Russia - WikiLeaks
Russia 090421
Basic Political Developments
• Russia's Lavrov to visit North Korea this week - Sergei Lavrov will arrive in Pyongyang on April 23, and will then visit South Korea on April 24-25, the Foreign Ministry's press service said on Tuesday.
• Russian FM to Visit Both Koreas - Lavrov is scheduled to visit Pyongyang for two days either on Thursday or Friday and then come to Seoul, a diplomatic source said. He will stay in Seoul for just one day.
• Russian Foreign Minister to Visit N. Korea - Sergey Lavrov's two-day visit starting Thursday is expected to focus on efforts to reverse Pyongyang's withdrawal from the so-called six-party talks. North Korea took the decision citing U.N. Security Council criticism of its rocket launch on April 5.
• President of Armenia Serzh Sargsyan will pay a working visit to Russia on April 23 at Dmitry Medvedev's invitation.
• Russia may become successful mediator in resolving to Nagorno-Karabakh conflict: experts
• Russia invites Europe to join new energy charter - Russian President Dmitry Medvedev unveiled the project at a press conference with Finnish head of state Tarja Hallonen in Helsinki on Monday (20 April).
• RF-Finland relations are fine and contacts regular – Halonen
• Finland Withholds Pipeline Backing - President Dmitry Medvedev didn't win firm backing for the Nord Stream gas pipeline from his Finnish counterpart Tarja Halonen in Monday talks, a signal that bargaining will continue in the next few months.
• Russia, China finalise oil pipeline deal - China and Russia signed a multi-billion dollar deal Tuesday, bringing into play a series of agreements on constructing an oil pipeline and supplying fuel to Chinese markets, state media reported.
• Russia, China sign oil deal, start new pipeline branch - Russia and China signed an intergovernmental agreement on oil cooperation in Beijing on Tuesday, under which a new branch from the East Siberia-Pacific Ocean (ESPO) pipeline will be built toward China.
• ESPO branch to China could be finished ahead of schedule – Sechin
• Russia sentences captain of sunken Chinese ship New Star - A court in Russia's Far Eastern port city of Nakhodka found the Indonesian captain of a Chinese freighter that sank in February guilty of border violation on Monday, an aide to the local prosecutor said.
• Russia jails captain over sinking of Chinese ship
• Russia confirms Admiral Gorshkov delivery to India in 2012
• NGO: India to keep buying Russian jets - The Center for Analysis and Technologies predicts India will purchase as many as 90 Su-30MKI fighters under existing contracts, and possibly buy more Su-30 or modernized MiG-29K aircraft, as well, RIA Novosti reported Monday.
• Russian army in North Caucasus receives new attack helicopters - The first six Mi-28N Night Hunter attack helicopters have been delivered to Russia's North Caucasus military district, a military source said on Tuesday.
• Georgian spy busted in Sochi – FSB
• FSB cuts operation of Georgian intelligence in Russia
• UPDATE: Russia Intercepts Georgian Spy – Interfax
• Russia’s FSB reported on ten branches of Hizb ut-Tahrir movement eliminated in 2008
• Turkish emissary of Al-Qaeda was killed in Dagestan last week: Russia’s FSB
• Anti-terrorist operation completed in Ingushetia - An anti-terrorist operation was completed in Verkhny Alkun and its neighbourhood in Ingushetia on Tuesday, the public relations group of the republican department of the Federal Security Service told Itar-Tass.
• Special regime of counterterrorist operation introduced in Russia’s Ingushetia village
• Former Soviet KGB officer turned billionaire eyeing second British paper - Alexander Lebedev who bought the debt-ridden London's Evening Standard tabloid newspaper, said in an interview that he was interested in buying British national daily The Independent
• 65 % of Russians affected by crisis - 65 % of Russians affected by crisis
• Russia to build wind farm on Russky island by APEC summit-2012
• Crisis or Not, Russia Will Build a Bridge in the East - The government plans to spend well over $1 billion on the span, which is to be one of the longest suspension bridges in the world, and at least $6 billion on related projects in this thinly populated region, near China and North Korea.
• Frenchman, Family Slain in Moscow Home
• Medvedev’s Mixed Messages - Although Nothing New Was Said, Medvedev’s Giving an Interview to Novaya Gazeta Is Noteworthy in and of Itself
• Paul Goble: Some of Russia’s Muslims Seeking to Define a Place between ‘Dar ul-Islam’ and ‘Dar ul-Harb’
National Economic Trends
• Russia may deplete Reserve Fund by 2010F due to economic slump
• Unemployment rate slow, wage arrears still rising
• Q1 Jobless Rate Hits 8-Year High Of 9.5%
• UralSib: Strengths and weaknesses of Russia's anti-crisis plan
Business, Energy or Environmental regulations or discussions
• Aeroflot, TNK-BP, Gazprom, Mosenergo: Russian Equity Preview
• RTS Opens Dollar Platform
• Russia, Airbus sign $4 bln titanium deal
• Electricity demand falls sharply in Siberia
• Putin’s Tariffs Stall Russian Growth for Caterpillar (Update1)
• Microsoft Plans to Invest 10 Billion Rubles in Russia (Update1)
• Microsoft Unveils $300M Expansion - Praising the government for its "amazing work" fighting the crisis, Microsoft CEO Steve Ballmer announced Monday that his company would invest 10 billion rubles ($300 million) in Russia over the next three years.
• Altimo appeals New York court decisions
• UPDATE 1-Severstal sees '09 Russia steel demand down 25 pct
• MMK returns to profitability in Q1
• Potanin Cuts Norilsk Stake to 25%
• Aluminum giant RusAl posts 7.2% decline in Q1 aluminum output
• Hambro Announces 53% Earnings Jump
• Russia VTB restructured 15 pct of loan portfolio –paper
• VTB’s Non-Performing Loans Share Rises to 3.4%, Kommersant Says
• VEB may attract financing to purchase stake in Rostelecom from KIT Finance
• Sistema eyes majority stake in telecom Svyazinvest - Russian conglomerate Sistema has ambitions to bid for control of Svyazinvest after a getting a lower-than-expected valuation on the 25 percent plus one share in the telecoms giant it wanted to sell to the state.
• UPDATE 1-Rambler Media EBITDA up, cost saving to continue
• Alfa Bank Profit Falls 9.2%
• Russia braces for fewer tourists - About 18 percent of the jobs in St. Petersburg or 500,000 jobs in the city rely on tourism, said Mariana Ordzhonikidze, who heads the city's tourism department, the Moscow Times reported Monday.
• Sevmash to produce containers for radioactive waste - Sevmash shipyard in Severodvinsk, Arkhangelsk Oblast, starts series production of a new type of containers for used radioactive fuel for Leningrad Nuclear Power Plant.
Activity in the Oil and Gas sector (including regulatory)
• Crude production up, Russia says - The output of crude oil from Russia for 2008 and the first two months of 2009 fell about 1 percent, but March output saw a modest increase of 0.4 percent to 9.76 million barrels per day.
• Turkmenistan: Russian Ministers Sent To Ashgabat For Gas Talks - Russian Energy Minister Sergei Shmatko and Deputy Prime Minister Igor Sechin will undertake an emergency mission to Ashgabat for talks aimed at stabilizing Russian-Turkmen gas relations.
• Sechin seals $25bn China loan-for-oil deal - China agreed last year to lend $10 billion to Russian oil pipeline monopoly Transneft and another $15 billion to state-run producer Rosneft in exchange for supplies of 300 million tonnes (1.1 billion barrels) of Russian oil over 20 years.
• Russia, China sign oil deal, start new pipeline branch
• President Ilham Aliyev: Azerbaijan can supply to Russia 5 bn cu m of gas a year - Russia can become the second after Turkey importer of Azeri gas.
• Is Nord Stream making progress? - Finland could give its approval for the construction of the Nord Stream pipeline by June, according to a Kremlin official quoted by Russian state news agency RIA Novosti.
• Surgut 'faces MOL lock-out' - Russian producer Surgutneftegaz, which recently bought a 21% stake in MOL, may be locked out of the Hungarian players, annual general meeting, according to local media reports.
• Surgut may be locked out of MOL's AGM –report
• Hungary suspects Surgutneftegaz of planning to block Nabucco project
• Russia's TNK-BP Seeks $300M Pre-Export Loan - Sources
• TNK-BP Announces a Senior Appointment - Francis Sommer has been appointed Executive Vice President, Technology of the TNK-BP group of companies.
• Rosneft keeps mum over Sibir talk - Russian state-run producer Rosneft has refused to comment on reports that it is considering bidding for AIM-listed Sibir Energy.
• Tchigirinski to sell his villa to settle debt to Sibir Energy
• Oligarch Chalva Tchigirinski to lose Monaco palace
Gazprom
• Gazprom saving energy - The Russian economy can easily save up to 100 billion cubic meters of gas per year if energy efficiency measures are taken, a Gazprom representative said. Today, the Russian economy is more than 50 percent dependent on gas supplies.
• Gazprom Neft Plans $299M Bond - Gazprom Neft said Friday that it was selling 10 billion rubles ($299 million) of bonds in its debut offering of domestic debt.
• Unicredit: Gazprom Raises $2.25bn in record bond placement
• Gazprom, Shell, Oando make $30bn Gas Master Plan shortlist
• Caspian Gas - we need to get much smarter to outsmart the Russians: Russia and Gazprom have once again circumvented an uncoordinated and lack-lustre EU activity in the region and managed to hammer home one of the last nails in the coffin of Nabucco pipeline.
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Full Text Articles
Basic Political Developments
Russia's Lavrov to visit North Korea this week
MOSCOW, April 21 (RIA Novosti) - Russia's foreign minister is to visit North Korea on Thursday for talks likely to focus on tensions over the North's recent rocket launch and its withdrawal from nuclear negotiations.
Sergei Lavrov will arrive in Pyongyang on April 23, and will then visit South Korea on April 24-25, the Foreign Ministry's press service said on Tuesday.
The ministry did not give details on the planned meetings, or confirm media reports that Lavrov would meet with North Korean leader Kim Jong-il.
The talks in Pyongyang and Seoul will address "the situation on the Korean peninsula and in the East Asian region, and key international issues of mutual interest," the statement said.
North Korea withdrew from the six-nation talks on its nuclear program in protest against criticism from the United Nations Security Council over its rocket launch on April 5. Russia, a party to the talks along with the United States, China, Japan, and the two Koreas, joined international criticism of the rocket launch, while opposing new sanctions against the North.
The visit comes at a tense time in relations between the two Koreas, over the rocket launch and the arrest of a South Korean at the Kaesong industrial complex.
Earlier on Monday, delegations from the two countries had been set to hold talks in the North Korean border town of Kaesong, the site of an industrial estate that has been a focus of international economic cooperation in recent years. However, the Yonhap news agency quoted sources as saying the meeting had been put off due to procedural disputes.
North Korean police arrested a South Korean worker at the plant a month ago, for allegedly making critical comments about Pyongyang's regime, and encouraging a North Korean woman to defect.
North Korea has reacted furiously to suggestions that Seoul could join the Proliferation Security Initiative (PSI), a U.S.-led pact to prevent supplies of weapons of mass destruction, and has warned that it would consider such a move a declaration of war.
Last week, North Korea ordered UN nuclear inspectors out of the country in protest against criticism of its rocket launch, and pledged to restart work at its Yongbyon reactor.
The inspectors had been overseeing the deconstruction of the Yongbyon nuclear facility, in line with a February 2007 deal between the six countries involved in talks on the North Korean nuclear problem.
The UN Security Council said the North's rocket launch contravened a UN resolution passed in late 2006 after Pyongyang's nuclear test, banning nuclear and ballistic activities.
Many countries suspect that North Korea's rocket launch was a test of a long-range missile. North Korea claimed the rocket, which was launched over Japan, successfully delivered a communications satellite into orbit, but the U.S. and South Korean militaries said all three stages fell into the ocean and that "no object entered orbit."
Russian FM to Visit Both Koreas
Russian Foreign Minister Sergey Lavrov will visit Pyongyang and Seoul sometime this week. Since it is likely that Lavrov will meet with North Korean leader Kim Jong-il, the South Korean government expects his visit to Seoul to provide an opportunity to find out North Korea's position following its launch of a long-range rocket and expulsion of nuclear inspectors.
Lavrov is scheduled to visit Pyongyang for two days either on Thursday or Friday and then come to Seoul, a diplomatic source said. He will stay in Seoul for just one day.
In July 2004, amid another stalemate in the six-party talks, Lavrov visited both Koreas, delivering a letter from former Russian president Vladimir Putin to Kim and proposing a three-way foreign ministerial meeting among North Korea, South Korea and Russia. Diplomats speculate Lavrov is again making the trip to break the current impasse.
englishnews@ / Apr. 21, 2009 11:57 KST
Russian Foreign Minister to Visit N. Korea
APRIL 21, 2009, 3:36 A.M. ET
MOSCOW -- Russia says its foreign minister will this week visit North Korea, which has acrimoniously withdrawn from international nuclear negotiations.
Sergey Lavrov's two-day visit starting Thursday is expected to focus on efforts to reverse Pyongyang's withdrawal from the so-called six-party talks. North Korea took the decision citing U.N. Security Council criticism of its rocket launch on April 5.
A ministry statement said only that Lavrov's visit would focus on "relevant international problems that represent mutual interest."
North Korea's relations are not as close with Russia as they were during Soviet times, but the two sides maintain cordial ties. Moscow is a member of the six-party talks aimed at the North's denuclearization and usually avoids openly criticizing Pyongyang.
President of Armenia Serzh Sargsyan will pay a working visit to Russia on April 23 at Dmitry Medvedev's invitation.
Russia may become successful mediator in resolving to Nagorno-Karabakh conflict: experts
21.04.09 09:00
Azerbaijan, Baku, April 20 /Trend News, E.Tariverdiyeva/
Russia may become a successful mediator through activating efforts to resolve the Nagorno-Karabakh conflict.
"Moscow is a key to resolution of Nagorno-Karabakh conflict. If Russia puts enough pressure to the Armenian side, we would have some quicker result that we have so far," European expert for the South Caucasus Amanda Akcakoca said.
The Azerbaijani President Ilham Aliyev discussed with the Russian Federation's President Dmitry Medevedev ways of Nagorno-Karabakh conflict settlement within the working visit to Russia on April 16-17. After talks Aliyev thanked Russia for attempts to solve Nagorno-Karabakh problem.
"Russia is trying to reach maximum progress in resolving the Nagorno-Karabakh conflict," Medvedev said after the meeting with Azerbaijani President.
On April 23, Armenian President Serzh Sargsyan will also visit Russia, the Kremlin reported. The visit will take place at the invitation of Russian President.
The conflict between the two South Caucasus countries began in 1988 when Armenia made territorial claims against Azerbaijan. Armenian armed forces have occupied 20 percent of Azerbaijan since 1992, including the Nagorno-Karabakh region and 7 surrounding districts.
Azerbaijan and Armenia signed a ceasefire agreement in 1994. The co-chairs of the OSCE Minsk Group - Russia, France, and the U.S. - are currently holding the peace negotiations.
Baku appreciates Moscow's efforts to resolve the conflict.
"Azerbaijani President's visit to Russia, successful talks and various discussions related to settlement of the Nagorno-Karabakh conflict give us Azerbaijan optimism regarding settlement of the conflict," Chief of the International Relations Department of the President's Office Novruz Mammadov told Trend News.
Russia can fulfill historic mission in settlement of Nagorno-Karabakh conflict, he said. "Character, content of multilateral relations between Azerbaijan and Russia, co-chairmanship of Russia in Minsk group, very strong impact and probable Russia's pressure on Armenia as an ally and necessity in restoration of stability in the region give grounds to consider that Russia will be able to fulfill its historic duty," Mammadov said.
Moscow's willing to participate in settlement of prolonged conflict is positive trend that can lead to its settlement, the supervisors said.
Moscow's efforts may accelerate the process of solution the conflict. In a light of recent development Russia tries to demonstrate that it wants that it can be serious and reliable partner in the region and trying to bring a solution to this conflict. But what I would say - that would suit its own interests and that would take into consideration Moscow's security interests in particular in South Caucasus region," Akcakoca told Trend News.
Moscow is interested side in settlement of the Karabakh conflict, Azerbaijan Azerbaijani expert Tofig Abbasov said.
There was a moment when the Kremlin tried to rule the region via hot conflicts, he said. "But this stake did not justify itself. Moscow condemns its ally - Armenia for blockade state, Leader Media-Holding analytic group expert Abbasov told Trend News. Presently, Russia demonstrates decisiveness in overcoming consequences of its blunders and tries to protect Yerevan from the West where diaspora constantly pushes it."
This visit and agreements achieved during the visit are sure not to harm negotiation process, Russian politician Azer Mursaliyev said. "Theoretically, certain progress is possible in settlement of conflict," editor-in-chief of Kommersant newspaper Mursaliyev told Trend News over phone from Moscow.
Moscow's activity is stipulated by willing of the Kremlin to be key player in the region, the analysts said.
Moscow is trying to make itself a key player in resolving Nagorno-Karabakh conflict, Akcakoca said.
The activity in the negotiation process between Moscow and the two South Caucasus countries, involved in the protracted territorial conflict, demonstrates that Russia is seriously considering creating a new geopolitical configuration in the region, Abbasov said..
"Russian diplomacy has finally realized that it will benefit nothing positive from the frozen Nagorno-Karabakh conflict, said Abbasov.
The conflict needs to be unblocked, so that frozen and potentially lucrative economic leverage with participation of Russian, Azerbaijani, and Armenian capital to benefit, said the expert.
Armenia is underproductive side for Russia, while Azerbaijan is not only an attractive country but also it is perspective. "Moscow may benefit from Azerbaijan's energy, transport and other sectors for its economy and geopolitical purposes," Abbasov said.
"A serious optimism is needed, as neither country is able to resolve the conflict alone," Mursaliyev added.
Peacemaking is a way to get a competitive advantage in the modern world.
"If Russia does not agree with the United States, then the peace process will force. There may arise problems from Western participants of the negotiation process," said Mursalov
E.Ostapenko contributed in the article.
Russia invites Europe to join new energy charter
ANDREW RETTMAN
EUOBSERVER / BRUSSELS - Russia has floated plans for a new global treaty on trade in fossil and nuclear fuel in an attempt to consign to history an earlier pact, the 1991 Energy Charter Treaty.
