MOSCOW, June 17 (RIA Novosti)
Withdrawal of Iran's money from Europe promises a war / NATO in search of pretext to turn down Ukraine / EADS refuses to buy into United Aircraft-Building Corporation / The world sees Russian investment as threat to national security / Gazprom to invest more than ExxonMobil in development/Aviation fuel prices in Russia hit world highs/
Nezavisimaya Gazeta
Withdrawal of Iran's money from Europe promises a war
Tehran has withdrawn $75 billion from its accounts with European banks to prevent their possible arrest in the event of international sanctions.
Analysts say this promises a new aggravation of the conflict over Iran's nuclear program. Iran is preparing for harsher financial sanctions at best, and for a war at worst. A war would send oil prices up and stock markets down, which promises major problems for Russia.
Samuel Ciszuk, a Middle East energy analyst at Global Insight, a London-based provider of economic and financial analysis, forecasting and market intelligence, told the popular daily Nezavisimaya Gazeta last week's discussions between President George W. Bush and EU leaders in Slovenia showed that the next round of sanctions [against Iran] is likely to be imposed in the fall, and that these will be financial sanctions against Iran's main banks.
According to the analyst, Tehran's move shows that Iran and Western powers do not think the introduction of new sanctions will be a problem.
Alexander Razuvayev, head of Sobinbank's market analysis department, said: "This news smells of war, not sanctions. There is a high probability of Republicans starting a military operation before the presidential elections in the United States. A strike against Iran is also being actively lobbied for by Washington's strategic partner, Israel."
The analyst said that if war becomes inevitable, the mercantile and stock markets would experience severe shocks. War expectations include the growth of oil prices, possibly to $200 per barrel, and a collapse of global stock indices. Moreover, growing oil prices will not save the Russian market from the global collapse.
Razuvayev said the withdrawal of $75 billion could be painless for Europe, "and yet the transfer of this considerable sum would have been impossible without negotiations between Iran and the respective EU countries."
RBC Daily
NATO in search of pretext to turn down Ukraine
Although NATO makes statements in support of Ukraine's aspiration to join the NATO Membership Action Plan (MAP), the alliance's leadership often adds that Ukraine is not yet ready for this advanced stage of integration.
Observers believe that Brussels is desperately trying to find a plausible reason to refuse Ukraine's MAP accession in December which won't look like they have succumbed to pressure from Moscow.
Ukraine's army is currently a long way from the NATO standards, a source in the alliance's headquarters told RBC Daily. Speaking upon condition of anonymity, he said that Ukraine needed material assistance for effective military reforms, while neither of the members was willing to provide financing to modernize such a large army.
The situation is further aggravated by the Ukrainian public's predominantly negative attitude to the membership, and by Russia's position which is openly opposed to it.
It is also possible that the goal of the current NATO leaders' visit to Kiev is to find a good reason to postpone Ukraine's MAP accession indefinitely.
NATO Secretary General Jaap de Hoop Scheffer's goal is to make Kiev responsible for the delay and prove that it is not a concession to Russia, said Vladimir Zharikhin, deputy director of the Institute of the CIS Countries think tank. He suggested that NATO's next refusal of Ukraine could be explained by its government's inability to carry out military reforms and to keep down the public anti-NATO sentiments.
"It cannot be accidental that two of the three cities Jaap de Hoop Scheffer will visit are in eastern Ukraine," Zharikhin said. While the NATO secretary general can expect a warm welcome in Lvov, Kharkov and Dnepropetrovsk will certainly bristle with pickets and street protest. "The anti-NATO sentiment will be so flagrant and visual that the alliance will be able to retreat without losing face," the analyst concluded.
Vedomosti
EADS refuses to buy into United Aircraft-Building Corporation
The European Aeronautic Defence and Space Company (EADS) has decided to sell its stake in Russian aviation giant Irkut, refusing to exchange it for the shares of Russia's state-controlled United Aircraft-Building Corporation (UABC), which consolidates assets engaged in the manufacture, design and sale of military, civilian, transport, and unmanned aircraft.
In December 2005, EADS bought a 10% stake in Irkut, planning to exchange it for UABC shares. However, the company later decided to sell the Irkut stake to UABC, EADS spokesman Gregor von Kursel told the paper.
