Russia - WikiLeaks
Russia 100810
Basic Political Developments
• NORAD: Hijack drill with Russia makes travel safer - The exercise is scheduled to wrap up Tuesday in Alaska, after fighter jets from Russia and the North American Aerospace Defense Command chase a chartered jet playing the role of a hijacked commercial airliner flying east across the Pacific.
• Putin to visit Ryazan region - He will hold a meeting on using GLONASS technologies in developing the country’s regions, and visit villages of Kriusha and Polyany that suffered from fires to watch restoration works.
• Russia 'arming Azerbaijan and Armenia' - Armenia should not be alarmed at Russia's sale of S-300 anti-missile systems to Azerbaijan, according to an Armenian analyst.
• Russian Muslims meet Ramadan - Russian Muslims will gather in mosques today to mark the beginning of the holy month of Ramadan. It is believed that God started to bestow the Holy Quran to Prophet Muhammad on the 27th of Ramadan.
• Russia works with CIS to upgrade early warning radar capabilities - The goal is closer because of a recent meeting of Commonwealth of Independent States in Minsk to integrate use of the Parol', or "Password," Unified System of State Radar Identification between CIS member states.
• MiG-35 stalls in Indian fighter tender contract - Russia's MiG-35 multirole fighter aircraft has failed to make the short-list in a $10 billion international tender for 126 combat aircraft for the Indian air force, according to Indian media reports quoted by Kommersant daily.
• Successful launch of ballistic missiles - A Russian submarine successfully launched two Sineva ballistic missiles from the Barents Sea to the Kamchatka Peninsula on Friday, the Ministry of Defense reports.
• Russia's missile forces chief to inspect Teikovo division - During his first inspection as Russia's missile forces chief, Lt. Gen. Sergei Karakayev will visit the 54th Strategic Missile Division in the town of Teikovo about 150 miles (240 km) northeast of Moscow.
• Medvedev Makes More Police Staff Changes - President Dmitry Medvedev on Monday appointed Major General Mikhail Velichko, currently deputy head of the Interior Ministry's administrative department, to the post of adviser to Minister Rashid Nurgaliyev.
• Defense Ministry Gets New Oversight Chief - In early July, the Defense Ministry's chief of staff and Shevtsova's former boss at the tax service, Mikhail Mokretsov, was also made a deputy minister. Of the ministry's nine deputy heads, just two of them are generals: General Staff chief Nikolai Makarov and Dmitry Bulgakov, deputy minister for administrative issues.
• WILDFIRES IN RUSSIA
o International aid to Russia in fighting wildfires
o Some 400 foreign specialists help tackle some 70 large fires in Russia - ministry
o Russia to suffer economic loss of $15 billion from wild fires - analysts: The short term losses for the Russian economy from the heat wave and consequent drought and wild fires may amount to 1% of 2010 GDP, or around $15 billion, analysts told Kommersant business daily in a report published on Tuesday.
o Moscow Smog Curbs Bond Trading, Bankers Flee Capital - “It is impossible to work in Moscow right now,” Semen Odintsov, head of debt syndication at IFC Metropol in Moscow, said in a phone interview. “Many traders are working shorter hours or taking vacations earlier than planned.”
o 10 % of Italian tourists cancel trips to Russia because of fires
o Situation stabilizes in 11 of 14 Russian regions hit by wildfires
o State Allots $1.8Bln for Firefighters - Emergency Situations Minister Sergei Shoigu also proposed the creation of emergency response centers across the country to deal with disasters like the fires, which resulted from Russia's worst heat wave in 1,000 years.
o Azerbaijan ready to send 120 firefighters to Russia
o Papandreou sends message of solidarity to Putin
o UAE Foreign Ministry advises citizens against travel to Moscow
o Bulgaria Extends Visas for Russian Tourists by 30 Days due to Dire Ecological Conditions
o Pres criticizes attempts to score political points on wildfires
o Greenpeace: Russian fires risk spreading radioactive contamination
o Wildfire near Russia's Urals nuclear center extinguished
o Another Russian nuclear facility threatened by wildfires - Emergency regulations over the threat of spreading wildfires were enforced late on Monday in the town of Ozersk in the Chelyabinsk region, where one of Russia's largest nuclear-waste plants is located.
o US disaster team sent to Moscow - State Department spokesman Philip Crowley said an Office of Foreign Disaster Assistance team "has had their first meetings with Russian fire experts" about how best to help.
o Russian capital in smoke again
o Moscow resembles apocalyptic movie scene
o Death rate increases 1.5 times in Moscow in July – registry office
o Russian official: Death rate increases 1.5 times in Moscow in July
o Radical opposition going to demand resignation of Moscow mayor - "The Moscow authorities, being perfectly aware of the unfavorable weather forecasts, were supposed to conduct an awareness campaign among Muscovites beforehand, to explain the recommended rules of behavior during the abnormal heat and smog," leader of the Left Front opposition movement Sergei Udaltsov said in a statement issued in Moscow on Tuesday.
o Who can put out Russia's wildfires? - Wildfires have caused chaos in Russia to the extent that it has had to suspend wheat exports. Moscow was woefully unprepared for the heatwave, says Andrew Osborn.
• NORTH CAUCASUS
o Slain militants plotted bombings at Grozny's central mosque
o Kadyrov Elected Head of North Caucasus Chess Federation
o Kadyrov declares checkmate - The bizarre trend which has seen leadership of chess federations become a proxy for political power in Russia continues with the news that Chechen president Ramzan Kadyrov has been elected head of the Chess Federation for the North Caucasus Federal District.
Militants killed Kabardino-Balkaria identified
o Two gunmen destroyed in Kabardino-Balkaria
• Water from Songhua river reaches Russia - Russia is keeping a close watch on the water content in the Amur River on the border with China, fearing contamination after 7,000 barrels with toxic substances inside were washed into the Amur's tributary - the Songhua River, by a flood in China.
• Old rivals, new partners: Russia and Turkey, tied by energy dependence - Hürriyet Daily News
• The Great Glonass Game - Over the past 10 years, Prime Minister Vladimir Putin has been one of the biggest cheerleaders of Glonass — a Brezhnev-era satellite navigation system that is intended to be an alternative to the U.S.-based GPS system, which has been operating since 1995. Now, the Kremlin is pondering steps to strengthen state control over Russia’s burgeoning telecom market — and to make some money from the Glonass system.
• No White Knight - How Medvedev's vaunted liberalism went up in flames. - BY JULIA IOFFE
• Cyprus Mail: Our View: Why are we in denial about Russia’s realpolitik?
• Russian village bought by torrent site for $150,000 and renamed after it
• PRESS DIGEST - Russia - Aug 10
o Russia's no. 1 oil firm Rosneft (ROSN.MM: Quote, Profile, Research) will pay Yukos Capital 13 billion roubles ($435.1 million) on Wednesday in debt, the daily writes.
o Russian President Dmitry Medvedev and Prime Minister Vladimir Putin are losing popularity, the paper reports, citing the country's main pollsters.
o Prices for tours away from the capital this August rose by up to 50 percent on the back of a feverish demand from Muscovites to escape the smoke, the paper writes.
o Russia has already spent $15 billion fighting forest fires, and will spend even more by the end of 2010, the paper reports.
o Russia's emergencies minister Sergei Shoigu received the highest popularity rating in July, the paper writes, citing an independent VTSIOM poll, which says he was supported by 75 percent.
o 973,700 cars were sold in Russia in January-July 2010, which is 48 percent more than the same period in 2009, the daily writes.
o The new laws surrounding how the blood alcohol level is regulated are absurd and may affect the innocent, the paper writes.
o People in Russia are ditching their jobs to drive to volunteer to fight the fires ravaging the country, the popular daily says.
National Economic Trends
• Russian Growth May Slow to 2.6% This Quarter, RenCap Says
• Russia 2010 Inflation Forecast Raised to 8.5% From 6.8% at ING
• With Ban Near, Russia Sets July High For Grain Exports-Vedomosti
• CBR FX interventions ease to USD 0.5bn in July
• Unemployment falls 1.1%
Business, Energy or Environmental regulations or discussions
• Norilsk Nickel, Razgulay, Silvinit: Russia Stock Market Preview
• Audit Chamber urges quotas to protect Russian banks
• According to preliminary data, in July, Sberbank's net income was RUB 10-12bn
• Russia Sees Post-Crisis Jump In Online Ad Spending –Vedomosti
• Alfa Group, VTB Capital may purchase News Outdoor
• PhosAgro suggests merger with potash miner Silvinit – sources
• Phosagro offers merger with Silvinit
• Regional airports to steal Moscow's hub role? - The Russian Transportation Ministry is seeking to reduce transit passenger traffic via Moscow's airports by using the larger regional airports as hubs, the ministry said on Monday following a meeting held by Transportation Minister Igor Levitin.
• Russian CEO faces hard sell for Uranium One control - Vadim Zhivov has a tough job to do: explaining to Uranium One Inc.’s investors that a state-owned Russian company has exactly the same goals that they do.
• For the Record
o VimpelCom Ltd. completed a “mandatory squeeze-out,” buying out all owners of shares and American Depositary Receipts in VimpelCom, the telecommunications company said Monday. (Bloomberg)
o Protek increased revenue 16 percent to 23.2 billion rubles ($780 million) in the second quarter, the company said Monday. (Bloomberg)
Activity in the Oil and Gas sector (including regulatory)
• Russia toughens ecological demands - Russia plans to toughen its oil and gas production laws and to this end, it will shortly submit a relevant draft law to the State Duma, the Lower House of parliament. The Natural Resources Ministry says that the disaster in the Gulf of Mexico had prompted it to draft the document.
• Proposed zero MET for Yamalo-Nenets oil to have neutral effect
• ONGC eyes Rosneft joint bid for Russia fields-paper
• ONGC Seeks to Bid for Trebs, Titov With Rosneft, Vedomosti Says
• UPDATE 1-Russia ups Primorsk oil exports, delays maintenance
• Rosneft Pays Yukos
• TNK-BP offers its subsidiary to Rosneft, Gazprom Neft for purchase
• TNK-BP might sell a secondary producing asset
• Betting on TNK-BP - Bonds in Russian-British oil company TNK-BP came under investors’ scrutiny when it became evident that BP did not intend to sell its 50 per cent share in the joint venture.
• Tatneft Implements Transport Satellite Monitoring System
Gazprom
• Russian Press: Bulgaria, Serbia Plot behind Gazprom's Back - Serbian President, Boris Tadic, and Bulgarian Prime Minister, Boyko Borisov, agreed on the route of the South Stream gas pipeline behind Gazprom’s back, the Russian newspaper Komersant writes Tuesday. The article points out the two have decided the pipe would cross the border between their countries in the area of the Serbian town of Dimitrovgrad, despite Gazprom opposing this version because it lengthens the route and makes the Russian-funded project more expensive.
• Gazprombank completes $350mn purchase of RTO stocks for option programme
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Full Text Articles
Basic Political Developments
NORAD: Hijack drill with Russia makes travel safer
By DAN ELLIOTT (AP) – 16 minutes ago
OVER THE PACIFIC — A Canadian officer says a groundbreaking international training exercise will make it more difficult for terrorists to pull off a hijacking against the U.S., Canada or Russia by "hardening" the air travel system against attacks.
The exercise is scheduled to wrap up Tuesday in Alaska, after fighter jets from Russia and the North American Aerospace Defense Command chase a chartered jet playing the role of a hijacked commercial airliner flying east across the Pacific.
The exercise is designed to test how well authorities on both sides of the ocean can coordinate their response. Of special interest is the critical handoff stage when the commandeered plane moves from Russia's airspace to NORAD's territory.
NORAD is a joint-U.S.-Canada command.
Putin to visit Ryazan region
Aug 10, 2010 07:32 Moscow Time
Russian Prime Minister Vladimir Putin will visit Ryazan region (to the south-east from Moscow) today.
He will hold a meeting on using GLONASS technologies in developing the country’s regions, and visit villages of Kriusha and Polyany that suffered from fires to watch restoration works.
Russia 'arming Azerbaijan and Armenia'
Tue 10 August 2010 | 06:27 GMT
Armenia should not be alarmed at Russia's sale of S-300 anti-missile systems to Azerbaijan, according to an Armenian analyst.
"Should Russia assume [responsibility] for defending Armenia's borders, then strategically the sale of S-300s to Azerbaijan is not so alarming for Armenia," the head of the Mitq analytical centre, Hrant Melik-Shahnazaryan, told a press conference yesterday.
Under the terms of a draft protocol extending the term of the Russian military base in Armenia, the Russian military is to ensure Armenia's security alongside the Armenian armed forces.
Melik-Shahnzaryan said it did not matter what kind of weapons Russia sold to countries in the region, since by arming both sides - Armenia and Azerbaijan - it should be able to keep any potential conflict under control.
"If one party has defensive сapability, while the other has offensive capability, it is highly probable that Russia, which is arming in fact both parties, may greatly help or harm the conflicting parties with a shift in its stance," Melik-Shahnazaryan said.
He also said that by extending the term of the military base in Armenia, Russia simply wanted to show it had long-term interests in the country.
Asked whom Russia would defend should a war start in Karabakh, Melik-Shahnazaryan said: "Something I know for sure: Russia will not meet its obligations stipulated by the Collective Security Treaty Organization agreement and Strategic Cooperation Agreement with Armenia. That is to say, Russian troops deployed in Armenia will not interfere in the war from Armenia's side, and there will be one explanation - the war isn't against Armenia but rather between Nagorno-Karabakh and Azerbaijan."
Tert.am
Russian Muslims meet Ramadan
|Aug 10, 2010 02:20 Moscow Time |
Russian Muslims will gather in mosques today to mark the beginning of the holy month of Ramadan. It is believed that God started to bestow the Holy Quran to Prophet Muhammad on the 27th of Ramadan.
It is a month when special attention is paid to spiritual self-perfecting and good works. Muslim tradition says that on Ramadan God pays for every good deed 700 times more than on other months, but He also punishes for sins more severely. At Ramadan, believers abstain from eating at daytime for 30 days – one can eat only when the sun is down. It is also recommended to give alms to the needy.
The end of the Ramadan lent is marked by holiday Eid al-Fitr that lasts 3 days.
Russia works with CIS to upgrade early warning radar capabilities
Published: Aug. 9, 2010 at 4:09 PM
MOSCOW, Aug. 9 (UPI) -- Since the 1991 collapse of the Soviet Union, one of the Russian Federation's biggest concerns has been to replace the Soviet Union's unified aerial radar surveillance capacities.
The goal is closer because of a recent meeting of Commonwealth of Independent States in Minsk to integrate use of the Parol', or "Password," Unified System of State Radar Identification between CIS member states.
CIS member nations include Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Uzbekistan. Turkmenistan is an unofficial associate member while Ukraine hasn't ratified the agreements and so is officially not a member.
The meetings concern the improvement and development of the CIS Joint Air Defense System.
Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan and Ukraine met recently to upgrade the CIS-wide radar system at a Belarus air base. The delegates reviewed and approved a draft work plan the CIS Secretariat of Council of Defense Ministers to upgrade, organize and integrate the Parol' system, which will subsequently be sent to the defense ministries of the countries of the CIS for coordination, the Russian Ministry of Defense newspaper Krasnaya Zvezda reported Monday.
CIS Council of Defense Ministers Secretary Aleksandr Sinaisky, said, "The formation and development of various unified military systems have been some of the most important areas in the activities of the Council of Defense Ministers of the CIS.
"It should be mentioned that the Agreement on the Provision of Radar Identification of Objects Equipped with Parol' Aircraft Identification Systems was among the first documents approved by heads of the governments of the states in the post-Soviet zone in 1992. And this is logical since the reliable identification of aerial, ground-based, and sea-based objects is in integral component of the provision of reliable security for the borders of any state, not to mention the special capability of the system.
"Correspondingly, the following were elaborated and approved by the Council of Defense Ministers of the CIS: Instructions for the identification of aerial, sea-based, and ground objects in the armed forces of the states-participants of the CIS; a training manual for the organization of the use of the Parol' system; and a technique for the preparation and conducting of evaluations of the equipment of the Parol' identification system."
