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Russia 100602
Basic Political Developments
• RIA: S. Korea to discuss in Moscow taking Cheonan issue to UN - "It is a matter of time before the Cheonan issue is taken to the UN Security Council," Deputy Foreign Minister Vee Son Nak, who is to meet for talks with Russian Deputy Foreign Minister Alexei Borodavkin, said.
• Itar-Tass: US holding consultations with Russia, France on Iranian nuclear prblm - U.S. Administration is holding consultations with Russia, France and other partners on the problems pertaining to Iran’s nuclear program, U.S. Assistant Secretary of State William Burns said Tuesday as he took the floor at the Council on Foreign Relations.
• VOR: NATO lacks competence in missile defence problems – Rogozin: He specified that the world’s only two nations with well-developed missile defence systems are Russia and the United States. Rogozin is attending a Riga-held session of NATO’s Parliamentary Assembly.
• Interfax: Medvedev wants anti-terror effort bolstered in Commonwealth of Independent States - "It is important to build up our common efforts to cut terrorist financing channels, and to fight drug trafficking, smuggling and illegal migration," Medvedev said in a message of greetings to the 28th meeting of the Council of Security and Special Service Chiefs from CIS countries, which has opened in Yekaterinburg. The message was read out by Russia's Federal Security Service chief Alexander Bortnikov.
• News.az: Russian President to visit Armenia - Presidents of Armenia and Russia Serzh Sargsyan and Dmitry Medvedev met in Rostov-on-Don today to discuss economic and regional issues.
• ArmeniaNow: Medvedev-Sargsyan meeting discusses Armenian-Turkish relations
• Aysor: Armenia-Russia relations are strong, says President Sargsyan
• RUSSIA-EU SUMMIT
o AP: Russia, European Union discuss economic modernization
o VOR: Russia, EU to boost cooperation
o Financial Times: Russia and EU hail modernisation deal
o Moscow Times: EU Calls for 'Fast-Forward' With Russia
o Xinhua: Russia-EU summit moderate success rather than mild failure
o Irish Times: EU-Russia visa regime advanced by Kremlin at summit
• Itar-Tass: Russian, Paraguayan frgn ministers to discuss economic relations - Russian Foreign Minister Sergei Lavrov and Paraguayan Foreign Minister Hector Lacognata are expected to have talks in Moscow Wednesday where they will focus on trade and economic relations between the two countries and, on a broader plane, the strengthening of cooperation between Russia and Latin America.
• VOR: Russian-Nicaraguan IGC session opens in Managua - The first session of the Russian-Nicaraguan intergovernmental commission on trade, economic, and scientific cooperation opened in Managua Tuesday. Russian Deputy Foreign Minister Sergey Ryabkov said he expects great prospects for the development of bilateral cooperation and promotion of joint projects in energy, transport, and telecommunications. Attending the session are also high ranking officials and businessmen from Russia.
• Moscow Times: New Zealand, Russia to Start Talks on Free Trade
o Nzherald: Tango with Russia shows promise - Trade Minister Tim Groser has chalked up a victory in New Zealand's long quest for a free trade deal with the emerging economic powerhouse of Russia.
o Nzherald: Specialist companies see big opportunities in store - Trade Minister Tim Groser, in Moscow for talks with his Russian counterpart on a proposed Free Trade Agreement, says there is an opportunity in Russia for New Zealand manufacturers to export specialised products.
• BarentsObserver: Murmansk and Bodø to counter air terrorism - Two sites in the Barents Region are chosen as local coordination sites within the new NATO-Russia cooperation system to counter air terrorism.
• Interfax: Russian warships to keep patrolling waters off Africa, Gulf of Aden - "Navy ships will continue to maintain regular presence in the vicinity of the African Horn and the Gulf of Aden with the aim of maintaining the security of navigation, and to participate in some international exercises," the spokesman told Interfax-AVN.
RIA: Russia to transfer its Nerpa nuclear sub to India in autumn 2010
• PTI: Gorshkov refit on track; panel to monitor work
• RIA: State-owned Russian Technologies buys Boeing jets, may have to resell them - Experts say if Aeroflot refuses to buy the aircrafts, and Rostekhnologii already signs a contract, the state corporation will still be able to sell 50 or even 65 planes on the market with favorable terms of delivery, including duty-free import.
• RIA: Algeria, Libya set to buy Russian Pantsir-S1 short-range air defense systems
• RIA: Russia to supply Su-30, Yak-130 planes to Algeria in 2011
• UPI: Algeria 'to cut U.S. arms, go Russian'
• VOR: Russia helps put Japanese satellite into orbit
• Russia Today: ISS crew returns to Earth as Baikonur Cosmodrome turns 55
• RIA: URGENT: Russia's Soyuz TMA-17 spacecraft lands in Kazakhstan
o Reuters: Russian Soyuz returns from space station mission
o AP: Russian space capsule with 3 astronauts from space station lands in Kazakhstan
o Straits Times: Russian Soyuz returns safely
• RIA: [pic] Russia needs long-term space strategy to remain cosmic superpower — Russian cosmonaut : "Unfortunately, Russia has no long-term space strategy. For some 15 or maybe 20 more years Russia will remain a space superpower, but after this period, Russia will become a second-league space power if a long-term space strategy is not adopted," Baturin, a Lomonosov Moscow State University professor, said during his speech at the Woodrow Wilson Center in Washington on Tuesday.
• VladivostokTimes: China And Primorye Unite Against Drugs
• Interfax: Polar researchers evacuated from drifting ice floe - The Rossiya nuclear-powered icebreaker has reached the North Pole 37 (SP-37) research station after the ice floe it is situated on began to break up and drift apart, Sergei Balyasnikov, spokesman for the Arctic and Antarctic Research Institute, told Interfax.
• Itar-Tass: FSB agent, local resident killed in Dagestan
o Dalje: Two killed, two wounded in Russia special services raid
o Straits Times: 2 dead in Dagestan shootout
o Interfax: Militants fired on a group of soldiers in Dagestan, killing two people - UPC
• Forum18: RUSSIA: Dagestan's controls on Islamic education - "Preaching or giving lessons on Islam not in the name of the Spiritual Directorate of Muslims of Dagestan is regarded as dissemination of radical ideas," Abdulmumin Gadzhiyev, Islamic affairs correspondent with Chernovik, a popular local independent Russian-language newspaper, told Forum 18 in the Dagestani capital Makhachkala on 15 April.
Interfax: Activists will publish results of probe into suppression of ‘Article 31’ rally in Moscow
• Rossiyskaya Gazeta/Russia Today: A warning from the FSB - A new bill proposes preventative measures in the fight against extremism and terrorism
Vedomosti/Russia Today: Kudrin’s decade - Yesterday, reformers have summed up the ten years of Putin’s economic activity: the 2010-Strategy was born in June of 2000 -- it is a program of action of the government, which is considered to be the starting point in the second wave of liberal reforms.
• .ru: Prime Minister Vladimir Putin meets with the leadership of the United Russia Party - “A key feature of the budget for next year is that it should trigger recovery and innovative growth in the Russian economy, and ensure that social obligations are met unconditionally as we come out of the downturn.”
• Trud/Russia Today: The Gaza blockade broke the Leningrad record
• Naviny: Russian Orthodox Church rejects Metropolitan Filaret's formal resignation letter
• Interfax: Juvenile justice unacceptable interference in family matters - Moscow Patriarchate
• Bloomberg: Russia’s Last Royal Born in Empire to Be Buried in Petersburg
National Economic Trends
• Reuters: EUR/USD rises after c.banks say will stick with euro - Official sources in Brazil, India, Japan, Russia and South Korea told Reuters in separate interviews that due to the liquidity of the dollar and the euro and the difficulty of shifting such large portfolios, there were no alternatives to the two currencies in the near term.
• Reuters: Russian rouble slightly down on weaker oil
• Moscow Times: Russia Used Eurobond Proceeds to Cover Deficit, Data Suggest
• DJ: Russian Banker Sees No Rapid Growth For Russian Economy
• RenCap: Reserve Fund not used again in May
• Bloomberg: Russian Reserve Fund Hit by Euro Decline, BNP Paribas Says
• Bloomberg: IMF’s Gold Assets Shrank by 15.1 Tons in April as Russia’s Rose
• Moscow Times: Gref Says Rate Cut Puts Banks at Risk
• Moscow Times: Putin Expects Salary Decision in the Fall
• Alfa: Government may regulate prices on 24 socially-sensitive products - Today's Vedomosti reports that the government has proposed regulations establishing a list of 24 socially-sensitive products, including beef, pork, lamb, chicken, butter and 2.5% - 3.2% milk.
Business, Energy or Environmental regulations or discussions
• Reuters: Russian markets -- Factors to Watch on June 2
• SMR: Russian stock market daily morning report (June 02, 2010, Wednesday)
• UralSib: Long-awaited contract signed with Ukraine - TVEL signs a contract with Ukraine over supplies of nuclear fuel.
• Moscow Times: Gold Output Drops
• Moscow Times: Alrosa Sees $2Bln in Sales
• Trading Markets: Severstal and Endeavour Financial Reach Agreement for Building Value in Crew Gold Corporation
• Bloomberg: VTB Swings to Profit on Russia Rebound With Record Quarterly Net
• Reuters: UPDATE 1-Russia's VTB record Q1 net profit beats forecast
• Bloomberg: Russia’s MFK Bank, Fleming Plan Partnership, Vedomosti Reports
• Reuters: State vodka producer offers shares to Sberbank
• Foodweek: Zespri looks to Russia for growth
• BRIEF - Comstar Q1 2010 net up sharply, beats forecasts
• DJ: Russian Fixed-Line Operator Comstar Reports Surge In 1Q Pft
• Reuters: Kimberly-Clark says Huggies demand up-INTERVIEW-UPDATE 1
• Broadband TV News: Sony channel progresses in Russia and Baltics
Activity in the Oil and Gas sector (including regulatory)
• Reuters: Russia May oil output edges down, near record-source: Russian oil output edged down in May but remained close to record levels above 10 million barrels per day for the ninth consecutive month, an industry source told Reuters on Wednesday.
• Upstreamonline: Russia gas output slips - Russia's natural gas production fell last month to 1.65 billion cubic metres per day from 1.87 bcm per day in April, according to Energy Ministry data.
• Upstreamonline: Transneft posts 70% profit boost
• Upstreamonline: Barsky takes TNK-BP helm as deputy
• Oil and Gas Eurasia: Spills in Gulf of Mexico Will Not Affect Russian Offshore Plans
• Business 24/7: Crescent opens doors to region for Rosneft
• Realdeal.hu: State may get Surgut's stake in MOL
• Oil and Gas Eurasia: Peace Pipe - Is the reconciliation between partners in the South Stream project a real step forward or the beginning of a series of moves which will end with Gazprom getting a tasty slice of the Ukrainian gas business?
• Bne: Russian firms eye Lithuanian refinery - Four years after PKN Orlen bought the only Baltic refinery Mazeikiu Nafta, Poland's leading oil and gas company is still struggling to turn the €1.9bn purchase into a profitable investment, leading to widespread speculation about a possible resale of the Lithuanian plant to a Russian company.
• Oil and Gas Eurasia: Microsoft’s Cloud Nine - As the digital oilfield concept continues to drive the upstream sector, the IT giant targets further growth in Russia’s petroleum industry
Gazprom
• Bloomberg: Gazprom-Naftogaz Venture May Get Black Sea Field, Vedomosti Says
• DJ Gazprom-Naftogaz Union Could Involve Richest Russian –Vedomosti
• Barentsobserver: Zagorovsky said to be new Shtokman director
• News.az: Gazprom to contribute to construction of Iran-Armenia oil pipeline
• MoneyShow: From Russia with Gas - The manager of the Eastern European Trust in London says Gazprom isn't getting the respect—or valuation—it deserves, writes Andrew McHattie in the Investment Trust Newsletter.
• Oil and Gas Eurasia: ILS To Launch Two Satellites For Gazprom
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Full Text Articles
Basic Political Developments
RIA: S. Korea to discuss in Moscow taking Cheonan issue to UN
12:16 02/06/2010
SEOUL, June 2 (RIA Novosti) - Seoul is seeking an agreement from Russia to take the Cheonan issue to the UN Security Council, a high-ranking diplomat in Seoul said prior to leaving for talks in Moscow.
"It is a matter of time before the Cheonan issue is taken to the UN Security Council," Deputy Foreign Minister Vee Son Nak, who is to meet for talks with Russian Deputy Foreign Minister Alexei Borodavkin, said.
"It is time to discuss the issue with Russia," Vee said, adding that South Korea had already "discussed the issue to a sufficient level" with the United States, China and Japan.
South Korea's 1,200-ton Cheonan corvette sank near the disputed Northern Limit Line in the Yellow Sea on March 26, causing the loss of 46 lives. An international investigation revealed that North Korea fired a torpedo at the vessel from a submarine, although Pyongyang has denied the allegations.
South Korea subsequently froze economic relations and maritime communications with its northern neighbor, further crippling the North's economy, which is already damaged by UN sanctions intended to force it to quit its nuclear program.
North Korea retaliated by announcing it was cutting all ties with Seoul and allegedly ordered its 1.2-million armed forces to get ready for combat. It later announced the withdrawal of all its military safeguards in relations with the South and said it would scrap an agreement between the two countries aimed at preventing clashes off the west coast.
South Korea wants a resolution from the UN Security Council condemning North Korea and demanding an apology, rather than new sanctions. However, press reports have suggested that if China speaks against the request, the UN Security Council will only be able to issue a statement by its chairman.
Vee Son Nak and Borodavkin headed the South Korean and Russian delegations at the Six-Party Talks in Beijing on North Korea's Nuclear Program. In April 2009, North Korea halted the talks in protest to the UN Security Council's condemnation of its missile tests.
Itar-Tass: US holding consultations with Russia, France on Iranian nuclear prblm
02.06.2010, 02.05
WASHINGTON, June 2 (Itar-Tass) – U.S. Administration is holding consultations with Russia, France and other partners on the problems pertaining to Iran’s nuclear program, U.S. Assistant Secretary of State William Burns said Tuesday as he took the floor at the Council on Foreign Relations.
In addition to the consultations with the Russians and the French, Washington also hopes to make its concerns known to the Director General of the International Atomic Energy Agency, Yukio Amano.
Burns indicated that the world community’s major concerns are linked to Iran’s intransigence as regards the fulfillment of obligations it undersigned.
VOR: NATO lacks competence in missile defence problems – Rogozin
|Jun 2, 2010 10:08 Moscow Time |
NATO lacks competence in some security problems, specifically in missile defences, says Russia’s ambassador to the North Atlantic Alliance Dmitry Rogozin in an interview with the BALTCOM Latvian radio station.
He specified that the world’s only two nations with well-developed missile defence systems are Russia and the United States. Rogozin is attending a Riga-held session of NATO’s Parliamentary Assembly.
He spoke generally positively of NATO’S Secretary-General’s attitude for cooperation with Russia.
Interfax: Medvedev wants anti-terror effort bolstered in Commonwealth of Independent States
Today at 10:39 | Interfax-Ukraine
Special services and law enforcement agencies in Commonwealth of Independent States (CIS) countries must cut terrorist financing channels, President Dmitry Medvedev said.
"It is important to build up our common efforts to cut terrorist financing channels, and to fight drug trafficking, smuggling and illegal migration," Medvedev said in a message of greetings to the 28th meeting of the Council of Security and Special Service Chiefs from CIS countries, which has opened in Yekaterinburg.
The message was read out by Russia's Federal Security Service chief Alexander Bortnikov.
The agenda has 19 issues, and special emphasis will be placed on CIS special services' cooperation in fighting international terrorism and other violent manifestations of extremism, Bortnikov said.
"A plan of measures to counter terror and extremist organizations, active in CIS countries, will be drawn up and ways to improve cooperation in combating nuclear terrorism will be discussed," he said.
The meeting has brought together representatives of special services and law enforcement agencies from eleven CIS countries - Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine, and leaders of the CIS Anti-Terrorist Centre and of the CIS Executive Committee.
Among the guests are representatives of special services from Germany, Italy and France.
News.az: Russian President to visit Armenia
Wed 02 June 2010 | 06:40 GMT
Presidents of Armenia and Russia Serzh Sargsyan and Dmitry Medvedev met in Rostov-on-Don today to discuss economic and regional issues.
"Right now we are holding meetings to exchange views on the current situation, especially because it requires this from us. There are, of course, economic issues, which are always discussed during your visits (to Russia) and my visits to you ( Armenia ) ", said Dmitriy Medvedev.
He also said that he intends to share the results of some of his meetings with European colleagues, including the situation around the Armenian-Turkish settlement. "There is something to tell and something to share," said Dmitriy Medvedev.
He thanked S.Sargsyan for participation in the celebrations of the 65th anniversary of Victory in Moscow. According to Dmitriy Medvedev, it shows the "degree of closeness of our countries and the progressive development of strategic relations.”
Serzh Sargsyan, in turn, noted the importance of working meetings between the two presidents and stressed that he was proud to take part in the celebrations of the 65th anniversary of victory.
"I was proud. And the grand parade is a wonderful reminder of our common history and our military brotherhood,” President of Armenia said.
During the meeting the parties reached an agreement on Dmitry Medvedev’s upcoming visit to Armenia in August.
Public Radio of Armenia
Official news | 02.06.10 | 11:14
ArmeniaNow: Medvedev-Sargsyan meeting discusses Armenian-Turkish relations
Armenian-Turkish relations were among issues discussed by the presidents of Russia and Armenia who met in a southern Russian city on Tuesday.
(Serzh Sargsyan was in Roston-on-Don reportedly to attend the annual horse race for the Russian Presidential Cup.)
A report made by Russian President Dmitry Medvedev’s press service quoted the Russian leader as saying ahead of his meeting with Serzh Sargsyan in Rostov-on-Don that “the current situation required an exchange of opinions”.
“There are, of course, economic issues… There are regional issues. In short, I have things to tell you about,” said Medvedev, who was on a visit to Turkey as recently as last month.
“I have had several important trips during which – and I won’t conceal it – we also discussed the situation around the Turkish-Armenian settlement and some other issues. I had contacts with some European colleagues. So I have things to tell you about and share with you,” said Medvedev.
The Russian leader was in Ankara in the middle of May, with his visit focusing on large energy projects with Turkey. It came some three weeks after Armenia formally suspended the process of ratifying normalization agreements with Turkey citing the latter’s “preconditions” in the rapprochement process, including calls for progress in the Armenian-Azerbaijani dispute over Nagorno-Karabakh that would favor Baku.
Speaking in Ankara on May 12, Medvedev said he hoped Turkey and Armenia would be able to “restore full-fledged relations” and “positive momentum gained after the signing of relevant documents in Zurich will go on.” He also noted “encouraging steps” taken recently in the Nagorno-Karabakh settlement, but stressed that “not all issues have been agreed” and that “all these issues should be discussed by the parties to the conflict first.”
Neither the Kremlin press service or the press service of the Armenian president released details of the discussion pertaining to Armenian-Turkish relations or other “regional issues” mentioned in the media releases.
Sargsyan’s press office said agreement had been reached on President Medvedev’s visit to Armenia in August.
Aysor: Armenia-Russia relations are strong, says President Sargsyan
TODAY, 12:32
Aysor.am
Relations between Armenia and Russia are strong, said Armenia’s President Serzh Sargsyan at a meeting with representatives of the Armenian Community of Rostov-on-Don. President said he hopes the relations between the two countries will be maintained.
“In terms of development of the Armenian communities, this factor marks a great and favorable condition as there are brilliant relations between Russia, coming as a new homeland, and Armenia, the historical motherland. Moreover, there is a mutual understanding and trust between the two countries that others can follow as an example,” said Sargsyan.
Keeping in view famous Novo-Nakhichevan-born persons like Rafael Patkanian, Mikael Nalbandian, Martiros Sarian and many others, President Sargsyan also said that Rostov-on-Don is a place that had greatly contributed to the Armenian literature, culture and political mind.
RUSSIA-EU SUMMIT
AP: Russia, European Union discuss economic modernization
Today at 06:48 | Associated Press
ROSTOV-ON-DON, Russia (AP) — Russia needs to modernize its economy and shun protectionism to gain access to Western investment, the European Union said Tuesday.
Russia and the EU launched a program to boost the Western investment and technology that Moscow severely needs to lower its dependence on natural resources. But EU officials warned Moscow needs to adhere to basic trade rules if "Partnership for Modernization" is to work.
"The Russian modernization needs to become a reality and it needs to follow certain patterns to avoid protectionism," EU President Herman van Rompuy said after an EU-Russia summit in the southern city of Rostov-on-Don.
Details were vague on the new program, which EU officials have simply said could increase trade and protect intellectual property rights, among other things.
Russian government intervention in the economy — large swathes of which it owns or controls — is common and, critics say, sometimes heavy handed. In particular, prices have been artificially supported in the vulnerable agriculture sector in recent years, with U.S. producers among the hardest hit as poultry quotas have been cut to protect Russian farmers.
Meanwhile, little progress appeared to be made in other Russia-EU areas such as abolishing visa requirements.
Russian President Dmitry Medvedev said that Russia is "prepared to lift visas as early as tomorrow" if the EU agrees to do the same, and assured that this would pose no security threat to Europe.
EU officials, however, declined to provide any timetable and refrained from comment on the Russian proposal.
Medvedev also called on the U.S. to speed through Moscow's accession to the World Trade Organization, for which Russia has been pressing for years.
"Everyone including our American counterparts should make up their minds. A WTO membership is not a carrot that we're being offered for good behavior, it is necessary step for Russia to become an full-fledged member of the global economy."
Russia is the only G-20 nation outside the WTO.
VOR: Russia, EU to boost cooperation
|Jun 2, 2010 09:25 Moscow Time |
According to a report released by the Ernst and Young audit company on Wednesday , Russia remains on the list of the world’s top-five economies in terms of implementing new projects in 2009.
Russia crucially continues to foray into European markets in the face of the global economic crisis fallout , the report says. It underlines that every second small- and middle-sized company in Europe signal readiness to inject significantly into Russia upon their riding out of the global economic meltdown. The survey also quotes these companies’ chief executives as urging Russia to show more openness and transparency in respect with European business people.
Financial Times: Russia and EU hail modernisation deal
By Catherine Belton in Rostov-on-Don
Published: June 2 2010 03:00 | Last updated: June 2 2010 03:00
Russia and the European Union signed off on a new partnership for modernisation yesterday as the two sides sought to progress on economic brass tacks as the crisis in the eurozone took the bite out of previous conflicts.
