MOSCOW, November 17 (RIA Novosti) Russian gas alarms NATO /Kremlin to curtail rights of foreign investors/TNK-BP owners want to sell stake in Svyazinvest at $700mln profit/LUKoil's JV plans with Gazprom Neft jeopardized/Russians love their government and president
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Russian gas alarms NATO
Energy security will be a priority topic at the NATO summit to be held in Riga November 28-29, a diplomatic source in Brussels said. Russia is ranked among the countries that could pose a threat to the alliance's energy interests, the press reported.
Russia came to the fore after provoking a gas conflict with Ukraine and Georgia, NATO officials believe. The alliance described the fact that Russia cut off gas supplies to those countries as a factor that affected deliveries to Germany, Italy and Hungary.
Moscow was accused of using energy as political leverage, and Washington has repeatedly expounded on the idea in the international arena.
The same idea was developed in a confidential report by experts with the alliance's Economic Committee, which was circulated in the capitals of the 26 member countries ahead of the NATO summit.
NATO fears that Russia will establish a 'gas OPEC' that will boost its clout on the European market. The alliance's experts believe the 'new OPEC' will be aimed "at using energy policy to attain political goals, in particular in relations with its neighbors, such as Georgia and Ukraine."
Most Russian experts are considering the creation of a gas cartel only as a theoretical possibility.
"Russian energy giant Gazprom is making no efforts to set up a 'gas OPEC,' nor does it have such plans," said Sergei Chelpanov, deputy director general of Gazprom's export arm Gazpromexport.
He said Gazprom wants to integrate gas suppliers and consumers, while a union of suppliers alone would provoke unwanted uncertainty on the market among consumers.
"Theoretically, the idea of a gas alliance looks lucrative, as coordination reduces costs and enhances the security of gas supplies. In addition, a monopoly is the most effective way of gaining profit," said Natalya Volynskaya, director of the Independent Fuel and Energy Institute.
"Experts have long discussed the idea of a 'gas OPEC'," she said. "However, whether the project will be implemented depends on politicians, who may find the damage from political speculation on Russia's monopoly difficult to justify."
Kremlin to curtail rights of foreign investors
Foreigners will not be permitted to control companies in some 40 sectors of the Russian economy, notably in aerospace and mineral production, and all natural monopolies.
The Ministry of Industry and Energy forwarded to the government a draft law regulating foreign investment in commercial organizations of strategic significance for Russia's security. The law is based on three principles.
First, it outlines 40 spheres of operation closed to foreign investors' control. The previous list of 39 spheres was expanded to include "enterprises enjoying a monopoly in the development, production and use of construction materials in the production of arms and hardware." The new addition was made to benefit titanium producer VSMPO-Avisma.
Second, the law stipulates strict control over transactions in strategic sectors by a special government commission and an authorized body. The provision concerns the acquisition of controlling stakes (more than 50%), although the Federal Security Service suggested controlling all acquisitions of more than 30% of shares.
Third, there is a list of permits foreigners wishing to invest in a strategic company must acquire.
The documents formulated by Russian officials can be interpreted in a number of ways. The success of Russian environmental authorities in fighting foreign companies shows that any report can be judged incomplete.
Russia and the EU have increasingly been exchanging accusations of protectionist policies. Russia claims the EU is hindering Russian companies' acquisition of large assets abroad, while the EU says European companies are being pushed out of projects in Russia.
The environmental "stick" is the most popular weapon. Sakhalin Energy, the operator of the Sakhalin II oil and gas project in Russia's Far East, has recently been accused of gross violations of environmental legislation, evaluated at 50 billion rubles ($1.9 billion), and now Russian environmentalists have attacked British Petroleum.
Inspections at the Kovykta gas project in Siberia's Irkutsk Region and several other fields being developed by TNK-BP subsidiaries spell problems for the British company.
A high-ranking official in the Russian government recently said that the law curtailing the rights of foreign investors was still under discussion and would not be rushed. He also frequently complained about the excessive activity of foreign investors in Russia, saying there was enough money in Russia.
It seems the Russian government wants to perpetuate a situation where the operation of foreign investors would not be curtailed by law, but "manhandled".
TNK-BP owners want to sell stake in Svyazinvest at $700mln profit
Co-owners of TNK-BP, a British-Russian joint venture, Leonard Blavatnik, president of Access Industries, and Renova's Viktor Vekselberg, have decided to sell 25% plus 1 share in Svyazinvest.
Just as the blocking stake's previous owner, George Soros, they have been disappointed by their investment, waiting in vain for the telecom holding to be privatized. Analysts assessed their stake at $1.4 million, two times what the American financier got three years ago.
Three businessmen familiar with the situation with Svyazinvest told the paper that the frontrunner for the stake was Vladimir Yevtushenkov, founder and chairman of the board of AFK Sistema.
A source familiar with the progress of the talks said Yevtushenkov and Blavatnik disagreed on a price and were discussing $1.3 billion. Nadezhda Golubeva, analyst with Aton, said the company's capitalization has more than doubled in the last three years, and continues to grow, adding that a blocking stake would cost $1.4 billion.
At the privatization auction in 1997, Mustcom consortium, headed by Soros, paid $1.875 billion for its stake in Svyazinvest. He then lost faith in the asset, describing it as his worst investment ever and selling it to Blavatnik for $625 million.
