MOSCOW, January 26 (RIA Novosti) Russia, India to expand mutual trade / Russia to secure foothold in Indian power generation / Russia to build strategic oil pipeline for Iran and Armenia / New Caspian pipeline to bypass Russia / Boris Abramovich now owns Malev
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Vedomosti
Russia, India to expand mutual trade
On Thursday, Russian President Vladimir Putin and Indian Prime Minister Manmohan Singh held talks in New Delhi, and pledged to expand bilateral trade, which is dwarfed by Russian-Chinese and Indian-Chinese trade, to $10 billion by 2010.
Russia's defense and nuclear industries are quite optimistic about the latest Russia-India summit's results, because India has promised to order four nuclear reactors; and a new cargo plane can be built in lieu of India's debt to Russia.
Military-technical talks were the most successful; the sides inked a protocol on developing a multirole cargo aircraft by Russia's Irkut Corporation and Hindustan Aeronautics Limited (HAL). India is to spend $7-8 billion on the project, and 200 planes will be produced, a source close to the talks said.
Rosoboronexport, Russia's main state arms exporter, and HAL may sign a contract on developing a fifth-generation fighter four to five months later, a source close to the talks told the paper. He said Russia, which has already contributed $4 billion, needs a foreign partner.
Russia's Federal Agency for Nuclear Power (Rosatom) and the Nuclear Power Corporation of India Ltd. signed a memorandum on building four nuclear reactors in addition to two now being constructed for a power plant in India. In all, Russia plans to build 10 reactors in India, he said.
Bilateral cooperation has become more active. It is much easier to work now, and serious contracts are being concluded, a source in the Kremlin said. This is due to invigorated political dialogue between Russia and India, which are now looking to the United States less frequently.
Putin said he and Singh had discussed cooperation between Russia, China and India, three rapidly growing economies. In 1999, the then Russian Prime Minister Yevgeny Primakov suggested establishing a Russian-Chinese-Indian alliance.
However, Russian-Indian trade is the weakest side of the Beijing-Moscow-New Delhi triangle.
Although trilateral interaction will continue to develop, our countries are focusing on common political interests, Andrei Niyazov, deputy director of the Institute of Asian and African Studies at Moscow State University, said.
According to Niyazov, unequal economic interests may hinder expanded economic cooperation. The United States, India and China, the three major oil consumers, may have common interests in the future, Niyazov told the paper.
Gazeta.ru
Russia to secure foothold in Indian power generation
New power generation contracts are quite promising for both Moscow and New Delhi. Experts, however, warn that in confining itself to the East, Russia risks being isolated from the West.
In addition to the two nuclear reactors under construction, Russia intends to build another four in India. Bilateral cooperation could be hindered by the ban of the Nuclear Suppliers' Group on the delivery of nuclear materials and technology, introduced after India first tested nuclear weapons.
India's interest in nuclear cooperation with Russia is logical, experts told the paper. "Complying with all of the IAEA requirements, Russian NPPs are less costly than their Western equivalents, and their maintenance is easier and cheaper," said Yevgeny Rudakov, an expert analyst with the Institute of Natural Monopolies' Studies.
However, experts fear that Russia does not have enough resources to honor all of its commitments. One of the risks inherent in additional export commitments is the limited capacity of the nuclear industry, notably, the Izhora plants, which at present cannot produce more than two VVER-1000 reactors a year, Rudakov said. Given Russia's ambitious plans to expand nuclear power generation capacity inside the country over the coming years, it is unclear whether it can produce the necessary amount of NPP equipment.
Power generation cooperation reflects Russia's course toward friendship with India, experts said. "Of course, India is an old partner of Russia both in the economic and political sphere," said political expert Dmitry Oreshkin. However, this turn toward the East and a chill in relations with the West may not be entirely positive for Russia.
"Russian elites, especially the military, traditionally want the country to claim the role of a regional leader, which is easier to do in the East than in the West, which is more economically advanced," he said. This traditional Soviet-era mentality may put Russia in isolation in the West, he warned.
Kommersant
Russia to build strategic oil pipeline for Iran and Armenia
Russian energy giant Gazprom's oil-producing subsidiary Gazprom Neft reiterated Thursday it was considering building an oil refinery in Armenia, on the border with Iran. The refinery is to have an annual capacity of 7 million metric tons of crude, and will cost $1.7 billion, plus $1 billion for transport infrastructure. Industry experts think the project makes no economic sense.
Armenia's initial plans were for 3 to 4 million metric tons. But Moscow countered by almost doubling the figure, even though Armenia does not need more than 250,000 metric tons of oil per year. Crude to the refinery is expected to come from Iran along a 200-kilometer pipeline to be built to the Armenian border from Tabriz, which already has its own refinery. Refined products are to be transported back to Iran along a rail line, which is also absent.
