MOSCOW, August 6 (RIA Novosti)
Russia's strategic bombers to patrol Indian Ocean/ Deal between BP, TNK-BP recognized as fraudulent/ Russian metal-makers eyeing Iran /Cost of Siberia-Pacific oil pipeline to grow by $1 billion/AvtoVAZ to use Pirelli tires/ Planned Suzuki plant goes up 50%
Gazeta.ru
Russia's strategic bombers to patrol Indian Ocean
Russian strategic bombers may soon start patrolling the Indian Ocean, said Colonel General Alexander Zelin, commander-in-chief of Russia's Air Force, a few days before a joint U.S.-India exercise kicks off.
Russia, like the U.S., ceased strategic patrols in 1992, but 15 years later decided to resume the practice - on August 17, 2007 its aircraft flew their first patrol missions over five areas. They have only made one demonstration flight to the Indian Ocean, while patrols over the North Atlantic and the Pacific continue.
Vladimir Yevseyev, a senior associate at the Russian Academy of Sciences' Institute of World Economy and International Relations Center for International Security, said the choice to patrol was made because while there was such a need, "it was impossible for the navy to stay in the Indian Ocean for a long time due to its insufficient technical readiness."
Of late, India has been determined to improve its relations with the United States. Washington, too, is set for deeper cooperation with the key player in South Asia. The U.S., which clamped an embargo on nuclear supplies to New Delhi after it developed the nuclear bomb in 1998, is prepared to resume cooperation in exchange for allowing international experts to visit Indian nuclear facilities. Next Saturday, the U.S. begins a two-week exercise code-named Red Flag at Nellis Air Force Base, Nevada, and India is to take part in it for the first time.
Russia's moves are being undertaken for propaganda purposes only, Yevseyev said, because they are not directed to hold back the U.S., but "to warn India," which has come to regard the Indian Ocean as a zone of its priority interests.
The analyst explains that this is propaganda because Russian long-range bombers no longer carry nuclear warheads on their missions.
"Compared with the time when the Soviet Union periodically sent its ships to the Indian Ocean, kept its fleet and aircraft in Vietnam and had a combat grouping in Ethiopia, our presence there now will be more token than real," he added.
Major General (Ret) Alexander Tsalko said that Zelin's remarks had no military motivation. "A commander-in-chief cannot take decisions of this nature on his own," he said. In his view, this could be done only by "a defense minister or the president."
Vedomosti
Deal between BP, TNK-BP recognized as fraudulent
Russian-British venture TNK-BP has paid British Petroleum $489.6 million for hiring BP professionals in 2003-2008. A Tyumen arbitration court, which considered a suit initiated by Tetlis, a minority shareholder of TNK-BP, has ruled that the employment contract between the two oil producers was fraudulent.
Under an agreement allowing TNK-BP to hire BP specialists, TNK-BP paid an average of $685,000 per BP professional, including salary, housing, travel and schooling costs, per year.
The court ruled that the transfer of the said money was a fraudulent transaction because BP and TNK-BP Management failed to tell the court who they had paid and how much.
They signed agreements on the hiring of professionals every month, but the documents do not include information about their positions in BP, the work they do for TNK-BP, or data on BP's spending on their business trips.
The court concluded that the deal was signed to cover a gratis transfer (gift) of money to BP.
The bulk of the money was provided by TNK-BP Holding. According to information about payments for 2006 made between BP Exploration Services and TNK-BP Management, the revenues of TNK-BP Management could only cover 0.32% of payments to BP.
Dmitry Stepanov, a lawyer at Yukov, Khrenov and Partners, said that since the court had recognized the deal as fraudulent, Tetlis might demand restitution, but only if the ruling is supported in a higher-instance court.
The Tyumen arbitration court will hear the restitution suit as a separate case after its first ruling comes into force.
BP is drafting an appeal, BP spokesman Vladimir Buyanov said. "The agreement was one of the documents signed during the establishment of TNK-BP, and spending under it was approved by the board of directors of the parent company, including Russian directors," he said.
Russian shareholders of TNK-BP - the AAR consortium of Alfa Group, Access Industries and Renova, which has been at loggerheads with BP this year - said they were not connected with Tetlis' suit but support it wholeheartedly.
Tetlis bought about 0.13% of TNK-BP Holding shares in April.
Gazeta.ru
Russian metal-makers eyeing Iran
For Russian metals companies, cheap Iranian gas and unexplored iron ore deposits are proving a stronger attraction than the political risks involved. The Magnitogorsk metals plant is the first Russian metal-maker planning to enter the Iranian market.
In March, its head, Viktor Rashnikov, made no bones about saying that his company was ready to buy a controlling stake in Iran's Esfahan Steel Mills.
On Tuesday, Iranian media reported that a 13-member team from Magnitogorsk had visited the mills.
Magnitogorsk is the only Russian metal-maker so far that is openly setting its sights on the Middle East market. Analysts believe its strategy is correct, because the rapidly developing and oil-rich Middle East, with its new infrastructure and construction projects, offers high profits for steel-making firms.
Maxim Khudalov, a Metropol analyst, said "metals-making companies have taken a strong liking to the Middle East market. The Arab Emirates and Egypt are building a lot and need steel products. All Russian metal-makers are looking to join this market."
He said Russian companies have to compete with Ukrainian and Turkish steel manufacturers in export supplies.
Alexei Sulinov, a Finam analyst, agrees. The Middle East, he says, is a "priority market for Magnitogorsk," especially since the company is already supplying 1 million metric tons of steel to Iran every year.
A stake bought in the Iranian company may benefit Magnitogorsk, especially if its exports are oriented to other Persian Gulf countries, which are expected to consume more steel in the coming years.
