MOSCOW, December 22 (RIA Novosti) Gazprom to pay $7.45 bln for control of Sakhalin II/Review of gas contracts with Russia to pose problem for any Turkmen regime/Total to share Kharyaginskoye license with LUKoil/New U.S. cruise missile to increase chances of nuclear conflict: expert/Russian mafia pours cash into Montenegro
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Vedomosti
Gazprom to pay $7.45 bln for control of Sakhalin II
Environmental regulators on Sakhalin have done their job - Russian energy giant Gazprom will pay Royal Dutch Shell, Mitsubishi and Mitsui $7.45 for Sakhalin II, a few billion dollars less than the market price. Russian President Vladimir Putin congratulated the partners on the bargain, and said that the biggest problems were in the past.
Shell will retain 27.5% minus one share in Sakhalin Energy, the project operator, while its Japanese partners Mitsui and Mitsubishi will control 12.5% and 10% respectively. All contracts for LNG supplies remain in force. A source close to a participant in the deal said it will be completed in February.
Experts have valued the controlling stake at $8-$10 billion. Gazprom used environmental protection as a bargaining tool to get a discount, according to experts. Since August 2005, Sakhalin II has been a target of environmental probes. The Russian Federal Agency for the Management of Mineral Resources, the Federal Agency for Forestry and even the migration service have accused Sakhalin Energy of violations.
The project cost will be increased, however the earlier announced sum of $22 billion until 2045 will be the ceiling, a source close to the deal said. A mechanism will be introduced for the government to claim excess profits from Sakhalin II. For that, oil prices should exceed the price included in the project and approved annually ($36 in 2006). Russian Industry and Energy Minister Viktor Khristenko said the cost problem will be settled in the first quarter of 2007.
"The president and government have played good-cop-bad-cop," said Alexei Makarkin, deputy director general of the Center for Political Technologies. "Everyone expected the worst, while [the authorities] treated investors loyally and promised them substantial compensation," he said. However, the expert said it is clear that the attack on Sakhalin Energy was pre-planned with the Kremlin.
Where will Gazprom get the money? The gas monopoly has approved a $20 billion investment program for 2007, and no purchase of a stake in the Sakhalin II project had been envisaged. As of late October, Gazprom's net debt hit $25.3 billion, according to the gas monopoly.
Today, Gazprom has over $6 billion of idle funds on its balance, said Dmitry Lukashov, an analyst with Alfa Bank. Theoretically, Gazprom could complete the deal by late this year. In any event, its net debt will exceed $30 billion, the expert said.
As the gas giant is eyeing bankrupt oil company Yukos' assets, which will be put up for auction next year, it will have to borrow more. However, this will hardly pose a problem for Gazprom, Lukashov said.
Biznes, Rossiiskaya Gazeta
Review of gas contracts with Russia to pose problem for any Turkmen regime
The death of Turkmen President Saparmurat Niyazov could lead to a review of all agreements on Turkmen gas supplies to Russia. Gazprom does have something to lose: the Central Asian republic planned to sell Russia 50 billion cu m of gas over the next two years at $100 per 1,000 cubic meters. Analysts, however, are unanimous that no matter what regime comes to power in Ashgabat, it would be suicidal for it to refuse to supply gas to Russia.
Energy exports have always been the main source of budget revenue for Turkmenistan. Natural gas, oil and petrochemicals account for over 80% of its overall exports. The country's trade turnover in January-May 2006 was $3.7 billion and foreign trade surplus reached $1.1 billion, with Russia accounting for about 50% of foreign trade, according to the Turkmen National Institute of State Statistics and Information.
The late Turkmen leader did not want to accept dependence on Russia as the only export route, and offered gas to China. The two countries signed an agreement under which China undertook to finance the construction of a pipeline with an annual capacity of 30 billion cu m. However, the project has yet to be launched, and Niyazov's death is unlikely to accelerate it.
The question of the day is whether a new regime will confirm the contract with Gazprom until 2010 in full, including prices, or whether it enters new discussions, threatening for example to return to plans for a Caspian pipeline bypassing Russia. The Russian gas monopoly has refused to comment. "No serious expert will make forecasts on this," a company representative said on conditions of anonymity.
However, experts close to the state-controlled energy giant advised against "escalating emotions" because cancelling the contract would be "suicidal for any regime, as any regime needs cash."
In fact, only the contract with Russia brings money to Turkmenistan, they said. "You can court different power centers, but you cannot build a pipeline in a month. If there is no gas money in the treasury, the regime will not even have this month," they said.
