MOSCOW, June 5 (RIA Novosti) Russia will be encouraged to accept NATO expansion at CIS summit/Putin gave Medvedev a chance to negotiate with Germany – expert/Russian gas has sedative effect on Europe/Gazprom plans to become authorized trader for Sakhalin PSA projects/GDRs first victim of Russia’s new law on foreign investment/Pirelli and Russian Technologies setting up joint venture
RBC Daily
Russia will be encouraged to accept NATO expansion at CIS summit
The State Duma yesterday proposed to President Dmitry Medvedev and the government a new formula for cooling the desire of neighboring countries to join NATO. The lower house of Russia’s parliament thinks Russia should consider withdrawing from the Friendship, Cooperation and Partnership Agreement with Ukraine if the latter makes a move towards joining NATO.
The proposal was approved by an overwhelming majority of votes ahead of the unofficial CIS summit in St. Petersburg, where Medvedev will have difficult talks with his pro-NATO colleagues.
The Ukrainian president’s allies in the Our Ukraine – People's Self-Defense Bloc said Viktor Yushchenko was ready for a battle with Moscow.
Vladimir Shandra, Ukraine’s Emergencies Minister, has demanded $1.5 billion as compensation for the accidents involving Russian tankers during last year’s November storm in the Kerch Strait.
Another member of the bloc, MP Andrei Paruby, said the president must talk with Medvedev about the delimitation of the Ukrainian-Russian border and the withdrawal of the Russian Black Sea Fleet.
Ukraine’s Foreign Ministry had previously expressed its indignation over some Russian politicians publicly questioning Ukraine’s ownership of Sevastopol.
Andrei Yermolayev, president of the Kiev-based center of social studies Sofia, said the Russian statements on the fleet and Sevastopol were not the root cause of bilateral problems. “If Kiev abandons plans to accelerate its accession to NATO, Moscow will stop talking about Sevastopol,” he said.
Russia has several other instruments of pressure on Kiev and Brussels.
Semyon Bagdasarov, a deputy from the Just Russia party in parliament, yesterday proposed denouncing the NATO-Russia agreement on the airlifting of weapons and troops to the bloc’s group in Afghanistan across Russia. He also said the Kremlin should demand that Uzbekistan, Kyrgyzstan and Tajikistan close NATO bases on their territories if Russia adopts a favorable migration policy regarding these Central Asian countries.
President Yushchenko hopes Medvedev will live up to his image of a liberal politician and soften Vladimir Putin’s tough policy regarding Ukraine, in particular its intention to join NATO.
Georgian President Mikheil Saakashvili is entertaining similar hopes.
If Medvedev proves to be a more liberal president, Ukraine and Georgia will try pressurizing Moscow into non-reciprocated concessions, as in the case of Moldova, which has pledged not to join NATO if Russia stops bothering it about Transdnestr.
But experts say these hopes are likely to be frustrated, because the danger of NATO expansion toward Belgorod and Chechnya has encouraged Russia to view the CIS as something more than simply a system of oil and gas pipelines.
Nezavisimaya Gazeta
Putin gave Medvedev a chance to negotiate with Germany – expert
The first foreign visit of Russia’s new head of state was to be to Paris. At least that was what he told Russian journalists a month ago. However, Prime Minister Vladimir Putin went to France instead, snatching from Dmitry Medvedev a perfect chance to show his worth at the new PCA talks with the European Union, which still need to be pushed through France, said political analyst Alexander Rahr.
His visit to Berlin is far less important strategically in this context, because Germany presided in the G8 and EU last year, the analyst explained. Which means, the head of state will make but a regular official visit, while the prime minister will handle the important negotiations with France. As for easing tensions with Germany, which is a smaller diplomatic task, Putin left the job to the president.
It is difficult to interpret the signs, Rahr said, but they arouse some concerns. It does not make much difference as far as the West is concerned, since European countries could still use their contacts with Putin to reach out to Russia if need be. It is more important, and much more difficult to tell, what implications these circumstances might have for the political situation inside Russia. If Medvedev has simply agreed to take the top post technically, only to hand the reins back to the current prime minister in a while, then one could say that the recent decisions fit into the scheme quite well.
On the other hand, the Russian government could have made a quiet decision to gradually transform the presidential republic into a parliamentary one without publicizing it in advance, the analyst suggested. In this case, they will probably wait until the United-Russia-dominated parliament gains as much real power as Putin himself, and then announce that it was time to establish a parliamentary republic in Russia.
