MOSCOW, April 2 (RIA Novosti) Ukraine may complicate Russian-American relations/ Foreign human rights reports seen by Russian public as enemy intrigue/ Gazprom plans power plant in Belarus for energy exports/ Chevron could become Tatneft's partner in heavy crude production/ Gazprom could lose $20 billion over domestic gas price curbs/ Foreign automotive giants to buy into KamAZ
Komsomolskaya Pravda, RBC Daily
Ukraine may complicate Russian-American relations
Washington is worried over the growing influence of European countries in NATO. It wants to maintain leadership in the bloc by encouraging the admission of as many pro-American East European countries as possible.
At the same time, the "new democracies" in the former Soviet space hope that the NATO umbrella will allow them to talk more firmly with Russia.
The "orange" leaders in Ukraine, who have been fighting each other for power, have lately become closer over the issue of NATO accession. President Viktor Yushchenko and Prime Minister Yulia Tymoshenko want Ukraine to be included in NATO's Membership Action Plan (MAP).
They hope that the new status will allow Ukraine to dictate gas prices and transit conditions to Moscow and crush pro-Russian sentiments in the country's eastern and southern regions.
Ukrainian political analyst Dmitry Vydrin said: "Ukraine will become a member of NATO, sooner or later; this is the opinion of the majority of the Ukrainian elite. As for the people, they have no say in the matter. It will be the elite's decision."
Alexei Malashenko of the Moscow Carnegie Center said: "George Bush risks undermining Sunday's meeting with Vladimir Putin in Sochi." If NATO yields to U.S. pressure and extends the MAP to Ukraine, Bush and Putin will have nothing to discuss, he said.
A Harvard professor said Washington was pushing Ukraine towards NATO because it doesn't want the bloc to be strong.
It needs a weak, disorganized bloc where the United States would be the only strong power, the professor said. It might reduce the French-German influence if as many small pro-American East European countries as possible are admitted to NATO.
Gazeta
Foreign human rights reports seen by Russian public as enemy intrigue
More than half of those surveyed by the Yury Levada Analytical Center consider recent criticism by western groups and politicians of violations of democratic and human rights in Russia as interference in the country's internal affairs.
Alexei Grazhdankin, deputy director of the Levada Center, links the mistrust by Russians of western criticism to the imperial ambitions entertained by most of the population. "Many Russians have developed a post-imperial complex after Russia lost its status as a superpower," he said. "Not surprisingly, people aged between 40 and 50 years old see any criticism from the West as another dig against Russia."
He said that criticism by foreign non-government organizations during the Chechen war was received more calmly. At that time, human rights issues stood out more obviously than during the recent election campaigns.
"People trust the authorities so implicitly that they just turned a blind eye to any irregularities during the election campaign or voting, and often are totally ignorant of them," Grazhdankin said. "This is particularly noticeable in Moscow, where people have more opportunity to get accurate information. Only 42% of the capital's population distrusts western criticism."
Allison Gill, the Moscow office director at Human Rights Watch, said officials in Moscow make critical remarks against her organization every time the group publishes a report. Sometimes, she said, Russian ministries and departments send it constructive proposals, especially when it issued a report on the mistreatment of army recruit. But lately its information has been increasingly rejected. Not surprisingly, ordinary Russians have been taking a very dim view of its activities.
As a rule, disbelievers regularly vote for the LDPR (60%), United Russia and A Just Russia (52% each). Only the democratic electorate - voting for Yabloko and the Union of Right Forces - pay attention to the opinions of foreign newsmakers. Just 34% of them admitted they reject western criticism.
Kommersant
Gazprom plans power plant in Belarus for energy exports
Russian natural gas monopoly Gazprom is ready to consider Belarus's proposal to jointly build a new power plant on the site of the Berezovskaya regional plant (GRES) in the Brest Region. Gazprom, which sells gas to Belarus at its lowest export price, will be able to earn extra profits from expensive electricity supplies to neighboring countries.
The tentative cost of building a power plant with a capacity of 450-600MW is $330 million. The project also includes the construction of power transmission lines to transport electricity to Western consumers.
Belarus is not suffering from a lack of electric power: the rated capacity of its power plants is about 8,000MW and consumption about 6,500MW. However, in 2009, Lithuania will shut down the Ignalina nuclear power plant, the main source of electricity for the Baltic countries (the European Commission will start examining this issue in the first week of April).
Now Gazprom is negotiating the construction of another power unit with Lithuania at the Kaunas thermal power plant, which could be commissioned in 2010. The new capacities of the Berezovskaya plant could also be exported to the Baltic countries, a source familiar with the situation says.
Tigran Oganesyan, an analyst at Sobinbank, underlines that Belarus receives gas at its lowest export price - $128 per 1,000 cubic meters. The gas price for Lithuania is $346 per 1,000 cubic meters. "Power production costs are very low with the gas price of $128," the expert says. "Even several years in the future, when Gazprom raises gas prices, the sale of electricity to the Baltic countries will be much more profitable than its production, say, in Lithuania."
Oganesyan assesses the new power plant's profitability at 35%-45%.
Alexander Kornilov of the Alfa Bank believes that in making the decision Gazprom will take economic as well as geopolitical factors into account. "Gazprom wants to prove its worth as a serious investor in the power sector and in this way it can get another lever of influence abroad," he says.
Business & Financial Markets
Chevron could become Tatneft's partner in heavy crude production
Following its planned mid-year Anglo-Dutch joint venture with Royal Dutch Shell, Tatneft, Russia's sixth largest oil producer is looking at U.S.-based Chevron as its second partner in heavy crude production.
Chevron is interested in cooperation with Tatneft holding the right to develop deposits with sizeable reserves of solid bitumen, the American company said to B&FM. "We have specially devised a new technology making it possible to nearly fully process solid bitumen into light petroleum products."