UABC vice president Valery Bezverkhny said EADS had notified the corporation of its decision two weeks ago.
The deal will be closed under a March 2008 UABC offer to buy Irkut shares that expired on Monday. EADS will sell the 10% Irkut stake for 2.18 billion rubles ($92 million), charging 22.3 rubles (94 cents) per share.
EADS, which had spent 1.87 billion rubles ($79 million) on the Irkut stake, did not profit from the deal. However, the company does not want to end its cooperation with Irkut.
The Russian company manufactures components for Airbus A-320 medium-haul jetliners and is getting ready to co-produce A-350 long-haul airliners. Moreover, EADS and Irkut have set up a joint venture converting Airbus passenger airliners into cargo planes.
Von Kursel said EADS had refused to exchange its Irkut stake for UABC shares because the latter had no market value, and any fair deal was impossible.
EADS had no choice, Bezverkhny told the paper. The company had bought into Irkut before UABC's inception. But UABC top managers now make all the decisions. Although EADS could have retained the Irkut stake, it would not be able to effectively influence corporate management.
Bezverkhny said UABC initially wanted to exchange its shares for EADS' Irkut stake, but that corporate proceedings had delayed the process. He said the corporate board was supposed to approve the UABC value, and that the corporation would issue additional shares this November and exchange them for the Irkut stake.
Von Kursel said EADS could eventually buy into UABC, declining to specify the deal's terms.
EADS will return if cooperation is expanded; and the sides could negotiate large-scale bilateral projects in the next 12 to 18 months, Bezverkhny told the paper.
Yevgeny Shago, chief analyst at Ingosstrakh Investments, said the EADS decision was bad news for Irkut because the company ranked among UABC's strategic partners. However, EADS may eventually buy into UABC because the global aviation industry is now focusing on risk-sharing concepts, he told the paper.
Nezavisimaya Gazeta
The world sees Russian investment as threat to national security
Russia, which the IMF and the World Bank tried to convince in the 1990s that direct investment is a boon for the economy, has had a nasty surprise. More Western countries are rejecting Russian money as undesirable and even dangerous.
Latvian President Valdis Zatlers yesterday said in a live television broadcast that Russian investment, unlike Western, was dangerous for his country's economic and political independence.
He has reasons to say so, what with Russia using "sanitary" bans on Latvian sprat and dairy exports to force it to deal with the problem of Russian speakers' infringed civil and language rights.
Estonians still remember the row over the removal of the Bronze Soldier monument to the WWII fallen from downtown Tallinn, during which pro-Kremlin youth movements blocked the border and "patriotic" Russian retailers refused to sell Estonian butter and milk.
Lithuania is still suffering from the consequences of the stopped Russian oil deliveries along the Druzhba pipeline to the Mazeikiai refinery, introduced after control over the refinery was granted not to the Russian contenders but to their Polish rival.
The United States and Germany, although many times stronger economically, entertain similar fears regarding Russian capital. They have laws limiting foreign investment in the key economic sectors and say openly that these laws are designed to protect their political and economic systems from excessive influence and industrial espionage on the part of China, Russia and the rich Arab countries.
The West is reviewing its attitude to direct investment. The acquisition of assets by foreigners is now seen not as boosting development and promising new technology and more jobs, but as a threat to national security. The same view dominated the world at the height of the Cold War in the 1960s and 1970s.
But a policy of isolationism, including in the investment sector, has never done anyone any good. A thousand years ago, China invented gunpowder, paper and many vital mechanisms, but 200 years ago it was so weak it could not resist the once barbarous Britain and other European powers.
Vedomosti
Gazprom to invest more than ExxonMobil in development
Russian energy giant Gazprom will spend $30 billion annually on development over the next 12 years, 30% more than the sector's leader, U.S. ExxonMobil.
In 2009-2020, Gazprom will spend 8-10 trillion rubles ($336.4-$420.5 billion), or 700 billion rubles ($29.44 billion) annually, on development, Sergei Pankratov, head of the gas monopoly's strategic development department, said.
Half of these funds will be channeled into transportation, and about 30% into production. The bulk will be invested by 2013, Pankratov said, because the huge Bovanenkovo gas field on the Yamal Peninsula in northwest Siberia is to be commissioned in 2011.
