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MOSCOW, September 20 (RIA Novosti) "Unbundling" requirement a shock for Gazprom/ Putin, Bush can compromise on missile-defense issue - expert/ CPC shareholders decide to raise pump fees and increase pipe capacity/ Sukhoi set to control 20% of global regional-aircraft market/ Rosneft will build refinery in China

Gazeta, Vedomosti

"Unbundling" requirement a shock for Gazprom

The European Commission has approved a new plan for regulating the EU energy market which provides for "unbundling," that is, separation of network operation of electricity and gas from supply and generation activities.
The package contains safeguards to ensure that in the event that companies from third countries wish to acquire a significant interest or even control over an EU network, they will have to demonstrably and unequivocally comply with the same unbundling requirements as EU companies.
According to experts, this will stop Gazprom's move on the European end consumer and force the Russian energy giant to overhaul its foreign economic strategy.
The final straw that forced the EU to stand up against Gazprom was reports about its plans to buy one of Britain's modern power plants, Baglan Bay, reported in the Russian media citing a Gazprom top manager.
The manager reportedly said the gas monopoly could acquire stakes in E.ON's power assets in Britain in an asset swap deal.
E.ON plans to acquire a 25% stake in Gazprom's Yuzhno-Russkoye field, and Baglan Bay share could be part of the Gazprom-E.ON swap.
Other analysts assume that the European Commission adopted the new energy policy so as to encourage Russia to ratify the Energy Charter. But Russia is unlikely to budge.
President Vladimir Putin said more than once that the unified gas pipeline system (UGPS) is Russia's holy of holies and undeniable competitive advantage. So Russia will not accept the terms of the transit protocol stipulating the right of third countries to access the UGPS.
Experts say the new energy package will spur the growth of export gas prices.
Although the sides are fighting like cat and dog, they are dependent on each other.
Jose Manuel Barroso, president of the European Commission, said in July that the European Union, which is already the largest importer and second largest consumer of energy in the world, is currently dependent on external sources for 50% of its energy needs. This could rise to 70% by 2030.
There are few alternative suppliers apart from Gazprom, so the Russian energy giant is unlikely to lose in sales, one way or another.

Nezavisimaya Gazeta

Putin, Bush can compromise on missile-defense issue - expert

Although a U.S. delegation has recently visited the Gabala early-warning radar in Azerbaijan, the South Caucasus, Moscow and Washington remain deadlocked on missile-defense talks.
Experts said presidents Vladimir Putin and George W. Bush could, nonetheless, make striking political gestures in the last few months prior to their handing over of power.
Moscow doubts claims by Lieutenant General Henry A. "Trey" Obering, director of the Pentagon's Missile Defense Agency, that the Gabala radar is not sufficiently accurate.
Major General Alexander Yakushin, deputy chief of Staff of the Russian Space Force, said the Gabala radar could monitor strategic and theatre-level missile launches, including those in Iran.
The Pentagon says the radar cannot guide Russian and U.S. missile interceptors to their targets, and that it is impossible to overhaul it in accordance with NMD (National Missile Defense) standards. This seems to be the main reason for turning down the generous Russian offer.
Major General Vladimir Belous, an expert on the U.S. NMD system, said Russia could, if necessary, upgrade the Gabala radar and use it to guide missile interceptors.
He said Washington planned to deploy an early-warning radar in the Czech Republic and 10 missile interceptors in Poland, and that this would make it possible to scan European Russia, southern Urals and Siberia.
Belous said the Pentagon would try and achieve this strategic objective, no matter what, and that the U.S. delegation's visit to the Gabala facility was nothing but a political game aimed at calming down Moscow and Europe.
Carnegie Moscow Center director Rose Gottemoeller said political, rather than technical, problems hindered Russian-U.S. cooperation in the missile-defense sphere.
She said the incipient technical dialogue was useful but that it had so far failed to influence political stands. When asked whether the missile-defense issue could be settled under Bush and Putin, Gottemoeller said resigning presidents frequently made serious decisions that could be viewed as positive heritage.
She said Bush and Putin would soon step down, and that both sides could still make impressive political gestures. However, Moscow and Washington must compromise in order to reach a consensus, Gottemoeller told the paper.