"Economically it makes no sense to build a 7-million ton plant in Armenia," said Mikhail Perfilov, business director of Fearnleys, an oil transit company. "Armenia has no crude of its own or long-distance pipelines. Crude imports will be expensive, and petroleum product exports will carry high transport overheads."
A refinery for Armenia is more a political project for its potential contributors to draw political dividends from.
With Moscow-Tbilisi relations deteriorating, Armenia is now threatened with being cut off from its main strategic partner and sponsor - Russia. Yerevan may find itself face-to-face with one of its increasingly ominous opponents - Azerbaijan. The refinery will at least help Yerevan to keep its positions in the region.
The Armenian refinery may come in handy for Iran if the United States decides to launch a military operation against Tehran. Experts say the U.S. will not go beyond missile strikes against Iran's strategic targets to undermine its potential. Most Iranian refineries would then be destroyed in a matter of days. The Americans, however, would not risk bombing a plant on Armenian territory, moreover one jointly owned by Russia and Armenia.
For Russia the project will spell fresh frictions with the U.S. - at least as unpleasant as those caused by the recent deliveries to Iran of Russian-made Tor missiles. But formally the Americans will have nothing substantial to charge Moscow with.
Nezavisimaya Gazeta
New Caspian pipeline to bypass Russia
Russia is losing its monopoly on oil and gas transit from the Caspian region. Kazakh state-owned company KazMunaiGaz has announced that it has reached an agreement with officials from Agip and Tengizchevroil on establishing the Kazakh Caspian Transportation System to deliver to global markets up to 38 million metric tons of oil a year.
The new Caspian route, which should be commissioned by 2010-2011, will bypass Russia and also weaken Moscow's attempts to make participants in the Caspian pipeline consortium (CPC), which is now transporting oil from Kazakhstan's largest Tengiz deposit to Novorossiisk, pay more to Russia.
Kazakhstan switched to the alternative Tengizchevroil route following a conflict with the Russian government, which owns 24% in the CPC, and says its capacity could only be expanded if the oil transit tariff is increased and interest on loans for the construction of the oil pipeline are lowered.
The Natural Resources Ministry criticized oil producers' transit plans in Kazakhstan. Yesterday, Amirkhan Amirkhanov, deputy director for state environmental policy, said: "Periodic reports about projects for laying a pipeline under the Caspian Sea, mostly those aimed at hydrocarbon transit bypassing Russia, alarm us."
Experts admit that the new trans-Caspian route will reduce Russia's "transit influence." "Kazakhstan is augmenting its output, and the deficit of Russian transit capacity would manifest itself sooner or later," said Valery Nesterov, an analyst at the Troika Dialog brokerage.
He added that "the problem of pumping oil through the Baku-Tbilisi-Cayman pipeline" had always been urgent, and Kazakhstan might have come under pressure before resolving to switch to the Turkish route. Kazakhstan is likely to start building a permanent underwater oil pipeline if Caspian oil tanker shipments exceed 10 million metric tons.
Biznes
Boris Abramovich now owns Malev
AirBridge Zrt has won a tender for the Hungarian air carrier Malev. Analysts say Malev's air route network will turn the AiRUnion alliance into a significant player on the international market.
Boris Abramovich, KrasAir CEO and co-owner of the alliance, is a shareholder of AirBridge Zrt.
It has not been revealed how much the winner paid for Malev. Earlier, Hungarian media put the figure at $187 million, but according to a source this was an estimate of the company's assets and debt. In the view of Finam analyst Sergei Kharchenko, Malev is not worth more than $150 million, although Hungarian authorities planned to get far more.
Abramovich said earlier that the bids were practically unchanged despite the fact that Malev's 2006 financials worsened, making the purchase less attractive.
According to a source close to the tender, the bid sum was broken into three parts: a payment to the privatization agency, repayment of the lines' debt, and a contribution to Malev's authorized capital. "Most of the bidding focused on the third point: what sum the bidders could set aside for Malev's development and how they planned to deal with the crisis," the source said.
According to Abramovich, Vnesheconombank will partner with AiRUnion to refinance the debt. A business plan drawn up by the shareholders sets the deadline for debt repayment at 2011.
The new owners want to tie up the company's activities with those of other alliance members. Malev's routes are set to link with AiRUnion flights. According to Oleg Sudakov, an analyst at Rye, Man & Gor Securities, Malev's air carrying system will allow Abramovich to make AiRUnion a competitive player in the international market. "Malev is a strategic purchase. By moving its passengers to Malev lines, AiRUnion will reach a new level," the analyst said.
AiRUnion comprises KrasAir, Domodedovo Airlines, Omskavia, Samara and Sibaviatrans.