Regarding upgrades to the Russian Federation's air defense upgrades, Russian air force Col. Gen. Alexander Zelin told journalists that Russia's S-500 air defense missile system, its most advanced, will shortly be deployed, commenting, "In the coming years, the Russian air force will be equipped with the latest S-500 and S-400 air defense missile systems.
"By 2020, we will have purchased a significant number of these systems. We are talking about five air defense missile regiments, with S-400 and S-500 systems in their arsenals, and about a quite large number of those systems. All of the plans that were proposed by us were reviewed and approved, since the development of air defense, aerospace defense, and missile defense is a priority in the construction of the armed forces of Russia."
MiG-35 stalls in Indian fighter tender contract
10:42 10/08/2010
Russia's MiG-35 multirole fighter aircraft has failed to make the short-list in a $10 billion international tender for 126 combat aircraft for the Indian air force, according to Indian media reports quoted by Kommersant daily.
The favorites to win the tender are the French Dassault Rafale and the Eurofighter Typhoon, Indian media say.
Russia's United Aircraft Corporation (UAC), the holding company for most of the Russian aircraft industry, and its fighter subsidiary MiG, have not officially confirmed the reports.
"The official results of the tender have not yet been announced," said UAC's Press Secretary Konstantin Lantratov.
"The MiG-35 is not leaving the tender, and I have no official information about this," said UAC First Vice-President Mikhail Pogosyan.
A MiG source quoted by Kommersant said it was too early to say what the Indians had decided.
"The envelopes with the commercial proposals should be studied by the tender commission only this week," the source said.
Several sources quoted by the paper listed a raft of problems around the MiG-35 program, including a lack of financing to support it. One source said the lack of state funding to support the program had been noted by UAC President Aleksei Fyodorov as long ago as the end of 2008, but the issue was not resolved.
The MiG-35 is said to be a cheaper aircraft than its rivals but is said to have problems with engine life.
"Time between overhauls should be at least 2000 hours and overall life 4000 hours, but the RD-33 doesn't meet these parameters now," said one source.
India already operates the early model MiG-29A fighter aircraft and is taking delivery of the MiG-29K naval fighter, which it will operate from a Russian-built aircraft carrier which is currently under refit.
The selection of two favored aircraft for the Indian tender follows a long trials process, which also involved Sweden's SAAB Gripen, America's Lockheed Martin with the F-16, and Boeing's F-18 Super Hornet, as well as the Russian MiG-35.
MOSCOW, August 10 (RIA Novosti)
Successful launch of ballistic missiles
2010-08-09
A Russian submarine successfully launched two Sineva ballistic missiles from the Barents Sea to the Kamchatka Peninsula on Friday, the Ministry of Defense reports.
The nuclear-capable intercontinental ballistic missiles were launched from submerged position by the Delta IV class nuclear powered submarine “Tula” and reached their target on the Kamchatka Peninsula on time, the Ministry’s web site reads.
The same submarine launched a Sineva missile in March 2010. In a test launch in October 2008, a missile launched by “Tula” travelled 11,547 kilometres downrange. This was reported to be the first full-range test of the missile. Russian President Dmitry Medvedev was on site to observe the test.
Also the Northern Fleet’s Delta IV class submarine ”Yekaterinburg” has been used for launching Sineva missiles from the Barents Sea, as reported by BarentsObserver.
Delta IV submarines can carry up to 16 missiles, while the intercontinental missile is reported to be capable of carrying up to 10 nuclear warheads.
Russia's missile forces chief to inspect Teikovo division
01:37 10/08/2010
New commander of the Russian Strategic Missile Forces (SMF) will inspect on August 10-12 the rearmament of a missile division in central Russia with new mobile missile systems.
During his first inspection as Russia's missile forces chief, Lt. Gen. Sergei Karakayev will visit the 54th Strategic Missile Division in the town of Teikovo about 150 miles (240 km) northeast of Moscow.
The division, which had Topol (SS-25 Sickle) mobile ballistic missile systems on combat duty since 1988, has been recently rearmed with 18 Topol-M (SS-27 Stalin) mobile systems and at least three RS-24 mobile systems.
According to SMF, Topol-M and RS-24 missiles will be the mainstay of the ground-based component of Russia's nuclear triad and account for not less than 80% of the SMF's arsenal by 2016.
As of June 2010, the SMF operated at least 50 silo-based and 18 road-mobile Topol-M missile systems. The RS-24 was commissioned in 2010 after successful testing.
The Topol-M missile, with a range of about 7,000 miles (11,000 km), is said to be immune to any current and future U.S. ABM defense. It is capable of making evasive maneuvers to avoid a kill using terminal phase interceptors, and carries targeting countermeasures and decoys.
It is also shielded against radiation, electromagnetic pulse, nuclear blasts, and is designed to survive a hit from any form of laser technology.
The RS-24 is heavier than Topol-M, and was created in response to the missile shield that the United States was planning to deploy in Europe.
The missile, equipped with a multiple independently targetable reentry vehicle (MIRV) warhead, is expected to replace the older SS-18 and SS-19 missiles by 2050 and greatly strengthen the SMF's strike capability.
MOSCOW, August 10 (RIA Novosti)
Medvedev Makes More Police Staff Changes
10 August 2010
By Alexei Nikolsky and Dmitry Dmitriyenko / Vedomosti
President Dmitry Medvedev on Monday appointed Major General Mikhail Velichko, currently deputy head of the Interior Ministry's administrative department, to the post of adviser to Minister Rashid Nurgaliyev.
Velichko will also serve as the Interior Ministry's chief of staff, according to the order.
The Interior Ministry has been undergoing a serious personnel shakeup in recent months, and the ministry itself is on the threshold of a major reform.
Last month alone, the president sacked the Interior Ministry's chief for the Northwest Federal District as well as three police generals from the Southern Federal District. He also named a new police chief for the Samara region and reduced the status of the central office of the transportation police.
In the same order, published Monday on the Kremlin web site, Colonel Valery Zhernov was named first deputy head of the main office for the North Caucasus Federal District.
Medvedev also appointed Major General Alexander Obukhov as head of the ministry's main office for the Irkutsk region, and Major General Nikolai Simakov as deputy head of the ministry's main office for the North Caucasus Federal District.
The order also relieved Colonel Yefim Finkelshtein, a senior police official in the Stavropol region.
Under the planned reform of the Interior Ministry, the police force is expected to be cut 20 percent to 25 percent, with those remaining getting a significantly higher salary. Last week, Medvedev proposed renaming the police force and kicked off a public discussion on the new law that will regulate its work.
Defense Ministry Gets New Oversight Chief
10 August 2010
By Alexei Nikolsky / Vedomosti
Tatyana Shevtsova, a former deputy head of the Federal Tax Service, has become the ninth deputy minister in the Defense Ministry, where she will coordinate all of its oversight activities and services.
President Dmitry Medvedev signed an order on Friday naming Shevtsova to the post, filling the last vacant deputy minister's position, as required under a June presidential order. That makes her the second female deputy minister in the current Defense Ministry, after Vera Chistova, a former Finance Ministry official who has overseen the ministry's finances since 2008.
In early July, the Defense Ministry's chief of staff and Shevtsova's former boss at the tax service, Mikhail Mokretsov, was also made a deputy minister. Of the ministry's nine deputy heads, just two of them are generals: General Staff chief Nikolai Makarov and Dmitry Bulgakov, deputy minister for administrative issues.
Defense Ministry spokesman Alexei Kuznetsov said the new deputy minister would coordinate all of the body's oversight services and activities. A former Defense Ministry official said Shevtsova was a talented economist as well as an exacting official, whose subordinates at the Federal Tax Service were very afraid of her.
From the start of the year, Defense Minister Anatoly Serdyukov has been drawing in former subordinates, including Mokretsov, and it became clear that the departing tax chief's close associates would also follow him to the ministry.
The Defense Ministry has at least 10 different oversight bodies, and Shevtsova will have to create a smoothly functioning system from them, said the former ministry official.
The ministry is divided into civil and military branches, and the main task of the civil branch — and the primary reason it is packed with former tax officials — is to oversee the generals' spending and bookkeeping, especially relating to state defense orders, said Igor Korotchenko, a member of the Defense Ministry's public committee.
The "invasion" of civilian officials from the tax service is entirely justified, said Ruslan Pukhov, head of the Center for Analysis of Strategies and Technologies, a think tank. The defense ministries of all Western countries are filled with civilian auditors, whose responsibilities are to oversee their militaries' massive budgets, he said.
WILDFIRES IN RUSSIA
International aid to Russia in fighting wildfires
[pic]
August 10, 2010
11:41
Some 400 foreign specialists help tackle some 70 large fires in Russia - ministry
Russia to suffer economic loss of $15 billion from wild fires - analysts
09:29 10/08/2010
The short term losses for the Russian economy from the heat wave and consequent drought and wild fires may amount to 1% of 2010 GDP, or around $15 billion, analysts told Kommersant business daily in a report published on Tuesday.
There will be no official attempts to estimate the losses from the catastrophe before the end of 2010, the paper said. Losses directly relating to the production of goods and services in July will be published in the Federal State Statistics Service data on industrial production next week.
"The main negative effect from the drought and fires will occur in July-August," HSBC's Alexander Morozov said, adding that stagnation may be formally recognized following the third quarter of 2010.
He said that 50% of value added in agriculture is created in the third quarter. According to his estimates, due to problems in industry and a reduction in the level of economic activity, the Russian economy "may lose about 4% of value added for the quarter and 1% of GDP growth in 2010."
The paper said the only concrete data available was the reduction in the grain harvest to 60-65 million tons. From the temporary ban on grain exports there will be an income loss of about $ 3 billion until the end of the year and a surge in food inflation, including a rise in prices of food imports.
Most analysts still assess the impact of the disaster on the economy more modestly. UBS has lowered estimates of GDP growth in 2010 to 0.5% and increased its inflation outlook for 2010 from 5.5% to 6%, and up to 6.5% in 2011.
Uralsib has not yet revised its forecast, but analyst Vladimir Tikhomirov "does not exclude 9% inflation " or more in 2010. His estimate of GDP growth remains within 5-5.5%, but "in view of recent developments, growth may be lower," he said.
MOSCOW, August 10 (RIA Novosti)
Moscow Smog Curbs Bond Trading, Bankers Flee Capital
August 10, 2010, 4:04 AM EDT
By Jason Corcoran and Denis Maternovsky
(Updates bond issuance in second, 13th paragraphs.)
Aug. 10 (Bloomberg) -- Record heat and drought in Russia are curbing stock and bond trading as bankers flee Moscow to escape acrid smoke from wildfires east of the capital.
Fixed-income trades dropped by as much as 25 percent in the past five days, according to Moscow-based investment bank IFC Metropol. Fewer sales of corporate bonds set the new issues market on course for its lowest third-quarter total since 2007, falling 26 percent from the same period last year, according to data compiled by Bloomberg. Transactions on the Micex and RTS exchanges are as much as 60 percent below typical August levels, according to Moscow-based broker Otkritie Securities Ltd.
Russia’s most extreme summer weather has almost doubled Moscow’s normal death rate and caused wheat prices to soar as Prime Minister Vladimir Putin’s government declared states of emergency in 28 crop-producing regions. JPMorgan Chase & Co. and Alfa Bank cancelled daily research reports yesterday because of concerns for the health of staff, while Deutsche Bank AG said it had sent non-essential workers home and advised bankers with a remote connection not to come to the office.
“It is impossible to work in Moscow right now,” Semen Odintsov, head of debt syndication at IFC Metropol in Moscow, said in a phone interview. “Many traders are working shorter hours or taking vacations earlier than planned.”
More than 104,400 people flew out of Moscow on Aug. 9, topping the previous 2010 record of 101,000, according to the Federal Air Transportation Agency. On Aug. 7, 95,000 left the city by plane, 20 percent more than the year-earlier date, agency spokesman Sergei Izvolsky said by telephone yesterday.
Trading Opportunity
Reduced trading is providing profit opportunities, according to an Aug. 5 report by JPMorgan analyst Jonny Goulden. A rally in the government’s 10-year dollar debt reduced the extra yield investors demand to hold the notes rather than similar-maturity U.S. Treasuries to below the five-year spread for the first time on Aug. 3, according to Goulden.
The yield difference on 10-year notes was 190 basis points, or 1.90 percentage points, on Aug. 9, compared with 200 for five-year securities, according to data compiled by Bloomberg.
The relationship “makes little sense” and will probably reverse, Goulden wrote, citing the higher price of Russia’s 10- year credit default swaps relative to five-year swaps. The 10- year contracts traded at 167 basis points on Aug. 6, 12 basis points above five-year swaps, according to CMA. Relative valuations between Russia’s Eurobonds have “seemingly left for vacation,” he wrote.
Carbon Monoxide
Moscow set a daily heat record of 35.5 degrees Celsius (95.5 degrees Fahrenheit) yesterday, the seventh such record this month and the 19th of the summer, according to the city’s weather service. The city reached 38.2 degrees Celsius, the highest ever, on July 29.
The heat and smoke caused the city’s death rate to increase to about 700 a day from 360 to 380 in normal conditions, Interfax reported, citing Andrei Seltsovsky, head of the city’s public health department. Carbon monoxide and suspended particulate matter in Moscow’s air is at least twice as high as acceptable levels, Yelena Lezina, a spokeswoman for the state environmental monitoring agency, told Rossiya 24.
Fire crews are battling 557 fires on 174,035 hectares (672 square miles), according to the Emergency Situations Ministry. So far this year, 747,722 hectares, an area about three times the size of Luxembourg, have burned, the ministry said in an e- mailed statement.
‘Stay Away’
Bond trading has dropped to 156 billion rubles ($5.2 billion) so far this month, from 1.12 trillion rubles during all of August last year, as some banks cut their working day, said IFC Metropol’s Odintsov.
Russian companies have sold 94.4 billion rubles of bonds since July 1, compared with 127.8 billion rubles in the same period last year, Bloomberg data show as of today.
Trading on the benchmark Micex Index of 30 stocks dropped to 21.6 billion rubles on Aug. 6, from 68.4 billion rubles on the same date last year, Bloomberg data show. The level was the lowest since July 9. Trading volumes rose to 26.4 billion rubles yesterday, the second-lowest so far this month.
VTB Capital, Russia’s second-largest bank, has “several” Moscow-based bankers working from its London office, managing director Olga Podoinitsyna said in a phone interview.
“Bankers coming to Moscow for business have also being advised to stay away,” Deutsche Bank’s Moscow-based spokeswoman Marietta Nikolaeva said by phone.
Alfa Bank in Moscow cancelled its daily research notes until Aug. 12 as the office is operating on a “skeleton crew,” Isai Pochtar, an international sales manager, said in a phone interview while on vacation in Rochester, New York.
Baltics Office
“There will be no daily until further notice because of the severe smog and health concerns,” said Derick Pearlin, head of equity trading at JPMorgan in Moscow, said in a phone interview. “A lot of the guys are working out of different offices in the Baltics, Sweden, Germany and London. The traders are holding the fort in Moscow because of the need to keep the systems going.”
The ruble depreciated 0.4 percent to 30.0300 per dollar by 10:54 a.m. in Moscow, heading for its weakest closing level since Aug. 2. Non-deliverable forwards, or NDFs, which provide a guide to expectations of currency movements and interest rate differentials and allow companies to hedge against currency movements, show the ruble at 30.2363 per dollar in three months.
A slump in the government’s ruble notes due November 2014 pushed the yield 6 basis points higher to 6.69 percent. The yield on Russia’s dollar bonds due in 2020 fell 3 basis points to 4.582 percent, the lowest level since they were sold in April.
Default Swaps
The cost of protecting Russian debt against non-payment for five years using credit-default swaps fell 1 basis point to 154.5 yesterday, its lowest level since May 13, according to data provider CMA. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
Credit-default swap contracts for Russia, rated Baa1 by Moody’s Investors Service, its third lowest investment grade ranking, cost 4 basis points less than contracts for Turkey, which is ranked four levels lower. Turkey swaps cost 40 basis points more than Russia on April 20.
