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MOSCOW, October 22 (RIA Novosti) Putin smoothes over confrontations between security services / Total makes another go at Novatek / AFK Sistema Makes Foray into India's Mobile Market / Tymoshenko blames Russian company for gas explosion in Dnipropetrovsk / Hyundai bets on Russia

Gazeta

Putin smoothes over confrontations between security services

Russian President Vladimir Putin signed a decree on Saturday establishing a state drug enforcement committee led by Viktor Cherkesov, head of the federal anti-narcotics service. Cherkesov has recently called on the security services to avoid internal strife.

The presidential decree is a carbon copy of the document that established the National Antiterrorist Committee led by FSB Director Nikolai Patrushev.

Experts believe that Putin has thus balanced the bureaucratic powers of Cherkesov and Patrushev, long-standing rivals. However, sources in the Kremlin administration said the two officials would soon be assigned to new posts.

Alexei Makarkin, an expert at the Center of Political Technologies (a Moscow think tank), said: "The president is developing a balanced system where the positions of his closest teammates will not strengthen or weaken considerably."

The political analyst believes that the positions of Cherkesov "have weakened in the struggle between the security services," as proved by his open letter to the media.

"I think the president wants to keep both sides in power," Makarkin said.

A source in the Kremlin administration pointed out that Cherkasov's deputy in the new committee will be Alexander Beglov, a presidential aide and head of the control department, who was first deputy to the presidential envoy in the North-Western Federal District until 2004.

The post of head of the control department was Putin's springboard into power, and therefore Beglov is now considered a probable presidential hopeful.

Another source in the Kremlin said there is no ambiguity in Saturday's decree, because Cherkesov and Patrushev might soon be given new jobs, Patrushev as Secretary of the Russian Security Council, and Cherkesov as his replacement in the FSB.

This should smooth over confrontations between the security services, at least for a while.

Vremya Novostei

Total makes another go at Novatek

The French oil major Total, which failed to acquire a blocking stake in Russian gas producer Novatek three years ago, has made another try.

Novatek and the French company Total E&P Activites Petrolieres have signed a cooperation deal, the Russian largest independent gas company's press office reported. As part of the deal, the companies will establish working groups to identify assets in Russia and abroad for the implementation of joint gas projects.

In 2004, the tacit position of Russian natural gas monopoly Gazprom and the Kremlin prevented the French concern from becoming a Novatek major shareholder. Sources in Gazprom and Novatek admitted off the record that the French were soon made to understand that they had set out for Russian gas reserves in the wrong way.

Total did not raise a scandal and, considering the situation, began talking about strategic cooperation with Gazprom. Last summer, the French company became Gazprom's first official partner for the first development phase of the Shtokman gas condensate deposit in the Barents Sea: it received a blocking stake in the project's operator.

Three years ago, Novatek shareholders badly needed funds (about $700 million) for settlements with the former co-owners of the company's gas producing assets. When the deal with Total fell through, they urgently organized an IPO and sold slightly less than 20% of their shares for $950 million. A year later it was officially announced that the Gazprom group had purchased a 19.6% stake in Novatek for $2.3 billion, gaining the rights of a blocking shareholder.

A source in Novatek said that the protocol signed with Total does not have a list of concrete assets with which the sides could work, but provides only for the companies' joint activities.

Strange things have been happening to Novatek's authorized capital of late. Firstly, the Development Bank sold a 5.6% stake in the company without naming the purchaser. Then, Etana, an obscure limited liability company, bought a 19.34% stake from Levit, a company whose main beneficiary was Leonid Mikhelson, Novatek's president.

Novatek says that its main beneficiaries are the same but declines to comment on the purpose of the reorganization launched by its shareholders. It is quite possible that a pre-sale preparation of a 25% stake in the company is under way.

If this is so, it is hard to say who will get it - Total or some companies close to Gazprom. Italy's Eni, another European partner of Gazprom, displayed a great interest in Novatek shares some time ago. The Italian company requested a permit for the purchase of its shares within an asset swap deal, but its request was denied.

Kommersant

AFK Sistema Makes Foray into India's Mobile Market

Russian consumer services company AFK Sistema is acquiring a controlling interest in Indian mobile operator Shyam Telelink, which will soon be able to obtain a so-called universal service license to provide mobile and regular communications services across India.

A Sistema source said the company had filed an application for the new type of license in telecommunications, having "secured top-level political support in both Russia and India" to ensure that it will be granted. If it is, the company will receive its frequency band under the license once the country's Defense Ministry frees the appropriate allotted band.

