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Basic Political Developments
• RIA: Putin to attend security forum in Turkey on June 8 - Russian Prime Minister Vladimir Putin will visit Turkey on June 8 to attend the third summit of the Conference on Interaction and Confidence-Building Measures in Asia (CICA).
• Itar-Tass: Medvedev to meet United Russia activists - “We shall speak about the work of the party, what it is doing, which projects is implementing and how it works with supporters,” a party official told Tass.
• VOR: Medvedev meets United Russia officials
• VOR: Russian government OKs START
• Hindu: Putin clears path for ratification of START treaty
• RIA: Russia assists Washington in search for bin Laden — official: "I know for certain that we have provided and continue to provide concrete assistance [to the United States] in this issue," Anatoly Safronov, Special Representative of the Russian President for International Cooperation in the Fight against Terrorism and Transnational Organized Crime, said on Thursday in Washington.
• VOR: US for good relations with Russia - The new US’s nation’s security strategy published by the White House on Thursday says that the US wants “stable and constructive relations with Russia based on mutual interests”.
• RIA: Washington offers condolences over south Russia terrorist attack
• RIA: Suspected Turkish terrorist detained in Moscow - police source
• Itar-Tass: Turkish national on international wanted list detained in Moscow - Documents on the arrest of Turkish national Mehmet Korkmas have been sent to the Russian General Prosecutor’s Office, National Central Bureau’s sources confirmed.
• RIA: Russia to give Poland data recorders from president's plane on May 31 - Russia will on Monday give Poland the flight data recorders of the Polish presidential plane that crashed in western Russia in April, an Interstate Aviation Committee spokeswoman said on Friday.
• Moscow Times: 30 blast victims remain in hospital - More than 30 people injured in a terrorist attack in the south Russian city of Stavropol remain in hospitals, five of them in a critical condition, a rescue worker from the Stavropol emergencies services said on Friday.
• RIA: More than 30 injured in Stavropol blast remain in hospitals, 5 in critical condition
• Moscow Times: Russia Inks Deal to Extend Waterway Lease for Finland
• Formin.finalnd: Statement by minister Väyrynen at EU-Russia Innovation Forum
• Brahmand: India Thought Leaders: Hypersonic BrahMos Missile By 2015, CEO Says
• ACT media: Russia will make military presence in Transnistria permanent
• Itar-Tass: Medvedev congratulates Aliyev on Republic Day
• News.az: Azerbaijani parliamentarians send letter to Russian State Duma chairman - Political parties represented in Azerbaijani parliament have sent a letter of protest to chairman of the Russian State Duma Boris Gryzlov.
• News.az: Russian MPs not sent to Khankendi or empowered to represent Russian interests
• RIA: Estonia publishes first child's primer in Russian - Russian-speaking minorities constitute 25.6% of the country's current population and 58.6% of the native Estonian population is also able to speak Russian.
• Rossiyskaya Gazeta/Russia Today: The Russian language regains an official status in Crimea - The parliament of the Crimean Republic has approved Russian as the regional language on the territory of the autonomous republic. Bloomberg: Russia, U.S. Reach Tentative Agreement on Poultry, Interfax Says
• Moscow Times: Russia May Allow U.S. Poultry Shipments to Resume Soon
• RIA: Russia expands ban on Brazilian meat imports
• VOR: Russian compatriots forum underway in San Francisco
• VOR: Patriarch Cyril to tour northeast Russia
• Interfax: Protodeacon Andrey Kurayev considers Bartholomew I visit to Russia as a serious victory of the Moscow Patriarchate diplomacy
• Bne: Proposed legislation to release ill suspects – but power remains in judges hands
• Moscow News: Corrupt officials face asset seizures - “The declaration of income data is expedient for modernising Russian legislation for expanding the basis for the confiscation of illegally acquired property,” deputy minister Yevgeny Shkolov said in a statement posted on the ministry’s web site.
• Angus Reid Global Monitor: Russians Want to Stick with Governing Party
• Moscow News: Mayoral Maybach mystery in St. Petersburg - The Maybach luxury car reportedly driven by Dmitry Vasilenko, mayor of the Leningrad region settlement of Schliesselburg, was whisked away from its secure parking compound on Thursday night, according to police in the northern capital.
National Economic Trends
• Bloomberg: Russian Banks on ‘Red Alert’ as Emergency Liquidity Is Unwound
• Reuters: Russian rouble extends gains on stronger oil
• Bloomberg: Ruble Heads for Biggest Three-Day Advance in Year Versus Dollar
• VTB Capital: Sergey Ignatiev makes a number of statements on the Russian banking sector
• RenCap: CBR chairman comments on the FX market situation
• RenCap: Money supply rises 2.7% in April
• COMMENT: Investment is key to sustainable Russian recovery – by Vladimir Tikhomirov of Uralsib
Business, Energy or Environmental regulations or discussions
• Bloomberg: Russian Stocks Climb Third Day; Sberbank, Novatek, Gazprom Gain
• Bloomberg: Norilsk, Rosneft, VolgaTelecom, Uralkali: Russia Equity Preview
• RenCap: FSK calls time on KES's purchases of TGK6 and TGK7 shares
• BarentsObserver: Norilsk-Nickel to pay 1.3 billion USD in dividends
• RenCap: Ukrainian antimonopoly watchdog will not rule on Kyivstar/VimpelCom deal before the end of June
• Troika: Polymetal included in FTSE Gold Mines Index
• Bloomberg: Rybolovlev Values Uralkali at $10 Billion, Vedomosti Says
• Steel Guru: Stainless Steel conference in Russia - Spetsstal Association will be holding a unique international conference on Stainless Steel in the Oil & Gas Industry on the June 22nd 2010 in the Radisson SAS Slavanskaya Hotel Moscow.
• Moscow News: New trains for Russia - Russian Railways, airport rail-link Aeroexpress, and German company Siemens have signed a deal to build state-of-the-art new trains for Russia.
• Reuters: Russia's RZhD to buy 2 billion euros of trains
• Reuters: BRIEF-AFI reports Q1 loss of $8.63 mln
• Reuters: Russian grocer Dixy sees Q1 net profit
• Moscow Times: For the Record
o Evraz Group said Thursday that it fully repaid a $1 billion VEB loan using a $950 million loan it took from Gazprombank.(Bloomberg)
o Alliance Oil said Thursday that first-quarter net income fell to $45.5 million from $50.5 million a year earlier. (Bloomberg)
o Gazprom Neft’s Omsk refinery is continuing to work after a fire at a processing unit was extinguished Thursday evening, about half an hour after it started because of a drop in power from the city, the oil producer said. (Bloomberg)
o Polymetal will be included in the FTSE Gold Mines Index as of June 21, the silver and gold producer said Thursday.(Bloomberg)
Activity in the Oil and Gas sector (including regulatory)
• Itar-Tass: Putin decrees higher oil export duty as of June 1
• Interfax: Oil export duty to rise to $292.1 per tonne on June 1 (Part 2)
• Oil and Gas Eurasia: Russian Oil Companies' Appetite for Offshore Licenses Grows
• Rte.ie: Petroneft secures $30m debt deal
• Moscow Times: Medvedev Questions Future of BP, Post-Spill
• Barentsnova: First non-Gazprom LNG plant to be constructed in the Nenets Area - Pechora LNG was developed by Italian company Technip and is owned by CH-Oil&Gaz which is a part of Alltech Group. Alltech Group is an investment company dealing with oil-and-gas, real estate and coal projects. The president of the Alltech Group is a Russian businessman – Dmitry Bosov.
Gazprom
• Reuters: UPDATE 1-Fire extinguished at Gazprom Neft's Omsk refinery
• Bloomberg: Gazprom, Partners Said to See Ex-Yukos Gas Field Peak in Decade
• Moscow Times: Gazprom Downgraded
• St. Petersburg Times: Gazprom Downgraded on Shale Threat
• Bellona: Teriberka mayor: I don’t believe in Shtokman
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Full Text Articles
Basic Political Developments
RIA: Putin to attend security forum in Turkey on June 8
00:3428/05/2010
Russian Prime Minister Vladimir Putin will visit Turkey on June 8 to attend the third summit of the Conference on Interaction and Confidence-Building Measures in Asia (CICA).
The CICA is an inter-governmental Asian security forum, which was established in 1992 and currently comprises 18 member-states, including Russia, China, South Korea and Turkey.
The summit will most likely focus on the current crisis on the Korean peninsula, following the alleged sinking of a South Korean warship by a North Korean submarine.
Relations between North Korea and South Korea soured after Seoul accused Pyongyang of firing a torpedo from a submarine at the 1,200-ton South Korean Cheonan corvette. The vessel sank near the disputed Northern Limit Line in the Yellow Sea on March 26 causing the loss of 46 lives.
North Korea, angered by the accusations, declared on Tuesday it was cutting all ties with Seoul and allegedly ordered its 1.2- million armed forces to get ready for combat.
Russia and China have called for North and South Korea to exercise restraint and not allow the situation on the Korean peninsula to escalate.
Russian President Dmitry Medvedev ordered on Wednesday to send a group of Russian experts to South Korea to examine the results of a probe into the sinking of the Cheonan corvette.
MOSCOW, May 28 (RIA Novosti)
Itar-Tass: Medvedev to meet United Russia activists
28.05.2010, 05.30
MOSCOW, May 28 (Itar-Tass) -- President Dmitry Medvedev will meet over a hundred activists of the ruling United Russia Party on Friday.
“We shall speak about the work of the party, what it is doing, which projects is implementing and how it works with supporters,” a party official told Tass.
The party planned to hold a forum on “social dimension of modernization” on May 31, but postponed it indefinitely because of the meeting with Medvedev.
“We shall definitely discuss the modernization, but it will not be the main issue,” the official said.
Medvedev is regularly meeting with party representatives. Last year the United Russia was the first followed by other political parties.
VOR: Medvedev meets United Russia officials
|May 28, 2010 09:53 Moscow Time |
This Friday President Dmitry Medvedev meets United Russia party officials, to take up the nation’s updating, the Interfax news agency quotes a party to the consultations as saying. The United Russia officials will, besides, raise the issue of developing housing and utilities infrastructure, and reforming the public sector. The participants in the meeting are prepared to discuss a number of topical international problems, including a ratification of the START treaty, which is expected to be shortly submitted to the Russian Parliament’s lower house, the State Duma, for consideration.
VOR: Russian government OKs START
|May 28, 2010 07:52 Moscow Time |
The Russian government has approved the Russia-US strategic arms reduction treaty that was signed on April 8 in Prague and passed it to President Medvedev for introducing to the State Duma (Parliament’s lower house) for ratification. The new treaty provides a mutual arms reduction by one third in the course of 7 years, thus the total number of warheads will be 1.55 thousand. The treaty is expected to be introduced to the Parliament by the end of May. President Obama introduced it to the Senate on May 13.
Hindu: Putin clears path for ratification of START treaty
Moscow, May 28, 2010
Prime Minister Vladimir Putin has cleared the path for the ratification of a cornerstone arms control treaty signed by the Russian and U.S. presidents in the Czech capital Prague last month.
According to the PMO Website, the Russian Cabinet has studied the new Russian-U.S. Strategic Arms Reduction Treaty (START) and in its recommendations signed by Mr. Putin has advised President Dmitry Medvedev to submit it for the ratification by the Parliament.
Under the Russian statute an international treaty signed by the President has to be approved by the Cabinet prior to parliamentary nod as it is the government, which is responsible for its implementation.
The new arms treaty, signed on April 8 by Mr. Medvedev and his U.S. counterpart Barack Obama, replaces the 1991 pact that expired in December 2009.
The treaty provides for the reduction of the number of nuclear warheads to 1,550 on each side over seven years.
Under it the world’s two nuclear superpowers, cannot have more than 800 deployed or non-deployed delivery vehicles.
Mr. Obama has already submitted the new START treaty on May 13 for the Senate nod and asked for its speedy ratification.
While signing the new treaty, Moscow had expressed several reservations, including its simultaneous ratification and reserved the right to walk out of the pact in case Washington goes ahead with its missile defence plans close to the Russian borders.
RIA: Russia assists Washington in search for bin Laden — official
04:4428/05/2010
Russia continues to assist the United States in search for the world's most wanted terrorist and the head of the al-Qaeda terrorist organization, Osama bin Laden, a senior Russian counterterrorism official said.
Washington holds bin Laden responsible for masterminding the September 11 terrorist acts in the United States, which claimed some 3,000 lives.
"I know for certain that we have provided and continue to provide concrete assistance [to the United States] in this issue," Anatoly Safronov, Special Representative of the Russian President for International Cooperation in the Fight against Terrorism and Transnational Organized Crime, said on Thursday in Washington.
The Russian official did not disclose the details of the ongoing operation.
Osama bin Laden and his organization have been major targets of the United States' War on Terror for a decade.
The elusive terrorist leader disappeared after Afghanistan's Taliban regime, which had granted him asylum, collapsed under U.S. air strikes in late 2001. Since then, bin Laden's location has been unknown.
Some analysts believe bin Laden could be in hiding in the mountainous regions on the border between Afghanistan and Pakistan. However, both countries have repeatedly dismissed the allegations.
