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    MOSCOW, April 13 (RIA Novosti) Nasdaq about to enter Russian market/ Does Russia have enough oil to fill pipelines?/Parliamentary elections a headache for Russian elite/ Kremlin establishes control over another national TV channel/ Hyundai likely to build car plant in Russia


    Nasdaq about to enter Russian market

    Nasdaq, one of the world's largest stock exchanges, plans to buy Scandinavian stock exchange group OMX for 23 billion Swedish krona (about $3.3 billion). Late March, OMX announced it was establishing a new international bourse, International Exchange St. Petersburg, together with its St. Petersburg counterpart. If the deal goes through, IXSP will be set up with direct American participation, and Nasdaq will become the first major Western exchange to have a presence in Russia.
    OMX is an international operator cooperating with more than 60 bourses in 50 countries. By the start of 2007, its capitalization was 19.2 billion Swedish krona. The Swedish government is the second largest OMX shareholder, after Investor brokerage.
    Lately, OMX has been showing growing interest in the Russian market. Last December it joined forces with the London Stock Exchange to trade futures contracts for depositary receipts of Russian companies.
    Early this week, IXSP was registered as a legal entity.
    Ovanes Oganisyan, a senior analyst at Renaissance Capital, said, "Should the deal go ahead, the new exchange in St. Petersburg will become very popular. The winners will be both investors and issuers."
    According to him, "Nasdaq will bring to Russia its technologies, business methods, and, perhaps, its marketing budget, which will cut risks. In that way, the new exchange will have a competitive edge over other Russian floors."
    Russian exchanges are not yet rushing to comment. Alexei Gerasyuk, Moscow Inter-Bank Currency Exchange public relations director, said that "Russian stock assets have lately become the main target for foreign exchanges. Time will show how adequate a foreign presence on the Russian market will be."
    OMX share prices leapt by 13% yesterday on talk of a possible merger. The explanation is ready at hand; Nasdaq's tentative bid was 20% higher than OMX current price.


    Does Russia have enough oil to fill pipelines?

    Russia's strive for independence from transit countries is becoming more pronounced. It is actively discussing plans to build a second line in the Baltic Pipeline System, which will pump crude to Europe bypassing Belarus and Poland. It is already constructing the North European Gas Pipeline, which will carry gas directly to Europe, and the East Siberia - Pacific oil pipeline, that will help to boost oil supplies to China. But transit independence and diversifying consumers are facing the same problem: the ambitious plans are not backed up by sufficient resources.
    Last year Transneft, Russia's state-owned pipeline operator, said it had idle pumping capacities. However, after a pipeline accident and the ensuing suspension of supplies to Lithuania the problem was solved, but overall the existing pipelines were not working at full capacity.
    What will the new pipelines pump? Last year oil exports to countries outside post-Soviet republics grew by a mere 1.7%, from 190.2 million metric tons in 2005 to 193.6 million metric tons. Overall exports are falling, last year according to official statistics, Russia exported 248.4 million metric tons of oil and gas condensate, down 2% from 2005.
    Plans to achieve independence from transit countries and to trade with both Europe and Asia are logical. But for them to be efficient, Russia needs to maintain a certain level of oil output. However, an increase in the growth rate of oil and condensate production is not expected: it was 11% in 2003, 2.5% in 2005 and 2.2% in 2006.
    The large and highly developed fields, which account for 75% of Russia's entire output, are nearly exhausted, the Natural Resources Ministry said. Producers, however, keep reducing investment in production and exploration. As oil prices grow, the government raises taxes on oil companies, and this burden often increases at a higher rate: export duties have already surged by almost 50% and the severance tax rate by 31%. The growing taxes have leveled out up to 90% from growing prices, and the increasing costs of oil production and sales exceed the remaining 10%. Of course, this tax policy encourages oil companies to refocus on oil refining, which is a welcome move, but petrol cannot be transported through pipelines.


