MOSCOW, October 21 (RIA Novosti)
Russia to guard Abkhazian, S. Ossetian borders/ Blocking stake in Norilsk Nickel may go to RusAl's foreign lenders/ Costs for Shtokman project could be lower/ Western banks demand a review of Alrosa loan/ Tatneft eager to gain foothold in Iran/ First victims of financial crisis are office workers
Kommersant
Russia to guard Abkhazian, S. Ossetian borders
Border troops of Russia's Federal Security Service (FSB) are to guard the borders of Abkhazia and South Ossetia.
According to the Russian Foreign Ministry, relevant agreements with the two newly independent states will be signed as soon as the lower house of Russia's parliament has ratified friendship, cooperation and mutual assistance treaties, which were forwarded to parliament by President Dmitry Medvedev yesterday.
The documents include wide opportunities for military cooperation, in part because they stipulate that "each side shall extend to the other side's armed forces the right to establish, use and improve military infrastructure and military bases on its territory."
Abkhazia and South Ossetia are unlikely to deploy their military bases in Russia soon, but Russia has such plans.
Defense Minister Anatoly Serdyukov reported to President Medvedev in early September that the issue of deploying 3,800 Russian troops in the two republics had been coordinated with their authorities.
Moscow also plans to use the treaties' provision allowing Russia to control the borders of Abkhazia and South Ossetia, including with Georgia.
Andrei Kelin, head of the fourth CIS department at the Russian Foreign Ministry, said: "The scheme will be the same as we use in relations with Armenia, notably joint financing and joint protection of the border."
If Abkhazia and South Ossetia decide that they want to guard their borders independently, the Russian troops will leave, the diplomat said.
So far, Abkhazia and South Ossetia, whose parliaments ratified the treaties with Russia on September 24 and October 2 respectively, are waiting for the Russian parliament to do the same and preparing to welcome Russia's border guards.
Gari Kupalba, deputy defense minister of Abkhazia, said: "Their deployment will strengthen our countries' security."
Irina Gagloyeva, head of the South Ossetian government press and information committee, said: "The borders are most likely to be protected by Russian troops. We need this, just as we needed it before the Georgian aggression. Foreign observers have proved to be ineffective, and our borders need to be strengthened."
The State Duma has expressed its readiness to do its upmost to allow Russia's executive authorities to cooperate more closely with Abkhazia and South Ossetia.
Leonid Slutsky, deputy head of the parliamentary committee on international affairs, said: "The friendship treaties may be ratified on Friday. This is an issue of fundamental importance for Russia, and therefore we will work as fast as we can."
Gazeta.ru
Blocking stake in Norilsk Nickel may go to RusAl's foreign lenders
Oleg Deripaska's RusAl is having difficulties repaying a $4.5 billion loan secured against Norilsk Nickel stock. Overseas lenders are likely to grab a blocking stake in the nickel company. If, however, the government pays back RusAl's loan, the depreciating Norilsk shares will go to the state.
The aluminum giant, that obtained a syndicated loan of $4.5 billion, has asked the financing banks to defer the repayments. It used the money last spring to buy a blocking stake in Norilsk Nickel, owned by Mikhail Prokhorov. For a 25% plus two shares of the nickel company, RusAl handed the owner 14% of the company's securities and cash (around $6 or $7 billion - no official figures were ever released). Since then Norilsk stock has depreciated by 75% and the company's blocking stake is now trading at just over $3 billion.
Last month, the aluminum company failed to observe the terms of its loan contract. True, western lending banks, which include BNP Paribas, Merrill Lynch, Credit Suisse and Royal Bank of Scotland, agreed to wait until the end of October. Also, RusAl had earlier said it was planning to attract $2 billion to refinance the loan. But talks on borrowing this sum for partial refinancing from a consortium of banks are now in doubt because of the global financial crisis.
"The company intends to fulfill its obligations to the banks as agreed," Olga Sanarova, a RusAl spokeswoman, said in a Gazeta.ru interview. But she declined to comment further.
If RusAl fails to secure funds for the refinancing and to honor the contract terms, the blocking stake in the strategic nickel company used as collateral could go to foreign banks, say experts.
"The state, however, is unlikely to let events develop in this way and will one way or another help RusAl to repay the loan," believes Nikolai Sosnovsky, a Uralsib analyst. Last week, the aluminum company confirmed it had sent a refinancing request with VEB, but refused to comment on its terms. However, government assistance may well mean the handover of the blocking stake from RusAl to one of the state corporations, such as Russian Technologies, the Uralsib analyst said.