The extra yield investors demand to hold Russian debt rather than Treasuries fell 2 basis points to 206, the lowest since May 13, according to JPMorgan EMBI+ Indexes. That compares with 131 for debt of similarly rated Mexico and 192 for Brazil, which is rated two steps lower at Baa3 by Moody’s.
Air Conditioning
The so-called yield spread on Russian bonds is 55 basis points below the average for emerging markets, down from a 15- month high of 105 in February, according to JPMorgan Indexes.
The yield on ruble bonds sold by OAO Gazprom, Russia’s biggest company, is 252 basis points above the same-maturity Gazprom debt in dollars, data compiled by Bloomberg show. The spread narrowed to as little as 115 on June 14.
Not all of Moscow’s bankers are evacuating the city. Tom Mundy, a strategist at Renaissance Capital, said the brokerage has a full working office. Renaissance and Otkritie said some staff were working longer hours because their offices had air conditioning.
“Despite working and living conditions becoming more repressive by the day in Moscow,” Citigroup’s trading and sales staff is “on ground in full effect,” John Heisel, an equity sales trader at Citigroup Inc. in Moscow, said by phone yesterday.
Simon Fentham-Fletcher, Moscow-based head of investment management at ZAO Raiffeisenbank, the Russian unit of Austria’s Raiffeisen International Bank Holding AG, said his approach on office attendance is based on the visibility of a billboard on Leninsky Prospect, close to his office in Moscow.
“I judge the smoke on how well I can read the small print,” Fentham Fletcher said by email yesterday. “I am letting non-essential staff stay at home.”
--With assistance from Michael Patterson in London. Editor: Gavin Serkin, Stephen Kirkland.
To contact the reporters on this story: Denis Maternovsky at dmaternovsky@
To contact the editor responsible for this story: Gavin Serkin at gserkin@.
10 % of Italian tourists cancel trips to Russia because of fires
10.08.2010, 05.10
ROME, August 10 (Itar-Tass) - Ten percent of Italian tourists have cancelled their trips to Russia because of wildfires raging in some parts of Central Russia, the president of the association of tourism companies Assotravel, Andrea Giannetti, said on Monday.
According to the association, over 2,500 Italians planned trips to Moscow or St. Petersburg for the second half of August, when most Italians are on summer holidays.
“The news circulated by media (about fires) of course give rise to certain panic of our tourists. Almost all of them have asked their tour operators to provide more detailed information on the situation. However, so far no more than ten percent have cancelled their trips,” Giannetti said.
He said that the Italian Foreign Ministry has so far issued only a warning about trips to Russia without necessity, but has not put the country on the list of the countries the visiting of which is not advisable.
“I believe the situation in Russia will get back to normal within days,” Giannetti said, adding, however, that he did not rule out further cancellations of trips, including those scheduled for the end of August.
Situation stabilizes in 11 of 14 Russian regions hit by wildfires
10.08.2010, 01.40
MOSCOW, August 10 (Itar-Tass) - Russian Minister for Emergency Situations Sergei Shoigu said on Monday that the situation had stabilized in 11 out of 14 Russian regions hit by wildfires.
He listed among them the Tula, Tambov, Lipetsk, Belgorod, Ivanovo, Kursk, Orenburg and Ulyanovsk regions, as well as Tatarstan. The situation in Mordovia and Mari-El has also improved, the minister said.
He said that all wildfires had been put out in the Lipetsk, Tula and Belgorod regions. One fire centre remains in the Tambov region, and no new fires were fixed in the Ivanovo region on Monday. Two separate fires rage in the region at the moment.
Shoigu stressed that the situation remains difficult in three regions. There are 77 wildfires in the Nizhny Novgorod region. Major efforts are made in the Moscow region, where a big group of planes is being concentrated. As soon as the visibility reduced because of strong smog improves, these planes are expected to finish all work on putting out wildfires within one day.
State Allots $1.8Bln for Firefighters
10 August 2010
By Alexandra Odynova and Anatoly Medetsky
The government on Monday backed a plan to spend 54 billion rubles ($1.8 billion) on state-of-the-art firefighting aircraft and trucks for the Emergency Situations Ministry, which is under enormous strain as it fights wildfires in central Russia.
Emergency Situations Minister Sergei Shoigu also proposed the creation of emergency response centers across the country to deal with disasters like the fires, which resulted from Russia's worst heat wave in 1,000 years.
The ministry asked the government to back a bill allowing it to recruit volunteer firefighters, especially in remote areas, Shoigu said. Thanks to a similar law, the United States has four times as many firefighters per 1,000 people as Russia, he said.
Another problem is that the private companies that are often employed by regional governments to battle fires are poorly prepared to face a large-scale disaster like the current blazes, Shoigu said.
He conceded that the Emergency Situations Ministry's firefighting force is not very efficient, saying it is trained to fight fires in apartments and factories, not forests.
But the firefighting efforts are yielding results despite all the shortcomings, Shoigu told reporters after a weekly meeting of the Presidium, the downsized Cabinet.
"The situation is no doubt better than three days ago," Shoigu said, adding that firefighters put out or significantly reduced blazes in several regions, including Tula and Tambov.
But in the Nizhny Novgorod region, fires continued to rage despite the deployment of four times as many firefighters as those who fought the disastrous fires in California that razed 1,700 houses over two days in 2007, Shoigu said, without elaborating.
The ministry is amassing a major airborne force in the Moscow region, where the situation also remains dire, to combat forest fires once visibility permits, Shoigu said.
A heavy smog from forest and peat bog fires has blanketed the capital and the Moscow region for the past four days.
Shoigu pledged to have all wildfires in the Moscow region extinguished in five to seven days, his ministry said in a statement on its web site.
The number of people killed in the wildfires remained at 52 on Monday, while the number of destroyed houses stayed at about 2,000. Fires covered an area of 174,000 hectares nationwide, Shoigu's ministry said.
Meanwhile, approaching flames forced the town of Ozersk in the Chelyabinsk region — which hosts a huge nuclear waste storage and recycling facility — to declare a state of emergency Monday.
On Friday, the fire approached another Chelyabinsk region town, Snezhinsk, which hosts the Federal Nuclear Center, but the blaze was beaten back by Monday, Interfax reported.
In Moscow, officials said the death rate in the city has doubled since the start of the fires.
"The average death rate in the city during normal times is between 360 and 380 people per day. Now we have about 700," Andrei Seltsovsky, head of Moscow's health department, said at a city government meeting.
He said heat strokes were the prime reason for the increase, which left city morgues on the brink of overcrowding, with 1,300 bodies stored, close to their maximal capacity of 1,500.
Health and Social Development Minister Tatyana Golikova said she was "surprised" by Seltsovsky's figures and asked him to explain where he got his data from.
Her ministry said the death rate in Moscow between January and June had actually decreased by 9 percent compared with the same period in 2009.
President Dmitry Medvedev warned politicians not to use the fires to boost their political clout during a visit to Ioshkar-Ola, capital of the Marii-El republic, one of the seven areas where he declared a state of emergency last week.
"One shouldn't engage in political PR … because of a disaster, especially if it doesn't depend on the authorities," Medvedev said.
He also dismissed the suggestion that heads of districts ravaged by wildfires should be dismissed for letting houses burn, saying they could not be held responsible for natural disasters.
Medvedev also spoke against punishing officials who cut trees without permission to save villages from fire.
Federal law only allows trees to be cut down within a 50-meter radius of a locality as a fire prevention measure. Medvedev said the limit should be increased to 200 or 300 meters.
Medvedev also threatened to fire forestry officials who refused to end their vacations because of wildfires, such as the head of the Moscow region forest agency, Sergei Gordeichenko.
Mayor Yury Luzhkov avoided coming under the president's fire by interrupting a European vacation Sunday, although not before being lambasted by the press for having stayed away from the city.
But his deputy Vladimir Resin said Monday that the mayor had controlled the situation in the capital even when formally off-duty. Resin said Luzhkov was giving orders at least four times a day during his vacation, Interfax reported.
"The measures he was taking through me and the administration helped decrease the fires by up to 7 to 8 percent," Resin added, without elaborating. "The matter is not where the mayor is, but how he governs."
Luzhkov, known for his love of beekeeping, has taken care to shelter his bees from fires in expensive, specially designed hives, Lifenews.ru tabloid reported Monday, adding that no bees have died from the disaster.
Resin said things were looking up.
"I believe that this week there will be a turning point, and God is with us," he told journalists.
Alexander Frolov, head of the Federal Meteorological Service, agreed, saying temperatures might dip on Wednesday when rains and a change in wind direction are expected.
The smog was already clearing up by Monday evening.
Frolov, speaking on Rossia-24 television, also said official archives have found that this year's heat wave is the worst in 1,000 years. He did not elaborate on the sources for the data. Moscow began keeping meteorological records 130 years ago.
Frolov said his service was planning to join forces with the Russian Academy of Sciences to create a scientific center for the study of weather and climate changes.
The smog that has blanketed Moscow caused the U.S. Embassy to cancel nonimmigrant interviews on Monday, promising to reschedule them at unspecified later dates. The embassy’s American Citizen Services unit operated as usual.
The German Embassy said in an e-mailed statement that earlier reports of it "halting operations" were incorrect and it was working “at a reduced level.”
Moscow's airports faced no delays Monday, the Federal Air Transportation Agency said.
Almost 64,000 flights and 1 million passengers nationwide have been delayed by smog since the start of wildfires in June, the Federal Meteorological Service said.
City officials, meanwhile, ordered Moscow clinics to stay open round the clock and limited sales of facemasks to 10 per customer to prevent price gouging.
Seltsovsky of the city's health care department said Moscow has no shortage of facemasks, with 3.2 million in stock.
But he said unspecified individuals had resold thousands of masks for 50 rubles ($1.60) apiece after buying them at drugstores for 7 rubles each, RIA-Novosti reported.
The Federal Anti-Monopoly Service pledged in a statement to look in to the prices of fans and air conditioners after they jumped during the heat wave.
Azerbaijan ready to send 120 firefighters to Russia
Tue 10 August 2010 | 06:06 GMT
Azerbaijan has offered extra help to Russia to tackle the forest fires raging in the centre and south of the country.
Azerbaijan’s Ministry of Emergency Situations is ready to send a 120-man unit of firefighters to Russia, according to Yuri Brazhnikov, director of the international department at the Russian Ministry of Emergency Situations.
"We have had offers from other states and are keeping them in reserve. We can see that a slowdown has come but it's hard to say how long it will last," Brazhnikov told journalists in Moscow yesterday, according to RIA-Novosti news agency.
He said that offers of further help had also come from Latvia and France.
“Fires have started in the south of Europe," Brazhnikov said. "Urgent action is needed in Portugal. Fire is threatening the entire south of Europe. Therefore, we are keeping these offers from other states in reserve.”
A state of emergency has been declared in seven Russian regions because of the fires.
Azerbaijan has already sent two helicopters to help tackle the fires in Voronezh and Lipetsk regions.
News.Az
Papandreou sends message of solidarity to Putin
08/10/2010
Greek Prime Minister George Papandreou on Monday sent a telegram of solidarity to his Russian counterpart Vladimir Putin, regarding the disaster caused by the wildfires that ravaged the country for a third week.
"My grief is huge for the tragic loss of human lives and the destruction caused by the wildfires raging in Russia these days. On behalf of the Greek government, I extend my sincere condolences to the families of the victims and our support for all those hit by this tragedy," Papandreou said.
UAE Foreign Ministry advises citizens against travel to Moscow
Ambassador Sultan Al Ali, Director of the Government Communication and Information Affairs Department at the ministry, said the UAE Embassy in Moscow contacted Emirati citizens and asked them to leave the Russian capital, and urged citizens not travel due to the current situation.
WAM
Published: 20:55 August 9, 2010
Abu Dhabi: The UAE Foreign Ministry urged its citizens not to travel to Moscow in view of dense smog and acrid smoke blanketing the Russian capital as wildfires continue.
Ambassador Sultan Al Ali, Director of the Government Communication and Information Affairs Department at the ministry, said the UAE Embassy in Moscow contacted Emirati citizens and asked them to leave the Russian capital, and urged citizens not travel due to the current situation.
It appealed to citizens to call the embassy at No. 007/4952344060 in case of an emergency or if they needed any help to leave the country.
The ministry will evaluate the situation next week.
Bulgaria Extends Visas for Russian Tourists by 30 Days due to Dire Ecological Conditions
10 August 2010 | The Bulgarian government has decided to unilaterally extend the permission for Russian citizens to stay in Bulgaria by 30 days, because of the difficult meteorological and atmospheric conditions in many parts of Russia.
Russian tourists will be allowed to stay in Bulgaria for up to a months after their tourist visas have expired. The measure is valid until September 6.
The Ministry of Foreign Affairs, which along with the Ministry of Internal Affairs, suggested the change, announced that Russian citizens won’t face any sanctions at the border control points upon leaving Bulgaria if they have overstayed the duration of their visas.
The decision was taken after the ecological situation in the region of Moscow and other parts of Russia became dire in the last few days. In addition to being hit by a record heat wave, Moscow is also suffering poisonous smog from wildfires, which have doubled the city’s death rate to 700 people per day, compared to an average of 360 to 380 deaths under normal conditions.
Currently, according to international news agencies, there are nearly 43,000 Russian tourists holidaying in Bulgaria.
Pres criticizes attempts to score political points on wildfires
10.08.2010, 04.45
YOSHKAR-OLA, August 10 (Itar-Tass) - Russian President Dmitry Medvedev on Monday expressed disapproval of attempts by some political forces to score political points on wildfires in Russia by criticizing steps made by the authorities to put out these fires raging in several regions.
Speaking about fires, the president said that as concerns, for example, the fire at the nightclub Lame Horse in Perm, the owners and the federal agencies, which had allowed fireworks inside the club, were to blame. “One cannot shift the blame onto nature in that case,” he said.
“But this time it is a natural disaster,” the president stressed, adding that many other countries suffer from such calamities.
He criticized statements by some politicians urging to sack the heads of municipalities where wildfires have destroyed some settlements. “But we all see what a crown fire is. Even it they had started getting ready for that ten years ago, they would not have been able to do anything,” the president believes.
“It is probably easier to put out a fire in Luxemburg than in Russia,” Medvedev said, adding that rich forest resources and the scope of the country seen as its advantages, bring additional difficulties in this case.
Greenpeace: Russian fires risk spreading radioactive contamination
Aug 10, 2010, 7:17 GMT
Moscow - The Russian wildfires could stir up and spread radioactive material, experts warned Tuesday, while local authorities and nuclear plant operators said there was 'no danger.'
The announcements came as the fire spread to within 80 kilometres of a nuclear waste-processing and storage plant, about 1,500 kilometres east of Moscow.
The Mayak facility at Ozersk presented a particular risk, Greenpeace atomic expert Christop von Lieven said in Tuesday's edition of the Hannover-based Neue Presse.
In 1957, a non-nuclear explosion occurred at the plant's waste storage facility, causing widespread radioactive contamination considered to be among the worst in the world.
'There is a lot of radioactive material in the surrounding area, a lot of material was just dumped in a lake,' von Lieven said.
Authorities in the nearby Russian town of Ozyorsk held an emergency meeting to discuss the threat, radio broadcaster Echo Moskvy reported.
Local authorities and the plant operators denied that the approaching fires risk spreading nuclear-contaminated material, the report said.
The risks were minimal, and panic should be avoided, Russia's nuclear power company Rosatom Corp said. 'There is currently no danger to the town or the facility,' spokesman Sergei Novikov said.
Mayor Viktor Trofimchuk was nonetheless planning additional steps to minimise the risk from wildfires. The mayor banned picnics in the town's parks and surrounding woodlands, as Russia faced the hottest temperatures in a century and persistent drought.
Civil defence authorities said they had put out a fire at a nuclear research centre in nearby Snezhinsk. Officers remained on standby in the area, news agency Interfax said.
