company paid on the dot it does not mean that you can predict how this company will behave in the current situation," Mr Mishin pointed out.
According to the experts, the only universal criterion which would help choosing a company capable of surviving the crisis with high probability is if the insurer is a part of a large holding. The diverse business of the parent company is a safe guarantee that you can trust the insurer in the time of crisis.
Maria Truskova
The Moscow Times: Sobchak Buys Yevroset Stake
17 February 2010
Socialite Ksenia Sobchak bought a stake of nearly 0.1 percent in Yevroset from shareholder Alexander Mamut for $1 million, Yevroset president Alexander Malis said Tuesday.
Mamut will retain control over the company, as he still owns more than 50 percent, Malis said. Yevroset is part-owned by VimpelCom, which bought a stake of 49.9 percent in 2008.
Sobchak said she wanted to try her hand at business and that she might increase her stake next year.
The Moscow Times: Timchenko Investing in Business Terminal at Sheremetyevo
17 February 2010
By Anastasia Dagayeva and Yelena Mazneva / Vedomosti
The Gunvor co-owner is building a business jet terminal, which could service planes operated by his Airfix Aviation.
Gennady Timchenko, a co-owner of the Gunvor oil trader, is investing in a business-aviation terminal at Sheremetyevo Airport, Vedomosti has learned.
"By 2011, we want to build a business terminal. The construction will be done by Avia-Group, which we hold a 26 percent stake in and an investor has 74 percent in," Mikhail Vasilenko, the airport's chief executive, said in a recent interview to Vedomosti.
He would only say that the investor is a firm called OOO Vega, whose owner, according to the Uniform State Register of Legal Entities, is the Cyprus-registered Sunhill Investments Ltd. But the board of directors of OOO Avia-Group, which was disclosed in Sheremetyevo's nine-month financial results to Russian accounting standards, suggests who the real investor is.
In addition to two executives from Sheremetyevo, the board includes Avia-Group chief executive Mikhail Semyonov, Vladimir Isayev and Andrei Spiridonov, all of whom have direct links to companies controlled by Timchenko.
Since 2003, Isayev has been the head of Surguteks and along with Spiridonov is a founder of Transoil SNG. Spiridonov and Semyonov are both on the board of directors of a Surguteks subsidiary, the Regiongarant insurance company.
A representative for Timchenko confirmed to Vedomosti that he was Avia-Group's investor.
The company has been partnered with Sheremetyevo since mid-2006, according to the airport's financial reporting. Since then, it has built a hangar for business jets and a ramp, and now it is time for a passenger terminal, a source at Sheremetyevo told Vedomosti. The overall cost of the Business Aviation Center is about 500 million rubles ($16.6 million), and it is hoping to recoup expenses within about seven years, the source said, adding that the investors would be contributing proportionally based on their stakes in Avia-Group.
Currently, about 70 percent of all Moscow business traffic goes through Vnukovo, while Domodedovo has 15 percent to 20 percent. Sheremetyevo, which is an outsider on the market, expects its market share to jump to 30 percent to 50 percent once the new terminal is launched, a member of the Avia-Group board said.
The source at Sheremetyevo said the airport had been seeking an investor for several years before Timchenko agreed to join the project. Nafta Moskva owner Suleiman Kerimov had plans to do build the terminal, as did Vladimir Bazlov and Boris Minakhi, who are longtime acquaintances of the founder of Wimm-Bill-Dann.
But the projects never got off the ground because of high costs and risks, including the lack of a good road to the airport or a third runway, the source at Sheremetyevo said. But Vega was ready for serious involvement in the project.
In its annual billionaires list, Finans magazine estimated Timchenko's net worth at $4.15 billion, putting him in 23rd place, up from 375th a year earlier. The longtime acquaintance of Prime Minister Vladimir Putin earned his fortune in oil trading and also owns stakes in the bank Rossia, Novatek and Stroitransgaz.
Ground service for business jets and their passengers is a profitable business in Russia, earning margins of 25 percent to 30 percent, said Sergei Koltovich, an executive at Austrian carrier Jet Alliance, which is one of Europe's largest business jet operators.
Parking space in a hangar costs an average of 20,000 euros to 40,000 euros ($27,200 to $54,600) per month. Virtually all services for passengers are three to five times more expensive than on regular flights, the Sheremetyevo source said.
