MOSCOW, September 26 (RIA Novosti) Russia, Venezuela to cooperate in building nuclear reactors / President Medvedev announces plans for joint aerospace defense system / Russia's Gazprom corners Italian gas market / Gazprom Neft, TNK-BP found guilty in anti-trust probe / President Medvedev adopts Vladimir Putin's rhetoric and flair / Union of Right Forces to become pro-Kremlin party /
Russia, Venezuela to cooperate in building nuclear reactors
Venezuela has accepted Russia's proposal to cooperate in building nuclear reactors and the two countries have set up a working group, Venezuelan President Hugo Chavez said last Sunday.
Russian nuclear power construction company Atomstroyexport, which is building the Bushehr nuclear power plant in Iran, will be the project operator.
Analysts say Venezuela will have problems with the United States if Caracas prevents specialists of the International Atomic Energy Agency (IAEA) from visiting the site.
Atomstroyexport has confirmed that it has a cooperation agreement with Venezuela.
Irina Yesipova, the company's press secretary, said: "It is too early yet to speak about the practical aspects of the project. Russia, as the only country that has commissioned two new generation power units abroad in the past 15 years, has formulated its proposals, which Venezuela has accepted. We are now waiting for the right moment to start implementing them."
Apart from nuclear cooperation, the sides have established a Russian-Venezuelan consortium, which will invest billions of dollars in the development of oil and gas deposits in Venezuela. It will include Venezuelan national oil and gas consortium PDVSA, Russia's largest oil companies Rosneft and LUKoil, Russian-British venture TNK-BP, and Russian energy giant Gazprom.
The consortium will initially work in Venezuela but later plans to develop deposits in other Latin American countries.
Russia and Venezuela have also strengthened their military ties, which Chavez has described as a way "to balance U.S. influence in the world."
In early September, two Russian strategic bombers landed in Venezuela for joint exercises, making the Air Force's first flight to Latin America since the end of the Cold War. Before the end of this year, the Russian and Venezuelan navies will hold joint exercises in the Caribbean.
Russia is strengthening cooperation with Venezuela, Nicaragua and Cuba at a difficult time in its relations with the United States.
The Venezuelan nuclear project will alarm the U.S. administration, which views Chavez as its biggest enemy in the Western hemisphere.
Pavel Zolotarev, deputy director of the Russian Academy of Sciences' Institute of the U.S. and Canada, said the project in Venezuela was unlikely to provoke a crisis like the Iranian one, despite Washington's nervous attitude to the proliferation of nuclear technologies and materials.
"There are no limitations on civilian nuclear programs, which must only proceed in accordance with the IAEA regulations," Zolotarev said. "There may be problems with Washington only if Caracas refuses to allow IAEA experts to visit its nuclear sites, as Iran and North Korea do."
President Medvedev announces plans for joint aerospace defense system
On Friday, Russian President Dmitry Medvedev, who is also commander-in-chief of the nation's Armed Forces, chaired a conference with military-district commanders in Orenburg in the country's Volga Federal District and announced the main military-development aspects until 2020.
President Medvedev said a joint aerospace defense system capable of shielding Russia from missile and terrorist attacks would have to be created in the next 12 years.
The Russian General Staff said the Space Force, a separate armed service, would now become an element of the Air Defense Force, an Air Force component.
The Air Force may be disbanded, and a separate service comprising the Space Force and the Air Defense Force established in its place.
A Defense Ministry staff official said the Moscow missile-defense system would become an independent unit, would encompass radio-technical and air-defense elements, and would eventually turn into a large formation shielding Russia's Far East, southern Russia, and other regions.
Viktor Yesin, former chief of the Strategic Missile Force's main headquarters, said, unlike the United States, Moscow was unable to deploy elements of its missile-defense system outside Russia.
"Even if Russia deployed its missile interceptors in Cuba and Venezuela, it would still be unable to reach missile bases in northern U.S. We must build missile-defense systems on the Kamchatka Peninsula and Sakhalin Island in Russia's Far East," Yesin told the paper.
He said a nationwide missile-defense system would prove too expensive and ineffective, and that it was better to deploy missile interceptors around major cities, industrial centers, and strategic nuclear-force bases.
Yesin said neither the federal budget, nor the Stabilization Fund were enough to build a 100% effective missile-defense system, and that Moscow must convince theoretical enemies that it is ready to defend itself and to retaliate, regardless of any scenario.