Two firefighters died on Monday when they were hit by falling trees in woodlands, reports said, bringing the official death toll of the fires to 54.
Aid organizations put the number of victims higher after a week of wildfires in several parts of the country.
Wildfire near Russia's Urals nuclear center extinguished
10:06 10/08/2010
A wildfire moving dangerously close to the nuclear research center in the Russian Urals town of Snezhinsk has been extinguished, the local emergencies service said on Tuesday.
"The hotspot in the Snezhinsk forest has been extinguished," a statement said.
The fire was sparked on Friday, quickly spreading across an area of 10 hectares. On Monday, the affected area was decreased to 5-6 hectares.
The Snezhinsk nuclear research center was established in 1955. It specializes in the technical aspects of producing and testing nuclear weapons and conducts nuclear research.
Earlier, emergency measures against the spread of wildfires were stepped up in the town of Ozersk in the Chelyabinsk region where one of Russia's largest nuclear-waste plants, Mayak, is based.
The Mayak plant, which makes tritium and radioisotopes from decommissioned weapons and waste from nuclear reactors, is about 80 kilometers (50 miles) from the Snezhinsk nuclear research center.
A scorching heat wave has gripped much of European Russia since mid-June, sparking wildfires and causing the worst drought in decades.
Thousands of emergency workers and military personnel have been working round the clock for almost three weeks to fight the fires in 22 Russian regions, which have so far killed more than 50 people and left over 3,500 homeless.
The NASA Terra and Aqua satellites registered 377 hotspots from wildfires across Russia on Monday, down 65 from Sunday.
The record-breaking heat wave in central Russia will continue through mid-August, meteorologists say.
MOSCOW, August 10 (RIA Novosti)
Another Russian nuclear facility threatened by wildfires
Emergency regulations over the threat of spreading wildfires were enforced late on Monday in the town of Ozersk in the Chelyabinsk region, where one of Russia's largest nuclear-waste plants is located.
The Mayak plant, which makes tritium and radioisotopes from decommissioned weapons and waste from nuclear reactors, is about 80 kilometers (about 50 miles) from the town of Snezhinsk where a forest fire has recently threatened a major nuclear research center.
"The head of Ozersk administration has enforced emergency regulations in the forests and parks due to a serious wildfire threat," the local administration said in a statement.
An emergency meeting is scheduled for Tuesday to coordinate efforts of all local emergency services to prevent the fire to close on the town and the nuclear facility, the statement said.
A scorching heat wave has gripped much of European Russia since mid-June, sparking wildfires and causing the worst drought in decades.
Thousands of emergency workers and military personnel have been working round the clock for almost three weeks to fight the fires in 22 Russian regions, which have so far killed more than 50 people and left over 2,000 homeless.
The NASA Terra and Aqua satellites registered 377 hotspots from wildfires across Russia on Monday, down 65 from Sunday.
The record-breaking heat wave in central Russia will continue through mid-August, meteorologists say.
MOSCOW, August 10 (RIA Novosti)
US disaster team sent to Moscow
(AFP) – 9 hours ago
WASHINGTON — The United States said Monday a US disaster team has arrived in Moscow to help Russia deal with massive forest fires causing havoc in much of the country.
State Department spokesman Philip Crowley said an Office of Foreign Disaster Assistance team "has had their first meetings with Russian fire experts" about how best to help.
The meetings follow Secretary of State Hillary Clinton's phone call on Friday with her Russian counterpart Sergei Lavrov, "where we offered our assistance to ... Russia in dealing with these horrible fires."
Crowley also said the State Department is also studying an embassy request to authorize the departure from Moscow of children and other family members of embassy staff who are suffering from the fire-induced smog in the capital.
"So that's something that we will be evaluating and perhaps make a decision before ... too long," Crowley said.
Russian officials said the daily mortality rate in Moscow has doubled and morgues are overflowing amid an acrid smog caused by the worst heatwave in Russia's thousand-year history.
The acknowledgement, which broke days of official silence on the toll, came after media reports accused authorities of covering up the scale of the disaster that has forced many Muscovities to flee the Russian capital.
The smog from the peat and forest fires burning in the countryside around 100 kilometres (60 miles) outside the city has choked Moscow for days and has been seeping into apartments, offices and even underground into the metro.
Emergency services battled to put out over 170,000 hectares of wildfires in central Russia and the Moscow region, as fires also raged close to a nuclear reprocessing site.
Russian capital in smoke again
|Aug 10, 2010 09:28 Moscow Time |
The Russian capital is in smoke again. Yesterday in the daytime Moscow got respite from smog, but it was all over the city again by the time night fell. The city airports are operating according to plan, save for Domodedovo, which had some problems at night. On Monday district human resource administrations set up anti-smog centres in Moscow, with anyone sweltering outside welcome to dive into the much-desired chillness and gulp some fresh air, have some cool drinks and get medical aid, if necessary. Weather forecasters claim that today is the smog’s last day in Moscow, given that an atmospheric front is coming form the northwest to bring along brief thunderstorms and to slightly lower the air temperature, down to 35 degrees.
Moscow resembles apocalyptic movie scene
10 August, 2010, 08:42
After a few hours of relief on Monday, millions of Russians are again waking up to a thick layer of smog as forest and peat fires continue to rage across the country.
Experts have already called the current record-breaking heatwave the worst in a thousand years.
With every other person wearing a mask, the city now looks like the center of a dangerous epidemic.
And as with such a scenario, people’s health is at great risk.
“The smog which has come to Moscow has increased the carbon monoxide concentration in the air by several times,” said Doctor Vasily Vlasov, president of Society for evidence-based medicine. “This smog is surely very toxic and poisonous to breathe…We register a death increase in comparison with the usual summertime."
Among other risks are heat strokes and dehydration.
Shrouded in a smoky haze, desperate people have tried everything – from dampening cloth and putting it on the windows to using vacuum cleaners to suck in the poisonous air.
“The smog is terrible, I can’t breathe!” one of Moscow residents told RT. “It makes my eyes itch. Nothing helps no matter what we do – whether we wear masks or put wet curtains over the windows.”
Unable to cope with the heat and toxic smog, many are now fleeing the city.
Natalya Zorina is taking her whole family on an unplanned vacation – on a hunt for gulps of fresh air.
“I think there isn't one person who wouldn't leave Moscow right now if they had an opportunity," Natalya told RT. “I feel sad for the elderly – most of them are really stuck here.”
Authorities are trying to ease people's suffering.
So-called smog centers have been set up, distributing water and masks.
But a lack of air-conditioners has marred the initiative – there may be no smoke inside, but the heat is unbearable.
“It’s like a volcano eruption, there is ash in the air,” a Moscow resident said. “It makes my throat sore, and it feels dreadful.”
“People shouldn’t work in such conditions; the government must send them home,” another Muscovite told RT.
The country’s chief doctor asked employers to give people days off.
Airports have become a Mecca for tens of thousands who hope to escape the smog choking the city.
“Visa free countries are the number one choice, because it's possible to leave the very next day,” said Yekaterina Izerman, a travel agency deputy head. “But besides that, people are going in all directions – even to tropical countries, which seem more comfortable compared to this heat.”
But the thick smoke has delayed flights, turning many airports into suffocating traps for stranded passengers.
Rain is now as highly sought-after in Moscow after as snow at Christmas.
Weather forecasts say there will be a small decrease of temperature and a change of wind in the next few days. But unfortunately it is not enough.
While burning forests and peat-bogs are feeding the capital’s smog, there is no imminent end in sight to these post-apocalyptic scenes.
August 10, 2010 10:28
Death rate increases 1.5 times in Moscow in July – registry office
MOSCOW. Aug 10 (Interfax) - Moscow's death rate increased 1.5 times in July, compared to July 2009, due to abnormally high temperatures.
Overall, 14,340 deaths and 11,477 births were recorded in Moscow in July 2010, compared to 9,516 deaths and 10,837 births a year earlier, the Moscow registry office told Interfax on Tuesday.
"Positive demographic trends were observed in Moscow in the second quarter of 2010 with 28,600 deaths and 30,300 births. But in July the death rate topped the birth rate," a spokesman for the registry office said.
Moscow's chief health official Andrei Seltsovsky said on Monday that Moscow's mortality rate has doubled due to the current heat.
sd mj
Russian official: Death rate increases 1.5 times in Moscow in July
Today at 10:00 | Interfax-Ukraine
Moscow's death rate increased 1.5 times in July, compared to July 2009, due to abnormally high temperatures.
Overall, 14,340 deaths and 11,477 births were recorded in Moscow in July 2010, compared to 9,516 deaths and 10,837 births a year earlier, the Moscow registry office told Interfax on Tuesday.
"Positive demographic trends were observed in Moscow in the second quarter of 2010 with 28,600 deaths and 30,300 births. But in July the death rate topped the birth rate," a spokesman for the registry office said.
Moscow's chief health official Andrei Seltsovsky said on Monday that Moscow's mortality rate has doubled due to the current heat.
Read more:
August 10, 2010 12:15
Radical opposition going to demand resignation of Moscow mayor
MOSCOW. Aug 10 (Interfax) - The Russian opposition said that the Moscow authorities have done too little to reduce the negative effects from the heat and smoke from forest fires on its citizens.
"The Moscow authorities, being perfectly aware of the unfavorable weather forecasts, were supposed to conduct an awareness campaign among Muscovites beforehand, to explain the recommended rules of behavior during the abnormal heat and smog," leader of the Left Front opposition movement Sergei Udaltsov said in a statement issued in Moscow on Tuesday.
Forest fires led to heavy smoke pollution in populated areas in the European part of Russia. It has been hard to breath for many days now because of the pungent smoke in Moscow.
"They should have thought out arrangements around the city, at sports centers, concert halls, movie theaters and other similar public places equipped with air conditioners where Muscovites could escape the heat," he said.
"However, none of this has been done, Moscow Mayor Yury Luzhkov is away on vacation, and Moscow officials have pretended that the situation is under control. And it was not until August 8 that it was announced that the Moscow mortality rates have doubled and Moscow morgues and cemeteries are virtually paralyzed," Udaltsov said.
kk mj
Who can put out Russia's wildfires?
Wildfires have caused chaos in Russia to the extent that it has had to suspend wheat exports. Moscow was woefully unprepared for the heatwave, says Andrew Osborn.
By Andrew Osborn, Moscow correspondent
Published: 8:52AM BST 10 Aug 2010
Russia, the country's top weatherman gloomily announced yesterday, is in the grip of its fiercest heatwave in a thousand years. Looking around, you can see what he means. The Kremlin is blanketed in thick smog from fires ringing the Russian capital; the sun, when visible, is a tiny orange orb; and a vast swath of central Russia, the world's largest country, is ablaze.
No wonder Russian President Dmitry Medvedev has told his citizens the country's fate is now in the hands of the Almighty. Indeed, as temperatures fluctuate between 33 and 38 degrees Celsius and with visibility down to as little as 200 feet in places, biblical references abound. Ordinary Russians mutter about the Apocalypse, the Russian Orthodox Church has hinted that the heatwave may be divine retribution, and true believers have prayed, in vain, for rain.
One thing is sure: the summer of 2010 will be imprinted on Russians' minds for years ahead. Long inured to bitterly cold winters, when the mercury sometimes falls to minus 30 degrees Celsius, they have found the heat a much sterner adversary. Since mid-June, when the heatwave set in, more than 30,000 forest and underground peat bog fires have ignited across Russia's giant Eurasian land mass.
Such fires break out every year, but this summer has seen far more than usual, and of much greater intensity. The authorities have thrown enormous resources into extinguishing them, yet new fires have been starting almost as quickly as the old ones can be put out – the wind and the heat have seen to that. Yesterday, more than 500 fires were raging across Russia, sending giant plumes of toxic smog laced with poisonous chemicals across Moscow, St Petersburg and other major cities.
But the worst devastation has been inflicted upon the countryside far from Moscow. Fires have damaged or laid waste more than 100 settlements or villages and at least 52 people, including rescuers, have lost their lives. The images broadcast on state TV are arresting. Entire settlements look as though they have been bombed rather than attacked by Mother Nature. The blackened husks of what were once houses smoulder in the summer heat, and the newly dispossessed root in the rubble in the hope of salvaging something precious. Russian viewers have not seen such gloomy images since 2008, when the country fought a short war with neighbouring Georgia.
The impact on the country's agricultural sector has been serious. A crop-growing area equal to a mid-sized European country has gone up in flames or shrivelled to nothing, forcing the government to halt grain exports for the rest of the year. Since Russia is the world's third largest wheat exporter, the decision matters. Prices have risen sharply on world grain markets, triggering gloomy forecasts that bread prices in the UK and elsewhere may have to rise.
Russia, whose recovery from the global recession was looking fragile anyway, has also had to spend heavily to cope with the disaster. Up to 250,000 fire fighters have been mobilised and thousands of conscripts have been drafted in.
Though it has been spared the direct effects of the flames, Moscow has been particularly badly affected by the smoke. Tourists strolling across Red Square could be forgiven for thinking they are on the set of the Hollywood film The Fog rather than on holiday. The onion domes of St Basil's Cathedral have been a ghostly apparition for days, and the tops of the Kremlin's terracotta-coloured towers are intermittently wreathed in smog.
In the past week, Muscovites have grown used to waking up with the smell of burning in their nostrils, an odour that wits have likened to that of a middling malt whisky. There is little escape from the smog, even in the city's famously deep metro system; it creeps into people's apartments overnight and seeps under door frames and through poorly insulated windows. The only blessing is that the city's notorious traffic jams have thinned, as visibility is so poor that driving is dangerous.
It is no surprise that Moscow, a city of 11 million, is emptying out. Those who can leave do, and those who cannot leave lock themselves inside their Soviet-era tower block flats with all the windows firmly shut. On Sunday, 104,400 people boarded planes out of the city, a record number for 2010. Those left behind hang wet towels around their flats, don masks when outside, and take as many cold showers as they can handle.
The fires and the heat have exposed, not for the first time, how degraded Russia's public sector has become in the last decade, even as officials have grown richer on bribe-taking. When the moment of truth materialised, local people discovered that many of the rudimentary Communist-era fire safety systems had been quietly dismantled in the often unchecked rush to embrace a free market.
That, unsurprisingly, has sparked real public anger, and officials from Mr Medvedev to Vladimir Putin, the Prime Minister, have had to concede how poor the official response was. Mr Putin described how people had watched the flames approach their homes and frantically phoned local emergency services. Yet, instead of offering advice or assistance, the officials merely hung up, he said.
In Moscow, the authorities have set up more than 100 so-called "anti-smog" centres across the city. Yet the centres are a farce – many of them, including the one closest to the mayor's office, are not even equipped with air conditioning.
Meanwhile, the city has been plunged into a fully fledged public health crisis. The smog is heavy in carbon monoxide and toxic particles usually found in tobacco, which have been linked to lung cancer and asthma. Officials have admitted that carbon monoxide levels have, at times, exceeded acceptable levels by almost seven times. People have complained of experiencing breathing difficulties, stinging eyes, and, perhaps unsurprisingly, severe depression.
The authorities have been careful not to release figures showing how many people have died as a result of the anomalous climactic conditions. But the head of the city's health department, Andrei Seltsovsky, said yesterday that mortality rates in Moscow have doubled in recent weeks. "In normal times, 360 to 380 people die each day," he said. "Now it is around 700."
The city's morgues, which have capacity for around 1,500 people at any one time, are filling up quickly, with at least 1,300 places currently occupied. Russia's most senior doctor, Gennady Onishchenko, has urged employers to grant employees leave from work. Otherwise, advice to Muscovites has been rudimentary. Officials have told people they should wear masks to prevent harmful particles in the smog penetrating their lungs. But few are able to get their hands on the kind of construction masks that can offer real protection, and most people have had to settle for surgical masks, which are not thought to be effective. Some public health officials have estimated the heatwave may have claimed the lives of almost 5,000 people in Moscow already, though others have played down what they call "alarmist" forecasts.
