MOSCOW, September 13 (RIA Novosti) Security chief's son appointed to senior post in Rosneft/ Radical opposition to support Kasyanov for president/ Russia wants blocking stake in EADS/ Ministry firm about Russia joining WTO before yearend/ Gazprom to spend $20 billion on upstream and downstream reconstruction
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Security chief's son appointed to senior post in Rosneft
On Tuesday, Andrei Patrushev, a son of Federal Security Service (FSB) director Nikolai Patrushev, was appointed as an adviser to Igor Sechin, Rosneft's board chairman and deputy head of the Kremlin administration. Patrushev Jr. joins the company after holding a job in the FSB's oil division.
A source in the Rosneft board said the new adviser had "not yet showed up in the office, but his business cards are already being printed." Rosneft declined to comment officially on Patrushev's appointment.
The youngest son of the FSB director is 25. Three years ago, he graduated from the FSB Academy at the same time as Pavel Fradkov, Prime Minister Mikhail Fradkov's youngest son. Andrei's last post, the paper says, was that of deputy chief of the ninth division in the FSB's industry department. At FSB headquarters, the Lubyanka, it is called the oil division because staff members keep a close watch over oil-market developments.
Andrei Patrushev's new brief is unclear. Sources in the company say the new adviser has been "seconded" to Rosneft from the FSB, "a reserve" as it is called at the Lubyanka. Until now "reserve" jobs in companies of such a caliber have been kept for senior FSB officials, no lower than generals. Rosneft already has one such "reserve": Tajikistan's former KGB chairman General Rezo Tursunov (he is also reportedly an adviser to Sechin, who is considered to be the leader of the Kremlin group with a background in the security services).
The new post offers the career Cheka man glittering prospects, especially since his older brother, Dmitry, supervises loans for oil companies at state-run Vneshtorgbank.
The appointment of a high-placed security officer to Rosneft comes against the backdrop of a fresh spiral in bureaucratic infighting among Vladimir Putin's men. Last week, at a meeting with Western political analysts, presidential aide Igor Shuvalov highlighted the risk of Rosneft's remaining stake being privatized in the interests of the Kremlin's "siloviki" wing. Shuvalov also spoke about a certain fusion between the "siloviki" oligarchs and the oil business.
Radical opposition to support Kasyanov for president
Former Prime Minister Mikhail Kasyanov may become the consensus presidential candidate for the Other Russia opposition alliance. Members of a union of Russian public and human rights institutions, which organized an "anti-summit" at the Group of Eight meeting in St. Petersburg this summer, said Kasyanov has a better chance than any other candidate.
The draft Other Russia program, which was recently made public by Georgy Satarov, president of the Indem Foundation, will be Kasyanov's election manifesto.
Eduard Limonov, the leader of the radical National Bolshevik Party and an active Other Russia member, said Kasyanov's chances of representing the alliance were the best, because "he has worked as prime minister and passed the test."
However, the decision of Other Russia to nominate Kasyanov, who became leader of the radical inter-regional opposition movement Popular Democratic Union this April, is not very logical. Limonov said Kasyanov does not look like a radical.
This is why Other Russia leaders are in no hurry to take part in the parliamentary election race, because their parties may never be registered.
Political scientist Alexei Makarkin said they have now linked their futures with Kasyanov's because he is the only man who possesses the qualities of a presidential candidate. "As prime minister, Kasyanov was the second most important man in Russia," Makarkin told the paper.
Makarkin said the opposition planned to take part in presidential elections, rather than win them. "Kasyanov may collect the required 2 million signatures, get registered and receive enough votes to become the main opposition politician," said Makarkin.
But Kasyanov may face problems because he is drifting closer to the radicals. Makarkin said Kasyanov has connections in the Russian bureaucratic machinery and possesses financial resources.
He said many of these associations are dubious. Those who were ready to promote Kasyanov as a moderate opposition leader will not want to support him as a radical, because this would spell greater political risks.
Russia wants blocking stake in EADS
Russia would like to acquire a blocking stake in European Aeronautic Defence & Space Co., Sergei Prikhodko, a Russian presidential aide, said Tuesday. Earlier this week the corporation officially confirmed that Russia's state-owned Vneshtorgbank had acquired 5.02% of its shares.
The stake will not necessarily be 25% plus 1 share, the aide said. Russia is discussing a stake equal to those held by key EADS shareholders so that "it can play a role in its management." If this goes through, Russia will claim a seat on the board of directors, which will require changes in the corporation's charter, Prikhodko said.
"An alternative is a share swap between EADS and [Russia's] United Aircraft Corporation, which is being set up," said a source familiar with the latter corporation's plans.
Any moves will be possible only after President Vladimir Putin achieves a principal political agreement with German Chancellor Angela Merkel and French President Jacques Chirac, said Konstantin Makiyenko, an expert with the Center for Analysis of Strategies and Technologies. Their next meeting is scheduled for September 22 and will be held in Paris.