Russian President Dmitry Medvedev unveiled the project at a press conference with Finnish head of state Tarja Hallonen in Helsinki on Monday (20 April).
"Our task today is to maintain, or rather ensure for the future, the balance of producers of energy resources, transit states and consumers of energy resources," he said.
A detailed paper has been sent to G20 and G8 members as well as Russia's allies and neighbours. Talks at the EU level are to begin "as soon as possible."
The new pact is to cover oil, gas, nuclear fuel, coal and electricity and to include the US, China and India as well as European countries.
It is aimed at replacing the Energy Charter Treaty (ECT), which gives legal protection to Western energy investors in the former Soviet bloc and sets out rules on gas transit.
The charter has 51 signatories, including the EU states and Russia. But Russia has not ratified it, saying it gives an unfair advantage to Western firms.
"We have not ratified these documents and do not consider ourselves bound by them," Mr Medvedev said.
The new initiative has a bearing on a major lawsuit in the Hague, where shareholders of the bankrupt Yukos oil firm have attacked Russia on the basis of the 1991 charter.
Russia broke up and sold off Yukos five years ago after its CEO tried to mount a political challenge.
"Russia cannot unilaterally cancel the ECT," the ex-Yukos side's lawyer, Tim Osborne, told EUobserver. "The [arbitration] tribunal will decide whether or not Russia is provisionally bound, not Russia."
Mr Medvedev's project could also impact EU-Russia negotiations on a new bilateral treaty, which was supposed to preserve the legal "principles" of the ECT.
Analyst Pierre Noel of the European Council on Foreign Relations says Russia and Germany have worked together on the new global pact, which is likely to have Berlin's support.
But he predicted the pact will be too vague to improve EU energy security.
"A treaty is only worth signing if it limits the room for manoeuvre of the people signing it. This is what the ECT is," he said. "The Russians want to put on the table a treaty that will not constrain anyone."
"They want to be free in the way they treat investors," Mr Noel added.
The Nord Stream question
The Medvedev-Hallonen meeting also saw Finland withhold support for the Nord Stream gas pipeline for the time being.
Ms Hallonen said Helsinki will in June give more details on its evaluation of the Russian-German pipeline's potential ecological impact on the Baltic Sea.
Russian analysts say Finland is using the ecology card to secure better rates on timber imports from Russia for its pulp and paper companies.
RF-Finland relations are fine and contacts regular – Halonen
HELSINKI, April 21 (Itar-Tass) - Relations between Russia and Finland are fine and contacts regular--this appraisal was given by Finnish President Tarja Halonen in a speech on Monday at a ceremonial dinner given by her and her husband in honour of the State visit by Russian President Dmitry Medvedev and his wife.
"Cooperation covers all fields of public life," Halonen pointed out, recalling that Russians are the largest group of foreign tourists in Finland. Last year Finnish diplomatic missions in the Russian Federation issued 750,00 visas, which was more than the number of visas in any other member-country of the European Union (EU).
"We are also regular guests on the Russian land. A large number of Finns work in Russia while Finnish companies employ tens of thousands of Russians," Halonen said, emphasizing, "The functioning of border services is of importance to both nations. Our task is to ensure that the border functions effectively and successfully".
Speaking of promising areas of cooperation between Russia and Finland, Halonen mentioned the protection of the environment, and first of all that of the entire Baltic Sea area, as well as science and technologies. She recalled that an innovations center had opened in St Petersburg last year. Through the center the Russians can cooperate with Finnish partners in this respect.
"Last year Russia became our most important trading partner both in export and import. The amount of investments also increased," Halonen said. She added, "To Finland as an EU country it is very important that relations between the EU and Russia have been strengthened and that talks on a new basic agreement will be continued".
"We also hope that talks on Russia's bid for membership at the World Trade Organisation will yield a positive result as soon as possible," Tarja Halonen said.
Finland Withholds Pipeline Backing
21 April 2009
By Anatoly Medetsky / The Moscow Times
President Dmitry Medvedev didn't win firm backing for the Nord Stream gas pipeline from his Finnish counterpart Tarja Halonen in Monday talks, a signal that bargaining will continue in the next few months.
Halonen said Finland was still studying the project in terms of its environmental safety and suggested that a decision might be coming in July, when the countries' prime ministers are scheduled to meet.
"As Finns have said earlier, the gas pipeline is an ecological question," Halonen said, speaking at a joint news conference with Medvedev. "If it can be built in an ecologically safe way, then we think it's a good solution."
Medvedev said simply that Russia would continue to promote the pipeline.
In exchange for permission to lay the undersea pipeline off its coast, Finland may ask Russia for further changes in timber export policy and discounts for gas and electricity imports, said Dmitry Abzalov, an expert at the Center of Current Politics, a think tank.
Russia is a major exporter of timber for Finland's sprawling forestry industry.
"I think Helsinki is trying to bargain," Abzalov said. "They are first and foremost interested in timber."
Gazprom, Germany's E.On and BASF and Holland's Gasunie expect all permits from Finland and four other littoral states for the pipeline's construction across the Baltic Sea by the end of the year. Gas shipments are scheduled to start in 2011.
Prime Minister Vladimir Putin delayed the introduction of prohibitively high export duties for timber from last January by nine to 12 months after a meeting with his Finnish counterpart Matti Vanhanen in November. After those talks, an irritated Putin said the environmental impact study on Nord Stream was so extensive as to cover "stones, fur-seals, birds, shipping, cables laid on the bottom and ammunition left from World War II."
As a return favor for the export-duty gesture, the Kremlin expected unconditional support for Nord Stream from Finland, a Kremlin source said ahead of Medvedev's visit.
"We are hoping for Finland's active participation on the issue of the Nord Stream pipeline," the source said, Interfax reported. "We hope this participation will be as active as when Finland turns to us on timber supply-related issues."
Nord Stream AG, the company set up to build the pipeline, in March presented Finland with a formal request to allow construction through two separate permits -- one in accordance with the Exclusive Economic Zone Act and the other under the Water Act. The company also needs permission from Russia and Germany, the countries that stand to gain from the pipeline, as well as Sweden and Denmark.
Medvedev also said he would present new proposals for energy cooperation in an effort to offer an alternative to the European Energy Charter, which Moscow has refused to ratify.
The alternative proposals, which will cover coal, nuclear fuel, oil and gas, aim to balance the interests of producers, buyers and transit states, Medvedev said.
Russia, China finalise oil pipeline deal
BEIJING (AFP) – China and Russia signed a multi-billion dollar deal Tuesday, bringing into play a series of agreements on constructing an oil pipeline and supplying fuel to Chinese markets, state media reported.
The oil cooperation pact was signed by Chinese Vice Premier Wang Qishan and Russian Deputy Prime Minister Igor Sechin, according to China National Radio's website.
"(Following this pact) a series of agreements between companies on pipeline construction, crude oil trade, loans and other projects will become immediately effective," the radio station quoted Wang as saying.
"This signifies a huge breakthrough in realising energy cooperation between the two nations."
The Chinese report gave few financial details.
But according to Russian news reports, the sides agreed to a 23-year deal to pump Russian oil to the energy hungry Chinese market, in return for 25 billion dollars in loans from China to Russian oil firms to finance a pipeline.
Russia will supply China with 15 million tonnes of crude during the period of the deal, Interfax news agency said.
Russian oil major Transneft had said in February at an earlier stage of the negotiations that it had agreed to a 20-year deal to pump Russian oil to China.
There was no immediate explanation as to why the deal had been apparently extended by three years.
The construction of the oil pipeline from Russia's far east to refineries in China's northeast will start at the end of April and will be completed by the end of 2010, it said.
The pipeline is a spur of the East Siberian-Pacific Ocean pipeline that is currently under construction and will transport Russian crude from Siberia to a terminal on its eastern coast.
"We hope to complete in a short time the basic infrastructure and provide the Chinese side with stable oil supplies," China Radio International quoted Sechin as saying at Tuesday's signing ceremony.
Russia, China sign oil deal, start new pipeline branch
BEIJING, April 21 (RIA Novosti) - Russia and China signed an intergovernmental agreement on oil cooperation in Beijing on Tuesday, under which a new branch from the East Siberia-Pacific Ocean (ESPO) pipeline will be built toward China.
The agreement sets out terms for oil cooperation between the countries, in particular on the laying of a pipeline from the Skovorodino refinery in Russia's Far East to Mohe County in China's Heilongjiang province. Under the deal, the pipeline must be completed by the end of next year.
After signing the deal, Russian Deputy Prime Minister Igor Sechin, who chairs the state oil company Rosneft, said the agreement "creates a new foundation for developing our energy cooperation."
"This is a unique agreement of a long-term nature, which is accompanied by financial agreements, and to implement it we have already begun building a branch from the main pipeline toward China," he said.
Vice Premier Wang Qishan, who signed the deal on behalf of China, said the deal brings into force "a packet of agreements and contracts on building the pipeline, buying and selling crude, and providing of credit between the companies of our two countries, which represents a significant breakthrough in bilateral energy relations."
The Skovorodino-Mohe pipeline will pass under the Amur River, and will have throughput capacity of 15 million metric tons of oil per year. The pipeline is part of Russian efforts to diversify export routes from Western and East Siberia.
The deal was signed after the fourth round of Russian Chinese energy dialogue meetings.
Under the intergovernmental deal, China agreed to provide $25 billion in loans to Rosneft and pipeline operator Transneft.
ESPO branch to China could be finished ahead of schedule – Sechin
BEIJING, April 21 (Interfax) - The construction of a branch from
the East Siberia - Pacific Ocean oil pipeline to China could be finished
earlier than late 2010 - the deadline, documented in an
intergovernmental agreement, Deputy Prime Minister Igor Sechin said.
The intergovernmental agreement, signed on Tuesday, says that the
construction of the branch must begin in late April 2009 and end in late
2010.
"This work is to be finished in 2010. I think, the efficiency
typical of our cooperation with China, will makes itself felt here and
the pace of construction will be faster," Sechin said.
Transneft (RTS: TRNF), the operator of the construction of the
Russian stretch of the pipeline, has started building the branch
already, he said. The physical construction of the pipeline is underway.
The work is continuing to build a pumping facility near Skovorodino. A
reservoir park and workers' towns are being built," Sechin said.
Concurrently, Russia is busy finishing the construction of the
first phase of the ESPO pipeline. Transneft "has yet to weld up a 6
kilometer-long stretch," he said.
Russia sentences captain of sunken Chinese ship New Star
VLADIVOSTOK, April 21 (RIA Novosti) - A court in Russia's Far Eastern port city of Nakhodka found the Indonesian captain of a Chinese freighter that sank in February guilty of border violation on Monday, an aide to the local prosecutor said.
The New Star, owned by a Hong Kong-based company, sank during a storm on February 13 in the Sea of Japan 80 kilometers (50 miles) from Nakhodka, due to damage sustained from gunshots fired by Russian border guards after it illegally crossed the Russian maritime border.
"The court sentenced the captain of the New Star, Indonesian citizen Nazvir Adi, to three months in prison," Irina Nomokonova said.
The border guards fired warning shots at the Sierra Leone-flagged vessel on the night of February 13, but when the vessel refused to stop, direct shots were fired. Video footage shown on local websites shows that Russian border guards fired a total of 515 shots at the vessel's bow. When this had no effect, they requested permission to open fire on the stern.
The ship issued a distress signal when it started to take on water, and 16 crew members, all Indonesian and Chinese nationals, got into two lifeboats. Half of them were picked up by a Russian vessel, but an attempt to save the other eight sailors failed when they were washed out to sea.
The Chinese ship owners have accused Russia of breaching international maritime laws. The owners said in a letter that Russia's actions were not only "a terrible violation of international law, but also a cruel violation of human rights."
The owners also demanded that Russia provide compensation for the incident and requested that a joint Russian-Chinese government group be set up to investigate the sinking of the New Star.
Russia jails captain over sinking of Chinese ship
(22 mins ago)
Russia has convicted an Indonesian captain and jailed him for three months over a shipping incident that left eight sailors dead, the RIA-Novosti news agency reported.
''The court sentenced the captain of the foreign vessel New Star, Indonesian citizen Adi Nazvira, to three months in prison,'' a spokeswoman for prosecutors in Russia's far eastern Primorye region, Irina Nomokonova, said.
Nazvira was convicted of unlawfully crossing the Russian border by a court in Nakhodka, a Russian port on the Pacific where the incident involving the Sierra Leone-flagged, China-owned New Star took place in February.
The ship, with 10 Chinese and six Indonesians on board, was fired on by Russian border guards after it left Nakhodka.
Eight of the sailors drowned when the captain ordered the evacuation of the vessel and their rescue boat sunk amid bad weather, although the exact circumstances of the incident are disputed.
Russia says New Star, pictured in a photograph taken by Russian border guards before the sinking, had been sequestered in Nakhodka for smuggling and that after the New Star fled the port, border guards had warned it repeatedly before opening fire.
The incident sparked a strong diplomatic protest from China.
AGENCE FRANCE-PRESSE
Russia confirms Admiral Gorshkov delivery to India in 2012
MOSCOW, April 21 (RIA Novosti) - Russia will deliver the modernized Admiral Gorshkov aircraft carrier to the Indian Navy in 2012, a senior shipbuilding industry official has said.
"Under an agreement with India, the aircraft will be delivered in 2012. Almost 2,000 highly-qualified workers are currently involved in the overhaul [of the ship]," Vladimir Pakhomov, the president of Russia's United Shipbuilding Corporation, said in an interview published on Tuesday with the Vremya Novostei newspaper.
"We will increase the number of workers and speed up the work, making sure that it does not affect the quality. We are continuing talks with Indian officials about the additional financing of the project," he added.
The original $750 million 2004 contract between Russia's state-run arms exporter Rosoboronexport and the Indian Navy envisioned that work on the aircraft carrier would be completed in 2008.
However, Russia later claimed it had underestimated the scale and the cost of the modernization and demanded an additional $1.2 billion, which New Delhi said was "exorbitant."
After long-running delays and disputes, Russia and India agreed in February 2008 to raise retrofit costs for the aircraft carrier, docked at the Sevmash shipyard in northern Russia for the past 12 years, by at least $800 million.
The current contract covers a complete overhaul of the ship and equipping it with modern weaponry, including MiG-29K Fulcrum aircraft and Ka-27 Helix-A and Ka-31 Helix-B anti-submarine helicopters.
The Admiral Gorshkov carrier, renamed the Vikramaditya, is to replace India's INS Viraat carrier, which, although currently operational, is now 50 years old.
After modernization, the carrier is expected to be seaworthy for 30 years.
NGO: India to keep buying Russian jets
Published: April 20, 2009 at 5:33 PM
MOSCOW, April 20 (UPI) -- A Russian think tank forecasts India will be the main buyer of Russia's combat aircraft for the next 15 years.
The Center for Analysis and Technologies predicts India will purchase as many as 90 Su-30MKI fighters under existing contracts, and possibly buy more Su-30 or modernized MiG-29K aircraft, as well, RIA Novosti reported Monday.
Russia also is looking to sell 126 MiG-35 Fulcrum fighter jets to the Indian air force.
In March 2008, Russian signed a contract with the Indian Defense Ministry to upgrade about 70 MiG-29 fighters and agreed to develop a fifth-generation fighter in concert with India.
Meanwhile, a military expert denies Russia is selling its newest model shoulder-fired surface-to-air missile launcher to Venezuela.
Anatoly Aksenov, a senior adviser to Russian arms export monopoly Rosoboronexport, said older models have long been in service with the Venezuela military.
"They were supplied to the Venezuelan side a long time ago and have been shown (at a military parade in Venezuela)," he said.
In recent years Venezuela has purchased more than $4 billion worth of armaments from Russia.
Russian army in North Caucasus receives new attack helicopters
ROSTOV-ON-DON, April 21 (RIA Novosti) - The first six Mi-28N Night Hunter attack helicopters have been delivered to Russia's North Caucasus military district, a military source said on Tuesday.
"The first six Mi-28N helicopters have been put in service with combat units [in North Caucasus]," the source told RIA Novosti, without specifying the schedule for further deliveries.
The Mi-28N is the latest modification of the Mi-28 attack helicopter, manufactured by the Rostvertol plant in southern Russia. It has been designed to conduct hunter-killer missions against main battle tanks, helicopters, ground forces, and armor in any weather conditions.
The Night Hunter is powered by two TV3-117VMA turbo-shaft engines with 2,200 shaft horsepower each. The armored cockpit protects the crew from small-arms fire and absorbs the impact energy during emergency landings, ensuring high survivability.
Its combat range with internal fuel tanks is 450 kilometers (about 280 miles), but with external fuel tanks can be extended to 1,100 km (about 680 miles).
Russia's Defense Ministry has said it is planning to procure between 45 and 67 Mi-28Ns in the next few years, and to fully replace the Mi-24 Hind helicopters in the Armed Forces by 2015.
Georgian spy busted in Sochi – FSB
21 April, 2009, 11:29
Russia’s Federal Security Service (FSB) says it has caught a Georgian spy operating in the city of Sochi.
The man named as Mamuka Maisuradze is an employee of Georgia’s foreign intelligence service, a source in the FSB told the media.
The man was organising an informant network in the Krasnodar region and its capital Sochi. Among the intelligence he was collecting were the plans for the Olympic Games, which Sochi will host in 2014.
FSB said the spy arrived in Russia in mid-2007 under the cover of a Ukrainian citizen. In Sochi, he owned an internet-café, which helped him keep in contact with his commanding officers.
Maisuradze already confessed to working for Georgian intelligence, and gave out his contacts in Russia, according to the FSB.
The source in the Russian security service pointed out that they had information on the spy dating back to 2000, when he was dealing with militants in the troubled region of the Northern Caucasus. He was helping them in acquiring military uniforms, explosives, and communication equipment.
Now Maisuradze will be expelled from Russia.
FSB cuts operation of Georgian intelligence in Russia
MOSCOW, April 21 (Itar-Tass) - The Russian Federal Security Service (FSB) “exposed and busted the operation of an officer of the Georgian intelligence service who illegally wormed his way into Russia for intelligence and other subversive activities”, a representative of the FSB told Itar-Tass on Tuesday.