For his part, Mr Putin, eyeing a possible return to the Russian presidency in 2012, has so far handled the crisis deftly. He has deflected blame away from himself by berating local officials for the poor response, and made a number of high-profile visits to the worst affected areas, kissing homeless babushkas and promising people their homes will be rebuilt.
By contrast, Mr Medvedev, the sitting president, has looked detached. He has issued dry directives and wrung his hands on state TV, projecting the impression of someone who is powerless before the elements. He has, in short, come nowhere near matching Mr Putin's virtuoso, man-of-action performance. Russia's grain harvest and the thousands of ordinary citizens who have died in recent weeks may, as a result, not be the only casualties of this crisis.
NORTH CAUCASUS
10 August 2010, 10:49
Slain militants plotted bombings at Grozny's central mosque
Grozny, August 10, Interfax - Two militants who were killed in a security operation in Grozny, Chechnya's capital, on Sunday had plotted bombings at Grozny's central mosque and a shopping and entertainment center.
"A memory stick was found in the pocket of one of the militants who was killed with a video recording on it which he and others discuss plans for terrorist acts in the mosque and the Grozny City shopping and entertainment center. The motives that they are giving are that Grozny City is place where Grozny people go for entertainment and that the central mosque has been built by Ramzan Kadyrov,"Chechen President Ramzan Kadyrov said.
Both militants were put on the wanted list for suspected involvement in murders of police officers. Last week, they shot dead two policemen in the village of Chernorechye.
In the operation, launched at daybreak on Sunday, the militants were blockaded in a nine-story building in Grozny. Special police forces were involved in the action.
Kadyrov Elected Head of North Caucasus Chess Federation
10 August 2010
The Moscow Times
Chechen President Ramzan Kadyrov will get to add another sports position to his resume after a chess federation unanimously elected him as its head on Monday.
The election was held in Grozny during the inaugural congress of the Chess Federation for the North Caucasus Federal District. It was unclear whether Kadyrov had any rivals for the job.
“If the federation starts developing as dynamically as the Chechen Republic, it will become a leader in the Russian Federation,” Artur Shakhmurzov, head of the chess federation of Kabardino-Balkaria, said about Kadyrov's election, the Rosbalt news agency reported.
Kadyrov follows in the footsteps of another regional head, Kalmykia's Kirsan Ilyumzhinov, who is the incumbent leader of the World Chess Federation. He faces tough competition to hold on to the post from former chess master Anatoly Karpov in upcoming September elections.
Kadyrov, a skilled ex-boxer, heads Chechnya's boxing federation and is president of Grozny's Terek football club. He also is an honorary member of the Russian Academy of Natural Sciences.
He had no immediate comment about his election to the chess federation.
Kadyrov declares checkmate
bne
August 10, 2010
The bizarre trend which has seen leadership of chess federations become a proxy for political power in Russia continues with the news that Chechen president Ramzan Kadyrov has been elected head of the Chess Federation for the North Caucasus Federal District.
It was unclear whether Kadyrov had any rivals for the job when he was unanimously voted into the role at the body's inaugural congress in Grozny on Monday, reports The Moscow Times.
"If the federation starts developing as dynamically as the Chechen Republic, it will become a leader in the Russian Federation," Artur Shakhmurzov, head of the chess federation of Kabardino-Balkaria announced.
Kadyrov follows in the footsteps of another regional head, Kalmykia's Kirsan Ilyumzhinov, who is the incumbent leader of the World Chess Federation. He faces tough competition to hold on to the post from former chess master Anatoly Karpov in upcoming September elections.
The pair have been waging a war over the post for some months now, with both claiming to have won official support from the Russian Chess Federation. The debacle has seen lawsuits flying and the head of the Russian body suddenly changed in the midst of the quarrel.
Kadyrov, a skilled ex-boxer, also heads Chechnya's boxing federation and is president of Grozny's Terek football club. He also is an honorary member of the Russian Academy of Natural Sciences.
Militants killed Kabardino-Balkaria identified
GOOGLE TRANSLATION
10/08/2010 11:02
NALCHIK, August 10 - RIA Novosti. Law enforcement officials in Kabardino-Balkaria identified the two militants killed on Tuesday night in Urvanskom region of the republic, told RIA Novosti spokesman for the Ministry of Internal Affairs of the CBD.
"In Tuesday night at the city Nartkala MUP of the CBD have been neutralized, two dangerous criminals who opened fire on the patrol car during an identity check," - said.
He added that the return fire fighters were destroyed, while none of the policemen was injured, the patrol car has received numerous bullet holes.
"The perpetrators are installed. It never employed residents of the republic 29-year-old R. Kunash spoke and 24-year-old A. Hadza. They confiscated a Kalashnikov rifle with four loaded magazine, two pistols with eight stores, two improvised explosive devices and more than 40 rounds of various caliber, "- said the press service.
According to him, checked the involvement of militants in the commission of serious crimes of extremist and terrorist orientation.
Two gunmen destroyed in Kabardino-Balkaria
10.08.2010, 10.26
NALCHIK, August 10 (Itar-Tass) - Two gunmen, who put up armed resistance to policemen during an identity checkup, were destroyed in the town of Nartkala, the Urvan district of Kabardino-Balkaria overnight to Tuesday, a source in the republican branch of the Prosecutor General’s Office Investigation Committee (SKP) told Itar-Tass.
“The police were attempting at about 2.40 am Moscow time to make an identity checkup of two men on the outskirts of the town. The men opened automatic fire, but were destroyed in the return fire,” the republican SKP source said.
The bandits were identified as residents of Kabardino-Balkaria. A pistol and a submachine gun were confiscated from them.
Water from Songhua river reaches Russia
|Aug 10, 2010 10:27 Moscow Time |
Russia is keeping a close watch on the water content in the Amur River on the border with China, fearing contamination after 7,000 barrels with toxic substances inside were washed into the Amur's tributary - the Songhua River, by a flood in China.
Thus far, environmental experts have not detected any signs of contamination in the water, which is expected to reach Khabarovsk on August 13-15.
The Chinese side says it had plucked out almost all of the 7,000 barrels and there have been no leaks of dangerous chemicals into the water.
Old rivals, new partners: Russia and Turkey, tied by energy dependence
Monday, August 9, 2010
BARÇIN YİNANÇ
ISTANBUL - Hürriyet Daily News
When Ankara and Moscow signed their first natural-gas supply agreement in 1984, some energy experts in Turkey worried that the country would not be able to consume all the gas it had pledged to buy.
These fears proved groundless, but were quickly replaced by concerns about over-dependence as energy-hungry Turkey ramped up its cooperation – and competition – with Russia on oil as well as natural gas.
Turkey’s 1984 commitment to buy 6 billion cubic meters of gas annually from the Soviet Union put an energy expert from the State Planning Department, or DPT, in a panic, one of his colleagues recalled. “He said, ‘We are going to end up paying for gas we won’t be using,’” former DPT energy expert Yurdakul Yiğitgüden told the Hürriyet Daily News & Economic Review.
The gas began flowing in 1987. But rather than lack a use for it, by 1996 Turkey was ready to sign a second agreement for an additional 8 billion cubic meters of gas each year. “In the early 1990s, we kept asking Russia to sell us more gas,” said Yiğitgüden, who is also a former Energy Ministry undersecretary. The increasing demand led the countries to sign the crucial Blue Stream agreement in 1997, aimed at supplying more natural gas via an offshore pipeline under the Black Sea.
“Blue Stream was Russia’s competitive response to the gas pipeline project from Turkmenistan. There was a race to capture the Turkish market,” said Vladimir Socor, a senior analyst at the Washington, D.C.-based Jamestown Foundation, which focuses on Eurasia and China. The agreement was a mistake for Turkey, Socor said, echoing criticisms made at the time that the government had failed to reach a deal that would be advantageous for Turkish consumers. “The terms of the agreement were kept secret and it is known that Turkey paid an extremely high price for natural gas,” Socor told the Daily News.
With the substance of such agreements generally not disclosed to the public, the terms agreed to by Turkey and Russia have been a subject of much speculation. “That the current and previous governments have not protected Turkey’s interests well enough during the negotiations is a generally accepted view among energy circles,” said Necdet Pamir, a Turkish energy expert.
As exploration intensified in new gas and oil fields in ex-Soviet Republics such as Azerbaijan, so did the competition between Turkey and Russia – especially after Turkey became a shareholder, along with British Petroleum and the Azeri firm SOCAR, in the Baku-Tbilisi-Ceyhan, or BTC, pipeline company established in 2002. Terminating in Ceyhan, on the Turkish Mediterranean, the 1,768-kilometer-long pipeline was completed in 2005; oil started to flow a year later. In a clear sign of its irritation at Turkey’s aspiration to become a transit corridor for energy resources, Russia has turned a cold shoulder to the BTC pipeline, continuing to ship its oil down the Bosphorus on tankers despite Turkey’s warnings about dangerous congestion on the waterway.
In 2009, 51,422 tankers transited the Bosphorus and Dardanelles Straits, according to Turkish official statistics. Eighteen percent of the ships carried potentially dangerous material such as oil and oil products, to the tune of 144.7 million tons. Russia is known to export about a quarter of its crude through the straits.
Energy diversification and a growing rivalry
Over the last decade, Turkey has sought to further position itself as an alternative route for gas deliveries as concerns mounted about Turkey’s and Europe’s increasing dependence on Russia.
In an attempt to reduce reliance on Russian gas, the EU has supported the Nabucco pipeline project, which seeks to make Turkey a key link in accessing Caspian and Middle Eastern gas reserves. The pipeline will link the eastern border of Turkey to Baumgarten in Austria – one of the most important gas hub in Central Europe – via Bulgaria, Romania and Hungary. Planned to be completed by 2014, the 3,300-kilometer pipeline will have an annual capacity of 31 billion cubic meters.
The project has proved to be yet another irritant to Moscow, which has responded by initiating the South Stream project, a planned offshore pipeline between Russia and Bulgaria.
“South Stream is a complete bluff. Russia has no gas resources to fill these pipelines. There is no specific gas earmarked for South Stream,” said Socor of the Jamestown Foundation, who believes the Russian project is intended to plant doubts in the minds of investors about the EU-backed pipeline. “South Stream is intended to kill Nabucco,” he said.
Russian energy giant Gazprom denies claims that it does not have sufficient gas.
Cooperative efforts continue, however, despite the climate of competition. During Russian Prime Minister Vladimir Putin’s visit to Ankara on Aug. 6, 2009, Turkey granted Gazprom permission to carry out feasibility and seismic studies for South Stream in the Turkish part of the Black Sea. The moved surprised many, especially the supporters of Nabucco. But Turkey’s decision was partially based on the conviction that the South Stream project will never be realized due a lack of sufficient funding.
There was also another motivation behind Turkey’s green light. In exchange, Ankara finally got Moscow to commit its oil to the 555-kilometer-long Samsun-Ceyhan pipeline project, which Turkey sees as crucial in easing traffic congestion on the Bosphorus. When completed, the pipeline, which will connect the oil terminal in the Black Sea port of Samsun with the terminal in Ceyhan, will reduce tanker traffic through the straits by up to 50 percent. The project is also crucial for Turkey’s aspirations to make Ceyhan an energy hub.
Though Russia has backed down from its objection to a pipeline that it sees as undermining its dominant position, a final agreement has not yet been signed on the Samsun-Ceyhan project. Because of this, some observers say it was premature for Turkey to ink a deal in May for Russia to help build the first Turkish nuclear-power plant, a contract for which it was the only bidder.
These agreements – along with the merger between Gazprom and a private Turkish company holding the gas-distribution licenses for 23 Turkish cities – are part of a “give and take” package, said Pamir, a member of the World Energy Council’s Turkish National Committee and a fierce critic of Ankara’s energy policies, which he says make Turkey dependent on foreign sources.
Turkey currently imports 98 percent of its gas and around 92 percent of its oil, paying $44.8 billion in 2008 for oil, oil products, and natural gas and liquefied petroleum gas, a level that Pamir said is not sustainable.
“State benefits are given to Russia in exchange for deals with selected companies that are known to be pro-governing party,” Pamir told the Daily News.
The Samsun-Ceyhan project was awarded to a company that counts Prime Minister Recep Tayyip Erdoğan’s son-in-law among its top executives, a move that has been criticized by opposition parties in the Parliament.
Pamir also criticized the government’s line that Turkey lacks indigenous energy sources, saying the country could readily develop solar or wind power, as well as coal and hydroelectric energy. He believes energy relations with Russia, which supplies two thirds of Turkish natural-gas imports, make Turkey dangerously over-dependent on a single source.
“Those talking about dependence on Russia should understand that Russia is also dependent on Turkey. It is mutual dependence,” said Sergei Komlev, the head of Gazprom’s contract-restructuring and price-formation directorate. “Relations are developing to the mutual benefit of both sides.”
According to Komlev, it is only natural for Turkey to buy gas from Russia. “Due to geography, the easiest way to get gas is from Russia,” he told the Daily News, adding that gas deals are part of the countries’ overall energy cooperation. “Turkey is perceived as the most important client of Gazprom. It is the second [biggest] client in terms of volumes,” he said.
Komlev also refuted criticism that Russia uses its energy resources as a political tool. “It would be suicidal for us to use gas as a political tool against Turkey,” he said. “We are not against Turkey trying to diversify its resources.”
According to Gazprom CEO Alexei Miller, Turkey’s other providers of gas – namely Iran and Azerbaijan – are often unable to fulfill delivery promises due to weather conditions. “Each year I get a note of gratitude from my Turkish colleagues that for yet another year, Gazprom supplied more gas to Turkey – more than was envisioned in our formal contracts,” he said.
But as demand security has begun to rival supply security in importance due to the global economic turmoil, consumer countries such as Turkey are gaining influence in the eyes of suppliers such as Russia. This shifting power dynamic may well sway the outcome of the ongoing negotiations for a new gas deal to replace the one that expires in 2011.
The Great Glonass Game
10 August 2010
By Peter Rutland
Over the past 10 years, Prime Minister Vladimir Putin has been one of the biggest cheerleaders of Glonass — a Brezhnev-era satellite navigation system that is intended to be an alternative to the U.S.-based GPS system, which has been operating since 1995. Now, the Kremlin is pondering steps to strengthen state control over Russia’s burgeoning telecom market — and to make some money from the Glonass system.
In 2009, 1.2 million phones and car-navigation devices using GPS were sold in Russia. The Russian government sees this as a threat to the country’s “information security” since Washington could shut down foreign access to GPS in the event of a conflict with Moscow. The Kremlin would like to see Glonass-compatible chips installed in all Russian phones and navigation devices.
At a meeting with Putin on July 16, Sistema chairman Vladimir Yevtushenkov said non-Glonass compatible phones will be barred from Russia in the near future. Sistema owns a controlling stake in MTS, the country’s leading mobile phone company. A week later, it was announced that a 25 percent tariff will be imposed on GPS-only phones.
The Glonass system was originally designed to improve the targeting of Soviet intercontinental ballistic missiles. The first satellite was launched in 1982, and 12 were in orbit by 1991. But the system requires 24 satellites for global coverage. Spending was frozen during the 1990s, and the number of satellites fell to eight by 2002. Putin made completion of the Glonass system a priority. With seven satellites launched in the past year alone, the system now has 21 deployed; this is sufficient to provide coverage in the northern hemisphere.
Other countries share this concern about dependence on the U.S. system. India is actively cooperating with Russia in developing Glonass. Both the European Union and China have started work on their own satellite navigation systems, but both systems are years away from being operational.
Russian officials claim that Glonass coverage is better than GPS in northern latitudes and can usefully complement GPS in eliminating blind spots in high-density urban areas. Free-market economists would agree that having two systems is more likely to promote competitiveness in the long run.
Russia’s mobile phone industry is one of the unsung success stories since the country started its transition to a market economy after the collapse of the Soviet Union. Like other countries in the developing world, the surge in mobile phones in Russia was aided by the fact that the state-owned phone monopoly on fixed lines was inefficient and inadequate. The telecom market is also one of the few examples of Russia’s successful conversion of the defense industry since the key firms were created by personnel from the military-industry complex — while foreign telecoms were kept out of the market, except as minority partners.
