What the Russian papers say


MOSCOW, September 12 (RIA Novosti) Russia to send military engineers to Lebanon/ Vneshtorgbank buys into EADS/ Rosneft may be re-privatized in next few years/ Siberian republic may build gas pipe alongside Pacific oil pipeline/ Raiders leave Moscow for the provinces

(RIA Novosti does not accept responsibility for the articles in the press)



Russia to send military engineers to Lebanon

A battalion of Russian military engineers will be sent to Lebanon later this month. Invited by the Lebanese government, they will not be part of the UN peacekeepers. One of the reasons for this decision is Moscow's unwillingness to obey NATO commanders, said a source in the Russian Defense Ministry.

The Russian personnel will avoid direct involvement in potentially dangerous operations, because "the Chechen wounds have not healed yet," the source said. They will be active outside the zone of the UN peacekeeping missions and will be subordinated only to the administrative headquarters of the Russian Armed Forces. "We will not be involved in peacekeeping," said Defense Minister Sergei Ivanov at a meeting with President Vladimir Putin Monday.

Moscow is ready to send up to 2,000 troops to Lebanon, the source said. However, another high-ranking source in the ministry said no more than 350 were likely to be sent within the first two months.

The operations may benefit the Russian army. At present, the Russian military does not have auxiliary ships to deliver engineering troops. So troops to Lebanon will be delivered by civilian vessels, first of all, cargo carriers, which will allow an assessment of how the commercial fleet works. This is also an opportunity for the Russian army to use outdated equipment in depots. According to one of the newspaper's sources, Russia will mostly send old equipment, such as pontoons that are now being discarded, which can be left in the Middle East.


Vneshtorgbank buys into EADS

The European Aeronautic Defence and Space Company (EADS) has said Vneshtorgbank has consolidated over 5% of its shares. The Russian bank will probably not stop there and it may try to raise its stake to 10%. Experts told the paper the bank was doing the state's bidding.

A source in the bank said Vneshtorgbank had bought 5.02% of EADS. But no details of the deal or further plans were disclosed. Vneshtorgbank seems to have taken advantage of a summer crisis in the European company.

Analysts agree that a brief drop in Vneshtorgbank stocks helped it consolidate them. But Finam expert Sergei Kharchenko said the bank was fulfilling the state's order. Alexei Fyodorov, head of Irkut Corporation and president of the United Aircraft Building Corporation currently being established, has said UABC is interested in acquiring a 10% stake in EADS. "This parcel could be positive for Vneshtorgbank, which is preparing for an IPO," the expert said.

Vneshtorgbank is likely to use the EADS stocks in a swap for the European concern's stake in Irkut. But even if the bank fails to regain the Irkut stocks in the mooted swap, Russia will be reassured of its strategic asset. VIKA analyst Sergei Generalov said the state, once it acquired a stake in EADS, might even receive a voting right on the European concern's board of directors.

Dmitry Ugolkov, head of analysis with CenterInvest Group, suggested the following scenario: Vneshtorgbank swaps the EADS stocks for shares of the newly created UABC, while EADS exchanges the Irkut holding (10%) for UABC shares. As a result, UABC will become an EADS shareholder, and EADS and Vneshtorgbank, UABC shareholders.

Financial Bridge analyst Igor Vasilyev forecast Vneshtorgbank would continue buying the European aircraft manufacturer's stocks to increase its stake to at least 10%.

Nezavisimaya Gazeta

Rosneft may be re-privatized in next few years

Rosneft Oil Company may be re-privatized in three to four years, said Dr. Marshall Goldman, an associate director of the Davis Center for Russian and Eurasian Studies at Harvard University. He said Rosneft's re-privatization will mark a U-turn in Russia's policy. However, Russian experts refrained from drawing categorical conclusions on the future of the state-controlled company.

Rosneft press service officials refused to comment on "rumors of a potential re-privatization." Shareholders, especially the government as its major shareholder, are responsible for the company. "The company's future depends on its shareholders. If they decide to privatize Rosneft, it will be privatized," a spokesman said.