WASHINGTON, May 28 (RIA Novosti)
VOR: US for good relations with Russia
|May 28, 2010 02:30 Moscow Time |
The new US’s nation’s security strategy published by the White House on Thursday says that the US wants “stable and constructive relations with Russia based on mutual interests”. “The US wants a strong, peaceful and prospering Russia that respects international laws,” the document says. “Moscow and Washington have the world’s biggest nuclear arsenals, but both work for nuclear non-proliferation by cutting down their arsenals and calling other nations to fulfill their obligations in this issue.” The US “promises to cooperate with Russia in fighting extremism, especially in Afghanistan.” The program also speaks of Washington’s intention for new trade and investment contracts with Russia and to support Russia’s strive to create a rule-of-law society. The US is to accept the principle of a multi-polar world, the document says.
RIA: Washington offers condolences over south Russia terrorist attack
01:3228/05/2010
Coordinator for counterterrorism at the U.S. Department of State Daniel Benjamin on Thursday offered condolences on behalf of the American people over the recent terrorist attack in southern Russia that killed at least seven people.
An explosive device went off outside a concert hall in downtown Stavropol on Wednesday evening about 15 minutes before a dance group from Russia's restive Chechen Republic was due to perform.
The bomb, equivalent to 400 grams of TNT, killed at least 7 people and injured more than 40.
Speaking at the Center for Strategic and International Studies (CSIS) in Washington, D.C., Benjamin said that both the United States and Russia had suffered from terrorist attacks and should expand their cooperation in the fight against terrorism.
The Stavropol Territory is the largest region in Russia's North Caucasus Federal District, and hosts its administration, but has remained largely free of the violence in the neighboring republics of Chechnya, Ingushetia and Dagestan.
Russia has been fighting militants in the volatile North Caucasus region for almost two decades but has so far failed to quash the resistance of radical Islamic separatists.
Earlier this year, twin powerful blasts hit the Moscow metro during the morning rush hour on March 29, killing 40 people and injuring over 100.
On March 31 two bombs shook the town of Kizlyar in Dagestan, claiming 12 lives.
WASHINGTON, May 28 (RIA Novosti)
RIA: Suspected Turkish terrorist detained in Moscow - police source
09:4928/05/2010
Moscow traffic police detained a Turk in Moscow who is on the international wanted list on suspicion of terrorism, a police source said on Friday.
According to the source, a man by the name of Korkmaza, born in 1973, has been on the wanted list since August 21, 2008, and was detained at noon on Thursday as he was driving along Leningradskoye shosse in Moscow.
RIA Novosti was unable to confirm officially the detainment of Turk.
A spokesman for the Interpol Central National Bureau with the Russian Interior Ministry said the Turkish authorities were informed and the information was being verified.
MOSCOW, May 28 (RIA Novosti)
Itar-Tass: Turkish national on international wanted list detained in Moscow
28.05.2010, 11.21
MOSCOW, May 28 (Itar-Tass) - A Turkish national on the international wanted list as participant in a terrorist organisation was detained in Moscow on Friday, spokeswoman of the Interpol National Central Bureau at the Russian Interior Ministry Olga Shklyarova told Tass.
Documents on the arrest of Turkish national Mehmet Korkmas have been sent to the Russian General Prosecutor’s Office, National Central Bureau’s sources confirmed.
They said the Turkish side, which initiated the search, has also been informed about the arrest.
RIA: Russia to give Poland data recorders from president's plane on May 31
11:5828/05/2010
Russia will on Monday give Poland the flight data recorders of the Polish presidential plane that crashed in western Russia in April, an Interstate Aviation Committee spokeswoman said on Friday.
"The copies of the flight records will be given to Poland on May 31," Marina Shnitova said.
The Polish Tu-154 crashed near the western Russian town of Smolensk on April 10, killing President Lech Kaczynski and 95 others.
MOSCOW, 28 May (RIA Novosti)
Moscow Times: 30 blast victims remain in hospital
Source Andy Potts at 28/05/2010
More than 30 people injured in a terrorist attack in the south Russian city of Stavropol remain in hospitals, five of them in a critical condition, a rescue worker from the Stavropol emergencies services said on Friday.
An explosion outside a city theatre and arts centre on Wednesday evening killed seven and injured more than 40 people.
One of the injured has been identified as Azeri dancer Rovshan Ismailov, 18, who was due to perform that evening with Chechen ensemble Vainakh. He is one of two victims still in intensive care, RIA Novosti reported.
RIA: More than 30 injured in Stavropol blast remain in hospitals, 5 in critical condition
10:0028/05/2010
More than 30 people injured in a terrorist attack in the south Russian city of Stavropol remain in hospitals, five of whom are in critical condition, a rescue worker from the Stavropol emergencies services said on Friday.
An explosive device went off outside the city's House of Culture and Sport early on Wednesday evening before a Chechen concert was to begin.
The explosion killed seven and injured more than 40 people.
"As of 7:20 a.m. Moscow time [03:20 GMT], May 28, 31 people injured in Stavropol blast remain in hospitals, five of them are in critical condition, six - in serious condition, no one has died overnight," the rescue worker said.
A source in the city hospital said two people are still in the intensive care unit. One of them is an Azeri dancer, Rovshan Ismailov, 18, who was to perform in the Chechen ensemble, Vainakh.
The Stavropol Territory is the largest region in the North Caucasus Federal District, but has remained largely free of violence that occurs in the neighboring republics of Chechnya, Ingushetia and Dagestan.
STAVROPOL, May 28 (RIA Novosti)
Moscow Times: Russia Inks Deal to Extend Waterway Lease for Finland
28 May 2010
By Anatoly Medetsky
Russia signed a deal Thursday extending a Finnish lease on a key waterway for another 50 years, allowing Helsinki to import timber and export paper and pulp.
Under the agreement, signed by Prime Minister Vladimir Putin in Finland, Russia will continue leasing its stretch of the 43-kilometer Saimaa Canal that connects Finnish lakes to the Gulf of Finland after the current 50-year contract expires in 2013.
The canal runs from the city of Lappeenranta, in the southwestern Finland, to the Leningrad region city of Vyborg. Finland agreed to pay a rent of at least 1.2 million euros ($1.5 million) per year, up fourfold from 300,000 euros. The pay may rise depending on the number of passing ships.
Putin, who spoke at a meeting of the EU-Russia Innovation Forum, described the deal as a show of the “special nature of our relations” and “trust” in talks with his Finnish counterpart, Matti Vanhanen, before they signed the accord in Lappeenranta.
The new agreement expands the usage of the canal by allowing passenger vessels from third countries to navigate it as well, the Finnish government said on its web site in March. It also seeks to exploit the scenic waterway's opportunities for the tourist industry and pleasure boating.
Finland will no longer lease Maly Vysotsky Island, or Ravansaari as it is known in Finland, during the next 50 years, the Finnish government said in a memo Thursday. Instead, the lease will include a new road between the border checkpoints of Nuimaa and Brusnichnaya.
Ships carry about 2 million metric tons of cargo across the canal every year, meeting the needs of some 20 Finnish companies that employ 7,000 people.
Russia gained the 20-kilometer portion of the canal following a brief war with Finland in 1940.
In other deals, state-owned shipping company Sovcomflot and three Finnish companies, including STX Finland, signed a memorandum of understanding on development and construction of an icebreaker for Sovkomflot to clean up oil spills in the Baltic Sea. The other Finnish companies were Aker Arctic Technology and Southeast Trading. Rosmorport, a Russian state enterprise that manages port infrastructure, also signed the memorandum.
State-owned railway-equipment maker Transmashholding agreed to set up a 50-50 joint venture with Finland’s Waertsilae to develop and produce diesel engines for trains, ships and power plants. The agreement calls for 1.8 billion rubles ($58 million) of investment, Transmashholding spokesman Artyom Ledenev said, Bloomberg reported.
The two companies will upgrade an existing plant in the Russian city of Penza, which will begin operation in 2012, Ledenev said. Waertsilae makes ship engines and power plants.
Putin and Vanhanen kicked off their meeting Thursday by taking a tour of a high-speed train that is scheduled to begin shuttling between St. Petersburg and Helsinki in December, reducing the travel time to three hours from the current 5 1/2 hours.
Atomstroiexport may invite Fortum to work on a $20 billion project to construct Turkey’s first nuclear power plant after a bid for a Finnish project was rejected, the Russian reactor builder’s first deputy president Timur Ivanov said.
Atomstroiexport may also invite Fortum to help build the Baltic nuclear plant in Kaliningrad and to seek projects in third countries, he told reporters in Lappeenranta.
Speeches, 5/28/2010
Formin.finalnd: Statement by minister Väyrynen at EU-Russia Innovation Forum
Check against delivery
EU-Russia Innovation Forum
May 27th 2010, Lappeenranta, Finland
Keynote comment by Dr. Paavo Väyrynen
Minister for Foreign Trade and Development
Mr. Chairman, ladies and gentlemen,
It is a pleasure for me to address this important forum, which focuses on extremely important themes and has gathered a considerable number of first-class speakers and a well-informed audience.
Issues dealing with innovations certainly belong to the most important ones in today´s economic life. My comments will mainly deal with trade policy and modernization aspects of the Russian economy. I believe that it is necessary to pay serious attention to the larger framework in order to be able to create the right preconditions for successful innovation policies. I will also say a few words on project cooperation which offers good possibilities also as regards to innovations.
It is encouraging to see that the leadership of Russia has embarked on the very important task of modernizing the Russian economy. The objectives in this endeavour are ambitious and plans to achieve the goals are manifold. The production base of Russia is not very wide and the economy is mainly relying on trade in energy goods, raw materials and basic industrial commodities. This is illustrated by the fact that more than two thirds of Russian exports to the EU, which is Russia’s main trading partner, are made up of energy, raw materials and to a smaller degree of chemicals and some manufactured goods. Modernization and diversification of the Russian economy are not easy tasks to accomplish, but they are absolutely necessary and will inevitably bring substantial advantages to the economy and to the Russian people.
Russia has put a lot of emphasis on the renewal of its technical standards and on fostering innovation. To reap the full benefit of modernization and increasing amount of innovations there is a clear need to anchor reforms in a solid and reliable trade policy framework. That framework needs to be based on liberal market access for goods and services and commitment to the international trade rules.
Raw materials are rarely subject to high duties or restrictions at importation. As we know, however, Russia strongly wants to become an exporter of technologically more advanced products. Staying outside the WTO would become really problematic. Duties and trade barriers imposed on countries which are not in the WTO could become real obstacles for ambitions of modernization.
To succeed in the global economy of today and to become competitive, companies need to have free access to components and materials. They need also a well-functioning business environment, which is based on common, globally agreed rules and practices. Harmonization of technical standards is an important part of this, but it also entails the protection of intellectual property rights, a modern and efficient customs control system and a predictable judicial system.
I am convinced that Russia has the capacity and the technical knowledge to become a modern, innovative economy. At the same time, I would argue that this can only happen if Russia joins the global trading system like all the other major economies in the world. It is clearly in Russia’s own interest to join the WTO as soon as possible. That is also something that the EU and many other great trade partners are very much looking forward to.
Ladies and gentlemen,
Finland has been implementing a bilateral cooperation programme with Russia for almost 20 years., The the so called ”Neighbouring Area Cooperation Programme” was launched in 1992 on the basis of Finnish-Russian intergovernmental agreement and it has an annual budget of approximately 20 million euros. The funds are used to finance projects in a great variety of sectors mainly in the regions bordering Finland: That is Murmansk and Leningrad regions, the Republic of Karelia and the city of St. Petersburg, but also in some other regions in the North West Russia. The implementation of joint projects has opened many possibilities for modernization and development.
The aim of this Finnish-Russian cooperation has from the beginning been to support economic and social development and promote cooperation between economic actors, authorities and citizens across the borders. At the moment we develop our cooperation on a basis of an equal partnership and focus strongly on economic cooperation. Particular attention is being paid on supporting entrepreneurship and networking between small and medium-sized companies as well as on improving efficiency in logistics and border-crossing. Public-private partnerships are being increasingly used in the process of developing joint Finnish-Russian projects.
I would like to mention a few examples of our latest projects. In the innovation sector a new Finnish-Russian project has been launched to build a system for gathering and commercializing Russian innovations. The objective of the project is to offer Russian innovators new possibilities and tools for utilizing their ideas and inventions commercially and to establish in Finland new companies whose business is based on these innovations. The main actors in this project are Lappeenranta Innovation Oy from the Finnish side and European-Russian InnoParnership.
The aim of the project Green Cities is to develop concepts and practices supporting energy efficiency actions especially in existing building stock in St. Petersburg. New type of concepts will be used and tested in collaboration with Finnish and Russian partners in order to set up innovative energy efficiency services and in this way to create a basis for a new business concept . The goal of yet another very innovative Finnish-Russian project is to develop a concept for an ecoefficiently built suburb in St. Petersburg. This so called EcoGrad concept will cover practically speaking the entire value chain from development, construction and operations to renewal and disposal.
In a broader, regional scope, innovations are also in the core of the new Northern Dimension Partnerships. The Partnership on Transport and Logistics aims at facilitating international transport and border-crossing by promoting the use of techological innovations like telematics and electronic customs clearance.