Dmitry Medvedev emerged from talks with the EU leadership yesterday saying the 25th EU-Russia summit in the southern Russian city of Rostov-on-Don had taken place in a "friendly and businesslike tone".
The Russian president hailed the new modernisation agreement as allowing the two sides to pursue co-operation in high tech, innovation and energy efficiency, while Herman Van Rompuy, the EU president, threw his backing behind the new pact. "We want to be Russia's partner in modernisation," he said. "With Russia we do not need a reset, we need a fast forward," he said, in a reference to the US vice-president's comments on US-Russia relations last year.
The acrimony of previous summits over Russia's relations with eastern Europe and its role as dominant energy supplier to the EU was conspicuously muted as Russia sought to present a more business-friendly face and the EU sought assurances from Moscow over the euro. Russia keeps a large part of its $460.7bn (€375.6bn, £314bn) in hard currency reserves in euros.
In a carefully scripted press conference, Mr Medvedev responded to a staged question by praising the EU's handling of the debt crisis and said Russia did not want to make any statements that would shake its own economy or that of Europe.
"We are looking at what happens to the euro," he said. "About 40 per cent of our reserves are kept in euros - and we don't have the smallest reserves. Therefore we think the main thing is to help our partners build a joint strategy, including a strategy to exit the crisis."
Contention over rule of law in Russia and the country's poor record on human rights remained. Mr Van Rompuy declined to go into details on specific human rights concerns, reading only from an almost ritual statement that "the situation for human rights defenders and journalists in Russia is of grave concern to the European public at large".
The EU had insisted the new accord on modernisation included a section on democratisation and rule of law.
The new agreement is so far vague on specifics, mapping out only areas in which the two sides will co-operate such as "innovation, research and development and space".
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Moscow Times: EU Calls for 'Fast-Forward' With Russia
02 June 2010
By Nikolaus von Twickel
European Union leaders on Tuesday backed President Dmitry Medvedev's efforts to reform Russia by launching a modernization partnership program, but they remained conspicuously silent about a violent crackdown on opposition protesters.
Speaking to reporters after a two-day EU-Russia summit in Rostov-on-Don, EU President Herman Van Rompuy stressed that the 27-member bloc wanted to be a close partner in Medvedev's drive for a more competitive and diversified economy and hinted that the Europeans were better suited for that than the Americans.
“With Russia, we don’t need a reset. We want a fast-forward,” he said, referring to the much-discussed "reset" of relations between Moscow and Washington.
Van Rompuy and Medvedev signed a joint declaration on the modernization partnership, which is supposed to give Russia easier access to Western know-how and technology while committing the country to more democratic reforms and fighting corruption.
Van Rompuy cautioned that the program needed political will from Moscow to succeed.
"For the partnership to become successful, the Russian modernization needs to become a reality and it needs to follow certain patterns to avoid protectionism," he said, according to a transcript published by the Kremlin.
The EU has complained that Moscow has used the economic crisis as a pretext for protectionist measures. Brussels says it has lost 600 million euros ($730 million) as a result of increased customs duties.
The summit put an emphasis on economic and trade issues. The EU as a whole is Russia's largest trading partner, accounting for about 80 percent of the country's exchange of goods, but the trade relationship has in recent years been tarnished by disputes and uncertainty about Moscow's desire to become a member of the World Trade Organization.
Medvedev said a fledgling customs union with Kazakhstan and Belarus would not influence its plans to join the WTO soon. If the union "works out … then we’ll enter separately,” he said, Interfax reported.
Medvedev suggested that it was mainly U.S. opposition that hampered the country's WTO accession.
"Everyone, including our American partners, should agree that Russia's membership in the WTO is not a carrot they are offering us all the time as a prize for our good behavior," he said in televised comments.
The EU leaders said in a statement that they continued to support Russia's early accession to WTO.
Van Rompuy did not address clashes between opposition activists in Moscow and St. Petersburg, where police detained about 200 protesters late Monday.
European human rights activists deplored the crackdown and lamented the fact that it happened as the EU-Russia summit started. "As long as the law is only enforced in the Kremlin's interest, there will be no modern Russia,” Volker Beck and Marieluise Beck, two Green Party deputies in the German Bundestag, said in a statement on the party's web site.
Speaking to reporters after the summit, Van Rompuy criticized recent killings of human rights activists and journalists and said Europeans were concerned about the “climate of impunity” created by the authorities in Chechnya and other parts of the North Caucasus.
Questions submitted at the post-summit news conference touched on the protests but were not among the four questions that were taken, an EU spokesman said.
The summit also failed to yield progress on visa-free travel, an issue pushed by Moscow after it was raised by the Spanish EU presidency in January. Expectations were low going into the summit after EU officials dashed Kremlin hopes that a roadmap toward visa-free travel could be forged at the summit.
But in a surprise move, Kremlin officials at the summit submitted their own framework convention for future visa-free travel between Russia and the EU-dominated Schengen zone.
An EU source familiar with the matter said the document resembles a convention signed earlier between Russia and another country with the country's name changed to "Schengen zone."
The source spoke on condition of anonymity because he was not authorized to speak to the media about the document, which has not been cleared for publication.
The EU statement said merely that both sides had reiterated their commitment to the long-term objective of visa free travel.
"Work will now begin on preparing a list of common steps for a visa-free travel regime," the statement said.
In a sign of solidarity, both sides condemned Israel's deadly attack on an aid flotilla sailing to Gaza. "The EU and Russia demand a full and impartial inquiry of the events and circumstances," said a joint declaration by Foreign Minister Sergei Lavrov and EU foreign policy chief Catherine Ashton.
Moscow has traditionally backed the Palestinians but has also cultivated closer ties with Israel in recent years.
The leaders also discussed how to tackle the global financial crisis by tightening global economic governance in the run-up of the next summit of the world's 20 leading economies in Canada later this month. Analysts have identified this as an area of common interest between Russia and much of Europe.
Other topics at the summit included energy policy and climate change.
Medvedev said the talks were held in an "open and business-like" atmosphere, which helped solve a whole range of questions.
It was the first EU-Russia summit after the EU reformed its leadership under the Lisbon Treaty, which created Van Rompuy's job as president of the EU Council and increased the foreign policy chief's powers.
Commission President Jose Manuel Barroso was the most senior EU official at the summit who had attended previous summits.
Also attending were EU Trade Commissioner Karel de Gucht and Economic Development Minister Elvira Nabiullina.
Xinhua: Russia-EU summit moderate success rather than mild failure
2010-06-02 10:41:49
by Igor Serebryany, Zhang Dailei
ROSTOV-ON-DON, Russia, June 1 (Xinhua) -- The reserved expression of Russian President Dmitry Medvedev during his press conference here following the Russia-EU summit showed the real achievements of the gathering were, possibly, far below his expectations.
However, since nobody expected the Rostov summit would be all milk and honey, political experts and analysts agreed the 25th summit was a moderate success rather than a mild failure.
IN VISA VERITAS?
Perhaps the major blow to Russia's aspirations on building closer relations with Europe right away was the refusal of the European Union leadership to set a timetable for introducing visa-free travel.
Medvedev gave the EU delegation a Russian draft for the visa-waver agreement.
"We should move forward to the main aim -- lifting of the visa regime," Medvedev, looking tired, told the press conference. "We must not politicize the issue and not dote on bubbles. Let's face the reality, the unreadiness of the European Union for resolving this problem."
Deputy head of the European Studies Institution of the Russian Academy of Science Vladislav Belov told Xinhua Tuesday the Russian position had been constructive and ahead of its European counterparts on most of the issues.
"It is just easier for a Russian leadership to make decisions than for the EU's bureaucrats, who have to sort out the issues among the union members first, which is a lengthy and painful process," Belov said, adding many EU countries suffered an "allergy" to anything concerning Russia.
Konstantin Kosachyov, head of the International Committee of the Russian parliament, or State Duma, agreed. "The European Union is quite a sluggish bureaucratic institution in regard to making decisions," he said.
And an unnamed MP told the official web-site of the ruling United Russia party: "Time will show how many of the agreements signed in Rostov will be put forward in reality and how many of them will remain just on paper."
The Irish Times - Wednesday, June 2, 2010
Irish Times: EU-Russia visa regime advanced by Kremlin at summit
ROSE GRIFFIN in Moscow
EU AND Russian leaders have met in the southern Russian city of Rostov-on-Don to discuss closer co-operation.
The latest biannual EU-Russia summit was initially dominated by condemnation of the recent Israeli attack on aid ships attempting to reach Gaza. Russian news agency RIA Novosti quoted a joint statement issued by Russian foreign minister Sergei Lavrov and EU foreign policy chief Catherine Ashton demanding a full investigation.
But for Russia, the establishment of a visa-free travel regime with the European Union was always going to be the big issue at the conference. Russia is keen to attract skilled workers for key modernisation projects such as the new Skolkovo business park, under construction near Moscow. With any new legislation required to be approved by EU member states, passing binding documentation was always unlikely at the summit, but Russian president Dmitry Medvedev raised the issue yesterday. As well as stressing Russia’s willingness to scrap visa requirements for residents of EU countries, the Russian leader said the quicker the EU came to a consensus on the issue the better.
Mr Medvedev also took the opportunity to push for progress on Russia’s accession to the World Trade Organisation. Negotiations for Russian accession have been ongoing for 16 years, and it remains the only G20 country outside the grouping. The customs union between Russia, Kazakhstan and Belarus which came into effect earlier this year has threatened to further stall progress, although the USA has indicated that it is willing to push Russia’s application through.
The summit takes place in what started out as a bad week for Russian authorities. Prime minister Vladimir Putin was put on the spot by rock star and Kremlin critic Yury Shevchuk at a charity event in St Petersburg at the weekend. Fielding criticism and questions about restrictions on press freedom and the right to assembly, Mr Putin was forced to express his support for public protests.
This was unfortunate given that Monday marked the latest unauthorised protest on the 31st of the month, in recognition that article 31 of the Russian constitution guarantees the right to assembly.
Any hopes of a more lenient approach were dashed however, as protesters were beaten and arrested. Local media reported that 100-200 people were arrested at the Moscow event. Similar events were held in other cities throughout the country. Protests were also reported in the Kemerovo region, still reeling from the Raspadskaya mine blasts, which killed 66 miners last month. Angry protesters earlier blocked a railway line in mid-May, as reports emerged of safety breaches and miners highlighted poor working conditions and meagre wages.
This didn’t stop European Council president Herman Van Rompuy from acknowledging Russia’s progress in observing human rights at this week’s summit, however, pointing to Russia’s confirmation of the moratorium on the death penalty as one example of the Russian government’s commitment. Mr Van Rompuy did express concern about working conditions for human rights’ defenders and journalists, particularly in Russia’s troubled North Caucasus region.
Itar-Tass: Russian, Paraguayan frgn ministers to discuss economic relations
02.06.2010, 01.00
MOSCOW, June 2 (Itar-Tass) – Russian Foreign Minister Sergei Lavrov and Paraguayan Foreign Minister Hector Lacognata are expected to have talks in Moscow Wednesday where they will focus on trade and economic relations between the two countries and, on a broader plane, the strengthening of cooperation between Russia and Latin America.
Hector Lacognata is making an official visit to Moscow, the first one in the history of Russian-Paraguayan bilateral relations.
Russian Foreign Ministry’s official spokesman Andrei Nesterenko said in this connection that the two sides are going to pay special attention to Russia’s dialogue with the countries making up Mercosur – the organization of the regional trade agreement uniting Argentina, Brazil, Paraguay, and Uruguay.
He indicated that this organization plays an important role in the promotion of integration processes in Latin America.
“Russia and Paraguay are linked by bonds of friendship and episodes of a common past,” Nesterenko said, adding that Paraguay became a second home for many representative of the Russian emigration at the beginning of the 20th century.
“They made an important contribution to the rise of the Paraguayan education system, science, culture, and national defense,” he said.
Nesterenko added that some streets in the national capital Asuncion bear the names of Russian officers who fell in combat operations for Paraguay.
VOR: Russian-Nicaraguan IGC session opens in Managua
|Jun 2, 2010 00:42 Moscow Time |
The first session of the Russian-Nicaraguan intergovernmental commission on trade, economic, and scientific cooperation opened in Managua Tuesday. Russian Deputy Foreign Minister Sergey Ryabkov said he expects great prospects for the development of bilateral cooperation and promotion of joint projects in energy, transport, and telecommunications. Attending the session are also high ranking officials and businessmen from Russia.
Moscow Times: New Zealand, Russia to Start Talks on Free Trade
02 June 2010
Reuters
WELLINGTON — New Zealand, the world's largest dairy exporter, and Russia, the fifth-largest food importer, have agreed to start negotiating a free-trade deal, New Zealand's trade minister said Tuesday.
The two countries agreed at a meeting in Moscow to hold preliminary talks ahead of the negotiation of a formal agreement, Trade Minister Tim Groser said in a statement.
"This is a significant step which in the long term could have significant potential for New Zealand businesses looking to expand into the broader European market," he said.
"An FTA with Russia and its customs union partners of Belarus and Kazakhstan could present a unique opportunity for New Zealand to future-proof its relationship with an emerging economic powerhouse," Groser added.
Nzherald: Tango with Russia shows promise
4:00 AM Wednesday Jun 2, 2010
By Fran O'Sullivan View as one page
Trade Minister Tim Groser has chalked up a victory in New Zealand's long quest for a free trade deal with the emerging economic powerhouse of Russia.
Let's just call it "China redux".
The smart geo-politicking by New Zealand's bevy of trade ministers and officials over nearly a decade has paved the way for this country to form a bilateral FTA with Russia in much the same fashion as it secured its earlier deal with China - by helping the bigger partner achieve its goals in the World Trade Organisation first, with the expectation that the bigger partner might return the favour by cementing a bilateral agreement with the smaller player ahead of larger contenders.
On Groser's watch, New Zealand has opened talks on a free trade agreement with South Korea, is also exploring moves with India - which is set to overtake China as the world's most populous nation this century - and is taking part in negotiations to broaden the Trans Pacific Strategic Economic Partnership.
But confirmation New Zealand and Russia will scope out the prospect for an FTA - with formal negotiations to take place after the ground rules are established - is a big fillip for the relationship at all levels.
A bilateral FTA has the ability to deliver major gains to New Zealand exporters as heralded in the wave of press statements from lobbyists in the past 36 hours.
Russia is the major importer of New Zealand butter and cheese. Russia imported food worth US$30 billion ($44 billion) in 2008 and is the world's fifth-largest food import market and among the world's largest importers of meat and dairy products - but the tariff levels are high, running to 50 per cent for some dairy lines.
But it's New Zealand's role in the broader goals of bringing Russia into the formal world trading system that could potentially be the game-changer.
The 1990s and 2000s provided a seemingly endless string of announcements and stories foreshadowing Russia's imminent accession to the World Trade Organisation. This never-ending saga has been played out since 1993 when Russia first sought to join what was the General Agreement on Tariffs and Trade (Gatt).
Groser has long had skin in this game himself. He was formerly New Zealand's ambassador to the Gatt.
And while New Zealand's Ambassador to the WTO in the mid-2000s, he linked up with former WTO boss Mike Moore on a behind-scenes mission to try to get Russia into the global trade organisation.
Moore was at that stage a roving trade ambassador for New Zealand. The pair conceived a strategy for New Zealand to be the first country to agree on an accession protocol with Russia.
Moore suggested New Zealand agree to Russia's accession terms to the World Trade Organisation.
As Moore put it this week, it was about "locking in - morally anyway - New Zealand's access for dairy products."
The former WTO Director-General, who will leave New Zealand next month to take up the post of Ambassador to the United States, believes the FTA study is worthwhile. Moore affirms Groser's stance that the move is highly strategic. And he notes that the European Union will be "fascinated and concerned".
Clearly if Russia lowers agriculture tariffs in its FTA with New Zealand, it will put pressure on the EU to start moving down that track.
But there is a chicken and egg issue here.
The big question is whether New Zealand and Russia will manage to cement an FTA ahead of Russia joining the WTO itself. A high-ranking aide to the Russian President recently suggested Russia could join the WTO next year.
Other former Soviet Republics, such as Georgia, Moldova, Kyrgyzstan and Armenia, are already WTO members. As is China, which joined in November 2001.
To get Russia over the line will take support from the United States and other players including the European Union.
Groser's strategy is also geared to ensuring Russia does stay pegged into the broader Asia Pacific regional trade framework.
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Russia - like the US and China - is a member of Apec. But it sits outside the East Asian grouping that the Asean countries are driving.
At the 2004 Apec in Chile, Prime Minister Helen Clark raised the prospect of a bilateral trade relationship with then Russian President Vladimir Putin. New Zealand had been the first country to agree to accession terms with China to pave its way to joining the WTO: one of a series of "firsts" that ultimately resulted in this country becoming the first Western nation to score a bilateral free trade deal with China.
The Russian tango has been no less complex.
At the 2004 Apec, Russian Economic Development and Trade Minister Herman Gref and Trade Negotiations Minister Jim Sutton signed an accession protocol on services to assist Russia's bid for membership of the WTO and agreed to combine forces to fight against agricultural export subsidies.
Gref told this columnist then that Russia was looking to forge closer trade relations with New Zealand.
"We have already come to terms in order pursue a common joint action plan after Russia's accession to the WTO and we are grateful to counterparts for the actions here ... We have removed or set aside all the disputable questions we had and we have signed a protocol with New Zealand on services on the accession of Russia to the WTO.
"We can see that the approaches of Russia and New Zealand in trade and economic intercourse overlap quite seriously."
New Zealand was the first country to complete negotiations with Russia on its goods protocol for WTO accession.
Groser and Moore expect Russia to join the fight against agricultural subsidies once its WTO membership is confirmed.
If that occurs New Zealand will score: first by capturing its first-mover advantage with Russia on the bilateral front, then by having another ally in the fight against export subsidies.
A decade-long strategy will have paid off.
Nzherald: Specialist companies see big opportunities in store
By Christopher Adams
4:00 AM Wednesday Jun 2, 2010
Trade Minister Tim Groser, in Moscow for talks with his Russian counterpart on a proposed Free Trade Agreement, says there is an opportunity in Russia for New Zealand manufacturers to export specialised products.
Kiwi-manufactured goods face import tariffs ranging from 2 to 20 per cent in Russia.
One New Zealand company that has already honed in on a niche market in Russia is Rocklabs.
The company makes machines that crush samples of ore and test them for mineral content.
Rocklabs was sold in 2008 to NZX-listed Scott Technology - which reported an operating revenue of $31.3 million last year.
The Onehunga company has exported to Russia since 2000 and has customers that include mining giant Norilisk Nickel, according to Rocklabs' Moscow-born company geologist, Oleg Pavlenko.
He said the firm sent one-third of its exports to Russia, but was forced to pay duties ranging from 5 to 10 per cent.
"The biggest benefit [of the FTA] would be the possibility to work not only in Russia, but with surrounding countries," Pavlenko said.
Groser said Russia's Customs Union partners Kazakhstan and Belarus would be included in a successful FTA, presenting "a unique opportunity for New Zealand to future proof its relationship with an emerging economic powerhouse".
Pavlenko said there was a long history of New Zealand firms supplying Russian mining companies - going back to the early 20th century - and the FTA had the potential to build upon that relationship.
"It's a very good opportunity," he said.
Margaret Comer, corporate services executive of Hamilton's Gallagher Group, which has exported a limited number of its products to Russia since the 1980s, said it was now a difficult country to do business with, but hoped the FTA could improve the situation.
"We see [the FTA] as a great opportunity. If we can get an arrangement with Russia that would be wonderful."
Gallagher's animal management division was already exporting its electric fencing products to Russia, and Comer said there was scope in the country for its access control (swipe card) technology, particularly in the mining sector.
"[The FTA] will create great relationships."
BarentsObserver: Murmansk and Bodø to counter air terrorism
2010-06-02
Two sites in the Barents Region are chosen as local coordination sites within the new NATO-Russia cooperation system to counter air terrorism.
The NATO – Russia cooperation system will be fully up and running by 2011, but already today the centers cam see each other’s date reports . With the system in place, both NATO and Russia can see a shared radar picture of air traffic all round the Barents Region and with that provide early notification of suspicious air activity. In addition to the Barents Region, the system provides similar radar exchange for all over Russian air space as well as air space around all NATO member states.
According to the systems main centers are established in Warsaw and Moscow. In addition to Bodø and Murmansk, local coordination sites are in Kaliningrad and Rostov-on-Don in Russia and in Ankara in Turkey.
Last year, the Joint Operational Headquarters of the Norwegian Armed Forces was moved to Reitan near Bodø in Northern Norway. All air space activities in the north are under surveillance from Reitan. From Murmansk, the Russian Armed Forces also controls northern air space activities.
Over the last years the Norwegian and Russian military are cooperating more closely than ever, with several meetings every year between the military leaders.
On Friday this week, the joint Norwegian-Russian naval exercise Pomor-2010 starts in the Norwegian- and Barents Sea.
The exercise will include joint efforts in releasing an oil platform from armed extremists. It is reasonable to believe that the new NATO-Russia system to counter air terrorism also will be tested during the up-coming Norwegian-Russian exercise in the north.
reports that training within the new NATO-Russia system is already ongoing and a joint exercise with live aircraft will take place in early to mid-2011.
NATO member states and Russia have so far contributed more than €10 million to the system.
Interfax: Russian warships to keep patrolling waters off Africa, Gulf of Aden
Today at 09:42 | Interfax-Ukraine
Northern, Pacific and Black Sea Fleet ships will continue training as members of naval groups in ocean waters during the summer training period, which started on Tuesday, a navy spokesman said.
"Navy ships will continue to maintain regular presence in the vicinity of the African Horn and the Gulf of Aden with the aim of maintaining the security of navigation, and to participate in some international exercises," the spokesman told Interfax-AVN.
The Black Sea Fleet will hold joint exercises with the Ukrainian navy and will take part in the activation of the Black Sea Naval Cooperation Task Force.
In the second half of the year, Russian navy vessels are to pay about 50 visits to ports in more than 20 states.
The planned large-scale Vostok 2010 exercise will be the year's main training event for the Russian navy. Ships have already begun to get ready for it.
