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    MOSCOW, September 13 (RIA Novosti) Things must be tough if Putin is juggling premiers/World's largest bank opens subsidiary in Russia/Rosneft may get shares of Germany's largest oil refinery from Shell/LUKoil to swap assets with CNPC/Russia develops the world's most powerful thermobaric bomb

    Gazeta.ru

    Things must be tough if Putin is juggling premiers

    The government shake-up has done nothing to clarify either a pre-election alignment or a post-election set-up.
    Instead, it confirmed the obvious - the jockeying for the top spot continues, and the installation of a still dubious figure as prime minister is proof enough.
    The changeover from the not-too-young Mikhail Fradkov to an even less young Viktor Zubkov may be seen either as part of a nice chess combination, or a gesture of despair.
    It appears the Kremlin of 2007, chock-full of resources, looking strongly cemented and having no external enemies to speak of, cannot sort out the problem that the beleaguered Kremlin of 1999 disposed of with flying colors.
    Taking our cue from 1999, we usually believe that a premiership is the royal highway to succession.
    But today, the White House cannot be used as a jumping-off point for the Kremlin. The Cabinet has been technical for too long to return to active political life overnight.
    The premiership might well prove a burden rather than a reward for the potential successor, especially since the new Cabinet will have to do what Mikhail Fradkov's team managed to avoid - namely take responsibility for unpopular decisions.
    These are, above all, reform of the housing and communal services (or a new abandonment of it), a likely drop in economic growth and in windfall oil prices, and as a result social budget commitments and the almost inevitable break-up of the mortgage program, i.e. problems that touch the bulk of the population most directly.
    The "technical" virus has infected all government levels where top functionaries could have helped the successor become president.
    Wherever you look, you can see only "technical services" burdened with postponed debts.
    Nor is it possible to create anything new - "national projects," even those such as "nanotechnologies," immediately become plagued with future debts and current flaws.
    The entire vertical power structure looks like nothing more than a technical appendix to the president.
    Therefore, it emerges that the best way of becoming a Russian president is to be one in the first place.
    But a third term is out of the question. Unless it proves a "lesser evil" sooner or later, and is resorted to by the elite and its leader, an elite tired of balancing in mid-air.

    Business & Financial Markets

    World's largest bank opens subsidiary in Russia

    The world's largest bank, the Industrial and Commercial Bank of China (ICBC), has registered a subsidiary in Russia, according to a representative of the Central Bank of Russia.
    The charter capital of the subsidiary will be 1 billion rubles ($40,000,000). ICBC is the leader in the expansion of Chinese banking on the world market, analysts said.
    Already the largest Chinese state bank, in June ICBC took the top spot in charts of the world's largest banks in terms of capital stock, pushing into second place America's Citibank. ICBC's capitalization is estimated at $300 billion.
    In Russia, ICBC plans to work with corporate clients, primarily companies working on the Chinese market and counterparties.
    "The major financial Chinese organizations are controlled by the state and are consequently agents of state policy," says Ivan Zakharov, director of the financial web site Pro-Credit.ru.
    "It appears that the strategic task of Chinese foreign banking policy is not capturing foreign retail business but promoting import-export operations with the Heavenly Kingdom.
    "Therefore, the ICBC subsidiary will not compete with other Russian banks. One can suppose that the Chinese will start to credit medium-sized and small businesses. Moreover, companies importing from China can get preferences in getting cheap credits," he said.
    Besides, market participants suppose that establishing the ICBC subsidiary in Moscow can give Russian banks access to a new major source of inter-bank borrowing.
    On the other hand, the financial integration with China is one-sided.
    "The Chinese internal market is closed. None of Russia's financial organizations can offer its clients to work on the Chinese stock market," says Oleg Ivanov, vice president of the Rossiya Association of Regional Banks.

