MOSCOW, April 17 (RIA Novosti) Russia a secret ally of the United States/ RUSAL faces problems in Guinea/ Gazprom completes the purchase of Sakhalin 2 energy project stake/ Putin unites two pipeline companies/ Allianz eyes Yukos's former insurer
Russia a secret ally of the United States
The United States has always told others what they should do and how, as a result they have always been disliked. Russian TV is always happy to show anti-American demonstrations, as the U.S. is disliked even in those countries that Russia suspects love America, including the former Soviet republics that have been shaken by "color" revolutions.
However, Washington has a secret ally that will not allow it to stand alone against the rest of the world.
Europe has respected American values for 50 years, since the fear of the Soviet Union. That fear dissipated with the break up of the Soviet Union. Rene van der Linden, president of the Parliamentary Assembly of the Council of Europe (PACE), said openly yesterday that the U.S. had less right to talk about human rights than any other country.
Western Europe openly rejects 50% of Washington's initiatives, such as the Iraq war, the accession of Turkey to the European Union, and the deployment of U.S. anti-ballistic missile systems in Europe.
It was also wary of the "color" revolutions in countries of the Commonwealth of Independent States (CIS). In November 2005, it was Polish President Kwasniewski and Washington who supported Ukrainian President Viktor Yushchenko, while Europe kept silent. Some time ago, a high-ranking European diplomat assured a correspondent from popular Russian business daily Kommersant, that the EU thought Russia was so important that Europe was prepared to turn a blind eye to the CIS countries. The diplomat hinted that it did not care about the "colored" democratic processes there.
In short, the world is on the verge of becoming united in its anti-Americanism. All countries are embarrassed by Washington's irrational moves. However, the U.S. has a secret ally who will not let it down.
The policy of that "ally" frightens its friends and neighbors as much as Washington's actions. If not for that "ally's" disproportionate aggression against its neighbors, the U.S. would have long ago won the title of being the most evil in Europe and the CIS.
That "ally" is Russia.
RUSAL faces problems in Guinea
The government of Guinea, a country in West Africa, wants to revise a bauxite production contract with Russian aluminum giant United Company RUSAL (Russky Alyuminy) owned by business magnate Oleg Deripaska. Although the company could produce aluminum feedstock in other African countries or Australia, it will have to comply with the demands. Foreign investors are now facing similar pressure tactics as those used in Russia.
Rusal officials said the National Assembly of Guinea had planned to examine a supplement regulating lease payments for a concession agreement on the Compagnie des Bauxites de Kindia on April 13 but decided that the document should be modified instead.
A RUSAL spokesperson said this would not influence the implementation of the concession agreement, which fully complies with Guinean legislation, and which was duly approved by the government and parliament.
But the situation could be even more serious because Russian-Guinean contracts are being revised for the first time, and the government has recently said it plans to revise all mining industry agreements.
The unstable Guinea has two-thirds of global bauxite supplies, the main aluminum feedstock. It appears that RUSAL will revise the contract if this is demanded by the government of Guinea, Vyacheslav Zhabin of BrokerCreditService said.
In 2006, RUSAL, the world's third largest aluminum producer, SUAL Group, one of the world's top ten aluminum producers, and Glencore International AG, the Swiss natural resources group, merged their respective aluminum and alumina assets to establish the United Company RUSAL.
RUSAL, SUAL Group and Glencore received 66%, 22% and 12% stakes respectively in the new giant. Deripaska's company has some alternative options left. After the establishment of Russian Aluminum, the delivery of raw materials was diversified. The company started receiving supplies from Sweden's Glencore, which owns considerable deposits in Africa and Australia. These new assets have minimized RUSAL's risks and mitigated economic losses in Guinea, according to Igor Nuzhdin of Zenit, a private bank.
Gazprom completes the purchase of Sakhalin 2 energy project stake
Russia's state-controlled gas giant Gazprom has acquired a controlling stake in Sakhalin Energy, which operates the Sakhalin 2 energy project in the Russian Far East that is being developed under a product sharing agreement. The company closed the deal yesterday. Government officials simultaneously endorsed the project's budget sheet till 2014. Investors' spending has almost doubled compared to the previous proposals, from $10 billion to $19.4 billion.
The signing of the final agreement with Sakhalin Energy's shareholders - Anglo-Dutch Shell and Japanese Mitsui and Mitsubishi - was postponed several times. Earlier this month, Bogdan Budzulyak, member of Gazprom's board of directors, said that the parties could not agree whether Gazprom should shoulder responsibility for Sakhalin Energy's environmental violations and ensuing economic sanctions.
The parties managed to sign most of the documents by 10 pm Moscow time yesterday, said a source close to the transaction. They endorsed the project's budget at $19.4 billion till 2014, out of which $3.6 billion was classified as non-refundable spending carried by previous shareholders, the source said.