RIA: Russia to transfer its Nerpa nuclear sub to India in autumn 2010
03:50 02/06/2010
Russia will transfer its Nerpa nuclear-powered attack submarine for a 10 year-lease to India in the autumn, the head of the Russian Federal Service for Military-Technical Cooperation has said.
"The training of the crew has been concluded, most of the tests have been carried out — everything is almost at the finish line," Mikhail Dmitriyev told journalists in New Delhi after a meeting of the Russian-Indian high-level supervisory committee on military and technical cooperation on Tuesday.
He said India would receive the K-152 Nerpa submarine in October or November 2010.
The lease follows an agreement inked between New Delhi and Moscow in January 2004, with India funding part of the Nerpa's construction at the Komsomolsk-on-Amur shipyard in the Russian Far East with an initial $650 million.
The Nerpa, the Akula-II class nuclear submarine, was scheduled to be inducted in the Indian Navy as INS Chakra by mid-2008 but technical problems delayed the process. After that, just as it began its sea trials in November 2008, 20 sailors and technical workers were killed on it due to a toxic gas leak when the automatic fire extinguishing system malfunctioned.
After repairs, which cost an estimated 1.9 billion rubles ($65 million), the Nerpa is now fully operational.
Akula II class vessels are considered the quietest and deadliest of all Russian nuclear-powered attack submarines.
Dmitriyev also expressed hope that Russia and India would sign a contract on the joint development of a new fifth-generation fighter within the next three months.
The sides earlier agreed to develop both a single-seat and a two-seat versions of the aircraft, which would be most likely based on Russia's T-50 prototype fifth-generation fighter, by 2016.
Russia has been developing its fifth-generation fighter since the 1990s. The T-50 aircraft was designed by the Sukhoi design bureau and built at a plant in Komsomolsk-on-Amur, in Russia's Far East.
Russian officials have already hailed the fighter as "a unique warplane" that combines the capabilities of an air superiority fighter and attack aircraft.
NEW DELHI, June 2 (RIA Novosti)
PTI: Gorshkov refit on track; panel to monitor work
Last Updated: Jun 02, 2010
NEW DELHI (PTI): India and Russia have constituted an apex monitoring committee to supervise the Admiral Gorshkov aircraft carrier refit programme at the Sevmash shipyard, even as work on the warship has gained pace in the last six months with additional manpower deployed.
The committee, to be headed by Russian shipyard's corporation chief, was formed recently, with a Russian official personally visiting the shipyard to supervise the work on the warship, to ensure its timely delivery to India by December 2012.
The progress report on the refit programme for the 45,000-tonne aircraft carrier that India bought in 2004 comes in the wake of a visit by Navy's Controller of Warship Production and Acquisition Vice Admiral N N Kumar to Russia in the middle of last month, a Navy spokesperson said Monday.
"The delegation observed a lot of progress in the refit work since September last year. Russia has put in significant efforts to ensure delivery of the aircraft carrier within the deadline," he said on the visit of Kumar and his team to Sevmash shipyard.
India's decision to pay USD 2.34 billion for the warship early this year helped in expediting work on the warship.
India had originally bought the ship at USD 974 million, which also included its repair, refit and trials cost.
Now, with the work progressing well, the Russians have assured the Navy that the warship would be ready for harbour trials by early next year, with all the work on the ship completed before December this year.
Already, the shipyard has completed all structural and hull related work and half of the cable laying work on the warship, the team lead by Kumar had noticed during the visit.
The shipyard had also significantly increased the number of men working on the warship -- a substantial number compared to what it was last year, the spokesperson said.
They had also completed the installation of all large equipment such as engines, gear box, alternators, and generators.
"The warship is in an advanced state of being sealed.
Only the minor equipment, piping, ventilation and air-conditioning work is left to be done, apart from another 50 per cent of cabling work," he said.
India had also bought 16 MiG-29K naval fighter jets for USD 526 million to operate on board Gorkshkov and these aircraft have been delivered to the Navy.
RIA: State-owned Russian Technologies buys Boeing jets, may have to resell them
12:15 02/06/2010
State-owned hi-tech corporation Russian Technologies announced that the U.S. jet maker Boeing won its tender to supply jets, however, the company may have to re-sell the planes, Russian respected daily Kommersant said.
Russian Technologies (Rostekhnologii) announced on Tuesday that Boeing won a tender to supply the industry holding with up to 65 midrange jets, after submitting the best technical, operational and financial offer.
"Boeing presented the best offer in terms of technical, operative and financial indicators. State corporation Russian Technologies declares it the winner," the statement said.
Boeing may receive up to $40 million from Russian Technologies this Friday as a 1.5% prepayment for the tender it won. The overall contract is estimated at $2.5 billion.
The paper said that the jets, however, do not have a final buyer.
Initially, the tender was held for a failed Rosavia state airline project. In August 2009, at the MAKS air show, Russian Technologies submitted requests for proposals to Airbus and Boeing to supply 65 aircraft to Rosavia.
In April this year, Russian Technologies and the nation's flagship carrier Aeroflot signed a partnership agreement.
Therefore, the planes will now go to Aeroflot. However, Aeroflot, which will also get Russian Technologies' assets, uses European Airbus planes. In December 2009, Aeroflot reached a deal with a unit of United Aircraft Corporation, Sukhoi, where it agreed to purchase 30 of the new Russian-built Superjet 100s, which will replace the Airbus 320s and 319s.
Russian Technologies postponed the announcement of the decision several times. This time Boeing and Airbus, the most obvious candidates, threatened to withdraw from talks with the holding.
The holding might have benefited if it had canceled the announcement of the decision as Aeroflot was not sure if the company needed the jets.
Aviaport analytical service head Oleg Panteleyev told Kommersant that, on the one hand, it might be unprofitable for Aeroflot to develop two separate and parallel lines of aircraft, however, on another hand, Boeing jets might fit subsidiaries of the carrier depending on their specialization.
Panteleyev added that it is too early to discuss the development of subsidiaries.
Experts say if Aeroflot refuses to buy the aircrafts, and Rostekhnologii already signs a contract, the state corporation will still be able to sell 50 or even 65 planes on the market with favorable terms of delivery, including duty-free import.
MOSCOW, June 2 (RIA Novosti)
RIA: Algeria, Libya set to buy Russian Pantsir-S1 short-range air defense systems
11:36 02/06/2010
Algeria and Libya are ready to buy Russian Pantsir-S1 short-range air defense systems, deputy head of the Russian Military-Technical Cooperation Service Vyacheslav Dzirkalin said on Wednesday.
"The new system has shown high efficiency. Algeria and Libya have shown interest. Syria has already bought these systems in the past," Dzirkalin said, adding that other potential customers were likely to appear.
Earlier in March the Russian press said Algeria was planning to buy 40 Pantsir-S1s for $500 million.
Several Russian papers also reported that Russia had signed a $734-million contract with the United Arab Emirates (UAE) in 2000 on purchasing 50 Pantsir-S1s.
Dzirkalin confirmed the reports and said Russia would finish delivering the Pantsir-S1's to the UAE this year.
Pantsir-S1 is a short-to-medium range combined surface-to-air missile and antiaircraft artillery system manufactured by the Tula-based Instrument Making Design Bureau (KPB).
It is designed to protect point and area targets and carries up to 12 two-stage solid-fuel surface-to-air missiles in sealed ready-to-launch containers.
The system also has two dual 30 mm automatic cannons that can engage targets at a range of up to 4 km.
ABU DHABI, June 2 (RIA Novosti)
RIA: Russia to supply Su-30, Yak-130 planes to Algeria in 2011
10:24 02/06/2010
Russia will supply Su-30 Flanker fighters and Yak-130 Mitten trainer/light attack jets to Algeria in 2011, the deputy head of the Russian Federal Service for Military Technical Cooperation, Vyacheslav Dzirkalin, said.
"The delivery of Su-30s and Yak-130s [to Algeria] is due to begin next year, this is no military secret," Dzirkalin said.
Earlier in April, the head of Russian Technologies state Corporation, Sergei Chemezov, in an interview with the Novaya Gazeta weekly said Russia would ship to Algeria "a party of modern Russian fighters" at a price of about $1 billion.
Dzirkalin did not specify the number of aircraft to be delivered to Algeria.
Speaking about Russian-Algerian Navy partnership, Dzirkalin said that "636 series diesel submarines are being repaired and modernized, but the Algerian side has not stated anything on the purchase of the new subs."
The 636 Kilo diesel-electric submarine is a more advanced version of a 877 Paltus sub. The Chinese Navy has two Russian Kilo submarines built at one of the leading submarine shipbuilding companies, Admiralty Shipyards in St.Petersburg.
ABU DHABI, June 2 (RIA Novosti)
UPI: Algeria 'to cut U.S. arms, go Russian'
Published: June 1, 2010 at 3:58 PM
ALGIERS, Algeria, June 1 (UPI) -- Algeria's defense ministry plans to cut arms purchases from the United States because of lengthy delivery delays and concentrate on Russian weapons systems, the El Khabar newspaper reports.
Russia's state arms exporter Rosoboronexport has signed two contracts worth $1.2 billion to deliver 16 Sukhoi Su-30 multi-role fighters to Algeria and six to Uganda, Russia Veomosti daily reported Monday.
The Irkut Corp., part of Russia's United Aircraft Corp., says it has delivered 28 Su-30MKA jets to Algeria, customized to meet Algerian specifications, since 2006.
There was no immediate confirmation by Algeria authorities of Monday's report in El Khabar.
Two years ago, Algeria refused to accept MiG-29 interceptors bought from Russia because of their "inferior quality." Moscow said Russia's defense ministry would fork out $690 million to buy back the aircraft.
It isn't clear why the Algerians, a key Cold War regional client of the former Soviet Union, would now seek to turn again to Moscow for its military equipment.
However, Moscow is making a serious effort to re-establish its influence in the Middle East, albeit on a more pragmatic level than the ideology-driven deals made during the Cold War and one of the most effective ways of doing that is through arms sales.
Russia's defense deals with Iran and Syria have aroused considerable controversy, particularly with the United States and Israel, but they have made the point that Moscow is determined to be a player in the region, particularly as U.S. influence is widely seen to be waning.
El Khabar quoted Algerian defense officials as saying that "long delays" in U.S. arms deliveries was the primary reason behind the focus on Russian systems.
"The delay in the deliveries of modern weapons from the United States has prompted the defense ministry to defer plans to purchase new arms systems in the fight against terrorism," the daily reported.
U.S. political conditions on arms sales to Middle Eastern states and U.S. support for Israel also appear to have been factors in the reported Algerian decision.
El Khabar said the Algerians decided to scrap plans to buy AH-64 Apache helicopter gunships, presumably for use against Islamist militants linked to al-Qaida who are operating in Algeria, particularly in its southern desert regions. The AH-64, designed by Hughes, is manufactured by the Boeing Corp.
Instead, the defense ministry plans to acquire fourth-generation Russian attack helicopters, either the Mi-28 Havoc, which costs a quarter of the AH-64, or the Kaman Ka-Alligator Hokum 2.
The Algerian move coincides with a move to establish a joint counterinsurgency operation against al-Qaida in the Islamic Maghreb, the jihadist group created in 2009 which seeks to integrate all Islamist militants in North Africa.
The Algerians, as the major military power in North Africa, have in recent months set up a joint headquarters with neighboring states to coordinate counterinsurgency operations across the region.
One of the main obstacles has been the lack of attack helicopters by these states to harass and pursue the insurgents across the desert wastes and transport aircraft for rapid deployment of ground forces.
VOR: Russia helps put Japanese satellite into orbit
|Jun 2, 2010 10:22 Moscow Time |
A Japanese satellite was put into orbit on Wednesday in a launch that was fulfilled with the help of Russia’s Rokot booster, which blasted off from the Plesetsk space port earlier in the day. Initiated by the Russian Space Forces, the launch of the SERVIS-2 satellite was implemented within the framework of a program to help test sophisticated space vehicles, a Russian Space Forces spokesman said.
Russia Today: ISS crew returns to Earth as Baikonur Cosmodrome turns 55
02 June, 2010, 09:45
The Soyuz TMA-17 spacecraft with Russian, Japanese cosmonauts and a US astronaut on board has successfully landed in Kazakhstan, after a total of 161 days at the International Space Station.
14 Mi-8 rescue planes, four An-12 and An-24 planes, and seven special rescue vehicles provided the safe landing of the capsule.
The state of the crew is estimated as good with their pulse rate normal, said the head of the Institute of medical and biological problem Igor Ushakov.
“The traditional test of eating apples has been completed successfully,” he jokingly told journalist. Ushakov said that on board the station there was a good doctor, Oleg Kotov, who was also the crew’s captain.
After the return of the crew, consisting of spacemen Soichi Noguchi, Oleg Kotov and Timothy Creamer, there are still three people remaining on the ISS. On June 18, a new space crew will join them on board the station.
The world's first cosmodrome turns 55
From the launch of the Sputnik and the first man in space to the first space tourist – the Baikonur cosmodrome has seen it all.
Built secretly in the Kazakh desert with almost no infrastructure in extreme weather conditions, it became and still is the world’s first and largest cosmodrome.
Boris Yesin has been working in the space industry for decades and is the only man in charge of the mail the cosmonauts receive.
He says the massive cosmodrome was only one part of the USSR’s gigantic project.
“It wasn’t only about sending rockets to space. Temperatures there vary from +40 C° to – 40 C°. And thousands of people needed a place to live,” remembers Yesin. “So a whole city was also built in the middle of nowhere with parks, fountains, apartment blocks and schools.”
The town and the cosmodrome make up the total area of nearly 7,000 square kilometers – that’s comparable to the size of Puerto Rico.
Construction began in February 1955 and in just two years the cosmodrome already hosted the launch of the world’s first man-made satellite – Sputnik.
And in 1961 Yury Gagarin became the first person to go into space, also blasting off from Baikonur.
Since then, the cosmodrome has hosted more than half of all space launches in history, including of the USSR's only Space Shuttle – Buran.
Boris Yesin says that, “It was one of the most prestige places to work in the country- not only because of space exploration. During Soviet years there were often food shortages. Well, Baikonur was always well stocked.”
However, it wasn't always like that. After the collapse of the USSR, the cosmodrome fell under the control of Kazakhstan.
The amount of launches fell, the financing was cut and many specialists left, looking for a better life.
In 1994 Russia began renting the Baikonur compound, including the town and the cosmodrome in a lease running until 2050, and slowly returning the area to its former glory.
Today, 55 years since its establishment, the cosmodrome once again plays a major role in space exploration, responsible for around one-third of all space launches in the world every year.
RIA: URGENT: Russia's Soyuz TMA-17 spacecraft lands in Kazakhstan
07:36 02/06/2010
© RIA Novosti. Oleg Urusov
The recovery capsule of Russia's Soyuz TMA-17 piloted spacecraft carrying three cosmonauts has landed in Kazakhstan.
Russian cosmonaut Oleg Kotov, U.S. astronaut Timothy Creamer, and Japanese astronaut Soichi Noguchi returned to Earth from a mission to the International Space Station.
MISSION CONTROL (Moscow Region), May 2 (RIA Novosti)
Reuters: Russian Soyuz returns from space station mission
Tue, Jun 1 2010
By Amie Ferris-Rotman
KOROLYOV, Russia (Reuters) - A Russian Soyuz spacecraft with three astronauts on board landed on the steppe of Kazakhstan on Wednesday, Russia's Mission Control said.
Russian Oleg Kotov, NASA's Timothy Creamer and Japan's Soichi Noguchi arrived near the town of Zhezkazgan as planned, at 0725 Moscow time (0325 GMT), an announcer at Mission Control outside Moscow said.
"There has been a soft landing," the announcer said to applause from observers in the gold-lined, Soviet-era Mission Control building.
The trio of astronauts, who make up Russian Expedition 23 and are commanded by Kotov, left Earth in December of last year for the $100 billion, 16-nation International Space Station (ISS).
In April, U.S. astronaut Tracy Caldwell Dyson and Russian cosmonauts Alexander Skvortsov and Mikhail Korniyenko docked with the ISS, replacing a Russian-U.S. duo who returned to Earth in March.
Russia will ferry all crews to the ISS aboard its single-use Soyuz spaceships after the U.S. space agency NASA mothballs its fleet by the end of this year.
Earlier this year, Russia announced a halt to space tourism to free capacity for ISS flights. It has said it plans to double the number of launches to four this year as permanent crews of professionals aboard the expanded ISS are set to rise to six.
(Editing by Michael Roddy)
AP: Russian space capsule with 3 astronauts from space station lands in Kazakhstan
By Associated Press
June 1, 2010 | 9:01 p.m.
MOSCOW (AP) — Russian mission control says a Soyuz capsule carrying three astronauts from the International Space Station has landed in Kazakhstan.
The landing on the barren Central Asian steppes on Wednesday morning took place about 3 1/2 hours after the capsule separated from the ISS and began streaking toward Earth.
It was carrying Russian Oleg Kotov, American Timothy Creamer and Soichi Noguchi of Japan, who had been aboard the orbiting laboratory since late December.
There was no immediate word on the crew's condition. Soyuz landings are tracked by helicopters that watch the capsule's parachute-slowed descent, then head for the site to extract the astronauts.
Jun 2, 2010
Straits Times: Russian Soyuz returns safely
KOROLYOV (Russia) - A RUSSIAN Soyuz spacecraft with three astronauts on board landed on the steppe of Kazakhstan on Wednesday, Russia's Mission Control said.
Russian Oleg Kotov, NASA's Timothy Creamer and Japan's Soichi Noguchi arrived near the town of Zhezkazgan as planned, at 0725 Moscow time (1125 Singapore time), an announcer at Mission Control outside Moscow said.
'There has been a soft landing,' the announcer said to applause from observers in the gold-lined, Soviet-era Mission Control building. The trio of astronauts, who make up Russian Expedition 23 and are commanded by Kotov, left Earth in December of last year for the US$100 billion (S$141.3 billion), 16-nation International Space Station (ISS).
In April, US astronaut Tracy Caldwell Dyson and Russian cosmonauts Alexander Skvortsov and Mikhail Korniyenko docked with the ISS, replacing a Russian-US duo who returned to Earth in March.
Russia will ferry all crews to the ISS aboard its single-use Soyuz spaceships after the US space agency NASA mothballs its fleet by the end of this year.
Earlier this year, Russia announced a halt to space tourism to free capacity for ISS flights. It has said it plans to double the number of launches to four this year as permanent crews of professionals aboard the expanded ISS are set to rise to six. -- REUTERS
RIA: [pic] Russia needs long-term space strategy to remain cosmic superpower — Russian cosmonaut
06:41 02/06/2010
Russia needs a long-term space strategy, otherwise it may lose its leadership in the space exploration sphere, Russian cosmonaut and former politician Yury Baturin has said.
"Unfortunately, Russia has no long-term space strategy. For some 15 or maybe 20 more years Russia will remain a space superpower, but after this period, Russia will become a second-league space power if a long-term space strategy is not adopted," Baturin, a Lomonosov Moscow State University professor, said during his speech at the Woodrow Wilson Center in Washington on Tuesday.
Baturin was talking about his vision of space development in the next 100 years, which he had presented in his book entitled Cosmonautics of XXI Century.
The cosmonaut said he believed that the U.S. would show big progress in space development in the 21st century.
"The U.S. will try to fully dominate space. In the long term prospect, there will be two power centers — the U.S. and China. They will be the main players," Baturin said.
He said China had a long-term space strategy, while U.S.'s space plan was limited as President Barack Obama had scrapped the lunar exploration program and some other space development projects.
Lunar exploration would be the next stage of space development, Baturin said. He said permanent stations would be eventually established on the Moon. The first station would be built by the U.S. and the second by China.
The cosmonaut suggested that the rapid militarization of space that would take place in the future could result in space wars.
Baturin also suggested that the first spacecraft equipped with an artificial intelligence system would take off for space on the first year on the 22nd century.
"This will make an incredible impression on the humanity, as Yury Gagarin's flight did," he said.
WASHINGTON, June 2 (RIA Novosti)
VladivostokTimes: China And Primorye Unite Against Drugs
Drug opponents from both countries noted that it’s more efficient to solve drug problem together
VLADIVOSTOK, June 2, The representatives of the Department of Public Safety (DPS) of Jilin Province, Chinese People’s Republic and FDSC of Russia, Primorye branch, shared their experience on struggle against drugs at the meeting and decided that it’s more efficient to solve drug problem together, as the Primorsky Territory Administration press service reported to RIA PrimaMedia.
“The experts from the territory drug enforcement department reported about drug preventive measures” said the press service. “In particular, Primorye holds several preventive actions “Mac”, “Heroine”, “Chanel” directed to break drug dealing and close drug channels. The territory purpose program “Primorye without drugs” started on the initiative of the governor Sergey DARKIN has been in power for several years.
The Chinese party also shared their experience. They noted that the demand for psychotropic substances coming from South China is increasing in the province.
At the meeting the Primorye delegation learnt about the work of information center of Jilin DPS and Chinese colleagues demonstrated technical and monitoring opportunities.
We would note that collaboration in struggle against drugs has become an important part of China and Primorye relations.
JUNE 2 2010 09:09h
June 02, 2010 11:33
Interfax: Polar researchers evacuated from drifting ice floe
ST.PETERSBURG. June 2 (Interfax) - The Rossiya nuclear-powered icebreaker has reached the North Pole 37 (SP-37) research station after the ice floe it is situated on began to break up and drift apart, Sergei Balyasnikov, spokesman for the Arctic and Antarctic Research Institute, told Interfax.
"Earlier helicopter crews had flown over the area, examining the ice and selecting a mooring place. Loading operations began immediately after the Rossiya moored," Balyasnikov said.
The polar researcher's equipment and reserves became scattered on various ice floes after the ice cracked. Therefore, helicopters will do the bulk of the loading, he said.
The polar researchers will board the ship on their own. "It's easy. They will walk to the ship and use improvised bridges across the cracks," Balyasnikov said.
"If the weather does not worsen the icebreaker will collect all researchers and equipment within 5-7 days. But the rescue mission could go even faster," he said.
The drifting research station SP-37 began to wrap up its work ahead of schedule after the ice flow cracked and broke into several parts.
The SP-37 station became operational on September 7, 2009. An extensive program of oceanographic, meteorological, environmental and hydrographic studies, many of which are unique, have been carried out since then in a little-studied region of the Canadian sector of the Arctic Ocean.