The FSB reported the arrest of a career officer of the Georgian special service of foreign intelligence Mamuke Maisuradze who was engaged, on orders of his superiors, “in creating a network of agents in the Krasnodar Territory”.
“In 2007, he arrived in the Russian resort city of Sochi as an Ukrainian national and started his own private business according to a prepared legend,” the FSB specified.
UPDATE: Russia Intercepts Georgian Spy – Interfax
MOSCOW (AFP)--Russia Tuesday said it had uncovered a Georgian spy on its territory carrying out reconnaissance and "subversive activities", news agency Interfax cited the FSB security services as saying.
"The Russian FSB uncovered and halted an agent of the Georgian security services...illegally trespassing on Russian territory with the aim of carrying out reconnaissance and subversive activities," said an FSB spokesman.
The FSB said the Georgian agent had entered Russian territory on a Ukrainian passport and was working undercover as a businessman in the Black Sea resort town of Sochi.
Russia’s FSB reported on ten branches of Hizb ut-Tahrir movement eliminated in 2008
20.04.2009
Ten branches of the Hizb ut- Tahrir al-Islami terrorist organization were eliminated in Russia in 2008, news agency Interfax reports, referring to Colonel-General Alexei Sedov, head of the Russian Federal Security Service's (FSB) service for constitutional regime protection and counter-terrorism, who talked to journalists in Moscow.
He marked that currently, 18 organizations were recognized by Russia as terrorist and therefore were illegal. Terrorist organizations are merging with transnational criminal groups, which increases terrorists' potential, Colonel-General Sedov added.
Turkish emissary of Al-Qaeda was killed in Dagestan last week: Russia’s FSB
20.04.2009
A militant who was killed in Dagestan last week was a Turkish citizen, an emissary of Al-Qaeda in that Russian republic and the financier of local religious terrorist groups, news agency Interfax reports from Makhachkala, referring to the Federal Security Service (FSB) of Russia Dagestan directorate.
In addition, the FSB and police detained Ali Oidenirov, born in 1981, in Khasavyurt on suspicion of financing sabotage and terrorist groups acting in the region, Interfax says. Oidenirov studied at university in Syria. Before his arrest, he was the imam of the mosque in the village of Olimpiisky in Dagestan's Khasavyurt district. From January to March 2009, he traveled to Turkey twice, where he received $15,000 from local religious extremists, according to the news agency’s source in the security services. The money was used to buy weapons and ammunition and for other needs of Dagestan’s extremists, FSB says.
Anti-terrorist operation completed in Ingushetia
NAZRAN, April 21 (Itar-Tass) -- An anti-terrorist operation was completed in Verkhny Alkun and its neighbourhood in Ingushetia on Tuesday, the public relations group of the republican department of the Federal Security Service told Itar-Tass.
A base under construction by gunmen and a ward for keeping hostages were found in the forest during the operation, no gunmen were detected there.
The operative republican headquarters introduced an anti-terrorist operation regime on Monday due to the information that several gunmen are staying in Verkhny Alkun.
Special regime of counterterrorist operation introduced in Russia’s Ingushetia village
20.04.2009
Today the special regime of counterterrorist operation has been declared in Ingushetia’s village of Verkhnyi Alkun, news agency RIA Novosti reports, referring to a spokesman of the press service of the Federal Security Service (FSB) of Russia directorate in Ingushetia.
The special regime was introduced after the FSB directorate received reports that in the
settlement and forests adjacent to it there were armed militants who had made a number of especially grave crimes in Ingushetia. The special regime of counterterrorist operation assumes introduction of restriction on entrance of citizens and vehicles and their full examination at reception of permit to pass into territory of countryside area.
The representative of the FSB asked citizens living in area to keep calm and to not impede carrying out by law enforcement bodies of operations on neutralization of the alleged terrorists.
On April 16, in the neighbouring Chechen Republic the special regime of counterterrorist operation which was in force since 1999in the territory of republic was lifted. Online paper Polit.ru, referring to undisclosed sources, notes that 25,000 militaries, including the most experienced special-task troops of the FSB and GRU, military counterintelligence, and also regular army soldiers and the policemen who have arrived to Chechnya according to a contract will be withdrawn from the Chechen Republic.
Former Soviet KGB officer turned billionaire eyeing second British paper
20.04.2009
Alexander Lebedev, 49, the former Soviet KGB’s foreign intelligence officer who bought the debt-ridden London's Evening Standard tabloid newspaper, said in an interview that he was interested in buying British national daily The Independent. Lebedev was posted to London in the 1980s and rose to Lieutenant-Colonel in the KGB.
In an interview with the Financial Times newspaper, Lebedev commented on speculation that The Independent could be up for sale. He said he was “interested, theoretically," though he added he had no free resources right now.
Lebedev already co-owns with ex-Soviet leader Mikhail Gorbachev a 49% holding in the Russian Novaya Gazeta newspaper which has been highly critical of the Kremlin. BBC marked that it continued to report on themes the Kremlin-controlled media prefer to ignore - corruption, human rights abuses in Chechnya, and the activities of the FSB, Russia's post KGB spy agency. Recently the Russian government critic has been struck from the mayoral ballot in the Winter Olympic city of Sochi.
65 % of Russians affected by crisis
2009-04-21
The effect of the financial crisis on Russian people’s lives is increasing, the results of two sociological survey conducted in course of the last six months tell. 65 percent of the respondents in a Russian survey conducted in March 2009 said that the financial crisis has had negative influence on their lives.
This is 1.5 times as many as in a similar survey autumn 2008. The number of persons saying that the financial crisis has no impact at all on their lives is halved compared to last autumn.
The survey shows geographical differences. People in Voronezh, Rostov, Saratov and Volgograd have been hardest hit by the crisis, and are most negative to the future. The situation looks best in Murmansk and Arkhangelsk. In Arkhangelsk, 47 percent said that their material situation had worsened in course of the last year. In Nizhny Novgorod the result was 72 percent.
The majority (42 percent) believes that inadequate politics from the country’s authorities’ side is the reason for the crisis, while 20 percent blame Western countries and USA. 16 percent think that the crisis is a result of the nature of capitalism.
12400 people in 21 different regions took part in the survey, Regnum.ru reports.
Russia to build wind farm on Russky island by APEC summit-2012
VLADIVOSTOK, April 21 (Itar-Tass) -- Russia will build a wind farm on the Russky Island by an APEC summit-2012. Acting RusHydro CEO Vasily Zubakin presented the foresaid projects in Vladivostok on Tuesday.
At the presentation of the project Governor of the Primorsky Territory Sergei Darkin noted that this project is very important for Vladivostok. An electric power station will be built on the Russky and Popov Islands. The generated electric power is planned to use for the power supply of the Far Eastern Federal University, APEC summit facilities and the Primorsky oceanarium. Meanwhile, some power supplies will be made to Vladivostok consumers on the mainland, corresponding electric power grids will be built. It is also important that an ecologically friendly electric power plant will be built on the islands, which is the favourite place for holidaymakers.
“It is important so that the price cost of a kilowatt/hour generated at the wind farm did not exceed the average cost in the territory. Meanwhile, a wind farm should be built with due account of recreation zones and monuments,” the governor said. According to him, “The wind farm should not spoil natural and historical landscapes.”
If the foresaid project is implemented it will be the first one in the Primorsky Territory to apply such technologies in power engineering. The public hearings will be held soon on building a wind farm on the Russky Island.
Crisis or Not, Russia Will Build a Bridge in the East
By CLIFFORD J. LEVY
Published: April 20, 2009
VLADIVOSTOK, Russia — Here on Russia’s eastern edge, seven time zones from Moscow, a huge project is beginning to take shape. Two miles worth of steel and cable will connect the mainland to a small island where there is not much besides a few thousand residents, some age-old ice fishing grounds and patches of locally prized curative herbs.
The comparison, of course, is hard to shake: the Kremlin is building its very own Bridge to Nowhere. And not even the financial crisis is putting a stop to it.
The government plans to spend well over $1 billion on the span, which is to be one of the longest suspension bridges in the world, and at least $6 billion on related projects in this thinly populated region, near China and North Korea.
The projects are supposed to spruce up Vladivostok to serve as the host for the Asian Pacific Economic Cooperation summit meeting in 2012, and come on top of another $6 billion that the government is allocating for the 2014 Winter Olympics in the southern resort city of Sochi. The costs for both ventures are likely to soar because of inadequate planning and widespread corruption in Russia, officials acknowledged.
The government is pouring money into the Vladivostok and Sochi events despite acute pressure on the federal budget from the financial crisis and rising concerns about the overall neglect of infrastructure in Russia. Poor quality roads, ports, power plants and other facilities have long been a drag on the Russian economy, as any multinational company that tries to do business in the country can attest.
The spending looms large because the government has sharply cut the rest of the infrastructure budget in response to the financial crisis. As a result, the work in Vladivostok and Sochi is drawing criticism that the Kremlin is focusing on trophy projects that might burnish national pride, but will not yield long-term economic benefits.
“Obviously, this spending on Vladivostok and Sochi doesn’t make any sense,” said Ivan Tchakarov, chief economist for Russia at Nomura International, a securities firm. “If Russia wants to diversify from the oil and gas sector, the only way to create sustainable growth is to create real infrastructure — such as, for example, doing badly needed repairs to Russia’s transport systems, including the dilapidated railway network, and spending on ports and the electricity grid.”
Before the financial crisis, Prime Minister Vladimir V. Putin proposed a $1 trillion program to modernize infrastructure, but those plans have been largely shelved, officials said, in favor of spending on social and employment programs, which are aimed at helping to soothe tensions in distressed parts of the country.
Financial analysts estimated that Russia spent roughly $42 billion for infrastructure in 2008, about 13 percent of government spending. This year and next, however, that figure is expected to drop to 5 to 7 percent, they said, and that includes the outlays for Vladivostok and Sochi.
The Kremlin is eager to use the Vladivostok meeting in 2012 to demonstrate that Russia is as much an Asian power as a European one. Yet it seems highly unlikely that the region could turn into an economic engine in the near future.
It is thousands of miles from Russia’s political and business core, and has less than 5 percent of the country’s population. The region’s manufacturing and maritime industries have been in steep decline since the Soviet Union’s fall, while the area’s population has plunged by 25 percent, to six million people from eight million.
Still, the government hopes to impress participants at the 2012 summit meeting by holding meetings on Russki Island off the coast of Vladivostok. It is currently reachable only by ferry.
In Soviet times, Vladivostok was closed to foreigners because it was deemed a strategic port, and the island was a secret military facility. Officials intend to build a conference center, hotels and a university campus there. Already worried about costs, they recently canceled plans for a medical center and a theater for opera and ballet in the city.
The government is also renovating Vladivostok’s airport, and erecting a smaller bridge between two sections of the city to ease bottlenecks. Improvements will be made to water treatment and other facilities.
Yevgeny V. Khokholkov, a vice governor of the region, said federal investment was desperately needed to stem the flow of people abandoning the Far East for the European part of Russia. Mr. Khokholkov said the bridge to Russki Island and related projects would symbolize the country’s commitment to Asia.
“The center of development in the world economy is shifting here,” he said. “So it is important for Russia to develop this territory as much as we can.”
Residents of Vladivostok have long complained about neglect from Moscow, but even some supporters of an increased federal role here question the wisdom of the summit meeting master plan.
“Without a doubt, it will do some good things for our city,” said Alan V. Gutnov, an analyst at the Far Eastern Marine Research, Design and Technology Institute. “But personally, I believe that all that money could be spent more effectively if invested in the economy of the Far East. These projects won’t create many jobs in the future.”
On a visit to Russki Island in February, residents expressed ambivalence about the 2012 meeting, saying that they realized that the region was suffering economically, but that they worried that the projects would destroy the environment.
Standing on the deck of a ferry as it chugged through a channel in the ice, Natalya A. Andreyeva, 51, an emergency room doctor, said the island should be turned into a national park.
“Visitors seriously pollute the island,” Dr. Andreyeva said. “Boatfuls arrive, and after that I personally myself will go and clean the beaches. It’s terrible what happens. Why is it worth spending those billions? Good ferries and boats would be enough.”
As the ferry approached Russki, the landscape changed.
All over the ice, heavily bundled people sat on chairs, holding small fishing rods above small holes in the surface. Some had been there many hours, as if there were no better pastime than staring into the horizon, bracing against the wind and hoping that a fish takes a bite.
Among them was Yuri T. Minayenko, 78, a retired driver who moved to Russki Island from Ukraine after the fall of Communism, looking to spend his final years here.
“I love the quiet,” he said. “If they construct that, there will be more people, more problems, more cars, more commotion and everything else. I don’t want that. As an old man, I want silence. That’s all.”
Frenchman, Family Slain in Moscow Home
21 April 2009
By Alexandra Odynovaand Jessica Bachman / The Moscow Times
A French businessman and his family were discovered dead in their burned-out apartment Monday in central Moscow in an apparent case of murder and arson, investigators said.
Firefighters found the body of winemaker Thierry Spinelli and his wife in their third-story apartment on 3rd Tverskaya-Yamskaya Ulitsa, near Mayakovskaya metro station, after responding to a report of a fire at about 6:30 a.m. Monday, law enforcement officials said.
The couple's 2-year-old daughter, Elisa, was alive when the brigade arrived but died of smoke inhalation in the arms of a rescue worker, according to Investigative Committee officials cited by news agencies.
Forensics experts at the scene preliminarily determined that Spinelli's wife, Olga Spinelli, had been strangled, Anatoly Bagmet, head of the Moscow branch of the Investigative Committee, told RIA-Novosti.
Firefighters discovered at least two separate sources of the fire, indicating a possible arson attack, and the door of the apartment was open when they arrived, law enforcement and emergency services sources told The Moscow Times.
Spinelli had lived in Russia for more than a decade and was a co-founder of the Chateau le Grand Vostok winery in the Krasnodar region.
"He was a very successful businessman," Yelena Denisova, a member of the company's board of directors, told The Moscow Times in a telephone interview.
Denisova said she had seen Spinelli just four days before his death.
"The company has produced the best wine in Russia. I don't think he had any enemies. It could be only a robbery," she said.
Spinelli had not worked with the company since 2006 but remained in the wine business, Denisova said.
The couple purchased the apartment in 2006, RIA-Novosti reported, citing no sources. They had also hired a nanny to look after their daughter, though none of the neighbors saw the nanny Monday, the report said.
The couple's black Mitsubishi Pajero was missing after the fire Monday, RIA-Novosti cited a law enforcement source as saying.
The Investigative Committee has classified the crime as a multiple homicide, which is punishable by up to life in prison.
Officials could not be reached for comment Monday about a possible motive for the crime.
The five-story apartment building was cordoned off by police Monday afternoon when friends and relatives of the couple came to identify the bodies and talk to investigators, who had set up headquarters in the Mayak cafe on the ground floor of the building.
One woman burst into tears as she entered the cafe, while another woman entered the building accompanied by two Frenchmen.
"I can't go in there, I can't look at it," the woman wailed in Russian.
Crime scene investigators could be seen examining the burnt-out apartment through its 10 windows.
The apartment building is located just across the street from the headquarters of the Office for Presidential Affairs.
The French consul in Moscow visited the crime scene Monday, said Sylvain Guiaugue, spokesman for the French Embassy.
Spinelli's remains were badly burned in the fire, hindering his identification at the crime scene, Guiaugue said.
Spinelli was a French citizen, his wife was a Russian citizen and their daughter had dual citizenship, Guiaugue said.
"We have passed the information that a French citizen might have died in Moscow to the Foreign Office in Paris," he said.
Thierry Spinelli was well-known in the domestic wine sector and was in charge of finances at Chateau le Grand Vostok when the company was launched in 2003 as the upscale successor to Avrora, a former Soviet collective grape farm.
Chateau le Grand Vostok's 500 hectares of vineyards are located 50 kilometers inland from the Black Sea in the Krasnodar region's village of Sadovy.
"We just found out an hour ago," Gael Brullon, whose husband, Frank Duseigneur, is the company's general director in Krasnodar, said of the tragedy. "We are in complete shock."
Olga Spinelli was also in the wine business, working for the wine company Simple and as director of the Simple Wine and Art Club, according to an obituary posted Monday on the web site of the magazine Simple Wine News.
Members of the club have included popular television personality Yulia Bordovskikh and Sergei Yastrzhembsky, a one-time senior aide to former President and current Prime Minister Vladimir Putin, according to the company's web site.
April 20, 2009
Medvedev’s Mixed Messages
By Albina Kovalyova
Special to Russia Profile
Although Nothing New Was Said, Medvedev’s Giving an Interview to Novaya Gazeta Is Noteworthy in and of Itself
Last week, President Dmitry Medvedev chose the notoriously critical newspaper Novaya Gazeta to give his first exclusive interview. This was the most eye-catching in a series of moves that could be deemed “democratic” and are meant to give some hope to Russia’s beleaguered liberal-minded constituency. However, the extent to which the president’s support of democratic ideas will be matched by action and legislation remains to be seen.
During the interview, the president was asked about the elections in Sochi, Mikhail Khodorkovsky’s trial, and the real transparency of the government member’s earnings. But in response to all of Novaya Gazeta Chief Editor Dmitry Muratov’s provocative questions, Medvedev provided vague, generalized answers. For example, when asked whether the current Khodorkovsky trial has a foreseeable result, Medvedev replied that “for members of the government and for the president, there cannot be any predictions regarding any court case, including the one that you have mentioned.” When asked about the recent disclosure of government salaries (another of his recent “democratic” initiatives), the president admitted that there was no way of checking whether what government officials and their families declared was true, but restated the importance of such public disclosure. He hopes that his could eventually turn into a “tradition” that could make the government feel more responsible. “It is the first step in the right direction,” the president said.
Although the president’s giving an interview to such a controversial newspaper as Novaya Gazeta (which is renowned for high-profile murders of its investigative journalists, such as Anna Politkovskaya in 2006 and Anastasia Baburova and Stanislav Markelov, a lawyer with close links to the paper, earlier this year) is a step in the right direction in terms of the government’s confronting its liberal critics, what he said was far from groundbreaking.