In 2009, the business aviation market fell by 30 percent, but the industry is optimistic that it will improve. Koltovich said the segment would grow by 15 percent to 25 percent annually for the next five years.
The Sheremetyevo project is logical fit given that Timchenko owns the Helsinki-based business jet operator Airfix Aviation.
Timchenko has already "built up a clientele," who would certainly go through the Business Aviation Center at Sheremetyevo, said Oleg Panteleyev, an analyst at Aviaport.
Novaya Gazeta has reported, citing Finnish airplane registries, that Airfix Aviation operates jets for Rosneft, Transneft and Gazprom's Austrian subsidiaries.
A businessman close to Timchenko previously said Airfix Aviation has managed several Rosneft planes for many years, including a Cessna Citation X. That was the plane that Rosneft president Sergei Bogdanchikov flew to London's Biggin Hill Airport in April 2003, when he was detained for several hours by immigration officials.
Offended, Bogdanchikov flew back to Russia instead of taking part in the London Economic Forum.
The Moscow Times: Ismailov Returns to Invest in Chechnya
17 February 2010
Vedomosti
Businessman Telman Ismailov and his son, Sarkhan, have returned to Russia and are investing in Chechnya, the republic's press service said in a statement.
Sarkhan Ismailov was named a vice president of the Grozny football club Terek, the statement said. The announcement came after the Ismailovs met with Chechen President Ramzan Kadyrov on Monday evening.
"I made the decision to entrust Sarkhan Telmanovich with this serious post in Terek. His concept for developing the club interested us. I'm certain that Sarkhan Ismailov will be able to solve many problems," Kadyrov, the club's president, said through his press service.
The elder Ismailov was briefed on a series of investment projects and expressed interest in studying them with his specialists so he could decide which to invest in, the statement said.
Senator Ziyad Sabsabi, who represents Chechnya in the Federation Council, said they were discussing a hotel complex in Grozny and a canning factory that would be built in either Argun or Gudermes.
Ismailov would most likely be interested in the hotel complex, Sabsabi said, adding that no sums were discussed during the meeting but that the projects would require several tens of millions of dollars.
A source in the prosecutor's office said neither of the Ismailovs or their partners were accused or suspected of involvement in smuggling dangerous goods found at Cherkizovsky Market. A criminal smuggling case is being conducted by the Investigative Committee.
An Interior Ministry source confirmed that Ismailov was not on the federal wanted list. The source said he never had been on the list and that he was free to move about Russia as he sees fit.
Bloomberg: Billionaire Blavatnik Takes On JPMorgan Over $98 Million Loss
By Thom Weidlich and Linda Sandler
Feb. 17 (Bloomberg) -- Billionaire Len Blavatnik said JPMorgan Chase & Co., his bank for 15 years, lost a tenth of the $1 billion he had it manage and, for redress, he did something he never did before: He sued.
JPMorgan, the second-biggest U.S. bank, put twice as much money into risky mortgages as Blavatnik’s investment guidelines allowed while Jamie Dimon, the bank’s chief executive, was unloading such investments from its own books, according to the complaint. Blavatnik tried for a year to resolve the $98 million loss before suing in June in New York state court, he said.
The dispute between the billionaire and the bank spotlights a common difference investors and their money managers have in the wake of a financial crisis that wiped out at least $1.73 trillion of wealth. Blavatnik blames the bank for his reverses; the bank blames the market.
“This is my first litigation that I initiated,” Blavatnik said in an interview in his conference room overlooking the Plaza Hotel and Central Park in New York. “I made several attempts to reach a solution.”
Both sides on Jan. 28 appealed a judge’s December order that tossed out two of Blavatnik’s claims while keeping two others alive. The case, which hinges on the definition of an “asset-backed security,” has begun the information-gathering, or discovery, phase.
The suit is “an improper attempt” to “use the courts to collect reimbursement for investment losses that have resulted from an extraordinary and unprecedented economic crisis that no one could have anticipated,” New York-based JPMorgan said in its court papers. “The lawsuit is a classic example of pleading with the benefit of 20/20 hindsight.”
Bank Comment
Mary Sedarat, a JPMorgan spokeswoman, said the bank, which ranks behind Bank of America Corp. in assets, wouldn’t comment on the litigation.
In the interview, Blavatnik, 52, detailed his rags-to- riches life before the dispute: He was born in Ukraine, grew up near Moscow and attended that city’s Transportation Engineering Institute. He and his parents emigrated to the U.S. in 1978.