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Itar-Tass: FSB agent, local resident killed in Dagestan
02.06.2010, 10.57
MAKHACHKALA, June 2 (Itar-Tass) - An agent of the regional department of the Federal Security Service (UFSB) and a local resident were killed in Dagestan's Karabudakhkent district in a shootout with a group of militants, the republic's Investigations Department (SKP) told Itar-Tass on Wednesday.
An FSB special task force unit engaged a group of gunmen as it was combing the area near the village of Kakamakhi on Monday afternoon. In the course of the fighting, an UFSB agent and a local resident t were killed, and two law-enforcement officers and one local resident were injured," the SKP said, adding that "the killed civilian and the injured civilian were guilds."
A criminal case was opened over murder of law-enforcement officer, attempted murder of law-enforcement personnel, premeditated infliction of grave bodily harm and illegal turnover of weapons and ammunition.
Dalje: Two killed, two wounded in Russia special services raid
Two people were killed and another two wounded when militants attacked officers of the Russian FSB security service during a raid in the troubled Dagestan region, an official said Wednesday.
A FSB unit was searching the woods near the village of Kakamakhi with the help of local guides when they were attacked by militants Tuesday afternoon, said Nizami Radzhabov, a spokesman for the regional Investigative Committee.
- There was a gunfight - he said. As a result, one FSB officer and one guide were killed and another FSB officer and guide wounded and hospitalized, Radzhabov told AFP.
Dagestan is part of Russia's volatile North Caucasus region where authorities are battling an Islamist insurgency and where shootings and bomb attacks are nearly a daily occurence.
Jun 2, 2010
Straits Times: 2 dead in Dagestan shootout
MAKHACHKALA (Russia) - DAGESTAN police said two people were killed and two wounded during a shootout between police and unidentified gunmen in the violence-plagued southern Russian region.
The shooting occurred during a routine search operation on Tuesday.
Regional police spokesman Vyacheslav Gasanov said on Wednesday that a policeman and a local resident who had been helping police died.
Mr Gasanov said the gunmen are still at large and a search operation is under way.
Dagestan is plagued by near-daily violence attributed both to criminal gangs and to insurgents apparently inspired by separatist rebels in neighbouring Chechnya. -- AP
02.06.10 08:39
Interfax: Militants fired on a group of soldiers in Dagestan, killing two people - UPC
June 2. Interfax-Russia.ru - In a forest in Dagestan in the shelling of militants armed forces, two people were killed and two injured, said on Wednesday, Interfax Senior Assistant Head SC UPC regional media relations Nizami Radjabov.
According to him, clashes occurred in a forest near the village of Kakamahi Karabudahkentskom in the area of the country. Unknown fired from automatic weapons from a group of military units and their Russian FSB agents who carried out reconnaissance and search members NWF, clarified N. Radjabov.
"The bombardment resulted in one soldier and one conductor were killed, another soldier and explorer hospitalized with serious injuries and are in hospital," - said the representative of SU UPC.
In fact clashes prosecuted under Articles 317 (assault on the lives of law enforcement officers.), 105 (murder), 111 (causing grievous bodily harm), 222 (arms trafficking), added N. Radjabov.
In turn, a law enforcement source said that troops returned fire. Meanwhile, information about casualties among the militants have not yet been reported.
This article was published by F18News on: 2 June 2010
Forum18: RUSSIA: Dagestan's controls on Islamic education
By Geraldine Fagan, Forum 18 News Service
Legal provisions in the Russian North Caucasus republic of Dagestan restricting religious education are a major element in the near monopoly on Muslim public life enjoyed by the Spiritual Directorate of Muslims of Dagestan, Forum 18 News Service has found. Some local Muslims maintain that the restrictions prevent qualified people from teaching. "You might have a very well-educated imam returning from Syria or Egypt who is a classic convinced Shafi'i Muslim in line with Dagestan's tradition," Shamil Shikhaliyev, head of the Oriental Manuscripts Department at the Institute of History, Archaeology and Ethnography of the Dagestan branch of the Russian Academy of Sciences, told Forum 18. "But he won't get a position at a mosque because it is the unwritten law of the Directorate that anyone who studied abroad is Wahhabi and can't become an imam." One local human rights defender, Ziyautdin Uvaisov, has described how those disagreeing with the Directorate's line who have tried to study in its educational institutions usually ended up either leaving or being expelled.
"Preaching or giving lessons on Islam not in the name of the Spiritual Directorate of Muslims of Dagestan is regarded as dissemination of radical ideas," Abdulmumin Gadzhiyev, Islamic affairs correspondent with Chernovik, a popular local independent Russian-language newspaper, told Forum 18 in the Dagestani capital Makhachkala on 15 April.
While not always enforced, local legal provisions restricting religious education are a major element in the near monopoly on Muslim public life enjoyed by the Directorate (see F18News 25 May 2010 ). Similarly important are restrictions obstructing Dagestan's many practising Muslims from reading more than a relatively narrow range of Islamic literature (see F18News 26 May 2010 ).
The educational restrictions mean that all Islamic educational institutions in Dagestan must subjugate themselves to the Directorate and conform their teaching with its views. Large-scale independent Islamic education is impossible. The Directorate reportedly also ensures that no one who has studied Islam abroad can work as an imam or religious teacher on their return to Dagestan.
Only one umbrella organisation per confession - in Islam's case, the Directorate – is permitted under Dagestan's 1998 Religion Law (Article 10). Under the same law, both religious educational materials and study abroad are subject to approval by that organisation (Article 9). Under Dagestan's separate September 1999 anti-Wahhabi law (Article 3), anyone teaching religion – even in private – must also have the permission of the relevant umbrella organisation (see F18News 5 May 2010 ).
In Dagestan Forum 18 found that Salafis - advocates of what they regard as a pure form of Islam as practised by the earliest Muslims - are informally referred to as Wahhabis regardless of whether they reject violence.
Elsewhere in Russia, Wahhabism is usually understood as the belief in the legitimacy of violence in the pursuit of Islamic ideals. The term derives from the surname of Mohammed ibn Abdul-Wahhab, whose radical teachings form the religious basis of the present-day kingdom of Saudi Arabia (see F18News 8 August 2007 ).
Dagestan - a republic in Russia's troubled North Caucasus which borders Azerbaijan and Georgia - is highly ethnically diverse. Most of the population is of Muslim background, the majority of them Sunnis but with a Shia minority.
Fear of foreign influence
Dagestan's controls on sharing Islam stem from concern that foreign influence is stoking the local Islamist insurgency. In a compilation of papers from a local government conference on preventing religious-political extremism held in Makhachkala in May 2009, scholar Tagir Muslimov points out that "for many, the way to the forest (joining the insurgency) starts in Islamic educational institutions abroad." The compilation also notes that some 4,000 young Dagestanis are currently studying in Islamic countries.
Pro-rector of Makhachkala's Imam Shafi'i Islamic University, Magomedgadzhi Gadzhiyev (no relation to Abdulmumin) sees religious education as the key to beating the insurgency. "If a vessel is full of water and you pour water into it, it will overflow," he explained to Forum 18 on 19 April. "If a young person has adopted Wahhabi ideas and we try to say something from the side, he won't accept what we say, as his head is already full."
For this reason, Gadzhiyev supports Russian President Dmitry Medvedev's pilot scheme introducing religious studies into state schools, he told Forum 18. He would go further, suggesting that a madrassah in every Dagestani village should teach even pre-school children, "giving different ideas first – that terrorism and murder are absolutely unacceptable in Islam."
Founded by the Directorate in 1997, Imam Shafi'i Islamic University is the oldest Islamic university in Dagestan. It trains imams in Arabic and sharia studies following study programmes approved by the Directorate.
Makhachkala's Institute of Theology and International Relations also agrees its educational programmes with the Directorate and uses approximately 80 per cent of the syllabus taught in purely Islamic universities such as Gadzhiyev's, its rector Maksud Sadikov told Forum 18 on 20 April. It also employs its lecturers via the Directorate.
With 750 internal and 500 external students, the Institute is the oldest of still only a handful of higher educational institutions in Russia offering combined Islamic and secular qualifications approved by the state. Graduates are thus able to work either as imams and Directorate personnel or as secular teachers and state officials, Sadikov explained to Forum 18.
While imams are elected, they must also be endorsed by the Directorate, he continued. Asked if this meant that Salafis could not work as imams, Sadikov drew an analogy with the unacceptability of a Jehovah's Witness wanting to lead an Orthodox parish church. (While Orthodox do not recognise Jehovah's Witnesses as Christians, however, Sadikov had told Forum 18 minutes earlier that he regards Salafis as full Muslims).
Directorate press secretary Magomedrasul Omarov confirmed to Forum 18 on 21 April that the Directorate trains all imams. If a village or settlement needs an imam, it consults with the Directorate, he said, while graduates of Islamic educational institutions are allocated posts in the way that employment was allotted during the Soviet period.
Local sociologist of religion Zaid Abdulagatov estimated to Forum 18 on 16 April that there are currently around 6,000 higher students of Islam in Dagestan. According to January 2010 official local government figures, the republic has 13 institutions of higher Islamic education.
Controls too tight?
According to Rasul Gadzhiyev (no relation to Abdulmumin or Magomedgadzhi), departmental head of Dagestan's Ministry for Nationality Policy, Information and External Affairs, there is generally no friction between the Directorate and Dagestani Muslims who have studied abroad. While those educated in Egypt, Syria and Saudi Arabia had some "points of misunderstanding" with local Muslims clergy, he told Forum 18 on 22 April, if they had not turned to terrorism they were engaged in peaceful dialogue.
Others maintained to Forum 18 that the restrictions on Islamic education prevented well-qualified people from teaching, however. "You might have a very well-educated imam returning from Syria or Egypt who is a classic convinced Shafi'i Muslim in line with Dagestan's tradition," Shamil Shikhaliyev, head of the Oriental Manuscripts Department at the Institute of History, Archaeology and Ethnography of the Dagestan branch of the Russian Academy of Sciences, recounted to Forum 18 on 16 April. "But he won't get a position at a mosque because it is the unwritten law of the Directorate that anyone who studied abroad is Wahhabi and can't become an imam."
Ziyautdin Uvaisov, a Makhachala-based lawyer working with the Russian human rights organisation Memorial, described to Forum 18 on 15 April how those disagreeing with the Directorate's line who tried to study in its educational institutions usually ended up either leaving or being expelled.
The situation which culminated in the state authorities' alleged abduction of Sirazhudin Shafiyev began when the community of Derbent's Juma Mosque attempted to elect a non-Directorate imam (see F18News 4 May 2010 ). (END)
June 02, 2010 11:14
Interfax: Activists will publish results of probe into suppression of ‘Article 31’ rally in Moscow
MOSCOW. June 2 (Interfax) - Leading Russian human rights organizations are conducting their own inquiry into the methods used by police to break up a rally of civil activists on Triumfalnaya Square in central Moscow on May 31.
"We are carrying out our own inquiry. We are investigating both what happened on Triumfalnaya Square and what happened at the Zamoskvorechye police station where some of the detained demonstrators were taken," Moscow Helsinki Group head Lyudmila Alexeyeva told Interfax on Wednesday.
"Policemen who beat those detained did not hide their faces. They can be identified. We will demand that criminal cases be opened," Alexeyeva said.
"The results of our investigation will be published," she said.
Human rights campaigners place high hopes on a report addressing the May 31 events being drafted by Russian human rights commissioner Vladimir Lukin, she said.
Activists of public organizations detained during Monday's rally in support of Article 31 of the Russian Constitution, which guarantees freedom of assembly, will sue police, Eduard Limonov, a leader of the Other Russia coalition, told Interfax on Tuesday.
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Rossiyskaya Gazeta/Russia Today: A warning from the FSB
A new bill proposes preventative measures in the fight against extremism and terrorism
Ivan Egorov
In the upcoming days the State Duma committee will begin discussing a bill that has caused a loud response. The controversy began after the Russian government had introduced amendments to the Law “On the Federal Security Service”. The amendments will also apply to the Code of Administrative Offenses.
If the deputies pass the new legislative initiative, then the FSB agencies will be able to issue official warnings to individuals who, according to the intelligence agencies, are “headed toward committing a crime” that poses a threat to Russia’s security.
Read more
The amendments propose strengthening special preventative measures that are used by security services. In addition to the already existing right to introduce conceptualizations for the elimination of reasons and conditions conducive to the development of security threats, the FSB will acquire the right to issue official warnings. Moreover, the bill proposes the introduction of the notion of administrative responsibility for disobeying a lawful instruction or demand of an FSB officer or obstructing the execution of his duties. “Insubordination” will result in either a fine or an administrative arrest.
As noted by the drafters of the bill, in case the law is adopted the new preventative measure will be applied exclusively to individuals and only under certain conditions. For example, the individual to whom the official warning is issued may appeal to a higher-level security agency, the Prosecutor General, or court. The warnings will not lead to any punitive action. They may be issued repeatedly, and could, perhaps, deter a person from taking some hasty and potentially dangerous actions. For example, if a student was “flagged” for visiting extremist websites -- which among other things train people how to make explosives, and which are monitored by the intelligence agencies -- and then went to the store to buy reagent and nitrate, he would then be advised to stop.
“The introduction of administrative responsibility will allow creating an additional barrier on one’s path toward committing a crime,” a source in the law enforcement structures explained to Rossiyskaya Gazeta (RG). “Moreover, this could give a person the opportunity to reconsider and walk away from the illegal act.”
Many human rights activists, however, have a different opinion. They have repeatedly stated that this law is not aimed at combating extremism, but rather at liquidating democratic institutions in the Russian society.
Direct Speech
The realities of the new legislative initiative were discussed by the Chairman of the State Duma Committee on Veteran Affairs, General of the Army, Nikolay Kovalev, who headed the FSB of Russia for a number of years, in an interview with Rossiyskaya Gazeta.
Rossiyskaya Gazeta: Nikolay Dmitrievich, human rights activists see the draft legislature as another “crackdown” and that it will expand the power of the FSB.
Nikolay Kovalev: In this case, in my opinion, a substitution of notions is taking place.
A measure that, by its nature, does not and cannot have a punitive character, is being presented as a step back toward the times when state security services were used by the power as the chief instrument in political repressions.
In reality, however, nothing more than preventative measures are being proposed. Remember Aniskin and Uncle Stepa, neighborhood police inspectors who were idolized in the Soviet films. I think that the older generation remembers how inspectors worked with those who violated the literal interpretation of the law: by drinking in restricted areas, making noise, cursing, and engaging in small-time hooliganism.
The inspector did not try opening a case file against everyone, and especially arresting them for 15, or however many days. Many times, a glance and just a few words from an authoritative representative of law and power were enough to discourage a person from crossing the line between everyday behavior that is criticized by society to violations of the law.
Therefore, we should base our opinions on the fact that, overall, we are normal people, citizens of our country; and if our behavior is at odds with the public understanding of security interests, there is no need of switching on the punitive mechanism with criminal liability.
RG: How should one determine the line when a person’s actions become dangerous -- from the view point of the security services?
Kovalev: It seems to me that the project specifically aims at launching the preventative warning mechanism, designed against potentially dangerous behavior of a person whose actions voluntarily and involuntarily could be classified as those that create a potential threat to Russia’s national interests.
Moreover, such practices exist in many Western countries in regard to public organizations and, as can be easily determined from the news sources, especially in regard to religious organizations. They are used when the declared goals begin to diverge from their daily implementation practices, and the tactics that are being used, such as luring new members for example, violate the rules of human coexistence.
If you look at it, these actions don’t only threaten the society as a whole, but also the organization that implements them. It could simply be shut down at some point due to non-compliance with the law. Period.
RG: Human rights activists are saying that preventative measures and the fight against extremism and terrorism will be carried out by the same people. What if they begin to abuse their power, or simply make mistakes?
Kovalev: Despite what anyone says, security services stand on the leading edge of the fight against extremism and its violent form, terrorism, including international terrorism. Nearly everyone agrees with the fact that this is one of the greatest modern threats. Security services are the ones responsible for public safety, national security, and the lives of each person. Therefore, providing them with another tool, especially of a preventative nature, does not pose a threat to democratic institutions but serves to prevent national security threats. I think it would be appropriate to bring up the analogy from one famous anecdote about the guillotine being the ultimate cure for dandruff. Do we always need to have a surgical intervention when prevention and therapy is enough? Medicine could be bitter, but if it heals, it’s a better alternative to a surgeon’s scalpel.
The most important aspect in the proposed changes to the legislation is not so much the warning mechanism, as much as the process toward making the decision. Here, I fully agree with the idea that this procedure needs to be transparent and democratic, which will only benefit the prevention component. We, unfortunately, often forget that the preventative function, which is prescribed in many of our laws, must come in advance of the punitive component. The effects of Russian citizens’ traditional approach toward the law and authority can perhaps be seen here. Recall the famous words: “Here, in Russia, we have two misfortunes: below is the power of darkness, atop is the darkness of power”. But, I believe that this law, rather than giving additional powers to the security agencies, disperses the darkness.
I will once again stress that the fight against extremism is a problem to be addressed by the entire society, but security services have always been and continue to be on the leading edge. Meanwhile, the proposed changes will increase the efficiency of their work, and allow for more flexibility in resolving national security problems.
Read the article on the newspaper's website (in Russian)
Vedomosti/Russia Today: Kudrin’s decade
Yesterday, reformers have summed up the ten years of Putin’s economic activity: the 2010-Strategy was born in June of 2000 -- it is a program of action of the government, which is considered to be the starting point in the second wave of liberal reforms.
There is at least one reason for why it deserves attention, and that is because it is the only long-term program for the country’s development, the term of which has come to an end and its authors and executors continue to be in power and can still answer for its results. German Gref, who was at the time serving as the head of the Center for Strategic Development and was in charge of preparing the 2010-Strategy, spent seven of ten years, during which the program was being implemented as minister of economic development and was directly putting his ideas into action. The second main reformer is Finance Minister Aleksey Kudrin, who continues to serve as the head of the Finance Ministry. Vladimir Putin also continues to lead the country.
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The results of the program look fairly agreeable: 36% of the all the measures that have been included in the program have been completed; and it could be considered that three of the 10 strategic developmental goals have been achieved. The doubling of the GDP was practically accomplished, had it not been for the economic crisis. The per capita GDP level had in fact exceeded the goal: from 2000 to 2008, it increased from $7,800 to $15,900, which allowed Russia to shift to the category of middle-income countries. Success has been achieved in strengthening the country’s financial solvency -- in 2000, Russia had an enormous foreign debt, whereas now the country is listed as one with the smallest national debt.
But, the pride of the reformers is somewhat misleading: all three strategic goals were reached due to the simple fact that there was more money in the country. May of 2008 marked the beginning of the triumphal rise of the price for oil, which lasted until 2008. Ten years ago, a barrel of oil cost $25, today, that number has increased nearly three-fold, though it is still far from the 2007-2008 records. In essence, this was Kudrin’s decade: he was the one who managed to repay the foreign debt, save the surplus oil revenues in the budgetary reserve, as well as achieve some of the most successful institutional reforms -- tax and budgetary -- which were carried out by subordinate agencies.
The situation in sectors, for which Gref was responsible, is much worse. There have not been any significant progressive shifts in the economic structure (the goal was to diversify the economy and eliminate its dependence on energy). The competitiveness of domestically-produced goods and services left much to be desired.
The slogan of economic modernization is once again being presented as the main long-term priority, although the 2010-Strategy was precisely aimed at modernization. There have practically been no positive improvements in the public administration system, while much effort and money has been put into the restructuring of the state purchasing system and other administrative reform measures. Land and real estate reforms, as well as reform of the customs policies, the natural monopoly sector, healthcare and the retirement system were either not started, never completed, or did not meet expectations, says Mikhail Dmitriev, head of the Center for Strategic Research and one of the authors of the 2010-Strategy.
The biggest disappointment has been the institutional failures. Defeating corruption proved to be unsuccessful, and very limited progress has been made in securing property rights. These are the program’s unaccomplished goals which were, in essence, Putin’s responsibility: “the emergence of the cult of education, inherent worth, and self-sufficient identity”, “the emergence and development of public institutions”, “enhancement of efficiency of the local government”, “strengthening the independence of the judicial system and unconditional execution of laws”.
A key failure in these reforms was the fact that “we did not pay enough attention to such factors as the reform of power,” Gref said yesterday. According to him, one key section had been withdrawn from the official text; it dealt with the reform of state power -- today, only its expert version exists. This explains a lot.
Read the article on the newspaper's website (in Russian)
1 June 18:32
.ru: Prime Minister Vladimir Putin meets with the leadership of the United Russia Party
Events / Photos
“A key feature of the budget for next year is that it should trigger recovery and innovative growth in the Russian economy, and ensure that social obligations are met unconditionally as we come out of the downturn.”
Vladimir Putin
At a meeting with the leadership of the United Russia Party
[pic]
Prime Minister Putin's introductory remarks:
Good afternoon, ladies and gentlemen,
Yesterday I met with business representatives, and I have just finished a meeting with trade unions. The government is working intensively to prepare the budget for 2011, the main points of which we will discuss tomorrow. Also, this week we're planning to present our final economic scenarios for the next three years.
While drafting the budget, we held a series of meetings to discuss measures to ensure stable prices in key industries. I've just mentioned one such meeting, where we discussed limits on the prices of natural monopolies and measures to counteract inflation.
But before we reach a final decision, I'd like to consult with you and ask for your support in parliament to help pass the draft budget, which will be necessary to implement all our plans.
A key feature of the budget for next year is that it should trigger recovery and innovative growth in the Russian economy, and ensure that social obligations are met unconditionally as we come out of the downturn.
Conservative forecasts suggest that GDP will grow by more than 3% or 4%. I repeat, these are conservative forecasts, and there are some experts who are more optimistic. I believe that if we manage to implement our plans, growth could be even higher.
We need to get a better return on our support for small and medium-sized businesses, and that includes eliminating administrative barriers, taxation incentives for innovative businesses, special economic zones and industrial parks, as well as other tools for development.
Increased labour productivity and investment, primarily through extensive modernisation of production facilities, should also contribute significantly to economic growth.
The basic social and economic forecast for 2011 to 2013 suggests that investment will increase annually by 6% to 8%, while labour productivity will rise by 3.3% to 3.8%.
However, it'll take time to overcome the negative effects of the global recession fully, rebuild the economy and reverse the budget deficit. This is why we cannot expect a sharp increase in budget revenues in coming years, which we could have spent on items other than servicing our debt.