I believe that cross-border cooperation on the external borders of the EU will play a significant role in promoting economic and social development in our regions. In parallel with Finnish-Russian bilateral neighbouring area cooperation three new cross-border cooperation programmes have started in the framework of European Neighbourhood and Partnership Instrument (ENPI CBC). For the first time, the regions on both sides of the EU borders have fully participated in the programming process and the establishment of the governing systems of the programmes, taking fully into account the needs and interests of the regions. Furthermore, for the first time, the co-financing will be based on an equal partnership.
Ladies and gentlemen,
I think it is evident that innovations have an important role in promoting economic well-being in Russia and in the EU and fostering economic cooperation between the two. My main message has been that Russia´s future accession to the WTO will be the most crucial single step promoting this cooperation to really make progress.
Thank you for your attention.
Brahmand: India Thought Leaders: Hypersonic BrahMos Missile By 2015, CEO Says
Last Updated: May 28, 2010
The Indo-Russian BRAHMOS supersonic missile program has made its mark in the international arena with a series of successful launches and subsequent rapid induction by the Indian Army and Navy. Now an air version of the missile is currently under development and will be fitted onto the Su-30MKI platform when ready.
Excerpts from an exclusive interview with BrahMos Aerospace CEO and Managing Director Dr. A Sivathanu Pillai published in the Aviation Week (AW).
AW: Indian media has often hailed your role in making BrahMos a major hit. What do you think has led to your successes so far?
Dr. AS Pillai: Joint venture BrahMos is built upon the technological synergy of strengths of the two nations – India and Russia. Moreover, the superiority of the product such as Speed, Precision and Power has ensured the realization of this high-tech product and attracted the users to go for induction of the system in the shortest possible time. It can be proudly said that the Indian Army is the only land force in the entire globe to have a supersonic maneuverable land-attack cruise missile regiment.
AW: Could you please give an update on the program? How many missiles (squadrons) have the Army and Navy inducted?
Dr. AS Pillai: As you are aware, the development of both antiship and land-attack versions of BRAHMOS had been completed successfully and we are in the process of delivering the systems to the Navy and Army. Recently, contracts have been signed for induction of the mobile complex for Indian Army and Indian Air Force. Further orders are in the pipeline. The number of systems will depend on the force strength the services need to have.
AW: What kind of additional orders are we talking about for Army and Navy? What’s the order value?
Dr. AS Pillai: As BRAHMOS will be the first strike weapon with punch, there will be a greater number of ships, mobile launchers and aircraft fitted with the missile. Our order value will exceed $5 billion.
AW: When will the hypersonic version come out? What’s the latest from this front?
Dr. AS Pillai: The hypersonic version is on the drawing board and mutual discussions are in progress. We would like to freeze the design aspects in the near future. The realization of the missile would be taken up. Probably five years down the line, we can start testing of the missile.
AW: What kind of role are private industries playing in the success of BrahMos?
Dr. AS Pillai: BrahMos is an ideal example for the public-private industries consortium. Many industries had been identified in both India and Russia for manufacture of subsystems. Industries have become the production partners and are extending full support in the timely manufacture of the systems/subsystems. In short, the Missile Industry Consortium has been established in both the countries.
AW: Over the last two years BrahMos Aerospace Thiruvananthapuram Ltd. (BATL) has taken shape in Kerala. Where do you see BATL in the next couple of years?
Dr. AS Pillai: BATL was established as a leading aerospace industry and a role model for Kerala. It is expected to grow in the coming years. BATL is primarily for supporting various projects of BrahMos, Defense Research Development Organization and Indian Space Research Organization. In addition, we will be supporting Bhabha Atomic Research Center for the robotic system and Hindustan Aeronautics Ltd. (HAL) for engines. The Phase-II expansion will begin after we get additional land and the Phase-III thereafter. The first fully-integrated BrahMos missile is expected to roll out from BATL by 2012.
ACT media: Russia will make military presence in Transnistria permanent
Date: 28-05-2010
Moldova might have to bear some “side effects” after Romania’s approval to host elements of the US anti-missile defense system on its territory, David Kramer, former deputy secretary for European and Eurasian problems in the US Department of State, told Radio Liberty on Thursday. He does not exclude the possibility that Russia used as argument the installation of US missiles in Romania to maintain its military presence in Transnistria. Transnistria too could use this pretext, the former diplomat considers.
As for the Transnistria difference, the US can only insist that the negotiation process in the five plus two format (Moldova, Transnistria, Russia, Ukraine, OSCE plus EU and USA as observers) should resume. Together with the European partners they could also ask at those negotiations the withdrawal of Russian troops from Transnistria.
Kramer, now at expert with the German Marshall Fund, criticized the actions of the Obama administration, too busy to re-launch relations with Russia, to the detriment of the other states in the area. That applies to a small extent to Moldova, compared to countries in the Caucasus or Ukraine. As for Moldova, the policy of the American administration is laudable since it backs the new government in the Millennium Challenge program. Kramer declared.
Itar-Tass: Medvedev congratulates Aliyev on Republic Day
28.05.2010, 10.45
MOSCOW, May 28 (Itar-Tass) -- Russia’s President Dmitry Medvedev has congratulated Azerbaijani President Ilham Aliyev on the national holiday of Azerbaijan – the Republic Day, celebrated on Friday.
“Achievements in political, social, economic and cultural spheres increase Azerbaijan’s potential, strengthen its influence on the regional and international issues’” the text of the greeting read.
“Old friendship and traditions of kind neighbourhood and friendship unite our countries. The Russian and Azerbaijani people overcame difficulties hand in hand several times, they fought against the Nazism. Participation of the Azerbaijani military in the Moscow parade celebrating the 65th anniversary of the victory in World War II was a splendid example of respect for our common history,” the press service of the Kremlin quoted the greeting.
“The development of the strategic partnership between Russia and Azerbaijan is a significant factor of stability and security in the region. This kind of partnership creates conditions for the implementation of mutually advantageous trade and economic cooperation projects and for the strengthening of humanitarian relations. I am sure that the increasing of joint effort to extend the effective cooperation between our countries is in line with the interests of the Russian and Azerbaijani peoples”.
“Dear Ilham Heydar oglu, I wish good health and success to you, and peace and prosperity to the citizens of Azerbaijan,” Medvedev concluded
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News.az: Azerbaijani parliamentarians send letter to Russian State Duma chairman
Fri 28 May 2010 | 05:30 GMT
Political parties represented in Azerbaijani parliament have sent a letter of protest to chairman of the Russian State Duma Boris Gryzlov.
The political parties represented in Milli Medjlis (parliament) have sent a letter of protest to chairman of the State Duma Boris Gryzlov over the participation of Russian deputies in the so called “parliamentary elections” in Karabakh.
Ruling party of Azerbaijan reports that the letter says:
“There is no need to prove that the conduction of ‘elections’ in the occupied lands of Azerbaijan by the unrecognized regime contradicts to the norms and principles of international law.
The unrecognized separatist regime is a direct result of occupation of 20% of Azerbaijani lands by Armenia.
We state with regret that despite the four resolutions of the UN Security Council, the due resolutions of OSCE and Council of Europe, the European parliament, as well as the efforts of the OSCE Minsk Group, aggressor Armenia still holds Azerbaijani lands under occupied for more than 20 years. For this reason, over a million of Azerbaijanis have been living as displaced persons and the region is in a state of a great humanitarian disaster.
The life of separatists of Karabakh that threaten directly to the peace and security in the South Caucasus is extended under direct participation of Armenia that ignores the proposals of the Minsk Group.
In this situation the campaign launched by the separatist regime is an attempt to legitimize itself before the world community.
This campaign targeting the territorial integrity of Azerbaijan is harmful to the negotiations on the resolution of the Karabakh conflict.
The letter also voices regret that some State Duma deputies have taken part in this “campaign”.
“We would like to note that such actions are contrary to the statement voiced by the Russian Foreign Ministry and the international law”, the letter says.
It also notes that the parties of Azerbaijan’s Milli Medjlis expect the adequate assessment of this issue by the speaker of the State Duma.
Such letters have been sent to the leadership of the parliaments of Czech Republic, Germany, United States, Iran, Argentina, Slovakia and France.
1news.az
News.az: Russian MPs not sent to Khankendi or empowered to represent Russian interests
Fri 28 May 2010 | 05:24 GMT
“Russia’s official position lies in the recognition of sovereignty and territorial integrity of Azerbaijan.
Head of the Black Sea-Caspian information and analytical center at the Russian Institute of Strategic Research Eduard Popov has commented on the visit of Russian deputies to separatist Nagorno Karabakh. “Russia’s official position lies in the recognition of sovereignty and territorial integrity of Azerbaijan. This position is changeless and has recently been reiterated by the Russian Foreign Ministry”, Popov said.
He noted that he is unaware of the mechanism under which the Russian deputies come to the occupied lands of Azerbaijan but they were not sent there officially or empowered to represent Russian interests there.
“The visit of deputy Zatulin and other Russian officials is private and everything they said there is their own opinion rather than the Russian position. I am confident that such unsanctioned visits can not have a negative impact on the Russian-Azerbaijani relations that have reached the level of strategic partnership and such activity contradicts the interests of Russia striving for the comprehensive enlargement and strengthening of ties with Azerbaijan”, Popov said.
1news.az
RIA: Estonia publishes first child's primer in Russian
02:3128/05/2010
A presentation of the first Russian-language child's primer published in Estonia was held on Thursday in Tallinn, the Estonian television reported.
Russian-speaking minorities constitute 25.6% of the country's current population and 58.6% of the native Estonian population is also able to speak Russian.
The Russian language was the second official language in Estonia during the Soviet era, but with the collapse of the Soviet Union Estonian went back to being the only state language in Estonia.
Before the release of the book, Russian-speaking children had to use the primers published in Russia, which introduced the Russian culture, history and geography.
The new book, on the contrary, offers children stories about Estonia, its history, culture, geography, and local folklore.
The Russian-language primer uses the same illustrations and structure as the Estonian one, but its content is mostly original, the TV report said.
TALLINN, May 28 (RIA Novosti)
Rossiyskaya Gazeta/Russia Today: The Russian language regains an official status in Crimea
by Pavel Dulman
Pushkin’s birthday became a holiday.
The parliament of the Crimean Republic has approved Russian as the regional language on the territory of the autonomous republic. Now Russian, which has throughout the years continued to be the main language spoken on the peninsula, will find its way back into the media, education and office administration, where it will be used with virtually no restrictions.
Read more
The first tangible result of the recent transition was the renaming of Crimea’s Verkhovna Rada to Verkhovny Soviet.
Crimea’s last parliamentary session was almost entirely dedicated to discussion of the Russian language. The result of the meeting was a decree with a long and an exhausting title: “On the implementation of constitutional guarantees for the free use of the Russian language in the Autonomous Republic of Crimea and ensuring the fulfillment of Ukraine’s obligations in relation to the implementation of the norm of the European Charter for regional minority languages.” The document was approved by three-fourths of the legislative body -- 75 out of 100 people’s deputies. The first article of the decree specifies that in accordance with the norms of the Ukrainian and the republic’s constitutions, the Russian language is to be considered a regional language on the territory of Crimea. Moreover, the decree established June 6 as the Day of Russian Language in Crimea, which also marks Aleksandr Pushkin’s birthday.
The reasons explaining why this decree was adopted and what tangible effects it is going to have were revealed to Rossiyskaya Gazeta (RG) by its author, the head of Crimea’s parliamentary science and education commission, Galina Grzhibovskaya.
“The parliament of Ukraine had ratified the European Charter for Regional Languages in 2003. There were some provisions that had been left out, but they did not actually have any effect on the general positions. Meanwhile, Ukraine’s Foreign Ministry had for two years, under various pretexts, postponed transferring the ratified document to the European Union. But even after Brussels had finally received it, the regulations outlined in the Charter were not observed in Ukraine, and specifically in Crimea. However, one important detail is the fact that the European Charter, as an international agreement, has higher priority over national legislature, and especially departmental bylaws, which have in recent years been openly and determinately pushing out the Russian language from all spheres of life in Crimea -- a place where 76% of the population considers Russian their native tongue! We found ourselves powerless against the nationalists, who have been actively arguing their claims while derogating the rights of the Russian speakers, and simply derogating human rights. All of our attempts to appeal to the central authorities have ended with the typical excuse -- by law, Ukrainian is the official language.”
“Now, having introduced the decree and simply confirmed the status of Russian as the regional language, we have an effective means of protecting the Russian language, including on an international level, tools for its development, as well as the monitoring powers,” he added.
According to Grzhibovskaya, the next step will be to develop measures for the implementation of the decree. In other words, the Russian language will return full scale to the peninsula’s media scene (language quotas will be cancelled and Ukrainian will no longer be mandatory), the educational sphere (“schools will be Russian, rather than Ukrainian, where Ukrainian programs are taught in the Russian language and Russian literature is considered foreign”). Russian will be the language used in local judicial offices and records management, and come back to Crimea’s regional autonomy.
“Let’s just say, life for the Russian tourist in Crimea will be easier, more straightforward and comfortable,” explained Grzhibovskaya.
Another article of the decree addresses the Verkhovna Rada, with a request to prohibit the passage of 15 draft laws which in one way or another derogate people’s rights in the linguistic sphere.
