MOSCOW, January 17 (RIA Novosti) Former Yukos top manager may testify against Khodorkovsky, Lebedev / Itera joins LNG project in India / Not a single futures transaction with REBCO in 3 months / Russian automotive market meets European standards / Russia should not embark on new moon race with U.S. - experts
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Former Yukos top manager may testify against Khodorkovsky, Lebedev
The Russian Prosecutor General's Office has rallied major help for its second Yukos trial. High-ranking officials of the bankrupt oil company are helping it to formulate new charges against Mikhail Khodorkovsky and Platon Lebedev on embezzlement ($13 billion) and laundering $8.5 billion of oil export revenues.
One of the new witnesses is Alexei Golubovich, a former co-owner of Group Menatep Limited (GML) and Yukos's director for strategic development and corporate governance, who has recently returned to Russia. He is likely to testify against his former partners because of differences with GML co-owners.
"He was infuriated when they stripped him of his status and offered very little severance compensation," said a source who knows Golubovich and is associated with GML. "They should have given him his proper share."
But shares are not the only reason for his testimony. "Two attempts have been made on the lives of my family members," Golubovich said in an interview published in Russia on December 1, 2005. "My wife and children were injured in the second attempt, and I survived by a sheer miracle."
He said the two attempts were "acts of intimidation" possibly organized to force him leave Russia, where he could become a prosecution witness. Golubovich said he suspected Leonid Nevzlin of ordering his poisoning with mercury. The Prosecutor General's Office announced in late December that it was investigating the possibility of Nevzlin's involvement in mercury poisonings of several people.
Golubovich also said he had negative feelings about GML's policy.
"The man doesn't know what to do. Besides, he and his family have a major business in Russia," said a source close to GML. Olga Mirimskaya, Golubovich's wife, chairs the board of directors of the Russky Produkt food holding.
A former top manager of Yukos said the second Yukos trial would be public and Golubovich would most likely give his testimony in court. This is a key trial for the prosecution.
By charging Khodorkovsky and Lebedev with money laundering, the General Prosecutor's Office may be able to seize their foreign property, and funds in the foreign accounts of Yukos and its biggest shareholder, GML, said David Goldberg, a partner of European law firm SJ Berwin who specializes in international arbitration.
Itera joins LNG project in India
Russian-Indian joint venture Suntera, in which the independent Russian natural gas producer Itera holds a 50% stake, intends to build a regasification terminal in India with a capacity of 5 million tons. Industry analysts say demand for LNG in the country is favorable for the project, but its success will depend on whether Suntera receives guarantees of supply, of which it has said nothing so far.
Suntera's partner will be Indian state-owned company Gujarat State Petroleum Corp. Investment in the project is estimated at $500 million, a source in the JV's management said.
The Gas Authority of India (GAIL) estimates that the country's demand for LNG will be 24.8 million tons this year.
India has two regasification terminals, both in Gujarat State. One of them, with a capacity of 2.5 million tons, belongs to Shell, and the other (5 million tons) to Petronet LNG, and the company is already working to double its capacity. GSPC has recently signed framework agreements on the construction of two new terminals with a capacity of 5 million tons each at a total cost of $1.1 billion. The project involving Suntera is the third new LNG project in India.
It could pay off quickly, said Nadezhda Kazakova, analyst with MDM Bank. "India's ONGC holds a 20% stake in the Sakhalin 1 project and is considering liquefying gas produced there," she said.
However, analyst of the Solid brokerage Denis Borisov said the terminal's success would depend whether Suntera had managed to guarantee future supply. Itera did not say where LNG for the terminal would come from. A source said Suntera hoped to attract Gazprom to the project by offering it a stake. But the state-controlled gas giant said it had not received any official proposals.
Itera could copy the supply model it intends to implement in its other LNG project, i.e. buying a stake in an LNG producer. Earlier the company's CEO Igor Makarov said that Cameroon's Bowleven, in which Suntera holds 13%, would start sending 10 mln tons of LNG to the United States, for which purpose a regasification terminal was being constructed in Canada.
Not a single futures transaction with REBCO in 3 months
Trading in futures for Russian oil REBCO (Russian Export Blend Crude Oil) launched last October on the New York Mercantile Exchange (NYMEX) has failed. Not a single real contract has been signed yet, and the first physical shipment of oil from Primorsk scheduled for January has not taken place.
Russian President Vladimir Putin's initiative to reduce the price gap between Brent and Russian crude, which in recent years grew from $1.5-$2 to $5-$7 per barrel, has failed. Many experts warned from the very beginning that instead of renaming Urals as REBCO, Russia would do better to address its crude's quality, which would be certain to reduce the gap.