The budget will continue to run a deficit for the next few years, which is why we must adopt a highly responsible approach for each expenditure item, concentrating resources on high-priority budget items and trying to stay on schedule to reduce the budget deficit to 3% in 2012. The same strict discipline is also absolutely necessary for regional budgets in order to avoid discrepancies and ensure the stability of the entire budget system.
Moving on, at yesterday's meeting at the Government House we announced measures to stabilise prices in the key industries and curb price increases for natural monopolies and in the housing and utilities sector.
I'd like to ask the members of our party and all deputies in the State Duma to speed up their work on the legislation to regulate utilities prices. We need to eliminate all loopholes that allow prices to be inflated unfairly and standardise requirements for the quality of utilities services.
This legislation includes amendments to the Housing Code that will give regions the necessary powers to set rates of utilities services consumption. Municipalities use these powers ineffectively: their decisions are often uncoordinated and haphazard.
Even though last year the overwhelming majority of municipalities acted responsibly, a little more than a thousand decisions were enough to spark popular protest.
And this protest was legitimate, I must admit.
We have already introduced amendments to Article 157 of the Housing Code in the State Duma.
Second, this legislation suggests giving regional executive bodies the power to regulate utilities prices and to delegate these powers only to those municipalities that are capable of implementing them properly. This draft law is now being developed.
Third, we need uniform standards for the quality of utilities services. We should start by standardising the rules for providing such services, and the federal government requires the appropriate authority for this purpose. We have introduced amendments to the Housing Code in the State Duma.
Fourth, the companies managing blocks of flats should be made accountable to ordinary people and government bodies, and their operations must be absolutely transparent. People should know what utilities services they are paying for.
The Ministry of Regional Development and the Federal Tariff Service are working on this legislation.
United Russia members in municipal and regional legislatures should keep a constant eye on utilities prices and respond quickly to people's complaints about extremely high mark-ups and monopoly abuse.
Another priority for the spring session is the legislation reforming public administration, which will improve the quality of administrative procedures.
I'm referring to the law establishing basic standards for government services at the federal and local levels, which will allow us to set up the necessary framework for an e-government.
As we promised, we'll seek to extend the period during which small and medium-sized businesses can buy out real estate on easy terms.
The amendments to the Urban Planning Code are already before the State Duma. This legislation will eliminate redundant site development requirements.
In the near future the government will consider amendments to the Tax Code to stimulate innovative businesses, as well as draft laws regarding mandatory medical insurance and health protection.
These acts should be adopted as soon as possible. I know that United Russia deputies in the State Duma have proposed a series of other economic and social initiatives, such as a draft federal law that gives families who have lost the primary breadwinner the right to receive two pensions if the breadwinner died while serving in the armed forces. The government will certainly support such initiatives.
Trud/Russia Today: The Gaza blockade broke the Leningrad record
Five unknown facts about the isolation of the Palestinian territories
Tatiana Krasilnikova, Dmitry Ivanov
After the Israeli military attack on the humanitarian cargo ships, Palestinians are left with no water and medicine. But, experts believe that the loud scandal will not obstruct Israel’s further isolation of the Gaza Strip.
Read more
A reaction to Hamas
The economic blockade of the Gaza Strip began on September 17, 2007, as a response to the coming of power of the Hamas movement, which is recognized by most countries as a terrorist organization. On January 18, 2008, Israel introduced a full transport blockade in the Gaza Strip: blocking land, maritime and air traffic. All security check points between Israel and Gaza had been closed.
Surrounded from all sides
The Gaza blockade has been ongoing for 988 days (the Leningrad blockade lasted for 872 days). During this time, human rights activists have made nine attempts to break the blockade through the sea, and once opened a security checkpoint on the border with Egypt. In January of 2008, the wall dividing Gaza and Egypt was taken down, and thousands of Palestinians flooded the passageway in hopes of obtaining the basic necessities. The land border is closed by reinforced concrete barriers, topped with barbed wire. The last time the Israeli military had stopped a humanitarian vessel was in January of 2009. At that time, there were no casualties.
Under the sea blockade the Israeli military forces have blocked the maritime space of Gaza in order to close access to the regional shores. According to Anatoly Kolodkin, president of the International Maritime Law Association, even in a naval blockade, the Israeli fleet does not have the right to apprehend a non-military ship. “There are only a few conditions under which military ships have the right to stop civilian vessels: if the vessel is used in piracy operations, if it is being used to transport slaves, if illegal TV or radio broadcasting is being done from the vessel, and if the ship is without nationality,” the expert explained to Trud. The UN international conventions do not provision sanctions for violation of these rules. The decision is made by the UN Security Council, which has already condemned Israel’s attack on the Freedom Flotilla.
Yes - to coffee, no - to chocolate
According to the nonofficial list of items that are permitted to be transferred to Gaza, Palestinians could receive flour, garlic, salt, toilet paper, tea, coffee, and food for animals. Some of the prohibited items include chocolate, fruit juices, and jams. According to Israeli officials, 15,000 tons of various commodities are weekly transferred to the Gaza Strip. However, representatives of the Embassy of Palestine in Russia say that it often happens that only a few dozen trucks are allowed to pass in a single day. Meanwhile, the needed daily volume of goods requires several hundred trucks.
“Sometimes, even the most harmless items, such as pencils for example, are not allowed due to ‘security reasons’,” a Palestinian embassy representative told Trud. Neither are fuel, gasoline, and construction materials allowed in the Gaza Strip.
The simple life
Residents are forced to live in tents or build housing from clay. Everything, aside from medicines and food, is smuggled from Egypt. According to international humanitarian law expert and lecturer at the Moscow State University ‘s Journalism Department, Andrey Raskin, humanitarian cargo primarily includes medicine, food, and clothing. “Construction materials are a negotiable item. And, Israel has the right to prohibit their transfer out of security-related concerns,” explained the expert.
Today, there are 1.4 million people living in Gaza. Half of the population is under the age of 15. According to the Embassy of Palestine in Moscow, 80% of the region’s residents are unemployed. People cannot leave the territory to study or work. Electricity is rare. One of the main problems is the shortage of drinking water.
Due to the blockade, the healthcare system is experiencing many difficulties. The outdated medical equipment can rarely be replaced or repaired. According to the International Committee of the Red Cross, the stockpiles of 110 essential medicines in Gaza’s hospitals are depleting. Hospitals don’t have clean linens; the sewage runoff is not being cleaned.
Flowers, under arrest
Exporting goods from Gaza is practically impossible. One of the rare cases was Israel’s permission to export 25,000 carnations from the region to Europe on St. Valentine’s Day in 2009. Before the blockade, the Gaza Strip had annually exported about 40,000 flowers. Today, the majority of the cultivated production is destroyed. Gaza residents are not allowed to work or shop in Israeli settlements, which are located on the Sector’s territory.
Yesterday, Assistant Secretary General of the UN Security Council, Oscar Fernandez Taranco urged Israel to stop the economic blockade. However, according to Raskin, even after the condemnation of Israel’s actions by the member countries of the UN Security Council, the Jewish state is unlikely to cancel the blockade. “In the best case scenario, Israeli authorities will issue an apology and ease the control at the security checkpoints,” he said.
Naviny: Russian Orthodox Church rejects Metropolitan Filaret's formal resignation letter
The Synod of the Russian Orthodox Church has rejected a formal resignation letter by Metropolitan Filaret, head of the Church in Belarus, and blessed him to continue his service.
The Church's rules require all eparchs to file a resignation letter when they turn 75, Alexy Shynkevich, spokesman for the Church's Belarusian Exarchate, told BelaPAN on Monday.
The Synod decides whether the eparch should resign or continue his service, with the decision to be approved by the patriarch, Mr. Shynkevich said, noting that “the Synod never specifies how long the service of the eparch who has reached 75 years will last.”
Thus Metropolitan Filaret will continue as head of the Church's Minsk Eparchy and Belarusian Exarchate, Mr. Shynkevich said.
The Synod's May 31 decision is evidence of the gratitude of the Russian Orthodox Church to Metropolitan Filaret and also a guarantee of the stable development of the Belarusian Exarchate under his experienced leadership, Mr. Shynkevich said. He expressed hope that active work to revive Orthodox faith in Belarus would continue.
Metropolitan Filaret was born Kirill Vakhromeyev in Moscow on March 21, 1935. He graduated from the Moscow Spiritual Seminary and Moscow Spiritual Academy. He has been patriarchal exarch of all Belarus and metropolitan of Minsk and Slutsk since February 1992.
In 2006, Metropolitan Filaret was awarded the title of Hero of Belarus.
02 June 2010, 10:01
Interfax: Juvenile justice unacceptable interference in family matters - Moscow Patriarchate
Moscow, June 2, Interfax - The Russian Orthodox Church has resolutely opposed the introduction of the institution of juvenile justice in Russia.
"I am totally convinced that the juvenile justice system is an unacceptable interference by the state in a family's private life, its world vision and way of life," Archpriest Vsevolod Chaplin, head of the Synodal Department for Church and Society Relations, told a press conference at Interfax.
A child without a family is always unhappy, the priest said. "Even if he was showered with money, sweets and toys, if his family or adoptive parents are taken away from him, this will leave him traumatized for the rest of his life, and the government should not substitute the family or destroy it, but support it in every way, including financially and, of course, morally," the priest said.
Such support is the best remedy against child homelessness and child crime, "that is against all those social ills, which the juvenile justice is seemingly trying to defeat without actually being able to," he said.
Family counseling by religious communities, the public, parents' associations is quite capable of overcoming 80-90% of family conflicts, "which do not always need a surgical intervention by the authorities," the priest said.
While admitting that the problem of violence in certain families does exist, the Russian Church official pointed to more important problems for Russia such as pedophilia, child pornography, sexual violence against children, and violation of orphans' rights.
Bloomberg: Russia’s Last Royal Born in Empire to Be Buried in Petersburg
June 02, 2010, 2:52 AM EDT
By Anastasia Ustinova
June 2 (Bloomberg) -- Grand Duchess Leonida Georgievna, the last member of the Romanov dynasty born in the Russian Empire before the 1917 Bolshevik Revolution, will be buried in the former imperial capital St. Petersburg tomorrow.
The duchess, who died on May 23 in Madrid at the age of 95, will be buried in the Romanov tomb in the Peter and Paul Cathedral next to her husband, Grand Duke Vladimir Kirillovich Romanov, according to a ceremony organizer.
“She and her husband spent most of their lives in exile, and she always dreamt of being buried in Russia,” Irina Fyodorova, a member of the Russia Imperial Union Order, a monarchist organization, said by telephone in St. Petersburg today.
Born in 1914 in Tiflis, now the Georgian capital Tbilisi, Leonida Georgievna was the last member of the Romanov family born before the Bolsheviks seized power, according to the Romanov family website.
A descendant of Georgia’s noble Bagrationi dynasty, she emigrated to Spain, then married Grand Duke Vladimir Kirillovich in Lausanne in 1948. The grand duke was the only son of Kirill Vladimirovich Romanov, a cousin of Russia’s last emperor, Nicholas II.
The couple visited Russia for the first time after the collapse of the Soviet Union in 1991. After the grand duke died in 1992 in Miami, Florida, his body was buried in the royal family tomb in the Peter and Paul Cathedral, the first Romanov to be buried in St. Petersburg since the Revolution.
‘Unjustifiably Repressed’
The Romanovs, who had ruled Russia since 1613, were forced to abdicate in March 1917 as the country’s defenses crumbled in World War I and food riots erupted in the capital. Nicholas II and his family were later sent to the Ural Mountains by the Provisional Government and subsequently executed in 1918.
Russia’s Supreme Court ruled in October 2008 that the royals were “unjustifiably repressed” by the Bolsheviks, reversing its previous judgment that the royal family couldn’t be rehabilitated because they weren’t arrested for political reasons.
The grand duchess’s body will lie in state in the cathedral today so Russians can pay their last respects.
--Editor: Patrick G. Henry
To contact the reporter on this story: Anastasia Ustinova in St. Petersburg at austinova@.
To contact the editor responsible for this story: Hellmuth Tromm in Berlin at htromm@
National Economic Trends
Reuters: EUR/USD rises after c.banks say will stick with euro
3:33am EDT
LONDON, June 2 (Reuters) - The euro edged up against the dollar and the yen on Wednesday after some of the world's biggest central banks said they would not stop investing in the single European currency.
The euro EUR= rose around 30 pips to $1.2248, shaking off earlier losses to trade slightly higher on the day. Against the yen EURJPY=R, it climbed to 112.30 yen from around 111.95 yen.
Official sources in Brazil, India, Japan, Russia and South Korea told Reuters in separate interviews that due to the liquidity of the dollar and the euro and the difficulty of shifting such large portfolios, there were no alternatives to the two currencies in the near term. [ID:nTOE650069]
(Reporting by Naomi Tajitsu)
2010-06-02 08:47
Reuters: Russian rouble slightly down on weaker oil
MOSCOW, June 2 (Reuters) - The Russian rouble fell slightly on Wednesday, extending recent losses under pressure from lower oil prices and falling stocks, with market players saying they expect trading in the currency to remain volatile.
By 0710 GMT, the rouble was down 3 kopecks at 34.28 versus the euro-dollar basket, still comfortably above May's low of 34.91, according to Reuters data.
Against the dollar, the rouble was unchanged at 31.19 and it weakened 9 kopecks to 38.08 versus the euro.
The rouble was affected by oil prices falling back to $72 per barrel from Tuesday's levels of $74-75 on a stronger dollar and negative sentiment on broader financial markets.
"Oil prices have changed overnight and the market's mood has shifted from uncommon optimism to its usual pessimism," said Pyotr Miloavanov, a dealer at Metallinvestbank.
The central bank also keeps the rouble under pressure with managed purchases of foreign currency for around $300 million a day within the rouble's floating trading corridor against the basket, dealers say.
Persistent concerns over the euro zone finances are dissuading investors from betting on risky assets including the rouble, though no mass investor exodus from Russian assets has yet occurred.
Used by foreigners to trade on Russian markets, non-deliverable forwards for the dollar/rouble were trading at levels seen throughout last month, with three-month NDF rates at around 3.4 percent after hitting a multi-month low of 3.1 percent in the previous session.
"I expect high rouble volatility to continue. It's likely that the most nervous investors have already left (Russia) but fundamentally Russia looks not bad compared to other European states," said Anton Struchenevsky, analyst at Troika Dialog.
Although oil prices went lower they are still "at comfortable levels" for Russia's export-focused economy, he said.
(Reporting by Andrey Ostroukh; Editing by Lidia Kelly; editing by John Stonestreet) Keywords: RUSSIA ROUBLE/
(andrey.ostroukh@, +7 495 775 12 42)
Moscow Times: Russia Used Eurobond Proceeds to Cover Deficit, Data Suggest
02 June 2010
Reuters
Russia left its oil-wealth Reserve Fund untouched in May, data showed on Tuesday, suggesting that the budget deficit was financed instead by cash from the sovereign's first eurobond issue in over a decade.
The Reserve Fund stood at 1.20 trillion rubles on June 1, broadly unchanged from a month earlier, the Finance Ministry said in a statement. The dollar value eased to $39 billion from $41 billion, based on the average exchange rate for the month.
Unlike the previous month, Russia did not transfer any money from the Reserve Fund to finance its budget, its coffers filled by a $5.5 billion eurobond issue in late April. The budget's needs for cash also tend to be lower early in the year, with spending tilted toward the final months despite urgings from the Finance Ministry for a more even distribution.
The Reserve Fund — accumulated during nearly a decade's worth of oil-fueled economic boom — is now propping up the budget, which slipped into the red in 2009 as Russia's gross domestic product suffered its biggest contraction in 15 years.
Deficits are expected to last until 2015, with this year's gap seen at up to 6.8 percent of GDP, some 3 trillion rubles ($96 billion).
The Reserve Fund was originally expected to run out this year, but higher oil prices as well as government borrowing are now likely to prolong its life into 2011.
The second outlet for Russia's oil revenues, the National Welfare Fund, was also broadly stable at 2.62 trillion rubles.
The welfare fund was initially designed to fund longer-term projects but, in the wake of the crisis, some of the cash will be used to plug a deficit in the state pension fund. Some 2.5 billion rubles was transferred there from the welfare fund in April.
JUNE 1, 2010, 4:14 A.M. ET
DJ: Russian Banker Sees No Rapid Growth For Russian Economy
MOSCOW (Dow Jones)--The head of Russia's biggest bank said Tuesday it's clear there are no prospects for rapid growth in the Russian economy over the short term.
"It's clear there won't be quick growth," Sberbank CEO German Gref told reporters in Moscow. The central bank's decision to cut the refinancing rate to a record low on Monday "isn't a sign of the country getting stronger," he added.
Russia's economy expanded by a seasonally adjusted 0.7% between March and April, according to the Economy Ministry. Still, a survey of the manufacturing industry Tuesday showed a slight slowdown in the rate of expansion in May compared with April.
-By Will Bland, Dow Jones Newswires; +7 495 232-9192, william.bland@
(William Mauldin in Moscow contributed to this story.)
RenCap: Reserve Fund not used again in May
Renaissance Capital
June 2, 2010
Yesterday (1 June) the Ministry of Finance released monthly statistics on the usage of the Reserve and National Welfare Funds. As of 1 June, the Reserve Fund was at RUB1.20trn ($39.3bn) and the National Welfare Fund was at RUB2.62trn ($85.8bn). According to the news, the Ministry of Finance did not use the Reserve Fund to cover budget gaps in May and the change in the nominal volume of those funds is related to forex revaluation effects. However, this does not mean that Russia's budget has closed May with a surplus, as massive withdrawals of funds in April and the recent eurobond issuance allows funding the deficit without the additional use of the Reserve Fund. Moreover, in our view oil and gas budget revenues should have been negatively impacted by the recent performance of commodities markets and the fall in oil price from near $90/bbl to $70/bbl. In January through April expenditures were executed at only 28% of those assignedfor the year. This implies the government's typical inequality of spending with regard to expenditures during the year and the use of the Reserve Fund in 4Q10 is likely to be higher than it is now. In addition, expenditures are typically lower in May due to holidays. Hence, we think the deficit may have stayed close to April's level - at around RUB200bn or 5.5% of GDP. However, our budget projection suggests the deficit will reach 5.9% of GDP in 2010. Our projection implies, should the Ministry of Finance tap the domestic market, unlike in previous months (the ministry is still at negative net borrowing YtD), the Reserve Fund is not likely to be exhausted in 2010. However, the recent inability of the Ministry of Finance to borrow domestically, using its current strategy, suggests to us that the role of the Reserve Fund is likely to increase this year.
Bloomberg: Russian Reserve Fund Hit by Euro Decline, BNP Paribas Says
June 01, 2010, 3:39 PM EDT
By Ben Levisohn and Oliver Biggadike
June 1 (Bloomberg) -- The 3 percent decline in Russia’s Reserve fund to $39.3 billion last month may have been the result of the euro’s drop, according to BNP Paribas.
The fund, which Russia uses to finance budget shortfalls, fell $1.3 billion in May, the Finance Ministry said on its website today. The euro dropped 7.4 percent versus the U.S. dollar in May. Forty-five percent of the fund’s reserves are allocated to euros, 45 percent to dollars and 10 percent to the British pound, BNP said.
“We believe that this decline is attributed to euro depreciation against the dollar,” Julia Tsepliaeva, head of research at BNP Paribas in Moscow, wrote in a note to clients today. “The current situation with the reserve fund increases incentives for more aggressive foreign borrowing.”
The euro depreciated almost 20 percent from last year’s peak in November as investors questioned its role as a reserve currency to rival the dollar as well as the European Central Bank’s ability to defend its legal tender. Russia cut the share of euros in its international currency reserves to 43.8 percent at the end of 2009 from 47.5 percent a year earlier, Interfax reported May 17, citing central bank data.
The euro fell 0.5 percent to $1.2247 at 3:22 p.m. in New York, from $1.2306 yesterday. Russia’s ruble fell 0.4 percent to 31.01 per dollar.
--With assistance from Alexander Nicholson in Moscow. Editors: Dave Liedtka, Dennis Fitzgerald
To contact the reporter on this story: Ben Levisohn in New York at blevisohn@
To contact the editor responsible for this story: David Liedtka at dliedtka@
Bloomberg: IMF’s Gold Assets Shrank by 15.1 Tons in April as Russia’s Rose
June 01, 2010, 7:24 AM EDT
By Claudia Carpenter and Nicholas Larkin
June 1 (Bloomberg) -- The International Monetary Fund’s gold reserves declined by 15.1 metric tons (about 486,000 ounces) in April, according to figures from the Washington-based lender. Russia’s holdings expanded by about five tons.
Reserves of gold at the IMF were 2,966.4 tons at the end of April compared with 2,981.5 tons at the end of March, data on the IMF’s website show. Russia increased holdings to about 668.7 tons from 663.7 and has added gold every month since at least February, the data show.
The IMF plans to sell a total of 403.3 tons of gold. India, Mauritius and Sri Lanka bought 212 tons last year and the IMF in February said it would begin selling the remainder on the open market. The combined February, March and April sales would leave about 152.1 tons as of the beginning of last month.
Central banks and governments added 425.4 tons last year to 30,116.9 tons, the most since 1964 and the first expansion since 1988, data from the World Gold Council show. Official reserves may expand by another 192 to 289 tons this year, according to CPM Group, a research and asset-management company in New York.
Russia’s central bank bought 142.9 tons of gold last year, raising its holdings of the metal by 29 percent, RIA Novosti reported last month, citing Bank Rossii’s annual report submitted to parliament.
Gold for immediate delivery traded at $1,222 an ounce at 11:41 a.m. in London. The metal is heading for a 10th annual gain and reached a record $1,249.40 on May 14.
--Editors: Stuart Wallace, Alastair Reed
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@; Nicholas Larkin at nlarkin1@
To contact the editor responsible for this story: Stuart Wallace at swallace6@
Moscow Times: Gref Says Rate Cut Puts Banks at Risk
02 June 2010
By Irina Filatova
The Central Bank's latest cut to its benchmark interest rate could have a negative impact on the country's banking sector, Sberbank president German Gref said Tuesday, cautioning that lenders still faced considerable risks from bad loans.
"Interest rates are unjustifiably low and don't reflect the real risks assessment," Gref, a former economic development minister, told reporters at an economic strategy conference.