Russian Deputy Industry and Energy Minister Andrei Dementyev said earlier that the government believed changes in technical decisions on the project, which boosted its cost, to be non-market factors. "We decided that the foreign shareholders should carry the engineering risks, and they agreed to that," he said.
Gazprom will pay the foreign companies $7.45 billion immediately after signing the agreement, said another source familiar with the transaction. The gas giant will borrow money, he added, declining to elaborate on the source of financing.
News agencies yesterday quoted a source in the banking community as saying that Gazprom would take a $2 billion syndicated loan this week to finance the deal. The loan will be divided in two equal tranches, one for three years and the other for five. A source familiar with Gazprom's borrowing plans earlier said that the company would also take a short-term $5-$8 billion loan to pay for the stake in Sakhalin 2.
Putin unites two pipeline companies
Russian President Vladimir Putin has signed a decree transferring 100% in Transnefteproduct (TNP), a 100% state-owned company, to oil pipeline monopoly Transneft. TNP will be removed from the list of strategic companies to make the transaction legally possible.
This will provide Transneft with additional funds to invest in major projects, but its merger with TNP means that, according to analysts, there will be no privately owned oil pipelines in Russia.
Transneft is a monopoly owner and operator of Russian oil pipelines, which deliver 93% of oil produced in Russia. The company owns 48,700 kilometers of primary pipelines; its revenue in January-September 2006 amounted to 147 billion rubles ($5.7 billion) with net profits of 50.9 billion rubles ($1.97 billion).
Transnefteproduct is a monopoly operator of oil product pipelines. It has 19,300 km of main oil product pipelines; its revenue in 2005 amounted to 13.9 billion rubles ($538.76 million at the current exchange rate) and net profits stood at 4.4 billion rubles ($170.54 million).
Mikhail Krutikhin, an analyst with RusEnergy, an agency providing Russian oil and gas industry news, said the transaction "reflects the old imperial ambitions of certain Kremlin groups."
"Transneft is one of the best Russian companies in terms of transparency and accounting," he said. "The incorporation of TNP will make it unwieldy at a time when Transneft is struggling to deal with three major projects: the East Siberia-Pacific Ocean oil pipeline, the BPS-2 leg of the Baltic Pipeline System, and the Burgas-Alexandroupolis oil pipeline [from Bulgaria to Greece]."
Stock market analysts are more optimistic about the deal than corporate ones.
Maxim Shein, an analyst with Broker Credit Service, said: "On the one hand, TNP is an additional headache for Transneft. On the other it is an opportunity to acquire additional funds."
Konstantin Cherepanov, an analyst with Rye, Man & Gor Securities, a Russian brokerage company, said: "Although Transneft has no loan problems, it needs an additional source of income, which TNP will provide. Transnefteproduct will generate cash, which Transneft will use."
The merger of two state-controlled companies will rule out the appearance of private pipelines in Russia.
Natalia Milchakova, an analyst with the Otkrytie brokerage, said: "The oil and oil products transportation assets should have been consolidated long ago. Now that Transneft and TNP have been merged, state monopoly in this segment will grow stronger, and the issue of private oil pipelines will be removed from the agenda. Such pipelines may be built only as offshoots from state-owned main pipelines."
Allianz eyes Yukos's former insurer
Having purchased the Russian insurer Rosno last February, Germany's Allianz appetite on the Russian market has not been satisfied. The insurance giant is now considering acquisition of Progress Garant, the former insurer of the embattled Yukos oil company, which experts estimate to be worth $100 million.
Allianz is now deciding how to develop its Russian business, which currently includes Rosno, Allianz Rosno Life, Allianz Rosno Asset Management, Allianz Life and Allianz Risk Audit.
Vyacheslav Loisha, advisor to Progress Garant's chairman of the board, said Allianz was not the only interested company. Three other leading international players have shown an interest, he said, but refused to name them as they had been prohibited from mentioning them in the press.
Allianz's representative Eduard Stipich confirmed that the concern was in talks with Progress Garant. But it was too early to talk of any results, he said. Rosno's director general Hannes Chopra confirmed that Progress was among potential companies eyed by Allianz. The German giant selects insurance companies for take over using the following criteria: business transparency, an attractive portfolio, developed regional network and profit under international accounting standards. He did not specify why Allianz was interested in Progress.
Yukos set up Progress Garant in the mid 1990s to insure the group's companies and employees. Later the insurer began distancing itself from the parent company, prohibiting the use of its name in 2000. In 2005, the company's managers bought it from Group Menatep, the main shareholder of Yukos.
None of the experts spoken to by the newspaper wanted to discuss why the German company, which controls a leading insurer on the Russian market, could be after another company. Sergei Tsikalyuk, CEO of VSK Insurance House, said that this would not be the last acquisition of Allianz in Russia.
Last year, the Russian insurance market saw 23 mergers and takeovers, said Rosno's financial director Andrei Skvortsov, citing open sources. In fact, there were more transactions, but not all of them were announced, he said.
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