After earning a master’s degree in computer science from Columbia University in New York, he landed jobs at the Arthur Andersen accounting firm and Macy’s Inc. He also has a master’s from Harvard Business School in Cambridge, Massachusetts.
Showing an entrepreneurial bent, he began investing in New York co-op apartments. Later, he took interests in privatized companies in Russia amid the fall of the Soviet Union. New York- based Access Industries Group, which he founded in 1986, owns energy, chemical, aluminum, media and real-estate companies.
Soccer Fan
Blavatnik, a soccer fan and World War II history buff, is now a U.S. citizen worth $7 billion, according to three people familiar with his finances. That includes a $1 billion gain made Jan. 22 as a minority owner of Moscow-based aluminum producer United Co. Rusal, which conducted an initial public offering in Hong Kong, the people said. He is also a suitor for Metro- Goldwyn-Mayer Inc., owner of a 4,100-film library with titles that include “Rocky,” according to two people familiar with the situation.
“I think like any successful businessman he has strongly held views when he believes he’s right,” said Edgar M. Bronfman Jr., chairman and chief executive officer of Warner Music Group Corp., on whose board Blavatnik sat until 2008. “I know Len’s a highly principled guy and would not do something unless he thought he was in the right.” Bronfman said he wasn’t familiar with the JPMorgan lawsuit.
Loaded Up
Blavatnik says JPMorgan loaded his Access Industries fund with subprime and so-called Alt-A mortgages at the same time CEO Dimon was ridding his bank of such exposure.
“One of the issues that we will be exploring in discovery is whether JPM sold the Access fund subprime securities that it owned and thereby reduced its subprime exposure,” said Richard I. Werder Jr., a New York partner at Los Angeles-based Quinn Emanuel Urquhart Oliver & Hedges LLP, the 400-lawyer litigation firm Blavatnik hired to handle the case.
JPMorgan said in court papers that the instruments it sold were different from those in the Access Industries account.
Other companies have accused the bank in lawsuits of stuffing portfolios with too much subprime-mortgage risk as it rid itself of the securities. They include bond insurer Ambac Financial Group Inc. and New Millennium Homes LLC, a homebuilder in Calabasas, California. On Jan. 28, JPMorgan won dismissal of a similar suit brought by reinsurer Assured Guaranty Ltd., which has appealed that ruling.
Investment Goals
The investment objective for Blavatnik’s fixed-income portfolio that JPMorgan began managing in May 2006 was “to provide a high level of current income consistent with low volatility of principal,” according to the guidelines cited in his complaint. Access Industries said its units needed to tap the money for their operations.
“Frankly, no one even said they were sorry -- they said it was the market,” Blavatnik said of the $98 million loss. “It’s unfair. It’s not a way to treat one of your customers.”
Justice Melvin L. Schweitzer of New York State Supreme Court in Manhattan threw out Blavatnik’s claims for negligence and breach of fiduciary duty. He refused to dismiss accusations of breach of contract and negligent misrepresentation.
Schweitzer limited the contract claim to the question of whether JPMorgan exceeded the guidelines’ 20 percent cap on mortgage-backed securities. Those investments eventually topped 46 percent, according to the complaint.
JPMorgan Disagrees
JPMorgan, which earned more than $1 million managing the account, according to the complaint, disagrees.
The guidelines listed asset-backed securities separately from mortgage-backed securities. The bank categorized certain instruments backed by real-estate collateral, such as home- equity loans or second-lien mortgages, as asset-backed, according to the complaint.
Blavatnik argues that the real-estate instruments tagged as asset-backed are really mortgage securities. Because the bank’s statements didn’t break out the asset-backed securities into subgroups such as auto and student loans, Access Industries didn’t know the asset-backed category included exposure to mortgages, according to the complaint.
The bank said in court papers that it’s an industry practice to classify certain instruments, such as Asset-Backed Securities Home Equity Loans, as asset-backed. It also said its reports to Access Industries identified which securities were so categorized.
Alt-A Securities
Alt-A securities “are a type of mortgage-backed security and thus capped by the guidelines at 20 percent,” JPMorgan wrote. Subprime securities “are a type of asset-backed security and thus capped by the guidelines at 40 percent,” it wrote.
Subprime mortgages are loans made to people with poor credit scores. Alt-A mortgages are loans made to people with higher credit scores than subprime borrowers who still don’t meet underwriting criteria established by government-sponsored entities such as the Federal Home Loan Mortgage Corp., or Freddie Mac.