"This is the essence of Russia's current strategic deterrence policy," Yesin told the paper.
"Russia, which staunchly opposes the militarization of other space and the deployment of orbital weapons, will not launch such weapons, unless the United States does it first," Yesin told the paper.
Yesin said Russia had the required know-how to quickly orbit extremely destructive weapons.
Russia's Gazprom corners Italian gas market
Russian energy giant Gazprom and Italy's A2A and Iride companies have signed an agreement to set up a joint venture to operate on the Italian gas market. In 2009, the Russian monopoly will supply 900 million cu m to Italy. Experts say the venture will help Gazprom to expand its presence on the Italian consumer market by 40%.
Gazprom will elect a chairman of the board of directors and A2A, a managing director. The deal is expected to be closed by the end of the year.
At the same time, the companies signed a long-term contract for Gazprom to supply gas for the new venture. It will come into force from October 1 and remain in effect until 2022, with a likely extension for another five years. The initial volume of delivery will be 900 million cu m of gas a year. This could be increased in subsequent years.
Gazprom has long been trying to expand its presence on the Italian gas market, but has seen significant success only recently. Two weeks ago, it received permission from the European Commission, jointly with Enia S.p.A. and Austria's Centrex Europe Energy & Gas AG, to acquire Italy's energy trader Enia Energia. Although the deal is not yet clinched, the monopoly has lined up the next one.
Svetlana Savchenko, director of investment projects at 2K Audit-Business Consultations, an independent consulting group, said the venture would enable the Russian side to gain direct access to consumers on the Italian market. Italy is one of the most attractive markets for Gazprom, because retail prices in the country are among the highest in Europe. Today, the gas holding sells just over 2 billion cu m of gas direct to Italian consumers. Through its venture, it will increase its hold on the Italian market by more than 40%, the analyst said.
The monopoly's annual earnings from supplies to Italy could increase by $35-70 million, depending on whom the venture will be selling gas to - industry or the population. But despite the venture, the percentage of Gazprom's direct supplies to Italy will remain pretty low - less than 15% of all gas supplied to the Italian gas market, Savchenko said.
Vitaly Kryukov, an analyst with the Kapital brokerage, said the new venture could earn $700-$800 million a year from the sales of 900 million cu m of gas. If these volumes were sold on Italy's borders, rather than its domestic market, the earnings would be only half as large.
Gazprom Neft, TNK-BP found guilty in anti-trust probe
Russia's Federal Antimonopoly Service (FAS) has disclosed the results of its first probes into the oil sector. Gazprom Neft and TNK-BP, accounting for 22% of Russian oil refining, have been found guilty and are facing a fine of 2% of their 2007 revenue.
This is the first time FAS is to impose a fine calculated as a percentage of turnover on an oil company. A decision on Rosneft and LUKoil, the two majors controlling 40% of oil refining facilities in Russia, will be made in October.
The officials established that the companies had been setting high monopoly prices and offering discriminative terms to customers outside of their groups. They set different prices for fuels sold to their own subsidiaries and to other consumers, explained FAS deputy head Anatoly Golomolzin.
FAS said Gazprom Neft manipulated prices on the markets for all fuels including car gasoline, jet fuel, diesel fuel, and fuel oil. TNK-BP only violated the anti-trust law with regard to gasoline and jet fuel.
The companies are facing fines of 1%-15% of their 2007 proceeds from sale of those petroleum products that they marketed at monopoly prices, Golomolzin said. This will be the first time FAS has imposed a fine calculated from a company's turnover on the entire national market rather than a regional one, he said adding that the amount is to be determined within the next month.
Under the law, the fine cannot exceed 2% of the company's total revenue, which is 8.7 billion rubles in Gazprom Neft's case, and 8 billion for TNK-BP.
Golomolzin also said that if the two perpetrators scrupulously follow all the service's instructions, FAS is likely to impose the lowest fine possible under the circumstances. The instructions will be ready in 10 days.
However, Gazprom Neft does not admit to the violations and plans to appeal against the FAS decision. TNK-BP, too, is certain that it has operated in accordance with competition law and is trying to convince FAS of its innocence.
Denis Borisov from Solid brokerage suggested the companies should raise prices for their subsidiaries to avoid FAS charges, as it would not affect their consolidated results.
Valery Nesterov from Troika Dialog added that FAS has not always been successful in proving its cases in court.