Gref's comments came a day after the Central Bank said it would reduce its refinancing rate to a historic low of 7.75 percent, even as some banks have begun to question whether they can afford to continue issuing cheaper loans amid a still tentative economic recovery.
Risks in the Russian economy are currently much higher than in the period from 2006 to 2008, although interest rates are lower than they were before the financial crisis, Gref said. A number of banks could end up facing negative margins as a result, he said, calling the falling rates a "sign of volatility."
The Central Bank indicated that its reduction Monday would likely be the last for the summer, and possibly the final reduction in this cycle, which has seen 14 separate reductions for a combined 5.25 percentage points since April 2009.
The regulator has been trying to help spur an economic recovery by encouraging lending to the real economy, while balancing fears that the cheaper money could lead to a surge in inflation later this year.
Finance Minister Alexei Kudrin defended the latest reduction, saying it was appropriate given the relatively low inflation.
"Inflation was 13 percent before the crisis, and now it's 6 percent in annualized terms. This factor is affecting rates as well," he said.
Gref said Sberbank did not plan to increase its interest rates, even as other lenders have suggested that they are ready to push rates higher.
"We'll move in accordance with the economic situation," he said. "Currently, the trend is for rates to decrease, and they will decrease."
But the situation could change toward the end of the year, particularly if the Central Bank decides to reverse course and raise its refinancing rate, Gref said.
"It will be a hard situation for banks, which will seek to shift [the costs] to the real sector," he said, adding that a subsequent rise in rates could put new pressure on companies and raise lending risks for banks.
The main danger for the banking sector now is rising bad loans, said Metropol analyst Mark Rubinstein.
"The risks of bad loans are much higher now, since the situation in the economy is not as stable as in was in 2006," he said.
Rubinstein argued that interest rates were too high, compared with international capital markets, and that a further decrease was needed. "The rates are unjustifiably high, and they were unjustifiably high in 2006," he said.
The refinancing rate was cut from 12 percent to 10.5 percent by the end of 2006, while inflation averaged 9.7 percent.
Although many banks were quick to follow Central Bank rate cuts last year — particularly amid frequent reminders from Prime Minister Vladimir Putin that lending to the real economy must be a priority for banks receiving state assistance — the primary impulse now is trying to remain competitive, analysts said.
"The banking sector is one of the most competing sectors in Russia's economy, and that's why we'll see a further decrease of rates in corporate and retail lending. The banks that don't do that may lose their market share," Rubinstein said, adding that the cuts would come as a growing economy reduces risk levels.
UralSib analyst Leonid Slipchenko said banks could respond to the low rates by diversifying their activities, rather than stepping up cheap loans to riskier borrowers.
"Given that it's quite difficult to find qualified borrowers now … banks may look to offer other services to increase their profit," he said.
VTB Group said last week that it planned to boost deposits and reduce the importance of corporate lending over the next three years, while keeping provisions for bad loans high.
Moscow Times: Putin Expects Salary Decision in the Fall
01 June 2010
By Anatoly Medetsky
Prime Minister Vladimir Putin said Tuesday that the government still held out hope of raising salaries this year for federal employees such as doctors and teachers, despite his recent support for a Finance Ministry plan to push for greater state austerity.
The government will base its decision on salaries — as well as higher retirement pensions — on economic conditions in the fall, Putin said in a meeting with union leaders, reiterating a plan first announced last year.
Hopes for higher payments had been fading because of the Finance Ministry’s efforts to narrow the budget deficit. Independent economists have warned that social spending should not swell any more if that means reducing investment in roads, bridges and power lines.
But Putin, who has left open the possibility of a presidential run in early 2012, indicated that the populist measure still had a chance.
“We will be able to make a final decision … no sooner than the fall, when it’s clear how the economy is functioning,” he told an assembly of labor leaders representing the Federation of Independent Unions of Russia. That will be around the time when next year’s federal budget is ready, along with any amendments to this year’s budget, he added.
The government will also push to make wages for industrial employees more substantial, Putin said. “It’s necessary to do our best to make sure the standard of living for their families begins to rise again.”
He did not specify whether he meant workers at state-run companies or whether he was referring to private industry, as well.
The government will urge businesses to raise their payrolls when it negotiates a new trilateral agreement with unions and employers later this year, Andrei Isayev, a State Duma deputy and deputy chairman of the union group, told The Moscow Times after the meeting.
At a meeting Monday with the business leaders, Putin painted an encouraging picture of the economy. Inflation in the first four months was 3.8 percent, the lowest rate in 20 years, he said, adding that it offered the chance “not only to maintain, but also to consistently increase real incomes.”
But Putin also backed a Finance Ministry proposal on May 20 to channel all state spending through long-term programs, which officials said could achieve greater results with less money. Some economists said the ministry would use the proposal to force austerity in government finances.
In offering to seek pay hikes, Putin pre-empted Mikhail Shmakov, chairman of the union federation, who threw his support behind the plan. Wealthier employees would buy more goods and services, thereby contributing to the economic recovery, Shmakov said.
“Low salaries … make it difficult to talk about growth in services and small business,” he said.
Putin rejected, however, Shmakov’s suggestion that the state find a way to dip into the personal wealth of the country’s billionaires, which grew sharply last year on the back of the stock market’s rally.
Introducing a proposal for higher taxes on the affluent, Shmakov said the fortunes made on the stock market were his favorite topic in dealing with the country’s “oligarchs,” prompting Putin to smile.
“This is the wrong place, then,” said Putin, who was flanked by some of his ministers at the meeting. “There’s no one like that here.”
Alfa: Government may regulate prices on 24 socially-sensitive products
Alfa Bank
June 2, 2010
Today's Vedomosti reports that the government has proposed regulations establishing a list of 24 socially-sensitive products, including beef, pork, lamb, chicken, butter and 2.5% - 3.2% milk. The government would reserve the right to regulate prices of these products should they increase more than 30% in any 30 day period. Additionally, on four socially-sensitive products-namely milk, chicken and rye and wheat breads-retailers would be prohibited from receiving any bonuses or additional payments from suppliers. Rosstat would be charged with monitoring price development and reporting inflation trends to the Economic Ministry.
While we would regard any form of government food price regulation as unfavorable, we think retailers and suppliers could work around the proposed criteria under which prices would be subject to government control, notably by phasing in price increases. The proposed limitation on bonuses and additional payments to suppliers would likely be more difficult to circumvent, but the products involved represent less than 5% of average food retailer turnover.
This is not the first time the government has proposed food price regulation to combat inflation. Previous attempts to control prices in recent years have had limited effect. Ultimately, the consequences and impact of the proposed regulation depend on whether and in what form it is passed. For now, we qualify this news as NEUTRAL.
Elena Mills
Business, Energy or Environmental regulations or discussions
2010-06-02 06:59
Reuters: Russian markets -- Factors to Watch on June 2
MOSCOW, June 2 (Reuters) - Here are events and news stories that could move Russian markets on Wednesday.
You can reach us on: +7 495 775 1242
STOCKS CALL (Contributions to moscow.newsroom@):
OTP: We expect the market to open flat or lower than the previous sessoin closing levels.
Gallion Capital: A negative opening is possible today on Russian markets following decline in the U.S. and Asia
EVENTS (All times GMT):
MOSCOW-Russian Prime Minister hosts meeting on the budget
MOSCOW- Congress on regulations in natural resources extraction
MOSCOW-International conference on foreign and domestic investments
MOSCOW-Russia's second-largest oil company LUKOIL to report Q1 results
MOSCOW-Russian IT company Sitronics to publish its Q1 financials
MOSCOW-Russian second-biggest bank VTB to post Q1 earnings
MOSCOW-Russian fixed-line telecoms operator Comstar discloses Q1 figures
MOSCOW-Russia's weekly inflation data
BAKU-Annual oil and gas conference (till June 4)
IN THE PAPERS:
State-owned alcohol production group Rosspirtprom offered Russia's biggest bank, Sberbank up to 49 percent in the company, the daily Kommersant reports citing Rosspirtprom director general.
Russia's 10th richest man, Dmitry Rybolovlev, will decide in the next three months whether he will sell his control in $7 billion potash miner Uralkali, Vedomosti business daily reports.
TOP STORIES IN RUSSIA AND THE CIS: TOP NEWS:
EU urges reform in Russia as ties improve
Ukraine ditches NATO goal, balances EU, Russia
Belarus says ready for compromise over union
COMPANIES/MARKETS:
Rouble falls on weaker oil, stumbling stocks
Russian banks' loans to firms rise in April
Kazakh bank Alliance eyes profits
Russia's oil wealth funds untouched in May
Boeing gets plane order from Russia state firm
Russian bidder sees Karstadt expanding to Russia
ECONOMY/POLITICS:
Soyuz returns from space station mission
Russia lifts restrictions on Turkish poultry
Russia's top banker calls for political reform
Transcript details last moments of Polish plane
Sberbank CEO: Russia rates too low
ENERGY:
Gazprom Neft launches $1 bln loan
Batumi May '10 oil loading down 11 pct
Azeri Shah Deniz gas output expectations raised
COMMODITIES: INTERVIEW-Cherney open to compromise in Rusal
Russia 4-mo 2010 gold output down 7.8 pct
Russia may restore copper export duty in 2010
MARKETS CLOSE/LATEST:
RTS 1,371.3 -0.2 pct
MSCI Russia 730.6 -1.1 pct
MSCI Emerging Markets 901.9 -0.6 pct
Russia 30-year Eurobond yield: 5.664/5.547 pct
EMBI+ Russia 270 basis points over
Rouble/dollar 31.1900
Rouble/euro 37.9925
NYMEX crude $71.96 -$0.62
ICE Brent crude $72.20 -$0.51
SMR: Russian stock market daily morning report (June 02, 2010, Wednesday)
By Veles Capital
Yesterday the trades at the Russian grounds opened with correction down after several days of climbing. Further drop worsened by the negative news on reduction of growth rates of industrial production in China, and also the negative stats from Europe. All the oil sector leaded the drop due to euro/dollar pair has once again renewed the minimums on the negative forecasts on the situation in the Eurozone by S&P and Fitch, and all that provoked sale on “black gold”. By the end of the day the shares of Surgutneftegas (-3.55%) and Tatneft (-2.45%) were the drop leaders among the blue chips. At day time the market calmed down and stood quiet with low volumes. By the end of the trading session the investors tried to win back the morning drop reacting to oil price U-turn due to the good stats from the U.S. that came out. The notes of VTB (+0.88%) closed opposite to the market due to expectations of good report which is to be output on Wednesday, metallurgy workers – Norilsk Nickel (+2.55%) and Polyus Gold (+0.94%), likely on the news on domestic price upping on metals and also the shares of RusHydro (+0.84%) related with positive references of Sechin on the course of rebuilding SSHEPS.
Main news
KAMAZ gained 2.6 bn RUR of loss by IAS in 2009.
KAMAZ, JSC gained 2.579 bn RUR of net loss in 2009 by IAS versus 1.065 bn RUR of net profit for 2008, sales of the company lost 36.8% and formed 60.894 bn RUR, imparts the report of the company.
Other news
All WGC and TGC signed agreements for providing capacity.
All WGC and TGC signed agreements on providing capacity, which set their investment liabilities on building new generation, announced vice prime minister of RF Igor Sechin.
UralSib: Long-awaited contract signed with Ukraine
UralSib
June 2, 2010
TVEL signs a contract with Ukraine over supplies of nuclear fuel. Yesterday Interfax reported that TVEL Corporation, the key shareholder in Mashinostroitelny Plant (MASZ - Buy) and Novosibirsk Chemical Con- centrates Plant (NZHK - Buy) - the only nuclear fuel producers in Russia accounting for 17% to the world's nuclear fuel production - signed a long-term contract with Energoatom, which controls the nuclear energy generating assets in Ukraine for nuclear fuel supplies for 2011 and thereafter. The existing contract for uranium fuel supplies between Ener- goatom and TVEL Corporation expires at the end of 2010. There are no details available with regard to the timing, price and supply volume of the new contract. Earlier Sergey Kirienko, CEO of Rosatom, announced the contract could be signed for 20-25 years.
Ukraine - a key markets for Russia. At the moment, Russia's TVEL is a monopoly nuclear fuel supplier to Ukraine, supplying all 13.9 GW of nuclear power capacity (NPC); revenues from Ukraine make up nearly 30% of TVEL's annual revenues. Ukraine plans to double its NPC by 2030, which should boost demand for nuclear fuel in the long-term; thus we see high demand-growth po- tential on this market. Construction of new nuclear power plants though may bring new players into Ukrainian nuclear sector, as Ukraine is targeting to diversify its sources of nuclear fuel supplies to break it dependence on Russia. Therefore, Ukraine may sign a NPP construction agreement not with Russian but with US builders. This may weaken TVEL's position on the Ukrainian market over the long term.
News widely expected. We view the news as neutral, as it was ex- pected that TVEL Corporation and Energoatom would sign the contract; our model also incorporates nuclear fuel supplies to Ukraine in the me- dium-term by the Russian producers. However, we see the news as fun- damentally positive for both MP and NCCP, the only nuclear fuel suppli- ers to Ukrainian nuclear power stations. We also point that recently both countries discussed a possible co-ownership in NCCP; thus we recom- mend investors to be cautious on the stock. Nevertheless, we believe it is too early to make any conclusions as this cooperation appears to be far from finalized.
Anna Kupriyanova
Moscow Times: Gold Output Drops
02 June 2010
The country’s gold output fell an annual 7.8 percent to 39.9 metric tons in the first four months of the year, the Russian Gold Producers Union said in a statement Tuesday.
(Bloomberg)
Moscow Times: Alrosa Sees $2Bln in Sales
02 June 2010
Alrosa said first-half diamond sales will probably exceed $2 billion, Interfax reported, citing a statement from the gem producer.
Alrosa plans to pay down debt to $3.5 billion from $3.79 billion at the beginning of the year on higher-than-expected profit.
(Bloomberg)
Trading Markets: Severstal and Endeavour Financial Reach Agreement for Building Value in Crew Gold Corporation
Posted on: Wed, 02 Jun 2010 03:57:06 EDT
Symbols: CRUJF
Jun 02, 2010 (Hugin via COMTEX) --
Crew Gold Corporation / Severstal and Endeavour Financial Reach Agreement for Building Value in Crew Gold Corporation processed and transmitted by Hugin AS. The issuer is solely responsible for the content of this announcement.
Moscow, George Town, Grand Cayman and London, England, June 1, 2010 - OAO
Severstal ("Severstal") (LSE: SVST; RTS: CHMF) and its subsidiary Bluecone
Limited, and Endeavour Financial Corporation (TSX: EDV) and its subsidiary
Endeavour Financial Luxembourg SARL (collectively, "Endeavour") and Crew Gold
Corporation ("Crew Gold") (TSX, OSE: CRU) are pleased to announce that Bluecone
has entered into an agreement with Endeavour and Crew Gold with respect to the
composition of the board of directors, and certain ongoing operational matters,
of Crew Gold…
Bloomberg: VTB Swings to Profit on Russia Rebound With Record Quarterly Net
June 02, 2010, 2:22 AM EDT
By Denis Maternovsky
June 2 (Bloomberg) -- VTB Group, Russia’s second-largest bank, swung to profit in the first quarter as Russia’s economy recovered from the steepest contraction on record.
Net income was 15.3 billion rubles ($490 million), the most ever for the group in a three-month period, versus a loss of 20.5 billion rubles in the first quarter of last year, VTB said in a regulatory filing today.
To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@
To contact the editor responsible for this story: Brad Cook at bcook7@
Reuters: UPDATE 1-Russia's VTB record Q1 net profit beats forecast
2:37am EDT
* Q1 net at record 15.3 bln rbls vs 10.2 bln rbls Rtrs poll
* Helped by economic recovery (Adds detail, quote)
MOSCOW, June 2 (Reuters) - VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz), Russia's second biggest lender, returned to the black in the first three months of 2010 after six consecutive quarters of losses, beating forecasts with a record net profit of 15.3 billion roubles.
The state-controlled lender on Wednesday posted the highest quarterly profit in its history, putting it on track to hit the $2 billion net profit it is aiming for in 2010 as the economy recovers from recession.
Analysts had expected VTB to make a net profit of 10.2 billion roubles ($326 million).
"While we have been helped by an improving economic backdrop, I am pleased that the efforts to re-orientate the group towards areas which can drive profitability are bearing fruit," Andrei Kostin, VTB's president said in a statement.
The bank increased net interest margin to 5.2 percent from 4.1 in the first quarter 2009 and well above the 4.6 percent it plans for 2010 as a whole. [ID:nLDE64Q0JI]
Its investment banking business, which it started from scratch in 2008, earned 6.1 billion roubles before taxes, while corporate banking and retail banking made 9.1 billion roubles and 6.7 billion roubles of pretax profits, respectively. (Reporting by Dmitry Sergeyev, editing by Will Waterman) ($1=31.26 Rouble)
Bloomberg: Russia’s MFK Bank, Fleming Plan Partnership, Vedomosti Reports
By Maria Ermakova
June 2 (Bloomberg) -- MFK Bank, part-owed by billionaire Mikhail Prokhorov, and Fleming Family and Partners, a money management firm, will form a partnership to manage assets of MFK’s wealthy clients, Vedomosti reported, citing an unidentified person familiar with the matter.
MFK and Fleming will present their project tomorrow, the newspaper said, citing MFK’s statement.
Last Updated: June 2, 2010 00:04 EDT
Reuters: State vodka producer offers shares to Sberbank
2:25am EDT
MOSCOW, June 2 (Reuters) - Rosspirtprom, Russia's No.2 alcohol producer, has made an offer to swap shares for distilleries and wineries that Sberbank (SBER03.MM: Quote, Profile, Research, Stock Buzz) holds as a result of loan deals, Kommersant daily reported on Wednesday. The daily said Sberbank, the country's biggest lender, may get up to 49 percent in the state-owned company and clear from its balance sheet some of the non-core assets it has seized during the crisis.
"We have already made an offer to Sberbank to enter Rosspirtprom's capital," Vladimir Ivanov, Rosspirtprom's director general was quoted by Kommersant as saying.
"The size of the stake will be determined by the value of the assets the bank can transfer to the company," he said, adding that Rosspirtprom is especially interested in alcohol producers Istok and Ost-Alko.
Rosspirtprom last October transfered controlling stakes in the Stolichnaya vodka maker Cristall and 10 other distilleries to state-controlled bank VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz) as part of a debt repayment deal. [ID:nLDE5BK1HT]
Sberbank seized billions of dollars worth of assets ranging from shops to oil fields during the crisis when bad debts soared, and it is hoping to sell these assets within three years. (Reporting by Dmitry Sergeyev, editing by Will Waterman) ($1=31.26 Rouble)
Wednesday, 2 June 2010
Foodweek: Zespri looks to Russia for growth
New Zealand kiwifruit marketer Zespri is targeting Russia as an emerging market with big potential for future growth.
Zespri has congratulated the NZ government as it moves toward a free trade agreement with Russia.
The announcement of negotiations, made May 31 by the Minister of Trade, Tim Groser, follows trade negotiations with a number of regions and is part of the continued focus on global trade agreements.
Zespri’s Director of Corporate and Grower Services, Carol Ward, said Russia was an emerging market for Zespri, where the exporter sees a lot of potential for future growth.
“We are already seeing increased sales and profit as a result of free trade agreements with China and Southeast Asia. As Russia’s economy strengthens we look forward to increasing the demand for Zespri kiwifruit within this dynamic market,” she said.
Kiwifruit is New Zealand's largest horticulture export, with 390,000 tonnes produced last year.
Source: Zespri
BRIEF - Comstar Q1 2010 net up sharply, beats forecasts
Wed, 2nd Jun 2010 07:21
MOSCOW, June 2 (Reuters) - Comstar:
* Q1 2010 net profit of $60.3 million vs $12.6 million a year ago (Reuters[pic] poll: $39.7 million)
* Consolidated revenues up 7% year on year in rouble terms to $407.0 mln
* OIBDA2 up 24% year on year in rouble terms to $178.8 mln
* Increased OBIDA margin of 43.9% (39.2% when excluding reversal of previously accrued phantom option expenses) (Moscow Newsroom, + 7 495 775 12 42, moscow.newsroom@)
JUNE 2, 2010, 2:47 A.M. ET
DJ: Russian Fixed-Line Operator Comstar Reports Surge In 1Q Pft
MOSCOW (Dow Jones)--Russian fixed-line operator OAO Comstar United TeleSystems (CMST.RS) Wednesday reported a surge in first-quarter dollar-denominated net profit compared with a year earlier when it was hit by foreign exchange losses and as subscribers spent more on calls.
Comstar, which last year came under control of mobile operator OAO Mobile TeleSystems (MBT), said net profit between January and March more than quadrupled to $60.3 million, from $12.6 million in the same period a year earlier, when a forex loss knocked $26.2 million off profit.
Revenue rose 22% to $407.0 million from $334.4 million, with $258.1 million generated by the company's original business of providing voice telephony to 4.4 million households and businesses in Moscow.
Comstar prices its services in rubles, and revenue in that currency was up 7% on the year.
-By Will Bland, Dow Jones Newswires; +7 495 232 9198; william.bland@
Reuters: Kimberly-Clark says Huggies demand up-INTERVIEW-UPDATE 1
Thursday June 03, 2010 12:09:08 PM GMT
KIMBERLYCLARK/ (UPDATE 1)
* Says some consumers switching to Huggies
* Looking to innovation for bulk of market share growth
* Sees Russian sales rising 25-30 percent/yr
STUPINO, Russia, June 2 (Reuters) - Kimberly-Clark Corp expects a pickup in demand for its Huggies diapers following a lawsuit against a rival brand to be short-lived, a senior executive said.
"Most of our market share gains will come from the innovation that we bring into the market place," Robert Black, President of Kimberly-Clark International, told Reuters in an interview on Wednesday.
Procter & Gamble Co is being sued by parents claiming new Pampers diapers -- a rival to Huggies -- caused severe rashes, oozing blisters and other skin problems for children, assertions the company calls "completely false."
"We are certainly seeing some consumers who are moving to Huggies -- trying Huggies or moving back to Huggies -- but probably it is not going to have a significant long-term effect," he said when asked whether the P&G situation has had any impact. The company, which also makes Kleenex tissues and Andrex toilet paper, is opening its first Russian plant on Wednesday in the town of Stupino some 100 kilometres (62 miles) south of Moscow.
"We are expecting some 25 to 30 percent (Russian sales) growth rate per year for the foreseeable future and hopefully more over time," Black said.