According to JPMorgan, the “over-concentration” of mortgage-backed securities happened because Blavatnik made “large cash withdrawals.” For example, in February 2007 he took out $455 million, or 24 percent of the account’s book value, which brought the mortgage securities up to 20.8 percent of the portfolio from 13.2 percent, the bank said.
“To the extent cash withdrawals skewed the allocation of the portfolio away from the guidelines, JPMorgan had a duty to adjust,” Access Industries argued in court papers.
Rebalancing Impact
Rebalancing the account by selling off mortgage securities would have generated losses, for which Blavatnik “would doubtlessly be suing,” the bank counterargued.
JPMorgan stuffed the portfolio with risky mortgages even though it knew the real-estate market was ebbing, according to the complaint.
In October 2006, Dimon, JPMorgan’s CEO, told William King, then its head of securitized products, that they needed to start selling its subprime-mortgage positions, Access Industries claimed in the complaint. By late 2006, JPMorgan had offloaded $12 billion in such mortgages that it had originated and was advising clients to follow suit, according to the complaint. Access Industries didn’t name the other clients.
At the same time, the bank told Access Industries to increase its subprime exposure, Blavatnik says. By January 2007, the portfolio had 23 percent in “risky residential real-estate securities” and, by the end of that July, more than 46 percent, according to the complaint.
First Losses
That was the first month the portfolio began to show big losses, shrinking in value by more than $2.1 million, according to the complaint.
JPMorgan calls the 46 percent figure “bogus,” a result of Access Industries’ combining mortgage- and asset-backed securities. It also says Dimon was referring to collateralized- debt obligations and structured-investment vehicles -- different entities subject to different risks than the ones Access Industries held.
“These statements therefore have nothing to do with the subprime or Alt-A mortgage-backed securities held in the account,” the bank wrote in court papers.
By November 2007, Access Industries couldn’t withdraw cash it needed, and by April 2008 the portfolio had lost more than $106 million, $98 million of which it blames on the residential real-estate investments, according to the complaint.
Access Industries said that when it started to complain about losses, JPMorgan told it the securities were backed by government agencies.
Swift Correction
JPMorgan said that was a “swiftly corrected error.”
As of December 2007, only two of 52 collateralized-mortgage obligations, accounting for $9 million, or just over 1 percent of the portfolio, had government backing, Access Industries says.
Blavatnik, while eschewing the filing of suits himself, has been involved in litigation and other disputes.
In December, unsecured creditors of his bankrupt Lyondell Chemical Co. said he undercut them by settling a lawsuit they brought against bank lenders, including Citigroup Inc., three days before it was to be tried.
The creditors accused Blavatnik and the lenders of crippling the company with $22 billion in debt when he bought it in 2007. The creditors, who called the $300 million settlement “woefully inadequate,” told a bankruptcy judge yesterday that they had secured a new accord to pay them $450 million.
BP Dispute
Blavatnik and three Russian-billionaire partners were embroiled in more than three months of public acrimony in 2008 when they accused BP Plc of treating their 50-50 joint venture in Russia like a subsidiary, ignoring their interests. The London-based oil company rejected those complaints.
The dispute was resolved with the Dec. 1 resignation of Robert Dudley, the venture’s CEO, whom the billionaires accused of mismanagement. Vice President Maxim Barsky will replace him next year. In the interim, Mikhail Fridman, one of the four owners, will run the company.
“I find him to be a very perceptive partner,” said Thomas H. Lee, head of New York buyout firm Lee Equity Partners. “He’s a guy who likes to invest for the future.”
Blavatnik and Lee were partners in the purchase of Warner Music from Time Warner Inc. in 2004, when Lee was still with his Thomas H. Lee Partners LP. Lee said he and Blavatnik have teamed up on other private investments, which he declined to name.
The case is CMMF LLC v. J.P. Morgan Investment Management Inc., 601924-09, New York State Supreme Court (Manhattan).
To contact the reporters on this story: Thom Weidlich in New York at tweidlich@; Linda Sandler in New York at lsandler@.
Last Updated: February 17, 2010 00:01 EST
Activity in the Oil and Gas sector (including regulatory)
The Moscow Times: TNK-BP to Invest $1.3Bln by 2015
17 February 2010
Combined Reports
LONDON — Oil company TNK-BP said Tuesday that it planned to invest $1.3 billion over the next five years to improve refining rates.