“Prior to becoming the opposition, the former leadership had laid a number of mines. For instance, a proposal was made to prosecute individuals using Russian language in the military. Because the humanitarian sphere in the Rada continues to be dominated by nationalists, we are afraid that these laws could be passed in a furtive manner,” said Grzhibovskaya.
Read the article on the newspaper's website (in Russian)
Bloomberg: Russia, U.S. Reach Tentative Agreement on Poultry, Interfax Says
By Patrick Henry
May 27 (Bloomberg) -- Russia and the U.S. reached a preliminary agreement on deliveries of American poultry, Interfax reported, citing Gennady Onishchenko, Russia’s public health chief.
Onishchenko said he met with U.S. Ambassador John Beyrle last week, and the two men agreed on ‘four positions’ that meet the demands of Russian law and allow the U.S. not to compromise its political principles, the Moscow-based news service reported.
If the U.S. Department of Agriculture and Russia’s consumer rights watchdog exchange the relevant letters, U.S. shipments of poultry not treated with chlorine could resume, Interfax said, citing Onishchenko.
Last Updated: May 27, 2010 05:53 EDT
Moscow Times: Russia May Allow U.S. Poultry Shipments to Resume Soon
28 May 2010
By Alex Anishyuk
The United States may be able to start shipping poultry in a month, a spokesman for Russia's veterinary watchdog said Thursday, calling the breakthrough a reward for Moscow's hard line in its negotiations with Washington.
"It will depend on the desire of the U.S. suppliers to resume exports of poultry to Russia as soon as possible, which I think they want very much," Alexei Alexeyenko, a spokesman for the Federal Service for Veterinary and Phytosanitary Control, told The Moscow Times. "I expect this to happen by the end of June."
Russia maintained a tough stance in its negotiations with the United States, and it looks like the effort was not in vain, Alexeyenko said.
"First, the U.S. side didn't even want to hear about banning chlorine for the poultry exported to Russia, and they continued to tell us that the U.S. safety rules allowing it were very trustworthy," he said. "We kept explaining that this country has its own laws, and importers are obliged to obey."
Washington offered a choice of 22 chemicals that they could use in place of chlorine to disinfect the poultry, but many of them also were prohibited in Russia, he said.
"Finally we reached a compromise by agreeing on the chemicals that satisfy both sides. Under the new rules, importers will be obliged to indicate which substance was used in a separate document in addition to the veterinary certificate," he said.
Gennady Onishchenko, head of the Federal Consumer Protection Service, told reporters Thursday that a tentative agreement was reached to resume supplies, without elaborating on the terms. The Agriculture Ministry and the U.S. Department of Agriculture still need to exchange formal letters outlining the terms of the agreement, he said.
Imports were frozen at the beginning of the year after long-planned regulations went into effect that forbid the import of poultry treated with chlorine, which is used by many U.S. producers. The Federal Consumer Protection Service signed the measure in June 2008, but the rules' start date was later pushed to Jan. 1, 2010.
But U.S. poultry producers — who supplied 750,000 metric tons last year, or 20 percent of the market — are unlikely to regain their former market share, analysts say.
In early February, President Dmitry Medvedev signed a new "food security" doctrine, which called for 85 percent of all meat consumed in the country to be produced domestically by 2020.
The Cabinet has taken an even more aggressive stance on poultry. In January, Prime Minister Vladimir Putin said Russia should be able to cease all poultry imports by 2015, while Agriculture Minister Yelena Skrynnik said the amount of poultry imports should be cut to zero within just three years.
Russia will produce 3.1 million metric tons of poultry per year by 2012, according to the ministry's forecast, up from 2.5 million metric tons in 2009. Cherkizovo Group, the country's biggest poultry producer, said Wednesday that its first-quarter profit rose 17 percent on higher prices and output.
Onishchenko also said Thursday that Russia was ready to resume supplies of Georgian wine and mineral water but that Georgian manufacturers should take the lead and prove that their produce complies with regulations, RIA-Novosti reported.
"We are ready to consider [Georgian businessmen's] proposals. We are ready to cooperate with them," Onishchenko said. "It is a difficult process, but it should begin."
RIA: Russia expands ban on Brazilian meat imports
06:2328/05/2010
The Brazilian Agriculture Ministry confirmed on Thursday that Russia's food safety watchdog had suspended meat imports from another eight meat processing plants in the Latin American country.
The temporary ban follows inspections of 29 Brazilian firms carried out by Rosselkhoznadzor in April and will come into force on May 30.
"We have received an official notification from Rosselkhoznadzor saying that the produce of eight out of 29 companies where the Russian experts conducted inspections in April does not meet the Russian requirements," a spokesman for the ministry said.
In addition, the restrictions on imports from four Brazilian meat processing plants, which were imposed earlier, also remain effective until further notice.
"We have to analyze the issue and investigate the situation at the firms that were put on this list," the official said.
Meat and meat products constitute about 65% of Brazilian exports to Russia, with an estimated annual value of $2.2 billion.
Brazil is also a key supplier of soybeans and soy products to Russia.
RIO DE JANEIRO, May 28 (RIA Novosti)
VOR: Russian compatriots forum underway in San Francisco
|May 28, 2010 10:44 Moscow Time |
A forum of Russian compatriots residing in the US is underway in San Francisco. Its main goal is to contribute to a stronger position of the Russian language and to promote for business and cultural cooperation between the Russian speaking community in the US and Russia. Among the participants of the forum are Russian diplomats, representatives of public, cultural and religious organizations of the US. They will attend the Russian center in California in particular the Russian culture museum, the library and the publishing house of "Russakya zhizn" (Russian life) newspaper.
VOR: Patriarch Cyril to tour northeast Russia
|May 28, 2010 08:45 Moscow Time |
The head of the Russian Orthodox Church Patriarch Cyril starts a 10-days tour this Friday. He will visit St. Petersburg, Karelia, Smolensk and Vyasma. In St. Petersburg His Holiness will preside a meeting of the Holy Synod and will serve a liturgy together with Patriarch Bartholomew in one of the city’s largest cathedrals – St. Isaac’s. In the port city of Kronshtadt the two Patriarchs will watch the restoration of the Sea cathedral – the one traditionally visited by seamen. In Petrozavodsk His Holiness will be at the opening of a monument to St. Alexander of Neva (the Russian duke who defeated German and Swedish invaders in 1240 – 1242) that will take place on June 3. The Patriarch will also visit the island of Kizhi and the Belomorsko-Baltiyskiy channel to commemorate its builders most of whom were victims of Stalin’s repressions. Later, he’ll sanctify a new cathedral in the Smolensk region, visit a convent in the suburbs of Vyazma and take part in festivities in the Tula region commemorating 630 years since the battle of Kulikovo when Russian troops defeated Tatar invaders.
28 May 2010, 10:11
Interfax: Protodeacon Andrey Kurayev considers Bartholomew I visit to Russia as a serious victory of the Moscow Patriarchate diplomacy
***This visit means that the Ukrainian question has been taken off the agenda in Moscow-Constantinople dialogue
Moscow, May 28, Interfax - Professor of the Moscow Theological Academy Protodeacon Andrey Kurayev believes that Patriarch Bartholomew's visit to Russia is very important and symbolic event.
"The fact that today Bartholomew is in Moscow means that our diplomacy has won a serious victory. It is a sign that Moscow-Constantinople dialogue will take the question of Ukrainian Church's canonical status off the agenda," Fr. Andrey said in his programme (the Stolitsa TV).
He reminded that Patriarch Bartholomew visited Kiev two years ago where he met with late Patriarch Alexy II and "it was a very tense visit, then many people expected that Constantinople would announce Ukraine its (church - IF) territory. It didn't happen."
According to him, today both Churches can discuss other questions and first of all "questions of our joint Christian witness in the secular world of modern Western Europe."
Fr. Andrey also pointed out that "ecumenical patriarchs seldom came to Moscow, such visits haven't been practiced for several centuries."
Bne: Proposed legislation to release ill suspects – but power remains in judges hands
bne
28 May 2010
The Federal Prison Service has drafted legislation to allow judges to grant freedom to suspects awaiting trial who are seriously ill.
The move comes after two recent high profile cases in which suspects died in detention. However, with the final say remaining in the hands of judges – who are already facing accusations that they are ignoring a directive from President Medvedev that those accused of economic crimes should not await trial in detention – the move could struggle to achieve the impact hoped for.
The proposed legislation will see a list of 40 health conditions qualify a suspect to await trail without detention, including tuberculosis, advanced AIDS and cancer, head of detention facilities Vladislav Tsaturov told Rossiiskaya Gazeta. Currently, the law allows judges to release seriously ill people that are already convicted and serving a sentence, writes the St Petersburg Times.
Conditions in pre-trial detention have come into the spotlight following the deaths of Sergei Magnitsky – a lawyer for Hermitage Capital (the company is fighting charges of massive tax fraud, but claims it is the victim of raiders) – and businesswoman Vera Trifonova. Thirty-seven year old Magnitsky died of acute pancreatitis in a Moscow pretrial detention center after reportedly being denied medical assistance. Trifonova, 53, suffered from diabetes and other ailments and died of heart failure in a Moscow detention facility last month. Valery Ivarlak, a senior investigator in Trifonova's case returned to work on Wednesday despite the investigation into his involvement in her death remaining open. Interfax reports that on the same day, a court in Moscow Region ruled Wednesday that Trifonova should have been released due to her poor health.
Andrei Babushkin of the Committee for Civil Rights told the St Petersburg Times that of the 130,000 people in pre-trial detention in Russia, several hundred meet the criteria for release under the proposed legislation.
Moscow News: Corrupt officials face asset seizures
by Ed Bentley at 28/05/2010 10:48
Officials’ ill-gotten goods could be confiscated under new Interior Ministry proposals to support President Dmitry Medvedev’s crackdown on corruption.
The move came after the ministry published income and asset information on its officials for the first time.
“The declaration of income data is expedient for modernising Russian legislation for expanding the basis for the confiscation of illegally acquired property,” deputy minister Yevgeny Shkolov said in a statement posted on the ministry’s web site.
“The disparity between the assets of some officials and their official salaries arouses the entirely understandable indignation of the public,” he added.
Corruption experts welcomed the legal changes as moving towards international standards, but pointed out that previous similar crackdowns have not managed to reduce the level of corruption.
Angus Reid Global Monitor: Russians Want to Stick with Governing Party
May 27, 2010
[pic]
(Angus Reid Global Monitor) - Most people in Russia would support the governing party in the next election to the State Duma, according to a poll by the All-Russian Public Opinion Research Center. 54 per cent of respondents would vote for United Russia (YR) in the next ballot, up two points since April.
The Communist Party (KPRF) is a distant second with eight per cent, followed by the Liberal Democratic Party (LDPR) with five per cent, and the opposition movement A Just Russia with four per cent.
Russian voters renewed the State Duma in December 2007. United Russia—whose candidate list was headed by then president Vladimir Putin—secured 64.1 per cent of the vote and 315 of the legislature’s 450 seats. On that same month, Putin endorsed Dmitry Medvedev as a presidential candidate, and Medvedev said it would be of the "utmost importance" to have Putin as prime minister.
In March 2008, Medvedev easily won Russia’s presidential election with 70.28 per cent of the vote. In May, Medvedev was sworn in as president. His nomination of Putin as prime minister was confirmed by the State Duma in a 392-56 vote.
Earlier this month, Putin rejected accusations that Medvedev is a puppet president who is easily manipulated by him, saying, "Our actions are guided exclusively in the interests of our country and the Russian people. We divide up our competencies in accordance with the constitution and Russian legislation."
Polling Data
Which party would you vote for in the election to the State Duma?
| |May 2010 |Apr. 2010 |Mar. 2010 |
|United Russia (YR) |54% |52% |53% |
|Communist Party (KPRF) |8% |8% |7% |
|Liberal Democratic Party (LDPR) |5% |5% |5% |
|A Just Russia |4% |4% |4% |
Source: All-Russian Public Opinion Research Center
Methodology: Interviews with 1,600 Russian adults, conducted on May 14 and May 15, 2010. Margin of error is 3.4 per cent.
Moscow News: Mayoral Maybach mystery in St. Petersburg
by Andy Potts at 28/05/2010 11:26
One of the most exclusive vehicles to be found on the streets of St. Petersburg is now seemingly off those streets.
The Maybach luxury car reportedly driven by Dmitry Vasilenko, mayor of the Leningrad region settlement of Schliesselburg, was whisked away from its secure parking compound on Thursday night, according to police in the northern capital.
With an estimated road price of 20 million roubles – roughly half the budget of Schliesselburg’s town council – it’s not a run of the mill motor.
The thieves broke into a secure carpark on Ulitsa Nakhimova and took the Maybach, helping themselves to a Mercedes for good measure, according to Petersburg TV station 5-TV.
Apparently they were able to evade guards at the city centre site, cut through a metal screen and disable the alarms before calmly rolling the vehicles along the street under cover of the summer twilight that passes for darkness in St. Petersburg.
Officials in Schliesselburg denied that the car was owned by the local authorites in the town of 12,500 people. Indeed most people living there said they had never seen or even heard of it before according to the TV report.
