What the Russian papers say


MOSCOW, July 10 (RIA Novosti) Gazprom ready for concession on Shtokman project/Kazakhstan to stop exporting uranium ore/Bulgaria trying to cash in on Russian oil project - experts /Shell teams up with Rosneft/Putin vows to prevent embezzlement of Olympic funds


Gazprom ready for concession on Shtokman project

The Shtokman gas field seems to be a clear indicator of Russia's foreign policy.
Alexander Medvedev, deputy CEO of energy giant Gazprom, told the Financial Times that Gazprom was in talks with foreign companies about a "new model" of cooperation that would "allow foreign partners to share in the economic benefits of the project, share the management, and take on a share of the industrial, commercial and financial risks."
That could be done by giving international oil companies stakes in the company running the project, rather than in the Gazprom subsidiary that owns the Shtokman license.
It appears that Russia is prepared to make compromises when it suits it. On the other hand, Gazprom may be unable to develop the project single-handed.
Shtokman lies more than 500 kilometers (300 miles) off Russia's north coast. Arctic conditions make production challenging, not least because of the threat of icebergs.
The position of the Russian government and Gazprom on Shtokman changed several times in the past few years, in tandem with changes in Russia's foreign policy.
The gas monopolist promised participation in the project to the United States or Europe. This time it supposedly intends to liquefy Shtokman gas for sale to North America, according to Medvedev.
Resuming discussions of the Shtokman project now that Russia's relations with the United States and the European Union have deteriorated over the proposed U.S. anti-ballistic missile system in Europe, may be Russia's attempt to emphasize the economic, rather than political, aspect of its relations with the United States.
The new model of cooperation announced by Medvedev could signify Russia's intention to develop constructive economic relations with foreign partners. On the other hand, the proposal, which is formulated as a concession, may suit Gazrom's plans.
According to analysts, Gazprom cannot develop the project without foreign partners, both because it is very expensive and because it needs foreign technologies. Another explanation could be that foreign partners have refused to take part in the project as mere contractors providing technologies.
Foreign partners on the Shtokman shortlist are Statoil and Norsk Hydro of Norway, which are in the process of merging, Total of France and ConocoPhillips of the United States. The cost of the project has been estimated at $20-$30 billion.

Nezavisimaya Gazeta

Kazakhstan to stop exporting uranium ore

The Japanese media has said that Kazatomprom, Kazakhstan's state-owned nuclear holding company, was currently negotiating the purchase of a 10% stake, worth $488 million, in America's Westinghouse Electric Corporation from electronics giant Toshiba, and that the deal could be closed in July.
Westinghouse Electric Corporation is the main rival of Atomenergoprom, the only holding company in Russia's civilian nuclear industry.
Kazakhstan hopes to use U.S. technologies to stop uranium ore exports to Russia and to sell high value-added products instead, namely, heat assemblies made according to Western standards.
On Monday, Kazatomprom representatives said the company had acquired Westinghouse Electric Corp. shares, and that subsequent uranium sales on U.S., European and Asian markets were a long-term aspect of the Kazakh business strategy.
This year, Kazakhstan will produce 7,630 metric tons of uranium ore. It plans to boost production to 15,000 metric tons by 2010, outpacing Australia and Canada, which account for 24% and 28% of global uranium output, respectively.
Russia, which annually requires 17,000 metric tons of uranium ore, produces insufficient amounts. And Astana hopes to take advantage of the global resurgence of nuclear power, which will inevitably create uranium shortages.
Russian nuclear companies were dismayed to learn about Kazakhstan's decision to discard Soviet-era technologies.
An anonymous expert close to the Federal Nuclear Power Agency said Westinghouse Electric Corp. still could not offer heat assemblies similar to hexagonal Russian-made versions, and that this was the reason why Czech and Finnish nuclear companies had to resume cooperation with Russian suppliers.
He said efforts by French companies to introduce their technologies at Hungarian nuclear power plants had resulted in nuclear contamination, and that Russian experts had been called in to rectify the situation.
According to the expert, Russian nuclear companies do not face any tough competition in Kazakhstan, which has rudimentary power-supply networks and which still cannot build high-capacity Westinghouse-type reactors.
He said the first Kazakh NPPs would be built according to Russian know-how and would generate 300 MW of electricity each.