Vedomosti

CPC shareholders decide to raise pump fees and increase pipe capacity

Shareholders of the Caspian Pipeline Consortium (CPC) have agreed to increase the pipeline capacity and at the same time to raise crude pumping fees and lower loan rates. Russia has been pressing for the move for several years.
The CPC operates a pipeline 1,580 km long stretching from Tengiz in Kazakhstan to Novorossiisk. Its shareholders are: Russia (24%), Kazakhstan (19%), Oman (7%), Chevron (15%), LUKARCO (12.5%), Rosneft-Shell joint venture (7.5%), Mobil Caspian Pipeline Company (7.5%), Agip International (2%), BG Overseas Holding (2%), Kazakhstan Pipeline Venture and Oryx Caspian Pipeline (1.75% each).
On Wednesday, a special CPC shareholder meeting decided to raise from October 1, crude transportation fees from $30.24 to $38 per metric ton, and lower interest rates on CPC loans from 12.66% to 6%. The co-owners also agreed to work towards a memorandum to expand the CPC. The memorandum could be signed before 2008, said a source close to shareholders.
A Chevron representative is pleased that the shareholders have at last agreed on critical issues. The Russian side has for several years been pressing for lower interest rates and increased fees. High interest on loans borrowed from CPC private shareholders leads to losses and to the consortium paying almost no taxes, officials from the Industry and Energy Industry have been complaining for several years.
Instead, the project's private investors were demanding that pipeline capacity be increased from the current 34 million tons to 67 million tons a year, and blocked Russia's proposals at shareholder meetings. The conflict has been running since crude was first pumped into the pipe in 2003.
Russia has been able to get private CPC shareholders to reduce rates and raise fees thanks to Transneft's role, said Sergei Grigoryev, the monopoly's vice president. The Federal Agency for the Management of Federal Property transferred the state's stake in the consortium to Transneft in June. For two months, Semyon Vainshtok, the former Transneft president, conducted talks with CPC shareholders in upholding Russia's position, Grigoryev said.
In the summer, Transneft proposed that CPC debt be restructured by issuing Eurobonds worth $5.3 billion. July's shareholders' meeting refused to endorse the proposal.
The bond-issuing point was raised at Wednesday's meeting again, but was left undecided, said a source close to CPC shareholders. The CPC said on Wednesday that "a plan of measures to restructure the debt has been agreed." Grigoryev had no comment to make.

Gazeta.ru

Sukhoi set to control 20% of global regional-aircraft market

Fighter manufacturer Sukhoi plans to become a leading player in the civilian aircraft industry and to control 20% of the regional-aircraft market.
The Russian company is placing high hopes on its most ambitious national aviation program, namely, the SuperJet 100 short-haul airliner seating 75 to 95 passengers.
Although production of the SuperJet is scheduled to commence next year, Japan may soon develop a rival plane.
Sukhoi CEO Mikhail Pogosyan said the company planned to expand production by 40% by 2010 and to manufacture more civilian aircraft. Corporate output is to total $2 billion and $4 billion by 2010 and 2015, respectively.
Yevgeny Shago, an analyst at Trust Bank, said the SuperJet program would cost half as much.
Analysts said short-term corporate prospects were good. Kirill Tachennikov, an analyst with Otkrytiye financial company, said Canadian and Brazilian aviation giants Bombardier and Embraer offer inferior planes. He said the cheaper Ukrainian-made Antonov An-148 had not yet received a certificate of international airworthiness.
Oleg Panteleyev, chief analyst at aviation monitoring agency AviaPort, said Sukhoi had consolidated its positions after Italy's Alenia Aeronautica joined the SuperJet program. He said many airlines buying its planes would prefer the new Russian liner.
Shago said about 200 SuperJets could be sold on the Russian market, and that the rest should vie with Embraer on the global market.
Panteleyev said similar Japanese projects could tip the balance on the global market. Japanese industrial giant Mitsubishi Heavy Industries announced plans to develop the Mitsubishi Regional Jet at the latest aerospace show in Le Bourget.
The new aircraft, due to be commissioned by 2012, will be 20% more fuel-efficient.

Business & Financial Markets

Rosneft will build refinery in China

Rosneft, Russia's largest state-controlled oil company, and China National Petroleum Corporation (CNPC) are waiting for a permit to build an oil refinery in China.
This is part of the Russian company's strategy of increasing its refining arm, which had been its weakest segment up to its purchase of former Yukos' assets. It will also propel Rosneft into one of the world's largest markets.
Rosneft became Russia's largest oil company after buying up the bulk of bankrupt company Yukos oil assets, auctioned off this year to pay tax arrears, which included five refineries.
It made public its plans to build a refinery in China, with an annual capacity of 200,000 barrels per day (9.5 million metric tons a year), when it was establishing two joint ventures with CNPC.
Yevgeny Dyshlyuk, an analyst with Uralsib Financial Corporation, said the project would cost $3 billion. Rosneft refused to comment.
CNPC expects to receive oil from Siberian fields. Rosneft delivers oil to China by rail; its 2006 deliveries amounted to some 13 million metric tons of oil and oil products.
The other day the Russian oil company confirmed its intention to build a refinery to process 20 million metric tons of oil at the end of the Eastern Siberia-Pacific Ocean oil pipeline. The first stage of the project, with a capacity of 10 million metric tons, is to be completed by 2012.
According to Dyshlyuk, investment in that project will reach $5-$7 billion.
The refinery will process oil from the Vankorskoye, Verkhnechonskoye and Yurubcheno-Takhomskoye fields, and market end products in Pacific countries.
"An offshoot to China is a possibility," Dyshlyuk said.
Timur Khairullin, an analyst with the Aton investment company, said Rosneft's refining segment had been unbalanced until it bought the Yukos assets.
Rosneft bought the Angarsk and Achinsk refineries and three refineries of the Samara group at a Yukos auction, and also considered buying fuel and energy assets in the republic of Bashkortostan.
"But that would have made its [refining] assets excessive," Khairullin said.
Although Rosneft is spotlighting Asian markets, analysts do not rule out its future expansion in Europe.


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