The market leaders are MTS with a 34 percent share, followed by VimpelCom and MegaFon with about 25 percent each. VimpelCom and MegaFon have seen fierce battles for control among competing shareholders in recent years, with foreign investors involved (Norway’s Telnor and Sweden’s Teliasonera respectively).
The introduction of Glonass gives the Kremlin a pretext to intervene in the lucrative telecom market. Now that the demand for mobile phones is fairly saturated, future profits will lie in the delivery of enhanced information services, such as navigation. Telecom gives different factions within the Russian elite another opportunity to promote the interests of large Kremlin-friendly corporations.
A good example is Yevroset, a mobile phone retailer, which was sold in 2008 by its former founder Yevgeny Chichvarkin under pressure from law enforcement agencies.
Just as the oil industry has seen the marginalization of foreign investors and a reassertion of state control in recent years, telecom might be the next target for the Kremlin. Given the track record of the Russian government in sectors where it has a dominant position, this can only be worrying news for the country’s telecom customers.
Peter Rutland is a professor at Wesleyan University and an associate of the Davis Center for Russian and Eurasian Studies at Harvard.
No White Knight
How Medvedev's vaunted liberalism went up in flames.
BY JULIA IOFFE | AUGUST 6, 2010
When your country, simmering for days in record-breaking heat, suddenly bursts into flame in 831 places, destroying half a million acres of land, killing 52 people, blanketing your capital in toxic smoke, and threatening to release old Chernobyl radiation into the atmosphere, someone has to take charge. If you're the Russian president, however, you will not be that person. You will sit in your office while your prime minister, his sleeves rolled up the way men of action tend to roll them up when they mean business, goes and tours the devastation, talks to grieving villagers, and shows the country that, hey, he's on it.
After the warm Moscow-Washington spring we've had, one would be forgiven for believing the conventional wisdom: that the aggressive, unpredictable Russian Prime Minister Vladimir Putin is relaxing his hold on the reins a bit, and that President Dmitry Medvedev, the shy liberal, is finally coming into his own. The events of the last week, however, have served as stark reminders of who really is in charge -- and how empty the promises of Medvedev's modernization pitch actually are.
First came the Minority Report law. Under the proposed policy, which came tucked into broader legislation designed to help Russian security forces fight terrorism, the Federal Security Service (FSB) would be able to issue warnings to people they thought were heading down the road to committing a crime -- possibly by throwing them into jail for 15 days.
When the law was introduced, people hoped that Medvedev the Liberal would step in and show Russians and the world that his country had gone beyond the point of punishing its citizens for acts not yet committed. Human rights activist Lev Ponomarev told the New York Times he hoped that Medvedev would show "the courage to oppose this bill." It would, Ponomarev said, win him much credibility and loyalty in liberal circles.
But then Medvedev cleared it up for everyone. Speaking at a press conference with Angela Merkel in Ekaterinburg on July 15, he said that not only would he sign it, but that he had initiated it. "The situation is extremely simple," the president said. "I don't really want to comment now on the changes in the legislation that are currently underway. But ... first I'd like to draw your attention to the fact that this is our internal legal system, and not an international act. Second, every country has the right to its own legal system, including its own intelligence agency. And we will do this. And what's happening now -- I want you to know -- is being done on my direct instructions."
His statement was a tremendous disappointment, even to the president's own men. Gleb Pavlovlovsky, who runs a think tank closely linked to Medvedev and who helped Putin get elected in 2000, sounded mournful, even doubtful, when he tried to explain the point of the new law to me. "The arguments of the law's supporters are that it comes from a liberal idea, 'Let's not always open a case, let's non-repressively warn people instead,'" he said. Sighing, he added, "Unfortunately, these amendments" -- the provisions allowing the FSB to warn people before a crime is actually committed -- "reintroduce an old Soviet idea of the role of the security forces and changes the concept of the law, implicitly supposing a quasi-judicial function for the FSB. These amendments carry the danger of informally expanding the powers of the FSB." Luckily, in the final version of the law, signed on Thursday, July 29, some of the provisions were made more vague -- and perhaps less enforceable -- and the one allowing the FSB to publish the warning in the media was removed entirely.
That was the first thing.
The next blow came the day after the bill was signed into law. That Friday morning, news broke that Ella Pamfilova, head of the President's Council on Civil Society Institutions and Human Rights, had abruptly resigned, giving no reason for her sudden exit. Pamfilova said she would "only say that I am planning to change the area of my activity drastically, and it will definitely be neither politics nor public service." She sounded exhausted and bitter, and despite pleas from the human rights community -- which sees the council as important, even if just as window-dressing -- Medvedev made a show of accepting her resignation.
In effect, however, Pamfilova was forced out. Just before her resignation, she had criticized Nashi, the pro-Kremlin youth group that festooned its summer camp with vicious propaganda, putting the heads of prominent journalists and human rights defenders on sticks and Wermacht caps on their heads with the sign, "You're not welcome here." Speaking on a radio show, Pamfilova bemoaned the "ugly youth politics" that bent kids toward fascism and sought to "make them into little tin soldiers who can do anything on command." "I am scared that these kids will begin coming to power in a few years," she said. "It'll be a doozy. This is the scariest thing. Because these fosterlings of some of our political technologists are selling their souls to the devil, to put it bluntly. They burnt books" -- they didn't -- "I don't remember, but I think they burned an effigy. What's the next step? ... Will they make their way toward people next?"
Three days later, Nashi was suing for libel and Pamfilova was gone.
This was not her first run-in with the satanic fosterlings. Last fall, Pamfilova publicly chastised Nashi for "persecuting" a journalist who had written an article the group felt was critical of veterans (it wasn't). She refused to apologize, and several members of Putin's United Russia party tried to have her dismissed. She was not well-loved in the circles of power. Shortly before her resignation, Alexei Chadayev, the party's political department head, had lashed out at her on his Twitter account, calling her a "star of agitprop," "hysterical," and a "ghoul."
Clearly, Pamfilova had stepped on some powerful toes, and her ouster had a sacrificial tone to it. "She had many enemies," says Pavlovsky. After the high-profile death of lawyer Sergei Magnitsky last year, Pamfilova publicly pressured Medvedev to take action and reform Russia's horrific prison system, antagonizing people in the Interior Ministry. As for the anti-Nashi statements, Pavlovsky told me, "Ella is very easily emotionally charged by the public mood, even if it is not based in fact." He added, rounding off the theme of the hysterical woman lost in a man's world, "She's not a natural apparatchik fighter. She's not a jedi."
(When I called her for comment, Pamfilova insisted she had not been forced out. "I am not the kind of person that tolerates pressure," she said. "If I wanted to stay and fight, I would've stayed and fought. It's more of a fundamental question about the politics of the development of this country. President Medvedev expressed his wish that I stay, but it's important to me what form this takes." For now, she is on vacation. "I am completely exhausted by what has happened.")
Throwing Pamfilova under the bus was yet another concession on Medvedev's part to the Putin faction of chest thumpers, the more traditional coalition inside the Kremlin that still needs to balk and talk tough and, yes, thump its chest. Which brings us up to the tandem's response to the unprecedented fires in European Russia. As Medvedev sat in his office and fired five officials for letting a naval aviation base outside Moscow burn down, Putin was with the people, showing them that he was looking out for them, that he was their leader.
Touring the destruction around Voronezh Wednesday, Putin -- in a masterfully artificial charade -- put in a phone call to his president, a call that was of course just coincidentally caught by the biggest state-owned TV channel. "Yes, Vladimir Vladimirovich," says Medvedev from his ornate office, looking down, rapping his fingers on his desk. "Hello again. So, what's going on?" "The situation is difficult," Putin says, furrowing his brow and looking around as one does when speaking on a cell phone. It takes a few minutes of dense bureaucratic-speak -- you know, your average cell-phone conversation -- of Putin to tell Medvedev, in his office, removed from the people, what he needs to do, which is to rubber stamp what Putin tells him should be done, given his superior vantage point on the ground: increase the firefighting capacity, make the compensation process faster. Because nothing says equality like giving your partner a "to do" list.
Julia Ioffe is a journalist living in Moscow.
Cyprus Mail: Our View: Why are we in denial about Russia’s realpolitik?
Published on August 10, 2010
THE VISIT of the President of the Russian Federation, Dmitry Medvedev to the breakaway region of Abkhazia on Sunday did not receive much coverage here. This could have been because the visit undermined the official mythology of successive Cyrpus governments, that Russia always stands on principle in international affairs and that Russia is somehow different from all other states because its foreign policy, supposedly, is not determined by its strategic and economic interests.
This nonsense was exposed by the recognition of the Abkhazia and nearby South Ossetia as independent states by Moscow, which ignored the relevant UN resolutions. Georgia considers the breakaway regions as part of its territory, in exactly the same way the Cyprus Republic views the occupied north. During Sunday’s visit, which coincided with the second anniversary of Russia’s brief war with Georgia, Medvedev said the decision to recognise the independence claims of the two regions was correct. He also pledged more financial support to both.
Not surprisingly, Cyprus abstained from voting on the UN resolution condemning Russia’s action in the two regions and calling on it to withdraw its troops. The justification for this decision was the consistent support offered by Russia to the Cyprus government at the UN Security Council - the Federation’s representative had often blocked or changed the wording of UN resolutions at Nicosia’s request. In other words, the Cyprus government also took a stand that was based on interests rather than principles - it failed to condemn the taking over of Georgian sovereign territory by use of military force - in order to maintain its good relations with Moscow.
This is how all states operate, but when it comes to Russia our government is in denial, repeating the official mythology about stands on principle and other such nonsense. We refuse to acknowledge that Russia has forged very strong links with Turkey and that trade, plus their co-operation on energy projects, is worth many billions of dollars. Would Moscow jeopardise these interests for the sake of the Cyprus problem? Only a complete fool would believe this.
It is not even as if Moscow has tried to fool Nicosia about its very strong ties with Turkey. Nothing illustrated this better than the announcement issued by the Russian foreign ministry, a couple of weeks ago, with regard to President Christofias’ latest package of proposals for the talks. This was “an important step in the effort to find a mutually acceptable settlement” and Russia was fully in favour a Cyprus solution, “based on the agreement, of their own volition, of the Greek Cypriots and the Turkish Cypriots.” In other words if the Turkish Cypriots did not want a solution that respected human rights and ended Turkish guarantees they were perfectly entitled to reject it.
This stand is as ‘principled’ as the stand on Cyprus taken by all the states we naively accuse of being pro-Turkish.
Russian village bought by torrent site for $150,000 and renamed after it
is one of the few companies that has decided to leave a permanent mark on the world map and rename a settlement after itself. The one with real houses and live inhabitants. A small russian village Gar was chosen to be renamed. It is located not far away from Seversk nuclear reactor (Russia, Tomsk region). As opposed to Google town that became the Texas «capital» for a limited period of time Torrentreactor village will retain its name forever. The price of $150,000 was announced for such «live billboard».
First reaction of Tomsk region authorities was controversial. But due to a considerable donation in favor of village citizens that accompanies the deal it was resolved pretty fast. The donation seems to cover costs for future development of the settlement and increase life standards.
Admins of the portal claim that adverisement and publicity is not the main goal of this whole act. They want to provide real help to at least one single village. «We realize it's just a drop in the ocean comparing to the amount of money needed to help thousands of other villages. But we at least do something to support complete strangers. We are proud that we are able to do so and hope we will be proud of this in the future. We would be even happier to become pioneers and other large Internet portals would follow our example to help many godforsaken places on Earth.»
The selection is explained easily as well: «We've picked a few thousands of godforsaken places around the world that are close to operating nuclear reactors to make a connection to the name of our company. The list was numbered and a random number was picked by a generator. The number 377 was a lucky one for Gar village. We think it was a good choice since Gar citizens are very kind and generous people.»
History:
Gar village was founded in 1958 by so-called Old Believers (a religious movement of Russian Orthodox Church that denied 1650s reforms and adopted many traditions of Greek Orthodox). As Russia was a part of The Soviet Union at that time all religions were persecuted. Many people had to keep it underground. Seversk nuclear reactor (200 km or 124 miles from Gar village) was launched in the same year and many political prisoners had to work there. Families of former Gulag prisoners still live in villages around Seversk including Gar village and know a lot about nuclear reactors and energy. (FYI: Gulag - is the acronym for The Chief Administration of Corrective Labor Camps and Colonies which was the ultimate source of free labor during repression years)
Gar village is now forgotten by authorities and lives in desolation. There are 214 citizens at the moment and 0 working businesses. The only income is from selling their home-grown vegetables in the nearby town. The average income of a Gar villager is about 1300 rubles ($42) a year! So they were extremely happy about the offer from company. The head of the settlement and the most respected Gar citizen Nikolay Prokhorov shared his thoughts: «Of course, we lose some of our history by renaming the village. But we will be able to create perspectives for our youth and the village in general. So we think it's a fair deal.»
Interesting facts:
1. There have been just 3 PCs in the village until lately: 2 in the school library and 1 in the administration office. Just one of them had an Internet dial-up connection. So it's not surprising none of the villagers knew about portal (which is one of top 10 torrent indexers in the world) and torrents in general.
2. The majority of villagers found it hard to define what a website is and none could describe what Internet portal might do. But some of them tried to make assumptions. Two leading theories were heard:
o is a large american nuclear station. (Villagers thought it was located on the outskirts of Toronto. But after they were explained that Toronto is the largest city in Canada some of them change their views.)
o is an environmental organization fighting against building new nuclear reactors around the globe which is clearly stated by «net» suffix (in russian «net» means «no»).
Details of the deal:
The amount of transaction is 4.5 mln rubles (about $148,000 or 115,000Eur). Most of it will be split among villagers and the rest will be used to re-equip the local school, repair roads, purchase agricultural equipment and machinery. Also company decided to pay for broadband Internet connection in the settlement which will result in about 900,000 rubles ($30,000) because there are no networks nearby.
PRESS DIGEST - Russia - Aug 10
12:18pm IST
MOSCOW, Aug 10 (Reuters) - The following are some of the leading stories in Russia's newspapers on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.
VEDOMOSTI
vedomosti.ru
- Russia's no. 1 oil firm Rosneft (ROSN.MM: Quote, Profile, Research) will pay Yukos Capital 13 billion roubles ($435.1 million) on Wednesday in debt, the daily writes.
- Russian President Dmitry Medvedev and Prime Minister Vladimir Putin are losing popularity, the paper reports, citing the country's main pollsters.
- Prices for tours away from the capital this August rose by up to 50 percent on the back of a feverish demand from Muscovites to escape the smoke, the paper writes.
KOMMERSANT
kommersant.ru
- Russia has already spent $15 billion fighting forest fires, and will spend even more by the end of 2010, the paper reports.
- Russia's emergencies minister Sergei Shoigu received the highest popularity rating in July, the paper writes, citing an independent VTSIOM poll, which says he was supported by 75 percent.
- 973,700 cars were sold in Russia in January-July 2010, which is 48 percent more than the same period in 2009, the daily writes.
NEZAVISIMAYA GAZETA
- The new laws surrounding how the blood alcohol level is regulated are absurd and may affect the innocent, the paper writes.
KOMSOMOLSKAYA PRAVDA
kp.ru
- People in Russia are ditching their jobs to drive to volunteer to fight the fires ravaging the country, the popular daily says.
National Economic Trends
Russian Growth May Slow to 2.6% This Quarter, RenCap Says
By Paul Abelsky
Aug. 10 (Bloomberg) -- Russian economic growth may slow this quarter as an unstable global recovery erodes demand for the country’s exports, Renaissance Capital said.
The economy may grow an annual 2.6 percent in the third quarter and 2.9 percent in the fourth, RenCap said in a report today. It previously forecast gross domestic product would expand 3 percent in the three months through September.
“Exports remain stagnant and the chances of a sustained increase in commodity prices appear slim,” Alexei Moisseev, RenCap’s Moscow-based chief economist, wrote in the report. “The possibility of a pick-up in volumes of commodity exports, or any improvement in non-commodity exports, is unlikely in the very near future.”