"Esfahan mainly produces long products, which show the highest growth rates," Sulinov said. Magnitogorsk could also be interested in high-iron deposits, which are poorly developed as yet, he said.
But, as it moves into the Middle East, Magnitogorsk might run into certain political risks which for the time being analysts shy from making predictions about. For example, Magnitogorsk might draw the displeasure of the United States, where it wants to build a plant. The company is planning to invest $1 billion in a mill in Ohio to produce 1.5 million metric tons of car steel sheet per year.
Vedomosti, Gazeta
Cost of Siberia-Pacific oil pipeline to grow by $1 billion
Russia's Federal Tariff Service has increased fees for the services of pipeline monopoly Transneft by about 4%, which means that Russian oil producers will contribute to the construction of the East Siberia-Pacific Ocean (ESPO) pipeline.
Transneft's tariffs, which are changed annually, were increased by 15% on January 1. However, the tariff service yesterday decided to raise the cost of dispatcher services (part of the tariff) by 19.5% because Transneft's interest payments on loans taken to build the ESPO have grown.
Denis Borisov, an analyst at the Solid investment financial company, told the daily Vedomosti that the overall increase was not clear, because Transneft never disclosed the share of dispatcher services in its revenues.
The tariff service only said the tariff's share in the price of oil and oil products would grow to 3.78% from 3.37% for oil supplied to refineries in Russia and to 2.71% from 2.46% for oil exports.
The share of the tariff in the price of gasoline will grow to 2.02% from 1.92%. According to Borisov, this means that the tariff will increase by about 4%. The cost of domestic oil transportation will grow to $3.85 per barrel from $3.7, while export fees will increase to $4.75 from $4.6.
Taken together, this adds up to as much as $1 billion of additional outlays for oil companies, the analyst said.
The new tariff will also affect consumers, because it will spur the growth of gasoline prices, said a press officer at LUKoil, Russia's largest private oil producer.
The move was to be expected, Borisov said, because Transneft had announced a planned increase in investment to 205.6 billion rubles ($8.77 billion) in 2008.
According to the popular daily Gazeta, the monopoly intends to spend about 95 billion rubles ($4.05 billion) instead of 70 billion rubles on the Baltic Pipeline System (BPS-2), $15 billion (instead of $11 billion) on the first leg of the ESPO pipeline, and another $10.7 billion on its second leg.
Kommersant, RBC Daily
AvtoVAZ to use Pirelli tires
The Russian Technologies state corporation and Italian Pirelli signed an agreement Tuesday to build a 250 million euro tire plant in Togliatti on the Volga. The partners will hold 50% each in the enterprise, which is likely to be a key supplier for Russia's largest automaker, AvtoVAZ.
Experts approve of Pirelli's choice amid concerns voiced by domestic auto producers about the emergence of another strong foreign player on the market.
Pirelli will contribute its technologies and patents to the joint venture, while Russian Technologies will be responsible for the building of the plant. It will be located in the Togliatti technology park, next door to AvtoVAZ's main production site.
An alliance with Russian Technologies will enable Pirelli to share the risks of entering a new market as well as provide it with a guaranteed major customer for its products - AvtoVAZ, in which the state corporation holds a controlling interest, said Mikhail Lyamin, an analyst with the Bank of Moscow.
However, he added, AvtoVAZ will hardly be able to save on logistics costs due to the new Pirelli plant's proximity, as major suppliers rarely give discounts even to their key customers.
"It is more likely that AvtoVAZ, which is currently using domestically produced tires, will benefit from the higher quality of Pirelli's products," Lyamin said. According to him, the company plans to generally improve the quality of its products by revising its list of suppliers.
One of the tire market players remarked that domestic tire producers are apprehensive about this project, as almost all of them are AvtoVAZ's suppliers. "The state corporation is facilitating a new foreign player's entry into the Russian market at a time when local producers have just announced or already started new projects," he complained. "However, Russian Technologies' and Pirelli's interests might clash in the future, especially with regard to the price of supplies to auto plants," he added.
RBC Daily
Planned Suzuki plant goes up 50%
The St. Petersburg city government approved an upwards readjustment of the estimate for construction costs for a planned Suzuki auto plant by 1.2 billion rubles ($51.2 million), to 4.2 billion rubles ($179.2 million), on Tuesday.
The additional investment will be needed to utilize 2 million cubic meters of turf found on the construction site in the Shushary industrial zone near Russia's second largest city.
The city hall said the problem was likely to delay the commissioning of the plant for another year.
The extraction of the 2 million metric tons of turf will require at least 1.1 billion rubles ($46.9 million). The material will then have to be utilized and the pit filled with soil.
Maxim Sokolov, head of the city committee for investment and strategic projects, said the city hall was not planning to help Suzuki out of the turf problem financially. However, he assured the media that the financial problem had not made the Japanese company abandon the project altogether.
Moreover, the turf problem will have to be dealt with within the existing area, as the city cannot afford to spare another plot of land, Sokolov added.
He also said that the plant wouldn't be commissioned for another year due to the problem. The St. Petersburg city government had to allocate the 50-hectare plot to Suzuki once again at a meeting Tuesday, since the company failed to complete prospecting within the preset 11 months' period to determine whether or not the construction of a plant was possible there.
One of the auto market players, familiar with Suzuki's sales in Russia, said there had been rumors in the past few months that the company would abandon the construction plans.
"The model was in high demand in St. Petersburg a few years ago, when the decision was made," he said. "Later, however, it was largely met with the development of logistic ties, and the feasibility of actually building a plant there is no longer obvious."
On the other hand, according to the European Business Association (EBA), Suzuki sales in Russia grew by 56% year on year in the first half of 2008, to 21,300 cars.
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