But, in case Putin wants to retain power without amending the Constitution, this policy may do substantial damage to the very institute of presidency.
The situation should become clearer in the next few months, which is in fact the key political intrigue in Russia. Putin probably just wants to remain prime minister and gradually transfer power to Medvedev without changing the Constitution, to stand by the new president until he gains confidence. Then he will quit big politics taking a respectable post in the planned ‘gas OPEC’ or the CIS. However, the first few weeks of Medvedev’s tenure have shown that plans differ from reality, the analyst concluded.
Kommersant
Russian gas has sedative effect on Europe
A summit and business forum of the Baltic states ended in Latvia yesterday. The key theme was Moscow’s energy policy toward the EU, and the Baltics in particular. The hottest issue was the Nord Stream project.
The presence at the forum of Valery Golubev, deputy chairman of Russian energy giant Gazprom, became the most discussable topic. Delegates from the European Commission said on the fringes of the meeting that the arrival “of such a person” showed the seriousness of Gazprom’s intentions toward the Baltics.
Speaking at an energy panel, the gas giant’s top manager was not slow in bringing home to his listeners the scale of the force they were facing: “Russia has an outlet to the Baltic Sea and is therefore part of this club, although its opposite side lies on the Pacific.”
Golubev said Russia had its own understanding of energy security: it was insisting on long-term contracts with a pricing formula that mirrored the growth of global energy prices. Moscow was also particularly concerned with transportation routes. In that context he described the Nord Stream project, the main merit of which being that “the project delivers gas directly from producer to consumer with no transit territories in-between, which sometimes raises political issues.”
Golubev followed up this thought in an interview with Kommersant: “Political processes occurring in transit areas are often opaque because transit countries, like Ukraine, are short on democracy. For some nations transit fees become subject to political manipulation. Nord Stream pursues no sinister aims, but for some reason people have begun to give a political coloring to the project, although it is a purely economic undertaking. Producer and consumer alone set the price, determine the margin of profit and bear transportation costs, without letting others in on the act.”
Following this explanation, Dmitry Medvedev’s visit to Germany is now certain: Moscow and Berlin have things to share and to mutually profit from. But the upcoming Russia-EU summit in Khanty-Mansiysk is not such a sure bet. EU policy allows even countries not commonly invited to share in the gas business have a full voice.
Vedomosti
Gazprom plans to become authorized trader for Sakhalin PSA projects
Before leaving office, former Prime Minister Viktor Zubkov instructed the Russian government to transfer eight mineral resource areas on the Yamal Peninsula and Sakhalin to Gazprom without a tender. On May 6, he made another farewell present to the gas monopoly when he instructed the government to draft a resolution making Gazprom an authorized organization for the sale of the state-owned share of gas output from Sakhalin-1 and Sakhalin-2.
Mikhail Subbotin, director of the SRP-Expertiza consultancy, recalls that thus far all gas output has been sold by the operators of the projects, with the state taking its share in cash. However, the Russian Far East needs gas and the state now wants to receive its share in fuel, an official at the Energy Ministry said. Of course, an authorized trader is needed for this and Gazprom is the most likely candidate. It will receive a commission for this work, the official said.
Gazprom has no objection to selling gas from the Sakhalin projects. After a meeting on gas supplies to the Far East, held in Vladivostok on June 4, the company’s press service said the government should “urgently” take the decision on the company’s new status allowing it to sell the state-owned share of gas output from Sakhalin-1 and Sakhalin-2 (with the further transfer of receipts to the budget).
According to Alexander Ananenkov, deputy chairman of Gazprom’s management committee, four Far Eastern regions alone need 15 billion cu m of gas a year. For this reason, government officials have not allowed Sakhalin-1’s managers to include construction of a pipeline towards China in the project’s budget. Though the operator is legally permitted to export fuel, both government officials and Gazprom’s top managers have repeatedly said that the region needs gas from Sakhalin-1. Meanwhile, all gas from Sakhalin-2 has been sold under contracts to foreign buyers for the next 20 years – before the sale of a controlling stake in the project to Gazprom. The gas monopoly has long been negotiating the resale of all gas produced in Russia with ExxonNeftegas, the operator of the Sakhalin-1 project, but without success. Talks are under way but, as before, other options are being considered, including the sale of gas to China’s CNPC, said Dilyara Sydykova of ExxonNeftegas.
