TOMSK, April 27 (RIA Novosti) - Russian and German officials signed agreements in the energy, banking and transportation sectors Thursday and Russia offered to settle its debts to the Paris Club by the end of 2006.
With President Vladimir Putin and Chancellor of Germany Angela Merkel meeting for the second day of talks in the West Siberian oil city of Tomsk, an economic forum held on the sidelines of the consultations was always likely to focus on energy, but Russia also made a proposal to pay back debts dating back to the Soviet Union.
Putin said Russia hoped to be able to pay off all debts to the Paris Club of creditors by the end of the year.
"This year we plan to fully cancel our liabilities to the Paris Club. We hope that Germany and other countries will be able to take advantage of our offer," Putin said.
Russia in 2005 made pre-term payments of $15 billion to the Paris Club - an informal grouping of 19 governments that have large financial claims on various other governments - and planned to pay off an additional $12 billion in 2006. Germany, however, in 2004 converted its $6-billion share of the debt to 3- and 5-year notes and 10-year bonds that cannot be repaid before maturation.
Finance Minister Alexei Kudrin said Russia was willing to use funds from its Stabilization Fund, set up to harvest windfall oil revenues above a cutoff point of $27 per barrel, to pay Germany $9.5 billion in lieu of its Soviet-era debt.
"This means just the [bilateral] part of the U.S.S.R.'s debt to Germany, which currently stands at some $9.5 billion," he said.
Early repayment could save Russia several hundred million dollars, Kudrin said, as even if Russia paid off everything, Germany would keep paying interest on bonds.
The forum included representatives of major companies from both countries, including German energy utility E.ON, chemical company BASF, telecommunications giant Siemens, and Deutsche Bank, and a number of deals were signed and agreements reached at the meeting.
Gazprom (RTS: GAZP) and Germany's BASF (NYSE:BF) (FWB:BAS) (LSE: BFA) signed an agreement on the joint production of 25 billion cubic meters of natural gas a year for the next 30 years - the first time a foreign company has been granted access to a strategic gas deposit in Russia.
Putin announced the terms of the deal and hailed BASF's decision to offer some of its assets to Gazprom, which is the second-biggest company in the energy sector after U.S. giant Exxon Mobil and fourth overall in terms of capitalization, in exchange for an increased stake in the Gazprom-operated Yuzhno-Russkoye oil and gas field.
With recoverable reserves estimated at more than 600 billion cubic meters, the Yuzhno-Russkoye deposit, in West Siberia's Yamal-Nenets Autonomous Area, will be the main source of natural gas for export via the North European Gas Pipeline (NEGP), a $10.5-bln Gazprom-managed project to supply western Europe with gas via a pipeline across the floor of the Baltic Sea.
Russia currently supplies about a quarter of Europe's gas, and 30% of Germany's. At current export rates to Germany of 40 billion cubic meters, the deposit will have enough gas for 15 years of steady supply. Production is slated to begin in 2008.
Under the asset-swap deal, Gazprom will increase its interest in the companies' Wingaz joint venture to 50% minus 1 share and gain a stake in Wintershall, a BASF subsidiary that owns hydrocarbon exploration and production assets in Libya.
The deal will give Wintershall a 25% minus 1 voting share stake and 10% of the non-voting shares in Severneftegazprom, raising BASF's stake in the Yuzhno-Russkoye deposit, operated by this Gazprom subsidiary, to 35% minus one share.
"Our cooperation with BASF is unique, and covers the entire chain of cost creation - from exploration and production of natural gas in West Siberia and its transportation along the North European Pipeline to distribution via a joint pipeline network in Germany and other countries of Europe," Gazprom CEO Alexei Miller said. "This opens up opportunities for reliable, long-term Russian gas supplies into Europe on competitive terms."
Gazprom and BASF also agreed to set up a joint venture, Wingaz Europa, to sell natural gas in Europe.
Merkel said Germany regarded fossil fuels as Russia's most important export, but that her country was also interested in expanding cooperation in areas including logistics, infrastructure, aircraft and car manufacturing, and banking.
The chancellor said Germany was a major trade partner for Russia, and that commercial turnover between the two countries had increased 24% year-on-year to $39 billion in 2005.
Reflecting the positive dynamics, Russian Railways and German railway operator Deutsche Bahn agreed to set up a joint logistics venture for freight transit from Asia to Germany and western Europe and back along the Trans-Siberian Railroad.
State-run Vnesheconombank and Deutsche Bank signed a bilateral cooperation agreement and a deal on interaction in state-private projects. The two countries' transportation ministries also adopted a statement on further cooperation in the sector.
Vnesheconombank, Roseximbank, which supports government export operations, the Russian Bank for Development, and German government-owned KfW Group signed an agreement on collaboration in consulting services and technical cooperation to implement the Russian government's plans to establish a financial institution to boost Russia's development.
Speaking on economic relations with the West in general, Putin said cooperation, including in the energy sector, should be pursued on equal terms.
He said current calls in Britain for a new law to prevent a possible Gazprom buyout of its largest gas-distribution company, Centrica, showed that Russian companies faced discrimination against on global markets.
"We constantly hear about some threat of dependence on Russia and that Russian companies should have limited access to the energy market," Putin told a news conference.
"When [people] come to us, it is called investment and globalization, but when we plan to enter [other markets], it is already referred to as expansion," he said. "We must agree on common rules of the game."
Putin said that Russia had no other option in such circumstances but look for other markets. But he praised British officials who said a new law preventing Gazprom taking over Centrica would be unacceptable and promised support for all investors.
"Such a partnership approach will help resolve any problem, even the most complex," he said.
Merkel, who was accompanied on her Siberian visit by nine ministers, said the European Union was discussing the issue, but ruled out the possibility of any protectionist trends.
The chancellor's statement came following harsh criticism of her predecessor, Gerhard Schroeder, for accepting a high position in a Russian-German joint venture to build the NEGP. The German parliament is investigating state credit guarantees given to the project by the government of Schroeder, who was on friendly terms with Putin.
Merkel, a fluent Russian speaker, also said Berlin had repeatedly said economic cooperation with Germany was a question of economic development.
Putin said Merkel and he agreed that energy cooperation between Russia and Europe had been ongoing for decades.
"Even during the Cold War, during confrontation between two regimes that were balancing on the edge of a nuclear world war, Russia supplied all its European partners exactly on time in accordance with commercial contracts," Putin said, before asking rhetorically what was the point of trying to increase fears artificially of dependence on Russia now that global dynamics had changed dramatically.
