MOSCOW, May 24 (RIA Novosti) Rosneft at crossroads: which way to choose?/ Russia's criticism of NOPEC not unexpected/ Moscow needs Taliban to be neutralized/ Cyprus still leads in offshore Russian capital/ Sotheby's opens its office in Moscow
Vedomosti
Rosneft at crossroads: which way to choose?
After purchasing assets of the now bankrupt Yukos oil company, state-run Rosneft has become Russia's largest oil company and is now preparing to carry out restructuring. On May 23, its managers announced the possible resale of part of its superfluous assets. Will the sector's new leader become a market-oriented and efficient company like Yukos was, or will it be as heavily state-controlled as Gazprom?
In its last years, Yukos was one of the most transparent among all Russian companies and Rosneft is following suit. The SmartMoney magazine, in a survey on whether there was enough information on the company's business, gave Rosneft a score of 4.33 out of 5.
Gazprom is known for its lack of transparency. The magazine rated Gazprom's transparency at 4 out of 5, and its managers' openness at 3 out of 5.
There is yet another indicator which places Rosneft in close quarters with the largest Russian state-controlled company. Rosneft's debt liabilities amount to about $36 billion. Gazprom's debts, including the approved borrowing of another $12 billion, will exceed $40 billion. However, for Gazprom, with its market capitalization of about $226 billion, the debts are not such a burden as they might be for Rosneft, with a value of about $85.5 billion. Yukos never had sizeable debts: prior to Mikhail Khodorkovsky's arrest, Yukos's capitalization surpassed $33 billion and the company's net debts did not exceed $3.7 billion.
As of the end of 2006, about $540 million, or 15.6 % of the company's net profits, according to US GAAP standards, will be used to pay dividends to Rosneft shareholders. This is slightly more than Yukos's dividend payments for 2001, when the company paid $488 million (19% of the company's net profit) to its shareholders.
The gap is nearly the same for the companies' profitability rates. Rosneft's net profit for 2006 (according to US GAAP) was $3.5 billion, with earnings amounting to $33.1 billion. In 2002, Yukos's earnings amounted to $11.3 billion and net profit slightly exceeded $3 billion (Yukos stopped publishing its financial reports by US GAAP in 2003).
Rosneft's debts are a result of borrowing to purchase Yuganskneftegaz, a Yukos major oil-producing asset, and some other assets. These debts do not put Rosneft in danger of bankruptcy as the government has listed it with strategic companies. The efficiency of the use of borrowed funds is high: Rosneft has not only purchased Yukos, but also obtained a leading position in the sector and ready financial flows.
Rosneft has every chance of becoming an efficient company. At present, its main advantage is the state acting as its main shareholder and minimizing risks and expenses. Rosneft's future progress depends on the role the company will choose: that of a market agent bringing high dividends to its shareholders, or of a government agent benefiting its shareholders in some other way.
Kommersant
Russia's criticism of NOPEC not unexpected
The U.S. House of Representatives passed a No Oil Producing and Exporting Cartels (NOPEC) Act, amending the Sherman Antitrust Act on Tuesday night. The governments of Russia, OPEC member countries, Saudi Arabia and other nations who might influence oil and gas pricing, will now have to expect lawsuits and sanctions against them initiated by Washington.
Even though the word "gas" is absent from the title of the new bill, similar documents envisaging sanctions for setting up gas cartels have been drafted and sent for voting to both houses of Congress.
John Conyers, Chairman of the House Committee on the Judiciary, does not even hide the fact that the NOPEC Act, a bill obviously designed to challenge OPEC members and those involved in the "gas OPEC" talks (Russia being one of the initiators), was prompted by skyrocketing gasoline prices in the United States.
Russia's reaction was predictably harsh. The Russian Foreign Ministry dubbed the decision by the U.S. Congress a "violation of international law."
Valery Yazev, head of the Russian parliament's energy committee, called it a "flagrant violation of international political principles," adding that he hoped the U.S. president would be "wise enough" to veto the "wild" act which is bound to trigger a wave of protest worldwide.
Russia's Industry and Energy Minister Viktor Khristenko said when U.S. Congress started considering amendments to the Sherman Act on April 27, 2006: "This brings a sarcastic smile to my lips, but it is also a sad smile, because when drafting new bills, one should at least make sure they apply to territories where one has sovereignty or a right to decide."
Sergei Kupriyanov, press spokesman for Gazprom chairman Alexei Miller, echoed the Russian government's position.
Europe reacted rather warily.
Christian Cleutinx, head of the European Commission's Directorate General for Energy and Transport, said Europe and the EU would refrain from commenting on U.S. actions until the bill is signed by President Bush and approved by the Senate.
Whatever George Bush's decision, it is clear that the NOPEC Act is drafted for the next U.S. government. Kommersant has found out that certain Republican consultants tried unsuccessfully to propose to the White House their versions of amendments to the Sherman Act.