Indeed, state support for some banks has already meant their nationalization. This is what happened, for example, to Sobinbank, Globex and KIT Finance Investment Bank, which are now government-controlled.
Vedomosti, RBC Daily
Costs for Shtokman project could be lower
The huge Shtokman gas project in the Arctic will require over $800 million to carry out the exploration and feasibility study. Shtokman Development AG, controlled by Russia's gas export monopoly Gazprom, has confirmed the project budget at over $800 million for 2008-2009.
However, experts believe the costs for the grand project could be lowered later.
It is one of the world's biggest and most complex offshore gas projects, said Shtokman Development spokesman Yury Akhremenko. The money will be used to pay for earlier seismic and geological exploration costs (not including the seven exploration wells drilled in 1988), satellite photography and other prospecting work, as well as conducting a feasibility study and drafting all the basic engineering solutions in 2009, Akhremenko added.
Shtokman is a gas and condensate field in the Barents Sea, with C1+C2 reserves estimated at 3.8 trillion cubic meters (134.14 trillion cu f). The license is owned by Sevmorneftegaz, Gazprom's wholly owned subsidiary. Gazprom controls 51% of Shtokman Development, the operator for the first stage of development, involving production of 23.7 billion cu m and the construction of a liquefaction plant. France's Total and Norway's StatoilHydro hold a 25% and 24% stake respectively.
A huge budget for the Shtokman project was expected. Gazprom earlier estimated the first stage (until production begins in 2013) at $13-15 billion, and the whole project at over $40 billion. The government is likely to compensate Gazprom for part of its prospecting and drilling expenses, said Valery Nesterov from Troika Dialog.
Gazprom's earlier estimate for 2008 was $14.7 billion. A spokesman for the monopoly confirmed they expected government compensation.
Alexander Nazarov, analyst with the Metropol investment company, said $800 million was a sufficient budget for a complete project assessment, including seismic survey, exploration drilling and interpretation of the results - that is, for a complete evaluation of the field's reserves, field facilities and production planning.
This budget will probably also cover the costs of purchasing a floating rig (a floating drilling rig costs around $300 million).
Mikhail Korchemkin, director of the East European Gas Analysis consultancy, said Gazprom shouldn't try to raise more money right now, as this is certainly not a good time for large upfront payments. Prices for pipes, materials, equipment and services will follow oil prices and fall soon, and the project will become cheaper, he predicted.
Kommersant
Western banks demand a review of Alrosa loan
A group of Western banks led by Morgan Stanley yesterday demanded a review of their loan to the diamond monopoly Alrosa. The $350 million loan matures in February 2009. The diamond maker says it is a technical procedure and will only slightly add to the cost of the borrowed money. Experts, however, say the banks' plans coincide with a crisis on the global diamond market, which has made Alrosa announce a 30% cut in rough stone deliveries.
The unsecured $350 million loan was provided in February for a one-year period at LIBOR+2.25%. News agencies say the lending banks pleaded their clause citing the worsening market situation.
Alrosa says that it knows nothing of the banks' demand for a review. A company source said the loan was requested "to loan up the deal to buy two oil assets in 2006." The source said the current demand from the banks to review the loan conditions is a technical procedure and will only slightly increase the borrowed sum. "This is a widely used practice in a falling market, and does not mean they will demand early repayment of the debt," he said.
The source does not think yesterday's events follow a recent decision by rating agency Standard & Poor to put Alrosa on a waiting list with a "negative" outlook after the company and Russian Railways (RZD) each bought a 45% stake in KIT Finance.
According to Alrosa's Q2 report, the company owes the syndicate a total of $550 million as of March 31. A $150 million loan matures on January 20, 2009. The remaining $400 million is to be repaid by November 20, 2012. The total debt stands at $1.3 billion.
Ararat Evoyan, vice president of the Russian Diamond Manufacturers' Association, the western banks' review demand coincides with a crisis that has hit the global diamond market. "Demand for cut stones in America, the diamond producers' largest market, has plummeted, sending global prices tumbling for rough diamonds. In Antwerp, prices on the secondary diamond market have dropped by an average of 14%," Evoyan said.
