What the Russian papers say


MOSCOW, September 25 (RIA Novosti) Russia to reroute Shtokman gas to Europe/Moscow to present financial claims against Sakhalin II operator/Russia unwilling to sign Energy Charter/PKN Orlen may cede Mazeikiu Nafta to LUKoil for fear of losses/Russia does not need a stronger Georgia - expert


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


Russia to reroute Shtokman gas to Europe

The huge Shtokman gas field in the Barents Sea, which was expected to supply gas to the North American market, will be redirected to Europe, Russian President Vladimir Putin said at the Russian-French-German summit.
Experts and sources in the Kremlin administration said there were several reasons, such as U.S. sanctions against Rosoboronexport, the Russian weapons exporter, its stand on WTO accession talks and the general chill in Russian-American relations.
Gazprom declined to comment on Putin's statement, but a source close to the state-owned gas monopoly said it was a surprise to the company's management, and that it was "big politics."
The decision to reroute gas deliveries from the Shtokman field, which holds 3.2 trillion cubic meters of gas and 31 million tons of gas condensate, does not mean that Russia will stop supplying America entirely, said a source in the Kremlin administration. "But from now on, deliveries to Europe and the U.S. from the field will be at least on a parity basis," he said.
"The United States could hardly hope that the situation with Rosoboronexport and the [aircraft producer] Sukhoi would go unnoticed in Moscow," said a source close to the Kremlin administration.
Steven Dashevsky, head of research with the Aton brokerage, said the move was politically motivated. The Russian authorities linked U.S. companies' participation in the Shtokman project with Russia's accession to the World Trade Organization, he said.
Another reason for the move might be the fear that Gazprom will not have enough gas to meet growing European demand, and Europe is far more important to the gas giant than America is, said Maxim Shein, head of research with Broker Credit Service.
Putin's statement has an element of bargaining with the United States in it, said Boris Shmelev, head of the Center of Comparative Political Studies at the Institute of Economics of the Russian Academy of Sciences. "Russia is trying to get political dividends out of its energy projects, and this is a way for Putin to demonstrate his freedom of maneuver in relations with different Western countries," he said.


Moscow to present financial claims against Sakhalin II operator

Russian authorities, which will conduct a 30-day comprehensive check of the Sakhalin II energy project starting Monday, have found a new way to pressure the companies involved, and may demand financial compensation from the project's operator, Sakhalin Energy.
Officials said rising production costs have aggravated the situation, and they promised to make the project more financially attractive to the state.
A source familiar with the situation said that implied "hundreds of millions of dollars."
At the same time, the Russian Natural Resources Ministry's order to cancel the state environmental assessment of the Sakhalin II energy project is also to come into effect within 30 days.
The delay is explained by the refusal of Konstantin Pulikovsky, head of the Russian environmental watchdog Rostekhnadzor, to sign the relevant order.
Independent lawyers said Pulikovsky does not want to assume responsibility for others' mistakes. Eldar Nazmutdinov, a lawyer for the Russkiye Fondy (Russian Funds) investment group, said officials had to save face and find acceptable options for canceling earlier decisions and justify the legitimacy of the process.
Deputy Economic Development and Trade Minister Kirill Androsov said the situation around Sakhalin II has worsened after project costs increased to $22 billion. He said the increase will greatly impact Russia's role in the project.
"Just like the State Expert Committee, we want to see whether this increase is justified - and we can negotiate after formulating our position on the expenses issue," Androsov told Kommersant. He said project stakes may be revised.
A source in the Kremlin Administration said authorities were primarily worried about the project's economic efficiency for the countries involved.
The Sakhalin II product-sharing agreement (PSA) is the only scheme stipulating the distribution of products between the state and investors after the latter have been reimbursed for all expenses.
The source said Russia, which finds this extremely unprofitable, cannot cancel or revise the PSA. The concerned ministries and departments are therefore doing all they can to reduce reimbursable project expenses.

