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MOSCOW, January 27 (RIA Novosti)
Russia formalizes borders with Abkhazia, South Ossetia / Europe in frantic search for alternative to Russian gas / Russian business encouraged to expand into CIS / Gazprom finally fined for abuse of market power /

Vedomosti

Russia formalizes borders with Abkhazia, South Ossetia

Russian President Dmitry Medvedev has appointed Ambassador at Large Alexander Golovin as his special envoy on the delimitation and demarcation of borders with the CIS states, Georgia, Abkhazia and South Ossetia.
The decision marks the beginning of formalization of borders with the newly independent Abkhazia and South Ossetia, a source in the Kremlin administration said.
Golovin has been head of the Russian delegation on the Caspian Sea since 2007 and headed the group on the status of the Sea of Azov and the Kerch Strait and the delimitation of the Black Sea since 2008.
Vadim Postnov, a senior counselor at the Russian Foreign Minister and head of the commission on the delimitation and demarcation of the border with Georgia, said Russia had not secured an agreement on border delimitation with Georgia, which advanced unjustified claims.
The Georgian delegates insisted that the part of the Black Sea Russia considers its own under the 1982 UN Convention on the Law of the Sea belongs to Georgia. The area comprises tens of square kilometers of Russia's exclusive economic zone.
"We hope to settle most questions with our friends now," Postnov said referring to Abkhazia and South Ossetia.
Konstantin Zatulin, director of the Institute of the CIS, said Russia had framework border accords with Abkhazia before it proclaimed independence, for example on placing border stations.
He also said the border must be formalized because Russia is developing remote mountain areas as part of preparations for the 2014 Winter Olympics in Sochi, Zatulin said.
A source at the Russian Foreign Ministry said Georgia had claimed the Roki Tunnel belonged to it. Khasan Pliyev, first deputy prime minister of South Ossetia, said the tunnel belongs to Russia.
Abkhazian Foreign Minister Sergei Shamba said they had not negotiated border delimitation with Russia but had never had conflicts with it regarding the use of the sea.

Vremya Novostei, Kommersant

Europe in frantic search for alternative to Russian gas

Europe is getting all worked up again about the planned Nabucco pipeline expected to carry Central Asian gas to European consumers, bypassing Russia.
However, the new political boom is likely to boil down to nothing, as neither Turkmenistan nor Azerbaijan, the two Asian countries seen by Europe as the most likely suppliers, are eager to issue any guarantees.
That much became clear at the top-level Nabucco conference, which opened in Budapest, even though the event was planned as a major step toward the implementation of the project.
Nabucco involves laying a 3,300 km (2,051-mile) pipeline from Turkish Erzurum to Austrian Baumgarten, crossing Bulgaria, Romania and Hungary, to carry 27-31 billion cubic meters of natural gas (about 1 trillion cu f) annually. The project cost is estimated at 7.9 billion euros. However, the project does not involve any potential suppliers of gas to fill the pipeline, which is a major hitch to its feasibility.
The president of Azerbaijan, Ilkham Aliyev, said upon his arrival in Budapest in an interview before the official dinner reception that Baku would only decide about providing gas to Nabucco after the project participants had agreed on the financing and timeframe of construction, and transit fees. Earlier than that, he said, it would be "premature" to discuss any guarantees on Azerbaijan's part.
European initiators of the projects have not made any specific commercial proposals to Baku yet, unlike Russia's Gazprom, whose CEO Alexei Miller offered in June 2008 to buy gas to be produced during the second stage of the Shakh-Deniz project.
Gazprom said it would pay a price calculated using a formula based on its own European contracts after deduction of transportation and marketing costs and a "reasonable" profit.
The Azerbaijan president said Baku was "considering" Gazprom's offer. "Price is an important issue here," he said adding that stronger competition for gas benefits the supplier.
Although the European Commission is persistently making attempts to establish a dialogue with potential suppliers to obtain their guarantees to fill the pipes, all of these attempts appear clumsy and futile.

Nezavisimaya Gazeta, Vedomosti

Russian business encouraged to expand into CIS

Russian authorities plan to use the economic crisis in CIS states to strengthen the positions of Russian business there.
Economics Minister Elvira Nabiullina said a special organization must be set up to coordinate the efforts of business and the government to buy assets whose value is plummeting in neighboring countries.
Independent analysts say Russia lacks funds for a large-scale expansion, and that the CIS states are unlikely to welcome Moscow's plans.
The Council for Coordinating Russian Investment in the CIS will be set up at the Economic Development Ministry in February, a ministry official said. Its analysts will use information from Russian trade missions in the CIS states to issue recommendations to business. The source said support to business would not be financial, but would take the form of "consultations and administrative-political measures."
Analysts say buying problem assets during a crisis is a risky undertaking.
Igor Nikolayev, chief strategic analyst at FBK, the leading accounting and business advisory services company in Russia, said: "Cheap assets are usually plagued with problems. Profitable enterprises will not be in demand because they are more expensive. Besides, decisions will be politically motivated."
The Russian business has no funds to buy problem assets in the CIS, which means it will expect state loans for such acquisitions, Nikolayev said. However, it would be unwise to invest considerable finds in foreign assets when the federal budget deficit is expected to reach 10% this year.
Alexander Osin, chief economist at Finam Management, part of the Finam Investment Holding, said the Russian business would focus on Ukraine and Kazakhstan, but might also expand to some East European countries with weak macroeconomies whose pre-crisis welfare rested entirely on internal consumption and EU loans.
The Russian business may fill some niches there with the financial assistance of the state, above all in the banking sector, Osin said.

Kommersant

Gazprom finally fined for abuse of market power

Russia's federal Antitrust Service (FAS) has for the first time fined state Gazprom for violating anti-monopoly law.
The gas giant is facing a 157.7 million ruble ($4.8 million) fine for an "unjustified" denial of access to the gas transportation and supply market in Tatarstan to independent producer Trans Nafta, while having the required transport capacities available.
The amount could have been 15 times higher, but the regulator said it chose the "mildest sanction" under the current anti-monopoly law, "taking into account the tight economic situation."
Companies abusing market power in Russia face fines of 1%-15% of the amount earned due to selling goods or services on the market where the abuse occurred. The regulator said Gazprom would be fined "a little over 1%" of the revenue it collected in the Volga republic.
It is the first fine slapped on Gazprom as denominated as percentage of the company's earnings. FAS introduced such a practice only last year, with oil producers so far hit hardest by the change.
LUKoil will have to pay 1.4 billion rubles for hiking prices, Rosneft 1.5 billion rubles, Gazprom Neft 1.35 billion rubles, and TNK-BP 1.11 billion rubles.
However, with oil companies the regulator calculated their fines as percentage of their total revenues in Russia, while with Gazprom, only what it earned on the specific market, Tatarstan.
Gazprom has already appealed against the FAS decision in court. The oil producers are also fighting to revoke decisions that labelthem law breakers.
However, industry watchers expect Gazprom to be more careful while interacting with independent producers from now on. "The company will now see that such cases never reach the FAS," said Valery Nesterov from Troika Dialog.
"Gazprom will try to use more cautious language denying anyone access to pipelines," echoed Denis Borisov from the Solid brokerage.
Nesterov also said that the regulator's activity in using floating fines is past its peak which was in the fall of 2008, as the government's attention is riveted to the economic crisis.

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