Aleksei Mukhin of the Center for Political Information in Moscow said that Medvedev did not say anything new, and this was the whole point of giving the interview. By facing an opposition newspaper like Novaya Gazeta, Medvedev was looking to challenge the image of a weak president. But another goal of the interview was to “get a dialogue going with the civil society. Medvedev wants to divide his ratings from those of Putin, by getting the approval of the liberal members of society,” said Mukhin. In other words, the decision to speak with the paper had nothing to do with showing solidarity with its values, but was rather a means of spreading his appeal to the more skeptical parts of the Russian society.
Commenting on the interview, Muratov told Ren-TV that “It is correct that [the president] should choose Novaya Gazeta, because he is the president of the whole country and not just the nomenklatura or the oligarchs. I think this is why Novaya Gazeta was chosen, because the people in power want to speak to all of the members of its civil society.” Muratov also quoted Medvedev as saying “You know the reason that I chose Novaya Gazeta is because you have never kissed up to anybody.” These words were said off the record, but according to Muratov, the president assured the journalist that he could pass on the message.
This is not the first time that the president has openly endorsed the paper. At a meeting in the Kremlin following the murders of Baburova and Markelov, he said that he would be sorry to see the paper go. And again, though no transcript of the meeting appeared on the Kremlin’s Web site, he told Muratov to spread the word.
Nor is this the first time that the current Russian president has spoken about democratic values. But a lack of supporting actions is beginning to show through his excessive rhetoric. Talk of eradicating “legal nihilism” has been circulating for quite some time, yet corruption remains a serious problem in Russia. Although Medvedev often emphasizes his legal training and background, Mukhin said that this vagueness is due to the fact that “he is a lawyer, and legal terminology is opaque and does not provide concrete answers.”
It is possible that Medvedev is merely paying homage to Russia’s liberals. But it is also conceivable that he genuinely believes in an open and transparent democracy. Skeptics have rightly noted that he did not impose a serious independent moderation system for checking government salaries, but trusted officials to disclose certain documents. But this could be simply because he cannot yet do so. Perhaps it is a question of a lack of power and means.
Medvedev did not use the word “democracy” to describe the direction he wants his country to go in, but he stressed the importance of a civil society that could play an active role in Russia. This, together with his newly-proclaimed desire to build a Russian equivalent of London’s Speakers’ Corner in Hyde Park, suggests that he is interested in implementing some democratic values.
But not everyone is that cynical about Medvedev’s motives. The Echo of Moscow radio station recently drew a parallel between Medvedev and Mikhail Gorbachev, who, it was also widely assumed, would simply continue the policies of his predecessors. No matter how evasive his answers, Medvedev’s very decision to give his first exclusive interview to Novaya Gazeta is a radical departure from the approach of his predecessor Vladimir Putin. Following the interview, Medvedev also met with human rights activists and liberals at the Institute of Contemporary Development INSOR.
One prominent Russian political analyst, Stanislav Bolkovsky, told Echo of Moscow that in his opinion, Medvedev was merely tying to improve his reputation abroad. “Medvedev had to sooner or later show himself to be a liberal politician who could cooperate with different parts of society,” he told the station. This, he said, was part of the larger “Project Medvedev,” which aims to patch up the Russian government’s reputation abroad.
It remains unclear whether Medvedev's interview for Novaya Gazeta was a political move for the benefit of the government or a genuine gesture of support for the paper. Perhaps a combination of the two, it certainly got the attention of his critics, who will now be watching for actions that will back up his vague gesture “in the right direction.”
Some of Russia’s Muslims Seeking to Define a Place between ‘Dar ul-Islam’ and ‘Dar ul-Harb’
20 April 2009
By Paul Goble / Special to The Moscow Times
Muslim theorists traditionally have divided the geography of the world between the dar ul-Islam, or “abode of peace,” in which Muslim governments rule over Muslim peoples, and the dar ul-harb, or “abode of war,” in which Muslims find themselves in places with non-Muslim governments and are urged to practice jihad to change that.
But some Muslim writers now argue that Muslims living in non-Muslim areas must make a distinction between countries where Muslims can practice their religion freely and whose governments have good relations with Muslim countries and those where Muslims remain subject to discrimination and whose governments are hostile to the world of Islam.
If Muslims in the latter must continue to view themselves as living in the dar ul-harb with all the religiously-based demands for struggle that entails, these writers say, Muslims living in the former need to revise that approach and recognize that they live in a third space, the dar ul-akhd, which might be rendered as “abode of coexistence.”
This idea has been at the margins of a broader discussion on Muslim minorities, and to this day, a large majority of the world’s Muslims appears to reject the whole idea either because it represents the kind of innovation of the faith that traditionalists reject or because it appears to be a tool by non-Muslims against the faithful.
That makes any treatment of the subject particularly important. The appearance of a sympathetic treatment of this idea by Ruslan Kurbanov, a leading Moscow expert, in an article on the Russian Federation’s largest Islamic web portal, and, even more, his promotion of such ideas on a Muslim Internet television channel, are thus especially intriguing.
Kurbanov, a senior specialist at the Moscow Institute of Oriental Studies, reviews the works of those Muslim writers who have suggested that modernity requires the unpacking of the concept of dar ul-harb, given the number of Muslims who live in states governed by non-Muslims and the diversity of those states.
Many of these authors, he notes, suggest that Koranic requirements for conducting jihad should be adjusted depending on whether these countries protect the rights of Muslims and seek friendly relations with Islamic countries or fail to protect the rights of the Islamic community and are hostile to the worldwide umma.
In the former category, Kurbanov suggests on the basis of the writings of these authors, are European countries, and there Muslims should work within the political system that protects them. In the latter category, the Moscow investigator says, is Israel, and there, these writers agree, the requirements for jihad remain unchanged.
But even more important perhaps than his article is Kurbanov’s more forceful presentation of it on Internet television. That broadcast is likely to reach a larger audience, simultaneously attracting support and generating opposition in the coming weeks and months.
This search for a middle ground between dar ul-Islam and dar ul-Harb may be a harbinger of further changes in the relationship between Russia’s Muslims and the Russian state, either prompting a strengthening of the traditional deference of that community to the authorities or alternatively sparking dissent to this reformist approach.
At the same time — and this is implicit in both Kurbanov’s article and his television presentation — at least some of the Muslims of the Russian Federation may use this argument to demand that Moscow protect their rights more than it has in the past or possibly face a more open challenge from the increasingly numerous community.
This idea could also have some international resonanceby providing the Russian government with a new argument in its campaign to join the Organization of the Islamic Conference and other institutions in the Muslim world — although in this case too, the argument could have exactly the opposite effect.
National Economic Trends
Russia may deplete Reserve Fund by 2010F due to economic slump
Unicredit, Russia
April 20, 2009
Russia might fail to collect some R800bn ($24bn) out of planned tax revenues in 2009, due to poorer-than-expected economic conditions, Vedomosti reports, citing Deputy Finance Minister Tatiana Nesterenko. This might force Russia to use its entire Reserve Fund (R4,100bn or $121bn as of April 1, 2009) as soon as 2010F.
Presently, the federal budget envisages tax revenues at some R6,700bn ($200bn) in 2009, with expected oil prices at around $41/bbl and the budget deficit at nearly R3,000bn ($90bn or over 7%of GDP). The latter is to be financed mostly from the Reserve Fund, which was expected to have some 1,900bn ($57bn) at year-end - an amount that was to finance budget deficits over the next 1-2 years. However, if the authorities indeed fail to meet the already reduced tax collection targets, massive public spending this year might indeed force the government to spend the entire Reserve Fund in 2010.
Despite some negative implications, we do not expect a strong market reaction to the news, as it should open a new stage of discussions on future Russian budgetary policy and the outcome of those talks is still unclear. We would also note that revenues might actually exceed the target if oil prices were to stay well above the projected average of $41/bbl in 2009. However, the news clearly indicates the limits of extremely expansionary Russian fiscal policy, which cannot last for long.
Unemployment rate slow, wage arrears still rising
bne
April 20, 2009
The rate of the rise in unemployment has slowed, but wage arrears are still rising and hit a three-year high of 8.3% in March.
While green shoots are appearing in the Russian economy - some sectors like metallurgy are seeing some recovery and the domestic bond market is function again for the blue chips - the damage done by the economic crash of the last six months is still eating into the fabric of the economy.
The lasting damage the loss of economic momentum will have is on the consumer. As companies downsize and continue to struggle to pay off debts they took out to finance fast growth the main victim is the workers who are either loosing their jobs or at least being paid less. This damages Russia's main economic driver - consumer consumption.
Even if some sectors are starting to recover falling consumption has now built up a momentum of its own and will continue to pull the economy down even if the external environment and confidence improves.
More than half am Russians received only part of their wages in March, the State Statistics Service data showed Friday. Arrears rose to RUB8.76bn ($262m) as of on April 1, reports Reuters, compared with RUB8.09bn a month earlier. Just under 95% of companies that failed to pay their staff said the reasons was a lack of working capital. The rest said they delayed payments because they were waiting on state or regional funds owed them. Manufacturing accounted for nearly half of the wage arrears and a transport accounted for a fifth.
In the last crisis in 1998 wage arrears rose to $3.8bn and sparked social unrest.
Still, there should be a turn about in wage arrears in the coming months. Tatyana Golikova, Russian health and social development minister, reported last week that after government employment support programs started working in provinces in February and March the rise in the level of unemployment has already slowed.
"When the programs started working at the end of February, a trend toward a decline in growth of registered unemployment has been clearly visible. In the past five weeks, growth in registered unemployment has been 1.5%-1.7% [weekly], compared to 9% that was recorded weekly in January and February," she said.
Russian Prime Minister Vladimir Putin signed off on an order to allocate RUB33.95bn to support jobs in the regions, most of which will be used for unemployment benefit payments.
Nevertheless, the government is now predicted a much higher rate of officially registered unemployment by the end of this year, increasing its estimate last week from 2.2m to between 2.5m and 2.6m, or about 3% of the country's working-age population. The number of officially registered unemployed persons in Russia amounted to 2.199m as of April 1, the Healthcare and Social Development Ministry said earlier.
The total number of unemployed, including those not registered, it about three times higher than the official number and will top 10% of the population if these predictions hold.
Q1 Jobless Rate Hits 8-Year High Of 9.5%
21 April 2009 Reuters
Some 1.8 million Russians lost their jobs in the first three months of 2009, taking the jobless rate to an eight-year high, data showed Monday, in a sign that it may be too soon to talk about the bottoming of the crisis.
The State Statistics Service did not give a monthly breakdown for the jobless data, but according to Reuters calculations unemployment hit 11.9 percent in March, from 8.5 percent in February, assuming that the previous data were unrevised.
Officials had been saying the worst of the crisis may be over for Russia, taking heart from higher global oil prices, a stabilization of the ruble and a recovery in domestic stocks.
But with retail sales, real wages and capital investment all falling sharper than expected in March, the data suggest that Russia's first economic contraction in a decade is still in full swing.
"We see this data as an indication that ... the decline is starting to spread to consumer demand, and it will continue to pressure the economy over the next several quarters at least," said Vladimir Osakovsky, an analyst at UniCredit.
"Overall, I think the data really calls for an interest-rate cut in Russia, and possibly some weakening of the ruble, to help exporters and the domestic economy in general."
The releases come as the Finance Ministry frets that a deeper-than-expected slowdown could slash budget revenues by a further 800 billion rubles ($23.9 billion) this year, taking the budget deficit to 10 percent of gross domestic product.
The government expects a contraction of just 2.2 percent in 2009, but international organizations and think tanks have said the slowdown could be at least twice as sharp.
At 7.1 million, the number of unemployed is already more than a million higher than the Economic Development Ministry forecasts for 2009 as a whole, as companies slash jobs in the face of falling global and domestic demand and the inability to attract fresh financing.
"Unemployment is coming up much sharper than I was expecting, so I am considering revising my forecast of 12 percent for year-end," said Elina Ribakova, an economist at Citi.
Retail sales fell for the second consecutive month year on year in March after slipping into the red for the first time since September 1999 in February.
One glimmer of hope came from housing construction, which recovered sharply from a one-year low in February, traditionally the worst month for the sector. The figures brought completed housing in the first quarter to 10.4 million square meters, a 2.4 percent gain year on year.
A presidential adviser on Monday forecast that the economy could start to recover in six months once demand picks up in China and other countries.
"We are an export-oriented economy. The drivers of growth, the variables, are outside of Russia, which makes it dependent on the global situation more than others," Igor Yurgens, chairman of the Institute of Contemporary Development, said in an interview.
COMMENT: Strengths and weaknesses of Russia's anti-crisis plan
Vladimir Tikhomirov of Uralsib
April 21, 2009
The approval by the Duma of the Russian cabinet's new anti-crisis programme on April 15 marks the end of a lengthy three-month period of debates within the government about the ways and means to tackle the deepening economic crisis. The new anti-crisis programmeme and the revised budget do not imply any immediate gains for the stock market or the investment community. Their strategic importance lies in the preservation of political and social stability - the major objective of both documents. Banks are the only sector of economy set to benefit from increased state funding, at the expense of significant cuts to spending plans in other areas, most notably state investment.
The pros of Russian government policy:
• Big reserves help to soften the negative impact of the crisis;
• Stability is not under threat as the government is firmly in control;
• Drive for reform grows stronger during periods of crisis.
The cons of Russian government policy:
• Russia is still a petro-economy;
• Heavy private debt burden is a major headache in tight credit markets;
• Over-centralization has blocked the development of a competitive economy.
Why the new programmeme?
• This programmeme is part of a political showdown, but is also driven by the need to save state funds;
• Systemic approach replaces initial piecemeal response to the crisis.
The new anti-crisis plan has four priorities: social policy, state companies, SMEs and banks. However, banks are set to get the largest slice of the new funds (48%) followed by social spending (15%) and tax cuts and rebates (14%).
2009 budget – from surplus to deficit
All budget items have been cut, except two. The revised federal budget will provide the bulk (55%) of funding for the new anti-crisis programme. To accommodate new spending needs, budget expenditures have been increased by 7.4% and spending priorities have been changed. Spending on the economy has been boosted by 62% and regional subsidies by 16%. All other budgetary spending items have been cut with the biggest falls recorded for spending on infrastructure, the civil service defence and law enforcement.
The drafting of the new programme and the accompanying revision of the 2009 federal budget law was completed at the end of March and in early April both documents were formally approved by the cabinet. As expected, the Duma made only minor cosmetic changes to these documents.
The upper chamber of the Russian parliament, the Federation Council, will start debating both documents and we expect that by the end of April, the programme and the revised budget will be signed into law by President Dmitry Medvedev.
Pros and cons of the policies
The drivers and dynamics of the economic crisis in Russia and the evolution of government's response to this crisis have once again underlined all the major strengths and weaknesses of the domestic economy. The quick deterioration of the economic situation in Russia between September and December demonstrated that, despite nine years of strong growth, the economy hasn't changed that much: it still remains the same petro-economy that it was before.
The crisis has revealed that all the talk about the decoupling of the Russian economy from its heavy reliance on commodity exports and growing dependence on domestic growth drivers were nothing but wishful thinking. As soon as oil export revenues started to fall, government finances immediately came under pressure, capital outflows increased and the incomes of the general population plunged. What clearly made things worse was the increased reliance of Russian companies and banks on foreign loans: a phenomenon that existed in the past as well (heavy public indebtedness characterized the late Soviet and early post- Soviet governments in Russia).
Dependence on oil revenues, multiplied by swollen private sector foreign debt has shown how small and limited reforms in Russia were. This is perhaps one of the biggest fundamental weaknesses that the crisis has helped to reveal. As the crisis evolved, it became clear that another major setback to the economic policies of the government was the belief that the state is capable of managing the many imbalances within the economy. Over-concentration of economic and financial power in the hands of the state soared when the crisis hit, as virtually all of Russia's largest companies lined up for government aid. It took less than three months for the cabinet to realize that its own resources - no matter how large they seemed in the past - are limited and, in fact, very limited.
Despite these negative features, the crisis has also demonstrated some extremely important positive shifts in Russia's economic policy that took place under Vladimir Putin. Undoubtedly, the key positive factor was the level of government preparedness for the crisis, which was unprecedented in Russian history. All the years spent scrupulously building up state reserves definitely paid off and so far the government has easily managed to retain control over social and economic development without undermining financial or political stability. While it still remains to be seen just how long this fragile balance can be maintained, there is no doubt that this crisis will have a far less detrimental effect on the living standards of the Russian population than any other comparable crisis in modern history.
Another positive development from this crisis is a sincere return to the implementation of the reform agenda by the Russian ruling elite. As during all previous crises, this crisis has given a powerful impetus to reform. Just like 10 or 20 years ago, Russia is once again being given a chance to reform and modernize. And we are confident that this chance is not going to be missed, even if it is unlikely that it will be fully taken advantage of. Hopes are strong that over the next few years we will see the Russian economy become less centralized, better managed, alongside lower levels of state intervention. The levels of trust between the government and the business community are likely to grow and the longstanding hostility to foreign investors should weaken. This crisis opens up a plethora of reform opportunities and even if only a few of these are taken advantage of, in a few years time Russia is likely to emerge as a far better place to live and do business than it is now.
Why the new programme?
Like many similar policy documents drafted in other countries, Russia's anti-crisis package is primarily supposed to have a psychological and political effect, ie. to demonstrate to the electorate that the government has contingency plans and is staying one step ahead of the crisis. However, the economic effectiveness of the anti-crisis programme is a completely different matter, and we do have doubts over the practicality and impact of some of the measures included in the programme.
The main reason why the government decided to come up with a more systematic approach to tackling the crisis - in contrast to the initial piecemeal anti-crisis measures since last autumn - is that it has felt increasingly overwhelmed by rapid growth in the number of requests for aid from various quarters: the regions, businesses, trade unions, political parties, powerful lobbying groups, etc.
This new demand for funds has significantly scaled down the size of available government funds. This realization occurred around early December and, not surprisingly, coincided with a shift in Central Bank of Russia's exchange rate policy when defending of the stability of the ruble was no longer seen as a plausible and practical response to the rise in capital outflows.
The managed devaluation of the ruble, which took place between early December and late January, was no doubt one of the most important components of the new anti-crisis plan. The other component was an introduction of a differentiated approach to the selection of possible recipients of state aid. The shift to this new approach started with the so-called list of strategic enterprises in late December. The practicality of publishing such lists, however, is unclear. By issuing blank cheques for guaranteed state bailouts to Russia's major companies, the government was de facto substituting company management and giving it protection from the mistakes it made in the past.