Although Vasilenko – who is also a successful businessman and moderately popular chanson singer – was elected mayor of the settlement, he spent most of his time in the big city.
Moreover as an elected local representative he was not obliged to declare his income and assets in the way that federal politicians currently should.
The Maybach brand, which was relaunched by Mercedes in 1997 is among the world’s most exclusive – but hasn’t been the success its manufacturers hoped for.
Despite predicting sales of around 2,000 a year, mostly in the US, its best figures came in 2004 when it sold 244 cars. Following the impact of the financial crisis, which saw 2009 sales figures drop to just 66, it is rumoured that parent company Daimler AG might be ready to drop the entire project.
National Economic Trends
Bloomberg: Russian Banks on ‘Red Alert’ as Emergency Liquidity Is Unwound
May 27, 2010, 7:20 PM EDT
By Maria Levitov and Paul Abelsky
May 28 (Bloomberg) -- Russian lenders say plans to withdraw emergency liquidity this year may shackle credit and confound government efforts to push banks to lend more.
Europe’s sovereign debt crisis means support for the financial industry must stay in place longer than planned to give Russia a buffer against capital flight, according to the country’s bankers’ association, as well as Russia’s third- biggest private bank, OAO Promsvyazbank, and rating service Standard & Poor’s.
“Our financial market isn’t very large and obviously, a worsening of the situation in Europe may spook investors,” said Anatoly Aksakov, head of the Russian Association of Regional Banks. “A fairly large outflow of liquidity may suddenly leave the market completely uncovered.”
The central bank said in March it wants to restore reserve requirements to 2008 levels as it unwinds crisis measures this year. Lenders may lose their safety net as they try to reduce problem loans, now almost 40 percent of assets, leaving the financial system “constrained,” S&P says. A clampdown on credit may derail Russia’s recovery from its deepest recession since 1991, bankers say.
“The banking system must remain in a state of red alert,” said Alexandra Volchenko, senior vice president at Promsvyazbank. “External markets remain the main source of danger for the banking system.” Any steps toward trimming emergency programs would “look premature.”
‘Less Necessary’
The regulator will probably tighten reserve requirements from July 1, returning to the pre-crisis standard for classifying problem loans, Mikhail Sukhov, a central bank board member and head of the licensing department, said last week.
“The market itself must adapt to working under normal conditions,” Sukhov said. “It’s absolutely clear that a number of these measures are becoming less necessary.”
Shares in Russia’s biggest bank, Sberbank, have fallen 15 percent in the past month, while VTB Bank OJSC, the second largest, is down 11 percent. The benchmark Micex index has dropped 13 percent in the period.
Lending grew 0.9 percent last month as corporate and retail loans showed gains, according to the central bank, the first time both portfolios increased since January 2009. Retail lending shrank 11 percent last year, after climbing 35 percent in 2008. Loans to companies advanced 0.3 percent in 2009 compared with growth of 34 percent in 2008.
‘Low’ Level
Lending is still at a “low” level, according to central bank Chairman Sergei Ignatiev, who has predicted loan growth of 15 percent this year. Prime Minister Vladimir Putin on April 9 said he had hoped lenders would react more “promptly” after the 13 cuts in interest rates in as many months, bringing the benchmark rate to a record-low 8 percent.
Lenders’ reserves surpass 2 trillion rubles ($67.88 billion), compared with 688 billion rubles a year ago, BDO consulting group in Moscow said on April 8. Investments in Russian central bank bonds account for the largest share of voluntary reserves, or 842.8 billion rubles, it said.
In other BRIC nations -- Brazil, India and China -- central banks have already withdrawn liquidity to avert asset-price inflation. Premier Wen Jiabao raised reserve requirements three times this year. India’s central bank on April 24 increased banks’ cash reserve ratio to 6 percent from 5.75 percent to drain 125 billion rupees ($2.6 billion) from lenders.
‘Key Factor’
At the height of the credit crisis, Bank Rossii was forced to extend 1.9 trillion rubles in unsecured loans to banks, loosen regulations and drain a third of its reserves to slow the ruble’s decline. Investors and companies pulled more than $300 billion from the country between August 2008 and mid-February 2009.
Russia’s international reserves fell $4.8 billion in the week through May 21, the most in four months, to $453.4 billion, the central bank said yesterday. Existing support measures “are a key factor in providing banking sector stability,” said Ekaterina Trofimova, a bank rating director at Standard & Poor’s in Paris. “Reversing the emergency measures and tightening regulations prematurely would pose a risk.”
Concern the region’s fiscal woes will stall a recovery has sent oil prices lower. Urals crude, Russia’s chief export blend, fell to $68.40 a barrel May 20, the lowest since October 2009. The euro fell to its lowest level against the yen since November 2001 on May 24 and weakened 20 percent against the dollar since a Nov. 25 high.
‘Tricky Point’
Bankers say the regulator must watch European markets closely to time any withdrawal of support. European policy makers pledged a loan package worth almost $1 trillion and a program of bond purchases to forestall defaults in the region’s most indebted countries.
Europe’s debt crisis may prompt some governments and regulators to delay withdrawing stimulus measures. German Chancellor Angela Merkel said on May 20 she is “very worried” about the challenges posed by coordinating exit strategies.
Russia’s central bank is at a “tricky point,” said Raimo Valo, board chairman of the Russian unit of Swedbank AB, the largest Baltic lender.
“You have to support the real sector and if the banks are controlled too tightly, it will of course harm that,” he said. “It’s very crucial that you don’t do too much too early. That might be really harmful for the system.”
--Editors: Chris Kirkham, Tasneem Brogger.
To contact the reporters on this story: Paul Abelsky in Moscow at pabelsky@; To contact the reporter on this story: Maria Levitov in Moscow at mlevitov@
To contact the editor responsible for this story: Willy Morris at wmorris@.
2010-05-28 08:31
Reuters: Russian rouble extends gains on stronger oil
MOSCOW, May 28 (Reuters) - The Russian rouble extended gains in early trade on Friday, driven by stronger oil prices and a bounce back in stocks amid fading risk aversion and increased interest by investors in Russian assets.
By 0700 GMT, the rouble was up 24 kopecks to 33.69 versus the euro-dollar basket, closing in on a 17-month high of 33.40 touched in mid-May and recovering from Tuesday's low of 34.84.
Against the dollar, the rouble gained 37 kopecks to 30.45 after falling to its 2010 low of 31.69 earlier this week . It was also up 10 kopecks versus the euro at 37.66.
The rouble got a boost on Friday from an overnight rise in oil prices, buoyed by rallying equity markets and expectations of rising U.S. consumption during the impending summer holiday season.
"It (the rouble rise) is just a reaction to an upside move in oil prices, which really didn't go very high," said Roman Pakhomenko, dealer at Lanta bank.
Crude oil futures -- the major rouble benchmark -- were trading just below $75 per barrel, the middle of the range of $70-$80 Prime Minister Vladimir Putin called "comfortable."
The 2010 budget is based on Russia's Urals blend of $76 per barrel.
"The attitude towards the rouble is positive. Clients are selling (foreign currencies), the central bank is buying", said Sergei Ponomaryov, dealer at Promsvyazbank. Keeping the rouble/basket rate within the floating corridor of 33.40-36.40, the central bank maintains so-called "planned" interventions in that range, buying around $250 million a day to smooth exchange rates fluctuations, dealers say.
For a factbox on key moves in the Russian rouble click .
(Reporting by Andrey Ostroukh; Editing by Lidia Kelly) Keywords: RUSSIA ROUBLE/
(andrey.ostroukh@, +7 495 775 12 42)
Bloomberg: Ruble Heads for Biggest Three-Day Advance in Year Versus Dollar
By Alex Nicholson
May 28 (Bloomberg) -- The ruble climbed for a third day against the dollar, headed for its biggest three-day advance since March last year. The Russian currency added 0.9 percent to 30.53000 as of 10:24 a.m. in Moscow, taking its weekly gain to 2.1 percent. The ruble strengthened 0.4 percent to 37.6100 versus the euro, leaving it at 33.7171 against the central bank’s target currency basket.
Last Updated: May 28, 2010 02:28 EDT
VTB Capital: Sergey Ignatiev makes a number of statements on the Russian banking sector
VTB Capital
28 May 2010
News: Yesterday, CBR Chief, Sergey Ignatiev made a number of comments on Russian banking sector. The key takeaways were the following:
- Ignatiev reiterated his forecast for the sectors loan portfolio growth in 2010 at 15% YoY, although from his point of view banks are still reluctant to rapidly increase lending due to lack of good quality borrowers.
- In January-April 2010, the volume of new issued mortgage loans more than doubled.
- Ignatiev supports interest rate cuts for state subords equally for all banks, though the reduction should not affect other banks that did not receive assistance from the state.
- CBR might sell its share in Sberbank to private investors only in the longterm perspective, while it generally does not exclude the transfer of the stake to another state institution.
- Ignatiev is not against an adoption of an option plan in Sberbank but his position on some points differs from that of the banks management.
Our View: All in all, the statements are quite positive for market sentiment.
Meanwhile, the support of subords interest rate cut might indicate the coming approval of the respective bill in the Duma, which will have a positive effect on Sberbanks financials and trigger the stock price.
Approval of the option plan in Sberbank is likely to also serve as a catalyst for the stock as the market sees it as an instrument for further improvement of Sberbanks performance. We expect that negotiations between the CBR and the management over option plan will be settled soon and the plan would be adopted in 3Q10.
RenCap: CBR chairman comments on the FX market situation
Renaissance Capital
May 28, 2010
Yesterday (27 May), Sergey Ignatiev, chairman of the Central Bank of Russia (CBR), commented on the FX market situation. We note the following key takeaways:
• The CBR is unconcerned by euro exchange-rate volatility and will stick to its current reserve structure. Ignatiev takes the view (a view we share) that all changes in the FX reserve structure (in a recent release of the international reserves management report for the period of 2009) were attributed purely to revaluation effects.
• The CBR sees no evidence of inflation picking up, and Ignatiev expects deflation in August-September. He added that lower CBR rates will contribute to faster credit growth. We take these comments as a clear hint that a 25 bpts rate cut at today's CBR board meeting is highly likely.
• The CBR has bought around $5bn into its international reserves since the start of May. Our estimates suggested the number was close to $5.2bn in FX interventions. As the CBR has not shifted its bid level since the start of May, this implies it may have increased its daily purchases to $400mn. Such strong purchases indicate to us that a tectonic shift out of the rouble has not taken place, and that the key players are continuing business as usual: selling current account revenues for roubles. Hence, we see no reason to alter our year-end forecast of RUB28.40/$1.
Alexei Moisseev
RenCap: Money supply rises 2.7% in April
Renaissance Capital
May 28, 2010
Yesterday (27 May), the Central Bank of Russia (CBR) released monthly statistics on monetary aggregates. As of 1 May, the money supply (M2) reached RUB16.4trn, up 2.7% from the previous month. M2 expanded 33% compared with the same period a year ago; however, this sharp change is largely explained by a low-base effect, as there was money supply contraction during the gradual devaluation process in early 2009. The broad monetary base increased 6.8% MoM and 51.6% YoY. Across major components, cash money accounted for RUB4.6trn, bank deposits in the CBR for RUB0.6trn and correspondent accounts for RUB0.5trn.
Expansion in these indicators is still mostly explained by the volume of FX interventions made by the CBR, we believe.
The CBR injected about RUB350bn into the system in April as it purchased $11.3bn and EUR0.4bn in the foreign exchange market. An additional inflow was received from the Reserve Fund, which printed RUB350bn in April in order to cover the budget deficit.
According to recent comments by CBR Chairman Sergey Ignatiev, the regulator purchased about $5bn into international reserves in May. As the pace of interventions slowed compared with previous months, we suggest that money supply growth is likely to be lower in May. We estimate growth in the money supply at 30% (annual average) by year-end.
However, such a significant expansion in monetary aggregates has not yet led to inflation, and CBR officials even expect deflation in the second half of the summer. Therefore, we still do not see any reason to adjust our inflation forecast of 6.3% YoY in 2010.
COMMENT: Investment is key to sustainable Russian recovery
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Vladimir Tikhomirov of Uralsib
May 28, 2010
In the current crisis, Russia has suffered a major slump in fixed investment levels, with total 2009 investment volumes falling to 2007 levels. This was a major factor in the decline in Russia's gross domestic product, and caused a sharp contraction in output in many areas of the economy, from non-residential construction to manufacturing.
Revenues from booming commodity exports, low-interest foreign loans that were easily accessible to Russian businesses, and state funding were the three largest contributors to a rapid increase in fixed investment volumes before the crisis. The spread of the crisis pushed export revenues down sharply and made it almost impossible for the majority of Russian corporate borrowers to restructure their debt. This forced companies to mobilize their resources through cuts to investment plans. It also made it necessary for the government to tap into its reserves and the budget in order to help the struggling private sector avoid mass debt defaults.
In March-April 2010, the investment trend in Russia returned to positive, helped by the base factor effect and continued spending from state companies. While we believe that in the coming months this upward trend will continue, we do not expect to see a fast return to pre-crisis investment levels, as companies remain over-leveraged, banks continue to avoid taking extra risks, global markets are still very volatile, and the prospects of recovery in the world economy remain fragile and uncertain.