Bulgaria trying to cash in on Russian oil project - experts

In Bulgaria, workers of a local LUKoil branch have gone on strike, demanding shorter working hours. About 1,500 of them, employed at LUKoil Neftochim Bourgas AD, have blocked a highway. Experts believe Russia, as it moves into European energy markets, will encounter more such problems.
The highway links Sofia, the Bulgarian capital, with the Black Sea port of Burgas. In that way, the "Bulgarian unrest" may affect the future of the agreement signed by Russia, Bulgaria and Greece to build the Burgas-Alexandroupolis pipeline, seen as an alternate route for Russian oil to southern Europe.
Nikolaous Zambounidis, governor of the Greek province of Evros (where Alexandroupolis, where the line is to terminate, is located) has recently said that the project could be banned, because Russia has failed to provide any environmental guarantees.
Industry experts are not inclined to connect the governor's remarks and the industrial action, but political commentators are sure that Bulgaria, as well as Greece, is trying to obtain certain benefits for itself.
"There is no direct connection between the two," said Konstantin Cherepanov, an analyst with KIT-Finans investment bank. "The strike in Burgas is a matter for LUKoil only. Rosneft, Transneft and Gazpromneft will be building the pipeline from the Russian side, so LUKoil's headaches need not be traced to it."
"Bulgarian workers' aggressive stance echoes the big political game Bulgaria is trying to play against Russia," a dissenting political expert said.
"Greece, by setting an example, has shown that Russia can be bargained with. Bulgaria, too, is trying to do the same, but it is in a less favorable position than Greece," he said.
"A bad example is infectious," the expert said. "Greece is well able to do without our oil transits, but Bulgaria lacks such a win-win position, and transit fees are important for its budget."
In the expert's view, the Bulgarian authorities will try to bargain for certain perks from Russia.


Shell teams up with Rosneft

Russia's state-controlled oil company Rosneft and Anglo-Dutch Shell have signed an agreement on strategic cooperation that stipulates joint exploration, oil production and processing, and the sale of petrochemicals in Russia and abroad.
Rosneft hopes to get a share of Shell's European refineries. However, analysts believe that their immediate cooperation will be limited to Shell financing exploration in an attempt to gain access to Russian projects.
That could make up for its losses from Gazprom's accession to the Sakhalin II oil and gas project, off Russia's Pacific Coast.
Industry experts said Shell would begin by replenishing its reserves. After it sold a 25% stake in Sakhalin II to the Russian gas monopoly, its proven reserves cited in its financial reports on the project went down from 109 million metric tons of oil equivalent to 55 million metric tons.
Rosneft needs financial support and access to European refineries.
Valery Nesterov, an analyst with Troika Dialog, said that Rosneft, whose ambition is to become a global company, has been working with British Petroleum, France's Total, and Chinese and Korean companies.
According to Maxim Shein, an analyst with Broker Credit Service, Russian companies need to buy European assets that refine Russian oil, because they may eventually have to compete with Kazakh oil.
Russia's largest private oil company LUKoil "has been working for several years to expand its facilities in Europe, all in vain, despite the support of ConocoPhillips," Nesterov said.
He believes that Rosneft may use the 9.44% stake it bought from the bankrupt oil company Yukos for the acquisition of refining assets in Europe.
Experts agree that Shell and Rosneft will initially focus on Russian projects. Last year Rosneft spent $916 million on licenses.
Konstantin Batunin, an analyst with Alfa Bank, said it "should invest substantially in order to use the projects' capabilities."
He believes that Rosneft will use a tried and tested scheme in its cooperation with Shell, under which the foreign partner finances exploration while the Russian company pledges to repay the expenses after the project comes on stream.


Putin vows to prevent embezzlement of Olympic funds

Russian President Vladimir Putin, who has a good idea of national traditions, recently demanded that the government prevent the embezzlement of funds earmarked for Sochi, a Black Sea resort that will host the 2014 Winter Olympics.
He ordered the Prosecutor General's Office to establish a task force to oversee and protect Olympic projects.
On July 5, the International Olympic Committee met in Guatemala City to award the 22nd Winter Olympics to Sochi. The decision was made at 3:00 a.m. Moscow time; and ratings for nighttime coverage broke all records on Russian television.
The Russians, who were overjoyed to hear the news, and who celebrated the victory en masse, are nonetheless quite pragmatic.
A recent sample survey by influential pollster Bashkirova & Partners revealed that Russians thought connections, hard work, professionalism and embezzlement were the main get-rich-quick schemes.
The Public Opinion Foundation said two-thirds of respondents believed a lot of money could not be made honestly.
The European Bank and the World Bank said bribes accounted for 1.99% of all state contracts in Russia and for 1.07% of annual corporate sales.
Yelena Panfilova, general director of the Center for Anti-Corruption Research and Initiative Transparency International Russia, said bribes made up for 15% of state procurement contracts, or 345 billion rubles ($13.42 billion) last year.
Starting with 2000, Russia has scored 2.1-2.8 points on the Transparency International Corruption Perceptions Index.
Georgy Satarov, president of the Moscow-based Indem Foundation think tank, and former Central Bank CEO Viktor Gerashchenko said contractors would embezzle 50% of Olympic funds.
Although, both men oppose the Kremlin, President Putin has also repeatedly mentioned corruption among Russian bureaucrats.
It is hard to believe that the Olympic project will be shielded completely from corrupt businessmen and officials. However, Putin, who views the project as his own, had no choice but to threaten reprisals from the Prosecutor General's Office.

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