Investment in the project (without transportation) will total 300 billion rubles ($12.6 billion), with the projected annual output of 115 billion cu m (4.06 trillion cu f) of gas on the Cenomanian horizons alone.
The first phase of the Shtokman offshore gas condensate deposit in the Barents Sea with an annual output of 23.7 billion cu m (836.61 billion cu f), to be commissioned in 2013, will cost $13-$15 billion.
Overall, Gazprom's production is to grow to 650-670 billion cu m (23.65 trillion cu f) by 2020, half of it from new fields.
Gazprom's investment program exceeded 700 billion rubles in 2007, when it increased it by nearly 70%. More than half of it was spent on the acquisition of a 51% stake in Sakhalin-II, a controlling block in Mosenergo, and other assets. The monopoly's production figures for the first time fell in 2007, by 1.3% to 548.6 billion cu m (19.37 trillion cu f).
In 2008, Gazprom is to increase production by 2.3%, to 561 billion cu m (19.8 trillion cu f). Its output went up 2.5% in January-May. This year's investment will be 710.3 billion rubles ($29.87 billion), 67% of it in capital investment.
The company's investment plan for 2009 is 739.4 billion rubles ($31.09 billion, out of which 90% will be capital investment), and for 2010, 968.9 billion rubles ($40.74 billion; 88%).
These figures do not include the giant's power generating subsidiaries and oil-producing unit, Gazprom Neft, which intends to invest 277.5 billion rubles ($11.67 billion) in 2008-2010.
Taken together with Gazprom Neft, the energy giant has the world's largest annual investment program, about $34 billion.
Global leader ExxonMobil plans to invest annually $21 billion in 2008-2010. However, its revenue is 4.5 times larger than that of Gazprom - $390.3 billion in 2007, compared with $82-$85 billion investment banks expect from Gazprom.
Brazil's Petrobras has the world's largest investment plan for 2008, at $33.5 billion.
Pavel Sorokin, an analyst at the UniCredit Aton, part of the international Unicredit Group, said Gazprom should implement its plans and possibly augment them, because production in Western Siberia is falling and it needs to invest in offshore and Yamal deposits and increase its transport infrastructure.
Kommersant
Aviation fuel prices in Russia hit world highs
Aviation kerosene sold at Russian airports has for the first time topped world highs. Since May market deals have shown an 8% drop in the average kerosene price in Europe, while the prices set early in June at Russian airports have not budged.
Analysts hope Russian prices will follow the world trend, but market players believe everything will depend on the oil companies' good will.
Russian tourists are among the hostages to the situation, with charter fares continuing to push up.
Since the summer of 2007 aviation fuel prices have doubled, yet last May they began to drop at overseas airports, but not in Russia. As a result, kerosene at Heathrow is now 6.2% cheaper than in Moscow (converted to ruble terms it costs 33,869 rubles per ton) and at Dubai Airport (United Arab Emirates) even 8.1% less (33,205 rubles per ton).
Yevgeny Ostrovsky, the owner of TOAP (a large aviation kerosene provider), is sure that the difference between Russian and foreign airports is due to market mechanisms of price regulation existing in the West.
"On a free market the price is bargained between seller and buyer, while in Russia the fuel price is fixed by the producer and is only stopped by psychological tolerance," Ostrovsky said. He thinks oil companies could "slightly ease the price" for fuel shortly, yet not for economic reasons, but for fears of a major row.
Oleg Panteleyev, head of analysis at the Aviaport service, said that the gap between Russian and Western fuel prices will give a slight edge to carriers making many international flights and able to refuel their planes at cheaper rates abroad. "Those who fly inside Russia have nowhere to turn," he said.
"Today Russia has practically no market or administrative mechanisms of price regulation on aviation fuel," said Ilya Aleksandrovsky, financial director of Sibir S7 airlines (one of Russia's largest domestic carriers).
"The ever-mounting fuel prices force tour operators to increase the fuel levy by 10% practically every month," said Inna Beltyukova, director general of Capital Tour. "Compared with last summer fuel prices shot up by 30% to 40%, and the trend is liable to continue into the winter."
"Most hit were charter flights, which are more dependent on the fuel levy, but regular flights are not immune against price leaps either," said Denis Malyutin, Aeroclub director general.
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