Kommersant
Total to share Kharyaginskoye license with LUKoil
Russian authorities will today discuss the license agreement for the Kharyaginskoye oil field, which French oil major Total is developing under a product-sharing agreement. Experts say the license can be revoked only by cancelling the PSA, which is unlikely to happen. However, they do not rule out that the commission for license withdrawal of the Federal Agency for the Management of Mineral Resources will insist on increasing the share of Russian companies in the project to 50%. LUKoil is the frontrunner for the stake.
The project envisages production of 3.5 million metric tons of oil annually, but real output is only around 1 million. The operators [Total holds 50% in the project and Norsk Hydro 40%] have committed violations, the main one being their failure to reach the planned output level, said the agency's head, Anatoly Ledovskikh.
"In this case the license only serves to certify a company's right to develop a field, it does not itself provide the right," said Mikhail Subbotin, director of SRP Ekspertiza, a consulting firm. The Industry and Energy Ministry, however, is unlikely to cancel the PSA, he said. "This will inevitably lead to litigations, and their outcome is unpredictable," he said.
After the authorities refused to endorse the project's cost sheet in 2001-2003, Total turned to court, but the parties then reached an amicable agreement. "But complaints about the company may allow the Russian authorities to negotiate an increase in Russian companies' stake to 50%, repeating the Sakhalin scenario," Subbotin said.
LUKoil, which is also developing Kharyaginskoye, has an option for purchasing a 20% in the project (10% from Total and the same from Hydro). A month ago, the Russian oil giant said it would like to change the articles of association and the work of the board. A source in the Russian government, however, said the negotiations were being delayed because "it is interesting to join the project only if a company becomes its operator and can control financial flows."
Dmitry Mangilev of the Prospekt brokerage did not rule out that the situation on Kharyaginskoye could "mirror the Sakhalin II scheme outcome." The project could also be of interest to state-owned companies, he said.
Vremya Novostei
New U.S. cruise missile to increase chances of nuclear conflict: expert
The Pentagon hopes to receive hypersonic nuclear-tipped cruise missiles for attacking terrorists in any part of the world in just 60 minutes. Russian experts said this would mean looser rules of engagement for nuclear weapons.
The United States plans to test its X-51 Waverider hypersonic cruise missile, which resembles an inter-planetary spacecraft, in 2008.
It is believed that the X-51 can fly at up to 6,000 km/h, or seven times faster than Tomahawk cruise missiles, and will have a range of about 1,200 km.
But air-launched and submarine-launched X-51 missiles will have an almost unlimited range.
Alexander Pikayev, the head of the disarmament department at the Moscow-based Institute of the World Economy and International Relations, said hypersonic cruise missiles are new-generation smart weapons.
These hard-to-detect and hard-to-destroy missiles can fly at low altitudes and in the terrain contour matching (TERCOM) mode.
"The Russian cruise missile program has always been more advanced than that of the United States; but I have not heard anything about similar hypersonic missiles," Pikayev told the paper.
Nuclear-tipped hypersonic cruise missiles provide for looser rules of engagement for using nuclear weapons; consequently, a nuclear conflict seems more likely, he said.
According to Pikayev, U.S. claims that the new missiles are only intended to be used against terrorists are groundless.
These super-fast missiles are primarily designed for use against countries with powerful anti-ballistic missile systems, including Russia, Pikayev said.
Gazeta.ru
Russian mafia pours cash into Montenegro
Two Russians were recently detained at the airport of Podgorica, the capital of Montenegro, for attempting to take out 1 million euros in cash. They are suspected of money laundering and tax evasion.
Russians are buying up real estate in the former Yugoslav republic, and the local authorities shut their eyes to the fact that they bring suitcases full of cash into the country.
A Montenegrin lawyer said Russians bring with them 4, 5 or 6 million euros in cash, and the authorities do not react.
According to the Russian diplomatic office in Podgorica, they learned of the scandal from the newspapers.
"This is a routine situation that does not call for our interference, because it is not a murder case. The local authorities will inform us when they see fit, but so far they have not made any statements or requests," said Andrei Yarmolenko, Russian charge d'affaires ad interim.
Russians have been buying land plots on the Adriatic coast of the Mediterranean for the past two or three years, building luxury hotels and investing in real estate.
Some Montenegrins wonder if the small country, with a population of 650,000, will eventually become "an outpost of the Russian mafia."
Montenegro is one of the few countries Russians can enter without a visa.
Officially Russians have invested $2 billion in Montenegro, and the unofficial figure is unknown.
In 2005, Russian aluminum giant RusAl, owned by Oleg Deripaska, who is close to the Kremlin, bought Montenegro's largest aluminum works, Kombinat Aluminijuma Podgorica, which accounts for a substantial portion of the republic's export.
RusAl also bought a stake in the Kombinat's subsidiary thermal power plant, as well as in bauxite and coal mines.
It is reported that Montenegro's largest steel mill has also been sold to Russians.