TNK-BP executive vice president for downstream, Didier Baudrand, said the company was looking at opportunities to improve refining and bring it into line with new standards.
"We will invest $1.3 billion in factory reconstruction, but this is to improve the depth of the refinery, not the output capacity — high-octane gasoline instead of fuel oil," Baudrand said at an industry conference.
He said TNK-BP's priority was to improve refining rates rather than increase exports.
The company would also study the acquisition of refining assets within the Russia-Kazakhstan-Belarus customs union, he said, but gave few other details.
"From an economic point of view it is most efficient to stick to refining in the duty-free zone, because that allows you to earn the largest profit on oil refining," he said.
"If there's a possibility to take a look at obtaining refinery assets in the customs-union zone, then we will take a look at these assets," he added.
He said TNK-BP wanted to build a very strong and competitive delivery system: "For us that's very important."
(Reuters, Bloomberg)
Reuters: Ex-Morgan Stanley exec to oversee TNK-BP strategy
Tue Feb 16, 2010 9:05pm IST
MOSCOW, Feb 16 (Reuters) - Russia's third-largest oil company TNK-BP (TNBPI.RTS), half-owned by British major BP (BP.L), has hired a former Morgan Stanley executive to pursue the company's new strategy, TNK-BP said on Tuesday.
The company said Stan Miroshnik, former executive director with Morgan Stanley, has been appointed executive vice president strategy and business development of the TNK-BP group of companies.
Miroshnik is to fill a vacancy left by Maxim Barsky, who was chosen as the new CEO of the company -- the position he is set to take up in 2011.
"His previous role involved strategic, corporate finance, and M&A advisory for Russia's major oil and gas companies," TNK-BP said in a statement about Miroshnik's career at Morgan Stanley.
In an interview to Reuters, Barsky said TNK-BP will pursue strategy of growth to tap giant fields on the Arctic Yamal peninsula and East Siberia with a view of beating Russia's second-largest oil firm LUKOIL (LKOH.MM) on all enterprise value indicators.
New appointments at TNK-BP follow a long-running dispute between BP and the quartet of Russia-connected tycoons over strategy and control at the 50/50 venture, which generated $5.3 billion in profits in 2008 and is responsible for a quarter of BP's worldwide output. (Reporting by Vladimir Soldatkin; editing by Louise Heavens)
16.02.2010
Oil and Gas Eurasia: TNK-BP Raised the Energy Efficiency of Its Oil Production by 3%
TNK-BP lowered its specific energy consumption for oil production by 3% in 2009, informed the press service of the company. According to the press service report, the company was planning to have this indicator decreased by 1.5 to 2% in the beginning of 2009. The technical effect of the energy-saving program of TNK-BP exceeded 395 million kW·h.
These results were attained owing, first and foremost, to special technical measures taken at the artificial oil lifting and reservoir pressure maintenance facilities, which raised significantly the equipment efficiency. In addition, a tangible contribution was provided through organizational measures aimed at centralized management of energy-saving programs.
In 2010, TNK-BP is going to develop an energy management system based on the requirements of the international standard ISO 50001 and to introduce it to its enterprises. The press service report points out that this energy management system will cover all business processes related to energy saving and all industrial processes associated with continuous growth of their energy efficiency.
All these measures are expected to save more than 320 million kW·h in 2010.
Apart from that, in 2010 TNK-BP is going to develop programs aimed at increasing the energy efficiency of its oil refineries until 2013 and at decreasing the energy intensity of oil refining. These programs will focus on lowering the specific energy cost of oil refining by 2 to 3% in the nearest 3 to 5 years.
TNK-BP is the third largest oil company of Russia owned, on a parity basis, by BP and the AAR Consortium (Alfa Group – Access Industries – Renova). TNK-BP owns approximately 50% of the Russian oil and gas company Slavneft.
In 2008, the company produced an average of 1.65 million barrels of liquid hydrocarbons a day. With the 50% participation in Slavneft taken into account, the average production rate of TNK-BP in 2008 was 1.85 million barrels of liquid hydrocarbons a day. TNK-BP accounts for approximately 16% of all oil production in Russia (including the oil production of TNK-BP in Slavneft). The overall proven reserves of the company as of December 31, 2007, according to estimates of the US Securities and Exchange Commission (SEC) without regard to the period of validity of the company licenses, amounted to 8.225 billion barrels of oil equivalent.