GDP hit by decline in exports, investment and manufacturing
Last year, the Russian economy shrank 7.9% on year, the largest annual decline since 1994. While negative dynamics were recorded in many sectors of the economy, the three main contributors to the sharp fall in gross economic output were exports (down almost 36% in 2009), fixed investments (down 17%) and manufacturing (down 16%).
The fall in exports was a direct consequence of a sharp correction in global commodity prices. However, this correction in prices has turned out to be relatively short lived, and already in the first quarter export volumes in Russia had increased to close to their pre-crisis average levels, posting a massive 61% on-year growth.
In the first quarter, the recovery in other key segments of economy was slower but still quite visible, not least due to the low base factor effect. Among the major areas of economic activity in Russia, it was only fixed investment that in the first three months of 2010 continued to demonstrate very weak dynamics. According to Rosstat, fixed investment volumes were down 4.7% on year in the first quarter.
In the years prior to the recent crisis, a rapid growth in investment volumes was - along with booming consumer demand - one of the key growth factors for the economy at large. In the period between the Russian financial crisis of the late 1990s and the spread of the current global financial crisis, fixed investment volumes in Russia increased in real terms by a massive 180%. On the eve of the current crisis, in 2007, the investment growth rate in Russia surpassed 21% on-year - annual growth rates not seen in Russia for almost half a century.
However, as the global crisis deepened, fixed investment was the worst hit. Over the course of just one year (between spring 2008 and spring 2009), fixed investment growth rates in Russia have gone from 20% annual growth to a decline of more than 23%. There were several reasons for such an abrupt shift in investment dynamics, including frozen global and domestic credit markets, sharp falls in export prices, and higher risks of investment in emerging markets - among others.
Foreign funding was the largest driver for investment growth. However, perhaps the biggest contributing factor to such a rapid reversal in this trend was the fact that during the pre-crisis period the bulk of funding for fixed investment came from foreign markets and had a short maturity. A graphic comparison between the fixed investment trend and that of private sector foreign debt illustrates this dependence quite clearly (see below). A protracted period of low rates on global credit markets in 2003-08 prompted many Russian companies and banks to increase their leverage. Thus, in the period between 2003 and 2008 the cumulative foreign debt of Russia's private sector increased by 5.6-times to almost $450bn. This was accompanied by a rapid increase in fixed investment, which rose 4.9-fold to $350bn.
The closure of the global credit markets with the onset of the 2008 crisis forced many Russian companies to reconsider their investment strategies, with short-term foreign loans becoming a vital component.
The big test came in late 2008. In the fourth quarter of 2008, Russian private businesses were scheduled to return over $80bn in interest and principal payments to their foreign creditors. Most of this money was eventually provided by the Russian government and the Central Bank from their reserves. This resulted in a sharp decline in investment volumes in the Russian economy as many businesses were forced to postpone or abandon altogether their plans for expansion. In turn, this affected many related segments of the economy: banking, industrial and infrastructure construction, production output in manufacturing - among others. Driven by these negative trends, Russian GDP followed suit with a sharp contraction from 8.7% annual growth in the first quarter of 2008 to 9.4% decline one year later.
Investment trend turns positive
Rosstat's monthly fixed investment trend data for Russia shows investment volumes bottoming out in May 2009. We have seen signs of investment gradually recovery since November 2009, and fixed investment trends finally turned positive in March. While there is no doubt that the low base effect has played an important role in the recent reversal of the investment trend, other factors contributing to the pick-up in investment volumes were the gradual unfreezing of global credit markets (which allowed private Russian borrowers to successfully restructure their debts), the domestic bond market boom (which was fueled by lower inflation and official rates, as well as excessive ruble liquidity), and continuing (albeit weaker) investment flows from the state, quasi-sovereign companies, and some major exporters.
A closer look at the fixed-investment structure by major sector, based on Rosstat's data, shows three sectors of the economy managing to increase their share in total investment volumes significantly in 2009, namely pipelines, electricity generation, and railroads, with the presence of the state being crucial either directly or indirectly in all of these areas. Ironically, the sector with the steepest decline in its share of the gross fixed investment volume is also state related: this is road construction, where the bulk of funding is provided by local governments whose budgets suffered significantly during the crisis due to decreases in revenues and rapid expansion in social spending.
The above-mentioned fixed-investment trends are also confirmed by regional trends. In Russia, 10 of the country's total 83 administrative regions account for half of all fixed investment volumes. These 10 regions include the largest cities (Moscow and the Moscow region, St Petersburg and the Leningrad region, Ekaterinburg and the Sverdlovsk region, Nizhny Novgorod, and Krasnodar) as well as key mining areas (Tyumen, Tatarstan, Sakha). In the three years before the crisis, investment growth in these areas averaged 16% on year, but slowed to 3.7% in 2008-09. Of the 10 regions, only three managed to retain positive investment growth last year: these were the mineral-rich Sakha republic and Krasnoyarsk, as well as the key agricultural region of Krasnodar. The largest investment volume declines were recorded in areas with developed manufacturing and financial sectors: Moscow and the Moscow region, St Petersburg, and Sverdlovsk region with its capital city of Ekaterinburg. As a result, the combined share of the largest mining areas (Tyumen, Sakha, Tatarstan, and Krasnoyarsk) in gross national fixed investment rose from 18.5% in 2008 to 22.4% in 2009, while that of key manufacturing areas declined from 23% to 20.2%.
State's increasing importance
One commonly held view is that positive fundamental changes in the investment trend in Russia can be expected only after banks and other financial institutions start to resume lending. This is true in a sense, though only to the extent that growth in bank loans would probably coincide with a general rise in economic activity in Russia and worldwide. However, the banks' role as funding providers for fixed investment has traditionally been extremely moderate in Russia. This was due to the lack of 'long money' in the domestic banking system, as high inflation expectations pushed long-term credit rates to prohibitive levels for the majority of corporate borrowers.
Thus, official statistics show the share of bank loans in gross fixed-investment volumes in Russia in the pre-crisis period peaked at 10.7%, in the first quarter of 2008. During the critical stage of the crisis in late 2008 and early 2009, this share increased to 13.4% a year later, but this was more a reflection of the massive government-funded aid that was delivered via state banks with the objective of restructuring companies' foreign debt. As the critical stage of the crisis passed and companies managed to restructure most of their short-term debt, the share of banks in fixed investment fell sharply, to 6.7% in the fourth quarter of 2009.
As Russian banks scaled down their lending activities, the domestic bond market underwent a major revival in 2009. The structure of banks' holdings reflected these changes as portfolios of corporate bonds held by banks rose rapidly during most of last year. However, revenues received by Russian companies from new bond placements were largely directed towards restructuring existing debts rather than investment.
State funding becoming increasingly important. Rosstat data on the structure of fixed investments by funding source reveals that bonds accounted for no more than 0.1% of total investment volumes. Funds from cash flows remained the largest source of fixed investment in the country, but their share decreased substantially from the pre-crisis levels of over 46% (in the first quarter of 2008) to just 29% in the fourth quarter of 2009. Meanwhile, the importance of investment funding received by companies from non-banking institutions and the government (federal and local) has grown immensely, accounting for over one third of all fixed investments in the country in in the fourth quarter of 2009 versus less than 19% in in the first quarter of 2008.
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Business, Energy or Environmental regulations or discussions
Bloomberg: Russian Stocks Climb Third Day; Sberbank, Novatek, Gazprom Gain
By Alex Nicholson
May 28 (Bloomberg) -- Russia’s 30-stock Micex Index advanced for a third day, climbing 0.5 percent to 1,312.15 as of 10:42 a.m. in Moscow and taking its weekly gain to 3.7 percent. OAO Sberbank, OAO Novatek and OAO Gazprom climbed.
Last Updated: May 28, 2010 02:44 EDT
Bloomberg: Norilsk, Rosneft, VolgaTelecom, Uralkali: Russia Equity Preview
By Jason Corcoran
May 28 (Bloomberg) -- The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.
The 30-stock Micex Index rose 3.2 percent to 1,305.99 at the close in Moscow. The dollar-denominated RTS Index advanced 4.1 percent to 1,358.6.
OAO GMK Norilsk Nickel (GMKN RX): Copper rose to the highest price in almost two weeks on speculation that an improving economy in the U.S. will bolster demand. Shares in Russia’s largest miner advanced 4.7 percent to 4,925.92 rubles on the Micex Stock Exchange.
OAO Rosneft (ROSN RX): Crude surged as equities and the euro rallied after China affirmed its commitment to investing in Europe. Oil for July delivery rose $2.85, or 4 percent, to $74.36 a barrel on the New York Mercantile Exchange. Russia’s largest oil producer gained 4.2 percent to 222.1 rubles on the Micex Stock Exchange.
OAO VolgaTelecom (VTEL RX): The dominant fixed-line phone company in Russia’s Volga River region is offering 84.73 cents a share for Teleset Networks, whose telecom interests are also focused in the Volga area. The bid values Teleset at $133.5 million. VolgaTelecom shares gained 3.4 percent to 91.52 rubles on the Micex Stock Exchange.
OAO Uralkali (URKA RX): Billionaire owner Dmitry Rybolovlev seeks to sell Russia’s second-largest potash maker. Rybolovlev has pitched the sale of a controlling stake in Uralkali to fellow billionaires including OAO GMK Norilsk Nickel shareholder Vladimir Potanin and OAO Polyus Gold’s Suleiman Kerimov, according to two people familiar with the matter. Uralkali increased 6.4 percent to 106.30 rubles on the Micex Stock Exchange.
To contact the reporter on this story: Jason Corcoran at Jcorcoran13@
Last Updated: May 27, 2010 22:00 EDT
RenCap: FSK calls time on KES's purchases of TGK6 and TGK7 shares
Renaissance Capital
May 28, 2010
Event: Vedomosti reported yesterday (27 May) that the Federal Grid Company's (FSK) supervisory board has decided to revoke agreements to sell stakes of 24% in TGK7 and 32% in TGK6 to Viktor Velkselberg's KES-Holding. The stakes were auctioned in early 2008 as part of the generating company (genco) privatisation programme when, having won the auctions, KES sought and received government approval to defer payment until Oct 2009. Pending payment, the stakes were placed on the balance sheet of the state-controlled FSK. The payment deadline was subsequently extended twice, but payment has not been forthcoming. According to Vedomosti, KES's pre-payments totalling RUB2bn ($64mn) will be returned to KES in the form of TGK7 shares, priced at the level of the original auction price. KES will thus receive a TGK7 stake of 2.18% (thereby reducing FSK's stake to close to 30%).
Action: Neutral for the Russian power sector, in our view.
Rationale: On the one hand, we judge that investors will welcome any attempt to clarify the ownership situation at TGK6 and TGK7. Furthermore, paying back KES's deposit in the form of shares priced at the auction level (approximately twice the current market price of TGK7 shares) may be perceived as relatively harsh treatment that restores a fair balance, after the state's generosity in allowing KES to defer payment in the first place. However, easing KES out of TGK6 and TGK7 will, in our view, do nothing to address the dearth of competent non-state genco proprietors to balance Gazprom's and InterRAO's growing dominance in the sector.
Vladimir Sklyar
BarentsObserver: Norilsk-Nickel to pay 1.3 billion USD in dividends
2010-05-28
The board of Norilsk-Nickel wants to pay half of last year’s net profit in dividends.
The mining and metallurgy giant Norilsk-Nickel posted announced a USD 2.65 billion net profit for 2009 and its board recommended Thursday to pay 1.325 billion USD in dividends to the company’s share holders, according to company’s web-site.
RusAl, which owns 25 percent of Norilsk-Nickel, had called on the company to pay out 3 billion USD, exceeding its profit for 2009, CEO Vladimir Strzhalkovsky told reporters according to The Moscow Times. The proposal was turned down by the board.
A subsidiary of Norilsk-Nickel is Kolskaya GMK that operate nickel and copper smelters in cities of Nikel and Monchegorsk and mines in Zapolyarny on the Kola Peninsula, in addition to its huge mines- and smelter complex in Norilsk in northern Siberia.
One of Russia’s richest men, Vladimir Potanin, is through his Interros conglomerate the main shareholder in Norilsk-Nickel. Potanin boosted his personal fortune from 2.1 billion USD in 2009 to 10.3 billion USD this year. That makes him Russia’s seventh richest man.
The company’s smelter in the city of Nikel near the Norwegian border is one of the largest polluters in the Barents Region. With an estimated emission of about 100,000 tons of sulfur dioxides (SO2) annually, the pollution from the factory affects the nature in Russia, Norway, Finland and Sweden.
Despite the company’s large profit, nothing is invested into cleaner production at the smelter in Nikel. Last month Russian President Dmitri Medvedev and Norwegian Prime Minister Jens Stoltenberg agreed that the cross-border pollution from the nickel-production in Pechenga on the Kola Peninsula must be reduced to a level not harming health and environment.
RenCap: Ukrainian antimonopoly watchdog will not rule on Kyivstar/VimpelCom deal before the end of June
Renaissance Capital
May 28, 2010
Event: According to Dow Jones yesterday (27 May), Ukraine's competition watchdog said it needs at least a month to reach a new verdict on the proposed merger of Kyivstar with VimpelCom.
