MOSCOW, May 14 (RIA Novosti) Turkmenistan, Kazakhstan in no mood to renounce Trans-Caspian pipeline/Evraz to build steel plant in Vietnam/Russia unable to deliver military planes to China/Environmental protection is a new trend in international policy/Yukos office sold for almost $4 billion
Kommersant
Turkmenistan, Kazakhstan in no mood to renounce Trans-Caspian pipeline
Last week, the presidents of Lithuania, Ukraine, Georgia, Azerbaijan and Poland gathered for an informal energy summit in Krakow, Poland, and discussed plans to extend an existing oil pipeline, which stretches from Odessa on Ukraine's Black Sea Coast to Brody in Poland.
The extension project is designed to help import oil from the Caspian Region to European markets by extending the pipeline to the Polish port of Gdansk, on the Baltic Sea.
At the same time, Astana, the capital of Kazakhstan, a republic in Central Asia, and the city of Turkmenbashi in Turkmenistan, another Central Asian republic, hosted another summit involving the presidents of Russia, Kazakhstan and Turkmenistan.
Both summits produced impressive political results, but failed to settle relevant business issues.
In Krakow, Valdas Adamkus, Viktor Yushchenko, Mikhail Saakashvili, Ilkham Aliyev and Lech Kaczynski agreed to launch the construction of the Odessa-Gdansk pipeline, but failed to agree on its throughput capacity.
In Turkmenbashi, Vladimir Putin convinced Nursultan Nazarbayev and Gurbanguly Berdymukhammedov to start building the Caspian oil pipeline.
However, the two Central Asian leaders did not agree to renounce the Trans-Caspian pipeline route.
On May 9, Uzbek President Islam Karimov and Russian Industry and Energy Minister Viktor Khristenko signed a declaration of the Turkmenbashi summit.
The Trans-Caspian pipeline, due to bypass Russia, could become part of the EU-backed Nabucco project envisioning the construction of a 3,400-kilometer (2,125-mile) pipeline, which will pump Caspian and Middle East natural gas to Europe via Turkey.
The Nabucco project is being carried out by a consortium of five companies, i.e. Otas of Turkey, Bulgargaz of Bulgaria, Transgaz of Romania, MOL of Hungary and OMV Gas of Austria, which have set up a company to build a pipeline linking Turkey with Austria.
The pipeline war will last until the September and October energy summits in Turkmenistan and Lithuania, respectively.
Turkmenistan, Kazakhstan and Uzbekistan, which now export 60 billion cubic meters of natural gas to Russia, will pump 90 billion cubic meters by 2014. However, neither party said anything about the sale of the additional 30 billion cubic meters.
Energy giant Gazprom may never receive this gas increment. Berdymukhammedov and Nazarbayev will probably demand at the next summit that Putin agree to set up a joint pipeline operator.
In September, Gazprom's partners will also demand concessions that would erode its monopoly on gas exports to the European Union.
Putin failed to convince his partners to renounce the projected Trans-Caspian pipeline route, which is actively opposed by Gazprom.
On Saturday, Berdymukhammedov and Nazarbayev unequivocally said the new pipeline will be discussed, no matter what.
It appears that the Turkmen and Kazakh stretches of the Caspian pipeline may eventually become part of the Trans-Caspian route.
Transnational oil companies are to negotiate their possible support for different projects with Azerbaijan, Kazakhstan and Turkmenistan.
Putin, Karimov and four out of the five participants in the Krakow summit have merely defended their positions.
But Nazarbayev and Berdymukhammedov have received additional bargaining chips for talks with international oil and gas majors Chevron, Exxon Mobil, British Petroleum and Eni, which will develop Caspian deposits.
Vedomosti
Evraz to build steel plant in Vietnam
Russian metals giant Evraz Group continues strengthening its foothold abroad. It may participate in the construction of a major steel smelter in Vietnam with an annual design capacity of 4.5-5 million metric tons, provided it wins in what will likely be a tough fight against Chinese Baosteel and Indian Tata Steel.
Metal Bulletin, a trading, metals pricing, information, news and communication system for the global metals industry, has cited a spokesman for Vietnam Steel Corp as saying that the bidders are Indian Tata Steel and Chinese Baosteel, Kunming Iron & Steel, and Wuhan Iron & Steel.
Vietnam Steel Corporation and Ha Tinh Mineral & Trade may get minority stakes in the $3.4-billion project, where a controlling stake has been evaluated at $1.7 billion.
Evraz spokesman Nikolai Kudryashov said his company does not comment on market rumors.
Olga Okuneva from Deutsche UFG said Evraz's victory if it wins the tender would amount to a change in its strategy of buying operating assets abroad to building them from scratch. She said the Russian group's desire to build a steel works in Vietnam was risky business.
Dmitry Kolomytsyn, an analyst with the Aton brokerage, said the Chinese and Indian companies, which have much stronger positions in the region, would most likely win the tender.
Evraz's only advantage is that it won a tender in 2006 to draft a feasibility study for the Thatkhe iron ore deposit near which the works are to be built.
According to Kolomytsyn, Evraz's interest in the project makes sense, as Asian trade accounts for about one-third of the group's revenues.