On the news from Russia, EADS' capitalization, which plunged by 26% last June, grew from $23.55 billion to $24.5 billion over the last two weeks. After Prikhodko's comments, the corporation gained over 5% on the Paris Stock Exchange. At present, the market value of its blocking stock is $6.1 billion.
It is impossible to get this sum from state-owned banks: in compliance with the Russian Central Bank's regulations, Russian banks cannot invest more than one fourth of their capital in one company. One fourth of Sberbank's capital as of July 1 equaled $2.7 billion, of Vneshtorgbank's $1.4 billion and of Gazprombank's $375 million.
"It would be logical to act via Vnesheconombank, which is not a classic bank in the Russian sense and is not subject to these regulations," said Andrei Cherepanov, a former director for foreign operations with the Central Bank.
Vnesheconombank's capital has not been disclosed, but before state-owned oil company Rosneft acquired Yukos's core production asset, Yuganskneftegaz, it had bought promissory notes issued by Rosneft and its subsidiaries worth over $6 billion.
Ministry firm about Russia joining WTO before yearend
The Economic Development and Trade Ministry is still unshakable that WTO accession talks with the United States will be completed by the end of the year. But neither the Kremlin administration nor experts share its upbeat mood.
"Every negotiating process has its own tactics," Kirill Androsov, deputy economic development and trade minister, said on Tuesday, probably commenting on remarks made by presidential aide Igor Shuvalov, who spoke recently about the talks folding because of the deadlock.
Experts, however, said that no matter how attractive WTO admission may look, Shuvalov's view was more realistic. Sergei Karaganov, chairman of the Council for Foreign and Defense Policy, said that economic matters - poultry imports or opening up the Russian banking market - had long outgrown the negotiations. "A big geopolitical game is on around the Middle East, Iran and the post-Soviet space, where the United States is demanding serious concessions," the expert said.
Iosif Diskin, co-chairman of the Center for National Strategy, said Russia had taken a timeout, which does not mean the technical halting of the negotiating process. "We have now given the U.S. time to weigh up all things connected with Russia's entry. It is an attempt by the Russian leadership to shift responsibility for the negotiations onto the American administration, which is now facing pressure from other WTO members, notably EU countries, that want to see Russia in the organization."
Vladislav Inozemtsev, director of the Center for Post-Industrial Research, said "the main obstacles to Russia's joining the WTO are political, and both the American and the Russian side are to blame for them." In his view, ordinary Russians will benefit from WTO membership - with its competitive market, modern regulations, and cheaper imports. "An economy depending 60% on customs duties cannot last long," Inozemtsev said. "Major Russian companies will easily survive the opening up of the market, but they do not rule the roost. In this country, all rules, including economic ones, are made by top-ranking bureaucrats, a practice that should be ditched when Russia accedes to WTO. The Russian authorities, unfortunately, are not yet ready for that."
Gazprom to spend $20 billion on upstream and downstream reconstruction
The unified system of gas production and transportation owned by Russian energy giant Gazprom is in worse shape than was previously thought.
Last Monday, the company's management committee approved two integrated programs for the reconstruction of its gas production and transportation assets, including underground storage facilities, for 2007-2010.
Investment in the maintenance and modernization of the production infrastructure was set at 106 billion rubles ($4 billion). No official information on the amount the company will invest in the reconstruction of its trunk pipeline network was disclosed. According to unofficial reports, it may involve up to $16 billion.
In 2005, the gas monopoly spent 3.5 billion rubles ($130.7 million) on the reconstruction of its upstream assets. It has not released data on its investment in the maintenance of its transportation facilities. However, if some $700 million was spent on repairs in 2004, the company may be spending up to $1.5 billion now.
Production on Gazprom's major gas fields has been falling by 20-25 billion cubic meters a year, and the holding is unlikely to make up for the deficit by introducing new facilities.
However, in the next few years the monopoly will exhaust its satellite deposits, which keep its output afloat, while large projects on the Yamal have not been approved yet, and are unlikely to increase the company's gas output before 2012.
A large investment in efficient new technologies to raise the output of depleted fields is deemed to be the only solution.
A Gazprom official said the sharp increase in investment in the reconstruction of its upstream assets is part of the company's plans to build up its gas output, although under the program there are separate provisions for investments in new deposits - Yuzhno-Russkoye, Yen-Yakhinskoye, Yety-Purovskoye, Bovanenkovskoye, which will require much larger sums.
Developers of the modernization program for the gas transportation system said the funds spent on it will prevent the loss of 16 billion cubic meters of capacity a year, and will increase the system's carrying capacity by an analogous amount as soon as narrow passage sectors have been eliminated.
In addition, up to 3.5 billion cubic meters of gas will be saved out a year, of some 70 billion cubic meters lost in transportation, following reconstruction.