MOSCOW, May 15 (RIA Novosti) Russia-EU relations will be bogged down for years - expert/Russian government won't wage economic war on EU member/Russia to pay top price for Kazakh gas/Deripaska fails to take over Chrysler Group/RussNeft owner made to pay for buying Yukos assets
Vedomosti
Russia-EU relations will be bogged down for years - expert
The Russia-EU summit in Samara will be either unproductive or scandalously ineffective, experts say, predicting prolonged stagnation in Russia's relations with Europe.
A new EU-Russia Partnership and Cooperation Agreement (PCA) will not be discussed in Samara this week, since the European Union has not yet developed a shared position on Russia.
The process was hampered by Russia's trade conflict with Poland, but Poland is not going it alone now.
Lithuania and Estonia openly supported it at Monday's meeting of EU foreign ministers. The only decision all the ministers agreed to was to actually hold the Samara summit.
A Kremlin source confirmed that the PCA talks would not be officially started in Samara, because Warsaw is unlikely to lift its veto before the summit. Still there is a hope for an informal discussion of a new PCA.
Summit participants are likely to touch upon a series of issues, including Polish food exports to Russia, the Kosovo settlement, U.S. missile defense bases in Poland and the Czech Republic, and the dismantling of Soviet monuments in Europe, the source said.
Even a declaration will be signed in the wake of the meeting, as is always the case, whether it was productive or not, the Kremlin source said.
Stagnation in Russia-EU relations will set in for years to come, according to Boris Shmelev, an expert with the Institute of Economics, a think tank with the Russian Academy of Sciences.
The sides are generally satisfied with the current arrangement of mutual economic ties, with Russia being Europe's major fuel supplier and the EU functioning as Russia's biggest export market.
Further rapprochement will require deeper political changes and economic reforms in Russia, something the country is not quite ready for yet.
From Russia's perspective, however, it is Europe that needs the new PCA more, so Russia is not going to make any concessions for its early conclusion, Shmelev said.
Novye Izvestia
Russian government won't wage economic war on EU member
A truce seems to have been called in the brewing economic war with Estonia. The Russian government's wariness, in contrast to its recent audacity in a similar conflict with a larger country, Georgia, can be explained in several different ways.
Russia's chief epidemiologist Gennady Onishchenko said yesterday that the Federal Service for the Oversight of Consumer Protection and Welfare, Russia's consumer rights watchdog, was satisfied with the quality of Estonian goods.
Other "hostilities" have been suspended as well. Oil transport by rail and the passenger route St. Petersburg-Tallinn, cancelled earlier this month "due to railroad repairs," have now been renewed, followed by official confirmation that Russia has no plans to disrupt traffic with Estonia.
Some experts link the recent decisions with Russia's oil interests. Political scientist Stanislav Belkovsky said Russia would not slap any serious economic sanctions on Estonia, because the most it would risk doing is aiming, not striking.
According to him, the Russian political elite are very closely connected with Estonia and simply cannot afford to sever all ties with that country.
Indeed, the status of an "energy superpower" has a reverse side. Around 22 million metric tons of Russian oil goes through Estonia annually, while alternative seaports in St. Petersburg and Vysotsk are already employed to their full capacity.
Even if Russia does not disrupt railway transportation, it would be enough to arrest a batch of frozen sprats to trigger "railroad repairs" on the Estonian side of the border.
Another important factor makes Estonia distinctly different from Georgia in this sense.
"One has to think twice before attacking an EU member country in any way," says Mark Urnov, who heads the Ekspertiza think tank in Moscow.
"Those Russian officials who tried so hard to win presidential praise had not realized that their methods, although effective on Russian companies and vessels, could be too risky to use on the international community," he said.
Kommersant
Russia to pay top price for Kazakh gas
Next week, Russian energy giant Gazprom will sign an agreement with Kazakhstan's state-owned oil company Kazmunaigaz on the commissioning of a joint venture at the Orenburg gas refinery.
After nearly a year of discussions, the sides have agreed on two key issues -- the purchasing price of gas to be supplied by Karachaganak Petroleum Operating, at $33 per 1,000 cubic meters, and its export price, at $160.
Although this is the highest purchasing price Russia will pay for Central Asian gas, the deal will benefit Gazprom because it is a party in another venture, Kazrosgaz, which will export gas (12-13 billion cubic meters).
"We have been selling gas at $145 [per 1,000 cubic meters] through Kazrosgaz since January [2007]," said Baktykozha Izmukhambetov, Kazakhstan's Minister of Energy and Mineral Resources. "Two days ago, we agreed to raise the price to $160, and Russia also pledged to sell a certain amount of gas to the CIS, Baltic and Western European countries at more than $160."
The minister said they had also discussed the construction of gas refineries in Kazakhstan.
