MOSCOW, June 9 (RIA Novosti) Gazprom trying to get foothold in Netherlands/ Russian government touts oil exchange/ Russia smoothes the path for foreign investors/ Extended presidential term could lead to excessive power/ Kremlin keeps successor options open
Gazeta.ru
Gazprom trying to get foothold in Netherlands
Russian energy giant Gazprom may invite Dutch Gasunie to participate in the North European Gas Pipeline project (Nord Stream), pushing back its German partners.
At their annual meeting June 29, Gazprom's shareholders will be asked to rubberstamp the final agreement with Germany's E.ON Ruhrgas, Wintershall AG, and project operator Nord Stream AG, as well as approve the participation of Gasunie.
The agreement stipulates the rights and duties of the parties and the terms of financing the project operator. Gazprom intends to increase Nord Stream's capital by up to 1.5 billion euros.
If the shareholders approve all these amendments, Gazprom will be able to demand that E.ON Ruhrgas and Wintershall cede a 4.5% stake in Nord Stream to Gasunie.
Experts view this as part of Gazprom's expansion strategy in Europe.
Natalia Milchakova, an expert with the Otkrytiye brokerage, said: "Gazprom badly needs the Dutch gas market. It may even hope to eventually gain access to end users in the Netherlands."
Gazprom could presumably supply some 7 billion cubic meters of gas to the Netherlands annually, or 5%-6% of aggregate supplies to West European consumers.
"Gasunie used to be Gazprom's rival in Europe," Milchakova said. "But now it mainly works on the domestic natural gas market."
The analyst said the Nord Stream project would gain from the Dutch company's participation, which is well known in Europe.
"This is a company from an industrialized country with a solid business reputation," she said. "Its participation should play a psychological role, as Europeans will see it as a guarantee of timely and uninterrupted gas supplies."
On the other hand, if the deal is made, Gasunie will have a reliable long-term partner Gazprom.
Kommersant, Vedomosti
Russian government touts oil exchange
The Russian government plans to launch exchange trading in Russian oil and petroleum products as of October 1, 2007, and intends to employ administrative methods to make oil companies set market prices for their products.
Russia's Economic Development and Trade Minister German Gref, St. Petersburg Governor Valentina Matviyenko and NYMEX CEO James Newsome signed a cooperation agreement Friday to establish an international oil exchange in St. Petersburg. Gref said full-scale REBCO trading will start in the second half of 2008.
NYMEX ceremoniously launched REBCO futures contracts in October 2006. The authors of the project expected it to bring REBCO and Brent quotations closer to each other. Gref said it would fetch Russia annually at least another $4 billion in export revenues. However, no REBCO deal has been made in New York so far.
The government issued a recommendation for the companies financed from the federal budget to buy at least 15% of oil and oil products through the exchange. Government representatives on boards of state-controlled companies will have to lobby fuel sales and purchases at the exchange.
Russia derived a useful lesson from the unsuccessful NYMEX launch of its oil futures. Gref said a smaller discount between REBCO and Brent could hardly be discussed before 2009.
According to Anatoly Golomolzin, deputy head of the Federal Anti-Monopoly Service, Rosneft and Gazprom Neft, two partly state-owned companies, will be the first ones to sell their products on the exchange.
Oil producers seem reluctant to talk of their plans for the exchange. "We are studying the situation," said Nikolai Manvelov, a Rosneft spokesman.
On the other hand, buyers might be interested in oil trading, according to Ludmila Lurye, an analyst with Kortes, a Moscow-based independent oil market research center. "Gazprom Neft, TNK-BP or Rosneft only hold closed tenders, inaccessible to individuals, whereas a generally accessible exchange will be a useful market instrument," she said. Still, at the initial stage sellers will have to be forced into the project, as all of them have old traditional contacts and are reluctant to change clients, the expert added.
Business & Financial Markets
Russia smoothes the path for foreign investors
The Bank of Russia (Central Bank) is negotiating a change in foreign depository banks' status on the Russian stock market with the Federal Financial Markets Service. If the regulators reach an agreement, non-residents will be allowed to directly become nominal holders of shares in Russian companies and be included in their registers as owners. Experts are convinced that a positive decision on this score will facilitate the integration of the Russian stock market into the global infrastructure.
"There is hope the issue will be settled soon," said Yelena Muzyka, deputy director of the Central Bank's department for licensing the activity of lending organizations and their financial recovery. At present, non-resident banks may operate through their local subsidiaries if necessary.
Essentially, the Central Bank proposes that a non-resident bank should be directly included in the shareholders register as a nominal holder of Russian companies' shares or their owner. Analysts claim such a decision is necessary for the operation of Russian trading floors in conformity with world standards. In particular, the settlement system will become more effective.