Vremya Novostei
Moscow needs Taliban to be neutralized
The Taliban and other government opponents in Afghanistan have stepped up their operations, and the drug situation has spun out of control. Many NATO countries doubt that the Afghan operation can be completed successfully, a Russian researcher told the popular daily Vremya Novostei.
Dmitry Volodin, a senior researcher at the Institute of the U.S. and Canadian Studies (Russian Academy of Sciences), writes that the withdrawal of coalition troops from Afghanistan would provoke a new round in the civil war, which has torn the country apart for the past 30 years.
The Taliban, which was the last force to join the political struggle, came out victorious in the late 1990s, because the people supported its proclaimed goals of bringing an end to internal strife, and because its adversaries were worn out by that time, he writes.
The appearance of the Taliban on the political scene changed the character of the confrontation, which went from being a war of everyone against everyone to a battle between the Pashtu (Taliban) and other ethnic groups (Northern Alliance).
According to Volodin, Russia is not interested in either a victory of the Taliban or the coalition forces.
A victory by the coalition forces and some kind of stabilization in Afghanistan would allow the West (and other countries) to build pipelines from Central Asia via Afghanistan, bypassing Russia. Moscow would lose transit revenues, and its influence in Central Asia and positions at energy talks with the main consumers - the United States, the European Union and China - would be weakened.
A victory by the Taliban would lead to the establishment of a radical Islamic regime in Afghanistan and destabilize the situation in neighboring Tajikistan and Uzbekistan, as well as in Russia's North Caucasian republics.
The researcher writes that the Kremlin must now decide on its Afghan policy. The withdrawal of coalition forces would push the country back into the mid-1990s, when the Pashtu (Taliban) fought Tajiks, Uzbeks and Hazaras (Northern Alliance). With the support of Pakistan, the Taliban could win the war.
On the other hand, Moscow does not want the Northern Alliance to win either, because the West might buy its leaders, as the U.S. did in 2001. What Moscow needs is to neutralize the Taliban, Volodin concludes.
Novye Izvestia
Cyprus still leads in offshore Russian capital
On Wednesday, Panayotis Loizides, secretary general of the Cyprus Chamber of Commerce and Industry, said the number of Cyprus-registered Russian companies is growing steadily.
Loizides said about 1,000 Russian companies are now registered in Cyprus.
Experts said Cyprus, which joined the European Union on May 1, 2004, remains the most attractive offshore zone for Russian business.
For many years, global business was lured by the Cypriot tax heaven, but the situation changed after the country became an EU member and had to implement reforms.
Kostas Christofides, assistant director general with the Cyprus Employers & Industrialists Federation, said most of the 82,000 foreign companies that left the island after 2004 were engaged in illegal business operations. He said 30,000 other companies chose to stay, and their number is growing each year.
Andreas Christodulu, commercial counsellor at the Embassy of Cyprus in Moscow, explained the influx of foreign companies by business incentives. He said all Cypriot-registered companies have automatically received the status of national legal entities and can do business in the country. All companies have to pay 10% single corporate tax, the lowest in Europe. The Russian-Cypriot agreement on avoiding dual taxation has made the country more popular with Russian companies.
The economic policy committee of the State Duma, the lower house of the Russian parliament, said Cyprus remains a de facto offshore zone offering lucrative business incentives. Cyprus' EU status will make it even more popular with Russian businessmen.
In 2003, Russia received $4.2 billion worth of Cypriot investment, which is now approaching the $20 billion mark.
Rossiiskaya Gazeta
Sotheby's opens its office in Moscow
The top management of Sotheby's met in Moscow yesterday. William F. Ruprecht, Sotheby's president and CEO, announced the official opening of a Russian subsidiary and named Mikhail Kamensky as its head.
Kamensky said the Russian office of the world's premier auction house for fine art, antiques, books, jewelry, toys, dolls, and other collectible memorabilia would be "a place where art and money meet," adding that the market for Russian art had grown substantially in the last five years.
When asked if Sotheby's would become a means of pumping Russian art to the West, the head of the Russian office said the company's daily practice indicated that the opposite was the case.
Firstly, the auction house will promote the return of the best from Russian and international art to the country. And secondly, it will help make the Russian art and antiques market more transparent, he said.
In accordance with its code of ethics, Sotheby's will work to make "black cash" operations on the Russian antiques market transparent and acceptable.
Kamensky said the operation of Sotheby's as a legal entity in Russia met the country's growing art requirements not because the Russian middle class has become richer, but because its rich have become richer and more numerous.
The company's Russian office will provide information to potential clients and cooperate with private collectors, owners of private galleries, art dealers, representatives of state museums, experts, valuators, and bankers.
Sotheby's does not plan to hold auctions in Russia, whose tax and customs legislations have no requisite provisions. But, since it is a legal entity, it may conclude financial deals on the antiques market and become involved in private transactions.
Kamensky did not rule out that the other world leader on the art market, Christie's, would open soon in Russia too.
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