    Parliamentary elections a headache for Russian elite

    A revolution that could hypothetically hit Russia will be provoked not by "orange" crowds taking to the streets, but by a dissent in the corridors of power.
    The December 2007 parliamentary elections, which were presented as a dress rehearsal for the triumph of Putin's successor, are rapidly becoming a major headache for the Russian elite and an independent factor in the upcoming change of power in the Kremlin.
    The lessons in Ukraine show that the authorities should not only fear the street and avoid amendments in the constitution. But that revolutions start only when there is dissent among the country's elite.
    This is exactly what could happen to the Russian elite. The parliamentary election campaign is turning into an opportunity to settle scores over the succession of power.
    When Sergei Mironov, speaker of the upper house and leader of Just Russia, said he advocated a third term for President Vladimir Putin, it became clear that something was amiss in the Kremlin.
    The confrontation between United Russia and Just Russia is no longer a game, and does not look it. Just Russia has unexpectedly become the only major party that has no political restrictions on it using Mironov's popular campaign slogans to move from 10%-15% of the electorate into a heavy weight category, with a promise of 20%-25% of December's vote. Mironov's party is rapidly attracting voters anxious about Putin's departure and unhappy with him, becoming an irreconcilable force within the elite.
    If Putin accepts a third term, victory in the parliamentary elections will go to Just Russia, whereas United Russia will have to fight not for its current 45% representation, but for 25%-30% of the vote.
    If Putin stands his ground, his successor will have a legal and substantial parliamentary force, which will advocate Putin's return to power in the 2012 presidential elections.
    Russian politicians should start monitoring political developments in Ukraine more closely, especially because a zero variant stipulating the simultaneous early parliamentary and presidential elections has been proposed there.


    Kremlin establishes control over another national TV channel

    Six years after the owners of the NTV channel were forcibly changed, REN TV faces the same fate. A pro-Kremlin structure has finally established control over the national channel.
    The Abros investment company, which is a subsidiary of the St. Petersburg-based bank Rossiya, has increased its stake in Media Holding REN TV to over 50%. The bank controlled by Yury Kovalchuk, a friend of Russian President Vladimir Putin, is also known for its former employees, now holding high positions within the government structures - Education Minister Andrei Fursenko and CEO of Russian Railways Vladimir Yakunin.
    Abros may further increase its share in the near future by purchasing 30% stake owned by RTL Group. The division of the German publisher Bertelsmann has already said that it will reduce or sell its holding in the TV company unless it manages to gain a controlling stake. Following Abros' expansion the Germans have no hope.
    REN TV's editor-in-chief, Ilya Kuzmenkov, started his own business ahead of the change in owners. A frontrunner for his position is Alexei Abakumov from the state-owned TV company VGTRK. This, however, is irrelevant, because the channel's pro-governmental shift is obvious as it is.
    Experts said that the developments were expected and easily predictable. "Everyone is cleansing media assets ahead of the elections," said Vladimir Yevstafyev, president of the Russian Association of Advertising Agencies. "REN TV used to be one of the most influential independent political media. It is one of the country's leading TV channels. Little time is left before the elections, and I am convinced that this is not mere coincidence."
    A former REN TV employee, who left the company in 2005, said, "Changes in 2005 touched the surface, for example, the policies of the information service. But the [liberal] spirit remained. Now they have come after it."


    Hyundai likely to build car plant in Russia

    Hyundai could make up its mind and build a plant in Russia. The Korean car company, according to sources familiar with its plans, has asked the Economic Development and Trade Ministry for information on potential tax breaks it could enjoy if it launched production in Russia.
    Hyundai was one of the first to "stake out" the Russian market. For several years now two of its car models, the Accent and the Sonata, have been produced under license at the Taganrog auto plant. But the Korean giant has been in no hurry to start its own operation.
    Hyundai spokeswoman Anna Kostyukhina said the company had not decided yet and was just exploring the outlook for its business in the country.
    If Hyundai builds its own plant in Russia, it will no longer need the services of Taganrog, the plant's top manager said, because it makes no sense to sell the same models in different price brackets.
    An ideal option for Hyundai could be to purchase the Taganrog plant, but the partners seem to be at odds over the price, said Deutsche UFG analyst Yelena Sakhnova. Overseas auto concerns dislike sharing technologies and rolling out new models in joint ventures, she added. Hyundai is no exception, it appears.
    Sakhnova thinks Hyundai's Russian operation could turn out between 50,000 and 100,000 units a year. A higher figure is impractical, what with the joint venture with Taganrog, she said. Besides, a source in Taganrog said a plant is due to open in the Czech Republic next Friday to cater for the European market.
    If Hyundai takes the plunge, it will mean its segment in the Russian market is large enough to warrant serious investment, argues Yevgeny Bogdanov, head of engineering and transport at A.T. Kearney.
    His calculations show that combined sales by Hyundai and Taganrog while any plant was under construction could reach 150,000 to 200,000 cars a year. In 2006, Hyundai sold 100,650 cars in Russia, with around 56,000 of them made at Taganrog.

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