"The crisis was really more of an issue last year than this year, and we are fortunate -- a lot of products that we are selling are products that people really need."
Russian consumer demand is slowly starting to pick up after being hammered by job and salary cuts in 2009, when the economy suffered its deepest contraction in 15 years. (Reporting by Maria Kiselyova; Writing by Toni Vorobyova; Editing by Erica Billingham)
Broadband TV News: Sony channel progresses in Russia and Baltics
By Chris Dziadul
June 2, 2010 07.48 UK
Sony Entertainment Television (SET) has signed a partnership agreement with Gazprom-Media to start selling ad time in Russia.
AKTR reports that it is a continuation of an existing deal between the two parties that sees Gazprom-Media sell airtime on AXN Sci-Fi. SET, which is operated by Sony Pictures Television (SPT), has been present in Russia since April 2009.
Separately, SET has launched in Estonia after securing carriage agreements with both Starman (for cable and pay DTT) and Elion (IPTV).
Activity in the Oil and Gas sector (including regulatory)
Reuters: Russia May oil output edges down, near record-source
11:02am IST
MOSCOW, June 2 (Reuters) - Russian oil output edged down in May but remained close to record levels above 10 million barrels per day for the ninth consecutive month, an industry source told Reuters on Wednesday.
He said May oil output stood at 10.08 million barrels per day (bpd), slightly down from 10.11 million bpd in April and a record-high of 10.12 million bpd in March.
(Reporting by Gleb Gorodyankin; Writing by Vladimir Soldatkin; Editing by Conor Humphries)
Upstreamonline: Russia gas output slips
Russia's natural gas production fell last month to 1.65 billion cubic metres per day from 1.87 bcm per day in April, according to Energy Ministry data.
Upstream staff 02 June 2010 06:37 GMT
The ministry also said that Gazprom's gas output declined to 1.28 bcm per day from 1.48 bcm per day in April 2010.
Upstreamonline: Transneft posts 70% profit boost
Russian oil pipeline monopoly Transneft reported an almost 70% rise in 2009 earnings to 121.8 billion roubles ($3.90 billion) from 72.5 billion roubles a year ago, the company said today.
News wires 02 June 2010 07:12 GMT
Profit attributable to shareholders reached 120.4 billion roubles, up 71% from 2008, the company said on Wednesday.
The company, which owns most of the oil and refined product pipelines in Russia, said its sales, under International Financial Reporting Standards (IFRS), increased 28% to 351.05 billion roubles.
Upstreamonline: Barsky takes TNK-BP helm as deputy
Russian explorer TNK-BP said today that Maxim Barsky has been made deputy chief executive officer of the company before assuming the already appointed role of chief executive officer from January next year.
Upstream staff 02 June 2010 07:56 GMT
The board of directors has approved the appointment of Barsky as deputy chief executive office, said TNK-BP in a statement.
"As part of this appointment, Barsky has been granted the authority to undertake all management decisions, with the exception of matters reserved as the competence of the board of director," said TNK-BP.
"Barsky will be responsible for ensuring TNK-BP’s effective performance, organising the work of the management board, and implementing its decisions. In addition, he will coordinate the work of all TNK-BP staff, including level 1 executives."
Barsky will report directly to current chief executive, Mikhail Fridman, who will remain in his role until 31 December.
TNK-BP is a 50-50 joint venture between supermajor BP and the AAR Consortium (Alfa Group, Access Industries and Renova).
Published: 02 June 2010 07:56 GMT | Last updated: 02 June 2010 08:05 GMT
02.06.2010
Oil and Gas Eurasia: Spills in Gulf of Mexico Will Not Affect Russian Offshore Plans
Russia has the world’s strictest regulations on offshore oil production, but lags seriously behind with regard to emergency preparedness, a leading official in the country's main environmental watchdog says.
In an interview with newspaper Izvestia, leader of the marine division in the Russian Environmental Control Agency (Rosprirodnadzor) says Russia today probably has the world’s strictest environmental regulations for oil companies operating on the shelf.
"We have set course towards “zero spills” of toxic materials to the sea. That is something they do not have even in Norway", Vasily Bogoslovsky told the newspaper.
He underlines that Russian authorities do not intend to abstain from petroleum exploration and production offshore – that this development on the contrary is a priority for the country. However, new technology must be developed and oil production conducted in the most environmentally friendly manner possible, Bogoslovsky said.
He admits that Russia has a long way to go before emergency preparedness at sea is appropriate, and especially highlights the lack of a fleet of specialized environmental protection vessels. Thus, when the aircraft carrier Admiral Kuznetsov in 2009 leaked more than 50,000 of diesel oil into the waters outside Ireland, Russia had no equipment to localize the spill and needed help from an Irish vessel.
"Unfortunately, we do not have this kind of vessels. Our great maritime power does not have a single environmental protection vessel, which could as much as reach an offshore oil platform", Bogoslovsky complains. The lack of the specialized vessels also makes it impossible for Russian environmental authorities to do independent controls of the offshore oil and gas producers, he adds.
Russia has big plans for the development of offshore hydrocarbon fields, and the most promising fields are located in Arctic waters. The country’s first offshore oil field – the Prirazlomnoe – is planned put in production in 2011.
Copyright 2010, Barents Observer. All rights reserved.
Business 24/7: Crescent opens doors to region for Rosneft
By
• Eman Al Baik
Published Wednesday, June 02, 2010
A joint oil project between Crescent Petroleum and Rosneft Oil Company will be signed and the first drilling operations will be started on June 5.
The joint venture represents the first entry of Russian oil to the region and the signing of the agreement and the first drilling operations will be in the presence of Sheikh Sultan bin Mohammed bin Sultan Al Qassimi, Crown Prince and Deputy Ruler of Sharjah, and a number of Emirati and Russian officials.
After the signing, the delegates will move to the project site to launch the first drilling operations after which details about the joint project and the partnership will be announced. This agreement constitutes the first joint activity between the two companies since the signing of the strategic partnership on May 10 in Moscow between Badr Jafar, Executive Director of Crescent Petroleum Group, and Sergey Bogdanchikov, President of Rosneft Oil Company.
The strategic agreement forms a partnership to cooperate by jointly developing specific and material oil and gas opportunities in the Middle East and North Africa (Mena) region and a groundbreaking Russian-Middle East energy alliance. It also creates the framework for the joint pursuit of specific oil and gas exploration and development opportunities in the region.
Access to material and high quality new upstream projects will be facilitated by combining Rosneft's Russian petroleum industry experience with Crescent Petroleum's unique access in the Mena region.
May 31, 2010, 9:54 CET
Realdeal.hu: State may get Surgut's stake in MOL
By Hungary Around the Clock
Both the outgoing and the new government held talks with Russian oil company Surgutneftegaz on buying its 21% stake in Hungarian oil company MOL, Népszabadság learnt.
It is the state, not MOL that could and would like to purchase the stake, as only it could provide the necessary cash at present, Népszabadság speculates.
The purchase fits in with Fidesz's plans to expand state holdings and will make a better position in gas price negotiations with the Russians, Népszabadság points out.
Fidesz certainly would certainly not sell the stake to unfriendly purchasers and it may be transferred to hands friendly to MOL, the daily adds.
№ 5 (May 2010)
Oil and Gas Eurasia: Peace Pipe
Is the reconciliation between partners in the South Stream project a real step forward or the beginning of a series of moves which will end with Gazprom getting a tasty slice of the Ukrainian gas business?
By Svetlana Kristalinskaya
If you are going to provoke a conflict, you should know exactly why you are doing it. That sentiment can be used to understand the recent heat in relations between Gazprom and its Italian partner Eni. A couple of undiplomatic phrases by a top Gazprom manager against Eni in fact led to the quick resolution of other problems that turned out to exist. But it cannot be ruled out that this speed could be linked to both companies’ loss of interest in the South Stream project. After all, Russia now has a new best friend – Ukraine.
We Are Friends, but Our Tastes Differ…
Gazprom and Eni became partners in building the marine segment of the South Stream pipeline back in 2007. Before then, the companies had worked together to build the Blue Stream pipeline along the floor of the Black Sea and no-one at that time doubted their mutual love or the strength of their relationship. Moreover, the Italians purchased a few interesting gas fields at an auction of YUKOS assets, which they later sold to Gazprom, thus freeing the Russian monopoly of possible, future legal risks.
This cooperation was cemented by the very public and long-time friendship between Russian Prime Minister (and previous president) Vladimir Putin and the head of the Italian government, Silvio Berlusconi.
However, “friends are friends, but our interests differ”, and business interests butted into the need to let go of romantic ideals.
First, during the CERAWeek conference in Houston in March, Eni CEO Paolo Scaroni made a public proposal to join the South Stream construction project with the competing project (at least in terms of route and support from the EU), Nabucco.
Scaroni stressed that Europe needed to diversify its routes and sources of gas supplies; after all, any commercial dispute between Russia and Ukraine could lead to disruptions in the supply of gas to Europe and bring countries in Eastern Europe “to their knees,” as a number of them are 100-percent dependent on Russian gas imports.
The head of Eni identified South Stream and Nabucco as routes that could meet this goal and noted they were not alternative routes to each other, but rather complementary. Scaroni emphasized the significant capital needed for both projects and pointed out that one of the world’s largest gas producers was a shareholder in South Stream while not participating in Nabucco and at the same time highlighted the fact that Nabucco included large European gas consumers among its shareholders.
“If the partners decided to join these two gas pipelines along a segment of the route, they could lower the capital investments and operational expenses and increase overall revenue,” Scaroni said.
The Last Drop
People were heard saying that after this, Alexander Medvedev, the deputy Gazprom head and the head of Gazprom Export, refused to give his presentation in Houston and left the conference. Further commentary by Russian officials on the proposal made by Gazprom’s foreign partner made it clear that Russia did not intend to back off its position and believed its project was not only realistic, but more progressed than Nabucco, which still lacks concrete contracts on its resource base. Rumors circulated that relations between Gazprom and Eni were cooling.
Later, the Italians got “our answer to Chamberlain” and the effect was no less than in Scaroni’s case. As Gazprom began actual construction on one of Russia’s biggest export arteries, the Nord Stream pipeline, the head of Gazprom’s foreign business department Stanislav Tsygankov stated that Eni was practically blocking development on South Stream. He complained that Eni’s position on carrying out the project was “not constructive”: the Italian side, he said, was not approving working programs and had not agreed on studies already performed. “And that’s not even bringing up payments from their side; so far, we have been paying for everything ourselves”, he said.
Tsygankov said that Gazprom had fulfilled all of its obligations “straight on,” having paid an option for a stake in Gazprom Neft and Sever Energiya (a joint venture between Gazprom and the Italian companies Eni and Enel).
Tsygankov declined to comment on whether Eni’s position on South Stream was tied to its suggestion to join the project with Nabucco. He did say that the Sever Energiya budget had not yet been determined.
These words were said the day before Scaroni arrived in Moscow for another round of talks and it is likely they were meant to push a decision on urgent issues associated with South Stream.
People say the head of Eni was probably incensed by the Russian negotiator’s words. In the end, both companies’ press offices tried to dampen Tsygankov’s comments, insisting that the companies’ plans on South Stream in fact coincided.
It cannot be ruled out that this manoeuver by the top manager at Gazprom was the initiative of its author who was appointed general director of Sever Energiya based on his own wishes. Moreover, there were rumors that he could soon leave his post as the head of Gazprom’s foreign business department and concentrate on work in Sever Energiya, but in order to begin full-fledged work on that project, the Italians’ agreement on confirming the budget was needed.
Third Player Joins the Duo
Whatever the case, the presence of problems became public and the sides did everything they could to convince the world they had no differences that threatened the development of South Stream. Immediately after his planned visit to Austria, where a seventh, and significant, agreement on South Stream was signed, Vladimir Putin stopped by Italy to see Berlusconi. After that visit, the last doubts dissipated – the Russian-Italian partnership was alive and well. Yet, truth be told, another nuance cropped up during these negotiations which may have been the catalyst for peace. The Russian prime minister announced that France’s Electricite de France (EDF) would receive a 20 percent stake in the marine segment of South Stream, and not the 10 percent believed earlier. Several high-ranking executives in Gazprom had felt that Eni was hindering EDF’s joining the project.
Official negotiations with EDF began at the end of 2009 and Eni was to have given the French 10 percent of its stake in South Stream AG, the company building and operating the South Stream pipeline. Gazprom insisted on retaining 50 percent in the project. After being asked to clarify, Putin said Eni and Gazprom would each give up 10 percent in South Stream.
Exactly two days later, Scaroni arrived in Moscow and the sides reported on handing up to 20 percent in the project over to EDF. The document on the matter was to be signed in June during the St. Petersburg Economic Forum.
Putin said that there were no delays in implementing South Stream. “The issue is progressing as it should. We have finished practical work in Turkey’s economic zone, and practically finished our work on studying the sea bed along the Bulgarian coast. Everything is going according to plan”, he said.
Here it should be pointed out that, officially, both the leadership of Gazprom and the Russian authorities are saying that South Stream will be built regardless of how relations develop between Russia and Ukraine, across whose territory most Russian gas is exported. While in Italy, Putin did not neglect to say that Russia would not delay work on large energy infrastructure projects, even given the situation in Ukraine.
“You can see for yourselves what is going on in Ukraine because of this (the gas contract between Ukraine and Russia – OGE): internal politicking surrounds these agreements and some members of the opposition have already said that if they come to power, they will denounce these agreements, and so there is no reason to delay large infrastructure projects which increase energy security in Europe”, the prime minister stressed.
Nevertheless, experts believe that the South Stream project will be empty if Ukrainian-Russian relations in the gas sector grow stronger. And to all appearances that strengthening can be expected: with Viktor Yanukovych having come to power, the sides took mere weeks to negotiate a new gas agreement and moreover, at his last news conference in Sochi, Vladimir Putin voiced an idea that shocked the public – he suggested merging Gazprom and the Ukrainian state gas company Naftogaz Ukrainy.
What Will Fill the Ukrainian Pipe?
Still, despite the fact that Gazprom’s essential takeover of Naftogaz Ukrainy – or its gas transport system through which 80 percent of Russian gas is exported – nullifies the risk of new “gas wars” and interruptions in gas supplies, this is hardly likely to benefit Europe. It will mean that Russia will be able to increase the amount of gas it exports to the European Union with minimal expense, in both monetary and political terms. Meanwhile, the purely European Nabucco project, which faces far more unanswered questions than does South Stream, will simply be buried, and European dependence on Russian gas will increase.
At the same time, it cannot be ruled out that a change in leadership in Ukraine will result in these agreements being reviewed, but that will depend on the success of Russian negotiators and lawyers.
Ukraine has already presented its conditions: the country can give up its gas transport system, but there must be guarantees it will be filled. Ukrainian Prime Minister Nikolay Azarov has already calculated that if it is modernized, the Ukrainian gas transport system will be 150 percent more profitable than both Nord Stream and South Stream which circumvent the country. At the same time, he expressed the need to guarantee gas will be pumped across Ukraine. He pointed out that the Ukrainian system can handle 140 billion cubic meters of gas a year. “But how much is needed? How much will Russia be able to sell given its two bypass pipelines?” he said, explaining the essence of the problem.
The head of the Russian government made it clear to Ukraine that it needs to be quick in making a decision. For even if delays keep South Stream from being built by the end of 2015 as planned, Russia will be able to increase capacity on Nord Stream in a few years.
So, it cannot be ruled out that the speed with which Gazprom and Eni made peace merely proves that the companies do not need South Stream and any progress seen on the project is simply the beginning of a series of many steps which is meant to end up giving Gazprom control over the Ukrainian gas transport system.
South Stream vs. Nabucco
The South Stream pipeline, meant to bypass risky transit countries, is to extend from the Russian Black Sea coast to Bulgaria, and then onwards to Italy and Austria. The new gas pipeline system is to have a throughput capacity of 63 billion cubic meters of gas a year. According to Gazprom, the project is too cost 8.6 billion euros. At the beginning of 2008, Gazprom and Eni founded South Stream AG on an equal basis. This company is to build and operate the marine segment of the pipeline.
The Nabucco gas pipeline project is meant to supply gas from countries in the Caspian basin to Europe while bypassing Russia. The budget for this 3,300-kilometer pipeline is 7.9 billion euros. Participants in the Nabucco consortium include RWE (Germany), OMV (Austria), Botas (Turkey), Bulgargaz (Bulgaria) and MOL (Hungary). Azerbaijan, Turkmenistan, Iraq and even Russia are envisioned as sources of gas for Nabucco.
Bne: Russian firms eye Lithuanian refinery
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Jaroslaw Adamowski in Warsaw
June 2, 2010
Four years after PKN Orlen bought the only Baltic refinery Mazeikiu Nafta, Poland's leading oil and gas company is still struggling to turn the €1.9bn purchase into a profitable investment, leading to widespread speculation about a possible resale of the Lithuanian plant to a Russian company.
In the first quarter of this year, the refinery's loss widened to €23m from €14.5m in the same period of 2009. But PKN's troubles with the refinery go back to 2006 soon after it was purchased from the Lithuanian government and now bankrupt Russian oil company Yukos when Russian oil stopped flowing to the refinery by pipeline and a fire broke out. Russia blamed the halt of crude supplies on a rupture to the spur from the Druzhba oil pipeline that feeds the refinery; Russian state-owned pipeline monopoly Transneft has denied blocking deliveries on purpose even though it hasn't resumed supplies in four years. However, given the Kremlin was frustrated it couldn't expropriate the refinery from the previous owner Yukos like it had that oil company's other assets and expressed anger when the Lithuanian government didn't choose a Russian company in the subsequent tender, the general impression in Lithuania and Poland is quite different.
"Orlen overpaid for Mazeikiu, which was originally designed as an export-oriented refinery for the Soviet crude," says Andrzej Sikora, president of the Energy Studies Institute, a consultancy in Warsaw. "Ever since Russian oil stopped flowing via the Druzhba pipeline four years ago, the plant has been entirely dependent on supply by sea. Given that Mazeikiu is an inland, not seaside, refinery, adapted for crude delivery through pipeline, the shift in supply source simply had to skyrocket the costs of refining."
Further weighing on Mazeikiu's performance have been the deep recessions that all three Baltic states have suffered since the global economic crisis. Approximately 50% of the refinery's 10.3m tonne annual output is sold in the three countries, but in 2009 demand for petroleum products in the Baltic states dropped by over 22%. Consequently, in 2009 Mazeikiu refined only 8.4m tonnes of crude compared with 9.6m in 2008. PKN Orlen decided to cut Mazeikiu's production capacity to just 68% in the first quarter of 2010; in the same quarter last year this rate was at 86%. "Cut off from pipeline deliveries, Mazeikiu has lost a large part of what previously established its competitiveness," says Andrzej Szczesniak, former CEO of Lotos Partner, another Polish fuel retailer. "A combination of costly transport, expensive crude and very low refining margins could be lethal for Mazeikiu."
Sikora also notes that the way the refinery is managed is confused, which is leading to problems. "There are two management models for refineries: the German one, in which the state remains a key shareholder, but also controls the level of refining margins; and the entrepreneurial one, in which the state withdraws from the market, but at the same time doesn't interfere in the pricing policy," he says. "Orlen's situation is somewhat hybrid, as Poland's Treasury owns only a 27% stake in the company, but maintains a major political influence over its operation. And such a state of affairs isn't either in Orlen's or in Mazeikiu's best interests."
Pipe dreams
Mazeikiu's sale to a Russian company would probably solve the problem of pipleine supplies to the refinery. However, such an outcome would boost competition on the region's petrochemical market and for PKN Orlen, which owns another three refineries in Poland and two in the Czech Republic, would therefore see its profits hurt in the long run. "Sold to a Russian company and reconnected to the pipeline, Mazeikiu could become a groundwork for its new owner's expansion in Central-Eastern Europe," says Szymon Araszkiewicz, chief analyst for the E-Petrol consultancy.
Three Russian oil giants are said to be interested in Mazeikiu: TNK-BP, Lukoil and Surgutneftegas. However, given that selling a majority stake in Mazeikiu is not PKN Orlen's preferred option, TNK-BP, which so far has shown the greatest flexibility on this matter, would appear to be the most probable buyer. "If Orlen will be interested in gaining a strategic partner for the [Mazeikiu] refinery, we will be open to talks," German Khan, TNK-BP's executive director, told journalists in May.
Acquiring a major stake in the refinery would advance TNK-BP's wider strategy of further emphasizing its downstream business. TNK-BP already boosted its presence in the Ukrainian downstream sector with the increase of its stake in 2009 in the Lysychansk refinery, which has a capacity of 8m t/y. As PKN Orlen hopes that a Russian partner could help relaunch crude delivery to Mazeikiu via the Druzhba pipeline, it is not without importance that Prime Minister Vladimir Putin is said to endorse TNK-BP's move into Mazeikiu.
The chances of the other two firms taking an interest in Mazeikiu are slimmer. Lukoil CEO Vagit Alekperov said a few months ago that his company was not interested in venturing into Mazeikiu, while another discussed option is an exchange between PKN Orlen and Surgutneftegas involving a 25% stake in Orlen Lietuva, the sole owner of Mazeikiu, in return for Surgutneftegas' 21% stake in Hungary's Mol Group, which the Hungarian firm and its government are trying to wrestle back from the Russian firm. But so far, the TNK-BP scenario remains the most likely for Mazeikiu.
However, as Araszkiewicz of E-Petrol notes, "The eventual resale depends on the outcome of Orlen's negotiations with the Lithuanian government." Given the latter didn't want to have a Russian firm involved in Mazeikiu four years ago, the outcome of PKN's talks with the government remain a big question.
№ 5 (May 2010)
Oil and Gas Eurasia: Microsoft’s Cloud Nine
As the digital oilfield concept continues to drive the upstream sector, the IT giant targets further growth in Russia’s petroleum industry. Today, running an oil or gas company efficiently means a lot more than locating hydrocarbons, lifting them out of the ground, refining them into high-quality products and selling them in the market.
By Bojan Šoć, Pat Szymczak
With profit margins becoming tighter, the role of IT solutions for the industry is becoming tremendously important. Data management and process automation are in high demand as fields increasingly “go digital,” while smooth operation is unthinkable without IT success.