Tatneft's five main fields are 80% exhausted, so its only chance to boost production is to launch the development of solid bitumen deposits, which is much more expensive.
According to various estimates, Tatneft's reserves in the Republic of Tatarstan amount to 1.5-1.7 billion metric tons. Such projects, however, require large-scale investment, and Tatneft has no experience of developing such deposits. A good way to resolve both problems is to invite foreign partners.
According to Chevron's forecasts, global electricity consumption will surge by 50% by 2030. To meet these requirements, heavy crude production should be increased by three to four times from present levels.
According to Vitaly Kryukov, an analyst at the Kapital investment group, the projected production cost of a barrel of solid bitumen for this year is about $22. In Canada, it costs about $15 to produce a barrel of heavy crude. Meanwhile, it costs merely $4 to produce a barrel of traditional oil. With current oil prices, the production and processing of solid bitumen provides good profits.
Svetlana Savchenko, director of the investment planning department at the 2K Audit - Business Consulting company, says that such projects become profitable even when oil prices stand at $40-$45 a barrel.
At present, Tatneft is implementing two such projects - in the Ashalchinskoye and Mordovo-Karmalskoye fields, but they are considered unprofitable. The main problem in Russia is a lack of technology making it possible to reduce prime costs of ultraviscous oil.
According to Vyacheslav Bunkov, an analyst at the Aton investment company, "Tatneft is actively looking for partners, so next year it may launch its new projects. Shell may become a partner in one project, and Chevron in another."
Vedomosti
Gazprom could lose $20 billion over domestic gas price curbs
According to Russia's Ministry of Economic Development and Trade, transition to the European gas pricing formula will triple gas prices in Russia by 2011.
Minister Elvira Nabiullina said at a recent conference on monopolies' tariffs, chaired by president-elect Dmitry Medvedev, that prices would only be allowed to double.
The move will cut Gazprom's profits by 470 billion rubles ($20 billion).
In 2006, the Russian government ruled that a new commodities pricing formula should be adopted by 2011 to level off the differences between Gazprom's exports and domestic sales.
The energy giant expected this scheme to produce sufficient funds to increase its investment program to nearly 1 trillion rubles ($42.4 billion) in 2010.
The government also decided in 2006 that gas tariffs should be raised by 20%-27% a year in 2008-2010 to ensure a smooth price rise by 2011.
But this will not protect domestic consumers, the Economic Development and Trade Ministry now says. Gas prices will almost double in 2011 and triple in 2008-2010. This is unacceptable for the national economy, said a ministry official.
He said that export gas prices depend on the cost of oil products, which have been recently growing at an unprecedented pace. Therefore, Nabiullina proposed raising gas prices by 30% in 2011. The ministry official could not say how this proposal will be adjusted to the aim of bringing domestic prices in line with foreign tariffs.
Gazprom spokesman Sergei Kupriyanov said the 2006 decision must be carried out.
But a Gazprom manager said price growth could level out in 2010-2011 only if prices were allowed to grow faster in 2008-2010.
Nabiullina's proposal may cost Gazprom about 470 billion rubles ($20 billion) in lost profits in 2011, when the monopoly expects to sell 271 billion cubic meters of gas under domestic contracts.
Valery Nesterov, an analyst with the Troika Dialog investment company, said Medvedev, who has been chairman of Gazprom's board of directors since 2000 and was elected Russia's president this year, might prolong the transition period, postponing the introduction of the equal pricing formula.
Sergei Chernavsky, laboratory head at the Central Economics and Mathematics Institute of the Russian Academy of Sciences, said increasing gas prices affect GDP. A 1% rise in prices decreases GDP by 0.09%. Nobody has calculated the effects of a 200% growth in gas prices.
Kommersant
Foreign automotive giants to buy into KamAZ
Leading asset management company Troika Dialog that recently sold a 25% stake in automotive giant AvtoVAZ to France's Renault plans to attract strategic investment into Russian truckmaker KamAZ.
Analysts said Volvo, Scania, Iveco or MAN could buy a stake in the company, and that KamAZ was unlikely to merge with its rival, MAZ of Belarus.
According to Ernst & Young, KamAZ, the largest national truckmaker, controls 50% of the domestic market. The government and Troika Dialog subsidiaries own 38% and 19% stakes in KamAZ, respectively. Defense industry corporation Rostekhnologii will soon receive the government stake as contribution to its statutory capital. The company's 2006 IFRS (International Financial Reporting Standards) earnings and net profits were $2.8 billion and $165 million, respectively.
Troika Dialog officials said the sale of the AvtoVAZ's stake to Renault was a major effort to expand corporate output, and that a foreign partner would also help KamAZ to double production by 2012, manufacturing 100,000 trucks per year and to enter new markets in Europe, Asia and India.
Last week, KamAZ bought a 12.5% stake in Vietnam's VMIC automaker. Akhat Urmanov, deputy KamAZ CEO for sales and services, said the company would buy another 23.5% stake from private VMIC shareholders, and that it planned to assemble 2,000 trucks per year in Vietnam.
A source at KamAZ said the company would soon buy a 75% stake in India's Tatra Vectra Motors and annually assemble 5,000 trucks there.
The sources said KamAZ would spend $10-12 million on both plants.
Mikhail Pak, an analyst with the Kapital Investment Group, said possible cooperation between KamAZ and a strategic investor was "positive news." He said, instead of financing production-expansion programs, KamAZ shareholders wanted a redemption premium.
Ivan Bonchev, the head of car practice at Ernst & Young, said foreign partners would want to acquire a blocking stake in KamAZ, but that the government and Rostekhnologii would not risk ceding control over KamAZ or granting majority-shareholder status to them.
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