Also yesterday, Alrosa announced plans to cut rough diamond supplies by 30%. Previously, De Beers, the largest diamond producer, said it would cut its supplies. In Evoyan's view, the only way to keep Alrosa liquid in the current situation is for the Finance Ministry to allocate money to purchase uncut stones from Alrosa for the state fund.
RBC Daily
Tatneft eager to gain foothold in Iran
Tatneft, Russia's sixth largest oil producer based in the Republic of Tatarstan on the Volga, has signed a memorandum of understanding with two Iranian partners, the National Iranian Oil Company (NIOC) and social welfare fund Bonyad Mostazafan, or the Oppressed Foundation.
Analysts say the memorandum, which will enable the Russian company to enter the Iranian oil market, covers three deposits which the sides discussed last June.
Tatneft came to Iran in 2002, when it signed an agreement with Iran's Petroleum Institute on the sale of oil processing technology and equipment and a $1 million contract for testing equipment to increase oil recovery.
A year later, the Russian company started seismic surveys at one of Iran's deposits and began a search for fresh water.
In 2005, Tatneft and the Oppressed Foundation set up a joint venture, Pars Tatneft Kish, to prospect for and develop oilfields. The Russian company was to invest $500 million in oil production, but has not signed a single contract since the establishment of the joint venture.
The Iranian media reported last June that Tatneft, Iran's Petroleum Ministry and the Oppressed Foundation held talks on joint oil production at three deposits in the provinces of Chaharmahal and Bakhtiari, and Kohgiluyeh and Boyer-Ahmad.
Iranian Oil Minister Gholamhossein Nozari said plans included seismic surveys, drilling of exploration wells, and calculation of the economic feasibility of developing the deposits.
The sides did not announce the possible production volumes.
Vitaly Kryukov, an analyst with the Kapital investment group, said the memorandum probably outlined Tatneft's involvement in the development of the deposits, because oil there is similar in terms of viscosity and high sulfur content to that which Tatneft produces in Russia.
"This will allow the Russian company to provide technical support for the project, exactly what Iran needs," Kryukov said.
Konstantin Simonov, head of Russia's National Energy Security Foundation, said Tatneft's foray into Iran would not benefit it economically, given the political tensions in the country.
In his opinion, the company should focus on Russia, where there are many unfinished projects.
Tatneft recently rejected an offer by Shell to assist in the production of bituminous oil in Tatarstan, claiming that it can implement the project without foreign assistance, Simonov said.
Kommersant
First victims of financial crisis are office workers
Office staff at Russian food chains are facing redundancies as retailers cut costs amid the global credit crunch.
X5 Retail Group, Russia's largest retailer which owns supermarket chains Pyatyorochka, Perekryostok and Karusel, plans to cut personnel by nearly 30% before the yearend.
Another chain, Viktoria, plans to cut office staff by 10% in November. According to headhunting agencies, employees at Seventh Continent, Mosmart, Dixy and Vester are also facing redundancy, while those who stay in employment are bracing themselves for 30% wage cuts.
"We think it important to keep operation managers and merchandisers. However, some of them may have to go, too," said Lev Khasis CEO of X5 Group, which employed 44,450 personnel in the second quarter.
Nikolai Vlasenko, chairman of the board at the Viktoria Group, which runs the Viktoria, Kvartal and Deshevo chains, said the board plans to dismiss 10% of its staff numbers (about 17,000). They will dismiss the advertising, PR, development and a few more "non-strategic" departments.
Inna Mozhaiskaya, director general of an employment agency, Mozhaiskaya and Partners, said former Seventh Continent employees now seeking new jobs include top managers (5%), operation personnel (25%), office staff (70%, HR, PR and market research professionals).
Oleg Bolychev, a co-owner of Vester, said the average compensation for company managers would fall 20%-25%, and redundancies would affect the development, construction, PR and office management departments. "I have never noticed how many employees we had with overlapping functions. We do not really need 12 secretaries, so we have left only four," he added.
Vlasenko said Viktoria's costs per one employee were much higher than their salary. For example, a middle manager making $36,000 a year effectively costs the company $50,000, including the maintenance of their workplace, their benefits package and other costs.
He said employment redundancies would free premises which could be leased out; other retailers have already followed suit and reduced workspace per employee by half, he said.
According to the HeadHunter research service, the number of retail jobs on offer will decrease by 11% in November.
Galina Spasenova, a partner of the Kontakt Agency employment service, said she expected a 30% reduction in annual bonuses of those who stayed.
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