The world’s leading information technology giant Microsoft is at the forefront of this change, with Russia’s oil and gas industry high on its global agenda. Microsoft’s Dubai-based managing director for Global Oil & Gas Industry Albrecht Ferling recently visited Moscow and discussed with OGE the rapid growth of this sector in Russia. Joined by the company’s industry manager, Oil & Gas Enterprise and Partner Group, Vladimir Egorov, he provided an in-depth account of Microsoft’s strategy on both global and national scale, featuring one common focal point – turning IT architecture concepts into client-tailored solutions.
OGE: Expansion of IT firms into oil and gas industry seems to be very aggressive in recent years. Would It be correct to say we’re on the brink of an IT revolution that could transform the industry as we know it?
Ferling: From my point of view, the revolution had already been triggered eight years ago by CERA*. In 2002, they launched the “digital oilfield of the future” (DOFF) theme, trying to bring the rigor of a typical manufacturing type of environment to the oilfield. It involved installing more and more sensors, designed to collect more data such as temperature, pressure and fluid data, which is then analyzed to get a better understanding of the subsurface, the movement of the oil, etc.
OGE: What kind of impact did this have on the industry?
Ferling: In the last couple of years CERA’s pioneering effort has led to a big revolution in the oil and gas industry and Microsoft has played a key role in the implementation of the digital oilfield concept. The market embraced it and today the concept has almost gone mainstream all over the world. The early adaptation phase is over and today we can see a tremendously higher degree of automation in these digital oilfield scenarios in many fields around the globe.
OGE: Where does Microsoft fit into this?
Ferling: For us, the oil and gas industry is a strategic industry – it has been growing at a relatively higher rate compared to other industries. We get a lot of traction within the industry. Our strategy focuses on building a huge ecosystem featuring the best of our major oil and gas industry partners and making sure they use Microsoft infrastructure, application platforms, communication software. We are working hand in hand with these companies on the technology side, i.e. developing the next type of architectures. By doing this we want to make sure we provide a unifying language, meaning better interoperability, for the oil and gas industry.
OGE: What are the main hurdles en route to achieving your goal?
Ferling: The industry is still struggling with adopting standards, and there has always been the question of standards vs. “let me do it my way”… I think we need and will make breakthrough on this through working with standard bodies such as Energistics and by building an ecosystem of partners, with whom we need to adopt common principles of designing IT architectures that should provide the solid foundation in this business. That is our key objective in the industry. We have a list of some 500 partners globally, including Global Alliance Partners that feature Schlumberger, Halliburton, Invensys, Honeywell, Aspentech. On the global scale these partners are managed by our Global Alliance managers, while country-wise we have people like Vladimir who manage these accounts locally.
Egorov: Maintaining alliances on the global level is important, but we also need to put them in motion through technology development and sales. That is why we pursue relations with those partners and have some joint planning activities: sometimes we need to choose which Russian partners will deliver some of our solutions, because customers often say, “The concept is great, but who is going to implement it?”
The alliance is responsible to bring all technology in sync, so all Microsoft’s investments are done by the corporation. At the local level we have joint planning sessions with our partners, deciding how to tackle customers’ business issues, which joint solution to offer. In Microsoft there are several groups of people responsible for different technologies and there are people from, let’s say, Schlumberger, who are responsible for each product. We need to build up a team, which will focus on certain customer issues to deliver this. The strategy is clear at the corporate level, but afterwards we have to make things happen in each region. That is why we strive to deliver real solutions – not concepts, but solutions.
OGE: What does it look like in practice?
Egorov: Each partner delivers a fragment of business processes technology. But if, for instance, an engineer uses a Schlumberger tool based on Microsoft’s high-performance computing cluster, then he can easily share this information with his colleagues around the company from Tyumen to Moscow… He can see the list of people who are experts on that particular subject. Microsoft helps by creating integrated systems, so that users can easily find people and information without any time losses for integration and data extraction from one system and then loading it into another system. All of that integration is done seamlessly on the Microsoft platform. And our role is to build the tool, which provides solution for the client – concept architecture is clear, but afterwards you need to visit the customer, understand the kind of infrastructure he has and type of communication between his branches, plans of IT development… Then we sit down and discuss types of questions and draw up a joint plan.
Ferling: Take MERAK from Schlumberger, for example – it’s the software for oil and gas financials in upstream. On the global level we’re making sure that the specifics of MERAK software are running on SharePoint as the layer of integration and collaboration. So we are bringing in Microsoft components and the partner then has the oil and gas specific financial application sitting on top of this and all of that bundled together is the product. It is sold by Schlumberger, but when they sell this it contains a lot of Microsoft components, too. We provide the “glue” in the collaboration process, with the motto “give people the right tools”. Our idea is not to make the companies successful, but the people in the companies successful, so they can deliver better results – increase their productivity, use these tools more efficiently and improve collaboration with fellow employees within the company. And this of course makes the companies successful as the ultimate result.
OGE: You will stay in Moscow for only a couple of days. What’s the main purpose of your current visit to the Russian capital?
Ferling: Our fiscal year starts on July 1 and this is the appropriate time to prepare for it. I’m here to talk to our partners to find out who is interested in working much closer with us than in the past. We’ll be sitting down with all of them in the next two months. We’ll go through the list of clients and see what we can do with whom. Each year we look at our portfolio and select alliance partners. We can’t work with 20 of them, so we will need to trim that list, continuing to collaborate with the most important ones.
OGE: What signal is the industry sending you?
Ferling: There are a lot of new things coming up, especially on the upstream side, where we still see many fragmented workflows; people still keep working often in their own domain silos – whether it be seismologists, reservoir engineers, geologists… Besides the need to have these and other specialists work with each other more seamlessly in integrated, cross-domain automated workflows, the oil companies’ management also requests much more information from the production side than it used to. The data that had been originally used only to manage the production side are now used in a much broader sense. This means that companies have to start communicating much more horizontally between the domains and the headquarters than they used to in the past. It is a huge opportunity for us, since it’s all about people working together and exchanging information. We did a field survey last year and a new one just recently, asking 275 upstream engineers throughout the world about the collaboration via new social media – social computing, wikis, blogs, instant messaging, email… The result was amazing: we saw an 83-percent (!) increase of importance of social media from last year.
OGE: What do they use social media for in their work?
Ferling: Purposes differ and it largely depends on the region. Overall, Asia-Pacific leads the rest of the pack by a big margin, they use all of these tools the most, from instant messaging, blogs, wikis, social networking... In Europe, Middle East and Africa they use it mostly to search information, in the United States – to find scarce human resources. The latter is very important as in Europe and the United States there is a big problem of the aging workforce, meaning people retire and are moving out. Oil and gas has the oldest workforce globally of all industries, with the average age of around 55. There is scarcity of workforce and it is therefore extremely important to preserve the knowledge in the company. Also, projects are getting more and more complex, and it’s getting increasingly difficult to find right resources. For both of these issues, preserving knowledge and finding the right resources, social medial can help a lot.
We also asked respondents how many hours these engineers think they can save with the help of social media, and more than 50 percent of them said between one and two hours a day, which is quite a big productivity boost. Interestingly enough, this is driven by the staff, not the management.
OGE: Today, there is a lot of talk about cloud services. In many countries, regulations are rather rigid when it comes to data sharing and the general feel is that the industry, being conservative as it is, is taking its time in assessing the benefits of this new opportunity. What potential do you see in this type of service and how quickly is the industry going to adopt it?
Ferling: It is evident that cloud services will drive much more inter-organizational collaboration in the future. This will lead to a bigger number of automated workflows in the clouds which go across company boundaries and are quite interesting for oil and gas companies. If you look at a typical oilfield, there are so many different service providers. Just imagine, if you could integrate them all in a single network, that would give small firms tremendous opportunity to work with big companies. Most of the Microsoft software you can buy today will be or is available already as a cloud application. The future IT architecture will not be cloud or on-premise architecture, but a blend of those two aspects.
One thing is for sure – cloud services are reality because they drive huge efficiencies as storage and administration costs go down dramatically. Today, on premise a systems administrator can manage 140 or so servers, but if you go into these huge mega data centers that are being built, you can have one person managing thousands of servers. Cloud services are not an answer to each and everything, but IT architectures of the future will definitely make use of them.
One question which are are often asked, is the concerns of companies in terms of security of these cloud services. Well, I strongly believe, that this has a lot to do with transparency provided by the service provider, and the trust people have in the service provider's technology. We put a lot of care on this matter at Microsoft. Oil and gas companies especially are more on the conservative side, due to highly sensitive data they deal with. One answer for them is to put their sensitive data in a “private cloud”, which is being run on the customer´s premises, and under the complete control of the company. “Public clouds” on the other hand have many tenants; they provide multiple services to many companies, and are provided by large data centers, which are run by companies such as Microsoft.
Egorov: There are some legal issues and scenarios when companies could use cloud services inside their organization. For instance, LUKOIL, Rosneft, TNK-BP have numerous subsidiaries and sometimes it would be useful to have a centralized resource for high performance computing and use this data in a center in Moscow or Tyumen… They could use it as a service inside the corporation and everybody would benefit from this. The people from the Russian Academy of Sciences told us it was an issue of government importance to make available some resource for oil and gas companies that would not allow the departure of data from the country. The way out could be the processing of data inside the country by the selected resource and the companies could pay a fee for using that resource.
OGE: What role does Russia play in Microsoft’s overall global performance in this sector? Could you briefly outline the milestones of your company’s presence here in the industry?
Ferling: We left the “IT room” and followed our customers to the field some eight years ago. In 2005, we did the first digital oilfield project in the North Sea for Chevron, together with Accenture and other partners and that was our first big milestone in oilfield integration. Since then, we have been pushing the limit of what we deliver with our partners each year. In Russia, we have had a special focus on the oil and gas sector since 2008 and we are represented in all oil and gas companies. Russia plays a key role for us compared to other areas, and drives Microsoft’s business growth in oil and gas globally.
Egorov: Microsoft started to interact with the Russian oil and gas industry two to three years ago. Initially, we hoped to build ties over a two-year perspective that would allow us to hold regular business briefings with vice presidents and heads of departments at oil and gas companies. Thus we could understand their projects, the role Microsoft could play in them, the scope of required investment, the type of resources committed by our partners, and find out who the customer’s decision makers are for each concept or project… This kind of relationship helps companies to save the money they would have spent to build separate systems.
OGE: What Microsoft products and solutions for oil and gas top demand globally? How does that differ from what’s happening in Russia?
Ferling: Currently, we are seeing the demand for oil and gas solutions which involve a lot of different Microsoft components. One such product is Microsoft Project, which is used to manage large scale industry projects. Another product is Microsoft SharePoint – the fastest-growing product in Microsoft history in terms of reaching over $1 billion in sales globally. SharePoint is the most strategic element of our whole product range, because it performs the role of a hub for all lines of business applications, providing the use of a wide range of capabilities such as collaboration, workflow and content management, just to name a few.
Egorov: It’s the same story in Russia – all pioneering projects are starting with SharePoint and SQL integration services. We are talking about presentation layers when employees are able to have all the relevant information for their role through one interface. It means that each engineer monitors the data he needs and a vice president can have an absolutely different set of KPIs, which he wants to monitor on a daily basis. All of them use the same software – SharePoint – to obtain this information and share feedback through the corporate or social networks.
OGE: How receptive are local clients to IT as means of enhancing performance at a cost, perhaps, higher than what they’re ready to pay? Can you cite examples when an initially reluctant future client had been hesitant to contract Microsoft due to cost, but later admitted it was validated by the higher profit margins he reaped thanks to your product’s performance?
Ferling: There is a tremendous pull on Microsoft in the oil industry, especially in the last two years since the crisis. Back then the industry had a lot of money to spend, whereas today oil companies are cautiously looking at where they should spend. If they invest their money in separate components, integration will cost a lot of money later, so they’re turning to us looking because of our integrated software stack. The feedback we’ve been getting from the market evolves around the need to have an easy-to-use, familiar interface, all integrated, which is what they get from Microsoft, and what is a very cost-effective solution. Customers always have a choice to walk away , but we can see that they are coming back. Therefore I would say that I am really pleased what is happening globally and when I look at the last two years I am very pleased with our performance in Russia, there is a very positive response to Microsoft here in the market.
OGE: Your client list here features some of the Russian O&G industry giants and demand is apparently driven by process automation and data management. Where do you see this market going further in the future and what shift (if any) in the structure of that demand do you forecast?
Ferling: There is a lot to be done both globally and in Russia in terms of collaboration with partners and service providers in this industry sector. Microsoft is investing around $9.5 billion in R & D and that’s the biggest figure for all industries. The second company on that list invests $3 billion less. We are investing heavily into R & D in order to develop further next versions of our software, for example in areas such as Natural User Interfaces, Low Cost Computing, Security or Business Insights. Looking ahead, what we’re going to see is a much higher level of integration coming in all the oil companies and a higher level of collaboration within the companies, and across the companies´ boundaries. We need to do a lot on the upstream side to overcome the still existing barriers between different departments and domains.
*Cambridge Energy Research Associates (CERA), is a consulting company that specializes in advising governments and private companies on energy markets, geopolitics, industry trends, and strategy. It is headquartered in Cambridge, Massachusetts.
Gazprom
Bloomberg: Gazprom-Naftogaz Venture May Get Black Sea Field, Vedomosti Says
By Maria Ermakova
June 2 (Bloomberg) -- OAO Gazprom and NAK Naftogaz Ukrainy’s planned venture may gain rights for an oil and gas field in the Black Sea, Vedomosti reported, citing an unidentified person close to Ukraine’s Energy Ministry.
Chernomorneftegaz, an explorer of which billionaire Vladimir Lisin is a board member, has rights to search for oil and gas at the field until 2012, according to the newspaper. The field, called Podnyatiye Pallasa, holds 490 million metric tons of oil and 60 billion cubic meters of gas, Vedomosti said, citing Boris Senin, chief geologist at Chernomorneftegaz.
Last Updated: June 2, 2010 00:03 EDT
DJ Gazprom-Naftogaz Union Could Involve Richest Russian –Vedomosti
Posted on: Tue, 01 Jun 2010 20:33:03 EDT
Symbols: OGZRY
Jun 01, 2010 (Dow Jones Commodities News via Comtex) –
DOW JONES NEWSWIRES
A budding partnership between OAO Gazprom (GAZP.RS) of Russia and state-run Ukrainian energy company Naftogaz could affect Russia's richest man, business daily Vedomosti reports Wednesday.
Last Friday, Gazprom Chief Executive Alexei Miller said after talks with Ukraine's Fuel and Energy Minister Yuri Boiko that the two companies may create a 50-50 joint venture. Such a tie-up, Miller said, could be "the first step" toward the full merger proposed by Russia's Prime Minister Vladimir Putin on April 30. Ukraine's President Viktor Yanukovych insists that a merger be on parity terms, even though Naftogaz is just 5% of Gazprom's size in terms of sales.
The two sides are already sizing up areas of cooperation, Vedomosti reports. One of these is a section of the Black Sea shelf known as "Pallas Rising," a source close to the leadership of the Ukrainian ministry said. An official with Russia's Energy Ministry confirmed to Vedomosti that joint development of the field is being discussed. Ministry spokeswoman Irina Yesipova said "development in this area (Pallas) was confirmed" on the agenda of the April meeting led by Putin and Yanukovych. But details haven't yet emerged, she added.
Representatives of Gazprom and the Ukrainian ministry declined to comment.
Since 2002, a license to explore the shelf, including "Pallas Rising," has belonged to a private Russian company named Chernomorneftegaz (not to be confused with Chornomornaftogaz, a subsidiary of Ukraine's Naftogaz). Shareholders aren't disclosed, but the company's website lists among its directors Vladimir Lisin, chairman of Novolipetsk Iron & Steel (NLMK.RS). His $15.8 billion fortune tops Forbes magazine's latest annual list of the wealthiest Russians.
Chernomorneftegaz is cited as an affiliate of steel producer Novolipetsk, says Vedomosti. Employees of several oil companies told the newspaper that Chernomorneftegaz is an asset of Lisin.
Representatives of the billionaire declined to comment.
The license, which expires in 2012, grants Chernomorneftegaz only the right to explore for oil and gas in the shelf, but not to develop it, said the company's chief geologist, Boris Senin. According to him, all work to prepare the field for drilling has been done, with the potential to recover some 490 million tons of crude oil plus 60 billion cubic meters of gas. But to drill to a depth of 500 to 1,000 meters, the company needs outside partners and has discussed this with companies including Lukoil (LKOH.RS), Royal Dutch Shell PLC (RDSA, RDSB) and ExxonMobil Corp. (XOM), Senin said. A two-year-old Russian law allows only Gazprom and the country's biggest oil producer, OAO Rosneft (ROSN.RS), to develop offshore fields.
Newspaper website: vedomosti.ru
-Dow Jones Newswires; 212-416-2900
(END) Dow Jones Newswires
06-01-10 2033ET
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Barentsobserver: Zagorovsky said to be new Shtokman director
2010-06-02
A Murmansk based website says Alexey Zagorovsky is chosen as the new executive director of Shtokman Development AG.
The website says a source close to Shtokman Development AG has off-the-record confirmed the appointment of Zagorovsky to take over the position.
Neft Rossia confirms that the board of directors of Shtokman Development AG has approved a new head of the company, but the only official information is that the appointed is a “man from Gazprom.”
If officially confirmed, it is no surprise. Zagorovsky is one of the names mentioned in most speculations about whom to take over the position after Yury Komarov resigned from his post as CEO of Shtokman Development AG in April this year.
Alexey Zagorovsky (44) comes from the position as Deputy General Director of the Gazprom Dobycha Shelf. Gazprom Dobycha Shelf was established in 2008 as a Gazprom unit specialized in shelf development. The company now has all Gazprom’s licenses to offshore fields, including for the Shtokman field.
News.az: Gazprom to contribute to construction of Iran-Armenia oil pipeline
Tue 01 June 2010 | 12:21 GMT
Russia's Gazprom will take part in the project of construction of the Iran-Armenia oil pipeline, said deputy chairman of Gazprom Valeri Golubev.
He noted that this project is realistic and Gazprom intends to take part in it. Gazprom will take part in construction by means of its daughter company - ArmRosgazprom. The project will be implemented through Gazprom's investment programs", said Golubev.
As for the construction of an oil refinery in Armenia, he said this project is frozen due to its unprofitableness.
ARMENIA Today
Tuesday, June 01, 2010
MoneyShow: From Russia with Gas
The manager of the Eastern European Trust in London says Gazprom isn't getting the respect—or valuation—it deserves, writes Andrew McHattie in the Investment Trust Newsletter.
The Eastern European Trust (London: EST) is planning a package of measures, including new tender offer arrangements and an issue of subscription shares. These are not due to be put to shareholders until July, but we had the opportunity to meet the manager of the trust, Sam Vecht, who told us more about his style of management and the trust’s prospects.
A year ago, BlackRock [and Sam] took over the management mandate from Pictet Asset Management, and has done well since. Sam is not sure that the immediate future will be quite so easy. He can see a series of speed bumps on the global horizon which might make the second half of 2010 a tricky period for global equities, although he still thinks that places with cheap valuations and growth are “best placed.”
He indicated that the trust has started to use options to hedge certain positions and provide some protection, adding “we have a full set of tools at our disposal.” This is perhaps especially important for Eastern European Trust, which has more than half of its assets in Russia, because as Sam notes, “when Russia goes down, it goes down very savagely.”
Eastern European trust has around 64% of assets in Russia, with Poland, Hungary, and Turkey the next largest allocations. The trust has a strategic underweight position in Turkey, which has yet to pay off, but it has done well from its sectoral and stock-specific bets. The trust is overweight energy and utilities and underweight financials and materials, and Vecht says the portfolio is “a whole collection of pretty punchy bets.”
Gazprom (OTC: GZPFY, London: GAZ) is one of the trust’s largest holdings, and Sam thinks it could become the most profitable company in the world in 2010, overtaking Exxon Mobil (NYSE: XOM). The company’s recent results beat market expectations by 50%, and it is trading on just four to five times earnings. Against a collection of the world’s largest and most profitable companies, Gazprom stands out as looking remarkably cheap—Sam says it is a “totally ridiculous outlier.” In part, this is because “people’s perceptions of Russia are almost universally negative and almost universally wrong,” he says. (Gazprom closed Monday at $19.30—Editor.)
With Russian trade looking increasingly to the east, Russia is arguably the cheapest way to access Chinese growth. The price-to-book ratio in China is something like 2.3x and 2.5x in Brazil, whereas in Russia it is only 1.3x. Sam believes there is a something of a “double standard” from investors who criticize Russian politics, yet don’t have a problem investing in China. He can see “significant tax reform in the Russian energy sector” perhaps changing some perceptions in the last quarter of this year or the first quarter of 2011. He thinks this could be “game-changing” and could see Russian companies becoming much more investor-friendly.
On a 14.8% discount to net assets, Eastern European shares offer decent value ahead of these new measures designed to further limit the discount volatility. (The trust closed at £266.50 in London trading Monday—Editor.)
01.06.2010
Oil and Gas Eurasia: ILS To Launch Two Satellites For Gazprom
International Launch Services (ILS) today announced the contract for the ILS Proton launch of two commercial satellites, YAMAL 401 and YAMAL 402, for Russian satellite operator, Gazprom Space Systems. Gazprom is the parent company of Gazprom Space Systems and is the world’s largest producer of natural gas. The launches are scheduled for 2012-2013.
The 3,150 kg YAMAL 401 satellite, to be launched directly into geostationary orbit will be built by Russian spacecraft manufacturer ISS Reshetnev with a Thales Alenia Space payload.
The YAMAL 402 satellite will be built by Thales Alenia Space and weigh approximately 5,250 kg. YAMAL 402 will be launched into geostationary transfer orbit to provide fixed communications and transmission services over Russia, CIS, Europe, the Middle East and Africa at the orbital location of 55 degrees East longitude. Both YAMAL 400-series satellites will have an anticipated service life of 15 years
The Proton vehicle is Russia’s premier heavy lift launcher and is built by Khrunichev, the majority owner of ILS and one of the pillars of the Russian space industry. Proton has a long heritage, with over 355 launches performed since its maiden flight in 1965.
Frank McKenna, president of ILS said, “We are pleased that we were able to provide a complete launch solution for Gazprom Space Systems to expand their satellite constellation and their business with these launches on ILS Proton. The entire ILS and Khrunichev team look forward to working with partners Gazprom, Gazprom Space Systems, Thales Alenia Space and ISS Reshetnev on these important missions.”
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