Novye Izvestia

Russia unwilling to sign Energy Charter

The Energy Charter does not satisfy Russia's interests, and President Vladimir Putin said it should be amended or a new one drafted.
Leonid Grigoryev, director of the Russian Institute of Energy and Finance, said the charter corresponds to Russia's interests with regard to oil and gas deliveries.
"Oil is being traded on the market, which satisfies Russia and Europe, and there is no divide between our stands on the gas issue. In particular, the charter was fully on Russia's side during the January gas spat with Ukraine," he said.
Problems with the charter and the related dissatisfaction of the Russian government concern other areas. The signatories' debates focused mostly on the issue of gas, and disregarded nuclear power generation and electricity supply.
"We lost time," Grigoryev said. "In the past, the West did not want to discuss these issues, and we did not insist. Since then, technical discrepancies have developed between the Russian and the EU grids, but the Europeans do not want to discuss it."
Tensions are more pronounced regarding the market for nuclear materials. Putin said that Russia feels discriminated against, and is losing $200-$300 million annually. According to Grigoryev, this happens because the EU has formal limits on the import of such products from other countries, which dissatisfies Russia.
He said Russia's refusal to ratify the Energy Charter is based on market rather than political considerations. The outlook is even bleaker now.
"We have complained about the charter, and there can be no question that it will be ratified," Grigoryev said. "But the charter will not be effective without Russia, because a related Transit Protocol regulates only relations outside the EU, while Russia, Azerbaijan and Turkey are the main energy transit routes in Eurasia.
So Russia is fulfilling the charter without ratifying it, which seems to be a reasonable stand."


PKN Orlen may cede Mazeikiu Nafta to LUKoil for fear of losses

Tensions around the Lithuanian refinery of Mazeikiu Nafta continue escalating. Last May, Yukos, which owned a 54% stake in the refinery, agreed to sell it to Poland's PKN Orlen.
But the transaction was not completed, while rumors circulate on the market that the Polish company is seriously considering abandoning the purchase. LUKoil, Russia's largest oil producer, is viewed as the new frontrunner for the stake.
Experts viewed PKN Orlen's victory as purely political: Lithuania chose a company that had nothing to do with Russia. At the same time, it was obvious that Poland was dependent on Russian oil, as only Russian producers could ensure supply to the refinery.
Four months later, talks that LUKoil will buy into the asset have resumed, but in a different context. There is no longer talk of an asset swap. Last Saturday, the Lithuanian press reported that PKN Orlen and LUKoil were discussing the resale of the refinery.
"There is no doubt that by refusing to pump oil, Russia encourages Poland to cancel the transaction," wrote the Lietuvos Rytas daily.
Oil supply to Mazeikiu Nafta was suspended last July because of an accident on the Druzhba pipeline. At first, Lithuanian officials remained unperturbed and spoke of finding alternative sources.
On September 10, the country received 70,000 tons of oil from a Venezuelan tanker; this was the first non-Russian oil delivered to Lithuania after the accident.
Obviously, this variant is very inconvenient and expensive for PKN Orlen, as it cuts the refinery's profitability drastically. So the resumption of talks on reselling the asset is quite understandable.
PKN Orlen has almost no chance left of withdrawing from the transaction without incurring a loss. Either it will go through, and the company will remain the owner of a refinery that is cut off from its oil supply, or it will resell the asset to LUKoil at a lower price than the almost $1.5 billion it agreed to pay.


Russia does not need a stronger Georgia - expert

Russian-Georgian relations have reached the breaking point, beyond which lies war, a political expert told the popular daily Gudok.
Mikhail Aleksandrov, head of the Caucasus department at the Institute of the CIS, said a war can be avoided, because there are people in Tbilisi who know that a direct military conflict with Russia will end in Georgia's defeat and its subsequent disintegration.
According to the expert, if the Saakashvili regime loses power in Georgia, Russia will do nothing to keep back the disintegration process. We have saved them once already, and we deeply regretted it even before Saakashvili came to power, Aleksandrov said.
The Abkhazian armed forces could have taken Poti, a port on the Georgian Black Sea coast, in 1994. Had this happened, Tbilisi would have been strangled in an economic blockade and lost control of its regions.
To prevent this, then-Russian President Boris Yeltsin ordered the landing of a Marine force of the Russian Black Sea Fleet in Poti, thereby preserving Georgia's territorial integrity.
Aleksandrov said that had Georgia disintegrated, Abkhazia, South Ossetia and Dzhavakhetia would have been recognized as independent states, and that Georgia would have been replaced with a conglomerate of autonomous regions (Adzharia, Mingrelia and Svanetia), which would have ceased to pose a threat to Russia's security.
It was believed in Russia for a long time that the destabilization of neighboring countries should be prevented at all costs, because Russia's security was directly affected.
It turned out, however, that the threat comes from the current government of Georgia, which is pursuing a policy hostile to Russia. The Georgian government is provoking tensions in Abkhazia and South Ossetia, and is pushing the country into NATO.
So a strong centralized power in Georgia is much more dangerous to Russia than its disintegration into fragmented republics.
Aleksandrov said the Kosovo precedent could be used to solve the problem of breakaway republics in the former Soviet Union, but that the West is undecided.
Kosovo can legitimately receive its independence only by a decision of the UN Security Council, where Russia has the right of veto. Moscow may suggest a package decision: Giving independence to Kosovo, Abkhazia, South Ossetia and Transdnestr, or to none.

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