Industry experts believe Sistema's obtaining of a universal services license to be a major breakthrough, as only a few local operators hold such licenses in India at present - BS-NL and Reliance Communications. India's territory is divided into 23 license zones, with five to eight companies, one of them government controlled, operating in each zone. The local regulating authorities had issued 158 mobile communications licenses as of August 2007. State-run Bharat Sanchar Nigam Limited (BSNL) has the greatest coverage, operating in 21 zones.

Yevgeny Solomatin, the development director at Cominfo Consulting, said Sistema's Indian project was not a cheap one. "If AFK really has top-level support, there should be no delaying the frequency band. But in any case, it is a very investment-intensive project, as around $1.5 billion will have to be invested at the initial stage alone," he added.

Sistema has expertise in building mobile communications networks, so it is likely to have 5% of the Indian telecoms market in three to five years if the situation is favorable enough, said Konstantin Chernyshev, head of analysis at UralSib.

$martMoney

Tymoshenko blames Russian company for gas explosion in Dnipropetrovsk

Democratic Ukrainian politician Yulia Tymoshenko, widely tipped to become the country's next prime minister, said Russian billionaire Viktor Vekselberg was responsible for the October 13 gas explosion in an apartment house in her home city Dnipropetrovsk, in eastern Ukraine, and demanded that the Dniprohaz gas distribution company, indirectly owned by Vekselberg's Gazex Company, pay damages to the blast's victims.

Tymoshenko, also called the "Gas Princess," believes that the owners of gas distribution companies must ensure safe gas supplies or have their assets taken away from them.

Ukraine's Emergency Situations Minister Nestor Shufrich said Vekselberg must pay 103 million hryvnias (about $20 million), the cost of clean-up operations, or that the state would take over Dniprohaz.

Ukrainian gas distribution companies had to be privatized in the 1990s because the cash-strapped government could not maintain them.

Prior to Tymoshenko's statements, Gazex and Dniprohaz promised to pay 500,000 hryvnias (about $100,000) to the families of the deceased.

Tymoshenko and her supporters are making politically motivated demands. Boris Nemtsov, former leader of Russia's Union of Right Forces (SPS) and a onetime adviser to Ukrainian President Viktor Yushchenko, said Tymoshenko liked the command-and-administer system, and that she was a typical Communist-era manager, rather than an "Orange Princess."

Dniprohaz owners would have less reason to worry if they faced a less emotional politician. Moreover, it will take several weeks to find who is responsible for the explosion. But the problem is that Tymoshenko's populist statements and actions facilitate her political career.

Tymoshenko, who cannot take steel giant Krivorozhstal from Indian-born billionaire industrialist Lakshmi Mittal once again, and who is in no mood to blame Dniprohaz or Gazex managers, prefers to attack Vekselberg, a seemingly greedy Russian capitalist.

Business & Financial Markets

Hyundai bets on Russia

The management of Korea's Hyundai Motor Company has officially named Russia a priority country for building a new car factory. Hyundai needs its own facility to keep its share of the Russian market, analysts believe.

The company is also considering options in South America and South-East Asia, but Russia is at the top of Hyundai's plans, Kim Dong-jin, vice chairman of the company's board of directors, said in Seoul. According to the top manager, Hyundai is weighing up several sites in Russia.

On September 14, Hyundai signed a memorandum of intention with the Russian government to build a plant in Russia, said a source familiar with the progress of negotiations.

The document makes it possible to secure the status of an industrial assembly enterprise, giving Hyundai the right to import car components on easy terms.

Hyundai was able to sign the memorandum at the last moment: beginning from September 16 the government ceased signing agreements on industrial assembly in view of obligations to joining the WTO, the source said.

Hyundai cars are already produced in Russia at the TagAZ plant. In August 2007, Kim Dong-jin announced his company had decided to increase the number of car kits shipped to the plant from 80,000 in 2008 to 120,000 in 2009.

Analysts do not believe the new plant will hamper the development of production at TagAZ, which manufactures cars whose production has been discontinued in Korea. GM has three industrial sites in Russia, and they do not compete between themselves. The same will happen to Hyundai's two factories, said Ivan Bonchev, an automobile industry analyst with Ernst & Young.

Experts agree that Hyundai needs a plant of its own to preserve its share of the market. In 2005, the company led the Russian foreign makes market, dropping to third place in 2006, and may rank fourth in 2007, Bonchev said.

Kirill Tachennikov, an analyst at Otkrytiye brokerage, does not rule out that in building the plant Hyundai will look not only to the Russian market, but also to CIS countries.

RIA Novosti is not responsible for the content of outside sources.

 

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