The producing enterprises of the company are located in Western Siberia, Eastern Siberia and the Volga-Ural region. TNK-BP owns five oil refineries in Russia and Ukraine and a network of retail sites working under the brands BP and TNK.
The net income of TNK-BP, according to US GAAP, fell by a factor of 1.8 in January–September 2009 from $6.552 billion in the same period of 2008 down to $3.691 billion, and its earnings shrank from $43.9 billion to $24.747 billion. The operating expenditures of the company dwindled from $3.914 billion to $2.945 billion, and its EBITDA dropped from $10.918 billion to $6.663 billion.
-TNK-BP
UpstreamOnline: Novatek plans Arctic LNG cargo
Russian gas player Novatek said today it plans to test shipping liquefied natural gas via the Northern Arctic Route to Asian markets from its fields on the Yamal Peninsula.
News wires 16 February 2010 23:33 GMT
The Northern Sea Route through the Arctic Ocean along the coast of Siberia opens for six to eight weeks each year, but Russian vessels have traversed the passage with expensive icebreaker escorts many times in the past.
Novatek finance chief Mark Gyetvay told an audience at the International Petroleum Week conference in London that the company, Russia's second-largest gas producer, would seek subsidised assistance from state oil-shipper Sovkomflot.
"We are planning to send a very large tanker to the Asian market via the northern route," Gyetvay said.
The Northern Sea Route trims 4000 nautical miles (7400 kilometres) off the usual 11,000-mile journey via the Suez Canal, which yields big cuts in fuel costs, time and CO2 emissions.
"If we're able to do that successfully in conjunction with Sovkomflot this potentially reduces the transport by about 30% to the Asia-Pacific market," he said.
"It's kind of preparatory at this point given the economics, but we're still in discussions with Sovkomflot."
Last September two German cargo ships successfully navigated across the Arctic-facing northern coast from South Korea to Siberia without the help of icebreakers.
Last year the Arctic's sea ice pack thawed to its third-lowest summer level on record, continuing an overall decline symptomatic of climate change, US scientists said in a report in September.
"There is a seasonality involved, and we will probably only be able to do this on a three-four month basis," Gyetvay said in a Reuters report.
Russian Prime Minister Vladimir Putin has called for foreign energy majors to enter "stable and long-term partnerships" to develop gas deposits on the Arctic peninsula of Yamal, a region with enough gas in the ground to satisfy world demand for five years.
But a wave of resource nationalism that marked Putin's eight years as president spooked foreign investors and led to supermajor Shell ceding control of its Sakhalin-2 project.
Russian gas export monopoly Gazprom this month said it had agreed with partners Total and Statoil to delay pipeline gas production from their Shtokman field in the stormy Barents Sea by three years to 2016 after its gas demand slumped in Europe.
Gyetvay said a recent Russian LNG production slowdown following a global price slump would likely reverse once Chinese energy users began to seek beyond their own coal-fired plants.
"China will probably grow significantly more than what anybody is forecasting," Gyetvay said.
"China will eventually move away from coal, to a market rate that might not be more than 10% (of energy derived from natural gas), but that movement divided by the population will be a very large increase."
"Novatek pegs the Asia Pacific as being the most significant break in the natural gas market," Gyetvay said.
Published: 16 February 2010 23:33 GMT | Last updated: 16 February 2010 23:33 GMT
FEBRUARY 16, 2010, 12:41 P.M. ET
WSJ: UPDATE: Lukoil Exec: Open To Refinery Expansions Or Acquisitions
(Adds details, quotes.)
LONDON (Dow Jones)--OAO Lukoil (LUKOY), Russia's largest oil company, is open to low-cost opportunities for either refinery expansions or acquisitions, said Thomas Mueller, Lukoil's vice president and head of global refining and petrochemicals Tuesday at the IP week conference in London.
In recent months, Lukoil has purchased stakes in two western European refineries, including a 49% stake in the Italian ISAB refining complex, and a 45% stake in Total SA's (TOT) Dutch Vlissingen refinery.
Downstream partnerships have been a "good strategy" for Lukoil, and would be appealing in future downstream ventures, Mueller said, speaking to reporters at the conference.
In terms of specific assets, "I don't think there's many things we wouldn't consider," Mueller said. But Lukoil is currently not in talks over any acquisitions, he added.
"Nothing is in the works," Mueller said.