Russian experts are not ready to accept unanimously Goldman's conclusions. Dmitry Mangilev, an analyst with the Prospekt brokerage, said, "there is no indication yet that Rosneft may be re-privatized." However, he added, even if re-privatization happens, no crucial changes will be made, since the government will retain control of Rosneft.

Yevgeny Yasin, academic supervisor at the Moscow-based Higher School of Economics, did not have an absolute confidence in Goldman's information either. He told the paper about two scenarios. Under the first, the government may maintain its policy toward the economy's socialization, and Rosneft will remain state-owned but, unlike private companies, will be entitled to government support.

However, the former economic minister said another scenario was also possible if the government took an active part in the redistribution of assets and management reshuffles. "There have been precedents with property transfers through the prosecutor's office. Yukos is a clear example. I will not be surprised if the people who fought to take Yukos finally establish control of Rosneft," Yasin said.


Siberian republic may build gas pipe alongside Pacific oil pipeline

The Siberian republic of Sakha (Yakutia) has proposed building a gas pipeline parallel to the Eastern Siberia - Pacific Ocean oil pipeline to pump natural gas from East Siberian and its own fields and sell some of it to China. The construction along the oil pipeline's route will make the gas project cheaper, but it is unlikely to be approved, experts told the paper. Gazprom has already chosen to supply gas to China along the Altai pipeline.

An official familiar with the Sakha government's proposal said the region had 29 oil and gas condensate fields that needed pipelines to develop. If only an oil pipeline is constructed, petroleum gas from oil fields will have to be burned, and if only a gas pipeline is built, a lot of oil will remain untapped. Sakha's fields can yield at least 35 billion cubic meters of natural gas annually for 50 years. Adding gas from the huge Kovyktinskoye field and petroleum gas from East Siberian oil fields, the gas pipeline capacity may amount to 80 billion cu m annually, the official said. The pipeline should have an offshoot to China. Also, Russia should build an LNG plant on the Pacific coast in order to export liquefied natural gas.

Despite these advantages, this project hardly has a future, said Valery Nesterov, an analyst with the Troika Dialog brokerage. Gazprom has already decided that gas to the Asia-Pacific region will be supplied from West Siberia (by the Altai pipeline) and the Sakhalin projects (LNG and pipeline gas) off Russia's Far East coast. Export prospects in China are unclear, the expert said. The Chinese market is unpredictable and too small, as it mainly consumes coal. However, Sergei Sanakoyev, head of the Russian-Chinese Center for Trade and Economic Cooperation, said that China was interested in Russian gas supplies.

A Gazprom representative said their priority was the Altai project, but refused to rule out the Sakha project. The Chinese market "has huge potential for growth, and the project can be implemented later."


Raiders leave Moscow for the provinces

Hostile takeovers in Moscow have decreased by two-thirds over the past year, according to Moscow Mayor Yury Luzhkov. Today, this $3 billion market is more civilized.

Raiders are using "white" schemes, without resorting to force, and the emphasis has shifted from prominent targets, of which there are practically none left, to smaller and medium-sized businesses, experts say.

In search of larger prey, many companies operating on the mergers and takeover market have headed for the regions. Market players also say Russian raiders are making overseas incursions - they have been involved in hostile bids against companies in Kazakhstan and the former Yugoslavia.

The Moscow City Council recorded 190 instances of forcible seizures of enterprises in Moscow in 2004, and 47 in the first half of 2005.

"On the one hand, the authorities have stepped up the fight against raiding," said Vladislav Grachev, deputy head of the Rosrazvitie group of companies. "On the other, Moscow has few large companies left (worth $30 million) to interest raiders."

"The largest industrial assets in the capital were absorbed in 1999-2005," said Svetlana Moiseyeva, analyst at the Agency for Anti-Crisis Technologies and Investments.

"Gorged on big deals, the raiders have now switched to small and medium businesses," Grachev said. "The current targets are small enterprises, for example, shops with a floorspace of 90 square meters and up," said Alexei Zemtsov, analyst at MA-Communication.

"The present policy of regional authorities is one of attracting investments. In such conditions, the price of assets and real estate in the regions grows quickly," Moiseyeva said.

"A factor aggravating the situation in the regions is the building of holdings, when raiders commissioned by big companies buy up core assets or sites for future manufacture for a pittance," Zemtsov said.

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