The above explains why the December strategic list has so far failed to play a significant role in anti-crisis management in Russia and is unlikely to do so in the future. Instead, the cabinet decided to opt for a case-by-case approach and set clear limits on the total aid package available. The need for this was also prompted by the fact that by January-February it had become clear that the crisis was likely to last for months and years rather than weeks, which means that the demand for state support could remain acute over one-two years or perhaps even longer.
The new plan
The result of this evolution in the government's approach to the crisis is a systematic anti-crisis plan that sets caps on state spending and clearly identifies sources of state aid. Uncertainties about the length and depth of the current crisis forced the cabinet to significantly scale-back their initial reliance on spending reserves. A large chunk of funding for the new anti-crisis programme should be covered by the budget by way of reallocation of government spending priorities and the 2009 spending cap for the Cabinet's Reserve Fund has been set at RUB2.7 trillion or 55% of the total volume of the Fund as at March 1, 2009.
The total value of the new anti-crisis programme amounts to RUB2.923 trillion, which is almost the same amount that the government said it had already spent since the start of the crisis last fall (RUB2.937 trillion). In all, 55% of the announced new spending is planned to come from the federal budget (RUB1.611 trillion) while the remainder will either come in financial form from other state agencies (central bank, VEB, etc.) or in the form of non-financial aid, ie. tax reductions, cuts in credit rates, etc.
The priorities have also changed with the adoption of the new programme. During the first stage of the crisis in October-November, the Russian government put the main emphasis on the provision of financial aid to banks and non-financial companies, most of which struggled in rolling over their foreign debts. While no defaults on foreign debt were recorded, this has cost the government and CBR reserves dearly. In the new programme the cabinet has shifted the priority from providing financial packages directly to companies and banks to supporting social spending, state enterprises, small businesses and banks. A big part of the spending will also go towards covering growing deficits in regional budgets, but a lot of this money will be spent on social programmes and state employees anyway. Agriculture, transport (railways and air carriers), housing and car industries are among planned recipients of this new state support.
Financial sector will get half of the new funding. Of the total volume of spending set out in the new programme the largest share (48%) will go to banks. However, in contrast to previously provided state aid, this money will be tied in to certain spending priorities: mortgages, low-rate loans to the agriculture and defence industry, etc. The next largest chunk in the new programme will go to increased social spending on unemployment benefits, job creation programmes and pensions (15%). The government estimates that the combined effect of its tax initiatives will contribute some 14% to the total new anti-crisis spending. These include changes in amortization rules, reduction of profit tax, rebates on new house purchases, etc. Direct spending on the economy comprises some 8% of the new programme while federal support to regional budgets accounts for 10%.
Conclusion – stability likely to be preserved
The new anti-crisis programme and the revised budget do not imply any immediate gains for the stock market or for the investment community. Their strategic importance lies more in the long term rather than short term. We believe that both documents are capable of ensuring that social and economic stability in Russia is maintained: a factor the significance of which is hard to underestimate given Russia's high levels of dependence on the dynamics of external markets (commodities, credit).
We believe that the possibility of a destabilization of the social and/or political situation in Russia remains very low, even though there are clear signs that economic development in some of the country's major industries and regions will continue to remain exceptionally weak.
Another important conclusion that can be drawn from both documents relates to the future of the Russian banking sector. Almost half of the total funds to be provided by the anti-crisis programme will be directed towards stabilizing and supporting the banking system. This makes it abundantly clear that financial stability is still regarded by the government as one of its key priorities. While the across-the-board support to the sector characterized by early anti-crisis measures is now likely be replaced by a more in-depth and selective approach, we remain confident that Russia's banking system will survive the crisis and, moreover, that during the post-crisis period it will emerge more effective, flexible and transparent.
Perhaps the biggest disappointment that some may feel after reviewing the new anti-crisis documents is that they lack any clear-cut statement about the government's plans in the investment and infrastructure areas. Ever since the crisis started to spread last autumn, we were among those who warned that bets on continued high capex spending by the Russian state as a means of weathering the crisis were bound to be short-lived as there will simply not be enough funds in government coffers. To our regret we were proved right, and investment programmes have suffered the largest cuts in the new budget. That said, this seems to be the right choice, as the cabinet was forced to choose between social and political stability and growth and investment. Nonetheless, this factor is certain to make the current slowdown in economic activity deeper and the future recovery more protracted.
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Aeroflot, TNK-BP, Gazprom, Mosenergo: Russian Equity Preview
By Paul Abelsky
April 21 (Bloomberg) -- The following companies may have unusual price changes in Russia trading. Stock symbols are in parentheses, and share prices are from the previous close.
The 30-stock Micex Index fell the most in three weeks, declining 4 percent to 895.35 in Moscow. The dollar-denominated RTS Index dropped 4.1 percent to 800.22.
OAO Aeroflot (AFLT RX): The Czech government didn’t allow Russia’s biggest airline to proceed to the second round of the bidding process for a majority stake in national carrier Ceske Aerolinie AS, Finance Minister Miroslav Kalousek said.
Aeroflot fell 2.1 percent to 34.43 rubles in Moscow.
TNK-BP (TNBP RU): BP Plc’s Russian joint venture is trying to get a three-year $300 million pre-export credit line from banks, the Wall Street Journal reported, citing unidentified people familiar with the matter.
TNK-BP was unchanged on the RTS.
OAO Gazprom (GAZP RX): Nord Stream AG, the natural-gas pipeline venture led by Russia’s state-owned gas export monopoly, will contribute to European energy security, President Dmitry Medvedev said today in Helsinki at a joint press conference with Finland’s President Tarja Halonen. Finland would give its approval for the project to connect Russia directly with Germany via the Baltic Sea if the pipeline can be completed in an environmentally safe way, Halonen said.
Gazprom declined 6.6 percent to 133.97 rubles on the Micex stock exchange.
OAO Mosenergo (MSNG RX) and OAO OGK-3 (OGKC RX): First Deputy Prime Minister Igor Shuvalov will chair a meeting tomorrow on Russia’s power retail market after a steep rise in electricity prices in recent weeks, Interfax reported.
Mosenergo, the power generator serving Moscow, fell 7.6 percent to 1.332 rubles, its biggest decline in three months. OGK-3, the generator part-owned by mining company OAO GMK Norilsk Nickel, dropped 12 percent to 0.693 ruble.
To contact the reporter on this story: Paul Abelsky in St. Petersburg at pabelsky@.
Last Updated: April 20, 2009 22:00 EDT
RTS Opens Dollar Platform
RTS share market, whose dollar-denominated trading platform was once Russia's most liquid, will launch a new ruble-based platform this week to win over broker volumes, RTS officials said Monday.
The new system, RTS Standard, will offer ruble-denominated trading in Russia's 20 most liquid shares and eventually expand to include all the components of Russia's main RTS share Index.
Trades on RTS Standard, to be launched on Thursday under the auspices of FORTS, the futures and options section of the RTS, will be used for the benchmark index, the RTS said.
Settlement dates will be on the fourth day following the trading dates, an unusually long settlement cycle, to help participants avoid failed trades. But participants can conduct operations with purchased securities before their physical delivery.(Reuters)
Russia, Airbus sign $4 bln titanium deal
17 hours ago
MOSCOW (AFP) — Russia on Monday inked a four-billion-dollar contract with Airbus to supply the European aircraft manufacturer with titanium for its planes over the next decade.
The agreement, hailed as a landmark deal between a European company and Russia, was signed at a ceremony in Moscow attended by Russia's powerful Prime Minister, Vladimir Putin, an AFP correspondent reported.
Under the deal, Russian state metals firm VSMPO-AVISMA will supply Airbus with titanium through 2020. VSMPO-AVISMA is part of the state industrial holding Russian Technologies.
"We started with small steps but this is a great step forward," said Airbus chief executive Thomas Enders, who inked the contract with Russian Technologies head Sergei Chemezov.
"This is an important strategic deal."
Putin declared the total value of the bilateral deal to be worth four billion dollars and said that Moscow intended to deepen its cooperation with the European aerospace group EADS, Airbus's parent firm.
He added that Russian trade with EADS had grown 20 times since the first bilateral deals signed in the early 1990s.
Russia currently manufactures components for Airbus planes and converts Airbus' A320 passenger liners for freight use.
The parties said in a statement Monday that the deal was the biggest and longest term contract "in the history of Airbus/EADS cooperation with Russian industry."
The contract -- initially discussed at the Farnborough airshow in 2008 -- provides for Russian Technologies to supply Airbus with titanium used in the production of all its aircraft, including a new longhaul model, the A350 XWB.
VSMPO-AVISMA is the world's leading producer of titanium, valued in the aerospace industry for being light-weight and resilient. About 70 percent of the titanium producer's yearly output goes to export.
"The signed agreement demonstrates that Russia can offer high technology products to the world markets," Chemezov said in the statement. "During a period of economic crisis, having stable orders is extremely important."
Chemezov, who also heads a startup airline company Rossavia, said that his firm was looking to buy planes from Airbus.
"Today, we put an inquiry to Airbus for a whole range of its airplanes," Chemezov said at the signing ceremony.
Rossavia needs around 200 planes to build up its fleet, he said, adding that the airliner would not exclusively purchase Airbus's planes but also place orders with other airline manufacturers.
Airbus has suffered from production delays of its giant A380 superjumbo project in recent years.
Now in the thick of the global financial crisis, many of Airbus's clients, including Russian state-controlled airline Aeroflot, are wavering on going through with their orders facing new financial constraints.
Electricity demand falls sharply in Siberia
Rencap, Russia
Monday, April 20, 2009
According to a press release issued by the Wholesale Market Council, electricity consumption in Russia for the week 10-16 April declined by 4.7% YoY. European Russia saw a slight improvement over the previous week, with demand 3.2% below last year. However, demand in Siberia has fallen sharply in the past two weeks and was 9.9% below the 2008 level. Meanwhile, we estimate European Russian electricity market prices are around 19% higher YoY, while prices in Siberia are flat YoY.
While the main burden of reduced demand falls on Russia's fossil-fuel generators, we think electricity prices have held up well, due perhaps to the large numbers of combined-heat-and-power plants being taken out of commission as the winter heating season ends. Although the sharp fall in demand in Siberia is a reminder that there is little sign of recovery in industrial output.
Putin’s Tariffs Stall Russian Growth for Caterpillar (Update1)
By Melita Marie Garza and Paul Abelsky
April 20 (Bloomberg) -- Prime Minister Vladimir Putin’s trade measures are starting to keep Deere & Co. combines and Caterpillar Inc. trucks out of Russian wheat fields and coal mines, dimming the companies’ prospects for expansion abroad.
Deere and Caterpillar, reeling from the longest U.S. recession in a quarter century, were the companies most affected by loan restrictions and tariffs of as much as 25 percent that Putin imposed this year, according to a U.S. Chamber of Commerce survey of the top 50 American businesses operating in Russia.
Putin is trying to boost Russian industries with tariffs on everything from drugs to farm equipment as declining oil revenue saps the nation’s economy. The policies are hurting sales by Caterpillar, Deere and Agco Corp. in a market where revenue was forecast to rise as much as sixfold in the next decade.
“The new tariffs kicked these guys in the knees when they were down,” Larry De Maria, a New York-based analyst with Sterne, Agee & Leach Inc., said in a telephone interview. “Russia was supposed to be a $3 billion market in 2008 with potential to grow to $20 billion, possibly in as little as a decade.”
Emerging-market sales likely fell so far this year for Deere and Caterpillar, which reports first-quarter earnings tomorrow, De Maria said. Caterpillar is expected to report profit excluding certain items of 5 cents a share, the average estimate of 20 analysts surveyed by Bloomberg. The company earned $1.45 a share a year earlier.
“We are really going to struggle this year in Russia,” Ken Harding, Caterpillar’s regional execution manager for the Commonwealth of Independent States, said in a telephone interview.
‘Low’ Expectations
Caterpillar’s “expectation is low” that it will sell any of its 60-ton trucks, used for quarry and construction work, in Russia this year after selling eight last year, Harding said.
Starting in January, Peoria, Illinois-based Caterpillar and other foreign makers of off-highway trucks faced duties of 25 percent, an increase from 5 percent last year. BelAZ, a Belarusian equipment producer that dominates the region’s truck industry, isn’t subject to the tariff and will benefit, Harding said.
Caterpillar declined 59 percent on the New York Stock Exchange in the 12 months through April 17. Deere fell 56 percent, and Agco dropped 64 percent.
Deere, the world’s largest maker of agricultural equipment, and Duluth, Georgia-based Agco are being hurt by a program that gives Russian farmers a 20 percent discount on loans from Russia’s Central Bank if they buy domestic machines.
Loan Program
The deal is for loans made through OAO Sberbank, Russia’s largest lender, and Rosselkhozbank, the Russian Agricultural Bank, which both have local offices that farmers rely on for financing, Michael Considine, director of EurAsia issues for the Washington-based Chamber of Commerce, said in an interview.
“If a Russian farmer had the cash to buy a Deere combine, it would cost substantially more because of the tariff increase,” Considine said. “And if you didn’t have the money, you could just forget about it because you’d only be able to get the money to buy something made in Russia.”
Putin undertook the measures after a December visit to Rostov, Russia-based Rostselmash, the country’s leading combine maker.
Putin’s press secretary Dmitry Peskov wasn’t available for comment. Valeriy Khromthenkov, a Russian official in Washington with oversight of agricultural issues, declined to comment. A spokesman for Finance Minister Alexei Kudrin, who also is deputy prime minister, wasn’t available to comment.
‘Dramatically Reduced’
Agco’s sales are “dramatically reduced” in the region, because borrowing for a foreign tractor is now almost impossible, Greg Peterson, Agco’s head of investor relations, said in a telephone interview.
In its first-quarter earnings announcement in February, Moline, Illinois-based Deere said sales will decline in Central Europe and the Commonwealth of Independent States for the year. Ken Golden, a spokesman for Deere, declined to comment.
“Our main problems have been the lack of state subsidies on loans combined with insufficient operating cash and the general economic downturn, not the import tariffs,” Alexander Altynov, the general director of AgroSnab, an official John Deere dealer in Russia, said in a telephone interview.
Market Decline
Altynov predicted the foreign machinery market in Russia will decline as much as 75 percent this year.
Deere was expected to post second-quarter profit excluding certain items of $1.08 a share, the average estimate of 17 analysts in a Bloomberg survey.
The U.S. Trade Representative has worked with the U.S. combine harvester industry and at a meeting in Moscow in March expressed concern about the tariff, Nefeterius McPherson, a spokeswoman for the trade representative, said in an e-mail.
The tariff runs counter to Russia’s G20 pledge to avoid protectionist measures and is contrary to a November 2006 bilateral agreement that Russia will maintain a 5 percent tariff on combines until it joins the World Trade Organization, McPherson said.
The ruble’s 31 percent decline against the dollar since July also has made foreign products more expensive. Russia’s Economy Ministry estimates that imports have tumbled more than 30 percent in the first quarter of this year.
Last month, Russia allocated 25 billion rubles ($746.7 million) to OAO Rosagroleasing, the nation’s largest farm- equipment leasing company, and 45 billion rubles to state-run Rosselkhozbank as part of a 3 trillion-ruble stimulus package.
Rosagroleasing spent the money on Russian-made equipment, including 5 billion rubles on OAO KamAZ trucks, Agriculture Minister Yelena Skrynnik told Putin during a meeting on April 17, according to a transcript on the government’s Web site.
Farm Equipment
Russia’s Union of Farm-Equipment Producers, known as Soyuzagromash, asked the government last week to extend the 15 percent import duty on combines to all farm equipment. The tariffs may boost domestic market share for farm machines to 60 percent, the union said.
“The government wants both to help the domestic producers and keep the state funds allocated to the agricultural sector inside Russia,” said Mikhail Pak, an analyst with IFC Metropol in Moscow.
Putin’s efforts may hurt U.S. companies’ operations in the rest of the world, said De Maria, of Sterne Agee.
“There is a worry that these measures could spread to China and other emerging-market countries,” De Maria said. That “would be a blow to the Deere brand and others, stifling their growth strategy as local companies build share.”
To contact the reporter on this story: Melita Marie Garza in Chicagot ; Paul Abelsky in St. Petersburg at pabelsky@.
Last Updated: April 20, 2009 07:59 EDT
Microsoft Plans to Invest 10 Billion Rubles in Russia (Update1)
By Maria Ermakova
April 20 (Bloomberg) -- Microsoft Corp., the world’s largest software maker, will invest 10 billion rubles ($296 million) in Russian projects to tap growth in the country’s technology industry, Chief Executive Officer Steve Ballmer said.
“We view Russia not only as a market of great strategic importance for Microsoft, but also as an important center for future innovation, entrepreneurship and economic growth,” Ballmer said at a press conference in Moscow today. “Despite the challenges we face, we are extremely optimistic about the long-term future” in Russia, he said.
Microsoft’s investment in Russia is planned for the next three years, Ballmer said. The company, based in Redmond, Washington, set up a representative office in Russia in 1992 and has been expanding in the country as demand for computers and services increases.
The company’s Russian investment program includes raising the amount of centers for improving computer literacy skills to 100 from 60, offering advanced programs through Microsoft’s IT Academies in Russian universities and developing its Technologies Center in Moscow, the company’s first in eastern Europe, according to Ballmer.
“The most important messages” we are getting from studying the Great Depression in the U.S. of the 1929 are “cut expenses but keep investing in innovation,” the CEO said. The company will invest “over $9 billion in research and development this year, constant from last year,” he said.
Online Services
Ballmer said that now is time to invest in online services, where the company is unprofitable at the moment, “but we will be making money.” The “partnership with Facebook is part of that,” he said.
Microsoft will also work with the Russian government and small enterprises on ways to improve the country’s healthcare system and support the 2014 Winter Olympics that Russia will host in Sochi on the Black Sea cost, Ballmer said. He met with First Deputy Prime Minister Igor Shuvalov as part of this trip to Moscow and said he had “a very good set of discussions,” without elaborating.