"With foreigners being nominal holders [of Russian companies' shares], our local papers could be assessed in the systems of Euroclear (Belgium) and DTC (Depository Trust Company, U.S.). This will finally integrate our market in terms of settlements," said Viktor Garmashev, head of the sales section of the international markets department at the Broker Credit Service investment company.
The regulators' [positive] decision will rid foreigners of infrastructure problems when they make investments in Russia.
"Infringement of foreigners' rights as nominal holders of Russian shares created additional risks for foreign investors," said Alexei Tyrin, an analyst with Uralsib. He believes that if the Central Bank and the Federal Financial Markets Service reach an agreement, it will be easier for foreign investors to come to Russia.
The new status of non-residents will oblige them to become more transparent for Russian companies in the financial sphere. "Under Russian legislation, an issuer may request additional information from a foreign investor, thus reducing his own risks," said Olga Veselova, an analyst with the Troika Dialog investment company.
Moskovskiye Novosti
Extended presidential term could lead to excessive power
President Vladimir Putin has said that a five- to seven-year presidential term was possible in Russia.
Immediately afterwards, Boris Gryzlov, speaker of the lower house of parliament, said on behalf of the pro-Kremlin party, United Russia, that his party was prepared to discuss a relevant amendment to the Constitution, which Putin had claimed to respect throughout his two terms.
Experts are disappointed with this development.
Boris Makarenko, first deputy director general of the Center for Political Technologies think tank, said: "There is no optimal presidential term. Putin said that four years was not enough to get to know every aspect. But there are countries that elect their presidents for four years, and everyone seems satisfied. I am referring to the United States, where the president relies on the machinery of a professional, neutral, and apolitical state service, and the party, which provides candidates for political posts. He has the agenda and the team to implement it. The president is only the team leader."
"The state service is not at its best in Russia, and there are no political parties with a strategy for the future," the expert said. "This is probably why Putin has spoken skeptically about the four-year term. Indeed, it should be extended, from this viewpoint."
Makarenko said: "On the other hand five or seven years is too long for a bad president and too short for a good one. A long presidential term has two major drawbacks. The first is inflexibility. Suppose there is a major change in the parliamentary majority, or the president falls ill but still clings to power. In this case, the country will have a president who is unable to come to terms with society, or is physically unable to fulfill his functions. Yet society will have to wait until his term expired. Besides, a long presidential term with a possibility of re-election carries the risk of excessive concentration of power. There is such a risk in Russia."
"In other words, we probably need to extend the presidential term but cannot do it," Makarenko concluded.
Sergei Markov, director of the Institute of Political Studies: "The country's stability should rest not on the individual, but on institutions. Therefore, excessive focus on the duration [of the presidential term] is unproductive."
Vedomosti
Kremlin keeps successor options open
Levada Center, an independent polling agency, has registered strange swings in the popularity ratings of Sergei Ivanov and Dmitry Medvedev: in April Ivanov leapt ahead, but in May the two potential successors drew level again. Experts explain this by the specifics of information policy and the Kremlin's desire to leave its options open until the last moment.
Since the end of last year the ratings of the two deputy prime ministers have been steadily growing, practically neck and neck. But in February, Ivanov, after he was made a first deputy prime minister, moved ahead (24% against 21%). Then their rating curves went into a sort of loop. Ivanov's rose from 22% in March to 25% in April, returning to the starting position in May. Medvedev's rating, on the other hand, slipped from 20% to 18%, and almost caught up with Ivanov in May (21%). Levada Center deputy general director Alexei Grazhdankin explains these changes by an altered information policy in the country: in March-April, Ivanov had more TV exposure than in previous months.
Ivanov's February promotion set off a successor race between him and Medvedev, while Putin's Munich speech refocused the rhetoric from social to military and foreign policy matters, making Ivanov, who is responsible for the defense industry sector, was shown on TV continuously, said TV anchorman Vladimir Solovyov.
A staff member on one of the national TV channels told the paper that in May journalists were instructed to give less personal coverage to Ivanov and focus more on the event itself: "Our chiefs explained that Ivanov was 'over exposed'."
In May, interest in the successors faded. Putin is departing, and both of them will pale in comparison with the president, Solovyov said. After the death of Mahatma Gandhi there was no one to talk to, Putin said, and all the attention was on him.
This balancing act between the candidates is allowing the Kremlin to save Putin from the "lame duck" status to the last, said political expert Alexei Makarkin. He forecasts that the air of uncertainty will prevent the Kremlin from laying its cards on the table until the parliamentary elections in December.
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