The latter can secure a profit of almost $700 million from the resale, but the investment cost him dearly. A source close to Access Industries said that Blavatnik bought the blocking stake in expectation of a new auction.
The Russian government has been planning to sell its 75% plus 1 share in Svyazinvest since 1998. In April 2005, the Economic Development Ministry submitted to the government a draft resolution on excluding the holding from the list of strategic companies that could not be privatized.
Since the spring of 2006, the resolution endorsed by the anti-monopoly authorities, the Finance Ministry, the Federal Guard Service and the Interior Ministry has been waiting for President Vladimir Putin's signature.
Yelena Bazhenova, an analyst with MDM Bank, said that two weeks ago the market discussed the idea of swapping all telecom assets held by Yevtushenkov for a stake in Deutsche Telekom.
If Blavatnik adds 25% of Svyazinvest to his holdings, AFK Sistema could hope to get a blocking stake in the German company, the analyst said.
Blavatnik has chosen the right time to sell his stake - if Svyazinvest is broken up and its subsidiaries are listed separately, as Economic Development Minister German Gref proposes, Blavatnik's stake will be diluted, Bazhenova said.
LUKoil's JV plans with Gazprom Neft jeopardized
Yesterday, the expected signing of a joint venture agreement between LUKoil and Gazprom Neft did not take place because the latter's president, Alexander Ryazanov, was fired.
The issue will be taken up again after November 22, when Alexander Dyukov, president of Sibur Holding, will take Ryazanov's place. However, the scenario might be adjusted.
Ryazanov's ideological opponent within Gazprom, deputy CEO Alexander Ananenkov, is drafting an agreement on cooperation in oil production with a different partner, namely Rosneft.
LUKoil President Vagit Alekperov said the joint venture would acquire "both Russian and foreign assets." But the company's vice president, Ravil Maganov, insisted that the new company would operate only in Russia.
A source familiar with the agreement said that Gazprom Neft would get a 51% stake in the JV and LUKoil 49%. It does not specify the time frame for the new company's setup, and does not mention any foreign projects or binding conditions.
Instead, it lists specific fields in the Yamal-Nenets Autonomous District and in the Komi Republic where joint exploration and production will take place.
Gazprom and LUKoil signed an agreement on strategic cooperation until 2014 in March 2005. It envisaged the joint implementation of oil projects in the Nenets and Yamal-Nenets Districts and in the Russian sector of the Caspian Sea.
Denis Borisov, an analyst with the Solid brokerage, said that LUKoil has a more powerful production potential than Gazprom Neft, whose operations focus on the Nenets District, where it has its key production asset, Noyabrskneftegaz.
LUKoil is the biggest oil producer in Komi and in many other regions.
"Besides, the JV with Gazprom Neft significantly increases LUKoil's chances of getting access to large Russian fields, including those that have not been distributed yet," Borisov said.
Earlier, LUKoil spoke of its interest in strategic fields in the Nenets District, Trebs and Titov.
A source familiar with the situation said the signing of the agreement was postponed until November 23. However, Gazprom has an alternative partner among Russian oil producers.
On Wednesday, Ananenkov said the concern would soon sign a cooperation agreement with state-owned Rosneft. It will also envisage joint oil production. Both Gazprom and Rosneft declined to elaborate on future cooperation.
Industry experts told the paper the two agreements need not compete. They may envisage projects in different regions, said Andrei Gromadin of MDM Bank. However, Rosneft is also interested in the Trebs and Titov fields.
Russians love their government and president
Russians, who have always loved Putin, now think better of the other bodies of power as well. Their respect for the government and both houses of Russia's parliament has grown compared to the first half of 2006, experts of the polling agency VTsIOM said. They explain the change by seasonal fluctuations and growing economic stability.
The majority of the respondents approve of the president's actions. The figure has grown from 72-75% in January-April, to 77-79% in May-October.
The number of respondents who approve of the work of the government totaled 31-38% for January-June, whereas 47-51% of the respondents were dissatisfied with its efforts. The numbers became almost equal in July-October (41% against 44%).
VTsIOM analysts do not view this growth as significant or unexpected. Igor Eidman, the pollster's director for communications, said public approval usually grows in summer.
"These are seasonal fluctuations, as the respondents are more relaxed and have a more positive view of life and the authorities [in summer], when social sentiments improved and positive changes were registered in the economy."
Dmitry Oreshkin, head of the Merkator analytical group, said the changes registered by VTsIOM were notable.
"These are not very big positive changes, but they are significant because they exceed the margin of error. The state is using television to popularize its achievements," he said.
"The ratings of [First Deputy Prime Minister] Dmitry Medvedev and [Defense Minister] Sergei Ivanov have grown considerably from 6% over the past year. However, it is becoming clear that the priority national projects are not bringing the desired result, and therefore Medvedev's rating has stopped growing."
Oreshkin said there are also palpable changes, such as growing pensions and an increase in wages for large groups of the public sector staff.
"Russians are not used to state care, and they don't need much [to be pleased with it]. There were wage arrears several years ago, and now wages are rising."
According to Oreshkin, the situation will not change much before the parliamentary elections.
"Everything will look more or less positive, with attempts made to cajole the people. But demands tend to grow very fast, and systemic risks are accumulating," he said.