Microsoft has also signed an agreement today with the Russian Academy of Science’s Space Research Institute to set up a scientific research center that will study climate change, Ballmer said.
Speaking about his personal investments, Ballmer said 80 percent to 85 percent is in Microsoft. As for the remainder, “I do believe in the general long-term economic growth of the world, so I am invested in a set of index funds that represent global traded financial securities,” he said.
To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@.
Last Updated: April 20, 2009 11:20 EDT
Microsoft Unveils $300M Expansion
21 April 2009
By Courtney Weaver / The Moscow Times
Praising the government for its "amazing work" fighting the crisis, Microsoft CEO Steve Ballmer announced Monday that his company would invest 10 billion rubles ($300 million) in Russia over the next three years.
The U.S. company will expand the free services it offers students and startups across Russia and will also help fuel innovation in sectors that are not directly software related, Ballmer said at a news conference in Moscow.
At the news conference, Microsoft's Russia president, Nikolai Pryanishnikov, signed an agreement with the Space Research Institute to create an institution dedicated to the study of global climate change. The three-year project will be based at the space institute and provide research for government services such as the Natural Resources and Agriculture ministries.
"Climate change is not a software problem -- it's an opportunity," Ballmer said following the signing. "Energy science, environmental science, medical science -- those are all fields of innovation. And yet software will be a key part of the way in which people develop non-IT industries."
In addition to assisting the government in creating a "more efficient health care system" and supporting the 2014 Winter Olympics in Sochi, Ballmer said Microsoft would create new innovation and research facilities "designed to help Russia respond to the current economic crisis" and continue long-term growth.
The innovation initiative will be coupled with a computer-literacy skills project intended to provide up to 300,000 people with enough IT training to "enhance their current job prospects," he said.
Ballmer said he had met with First Deputy Prime Minister Igor Shuvalov and praised the state's handling of the crisis.
"We're very appreciative of the amazing work the Russian government is doing in fighting the economic crisis and the measures it has taken still with a view toward long-term growth through innovation and productivity," he said.
A spokesman for Shuvalov confirmed that the meeting had taken place but declined to elaborate further on the discussions.
Ballmer also echoed the importance of providing support to small businesses during the downturn -- a popular platform of the government.
During a recession, most private-sector job creation occurs in small business, Ballmer said. To encourage this, he added, Microsoft will offer free software licensing for its products to more than 1,000 Russian startups between now and 2012.
Microsoft currently has more than 7,500 partner companies in the country and will soon open Eastern Europe's first Microsoft technology center here, Ballmer said.
The company will also widen its student outreach through expanding its Dream Spark program, an initiative that provides the company's "cutting-edge software" to university students, soon to high school and elementary school students.
This year, Microsoft plans to invest more than $9 billion in research and development worldwide, Ballmer said, and will continue the expansion of its IDEA (Information Dissemination and Equal Access) centers and innovation centers -- hubs for Microsoft to work with universities, startups and larger firms to develop new technologies.
The company has thus far opened 10 innovation centers in Russia and hopes to open one more by the end of the year.
While there are current 60 IDEA centers in 40 Russian regions, the company plans to expand that number to more than 100 to reach all areas of the country.
Microsoft's new plans to penetrate the Russian market are not so different from other Western IT companies such as Google, said David Ferguson, an analyst at Renaissance Capital.
"The Russian IT market is still pretty much dominated by local players, and it's all about trying to strengthen your position in the market," he said.
The company's current strategy would likely open ways for the company to both expand its Internet services and defend the market share of its Microsoft Office products during a push for open software here, Ferguson said. Both initiatives require the support of the state, he said.
"There's massive opportunity in this market, but probably both [software and the Internet] are relatively politically sensitive. You probably have to give to receive, and investments of this kind are probably a way toward building a bridge," Ferguson said.
Acknowledging the crisis, Ballmer said he remained optimistic about the future, noting that although some of the past 10 years' growth had been built on debt, the majority of it had been built on "innovation and productivity."
This, he said, is precisely why Microsoft is forging ahead with its investments.
"The economy is challenging -- our company is certainly not immune to the challenge. ... But even while we cut in some areas, we are going to invest in other areas. And I think Russia has one of the brightest futures both as a market and as a source of new technology development," he said.
Altimo appeals New York court decisions
Rencap, Russia
Monday, April 20, 2009
According to Vedomosti today (20 Apr) Altimo, a subsidiary of Alfa, has appealed two decisions of a New York court. Altimo has appealed an 11 Mar decision which imposed a $100,000 per day fine on the company because it had failed to comply with the court rulings (to transfer its 43.5% stake in Kyivstar to the court and reduce its stakes in Kyivstar competitors in Ukraine). Altimo has also asked for permission not to compensate for plaintiff's (Telenor's) expenses.
Previously Vedomosti reported that the New York court should have waited until 17 Apr for the payment for a 1.6% indirect stake in Turkcell to be transferred to Alfa and for Alfa to comply with another ruling to release its Kyivstar shares (currently seized) and transfer them to the court. By appealing the court rulings, we think Altimo is trying to avoid negative financial implications, which is logical in our view.
UPDATE 1-Severstal sees '09 Russia steel demand down 25 pct
Mon Apr 20, 2009 3:33pm BST
(Updates with quotes, background)
VIENNA, April 20 (Reuters) - Severstal (CHMF.MM: Quote, Profile, Research), Russia's largest steel maker, expects domestic steel demand to fall by 25 percent in 2009 from last year, the head of strategic planning at the company, Andrei Laptev, said on Monday.
"The automotive sector could be the hardest hit ... production of cars and buses has decreased by 70 percent," Laptev said at the CRU 15th World Steel Conference.
Russian steel producers have been hard hit by the financial crisis, which has crimped orders for construction materials and durable goods such as autos and plant equipment.
But he said Russian steel consumption was likely to pick up from January and February levels, when it was down about 50 percent year-on-year.
"We do expect a recovery in domestic consumption in the second half of 2009. Indeed, we believe Q2 domestic demand will already be better than the first quarter," the executive said.
Severstal in February reported fourth-quarter crude steel production declined 48 percent from the previous quarter to 3.14 million tonnes. [ID:nLB744950]
The company has yet to issue its first-quarter production statistics. Laptev did not supply these figures at the conference.
Rivals Novolipetsk Steel (NLMKq.L: Quote, Profile, Research) and Magnitogorsk Iron and Steel Works (MMK) (MAGN.MM: Quote, Profile, Research) said this month their crude steel production was up 21 percent and 25.6 percent respectively from the final quarter of 2008.
Domestic steel makers are compensating for soft domestic demand by boosting shipments abroad, where the weak rouble provides them with a competitive advantage against other exporters. [ID:nLJ55539]
"We firmly believe Russia is the best country in the world to be in for making steel. One of the key reasons is low costs," Laptev said, adding that Russia now exports 65 percent of its steel.
(Reporting by Sarah Marsh; writing by Alfred Kueppers and Peter Blackburn)
MMK returns to profitability in Q1
MOSCOW. April 21 (Interfax) - Magnitogorsk Iron & Steel Works (MMK)
(RTS: MAGN) posted a net profit of 3.89 billion rubles in the first
quarter of 2009, down from the profit of 6.17 billion rubles in the same
quarter last year, the company said in a statement.
MMK had a net loss of 23.4 billion rubles in the fourth quarter of
2008. The improvement in the latest quarter came on a 9% increase in
sales and an 18% decline in production costs, as well as a gain from
revaluation of financial investments (compared with a revaluation loss
in the fourth quarter last year).
It was reported earlier that MMK produced 2.7 million tonnes of
steel in the first quarter of 2009, 42.5% less than in the same period
last year.
Potanin Cuts Norilsk Stake to 25%
21 April 2009 Bloomberg
Vladimir Potanin cut his stake in Norilsk Nickel to 25 percent, according to an April 17 filing by a Norilsk unit to the U.S. Securities and Exchange Commission.
Potanin is the beneficial owner of 25 percent plus one share of Norilsk. Potanin said Aug. 8 that he held "just below" 30 percent of Norilsk.
Potanin's wealth dropped to $2.1 billion, almost 90 percent less than last year, according to a list published last month by Forbes magazine. He received about $1.3 billion after selling 37 percent of Polyus Gold, Vedomosti reported April 17.
Potanin's Norilsk stake was reduced after Potanin sold shares to the nickel producer as part of its $2 billion stock buyback last year, said a spokesman for Potanin's investment company Interros Holding. United Company RusAl owns 25 percent plus two shares of Norilsk, according to RusAl's web site.
Aluminum giant RusAl posts 7.2% decline in Q1 aluminum output
MOSCOW, April 21 (RIA Novosti) - Russian aluminum giant RusAl said on Tuesday its primary aluminum output had decreased 7.2% year-on-year in January-March to 1 million metric tons.
United Company RusAl, established in March 2007 through a merger of the Russian aluminum giants RusAl and SUAL and Swiss Glencore's alumina assets, said bauxite production fell 34.2% in the reporting period to 3 million metric tons, while alumina output declined 25.3% to 2.1 million metric tons.
"As part of its Cost Efficiency Leader program, RusAl has reduced production across its most economically inefficient and environmentally unsound facilities. By the end of 2009, the total reduction of aluminum will be 0.5 mln tons, which is approximately 11% of 2008 volume. The alumina output will be cut by 3.9 mln tons, approximately 34% of the total output," the company said.
RusAl said that total savings from cost-cutting measures amounted to $554 million in the first quarter, with the company expected to save $1.1 billion in 2009, excluding the investment program.
Hambro Announces 53% Earnings Jump
21 April 2009 Reuters
LONDON -- Peter Hambro Mining, Russia's second-biggest gold producer, posted a 53 percent jump in underlying annual core earnings Monday but missed expectations partly because of foreign exchange losses.
The London-listed company also said it would not pay a final dividend and said chairman Peter Hambro and deputy chairman Pavel Maslovsky have accepted a 50 percent cut in bonuses to conserve cash.
Underlying earnings before interest, tax, depreciation and amortization rose to $136.4 million, below the $144.7 million average forecast of four analysts.
"It's been a very tough year," Hambro said in a telephone interview. "I don't want to go through it again."
Revenue surged 69 percent to $381.7 million, however, beating the $347.2 million expected thanks to higher production and gold prices.
The AIM-listed company announced its results a week early because of the expected completion of its takeover of iron-ore company Aricom on Wednesday.
The combined company, which will have a market capitalization of about ?980 million ($1.5 billion), will list on the main market of the London Stock Exchange and is a contender to enter the FTSE 100.
Merrill Lynch expects the move to be supportive to the shares and estimates that index-tracking funds could need to buy 8 million shares, equivalent to 9 1/2 days trading volume.
Brokerage Fairfax IS also anticipates that the shares will be rerated higher.
"We can see a potential doubling of the shares this year, putting the stock on the edge of the FTSE 100, where a market cap of ?1.4 billion would have been sufficient for index entry this month," it said in a recent research note.
The shares closed down 8.4 percent at 513 pence, retreating from recent gains.
The rise in the share price since the beginning of the month, in the face of a declining gold price, is most likely a reflection of the move to the main board, Arbuthnot said.
Hambro said he saw the recent decline in gold prices as temporary and that he was still confident of substantially higher gold prices this year.
Some analysts have forecast prices of about $1,500 per ounce over the next 12 months, a level that Peter Hambro called realistic.
"I don't see any sign of people wanting to own money. People want real assets, they don't want paper."
The company's total attributable production rose 36 percent, following a restatement of 2007's output, to 393,600 ounces. The company aims to increase gold production to 1 million ounces by 2012.
Peter Hambro said production this year was on track with group's target of 460,000 to 510,000 ounces.
The average realized gold sales price rose to $845 per ounce in 2008, from $668 per ounce in 2007.
Gold firmed in Europe on Monday as last week's price fall of 1.5 percent tempted jewelry and other physical buyers back to the market and as stock markets weakened, but a firmer dollar kept a lid on gains.
Spot gold was bid at $871.45 an ounce Monday afternoon, against $867.90 late in New York on Friday.
Noncash items included a $32 million rise in foreign exchange losses, while higher staff costs and financing costs also weighed.
"One of the effects of the economic downturn is that people are more concerned about keeping their jobs than in what they get paid," Hambro said. "Wage pressures are not where they were in the first half of last year."
As part of its exploration update, the company was upbeat about prospects at its Pokrovsky deposit and further drilling and trenching at the Andreyevskaya zone at Pioneer could indicate the likelihood of further ore columns and show bonanza grades, in places up to 3,500 grams per ton in individual samples, the company said.
Russia VTB restructured 15 pct of loan portfolio –paper
Tue Apr 21, 2009 2:19am EDT
MOSCOW. April 21 (Reuters) - State-controlled VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz), Russia's second biggest lender, has already restructured 15 percent of its loan portfolio and sees "problem debt" at around the 7 percent mark, its CEO was quoted as saying on Tuesday.
"I think it is 15 percent (the share of the loan portfolio that has been restructured so far). It is no use to milk a cow if there is no milk," Andrei Kostin told Kommersant business daily.
VTB was entrusted by the state to act as clearing house for credit resources for Russia corporates at a time when the global financial crisis has effectively blocked wholesale credit markets.
"VTB during six months of the crisis has increased its loan portfolio by 50 percent," Kostin said.
Analysts questioned the economic wisdom of VTB aggressively expanding its loan book, given the difficult environment for Russian corporates, as souring assets are likely to spill over into hefty losses.
"I am always ready to give loans once my departments tell me this is an awesome loan with a return, an entry, an exit and everything works out," Kostin said.
VTB is expected to show a net loss of $316.7 million in the fourth quarter of 2008 as provisions on bad loans soar as the economy shrinks, forcing the state bank into the red. [ID:nLH692798]
The bank went public in May 2007 in an $8 billion IPO and its shares have lost around 75 percent of their initial price so far bringing losses and angering thousands of Russians who had believed in a high-level promoted "people IPO".
VTB is considering compensation to those individual investors who had bought its shares during the placement but no concrete solution has so far been proposed.
"The core principle should be the same as for Deposit Insurance System. It means there is a minimal amount (as a base to calculate the compensation) which should be the same as for small as for big investors," Kostin said. (Reporting by Dmitry Sergeyev; editing by Mike Nesbit)
VTB’s Non-Performing Loans Share Rises to 3.4%, Kommersant Says
By Denis Maternovsky
April 21 (Bloomberg) -- VTB Group Chief Executive Officer Andrei Kostin said the share of non-performing loans held by Russia’s second-biggest bank almost doubled in the first quarter, Kommersant reported.
The share of non-performing loans jumped to 3.4 percent on April 1 from 1.8 percent on Jan. 1, the Russian newspaper cited Kostin as saying in an interview. State-controlled VTB already considers about 7 percent of its portfolio as “problem” loans and that figure will probably rise this year, Kostin said, according to Kommersant.
To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@
Last Updated: April 21, 2009 02:23 EDT
VEB may attract financing to purchase stake in Rostelecom from KIT Finance
Unicredit, Russia
April 20, 2009
Vnesheconombank (VEB) may attract credit financing from the Deposit Insurance Agency to purchase 40% in Rostelecom from KIT Finance, Kommersant reports citing unnamed sources in banking industry. The amount of the loan could reportedly reach R70bn ($2.1bn).
The news confirms previous reports that VEB is likely to accumulate a minority stake in Rostelecom. Although the reported price is 27% below the company's market capitalization (approximately $7.2bn on MICEX as of Friday's close), it is several times above our fair value estimate of $1.1bn. Given the high probability of Rostelecom being the center of the consolidation of Svyazinvest's assets, the valuation would still imply strong swap risks for regional telecoms' minorities.
Sistema eyes majority stake in telecom Svyazinvest
Tue Apr 21, 2009 2:20am EDT
MOSCOW, April 21 (Reuters) - Russian conglomerate Sistema (SSAq.L: Quote, Profile, Research, Stock Buzz) has ambitions to bid for control of Svyazinvest after a getting a lower-than-expected valuation on the 25 percent plus one share in the telecoms giant it wanted to sell to the state.
Sistema proposed in October that the government buy back its quarter share in Svyazinvest for $1.9 billion. Sources said last week the stake, which is held by Sistema's unit Comstar (CMSTq.L: Quote, Profile, Research, Stock Buzz), had been valued at about $668 million. [nLH393485]
"Comstar is going to file a proposal to the government to buy another 25 percent of Svyazinvest based on a valuation made by Ernst & Young," Sistema's spokeswoman Yulia Belous said on Tuesday.
"In our opinion, this valuation was made based on very conservative forecasts for Svyazinvest's development. We believe that we can present ourselves to the state as a more efficient manager (of Svyazinvest)."
Yelena Lashkina, a spokeswoman for the Communications Ministry, said the government had no intention of selling its Svyazinvest shares.
Yekaterina Nevskaya, a spokeswoman for Comstar, said Comstar would be interested in increasing its Svyazinvest stake to a controlling one "at an attractive price."
The government is currently mapping out another restructuring plan for Svyazinvest, whose privatisation has been delayed by nearly a decade.
Analysts believe the government is likely to negotiate for a non-cash swap of the Svyazinvest stake held by Comstar for Svyazinvest's shares in Moscow fixed-line network MGTS (MGTS.RTS: Quote, Profile, Research, Stock Buzz), which is already majority-held by Sistema.
They have also said that Comstar's 26 billion-rouble ($777 million) loan from Sberbank (SBER03.MM: Quote, Profile, Research, Stock Buzz) would likely figure in the deal.
(Reporting by Anastasia Teterevleva; writing by Maria Kiselyova; editing by John Stonestreet)
((maria.kiselyova@, +7 495 775 12 42, Reuters Messaging: maria.kiselyova.@))
UPDATE 1-Rambler Media EBITDA up, cost saving to continue
Tue Apr 21, 2009 2:59am EDT
* FY EBITDA rises 112 pct, revenue up 59 pct
* Says cut 10 pct jobs
* Says cost-saving measures to continue in 2009 (Adds details)
April 21 (Reuters) - Russian Internet company Rambler Media Ltd (RMG.L: Quote, Profile, Research, Stock Buzz) posted higher EBITDA and revenue for 2008, helped by a growth in display and banner advertising, and said cost-saving measures initiated in the fourth quarter would continue in 2009.