"The main problem of trading in REBCO futures is that players do not have confidence in it," said Alexander Yershov, an analyst with the Argus oil agency. Notably, a mistake in setting or forecasting prices can be very costly, even if it is just a few cents, because these cents are multiplied by a tanker, he said. Besides, trading on exchanges does not envisage large sales volumes. "Physical shipments under futures contracts on the NYMEX account for about 0.1% of total oil sales," he said.
At present, companies are neither saying yes nor no to the new futures. Everyone welcomes the new mechanism, but no one is in a hurry to use it. The main reason for wariness on the part of oil producers is that most of them now use long-term contracts, experts say. Besides, oil companies have repeatedly pointed to the lack of coordination between futures prices and oil duties levied on physical shipments depending on current global prices. This makes it very difficult for companies to forecast losses for three to six months ahead.
Experts continue saying that the project to trade REBCO on the NYMEX is unlikely to succeed, because it was initiated from above, i.e. by the government, and is not supported from below, meaning that the mechanism is not market-oriented.
Russian automotive market meets European standards
Stanley Ruth, who heads a PricewaterhouseCoopers group for cooperation with automotive companies in Russia, said 2 million cars had been sold on the domestic market last year, which placed Russia on a level with leading European markets. He said Russia will be second only to Germany in terms of car sales by 2010. Market volume may reach 3.5 million cars by that time, analysts said.
According to Ruth, 2.06 million cars were sold in Russia last year, a 20% increase on 2005. Total sales soared by 45% to reach $32 billion, but Russian automakers sold only 800,000 vehicles, or 5% less than in 2005.
Although Ruth said he cannot yet predict the way the market will develop in 2007, some analysts are already making preliminary forecasts.
Independent expert Valery Tarakanov said he expects overall sales of new cars to grow more slowly, i.e. by 19%, rather than the 23% registered last year; and that the market's volume will not exceed 2.2 million vehicles.
He said substantial personal savings will no longer be channeled from the real estate sector into the automotive market, demand for second-hand foreign cars will rise, and logistics and service infrastructures will continue to fall short of local demand.
Russian car sales will inevitably fall by 5-6% because local vehicles are becoming more expensive, Tarakanov said.
Yevgeny Shago, an analyst with Trust company, said the market will only grow by 15% on 2006 and reach a volume of 2.3 million cars.
The positions of Russian cars will be seriously impaired. Tarakanov said the share of traditional domestic automakers may drop below 20% by 2010.
Prices are bound to increase and competition with foreign companies will be tougher, as the Russian automotive industry switches over to new models. Consequently, major Russian carmakers AvtoVAZ, GAZ and UAZ will have to boost exports.
Russia should not embark on new moon race with U.S. - experts
Russia's space authorities have all of a sudden conceived a desire to resume Moon flights. A thirty-year space program provides, as a separate item, for the establishment of a permanent habitable base on the Moon. The first flights - not only of cosmonauts, but even for tourists - are expected to take place in 2015. Similar bold statements are being made in the United States.
The situation repeats that of the 1960s when the U.S.S.R. and the U.S. launched a moon race, the only difference being that China, Japan, the United Kingdom and even Turkey are now ready to compete.
Neither Russia nor the U.S. deny their ambitious task of going on the Moon in 2015-2017 and setting up Moon bases in 2025-2030. It is natural to ask: what will this cost the two superpowers?
Presenting a U.S. Moon program in the White House, the NASA administrator said the first flight of four astronauts over a week is estimated at $100 billion. The presentation and its approval by President George W. Bush came under immediate fire for the impossible costs involved, what with spending on the war in Iraq and the rehabilitation effort in the wake of Hurricane Katrina.
Moscow, too, has harsh critics of moon race No.2. "Unfortunately, Russia can only deliberate about such projects," said Dr. Mikhail Delyagin, chairman of the Presidium at the Institute of Globalization Studies. "It is my belief that exploring the Moon is beyond our strength at present. We are unable to develop our own lands in the East, in Siberia, let alone make extraterrestrial plans."
Dr. Alexander Zakharov, a leading research fellow at the Institute of Space Research, said: "We have never had a harmonized program for Moon research, anymore than for other planetary research. All these statements are mere rhetoric. Russia has only one lunar research program on hand so far - Luna-Glob. Other projects are discussed as well, but they are for a distant future. It is too soon to talk of a race against the Americans."