-By Lananh Nguyen, Dow Jones Newswires; +44 (0)207 842 9479; lananh.nguyen@
UralSib: Rosneft: Rosneft returns license for East-Shmidt on Sakhalin shelf
UralSib, Russia
February 17, 2010
Another license dropped in Far East. Rosneft (ROSN - Hold) has returned the exploration license for the East-Shmidt block on the Sakhalin shelf, Interfax reported today. The East-Shmidt block was part of the Sakhalin 5 project developed with BP. Rosneft has historically controlled six exploration and production projects on the Okhotsk Sea shelf. This is the third license - after the West Kamchatka block and West-Shmidt block (Sakhalin 4 project) - cancelled by Rosneft in the past two years. All were returned because the exploration wells drilled appeared to be dry. This news will have no effect on Rosneft, as this was still an exploration project and the company was not incur to capex expenditures due to the specific arrangements of financing exploration operations.
Sakhalin remains strategic ... The Sakhalin shelf remains a strategic offshore exploration zone and Rosneft development. The company still controls exploration blocks at the Sakhalin 3 project (developed with Sinopec) and the Kaygano-Vasyukanskiy block of the Sakhalin 5 project (developed with BP).
Both projects are run under carry-finance arrangements, when the second party is responsible for financing the exploration (Rosneft does not incur any exploration capex). If oil is discovered, the second party is reimbursed from the cashflow generated by the project. In addition, Rosneft controls 20% of Sakhalin 1 production-sharing agreement, which is the second production growth source for Rosneft in 2010 after Vankor.
... but priority is Eastern Siberia. Eastern Siberia remains Rosneft's priority, with the Vankor project (in the northern part of Eastern Siberia) already on stream, and the Yurubcheno-Takhomskoye field (the southern part of Eastern Siberia) to be brought on stream by 2012. Both fields are included in the list of 22 fields exempt from export duty. According to Rosneft, the Vankor field's production will reach 10-11 mtpa in 2010 and might plateau at 25 mtpa by 2015.
We expect operations at Yurubcheno-Takhomskoye to commence in 2012 and to peak at 5-7 mtpa by 2017. We believe that the exploration and development of greenfields both around Vankor and in the south of Eastern Siberia, will be key priority in Rosneft's upstream strategy in the next three-five years. We reiterate our Hold recommendation on Rosneft with target price of $8.7/share.
Victor Mishnyakov
Gazprom
Financiarul: Gazprom Vice Chairman Aleksandr Medvedev arrives in Bucharest on Wednesday
17 Februarie 2010
Gazprom Vice Chairman Aleksandr Medvedev on Wednesday is expected in Bucharest to discuss with the Romanian authorities in the energy sector on joint projects the two countries may run in the future.
The arrival of Gazprom Vice Chairman in Bucharest was confirmed by the Minister of Economy, Trade and Business Environment Adriean Videanu.
The two will discuss such issues as the setting up of a joint company Romgaz-Gazprom, to develop natural gas storage capacities, as well as other projects that could be undertaken in partnership by Romania and Russia.
Romania and the Russian Federation signed an agreement on natural gas storage capacities, to make the subject of a contract between the two parties setting up the joint Romanian-Russian company.
UpstreamOnline: Scorpion seeks Gazprom arbitration
Drilling operator Scorpion Offshore said it was seeking international arbitration in its ongoing dispute with Russia’s Gazprom over outstanding payments for services of the rig Offshore Vigilant off Venezuela.
Upstream staff 17 February 2010 01:23 GMT
Scorpion said it was still seeking $15.9 million in outstanding invoices from the work, which was wrapped up in mid-October. An initial notice of mediation in October resulted in Gazprom paying $19 million of more than $33 million due at that stage, it said.
The Bermuda-registed driller had contracts to drill one well each for two separate Gazprom units operating in Venezuela, plus options to drill a further two.
After the first well was sunk, Gazprom told Scorpion it was unable to go ahead with back-to-back sinking of the second well, and the rig moved to Trinidad to its current gig with a US independent, Scorpion said.
The company said it was still in discussion with Gazprom over future plans to drill the second well.
Arbitration will take place in Paris with proceedings governed my Venezuelan law, Scorpion said in a news release.
Published: 17 February 2010 01:23 GMT | Last updated: 17 February 2010 01:23 GMT
Bloomberg: Gazprom, Partners May Shift Shtokman LNG to U.K., Italy, France
February 16, 2010, 06:11 PM EST
Feb. 17 (Bloomberg) -- OAO Gazprom, the world’s largest gas producer, and its partners in the Arctic Shtokman project plan to direct some liquefied natural gas to Europe until demand for fuel imports recovers in North America.