Rambler said it cut about 10 percent jobs to 660 employees at the end of the year from October 2008 levels.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $16.1 million, compared with $7.6 million in the year-ago period, the UK-registered owner of Russia's search engine rambler.ru and on-line newspaper lenta.ru said.
Revenue rose 59 percent to $110 million for the year.
The company said adverse macroeconomic conditions in the fourth quarter, which is usually its strongest period, halted the progress that was shown in the previous five quarters.
Rambler, the only listed Russian Internet firm, is part of Russian billionaire Vladimir Potanin's holding company Prof Media.
Rambler shares closed at 5.56 pence on Monday on the London Stock Exchange. (Reporting by Purwa Naveen Raman in Bangalore; Editing by Gopakumar Warrier)
Alfa Bank Profit Falls 9.2%
Alfa Bank's profit fell 9.2 percent last year as it increased provisions for bad loans, Alfa said in an e-mailed statement Monday.
Net income dropped to $230.1 million in the 12 months to Dec. 31, compared with $253.5 million a year earlier, it said. The lender's operational revenue rose 20 percent to $1.21 billion. (Bloomberg)
Russia braces for fewer tourists
Published: April 20, 2009 at 3:41 PM
ST. PETERSBURG, Russia, April 20 (UPI) -- Russians are bracing for a decline in international travel critical to cities like St. Petersburg that are heavily dependent on the tourist industry.
About 18 percent of the jobs in St. Petersburg or 500,000 jobs in the city rely on tourism, said Mariana Ordzhonikidze, who heads the city's tourism department, the Moscow Times reported Monday.
The department expects a 30 percent drop in the number of foreign travelers this year and a 15 percent drop in Russians traveling to the city, Ordzhonikidze said.
"We are all very troubled and discouraged," she said.
The World Tourism Organization reported international tourism would contract by 2 percent this year, the first decline since the organization began keeping track in 2003.
In response, Russian tourism departments are hoping to interest Russians in spending their vacations near home, a dynamic the global recession has already begun.
In the first quarter of 2009, the number of Russians traveling abroad dropped 25 percent, said Anatoly Yarochkin, head of the Federal Tourism Agency.
Amid the downturn, "we have asked the government to consider making summer sanatorium and health resort visits tax deductible for retirees and youth. We hope the measure is approved," Yarochkin said.
Sevmash to produce containers for radioactive waste
2009-04-21
Sevmash shipyard in Severodvinsk, Arkhangelsk Oblast, starts series production of a new type of containers for used radioactive fuel for Leningrad Nuclear Power Plant.
Sevmash and Leningrad Nuclear Power Plant (LNPP) have concluded an agreement on production of 30 containers for storage and transportation of radioactive waste, a press release from the company reads.
The shipyard in Severodvinsk has earlier produced containers for used radioactive fuel from submarines and icebreakers. The containers for LNPP are larger and heavier than earlier produced types. They are four meters high, 2.4 meter in diameter and weigh 88 tons.
Activity in the Oil and Gas sector (including regulatory)
Crude production up, Russia says
s
Published: April 20, 2009 at 11:50 AM
MOSCOW, April 20 (UPI) -- Crude oil production from Russia is expected to boast modest gains in 2009 despite earlier forecasts of a decline in the industry, officials said.
The output of crude oil from Russia for 2008 and the first two months of 2009 fell about 1 percent, but March output saw a modest increase of 0.4 percent to 9.76 million barrels per day.
The Russian Energy Ministry said it expects that trend to continue for the rest of the year, with an increase of as much as 2 percent, the Platts news service reports.
Russian Prime Minister Vladimir Putin, however, had predicted declines in crude output to 9.6 million barrels per day, or roughly 1.1 percent, as the global economic recession trickled over to oil field maintenance and production levels.
The Platts report said, however, that declining export duties and a plummeting value of the ruble may have prompted Russian oil producers to ramp up production in an effort to offset any losses.
Russia is the second-largest oil producer in the world and boasts proven oil reserves of around 60 billion barrels.
Turkmenistan: Russian Ministers Sent To Ashgabat For Gas Talks
4/20/09
Russian Energy Minister Sergei Shmatko and Deputy Prime Minister Igor Sechin will undertake an emergency mission to Ashgabat for talks aimed at stabilizing Russian-Turkmen gas relations.
The talks are scheduled for early this week, a Kremlin source told the Interfax news agency on April 20. "The topic of the negotiations should be cooperation in the gas sphere," the agency reported.
It is unclear whether Shmatko and Sechin will attend an energy security conference due to be held in the Turkmen capital on April 23-24. The announcement of the Russian duo’s mission to Turkmenistan came after Ashgabat launched a high-octane attack on the Kremlin’s record as a gas partner.
A commentary published on the semi-official Turkmenistan.ru insinuated that Russia, struggling with a gas glut and falling prices, had purposefully allowed a blast to disable the Davletbat-Daryalik pipeline on April 9.
It would be "counterproductive to engage in confrontation with Turkmenistan - and more expensive," the commentary warned, adding that Turkmenistan had recently spent $1 billion upgrading the pipeline contrary Russian media reports suggesting the explosion had been caused by worn-out infrastructure.
Experts say the Turkmen budget would be battered by a permanent reduction in gas exports to Russia. But equally, Gazprom may have overstretched itself in its attempt to gain a monopoly on regional energy reserves.
Sechin seals $25bn China loan-for-oil deal
News wires
Moscow and Beijing today finalised a $25 billion deal under which Russia will supply China with oil for 20 years in exchange for loans to Russian state companies.
A Russian Energy Ministry official told Reuters that an intergovernmental deal was signed this morning in Beijing by Russian Deputy Prime Minister Igor Sechin, who oversees the energy sector.
China agreed last year to lend $10 billion to Russian oil pipeline monopoly Transneft and another $15 billion to state-run producer Rosneft in exchange for supplies of 300 million tonnes (1.1 billion barrels) of Russian oil over 20 years.
Beijing has abundant cash that Moscow needs to access as it heads into its first recession in a decade. Some Russian companies are finding it difficult to repay loans and to borrow project finance on commercial markets.
China, which has been working hard to win oil supplies from Africa and elsewhere to run its industries, will secure flows from its neighbour.
Russia is seeking to diversify its exports away from the West and is targeting China as the main market for oil that will be extracted from a new generation of fields in East Siberia.
Transneft and China National Petroleum Corporation agreed in October to build a spur to carry 15 million tonnes a year, or 300,000 barrels per day, between the countries' trunk pipelines.
Over 20 years, this adds up to 300 million tonnes - enough to meet around 4% of China's current oil needs.
Russian news agencies today quoted Sechin as saying the spur would be built next year. He added Chinese companies could get access to Russian oil fields, while Russian players would increase their presence in Chinese refining. He did not elaborate.
"The experience we obtained when preparing this agreement can be used to boost co-operation in other energy spheres," Russian agencies quoted Sechin as saying.
"We will boost co-operation in the natural gas, nuclear, power and coal industries," he added.
Tuesday, 21 April, 2009, 07:19 GMT | last updated: Tuesday, 21 April, 2009, 07:27 GMT
Russia, China sign oil deal, start new pipeline branch
BEIJING, April 21 (RIA Novosti) - Russia and China signed an intergovernmental agreement on oil cooperation in Beijing on Tuesday, under which a new branch from the East Siberia-Pacific Ocean (ESPO) pipeline will be built toward China.
The agreement sets out terms for oil cooperation between the countries, in particular on the laying of a pipeline from the Skovorodino refinery in Russia's Far East to Mohe County in China's Heilongjiang province. Under the deal, the pipeline must be completed by the end of next year.
After signing the deal, Russian Deputy Prime Minister Igor Sechin, who chairs the state oil company Rosneft, said the agreement "creates a new foundation for developing our energy cooperation."
"This is a unique agreement of a long-term nature, which is accompanied by financial agreements, and to implement it we have already begun building a branch from the main pipeline toward China," he said.
Vice Premier Wang Qishan, who signed the deal on behalf of China, said the deal brings into force "a packet of agreements and contracts on building the pipeline, buying and selling crude, and providing of credit between the companies of our two countries, which represents a significant breakthrough in bilateral energy relations."
The Skovorodino-Mohe pipeline will pass under the Amur River, and will have throughput capacity of 15 million metric tons of oil per year. The pipeline is part of Russian efforts to diversify export routes from Western and East Siberia.
The deal was signed after the fourth round of Russian Chinese energy dialogue meetings.
Under the intergovernmental deal, China agreed to provide $25 billion in loans to Rosneft and pipeline operator Transneft.
President Ilham Aliyev: Azerbaijan can supply to Russia 5 bn cu m of gas a year
Baku, Fineko/abc.az.
Russia can become the second after Turkey importer of Azeri gas.
President Ilham Aliyev of Azerbaijan stated that the pipeline between Azerbaijan and Russia is able to accept 5 bn cu m a year without additional investments.
“The chief thing is also to reach an agreement about possible transit and gas sale and purchase between Russia and Azerbaijan and move further. It is necessary to accord commercial conditions to make them mutually profitable, coordinate issues of long-term co-operation guarantees to prevent any market conditions to interfere into the further course of our co-operation. Besides, the agreement should be drafted in such a way to prevent its further subjecting to any amendments,” President Aliyev said.
According to the Azerbaijan leader, annual gas production in the country is 20 bn cu m and up to 7 bn cu m is exported to Turkey.
For Azerbaijan co-operation between Russia’s Gazprom and State Oil Company of Azerbaijan (SOCVAR) is an issue of diversification of gas supplies as today Azeri gas is carried only in western direction.
“Diversification of supplies is of course a possibility of access to new markets and is of great importance as for any other country,” Aliyev said.
The Memorandum signed between the above-mentioned companies stipulates the launch of deliveries from January 2010.
“I hope that negotiations between our countries’ companies on the occasion will finish successfully,” President Aliyev said.
Russia also expects quite fast result of talks.
This week Russian ambassador Vladimir Dorokhin to Azerbaijan stated that already this May Gazprom and SOCAR would agree on concrete conditions of supplies, prices and terms.
According to the Russian media, the Gazprom-SOCAR contract for gas supplies since 2010 is going to be long-term and the price for gas will be calculated on European formulae (depending on basket of oil products).
The 200 km gas pipeline Baku – Novo-Filya, via which Azeri gas will be supplied to Russia, demands upgrade, but it is not a problem.
Under the Memo, it was achieved an arrangement to launch talks on co-ordination of conditions of Azeri gas sale and purchase with start of its supplies since January 2010 on conditions DAF (Delivered At Frontier) Azerbaijan/Russia frontier. The countries will also work out options and economic expediency of gas swap operations.
The Memo stipulates development of a programme of co-operation on exchange of experience, holding of training courses, organization of seminars and visits to production sites by two countries’ specialists for exchange of data.
Soon Gazprom and SOCAR are to conduct technical inspection of gas pipeline system on segment Baku – Novo-Filya for its upgrade. Azeri gas will be supplied to Russia via this pipe segment.
Under Russian gas monopoly’s estimate, Azerbaijan has around 1.5 trillion cu m of explored reserves of natural gas and consumption of natural gas in Azerbaijan itself makes 12-14 bn cu m a year. Baku – Novo-Filya is a segment of Azerbaijan’s gas transport system running from Baku to the border with Russia along the Caspian Sea coastline. Length of the segment is about 200 km and diameter of the pipe is 1,220 mm.
Earlier it was informed non-officially that Gazprom discussed a possibility to buy gas from Azerbaijani field Shah Deniz. At the June 27 Gazprom shareholders’ annual meeting Miller estimated the arrangements on gas purchase in Azerbaijan as quite probable. In October 2008 SOCAR advisor to president Murat Heydarov said that Azerbaijan was discussing with Gazprom its gas supplies to Dagestan on the basis of direct sales or swap operations and that preliminary consultations with Russian gas monopoly were held.
This issue is under discussion separately from debates about Shah Deniz gas within the 2nd stage of field development which Gazprom proposes to buy and does not depend on Azerbaijan’s export in any way.
In December 2008 Vagif Aliyev, the head of the SOCAR Department of Investments, claimed of primary stage of talks with Gazprom about swap supplies of Azeri gas to Dagestan. Gazprom expected for beginning of supplies already since 2009.
Gazprom-SOCAR negotiations are being conducted on short- and long-term operations. Long-term operations include gas supplies within Phase II of Shah Deniz Project, while short-term ones creation of swap relations.
As for Shah Deniz, Gazprom has intention for whole gas export volume, but this matter of relations should also be coordinated with the Shah Deniz Project partners.
Nevertheless, on 29-30 January 2009, BP Azerbaijan (technical operator of Shah Deniz gas condensate field development located in the Azerbaijani sector of the Caspian Sea), the State Oil Company of Azerbaijan Republic (SOCAR), and Azeriqaz CJSC conducted monitoring of the infrastructure to evaluate the prospects of gas export from Shah Deniz field through Russia.
The conducted monitoring of GaziMagomed – Shirvanovka line covered all infrastructure, including Siyazan and Shirvanovka pump stations and river passages.
Until 2007 Gazprom was supplier of gas to Azerbaijan. But the latter declined from supplies since 2007. It was linked in particular with the fact that Gazprom intended to cut its gas supplies to Azerbaijan in 2007 from 4.5 bn cu m to 1.5 bn and increase the price for it $235 per 1 000 cu m. Now Azerbaijan meets its gas needs due to its own gas production, including on Shah Deniz field. In addition, since 2007 Azerbaijan has been supplying gas to Georgia. Natural gas consumption in Azerbaijan totals 10-11 bn cu m a year.
21.04.2009 11:16
Is Nord Stream making progress?
bne
April 21, 2009
Finland could give its approval for the construction of the Nord Stream pipeline by June, according to a Kremlin official quoted by Russian state news agency RIA Novosti.
"It remains unknown, however, whether this view is based on any evidence or on wishful thinking. This illustrates the ongoing controversy around the Nord Stream pipeline, which is caught between strong support from Russia, Germany, the Netherlands and France and strong opposition from the Baltic and Scandinavian countries. As the planned route of Nord Stream runs through the Exclusive Economic Zones of Russia, Finland, Sweden, Denmark and Germany as well as through the territorial waters of Russia and Germany, it has been a political minefield to negotiate," Business Monitor International said.
The planned 1,200km Nord Stream pipeline is designed to carry an eventual 55bn cubic metres (bcm) of natural gas annually under the Baltic Sea from Vyborg in Russia to Greifswald in Germany. Construction of the onshore segment of Nord Stream began in 2005, while construction of the underwater segment is yet to begin. The construction of this part of the pipeline has been experiencing delays owing to environmental concerns, rising costs, technical obstacles and political objections from neighbouring states. Construction was expected to start in 2009, but according to the latest timeline on Nord Stream's official website, the construction phase has been pushed back to 2010, with completion still scheduled for 2011. This start-up date is looking increasingly ambitious.
The Baltic and Scandinavian countries continue to oppose the construction of the pipeline, with a major concern being its environmental impact. A total EUR100mn has already been spent on environmental impact studies and planning, with final approvals still outstanding. Until these approvals have been granted, which is expected by the end of the year, the pipeline's route cannot be finalised. It seems that some countries are trying to use environmental concerns as political bargaining chips. These countries, as well as the traditional transit countries in Central and Eastern Europe (CEE) for Russian gas en route to Europe, have expressed suspicion over their exclusion from the project. It is feared that Nord Stream will allow Russia to cut off their gas supplies strategically while maintaining direct supplies to Europe, putting CEE's gas supplies at risk.
"It has been reported that Latvia is planning to propose a new route for the pipeline to limit any potential environmental damage. Latvian President Valdis Zatlers, in an interview with radio Ekho Moskvy, said that Latvia would propose that the pipeline be routed through Latvia. He argued that overland transit would be safer than routing Nord Stream along the Baltic seabed. Details of his pipeline route have not yet been released. Although he added that Latvia would not hinder the pipeline's construction even if it were routed along the Baltic seabed, he warned that all environmental issues needed to be addressed. This illustrates the Baltic countries' current bargaining power," says BMI.
Nord Stream is being developed by a consortium of Russia's Gazprom (51%), Germany's Wintershall (20%) and E.ON Ruhrgas (20%) and the Netherlands' Gasunie (9%). On December 22 2008 French energy group GDF Suez signalled its intention to participate in Nord Stream as a minority partner. In April 2009, the company confirmed that it was holding talks with Gazprom, with the company's Chief Executive Gérard Mestrallet, being quoted by Bloomberg as saying that his company was 'ready to participate in this project if our gas supply is increased and secured through this project'. On April 18, Germany's WirtschaftsWoche reported that GDF Suez was also in talks with E.ON over its participation in the pipeline. According to E.ON's Chief Executive Wulf Bernotat, who was quoted by WirtschaftsWoche, his company would be willing to spin off up to 4.5% in the pipeline, making GDF Suez's entrance into the project more likely.
Surgut 'faces MOL lock-out'
News wires
Russian producer Surgutneftegaz, which recently bought a 21% stake in MOL, may be locked out of the Hungarian players, annual general meeting, according to local media reports.
Surgut bought the stake from Austrian oil company OMV for €1.4 billion ($1.8 billion) in a surprise move last month, earning the ire of both MOL and Hungary's government.
Today, Budapest-based business daily Napi Gazdasag published a report saying Surgut breached Hungarian law by failing to notify the Hungarian Energy Office of the deal, which could result in Surgut being unable to exercise its voting rights at MOL's AGM on Thursday.
The Hungarian Energy Office declined tyo comment to Reuters, while MOL said it could not comment on individual shareholders.
Earlier this month, MOL proposed amendments to its articles of association which analysts said were designed as a defence against hostile takeovers.
According to a planned amendment, shareholders must declare who the "ultimate beneficial owner" of their shares is before their meetings, if requested by MOL's board of directors.
Other proposed amendments would strengthen the special voting rights of the "B" series MOL share and delete the section which says that the special rights exist only if the share is held by the Hungarian state.
Tuesday, 21 April, 2009, 07:57 GMT | last updated: Tuesday, 21 April, 2009, 07:57 GMT
Surgut may be locked out of MOL's AGM –report
Tue Apr 21, 2009 3:34am EDT
BUDAPEST, April 21 (Reuters) - Russian Surgutneftegaz (SNGS.MM: Quote, Profile, Research, Stock Buzz), which recently bought 21 percent of MOL (MOLB.BU: Quote, Profile, Research, Stock Buzz), may be locked out of the Hungarian oil and gas company's annual general meeting, business daily Napi Gazdasag reported.