Action: We do not think the threat of a negative ruling by the Ukrainian antimonopoly watchdog should be overplayed.
Rationale: There is a threat that the Ukrainian regulator may not approve the merger of Kyivstar and VimpelCom, but this does not relate to VimpelCom; rather, it affects VimpelComs Ukrainian division (the countrys fourth-largest operator, with a 4% share of revenues in the market). We believe the regulator will approve the merger, but that VimpelCom Ukraine may need to give up some of its frequencies. Even in the worst-case scenario – if the deal were not approved and VimpelCom Ukraine lost its licence – we would expect its subscribers to be transferred to Kyivstar with only a small loss of value. VimpelCom Ltd CEO Alexander Izosimov said in a recent earnings conference call that Kyivstar and VimpelCom shareholders Alfa and Telenor have submitted all the necessary documents and are waiting for a ruling by the antimonopoly committee.
Ivan Kim
Troika: Polymetal included in FTSE Gold Mines Index
Troika Dialog
28 May 2010
Polymetal announced yesterday that the company has been included in the FTSE Gold Mines Index, one of the leading indexes in the precious metals space, as part of its semi_annual review. The changes will be made on June 21.
The index currently consists of the 23 largest gold mining companies globally, including Barrick Gold, Newmont Mining and AngloGold Ashanti, along with two Russian companies, Polyus Gold and Petropavlovsk, which have respective weight of 1.45% and 1.33% based on free float. Inclusion in the index is conditional upon achieving a sustained production level in excess of 300 koz per annum and receiving 51% of revenues from gold sales. In 2009, Polymetal produced 311 koz of gold and 17.3 mln oz of silver, translating into gold equivalent of 580 koz. This year, we expect the company to churn out 433 koz of gold and 19.8 mln oz of silver, for a total of 762 koz in gold equivalent, up 32% y_o_y.
The news is obviously positive for the company, as it will trigger an inflow of index_tracking fund money to the stock.
Mikhail Stiskin
Bloomberg: Rybolovlev Values Uralkali at $10 Billion, Vedomosti Says
By Maria Ermakova
May 28 (Bloomberg) -- OAO Uralkali’s billionaire owner Dmitry Rybolovlev values Russia’s second-largest potash maker at $10 billion, Vedomosti said, citing unidentified people familiar with the matter.
That would value Rybolovlev’s 66 percent stake in Uralkali at $6.56 billion, the newspaper reported. Rybolovlev’s Madura Holding Ltd. is in preliminary talks with interested parties about the stake sale, Uralkali said in a statement yesterday.
Last Updated: May 27, 2010 23:42 EDT
Steel Guru: Stainless Steel conference in Russia
Friday, 28 May 2010
Spetsstal Association will be holding a unique international conference on Stainless Steel in the Oil & Gas Industry on the June 22nd 2010 in the Radisson SAS Slavanskaya Hotel Moscow.
The conference will address all crucial topics concerning the Russian market for stainless steel including consumption, production, imports and exports and specially highlight the needs in stainless steel of one of the key stainless steel consuming industries the oil and gas sector.
Key presentations will be on:
1. Global Stainless Steel Market by Markus Moll, SMR GmbH - Steel & Metals Market Research
2. Russian Stainless Steel Market by Andrey Voronin, Executive Director, Spetsstal Association
3. Stainless Steel in Oil&Gas Projects by Alexey Oryshenko, General Director, KM Prometeus
4. After-crisis Stainless Steel Demand & Supply Situation in Russia by Alexey Orlov, Director, Orinnox
5. Stainless Steel Thick-Gauge Sheets for CIS Markets by Sergey Frolov, Marketing Director, Acroni Meral Ravne
*
6. Outokumpu's Stainless Steel for the Oil & Gas Complex and Industry by Leonid Azheganov, General Director, Outokumpu ZAO
Moscow News: New trains for Russia
Source Andy Potts at 28/05/2010
Russian Railways, airport rail-link Aeroexpress, and German company Siemens have signed a deal to build state-of-the-art new trains for Russia.
The deal will mean a new generation of electric locomotives, to be called "Lastochka" (Swallow) will be built in Russia as the country looks to renew its ponderous rolling stock, RIA Novosti reported.
Russian Railways chief Vladimir Yakunin said the Republic of Tatarstan is likely to be the production centre of the new trains. The company plans that production would be 80 per cent localised by 2017.
Reuters: Russia's RZhD to buy 2 billion euros of trains
12:15am IST
SOCHI, Russia, May 27 (Reuters) - Russian state rail monopoly RZhD signed two contracts on Thursday to buy 421 trains for 2 billion euros ($2.45 billion) from Germany's Siemens (SIEGn.DE: Quote, Profile, Research) and France's Alstom (ALSO.PA: Quote, Profile, Research).
A joint venture of the German engineering giant and Russia's Sinara Group will build 221 locomotives worth 42 billion roubles ($1.36 billion), Sinara head Dmitry Pumpyansky said on Thursday.
The venture will supply the locomotives to RZhD between 2011-16.
Meanwhile, Russian railway equipment maker TransmashHolding and its strategic French partner Alstom will provide RZhD with 200 passenger trains between 2012-16.
The locomotives, able travel at speeds of up to 200 km/h, will be built at Novocherkassky locomotive plant. (Reporting by Gleb Stolyarov, writing by Nastassia Astrasheuskaya, editing by Leslie Gevirtz)
Reuters: BRIEF-AFI reports Q1 loss of $8.63 mln
Fri, 28th May 2010 07:21
MOSCOW, May 28 (Reuters) - AFI Development:
* Q1 loss $8.63 million (31 March 2009: profit $416.85 million including revaluation gain)
* Strong cash position[pic] retained with $135.41 million in cash and cash equivalents.
* Loss per share of 1.62 cents (31 March 2009: diluted profit 79.30 cent).
* No material change in the values of the company's investment portfolio since 31 December 2009 based on the review by Jones Lang LaSalle. (Moscow Newsroom, + 7 495 775 12 42, moscow.newsroom@)
Reuters: Russian grocer Dixy sees Q1 net profit
3:40am EDT
M0SCOW, May 28 (Reuters) - Russian discount grocery chain Dixy Group (DIXY.MM: Quote, Profile, Research, Stock Buzz) said on Friday it saw a net profit of 129 million roubles in the first quarter of the year, a significant improvement from a 790 million roubles loss a year ago.
In dollar terms, profit amounted to $4.3 million, the company said in a statement.
Revenues rose 12.9 percent to 14.99 billion roubles as the company opened 10 new stores. In the corresponding period of last year, the company opened nine stores.
Dixy, controlled by businessman Igor Kesayev through his Mercury holding company, said earlier it had 552 stores as of April 30, up from 492 outlets a year ago, adding a net 7.8 percent selling space [ID:nLDE64P0ZQ].
Like-for-like sales were up 4 percent, mainly because of a 3 percent growth in traffic, Dixy said. (Writing by Lidia Kelly; Editing by XX.XX)
Moscow Times: For the Record
28 May 2010
• Evraz Group said Thursday that it fully repaid a $1 billion VEB loan using a $950 million loan it took from Gazprombank.(Bloomberg)
• Alliance Oil said Thursday that first-quarter net income fell to $45.5 million from $50.5 million a year earlier. (Bloomberg)
• Gazprom Neft’s Omsk refinery is continuing to work after a fire at a processing unit was extinguished Thursday evening, about half an hour after it started because of a drop in power from the city, the oil producer said. (Bloomberg)
• Polymetal will be included in the FTSE Gold Mines Index as of June 21, the silver and gold producer said Thursday.(Bloomberg)
Activity in the Oil and Gas sector (including regulatory)
Itar-Tass: Putin decrees higher oil export duty as of June 1
28.05.2010, 10.13
MOSCOW, May 28 (Itar-Tass) -- Russian Prime Minister Vladimir Putin signed a decree on a higher crude oil export duty from 284 dollars per tonne to 292.1 dollars per tonne as of June 1, 2010. The decree text was posted on the website of the Russian government.
The export duties on light petroleum products will rise from 203.7 dollars per tonne to 209.1 dollars per tonne and those on dark petroleum products from 109.7 dollars per tonne to 112.7 dollars per tonne.
The light petroleum products subjected to the export duties are light distillates, medium distillates, gas oils, benzene, toluene and xylene. Dark petroleum products include liquid fuels, oils, wasted oil products; petroleum jelly, mineral waxes and similar products, oil coke, oil asphalt and other remnants from the refinery of oil or oil products produced from bituminous rocks.
The export duty on propane, ethylene, propylene, butylene, butadiene and other liquefied gases is set at 27.3 dollars per tonne against 53 dollars per tonne since May 1.
The zero export duty is set on oil calcinate coke.
Since December 1, 2009, the Russian government set the zero oil export duty from oil fields in Eastern Siberia. The export duty on the Eastern Siberian oil will be set at the zero rate monthly simultaneously with the duties on oil and oil products set every month.
May 28, 2010 10:40
Interfax: Oil export duty to rise to $292.1 per tonne on June 1 (Part 2)
MOSCOW. May 28 (Interfax) - Russia will raise the export duty on crude oil to $292.1 per tonne effective June 1 under a resolution signed by Prime Minister Vladimir Putin on May 26, the government said on its web site.
The export duty is currently $284 per tonne.
The duty will rise to $209.1 per tonne from $203.7 on light oil products and to $112.7 from $109.7 for heavy products.
The duty for oil from 22 fields in Eastern Siberia will stay at zero.
The export duty on liquefied hydrocarbon gas will decline to $27.3 per tonne from $53.
jh
28.05.2010
Oil and Gas Eurasia: Russian Oil Companies' Appetite for Offshore Licenses Grows
There are currently no operational offshore oil- and gas fields in the Russian Arctic Oceans, but the interest to start exploring the northern offshore fields appear to increase. Less ice due to the on-going rapid climate changes makes it more attractive for oil companies to enter the Arctic Oceans.
Interfax reported that Russian oil major Rosneft has applied for three licenses within the Prinovozemelnye section of the Kara Sea, east of Novaya Zemlya. The Kara Sea is normally ice-covered or has drift ice eight months a year.
Rosneft has also applied for the licenses to the Admiraletsky and Pakhtusovsky fields in the Russian part of the Barents Sea. One month ago, Russia and Norway reached an agreement on the maritime delimitation in the Barents Sea, ending an almost 40 year long dispute between the two Arctic nations. The huge maritime area in question is believed to hold large amounts of natural gas and potentially also oil.
With reference to an anonymous source within Russia’s Natural Resources Ministry, Interfax says Rosneft has also expressed an interest in the Yuzhno-Russky field in the Peachora Sea, east of the Barents Sea.
The same Interfax source also indicate that other state owned companies had applied to offshore licenses, but without specifying who and where.
Russia’s agency for issuing offshore petroleum licenses, Rosnedra, has started to prepare the licenses, but nothing is said about when applications will get approval or denial.
Copyright 2010, Barents Observer. All rights reserved.
Rte.ie: Petroneft secures $30m debt deal
Friday, 28 May 2010 08:43
Exploration company Petroneft has confirmed it has signed a three-year debt facility for up to $30m with Macquarie Bank. The Dublin-listed company says $12m of this will be available immediately.
Under the terms of the deal, Petroneft has granted Macquarie one million warrants to subscribe for shares in Petroneft at a price of £0.3781, exercisable over a period of four years. The bank will be entitled to further warrants if Petroneft draws down more than $15m.
The deal is aimed at funding development at its two licences in the Tomsk Oblast in Russia. Last week, Petroneft said it hoped to start year-round oil production from one of the licences during the third quarter of this year.
Moscow Times: Medvedev Questions Future of BP, Post-Spill
28 May 2010
Combined Reports
President Dmitry Medvedev on Thursday questioned the future of BP, saying its spill in the Gulf of Mexico could ultimately ruin the oil major.
"No one knows what will happen to the Gulf of Mexico, with the flora and fauna of the sea. There is even an uncertainty as to what will happen to the firm," Medvedev told a meeting on environmental regulation.
"The nature of environmental responsibility is such that it can destroy anyone," he said.
BP, which traces its history back to 1909, is the fourth-largest company in the world, with revenue of $246.1 billion in 2009. One-quarter of its global output comes from TNK-BP, a 50-50 joint venture with Russian partners.
Speaking in Finland, Prime Minister Vladimir Putin expressed his condolences over the BP spill, saying nothing like that could happen with the Nord Stream pipeline.
"The Gulf of Mexico is, of course, a long way away, but we're enduring [the accident] alongside those who are now facing this catastrophe, which is taking on a global nature,” Putin said, Interfax reported.
BP has had a bumpy experience in Russia since establishing its 50-50 joint venture, TNK-BP, in 2003. The venture has suffered from a conflict between BP and its billionaire Russia-connected partners, whom BP accused of using administrative pressure and judicial connections to win a dispute over strategy and management control in 2008.
On Thursday, BP was undertaking its latest attempt, dubbed the top kill, to seal a gushing well deep underwater in the Gulf of Mexico. The spill created by a deadly blast aboard a rig, which was leased by BP, is shaping up to be the worst in U.S. history.