In 2006, Evraz Group, one of Russia's largest steel and mining companies, produced 16.1 million metric tons of steel and 14.46 million metric tons of rolled stock, earning $8.29 billion in revenues with $1.38 billion in net profit.
Cypriot company Lanebrook, in which Russian billionaire Roman Abramovich controls 50%, owns 83.19% of the group.
Gazeta
Russia unable to deliver military planes to China
A $1.5-billion contract to deliver 34 Il-76 military transport planes and four Il-78 tanker aircraft to China, signed in September 2005, has been suspended, said Viktor Livanov, director general of the Ilyushin Aircraft Corporation.
He said his company would lose substantially from meeting the terms of the contract at the stipulated price, because the price of materials and works has grown several-fold in the past two years.
In the Soviet period, the Il-76 military transports were produced at the Chkalov aircraft production association, based in Tashkent, the capital of Uzbekistan.
Russian plants do not have the equipment to assemble them. When the company signed the contract, Ilyushin believed the Chkalov plant had 38 complete sets of components, whereas it had only 14-16.
"The contract was very complicated," said Ruslan Pukhov, director of the Moscow-based Center for the Analysis of Strategy and Technology (CAST), yet the parties decided to sign it, hoping that everything would turn out right in the end.
They should have consulted the authorities, which did not know what to do with aircraft manufacturers then.
According to an informed source in the Russian defense industry, the problem has been settled and the contract will be fulfilled.
"We should establish the required assembly facility in Russia, for example at the Voronezh plant, as we will need more heavy-duty military transports," Pukhov said.
Livanov most likely made his announcement to prepare the Chinese partners for the forthcoming change of the contractual prices by at least adding the cost of a new assembly line ($80-$100 million) to it.
Novye Izvestia
Environmental protection is a new trend in international policy
Environmental protection has become a proven tool in inner political fighting in Europe. The pending gas pipeline that will run from Russia to Germany along the Baltic seabed is a vivid example of the new trend, and its construction has triggered passions in the Baltic states.
Moscow has faced a united environmental front comprising Poland, the Baltic states and Sweden.
The "Greens" oppose plans to build a pipeline through the chemical weapons disposal sites and areas planted with two world wars mines, because its construction will raise bed silt bearing harmful agents to the surface.
In fact, economic and political interests stand behind their arguments.
The "Green" countries have shown their true adherence to environmental issues in some other, no less dangerous energy projects in the Baltic area.
The high-voltage Estlink underwater cable connecting Finland and Estonia was launched in late 2006. It was laid along the line of the most powerful mine fencing in the world, which was built between Helsinki and Tallinn during the first and second world wars.
Sweden, Poland and the Baltic states responded positively to the project: "The Baltic region has reduced its energy dependence on Russia."
Sweden is discussing the economic benefits of building a gas pipeline from Norway to the western coast of Sweden.
The pipeline is to run through the chemical weapons disposal sites in the Skagerrak Strait, near the city of Lysekil. The environmental problems associated with this project are never mentioned.
Poland also intends to benefit from the construction of the Gdansk pipeline as part of the Norway-Sweden project.
The Polish branch will run through the chemical weapons disposal sites near the Danish island of Bornholm, and a former German then Soviet marine range near Gdansk, where the bottom is littered with unexploded bombs, torpedoes and munitions.
Even if the Norwegian-Polish project is never implemented, Poland has already sufficiently contributed to the Baltic's destruction.
The Petrobaltic company is actively pumping oil on the Polish shelf and disposing of nitrogen- and phosphorus-containing wastes into the sea.
The country accounts for over 60% of harmful waste getting into the Baltic Sea, which does not evoke any protests in the region. But for some reason, the Russian pipeline leaves no one indifferent there.
Nezavisimaya Gazeta
Yukos office sold for almost $4 billion
On Friday, the business world was stunned to learn about the sale of embattled oil giant Yukos' Moscow office and several other buildings it owned for a staggering $3.87 billion, a sum far in excess of their real value.
The auction involved Neft-Aktiv, a company affiliated with Russia's largest state-owned oil company Rosneft, and Prana, which sells and services trash chutes, but which is unknown to many financial analysts in Moscow.
The asking price was 22.7 billion rubles ($878.14 million). Prana offered to pay 100.1 billion rubles ($3.87 billion) and won the auction.
If the company proves insolvent, the bidders would lose $200 million in collateral, an impressive amount for even the largest companies.
It appears that nobody will pay for the lot, and some experts said Prana is being used as a front company.
Sergei Andropov, general director of business developer Yubilei Stolitsy, explained the lack of buyers by the lot's overstated price.
He said any Moscow-based company or shopping center could be bought for $100-$150 million, and that the exorbitant asking price has nothing to do with market economics.
Andropov said the overstated lot price is probably aimed at depriving Rosneft of its financial assets.
The previous bidder would have the right to buy the lot if Prana backs out, Maxim Chernigovsky, head of the analytical department at law firm Vegas Lex, told the paper.
Chernigovsky said this subtle ploy implies that Rosneft, which won the 12 previous Yukos property sale auctions, would be forced to pay the exorbitant price and would then prove unable to take part in investment projects.
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