GDP increased an annual 5.4 percent in the three months through June, Deputy Economy Minister Andrei Klepach said on July 27. The economy expanded an annual 2.9 percent in the first quarter after shrinking a record 7.9 percent last year.
To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@.
Last Updated: August 10, 2010 02:00 EDT
Russia 2010 Inflation Forecast Raised to 8.5% From 6.8% at ING
By Stephen Kirkland
Aug. 10 (Bloomberg) -- Russia’s year-end inflation forecast for 2010 was raised to 8.5 percent from 6.8 percent on concern drought may boost consumer prices, ING Groep NV wrote in an e- mailed report yesterday.
“We stick to our call for no CBR rate changes through early 2011, but with a possible total 75-100 basis points of hikes in 2011, more likely combining the move with higher reserve requirements and further ruble appreciation,” ING wrote in the report.
Last Updated: August 10, 2010 01:06 EDT
AUGUST 9, 2010, 6:53 P.M. ET
With Ban Near, Russia Sets July High For Grain Exports-Vedomosti
DOW JONES NEWSWIRES
Grain exports from drought-ravaged Russia set a record for July, business daily Vedomosti reports Tuesday, as Prime Minister Vladimir Putin warned that an export ban could be extended beyond its current Dec. 31 deadline.
Russia's grain exports in July totaled 1.55 million metric tons including 1.35 million tons of wheat, according to preliminary data from agricultural research firm SovEcon. Both are records for the month. In July 2009, grain exports totaled 1.35 million tons, 870,000 tons of which was wheat.
A government official responded to news of SovEcon's report by citing even-higher numbers from the Federal Customs Service -- 1.96 million tons of grain exported last month, including 1.75 million tons of wheat. While the customs service's data, too, are preliminary, they are considered the most reliable.
Igor Pavensky, an analyst for Rusagrotrans, the country's main rail service for transporting grain, gave an estimate in line with that of the customs agency -- 1.9 million tons in July, including 1.7 million tons of wheat.
The head of the Russian Grain Union, Arkady Zlochevsky, estimated exports for July at 1.6 million to 1.7 million tons -- but he cautioned that a true picture of the month won't be known until actual shipment amounts have been registered with customs authorities.
The record was achieved because importers Egypt, Tunisia and Iraq won Russian government tenders to deliver 750,000 tons of grain last month, explained Rusagrotrans's Pavensky. In June, he said, state tenders accounted for 310,000 tons of grain exports. That assessment was echoed by Vladimir Petrichenko, head of industry analyst Prozerna, and by a manager of a major exporting company.
But the grain union's Zlochevsky told Vedomosti that last month's record was due to the large amount of still-to-be-shipped grain -- 24 million tons -- carried over from contracts signed during the previous exporting year, which ended June 30. The grain-exporting year begins July 1.
Kirill Podolsky, chief executive of Valars Group, one of Russia's biggest grain traders, saw nothing extraordinary in last month's numbers. His company shipped about 240,000 tons, which is typical for July, he said.
Newspaper website: vedomosti.ru
-Dow Jones Newswires; 212-416-2900
CBR FX interventions ease to USD 0.5bn in July
VTB Capital
August 10, 2010
News: According to the latest CBR data, FX interventions eased to USD 0.5bn in July, from USD 2.2bn in June and USD 5.6bn in May.
Our View: A week ago we noted that the CBR's 30 July statement accompanying its rate decision (the benchmark rate was kept unchanged at 7.75%) contained the first signs that the monetary authorities were getting concerned about inflation. We argued that, with inflationary risks rising (in part due to the current drought), the CBR was likely to intervene less. The latest readings support this view.
Indeed, we believe that the CBR might already have started to allow faster RUB appreciation in order to meet the current inflation targets (the official forecast is for 5-6% Dec/Dec in 2010). At the same time, pressures on the RUB stemming from the current account surplus have been abating of late.
Unemployment falls 1.1%
bne
August 10, 2010
Russia's official unemployment dropped 1.1% to 1.786 million in the week to August 4, the Healthcare and Social Development Ministry's press office said Monday, ITAR-TASS reported.
A total of 1.3 million people have lost their jobs since the financial crisis began in October 2008, the ministry said. Of these, 396,524 people have since found employment, according to the ministry.
Business, Energy or Environmental regulations or discussions
Norilsk Nickel, Razgulay, Silvinit: Russia Stock Market Preview
By Yuriy Humber
Aug. 10 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.
Russia’s 30-stock Micex Index rose 1.2 percent to 1,419.20. The dollar-denominated RTS Index rose 0.7 percent to 1,520.56.
OAO GMK Norilsk Nickel (GMKN RX): The nickel company’s ex- chairman Alexander Voloshin said he has signed the protocol for Norilsk’s disputed annual general meeting. Norilsk said this means the company should not delay dividend payments. Norilsk rose 3.1 percent to 5,181.52 rubles.
OAO Razgulay (GRAZ RX): Prime Minister Vladimir Putin said he doesn’t rule out extending a ban on Russian grain exports beyond Dec. 31 and a decision on a possible extension will be made based on final harvest numbers. Russia has 90 million metric tons of grain in reserve, Putin said. Razgulay, a Russian grain and sugar producer, rose 1.8 percent to 48.60 rubles.
OAO Silvinit (SILV RX): OAO PhosAgro, the second-largest producer of phosphate-based fertilizers, wrote to the Russian government saying it’s interested in merging with potash maker Silvinit, Interfax reported, citing unidentified people in the industry. PhosAgro is seeking to block any merger between Silvinit and OAO Uralkali, Russia’s two sole producers of potash, which PhosAgro uses as a fertilizer component. Silvinit rose 2.3 percent to 19,443.33 rubles.
To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@.
Last Updated: August 9, 2010 22:00 EDT
Audit Chamber urges quotas to protect Russian banks
RBC, 10.08.2010, Moscow 10:46:42.Russia's Audit Chamber has analyzed the implementation of the country's main principles of the monetary and credit policy and arrived at the same conclusion as before. According to the RBC Daily newspaper, the regulator is confident that the Bank of Russia should introduce quotas in order to protect Russia's banking system from the excessive expansion of foreign investors and non-resident banks.
The Audit Chamber's report on the state of the banking sector in 2009 indicates that non-resident banks strengthened their positions in Russia, and their share jumped from 26.8 to 29.1 percent last year. Consequently, the regulator believes that it is now time to restrict foreign capital by stringent quotas.
The Audit Chamber also indicated that the number of banks fully owned by foreigners had increased by 8 percent, noting that foreign investors already owned significant shares in state-owned funds, specifically, 24 percent in Sberbank and 8.75 percent in VTB. Moreover, since the government is poised to privatize an 8.5-percent stake in VTB, it is currently seeking foreign investors.
According to preliminary data, in July, Sberbank's net income was RUB 10-12bn
VTB Capital
August 10, 2010
News: Vedomosti has quoted the Head of Sberbank's Financial Department, Alexander Morosov, who presented the bank's preliminary results for July. The key takeaways are: _ net income of RUB 10-12bn;
- the total loan portfolio increased 0.9% MoM (or 1.5% MoM, excluding the currency revaluation);
- corporate lending grew 1.5% MoM, while the expansion of the retail book slowed to 1.3% MoM;
- corporate term accounts decreased RUB 47bn while retail term accounts increased RUB 66bn.
Our View: Net income is in line with expectations and opens up the prospect of Sberbank posting full year earnings of RUB 150bn (as forecasted by the market). We also believe that asset quality stabilisation in 2H10 would allow Sberbank to reduce the cost of risk and boost net income. Meanwhile, the further rapid growth of lending implies that the positive trends are strengthening and might create upside potential for our forecast of lending growth. The outflow of funds from corporate term accounts reflects Sberbank's further reduction in interest rates, while the high liquidity cushion and ongoing growth of retail deposits make this decline insignificant for the bank.
We are reiterating our bullish view on the stock and our Buy recommendation.
Dmitry Dmitriev
Russia Sees Post-Crisis Jump In Online Ad Spending –Vedomosti
First Published Tuesday, 10 August 2010 01:42 am - © 2010 Dow Jones
DOW JONES NEWSWIRES
Russian Internet companies saw a spike in advertising revenue during the first half of the year and are hoping for sustained growth from big companies' presence online, business daily Vedomosti reports Tuesday.
According to the Russian Association of Communication Agencies, a trade group, market volume in the first six months of 2010 was 6.2 billion to 6.4 billion rubles ($207.9 million to $214.6 million). That's 40% higher than in last year's first half. Nearly half that total -- RUB3 billion to RUB3.2 billion -- came from advertising through traditional media. The figures don't include value-added taxes.
Since the end of the 2008-2009 financial crisis, the number of advertisers has begun to grow, along with spending on so-called contextual ads -- online messages aimed at specific types of Internet users based on keyword searches. The average price per keyword used in such ads has also risen, explains Maria Chernitskaya, chief executive of ad agency iConText.
In a business climate showing signs of life, increased competition among advertisers has led to higher rates, said Dina Litvinova, spokeswoman for Yandex, Russia's most popular search engine.
Contextual advertising was first embraced by small and midsize companies but is now gaining popularity from big business, industry insiders said, pointing to retailers, auto makers and financial services firms.
Alexei Basov, CEO of online advertising agency Begun, said growth in contextual ads shows that advertisers have tweaked their approach since the crisis. They are more careful in monitoring the impact of their ad spending, he said.
Alexander Khudoley, commercial director of video sharing website RuTube, said big advertisers have boosted Internet ad spending, with online platforms accounting for 10% or more of their ad budgets -- a much bigger chunk than at the start of the crisis two years ago.
Newspaper website: vedomosti.ru
-Dow Jones Newswires; 212-416-2900
Alfa Group, VTB Capital may purchase News Outdoor
10:55 10/08/2010
Russia's Alfa Group and VTB Capital are interested in purchasing Russia's largest advertising operator, News Outdoor, business daily Kommersant said on Tuesday, citing unknown sources.
Financial-industrial conglomerate Alfa Group and state-owned investment bank VTB Capital are among a pool of investors interested in the purchase, Kommersant said.
Alfa Group and VTB Capital declined to comment on the possible purchase, as did News Outdoor Group CEO Maxim Tkachyov.
Kommersant referred to News Corporation's 2010 annual report, published on Saturday, which indicates the possible sale of News Outdoor and another subsidiary, Fox Mobile.
News Outdoor, a subsidiary of News Corporation owned by U.S. tycoon Rupert Murdoch, was recently fined for tax payment infringements in 2005 and 2006. The company is now faced with paying out 1.341 billion rubles ($45 million) in taxes and penalty fees.
MOSCOW, August 10 (RIA Novosti)
August 10, 2010 11:09
PhosAgro suggests merger with potash miner Silvinit – sources
MOSCOW. Aug 10 (Interfax) - The PhosAgro holding has suggested merging with potash miner Silvinit (RTS: SILV), fertilizer market sources told Interfax.
One of the sources said PhosAgro had written to the government at the beginning of July and that the Industry and Trade Ministry had already considered the initiative, but had not yet reached any decisions.
The market thinks PhosAgro might be looking to put up resistance to a potential merger between Silvinit and Uralkali (RTS: URKA) which, like Silvinit, is based in the Perm territory. The thinking is that creating a potash monopoly would make life hard for compound fertilizer producers, market participants say.
But the market is still inclined to believe that firms controlled by Suleiman Kerimov, which owns a blocking stake in Uralkali, will acquire control of Silvinit.
Pr
Phosagro offers merger with Silvinit
VTB Capital
August 10, 2010
News: According to sources in the fertiliser industry quoted by Interfax, privately-owned Phosagro (the largest phosphate producer in Russia) is offering to merge with Silvinit. The government is considering the deal, but no decision has been made yet.
Our View: While this offer could compete with Suleiman Kerimov's plan to merge Uralkali and Silvinit, from a business perspective it does not make as much sense. And although it would mean no potash monopoly on the domestic market, it could still increase pressure on NPK producers, as Phosagro is a major supplier of apatite concentrate (the second largest component of complex fertilizers). On the other hand, a potash monopoly would not change much on the domestic potash market: it is currently regulated by the Federal Anti- Monopoly Service (FAS) and would remain so.
There are also no synergies between the potash and phosphate businesses, just vertical integration as concerns the production of complex fertilizers. The phosphate business is also less profitable and more volatile, hence the value of the merged company would be less than the two standalone entities.
Elena Sakhnova
Regional airports to steal Moscow's hub role?
bne
August 10, 2010
Regional airports could be set to see increased transit traffic at the cost of the airports in the capital, reports Prime Tass.
The Russian Transportation Ministry is seeking to reduce transit passenger traffic via Moscow's airports by using the larger regional airports as hubs, the ministry said on Monday following a meeting held by Transportation Minister Igor Levitin.
At the meeting, Levitin expressed concern over the planned reconstruction of runways at Moscow's Domodedovo and Vnukovo airports in 2011, which is expected to reduce throughput capacity. The minister asked the Federal Air Transport Agency and the Federal Tourism Agency to consider the proposal.
Russian CEO faces hard sell for Uranium One control
Peter Koven in Toronto, Financial Post · Monday, Aug. 9, 2010
Vadim Zhivov has a tough job to do: explaining to Uranium One Inc.’s investors that a state-owned Russian company has exactly the same goals that they do.
Mr. Zhivov is general director of JSC Atomredmetzoloto (ARMZ), the Russian uranium giant acquiring a controlling stake in Uranium One in exchange for cash and prized assets. He is in the midst of a busy marketing campaign to explain the benefits of the deal, announced in early June, to uncertain shareholders, who are to vote on it at the end of this month.
“I strongly believe we will be able to build an even bigger company for the benefit of all shareholders,” he said in an interview in Toronto.
The transaction is highly complex and would be tricky to explain at the best of times. Throw in the word “Russia” and you’re working from an even bigger disadvantage. Some investors saw that and ran for cover.
But as the shareholder vote approaches, Mr. Zhivov is confident that shareholders are coming around to his vision. The stock jumped 30¢, or 9.5%, Monday to close at $3.14 after the company reported a narrower quarterly loss and increased its 2010 production forecast; its shares are up 58% from their 52-week low.
“We’re more than one month on the road, and the [Uranium One] share price speaks for itself. Sophisticated investors are getting the picture and buying shares,” he said.
The relationship between ARMZ and Uranium One dates back to July 2008, when Mr. Zhivov and Uranium One chief executive Jean Nortier met in Namibia.
Both companies have assets in Kazakhstan (which Mr. Zhivov calls “The Saudi Arabia of uranium”) and found that they had similar strategies for growth and a common view of the industry. They kept in close contact before making their union official in 2009, when Uranium One bought 50% of the Karatau mine in Kazakhstan from ARMZ, while the Russian firm took a 19.9% stake in the Canadian company.
That proved to be a precursor to the much bigger agreement the companies unveiled in June. If it is approved by shareholders, ARMZ would take a 51% controlling interest in Uranium One in exchange for stakes in two more Kazakh mines. ARMZ also plans to give Uranium One US$610-million in cash, allowing it to pay out a special dividend and essentially give shareholders a “takeover premium” even though there is no takeover.
It is an arrangement that appears to be unprecedented.
“Goldman Sachs advised us that no such transaction was ever made before. That’s why it was a long discussion,” Mr. Zhivov said.
He said that the idea of taking Uranium One private was never considered, because ARMZ’s goal is not to secure uranium supply. Rather, he hopes to build value by using the capital markets to continue growing Uranium One, both through acquisitions and organic growth. This deal alone will make the Canadian company one of the world’s top five producers.
ARMZ is the mining arm of Rosatom, the world’s biggest integrated nuclear firm, and Mr. Zhivov said that Rosatom management is also eager to “look at the screen” every morning and see how its uranium investment is doing. Being a public company allows that.
For uncertain Uranium One shareholders, Mr. Zhivov pointed out that there are minority protections in the deal that go well beyond what is required by Canadian regulators. He also said that Uranium One can benefit from Rosatom’s business ties in Kazakhstan.