“Gazprom’s new plans are fully in line with its strategy – to monopolize all possible [gas] supplies. Taking advantage of the law on gas supplies, Gazprom receives licenses for major gas fields without a tender. Under the law on gas exports, Gazprom is the only company to sell gas abroad (apart from fuel received under product sharing agreements, or PSAs). Under the law on subsoil resources, only Gazprom and other state companies can develop offshore fields. Now Gazprom is planning to receive the status of the authorized trader on PSA projects,” Subbotin said in conclusion.
Gazeta.ru
GDRs first victim of Russia’s new law on foreign investment
Deutsche Bank Trust Company Americas has suspended the issue of new global depositary receipts (GDRs) for shares of some Russian raw materials issuers, notably Severstal, Novatek, Bashneft, Novolipetsk Steel and Polymetal.
The companies say this is a technical malfunction, but analysts blame the move on the recently approved Russian law on foreign investment in strategic sectors.
Independent gas producer Novatek has refused to comment on the “rumor.”
Pavel Danilin, Polymetal’s director for corporate finance and investor relations, said: “This is a purely technical problem, which will be solved very soon and the issue of GDRs will be resumed.”
Steelmaker Severstal said: “Trading in GDRs for Severstal shares continues as usual on the London Stock Exchange.”
Several days ago, Troika Dialog managing director Andrei Sharonov pointed to a discrepancy between the law restricting foreign investment in strategic sectors, which came into force in May 2008, and GDR programs.
Companies from strategic sectors issue depositary receipts through foreign depositary banks, he said, adding that these banks therefore hold a substantial number of Russian shares.
“Not only oil and gas companies, but also steel, chemical, machine-building and telecommunications firms could be damaged by the blow,” Sharonov said.
Nikolai Podlevskikh, chief analyst at the Zerich financial group, said the depositary banks keep the shares for which they issue depositary receipts, actually becoming owners of the shares and therefore accountable under the new law.
The analyst said some companies issue GDRs for as much as 35% of their stock.
There are dozens of potential victims of the new law.
“There have been between 30 and 40 issues of GDRs, approximately half of them for the shares of companies from the so-called strategic sectors,” Podlevskikh said.
Mikhail Zanozin, an oil and gas analyst at Sobinbank, said the decision would lower the liquidity of the companies concerned.
Alexander Kuznetsov, an analyst at the Prospekt investment group, said: “The limitation of GDR programs will not kill the companies concerned, but it would still be better in the long run if capital were distributed among as many shareholders around the world as possible. This will greatly reduce risks and increase companies’ attractiveness.”
Vedomosti
Pirelli and Russian Technologies setting up joint venture
The Russian Technologies state corporation has decided to go into the tire business, and the first step it is going to make is to set up a joint venture with Italy’s Pirelli.
The venture is expected to produce tires for cars, light and heavy trucks, as well as metal cords and auto filters. The protocol of intent has made Russian Technologies the sole negotiator with Pirelli until September 30. Pirelli, for its part, will be responsible for business strategy and day-to-day running, while the venture’s products will be marketed under the Pirelli brand.
A source from a tire holding, also eyed by Pirelli, said that the Italian company would like to build in Russia a plant able to produce 3 to 4 million tires a year with the possibility of doubling output in a few years’ time.
It makes no economic sense to produce less than 1 million tires a year, agrees VTB analyst Yelena Sakhnova. But investments in such capacities cannot exceed $50 million, she said.
A source close to the state corporation said the tire business for it was an outgrowth of its auto business (Russian Technologies controls the AvtoVAZ car maker and claims a stake in the KamAZ truck manufacturer). An AvtoVAZ spokesman was unable to say if his company was interested in the project.
Pirelli’s logic in choosing its partner is easy to understand. The Italian company also negotiated with Sibur–Russian Tires, said the company’s deputy director Igor Karavayev. But the negotiations stalled: Pirelli wanted a partner that had no tire business in Russia to avoid a conflict of interests.
Nokian and Michelin are the only foreign tire makers that have production facilities in Russia. The first has a factory outside St. Petersburg. Its capacity is 4 million tires a year, and is planned to grow to 10 million by 2011. The capacity of Michelin’s plant outside Moscow is 2.1 million tires a year. It was recently reported that Goodyear plans to build a 2 million tires per year plant near Yaroslavl.
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