President Medvedev adopts Vladimir Putin's rhetoric and flair
Dmitry Medvedev sounds more and more comfortable in his role as the Russian president, gradually adopting his predecessor's language and tone.
Last Wednesday, he slammed Polyus Zoloto, Russia's largest gold miner, although his attack was not as destructive as those by Putin used to be.
"Stop whining! If gold mining profits are too marginal for you, give up this work; we'll find someone else. If you want, we can take the license back," he told Polyus general director, Yevgeny Ivanov, at a meeting in Magadan in response to a small complaint about the government's lack of haste in providing assistance in developing the Natalkinskoye deposit.
Similar rhetoric used by Vladimir Putin against the Mechel steel giant caused panic on the stock market in July. "Mechel was selling steel in Russia at twice the price it put on exports," Putin said in televised comments. "And where has the margin for the state taxes gone?"
His promise to send a doctor to Mechel's owner, who was reportedly ill and not present at the meeting to hear Putin's threat, cost the company $5 billion - it was exactly this amount by which Mechel's market capitalization collapsed that evening on the New York Exchange. Investors then rushed to dump Russian stocks, causing the whole Russian market to lose $144 billion in a week.
Admittedly, Medvedev's statement did not have such an overwhelming effect. The market seemed more alert to economic realities than to presidential comments. Polyus shares went up last Wednesday long with other stocks. Friday saw a general 20% surge, while most blue chips fell with Sberbank in the lead.
Gold has not budged from the current $900 per ounce. It is usually regarded as safe haven for investors when storms rage on the financial market.
On the day Medvedev criticized Polyus Gold, it became known that its owners, Mikhail Prokhorov and Vladimir Potanin, had finally settled their dragged-out conflict two weeks earlier by signing a protocol on the delineation of assets. Prokhorov obtained his former partner's stake, which added formal control of the company to his actual control.
Polyus's stocks are clearly of interest to the market. Despite the settlement between its co-owners, Suleiman Kerimov's Nafta Moskva immediately made an offer to Potanin to buy his stake. That caused the company's shares to surge 46% on the RTS last week.
Union of Right Forces to become pro-Kremlin party
On Friday, Nikita Belykh resigned as Union of Right Forces (SPS) leader and said he planned to establish a joint democratic opposition party, and that the SPS would become part of the Kremlin project.
Boris Nadezhdin, member of the SPS Federal Political Council, said the Kremlin had suggested that the party move away from the 'radical opposition' and build constructive relations with the presidential administration. In this case it would be allowed to take part in elections.
He said the SPS had failed to register a single candidate during this fall's regional elections.
A liberal SPS would depend on the government and would lack outspoken leaders; however, the new party would have several leaders, including new politicians, Nadezhdin told the paper.
SPS deputy chairman Leonid Gozman said the SPS, which has twice lost federal elections, would change its name, but that it would not merge with the Democratic Party or Civil Force.
A source in the SPS leadership said the party was negotiating with the Kremlin, rather than with the latter two parties.
Gozman said an overwhelming majority of SPS members wanted to work inside the current political system, and that Anatoly Chubais, member of the Federal Political Council and CEO of the state-owned Russian Corporation of Nanotechnologies (Rosnano), was aware of the situation and fully supported a decision to conduct legitimate political work.
An SPS member said Gozman wanted to side with the Kremlin in order to get a job with Russian Nanotechnologies.
Gozman said he would be appointed to Rosnano soon.
Nadezhdin said the party owed 180 million rubles ($7.2 million) to television channels for promo footage. A former official of the SPS Executive Committee said about 40 companies had financed the party in early 2000, and that leading businessmen had formed a supervisory council.
"Although we helped SPS at various stages, the party did not justify our hopes and those of the entire business community," Alfa Bank Vice President Alexander Gafin told the paper.
Political analyst Yevgeny Minchenko said businessmen would like the new project because now they could only invest in the pro-Kremlin United Russia party.
Igor Yurgens, Vice President of the Russian Union of Industrialists and Entrepreneurs, said the business community would once again finance the SPS if it were headed by Gozman, an "obliging" man backed by Chubais.
A source close to the presidential administration said prospective leaders of a revamped SPS were still being selected, and that the Kremlin wanted to attract pro-Kremlin intellectuals.
The party, which needs collective leadership today, will get a leader 12 months before the 2011 elections to the State Duma, the lower house of parliament, Grigory Tomchin, a former member of the SPS Political Council, told the paper.
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