“The LNG business will develop in Europe,” Yuri Komarov, chief executive officer of Shtokman Development AG, said in an interview in the northern Russian port of Arkhangelsk yesterday. “Some LNG volumes can go to the European market, first of all, the U.K., Italy and France.”
Gazprom, the majority owner in Shtokman, planned to market as much as 90 percent of its LNG to North America in a bid to break into the market. The company aims to gain 25 percent of the global LNG market by 2020 and with it greater flexibility than pipelines offer as the chilled gas can be shipped by tanker and sold on the spot market.
Gazprom, Total SA and Statoil ASA delayed their first gas output at Shtokman by three years to 2016, with LNG production to start in the following year. Global fuel demand waned in the economic slowdown, while new LNG capacity and U.S. success in developing unconventional resources, such as shale gas, may lead to oversupply.
“We expect the situation will change by the end of next year and either let us make an investment decision or not,” Komarov said. The partners plan to make a final investment decision on pipeline gas by March 2011 and on LNG by the end of that year. The LNG project will be ready to start when the market is ready for it, he said.
Shtokman in 2015
The start of Shtokman may be moved up, with pipeline shipments as early as the end of 2015 if European demand recovers, Komarov said.
The partners initially planned to ship half of Shtokman’s gas by pipeline and liquefy the other half. In the first phase, 23.7 billion cubic meters of gas a year will be pumped from the field.
That ratio may be changed, Komarov said. Still, Gazprom remains committed to LNG production, he said.
“From the strategic point of view, it is extremely important for Russia to have LNG,” Komarov said. “Gazprom, as a global player, will be able to choose gas flows depending on the market situation.”
Shtokman, 550 kilometers (340 miles) offshore under the Barents Sea, will be connected to land through a subsea pipeline. The link will be extended by land to the town of Vyborg on the Gulf of Finland, where it will connect to the planned Nord Stream export pipeline under the Baltic Sea to Germany.
Investment Burden
The pipeline project documents will be ready to submit to the venture partners by September, Komarov said. The onshore link will be “purely Russian,” he said, with the design, construction and supplies provided by domestic companies.
The partners are carrying out additional studies to minimize the capital expenditure, Shtokman Development First Deputy CEO Herve Madeo said at a conference in Arkhangelsk yesterday.
Komarov declined to provide a new estimate for Shtokman’s project costs, which in 2006 were seen to be about $15 billion, saying the economics are “interesting.”
“Maybe it will be one of the best projects in terms of investment burden,” Komarov said. “The investments per unit of production will be very low.”
Shtokman has 3.9 trillion cubic meters of gas reserves, enough to supply the world for more than a year. It is surrounded by satellite fields that may hold 10 trillion cubic meters of gas, which may fuel the project into the future, Komarov said.
--Editors: Torrey Clark, Amanda Jordan
To contact the reporter on this story: Anna Shiryaevskaya in Moscow at +7-495-771-7729 or ashiryaevska@
To contact the editor responsible for this story: Will Kennedy at +44-20-7073-3603 or wkennedy3@
Gazprom: Meeting on gas supply to and gasification of Republic of Buryatia held
16.02.2010 11:00
At the Gazprom Headquarters, Alexander Ananenkov, Deputy Chairman of the Company’s Management Committee moderated a meeting dedicated to gas supply to and gasification of the Republic of Buryatia within the Eastern Gas Program.
Participating in the meeting were heads and experts from Gazprom’s specialized subdivisions and subsidiaries – Mezhregiongaz, Gazprom promgaz, Gazprom dobycha Irkutsk and Gazenergoset.
It was pointed out that gas supply to and gasification of the region would primarily rely on the General Scheme developed by Gazprom and approved by the parties in December 2009. The Scheme provides for a comprehensive approach to the gasification of Republic of Buryatia. The meeting discussed the outlook for consumption of main fuel and energy resources in the region.
Special emphasis was placed on ensuring the environmental safety during energy projects execution in Buryatia. This is mainly related to the necessary preservation of the ecosystem of Lake Baikal.
The specialized subdivisions were entrusted with the tasks aimed at developing the adjusted technical and economic parameters for top-priority gasification activities in the Republic of Buryatia.
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