Medvedev also said Russia needed to "put an end to the environmental nihilism" and introduce stronger punishments for infractions, Interfax reported. Medvedev has made the fight against "legal nihilism" — his term for the country's flawed judicial system — a cornerstone of his presidency.
(Reuters, MT)
Barentsnova: First non-Gazprom LNG plant to be constructed in the Nenets Area
2010-05-28
First Russian LNG plant to be constructed without Gazprom will be located in Nenets Autonomous Area.
Pechora LNG will be located in the South-East part of the Barents Sea in the settlement of Indiga. The project targets fields of Kumzhinskoye and Korovinskoye found in the Nenets autonomous Area and is to process 4,2-8,4 billion m3 annually, informs Kommersant.
The plant will be launched in 2015 (earlier than Shtokman); the final investment decision is to be taken in Autumn 2010. The tender for subcontractors will be opened in 2012.
Pechora LNG was developed by Italian company Technip and is owned by CH-Oil&Gaz which is a part of Alltech Group. Alltech Group is an investment company dealing with oil-and-gas, real estate and coal projects. The president of the Alltech Group is a Russian businessman – Dmitry Bosov.
According to Kommersant, Mr. Bosov is not going to compete with Gazprom and promises to agree his plans with the Russian gas giant.
Gazprom
2010-05-27 16:59
Reuters: UPDATE 1-Fire extinguished at Gazprom Neft's Omsk refinery
MOSCOW, May 27 (Reuters) - A fire that broke out on Thursday at one of Russia's largest oil refineries, Omsk, owned by Gazprom Neft, has been put out, the company said, adding that May output was likely to be cut.
Earlier, a local emergencies officer told Reuters by phone that the fire hit one of the crude distillation units' heaters at the Siberian refinery.
"One of the Omsk refinery items was hit by fire due to a voltage decrease in the line from the local power station," the company said in a statement.
"At 1909 local time (1209 GMT) the fire was put out. The situation has been taken under control."
The company also added that two people were injured but had been treated and were not in danger.
A source at the plant told Reuters that it would take several days to repair the damage, which will lead to gasoline production cuts.
He didn't specify the potential volume losses at the refinery, which has an annual capacity of 19.8 million tonnes.
(Reporting by Vladimir Soldatkin and Alla Afanasiyeva, writing by Dmitry Zhdannikov, editing by Will Waterman) Keywords: RUSSIA REFINERY/ (dmitri.zhdannikov@, +7 495 775 12 42, Reuters Messaging: dmitri.zhdannikov.@)
Bloomberg: Gazprom, Partners Said to See Ex-Yukos Gas Field Peak in Decade
May 28, 2010, 1:21 AM EDT
By Stephen Bierman
May 28 (Bloomberg) -- Eni SpA’s Arctic gas venture with OAO Gazprom, the country’s natural-gas export monopoly, and Enel SpA plans to almost triple output in a decade from initial volumes as Russia allows domestic gas and electricity prices to rise.
Production should reach 25 billion cubic meters to 30 billion cubic meters a year (542,000 barrels of oil equivalent a day) in 2020 and remain at that level, said an executive with one of the partners of the Gazprom-led project, declining to be identified because he isn’t authorized to talk to the media.
Eni and Enel bought the gas assets and a stake in Gazprom Neft, the Russian gas company’s oil arm, for $5.8 billion at state-run Yukos liquidation auctions in 2007, the only foreign companies to win lots. Former Yukos shareholders said the state expropriated its assets after laying more than $30 billion of tax claims against once was Russia’s biggest oil exporter.
The venture, called SeverEnergia, plans to start output next year, reaching an initial level of 150,000 barrels a day of oil equivalent within two years, according to Eni and Enel.
Gazprom’s press service declined to confirm the planned output volume while the venture continues exploration.
SeverEnergia’s main increase in output will come after 2017 when a gas glut in Europe eases, the person said. The venture plans to drill 36 wells in total, he said.
Gazprom completed payment on March 31 of $1.6 billion for a 51 percent stake in the venture. That reduced Eni’s holding to 29.4 percent and Enel’s to 19.6 percent. Gazprom paid $4.1 billion to Eni last year for the 20 percent of Gazprom Neft.
Enel wants to use its share of gas from the project to supply its Russian utility, OAO Enel OGK-5, as the government plans to deregulate electricity prices from next year. The Italian companies are also seeking to benefit from Russian plans to raise domestic gas prices to the equivalent of European prices minus transit costs by 2014.
--Editors: Torrey Clark, Will Kennedy.
To contact the reporter on this story: Stephen Bierman in Moscow +7-495-771-7745 sbierman1@.
To contact the editor responsible for this story: Will Kennedy at wkennedy3@
Moscow Times: Gazprom Downgraded
28 May 2010
Gazprom was downgraded Thursday to “sell” from “hold” by ING as the company may have to lower prices on increased competition from U.S. shale gas and liquefied natural gas.
Gazprom is facing growing competition from increasing global LNG infrastructure and production from unconventional sources such as shale rock in the United States and coal-bed methane in Australia, said Igor Kurinnyy, a London-based analyst at ING.
(Bloomberg)
St. Petersburg Times: Gazprom Downgraded on Shale Threat
By Eduard Gismatullin and Stephen Kirkland
Bloomberg
MOSCOW — Gazprom was downgraded to “sell” from “hold” by ING Groep as the world’s biggest natural-gas producer may have to lower prices on increased competition from U.S. shale gas and liquefied natural gas.
Gazprom, which supplies about a quarter of Europe’s gas, is facing growing competition from increasing global LNG infrastructure and production from unconventional sources such as shale rock in the U.S. and coal-bed methane in Australia, Igor Kurinnyy, a London-based analyst at ING, said in a report.
“The emergence of unconventional gas poses a serious risk for Gazprom’s oil-linked export prices in Europe,” Kurinnyy wrote in a report dated Wednesday. “The volumes of gas traded on the spot market will increase substantially to the point where the gas spot price will become more relevant than the current oil-based price.”
Moscow-based Gazprom links most of its export gas to oil prices with a six to nine month lag. Brent oil averaged about $79 a barrel so far this year, compared with a U.K. front-month gas price of 34 pence a therm, or about $27 a barrel of oil equivalent.
An “abnormal” gap between spot fuel prices and long-term contracts is threatening investments in new fields and pipelines, Deputy Chief Executive Officer Alexander Medvedev said in April.
“As Gazprom’s customers start to switch to buying cheaper gas from alternative supplies on the spot market, we believe Gazprom will have no choice but to offer further price concessions until the differential between the spot and contract prices disappears,” Kurinnyy wrote.
ING lowered its forecast for Gazprom’s long-term spot price in Europe by 12 percent to $285 a thousand cubic meters.
“Lower gas export price assumptions lead to a corresponding decline in our assumptions for Russian domestic gas prices,” Kurinnyy wrote.
“The speed of domestic gas price deregulation and Gazprom’s ability to maintain its advantageous gas pricing on its European exports are company-specific risks.”
The state-controlled gas monopoly has delayed some investments as it waits for global demand to recover. It pushed back production from the Shtokman field by three years. With partners Total and Statoil, Gazprom planned to ship 90 percent of Shtokman to North America.
Bellona: Teriberka mayor: I don’t believe in Shtokman
Part of: Gas , Oil
MURMANSK – “I believe that the port and the plant will be built, but I don’t believe that gas production for the plant will be from the Shtokman field. It is impossible to develop a project such as Shtokman in the near ten to fifteen years,” said Teriberka Mayor Valery Yarantsev during the latest public hearing on the major gas condensate project to be launched by the Russian giant Gazprom on the shelf of the Barents Sea. Anna Kireeva, 27/05-2010 - Translated by Maria Kaminskaya
Shtokman, deemed to be one of the largest explored natural gas fields in the world, is a shelf deposit in the Russian sector of the Barents Sea, some 600 kilometres from Russia’s Murmansk, a large regional centre on the Kola Peninsula. Around 23.7 million cubic metres of gas is slated to be produced at the site during each of the envisioned three phases of Shtokman development.
And Teriberka is a settlement on the Kola Peninsula, on the very shore of the Barents Sea, that is projected by Shtokman developers to become home to a liquefied natural gas (LNG) plant. There are plans as well to build a local pipeline between Teriberka and Volkhov, near Murmansk, to supply gas to Murmansk and surrounding municipalities. However, a large part of the natural gas produced at Shtokman will be transported across the Baltic sea via the Nord Stream main pipeline, a controversial project under development, which will connect Russia and the European Union for gas deliveries into Western Europe.
The latest public hearing on Shtokman’s environmental impact evaluation report took place in Teriberka on May 14. Yet, in contrast to a similar event in the city of Kola in Murmansk Region, few specialists or scientists were in attendance in Teriberka to offer expertise on the subject, which may explain the lack of any substantive critical discussion of the report at the hearing.
Mostly, locals were in the audience, residents of this small struggling village, where the economic situation has been so dire as to seemingly disaffect the population toward any governmental initiative, while at the same time making them vulnerable to the lure of lucrative possibilities that may or may not be on offer.
“The village is so disadvantaged that local residents are eager to believe almost any promises whatsoever made by [project first phase developers] Shtokman Development AG, which, obviously, is something company representatives are putting to use,” said Vitaly Servetnik, head of the environmental organisation Priroda i Molodyozh (Nature and Youth).
“Of course, all formalities have been taken care of, the hearing has been conducted as it should have been, but the situation with civil society is so bad [here] that most of the hearing’s participants do not even understand the procedure or the meaning of such a discussion.”
As for municipal authorities, Servetnik continued, “instead of defending the interests of the local community, they, in their turn, are also blinded by the hope of getting all those handouts from project initiators.”
Shtokman and local concerns
Despite the fact that most in Teriberka support the Shtokman project, locals still retain a measure of healthy scepticism to balance out the appeal of promises they may want to succumb to. One of the participants of the hearing, a woman who only gave her first name, Tatiana, said: “Well of course we get distrustful of what they’re telling us. They must be hiding something, because it’s just too ideal to be true.”
“Of course, the project will impact the ecological situation in the area,” an eighteen-year-old Teriberka resident told Bellona.
“I don’t believe that everything will be all right, like they say, and I don’t want to work there,” the boy went on, just before a group of adults came up and made him stop talking, preventing the conversation from going any further.
According to Teriberka deputy council chair Yelena Kozhina – during the hearing, this woman kept urging the audience to give a ‘yes’ vote with egg-ons such as “Come on, let’s support the project, is that really such a big deal?” – it will come as no huge surprise to local residents that “we’re being told one thing, but in reality, it may turn out quite differently. But the only thing we fear is depletion of biological resources due to project development.”
Yet, both the anticipated loss of biological resources and the closing-off of fishing areas, as well as foreseeable damage compensations, have all been already considered and provided for.
“One of our points of concern with regard to the [environmental impact assessment report] is that we do not understand how exactly damages have been calculated from the loss of fishing livelihood,” said deputy head of Shtokman Development AG’s Teriberka branch, Nikolai Berezhnoi.
Shtokman and the indigenous peoples of the North
According to Nina Afanasiyeva, who chairs the regional non-for-profit organisation Association of Kola Lapps, local ethnic minorities’ attitude toward the project breaks down into two distinct elements. One of them is worry about the social – and, in general, future – life of a village in a perpetual decline.
“What has been shown today is convincing and impressive. There is hope that things will get better in the village,” Afanasiyeva told Bellona. She added that she believed Gazprom, the Russian gas corporation with the majority holding in Shtokman, would have to abide by environmental regulations and standards in its handling of the project, which is an internationally significant joint venture pursued in cooperation with Norway’s StatoilHydro and France’s Total.
On the other hand, locals, indigenous minorities included, cannot disregard such disturbing prospects as gas flaring at the production site. A similar project developed at the Norwegian field dubbed Snøhvit (Snow White) – a deposit estimated to contain 12 times as little gas as Shtokman – features an almost continuously burning 150-metre flare. Statoil pays dearly for the pollution in environmental fines levied by the Norwegian authorities, but no such fines are provided for in the current Russian legislation.
Environmental impact report gets locals’ approval – basically…
One of the representatives of local authorities who spoke to the Teriberka hearing’s participants was Nina Sukhanova, head of the Murmansk Regional Department for Environmental Supervision at Sea with the Russian Federal Service for Natural Resources Management Oversight (referred to in Russian by its vernacular acronym Rosprirodnadzor). Sukhanova said the Shtokman project was going to remain under the agency’s special and thorough scrutiny.
“We will not only be examining the [environmental impact evaluation report], but accompanying documentation as well,” Sukhanova promised.
“Our opinion is that this project should be supported, it must, of course, be realised,” she said, speaking, apparently, on authority from Rosprirodnadzor.
The Teriberka hearing ended in the same finale as the analogous event in Kola City, its presidium members concluding with an official summation saying: “Hearing participants recommend to approve the planned activity, provided that the remarks and suggestions forwarded are taken into consideration.” The verdict, however, was sealed “by default” – without any discussion or vote taking place beforehand.
Priroda i Molodyozh’s Servetnik gave his own verdict: “That such projects should receive mindless approval born of catastrophic ill-being – this is a frightening diagnosis to have to give to the regime, society, and Russia as a whole.”
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