A source in Karachaganak Petroleum said Gazprom had agreed to raise the purchasing price from $31 to $33, but did not specify when that would happen. According to Gazprom, the final agreement on cooperation with Kazmunaigaz at the Orenburg refinery will be signed May 21.
That venture's export price is the highest Gazprom will pay for Central Asian gas, but it will be introduced only after the modernization of the gas refinery in 18 months. Besides, Gazprom owns 50% in both joint ventures, and will therefore benefit from the agreement.
Independent experts share that view.
Valery Nesterov, an analyst with the Troika Dialog brokerage, said Gazprom needs more gas to ensure uninterrupted operation at the Orenburg refinery, because gas recovery from Orenburg deposits has been falling. Karachaganak gas is the best way of doing this.
The purchasing price of Karachaganak gas is not profitable for Gazprom "due to the [low] quality of the gas, and marketing and transportation problems," Nesterov said.
As for the export price, he said the Russian gas monopoly would resell it at a profit.
Business & Financial Markets
Deripaska fails to take over Chrysler Group
Automotive giant DaimlerChrysler said the Cerberus Capital brokerage had paid $7.4 billion for its U.S. division, Chrysler Group.
The U.S. company, rather than Canada's auto-components giant Magna soon to be co-owned by Russkiye Mashiny (Russian Machines), the automotive unit of the holding company Basic Element, controlled by Oleg Deripaska, the second-richest man in Russia, will now take over the troubled U.S. automaker.
DaimlerChrysler, which spent $37 billion on the Chrysler Group purchase in 1998, will receive only $1.4 billion from the deal, while the rest will be used to repay Chrysler Group debts.
Many experts linked the Russian Machines - Magna deal, announced last week, with the Canadian company's intention to buy Chrysler Group.
Gairat Salimov, an analyst with the Troika Dialog brokerage, said Magna did not have the money to buy Chrysler.
Top Magna managers have repeatedly said they would buy the U.S. carmaker only if their company does not have to borrow additional assets.
Magna chief executive officer Frank Stronach said the company could spend $2 billion on the Chrysler purchase.
The Basic Element press service said the Chrysler purchase is not linked with that of Magna shares.
Ivan Bonchev, an analyst with the Ernst & Young consultancy, said this changes nothing in the deal between Russian Machines and Magna.
He said Russian Machines primarily wants to gain access to Magna's car-component production process and its experience in developing car units.
Magna, which is closely linked with North American and Western European markets, wants to expand operations in Russia.
Salimov said Russian Machines might have wanted to buy Chrysler Group, but that was not the main reason for its deal with Magna.
Car assembly plants, now appearing all over Russia, require top-quality components, which cannot be found here, Salimov told the paper.
Maxim Ivanov, an analyst with the TsentrInvest Group brokerage, said Basic Element would buy a stake in Magna for $1.54 billion, a sum matching the company's market value.
Even without Chrysler, Magna is a good buy, Ivanov said.
Vedomosti
RussNeft owner made to pay for buying Yukos assets
Mikhail Gutseriyev, a co-owner of the Russian oil company RussNeft, has been charged with large-scale tax evasion and illegal business practice.
The Kremlin has clamped down on Gutseriyev, who had been deputy speaker of the lower house of Russia's parliament and was ranked 31st by Forbes in terms of personal wealth ($3 billion), for buying Yukos assets before its bankruptcy and refusal to sell RussNeft.
The RussNeft co-owner provoked the Kremlin's wrath by buying some Yukos assets shortly before it was declared bankrupt, and by refusing to sell his company, said the majority of his acquaintances.
In 2005, RussNeft bought 50% in the West Malobalyksky oil deposit in Siberia, Yukos's joint venture with Hungarian company MOL.
One of Gutseriyev's acquaintances said the co-owner of RussNeft negotiated the deal with Group Menatep Limited (GML), the main beneficiary of Yukos. But Mikhail Brudno, a co-owner of GML, refuted the rumor.
Another acquaintance, a top manager of an oil company, said Gutseriyev had problems with many operators, including the state-owned oil company Rosneft and the privately owned LUKoil.
Last year, Gutseriyev was urged to sell his company to a state agency for $1 billion, but he refused, saying the price was ridiculously low.
Steven Dashevsky, chief analyst with the Aton brokerage, said RussNeft costs $8-$10 billion.
One of Gutseriyev's partners had earlier said he was prepared to act as his intermediary, but he rejected his services.
Another man from Gutseriyev's team said he was a survivor and would fight to the last for the company he had built from scratch.
He said Gutseriyev had discussed with Kremlin officials the possibility of selling part of his oil assets to Rosneft, but Rosneft spokesman Nikolai Manvelov said his company had not negotiated the issue with the RussNeft president.
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