“We understand that because [ARMZ] is a government-controlled entity, we have to behave in a certain way and prove three times what other companies shouldn’t have to prove at all,” he said.
When it comes to Russia specifically, he pointed out that the country has not missed a single delivery since it began exporting uranium in 1968. He also noted that other nuclear companies, including Canada’s Cameco Corp., have benefited from their business dealings in Russia.
The rally in Uranium One shares, which fell sharply when the deal was announced, comes despite some loud criticism from Khan Resources Inc., a junior miner in Mongolia that ARMZ tried to buy last year. That offer was trumped by a Chinese bidder shortly before the entire arrangement fell apart, along with Khan’s share price. Former Khan CEO Martin Quick blamed Russia for scuttling the deal, and took some veiled shots at ARMZ.
Mr. Zhivov does not know what else he can say to dismiss the allegations.
“We initially offered them a 400% premium to the current price. All the valuations were done by Canadian investment banks. I think it was a fair price.”
pkoven@
For the Record
10 August 2010
• VimpelCom Ltd. completed a “mandatory squeeze-out,” buying out all owners of shares and American Depositary Receipts in VimpelCom, the telecommunications company said Monday. (Bloomberg)
• Protek increased revenue 16 percent to 23.2 billion rubles ($780 million) in the second quarter, the company said Monday. (Bloomberg)
Activity in the Oil and Gas sector (including regulatory)
Russia toughens ecological demands
Aug 9, 2010 15:32 Moscow Time
Russia plans to toughen its oil and gas production laws and to this end, it will shortly submit a relevant draft law to the State Duma, the Lower House of parliament. The Natural Resources Ministry says that the disaster in the Gulf of Mexico had prompted it to draft the document.
Although oil and gas exploration is being carried out on the Russian shelves where depths are far less than that in the Gulf of Mexico, the ecological disaster off the American coast should give the Russian oil producers food for thought how to avert such incidents. The drafting of a special law to protect seas from oil spills was announced at the G20 summit in June.
If approved, the new law will oblige Russian oil producers to insure against risks of such oil spills. A company that implements an offshore project should present a plan for averting and cleaning up oil spills. This plan should be approved by the relevant federal agencies and should undergo ecological checks.
The company should also have money to finance the plan, its own funds reserved in a special fund or a bank guarantee. The oil companies should conclude an agreement with the government on what needs to be done to eliminate large-scale oil spills, which is impossible under the plan submitted. In this case, the government will take necessary measures and the company will finance the expenses.
Russian oil companies see no obstacles in meeting the given demands. One of the world’s largest oil companies, LUKOIL annually insures its oil refineries and export terminals, says the company’s spokesman, Vladimir Semakov.
“This concerns offshore oil rigs,” says Vladimir Semakov. “At present, the company has two oilrigs in the Baltic Sea and the Caspian Sea and an export terminal in the Barents Sea. A significant sum is allocated to insure these facilities annually. Moreover, the company meets special demands for guaranteeing security for the facilities on the seas,” Vladimir Semakov said.
Russia has developed effective means to cope with oil spills on the seas. This is the reason why Russian experts will be engaged in the elimination of the consequences of the accident in the Gulf of Mexico, processing oil waste and cleaning the coastal area. The Americans studied 69 thousand proposals aimed at eliminating the consequences of the disaster, and eventually opted for a plan proposed by the Russian scientists at the Scientific Research Institute for Ecology and Natural Resources in Tyumen as the most efficient.
In fact, the institute has already implemented several hundred projects for leading oil companies in northern Russia.
Proposed zero MET for Yamalo-Nenets oil to have neutral effect
UralSib
August 10, 2010
Yamalo-Nenets oil to receive zero MET rate. The government has ordered that a law be drafted introducing zero mineral ex- traction tax (MET) on oil produced at greenfields located in the Yamalo-Nenets region. This was in the Energy Ministry's strategic development plan for the Yamalo-Nenets and Krasnoyarsk regions by 2020, which was proposed in February and aims to attract investment in the regions and accelerate infrastructure construction. The Finance Ministry commented earlier this year that the costs of developing the fields are comparable to those for East Siberian fields, which already have zero MET.
Neutral effect on valuation. The majority of Gazprom Neft's (SIBN RX - Buy) operations are in the Yamalo-Nenets region, and the company is developing a number of greenfields in the area, with a cumulative 4% share in the company's total 2011E pro- duction. Gazprom Neft is also transferring the license for the Novoportovskoye oilfield from (production at which may begin in 2020) its parent company. TNK-BP (TNBP - Buy) is developing the Suzun and Tagul fields, commercial production at which will begin in 2012E. The impact of zero MET at Yamalo-Nenets fields on oil companies' valuations should be negligible (a 1% in- crease in EBITDA, 2% increase in net income, and less than 2% increase in Gazprom Neft's target price), as the share of greenfields being developed in the area in the companies' totals is not large.
Positive view confirmed, but new taxes may offset gains. We reiterate our Buy recommendations on our top picks Gazprom Neft and TNK-BP, with target prices of $6.8/share and $3.1/share, as they remain among the fastest-growing Russian oil sto- ries. Introduction of a preferential tax regime for Yamalo-Nenets fields may help to accelerate investment and attract international partners. We confirm our neutral view on the oil sector as a whole, as the government is likely to consider raising taxes on oil companies, as proposed by the Economics and Finance ministries, which would be value-destructive for the industry.
Victor Mishnyakov
ONGC eyes Rosneft joint bid for Russia fields-paper
10:23am IST
MOSCOW, Aug 10 (Reuters) - India's state-run Oil and Natural Gas Corp (ONGC.BO: Quote, Profile, Research) has proposed to Russian major Rosneft (ROSN.MM: Quote, Profile, Research) that the two companies jointly bid for the strategic Trebs and Titov fields in the Arctic north, Vedomosti reported.
ONGC has already expressed interest in the oil and gas fields [ID:nLDE62A0US], which the Russian government plans to auction this year with a starting price of 17.5 billion roubles ($586 million) [ID:nLDE65G1HX].
ONGC is now looking into the possibility of bidding jointly with state-controlled Rosneft, Russia's biggest oil producer, Vedomosti business daily reported on Tuesday, citing two sources close to both companies. A Rosneft official confirmed to the paper that there are talks, but no decision has yet been taken.
Rosneft declined comment when contacted by Vedomosti, while ONGC did not reply to a comment request. ($1=29.88 Rouble) (Writing by Toni Vorobyova; Editing by Anshuman Daga)
ONGC Seeks to Bid for Trebs, Titov With Rosneft, Vedomosti Says
By Torrey Clark
Aug. 10 (Bloomberg) -- Oil & Natural Gas Corp. is seeking to bid jointly for Russia’s strategic Trebs and Titov oil fields with OAO Rosneft, Vedomosti reported, citing two unidentified people close to the two companies.
ONGC is also looking to join the Sakhalin-3 project in Russia’s Far East and joint construction of a refinery in India or Rusia, the newspaper said, citing the people close to ONGC, India’s biggest energy explorer. Rosneft is in preliminary talks with ONGC on the project off Sakhalin and isn’t discussing a refinery, Vedomosti reported, citing the person close to the state-owned Russian oil producer.
The Trebs and Titov fields may be sold in the fourth quarter in one lot with a starting price of 17.5 billion rubles, according to the Russia’s subsoil resources agency.
Last Updated: August 10, 2010 01:13 EDT
UPDATE 1-Russia ups Primorsk oil exports, delays maintenance
Mon Aug 9, 2010 4:18pm GMT
* Maintenance delayed due to fears of forest fires
* Four more cargoes added compared to initial plan
(Adds comments by Transneft and traders)
MOSCOW, Aug 9 (Reuters) - Russia's Transneft will raise Urals crude shipments from the Baltic Sea port of Primorsk in August by 400,000 tonnes after fears of forest fires forced the pipeline monopoly to postpone pipeline maintenance.
"We've made a decision to postpone all fire related (maintenance) works due to fire danger," a Transneft spokesman said.
He declined to comment on Primorsk's loading schedule after traders said it was boosted by four additional cargoes compared to the initial schedule.
Sources said TNK-BP (TNBPI.RTS) will lift two additional cargoes for loading on Aug. 12-13 and 13-14, while LUKOIL (LKOH.MM) will load one extra vessel of Urals URL-NWE-E on Aug. 15-16.
Kazakhstan will reroute one of its three additional cargoes previously scheduled for Gdansk to Primorsk, sources said. The vessel is scheduled for loading on Aug. 14-15.
Some trading sources said extra cargoes could further depress Urals prices.
"I think Urals can now get pretty weak on the back of this," a source with a European refiner said.
"The differentials have eased a lot (over the past few days). It is already in the price," said another trader. (Reporting by Gleb Gorodyankin)
Rosneft Pays Yukos
10 August 2010
Rosneft paid Yukos Capital in accordance with a court order, Interfax said, citing an unidentified company official.
The oil producer transferred 12.9 billion rubles ($431 million) Monday and $857,500 on Aug. 6, the news service said.
Rosneft’s press service said the company had settled its debt to Yukos, confirming the payment dates, while declining to give the sums paid.
(Bloomberg)
TNK-BP offers its subsidiary to Rosneft, Gazprom Neft for purchase
RBC, 10.08.2010, Moscow 11:37:44.In order to help its parent company, the Russian-British oil company TNK-BP is ready to sell some of its assets, the RBC Daily newspaper reported today. According to the publication, the company is in the active stage of negotiations on the sale of its Siberian subsidiary Novosibirskneftegaz.
TNK-BP has already held talks with Rosneft and Gazprom Neft on the matter, though they did not reach any agreements. According to a source from one of the oil companies, no agreement was reached because the companies lack funds to purchase assets at the moment. RBC Daily was unable to get commentary from either Gazprom Neft or Rosneft. Meanwhile, according to a source close to TNK-BP, the idea of Novosibirskneftegaz's sale first arose over a year ago, but it has become especially important at the moment. "As soon as we find a buyer and agree on the price, we will sell Novosibirskneftegaz," the source told the publication.
TNK-BP might sell a secondary producing asset
VTB Capital
August 10, 2010
News: According to RBC-Daily, TNK-BP might sell Novosibirskneftegaz, one of its producing assets. The subsidiary accounts for roughly 3% of TNK-BP's production and could in our view be worth USD 500-800mn. The paper speculates that the purpose of the divestment is to raise money for BP. Meanwhile, there is no clarity yet on whether TNK-BP is to participate in the sale of BP's Venezuela assets.
Our View: TNK-BP has in the past sold some of its less productive assets and we believe that this deal could well materialise as part of the company's plan to optimise its portfolio. We also think that disposing of the asset could increase the company's 2010 dividend payout 15-25%. At the same time it would not have any material negative impact on the company's production profile, given that Novosibirskneftegaz's output is likely to decline in the coming years. We see Bashneft as one of the potential buyers, should the sale materialise.
In our view, the deal could be a positive indication that BP wants to sustain TNK- BP's high dividend payout in the near term, suggesting that TNK-BP might pay more than the policy-stipulated 40% of net profit in dividends yet again this year. At the same time, the potential acquisition of BP's assets in Venezuela could undermine the company's dividend payout, as it is effectively an alternative way of transferring cash to BP (which is unlikely to be welcomed by the market).
Lev Snykov
Betting on TNK-BP
by Oleg Nikishenkov at 09/08/2010 19:29
Bonds in Russian-British oil company TNK-BP came under investors’ scrutiny when it became evident that BP did not intend to sell its 50 per cent share in the joint venture.
Pyotr Grishin, a credit analyst at Renaissance Capital, said that dollar-denominated TNK-BP bonds (2020 maturity) grew by 10 points within a month, while the coupon rate fell from 8.5 per cent to 6 per cent.
“The fear factor, associated with rumours that BP may sell its stake in TNK-BP, is gone,” Grishin said.
If BP intended to sell its share it would make additional debt pressure to finance the deal and would downgrade TNK-BP’s credit rating, Grishin said. The potential for growth is quite low since corporate debts of developing economies now look worse than European ones, he added.
Metropol’s Alexei Kokin said his company was sticking to a “buy” recommendation for both ordinary and privileged stock of the company.
“Our recommendation is based on a combination of high dividend yield, production growth in Eastern Siberia and improvement of the situation in the Gulf of Mexico,” said Kokin.
“Given the fact that the average price of oil at the first half-year is higher than the year before, we might expect dividends at least at a similar level for 2010.”
Kokin added that minority TNK-BP shareholders could even benefit from the Gulf of Mexico accident, as BP needs to keep dividends at a high rate to offset incoming financial claims.
10.08.2010
Tatneft Implements Transport Satellite Monitoring System
Tatneft is continuing to install satellite monitoring equipment on its transport fleet, the company reported in a news release. This effort will improve the relay of data on the location and speed of shipments and is meant to aid transport enterprises.
Currently, 7,039 units have been outfitted with the systems at 44 auto transport enterprises.
Tatneft views the satellite as a way to improve its resource conservation efforts. According to the company, the system enable Tatneft to reduce the routes of individual vehicles by 25 percent and cut fuel consumption 22 percent compared to 2006.
Copyright 2010, Tatneft. All rights reserved.
Gazprom
Russian Press: Bulgaria, Serbia Plot behind Gazprom's Back
Energy | August 10, 2010, Tuesday
Serbian President, Boris Tadic, and Bulgarian Prime Minister, Boyko Borisov, agreed on the route of the South Stream gas pipeline behind Gazprom’s back, the Russian newspaper Komersant writes Tuesday.
The article points out the two have decided the pipe would cross the border between their countries in the area of the Serbian town of Dimitrovgrad, despite Gazprom opposing this version because it lengthens the route and makes the Russian-funded project more expensive.
“Belgrade has always been interested in this route, but failed to convince Gazprom and now is making attempts to use Sofia to achieve its goal while the latter, until recently, blackmailed Moscow with refusals to partake in South Stream,” the author says.
The publication reminds that after informal talks in Bulgaria’s Black Sea city of Varna over the weekend between Tadic and Borisov, the Bulgarian PM reported they have discussed and agreed the South Stream route will pass through Dimitrovgrad per the desire of the Serbian side. Tadic, on his part, had guaranteed Serbia’s participation in Bulgaria’s project to build a second Nuclear Power Plant (NPP) in the Danube town of Belene, the article points out.
The author further explains the South Stream route through Serbia is yet to be finalized, but there had been an agreement between Moscow and Belgrade the pipe would enter the country at the town of Zaychar, about 100 km north of Dimitrovgrad. Serbia insists on Dimitrovgrad because this way the pipe will cross its entire territory, not just the southern parts, cutting off important locations such as the regional city of Nis.
It was reported in Russian press Monday that Russian PM, Vladimir Putin, made a phone call to his Bulgarian counterpart to thank him about Bulgarian help in extinguishing Moscow wildfires, but the two also talked about South Stream and Belene, something the press center of the Bulgarian cabinet failed to note.
Gazprombank completes $350mn purchase of RTO stocks for option programme
Renaissance Capital
August 10, 2010
Event: According to Vedomosti today (10 Aug), Gazprombank has completed the purchase of regional telecom operators' (RTO) stock, which will be used for an option programme of the newly created Rostelecom. The purchase amounted to $350mn of stock. So far, only Uralsvyazinform and South Telecom have disclosed Gazprombank's shareholding, at 6.81% and 7.41%, respectively.
Action: The purchase of RTOs' shares by Gazprombank did not have any significant impact on RTOs' stock.
Rationale: The $350mn option programme was approved by the boards of the RTOs and Rostelecom in May 2010. Gazprombank was nominated as an agent to purchase the RTOs' stock. The price change of RTOs' common stock on MICEX varied between -2% and 1% in June-July, while the MICEX added more than 5%. In our view, this could be explained by the purchase of significant blocks of shares by Gazprombank over the counter or in the market. Given that the prices of common stocks are trading with no upside to relative valuation for conversion purposes, we think there is no reason for the stocks' prices to increase, unless Rostelecom common stock strengthens substantially.
Ivan Kim
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