Surgut, Russia's fourth biggest oil producer, bought the stake in MOL from Austrian oil company OMV (OMVV.VI: Quote, Profile, Research, Stock Buzz) for 1.4 billion euros ($1.8 billion) in a surprise move last month, earning the ire of both MOL and Hungary's government. [ID:nLU169740]
The paper said Surgut breached Hungarian legislation by failing to notify the Hungarian Energy Office of the deal, which could result in Surgut being unable to exercise its voting rights at MOL's AGM on Thursday.
The Hungarian Energy Office would not comment, while MOL said it could not comment on individual shareholders.
Earlier this month, MOL proposed amendments to its articles of association which analysts said were designed as a defence against hostile takeovers.
According to a planned amendment, shareholders must declare who the "ultimate beneficial owner" of their shares is before their meetings, if requested by MOL's board of directors. Other proposed amendments would strengthen the special voting rights of the "B" series MOL share and delete the section which says that the special rights exist only if the share is held by the Hungarian state.
At 0713 GMT, MOL stock traded down 0.7 percent at 10,670 forints on the Budapest Stock Exchange, broadly in line with losses in the wider market .BUX. (Reporting by Gergely Szakacs; Editing by Dan Lalor) ($1 = 0.7748 euro)
Hungary suspects Surgutneftegaz of planning to block Nabucco project
Kommersant
Hungarian politicians consider the acquisition of a 21.2% stake in oil and gas company MOL by Russia's Surgutneftegaz as an attempt to hinder the implementation of the Nabucco gas pipeline project, where Hungary is a partner.
The Russian company will be unable to influence decision-making at MOL, but will gain access to confidential information on the Nabucco project, planned to transport Central Asian gas to Europe bypassing Russia.
Surgutneftegaz closed the deal to buy the stake in MOL from Austria's OMV last week. MOL owns 16.6% in the Nabucco Pipeline Consortium, also comprising OMV, Germany's RWE, Turkish Botas, Bulgarian Bulgargaz and Romanian Transgas.
Zsolt Nemeth, head of the Hungarian parliament's foreign affairs committee, said Surgut bought a stake in MOL to get access to the Nabucco project. He said the Russian company's goal was to limit investment in the project and to give competitive advantage to Gazprom's South Stream.
A possible conflict of interest within the Nabucco project is increasing tensions created by the MOL deal. Surgut, which paid 1.4 billion euros for the stake, plans to process its crude at Hungarian refineries. However, MOL's managers said they consider Surgut only as an investor and are refusing to pay 2008 dividends.
An extraordinary meeting of the MOL shareholders scheduled for April 23 will consider changes in the company's charter that will oblige nominal shareholders to disclose their beneficiaries.
On April 9, the Russian Foreign Ministry said the Hungarian authorities' statements were aimed at "adding a non-existent political element to the actions of economic operators."
However, Valery Nesterov of Troika Dialog said that Surgut could not have made the decision to buy into MOL without the Russian authorities' approval "in the light of their traditionally conservative policy regarding acquisitions in Europe."
Lev Snykov of VTB Capital said Russia could not use MOL to block the construction of the Nabucco pipeline. The only thing Surgut can do is nominate a candidate for MOL's board of directors and thereby gain access to insider information regarding Nabucco.
APRIL 20, 2009, 11:57 A.M. ET
Russia's TNK-BP Seeks $300M Pre-Export Loan - Sources
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--BP PLC's (BP.LN) Russian joint venture TNK-BP Holding (TNBP.RS) is seeking to obtain a three-year $300 million pre-export finance facility from several international banks, people familiar with the matter told Dow Jones Newswires Monday.
According to the people, ING Bank N.V. and Unicredit S.P.A (UCG.MI) have joined Calyon and Deutsche Bank AG (DB) in arranging the facility.
Pricing is likely to be in the region of 400 basis points to 500 basis points over Libor, the people said. The facility is expected to be syndicated in due course, one of the people said.
For most of 2008 TNK-BP was locked in a bitter dispute between BP and its Russian partners over corporate governance and strategy. However, the parties resolved the dispute in September clearing the way for raising financing.
"Such a loan, although relatively cheap, limits a company's flexibility, but, probably, now, when the credit window has opened a little for Russian oil companies', it's the best moment to seek such a loan", analyst Mikhail Zanozin at UralSib bank said.
Pre-export finance comprises loans advanced against confirmed orders from a foreign buyer or buyers to enable the exporter to make and supply ordered goods, in this case oil. This facility therefore is a more secure form of lending for banks.
As Dow Jones Newswires reported in March, Russia's major oil companies OAO Rosneft (ROSN.RS), OAO Lukoil (LKOH.RS), OAO Gazprom Neft (SIBN.RS) and OAO Tatneft (TATN.RS) are also separately in talks with different consortiums of international banks to agree pre-export loan facilities, which may collectively total $4.6 billion.
None of the deals has been concluded as yet.
-By Alexander Kolyandr and Carol Dean in London, Dow Jones Newswires; +44 (0)20 78429410; alexander.kolyandr@
TNK-BP Announces a Senior Appointment
April 20, 2009, Monday
TNK-BP today announced that Francis Sommer has been appointed Executive Vice President, Technology of the TNK-BP group of companies.
Francis has been with TNK-BP since 2005, as Vice President, Technology. He has played an important role in technology transfer to TNK-BP, and has been instrumental in establishing a consistent approach to the evaluation and quantification of reserves across TNK-BP’s asset base. He joined TNK-BP following a successful and varied petro-technical career of almost twenty years in BP, in the UK, USA and Colombia.
The appointment takes effect immediately.
“Francis has brought the wealth of his technical experience as a respected petroleum engineer to TNK-BP, managing a talented team of our technical experts, and I look forward to his further contribution in his new role,” said Tim Summers, Chief Executive Officer of TNK-BP.
Rosneft keeps mum over Sibir talk
News services
Russian state-run producer Rosneft has refused to comment on reports that it is considering bidding for AIM-listed Sibir Energy.
A report in yesterday's Sunday Times said Rosneft was understood to have contacted Sibir regarding a possible bid for the company.
The London-based newspaper, which did not cite its sources for the report, also wrote that Merrill Lynch had carried out a valuation of Sibir in anticipation of forthcoming offers.
Last week, the Sunday Times reported that German Khan, a large shareholder and key executive at TNK-BP had canvassed Sibir investors to accept a £6 ($8.88) per share bid.
Sibir then said it had not received any direct offers from rivals.
The company's shares were suspended in February after it was discovered it was owed $325 million by its 23.5% shareholder Shalva Chigirinsky.
The Sunday Times also reported Chigirinsky had agreed to sell $350 million worth of his personal assets, including a French villa, in order to repay debt.
The newspaper did not say where it obtained this information.
Monday, 20 April, 2009, 07:22 GMT | last updated: Monday, 20 April, 2009, 07:22 GMT
Tchigirinski to sell his villa to settle debt to Sibir Energy
Rencap, Russia
Monday, April 20, 2009
The Sunday Times reported over the weekend (18-19 Apr) that Sibir Energy and one of its key shareholders Shalva Tchigirinski (who holds a 23.3% stake in the company) have agreed that Tchigirinski will sell his private assets (including villa Maria Irina in the south of France and his London house) for $350mn by the end of the year in order to settle his debt to the company. The respective agreement has not yet been signed.
Our rating for SEB remains under review pending the results of an internal investigation regarding an unauthorised cash withdrawal from the company, and resumption of shares trading.
The total size of Tchigirinski's debt is unclear to us, as is the value of his real estate portfolio. The latter must have declined substantially in the recent months, given the adverse market conditions. The English High Court recently granted a worldwide freeze order under which Tchigirinski is prevented from disposing of his assets to the extent the value of his remaining assets falls below GBP250mn. By signing this deal with Tchigirinski, SBE is trying to secure its position in front of his other creditors, in our view.
From The Sunday Times
April 19, 2009
Oligarch Chalva Tchigirinski to lose Monaco palace
Danny Fortson
THE Russian oligarch at the centre of a shareholder loan scandal at Sibir, the London listed oil company, has agreed to sell $350m worth (£237m) of his personal assets, including a stunning $250m villa in the south of France, to repay the debt. The agreement was hammered out over the past week by lawyers for Sibir and Chalva Tchigirinski, Sibir’s largest investor. Details of the deal emerged as another bidder surfaced for the stricken company. Rosneft, the Kremlin-owned oil giant, is understood to have contacted the company about making a bid. Igor Sechin, chairman of the company and also deputy prime minister of Russia, is leading the talks.
TNK-BP has also been sounding out investors about their willingness to sell. Merrill Lynch was this weekend carrying out a valuation of the company in anticipation of forthcoming offers.
Shares in Sibir, once the most valuable company on London’s junior AIM market, have been suspended since February when it was revealed that the company had loaned $325m to Tchigirinski. Since then it has been working to recover the money. An internal investigation, led by Ernst & Young, has since found that between $328m and $400m in company funds have been allegedly misappropriated. The asset sale means that Sibir will likely be able to recover some if not all of the missing money. Under the memorandum of understanding, the Moscow property tycoon has until the end of the year to sell $350m-worth of personal assets to repay the money owed to the company. Among the assets included in the agreement are the palatial Villa Maria Irina in Cap Martin. The clifftop property overlooking Monaco is valued at $250m, making it one of the most expensive residences in the world and includes its own helipad and an Olympic-sized swimming pool. Tchigirinski has also agreed to sell a £14m house in Eaton Square, Belgravia.
The deal removes a cloud hanging over a company that operationally is performing well and could prompt potential bidders, who have shied away from making formal offers because of the uncertainty over the missing money, to come forward. Sibir’s main assets, the Salym oilfield in Siberia and a Moscow refinery, are highly prized.
Its corporate reputation is in tatters however. Earlier this month the Sibir board fired chief executive Henry Cameron, who had approved the loans, and started High Court proceedings against him and Tchigirinski. The latter and his business partner, Igor Kesaev, each own 23.5% of Sibir but Tchigirinski pledged the shares as collateral for outstanding loans from Sberbank.
The Kremlin-controlled bank now holds the 47% stake as collateral. Another 18% of the company is owned by the City of Moscow. Analysts believe that once the smoke clears Sibir will end up in the hands of a Russian buyer. Analysts at JP Morgan Cazenove valued the company in February at 400p per share, or £1.5 billion.
Gazprom
Gazprom saving energy
2009-04-20
The Russian economy can easily save up to 100 billion cubic meters of gas per year if energy efficiency measures are taken, a Gazprom representative said. Today, the Russian economy is more than 50 percent dependent on gas supplies.
More efficient use of energy is top priority for Russia, Gazprom’s Oleg Aksyutin said in a recent conference, a company press release reads.
Mr. Aksyutin underlined that the Russian economy’s energy consumption is far above the world average and highlighted that energy-saving measures are of the highest significance for the national economy.
He maintains that alone measures like the more efficient use of gas turbines and the introduction of new technology in the housing sector would help Russia save more than 90 billion cubic meters. The company representative also maintained that Gazprom itself over the last seven years has saved 20,8 billion cubic meters of gas following energy efficiency measures.
Gazprom Neft Plans $299M Bond
20 April 2009 Bloomberg
Gazprom Neft said Friday that it was selling 10 billion rubles ($299 million) of bonds in its debut offering of domestic debt.
The 10-year notes, which will be listed on the MICEX on Tuesday, have a coupon of 16.7 percent and a put option giving bondholders the right to redeem the notes after two years, Gazprom's oil unit said in a statement.
The sale, managed by Renaissance Capital and Gazprombank, is the oil company's first in rubles. Gazprom Neft has $5.8 billion of loans outstanding, including $1.5 billion due this year.
Gazprom Neft said it would use the proceeds for "general corporate purposes." The company received orders for 25 billion rubles of bonds from investors, it said.
Ruble bond sales fell 51 percent in the first quarter to 43.5 billion rubles from 88.9 billion rubles in the same period in 2008.
Gazprom Raises $2.25bn in record bond placement
Unicredit, Russia
April 20, 2009
Gazprom raised $2.25bn in 10-year bonds, with a coupon of 9.25% (the lower end of the range), $0.25bn more than originally planned, as the issue was oversubscribed to, Vedomosti reports. The funds raised are to be used to refinance a Credit Suisse loan.
We see the success of the placement as a positive catalyst for Gazprom's equity and mildly positive for the Russian market as a whole, as it suggests investors are increasing their risk tolerance towards Russian companies, although generally focusing larger companies for the time being. We also see the news as an indication of investor confidence in Gapzorm settling or refinancing its $10bn in debt due in 2009. We also note that with this deal Gazprom is refinancing a loan with an interest rate of 5.25% with bonds yielding 9.25%, which seems justifiable under the currently distressed debt market conditions.
Gazprom, Shell, Oando make $30bn Gas Master Plan shortlist
By Obinna Ezeobi, Abuja
Published: Tuesday, 21 Apr 2009
Russian gas giant, Gazprom, British Gas and Anglo Dutch Shell were among the top 15 oil and gas companies unveiled on Monday by the Federal Government, as the potential investors that will continue in the prequalification process for the $30bn Nigeria Gas Master Plan.
Other companies picked from the initial 46 that responded to government’s invitation for Expression of Interest included Centrica from Britain, EoN Rhugas from Germany, Stat Oil Hydro from Norway, and US oil giant, Chevron.
Two Spanish firms, Union Fenosa and Gas Natural as well as Gail from India and Thailand’s oil and gas conglomerate, PTT also made the list.
South Korean firm, Kogas also made the list completed by Global Energy/Hanover and indigenous firms, Oando and Sahara Energy.
Speaking at the briefing session with the successful 16 companies in Abuja, the Group General Manager/ Special Technical Assistant to the Group Managing Director of the Nigerian National Petroleum Corporation, Dr. David Ige, said the companies would be expected to form a consortium among themselves that would be evaluated once again and announcement of bid winners made before end of October, 2009.
He explained that selection at this stage would depend on the consortium’s credibility, viable technical design, compliance with local content and social development plan.
Ige said that the successful consortium must co-opt strategic co-investors, incumbent international oil and gas companies, marginal field operators and have equity thresholds of 10 per cent owned by an indigenous company and five per cent by the host state government.
“The consortiums would rank on their proposed tariff for processing gas; the capacity of the processing plant they will have by January 2012, and the consortium with the lowest tariff and largest capacity availably by 2012 will considered the best,” Ige further stated.
Earlier in his speech, Minister of State for Petroleum, Mr. Odein Ajumogobia, said the successful companies would be the definers of the new Nigerian gas industry.
He added, “The purpose of the exercise is to identify those who have the capacity to lead the nation through the uncertainty that defines the sector currently to one which is fully structured, in return, you get the benefits of incumbency which will apply to you as first movers.
“The opportunities would challenge your entrepreneurial capacity, but the reward would be great for those who win. Winners would be those who demonstrate capacity to deliver at speed and make a major impact on gas flares as well.
“In addition, they must demonstrate innovation in cost effectiveness and risk management.”
The minister further stated that Nigeria gas industry had a demand outlay of over 15 billion cubic feet of gas per day from the domestic, regional and export markets.
He said, “A gas backbone infrastructure is desperately needed to enable the realisation of that market.
“The GMP envisions a hub, and dispatch of gas infrastructure model, comprising a network of gas gathering and processing hubs which feed dry gas into a network of three downstream transmission lines that feed all three possible markets.
“The speed with which the infrastructure is required is high, so also is the cost at which it would be delivered. The Federal Government, through the current Joint Venture structure is clearly unable to fund such massive expansion.
“In addition, a broad and diversified landscape with different types of players needed to be entrenched to enhance efficiency and competition in supply,” he said.
In his presentation, the GMD, NNPC, Dr. Mohamed Barkindo said the corporation would be evaluating the 15 investors to identify those with which there is mutual alignment in strategies and for which a partnership was possible.
Caspian Gas - we need to get much smarter to outsmart the Russians (Part 2)
(Part-2)-37742.html
Monday, April 20, 2009
• Analysis by: Leigh Bolton
• Analysis of: Is the EU in danger of losing Azeri gas? |
• Source:
Implications:
Russia and Gazprom have once again circumvented an uncoordinated and lack-lustre EU activity in the region and managed to hammer home one of the last nails in the coffin of Nabucco pipeline.
Analysis:
In Guiseppe Verdi’s 1841 opera “Nabucco,” the Babylonian king destroys Jerusalem and takes the Jews captive; goes mad and then regains sanity; then begs the God of the Hebrews for forgiveness and lets the Jews go. Apparently, someone named Europe’s proposed “strategic” southern gas corridor pipeline project after this classic Italian masterpiece. We are still in the “mad” stage of this project however.
I unashamedly quote an excerpt from a March article (Energy Tribune) by Peter Glover that describes the situation perfectly - The $10 billion Nabucco pipeline story reads like a Bourne-style political thriller. Since its conception in the early 1990s the project’s narrative has been full of international intrigue geared to helping Europe plot its escape from the ‘tyranny’ of Russian energy supremacy. But almost two decades on we are still not at chapter one and the future remains uncertain, spawned in intrigue, in no small part due to the sabotaging efforts of the EU’s anti-Nabucco “fifth column”: Germany - We have had the “Identity”, are moving into the “Supremacy” and in future years Europe will feel the “Ultimatum”!
Back in December 2007 I wrote a GLG analysis describing how Gazprom had totally out-maneuvered the EU in “tying up” gas supplies from Turkmenistan. Well, they’ve done it again but this time with supplies from Azerbaijan. Gazprom’s political rapprochement with the Azeri government and their deft negotiating has now “robbed” the chance of further Azeri gas for Europe’s proposed Nabucco pipeline. With the fate of Nabucco now hanging by a thread any major Nabucco gas supply for the future must now come from Iran to give it any chance of development.
Russia and Gazprom have once again circumvented both a “lazy” and uncoordinated EU activity to secure substantial Azeri gas supplies for Nabucco. The whole Caspian region in terms of both oil and gas is in a three-way competitive race between Russia, China and the EU and the winners may well be in this order ………….. with Russia winning easily.
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