    Vedomosti

    Rosneft may get shares of Germany's largest oil refinery from Shell

    It is not fortuitous that Russia's state-run oil major Rosneft has decided to negotiate an asset swap with Anglo-Dutch Shell, its partner, because it may get a stake in an oil refinery in southern Germany from it and thereby take its first step to end consumers in Europe.
    Shell offered its share in Miro oil refinery in Karlsruhe to Rosneft, said a source close to the Russian company and one of its top managers September 12.
    In turn, Shell will obtain the right to participate in the development of the Severo-Komsomolskoye field in the Yamalo-Nenets Autonomous Area (in northern Siberia) and the Tuapse depression in the Black Sea, as well as of two minor fields on the Priyamalsky shelf, said another source close to Rosneft.
    Both sources could not say anything about Rosneft's future share in Miro, as the final decision has not been taken yet.
    Now the companies are evaluating the assets and discussing the possibility of setting up a joint venture on the basis of Rosneft's oil producing projects.
    The Russian company's stake in Miro depends on Shell's stake in the joint venture, said one of the sources.
    Miro is a choice bit for Rosneft thanks to its convenient location, said Valery Nesterov, an analyst with Russia's Troika Dialog investment company.
    Oil could be supplied to Miro from Russian pipelines, and also via the Mediterranean and Baltic seas. In addition, 40.7% of Rosneft's crude exports go to Western Europe.
    The said transaction will be Rosneft's first step to end consumers in Europe, and it will receive a quota for processing its oil at Miro proportionate to its stake in it, said Maxim Shein, an analyst from Broker Credit Service brokerage.
    In his opinion, Rosneft's next step should be the purchase of a network of petrol stations in Europe. Oil refining margins in Europe are over $5 per barrel, and retail margins are twice as high, the expert said.
    Proven reserves of the Severo-Komsomolskoye field are estimated at 30 million metric tons of oil and 13.5 billion cubic meters of gas. In 2006, Rosneft produced 32,000 metric tons of condensate and 508.4 million cubic meters of gas there.
    There is no oil production on the Tuapse depression but its accessible reserves are estimated at 733 million barrels of oil equivalent.
    Rosneft does not own any fields on the Yamal shelf. The question may concern areas from the undistributed mineral resource fund that could be claimed by companies in the future, Nesterov said.
    He assessed the Tuapse depression and the Severo-Komsomolskoye field at slightly more than $1 billion, and Shell's stake in Miro at $2.5-$3 billion.
    For that reason, Rosneft will have to pay extra to Shell, the expert said.

    Kommersant

    LUKoil to swap assets with CNPC

    Cooperation between Russia's largest private oil company LUKoil and China's CNPC under an agreement signed the other day will begin with a settlement on a series of disputed assets in Kazakhstan.
    LUKoil will obtain a stake in one of CNPC's foreign projects in exchange for abandoning its preemptive right to a 50% stake in Kazakh oil producer Turgai Petroleum.
    Experts believe the Chinese company is involved in a few projects LUKoil would be particularly interested in, adding that the solution would, in the first place, protect shareholders of Turgai Petroleum from possible claims by state-owned Kazmunaigaz.
    Turgai Petroleum is a 50-50 joint venture of Canadian PetroKazakhstan Kumkol Resources and Dutch-registered LUKoil Overseas Kumkol B.V. The joint venture was set up in 1995 to develop the northern part of the Kumkol oilfield in Kazakhstan.
    "CNPC will transfer to LUKoil a stake in one of its foreign projects, equivalent to the one LUKoil would have acquired in Kazakhstan," LUKoil head Vagit Alekperov said Wednesday.
    He did not elaborate. Although judging by the situation around Turgai Petroleum, the license area LUKoil will thus obtain must contain around 12 million metric tons of remaining proven reserves.
    "LUKoil and CNPC are both active in several regions. In Latin America, the Chinese company is operating in Venezuela and Peru, while LUKoil is in Venezuela and Columbia.
    "Both companies have projects in Kazakhstan, and CNPC also has assets in Western and Northern Africa," said Valery Nesterov, an analyst with the Troika Dialog investment company.
    CNPC's foreign projects are far better developed than LUKoil's. While the Russian company produces a mere 5.7 million metric tons of oil a year abroad, CNPC's foreign projects account for 34% of its total production, or 54 million tons a year.
    "Almost any of that can be interesting for LUKoil," Alfa Bank analyst Konstantin Batunin said, adding that a few peculiar aspects of Kazakh legislation really make the specific CPNC project offered to LUKoil a secondary issue.
    "If the company had followed the [October 2006 Stockholm] Arbitration Institute's decision, the pre-emptive right amendments would have applied to it automatically. But the national company Kazmunaigaz would have also had the right to make an offer of the same value as LUKoil," Batunin explained.
    As it is, LUKoil has preserved the possibility of obtaining a CNPC asset instead.

    Vremya Novostei, Moskovsky Komsomolets

    Russia develops the world's most powerful thermobaric bomb

    It is becoming a tradition in Russia to surprise the rest of the world with new and "unparalleled" weapons.
    This time, the move came on the sixth anniversary of the September 11 terrorist attack on the United States - Russia's military tested a super-powerful thermobaric bomb.
    Its most unusual feature is that, unlike recently unveiled strategic and hypersonic cruise missiles, the new product is ready to use.
    Before now, the biggest fuel-air bomb had been the American one, which was tested four years ago and which the U.S. dubbed the "mother of all bombs."
    The Russians, to spite their "sworn friends," described their invention as the "father of all bombs."
    So we have here a sort of family. True, "father" shows two times "mother's" temperature and four times her yield, while the area he covers is two dozen times more than "mother's."
    Russia's specialty, the military said, will replace low-yield nuclear munitions (backpack weapons).
    The struggle against international terrorism will now scale new heights. Russia's Defense Ministry claimed that the new weapon violates no international treaty.
    The presentation of the "father of all bombs," which is clearly to be air-delivered, has taken place at the same time as Russian long-range bombers resumed patrol flights over parts of the world they have not visited since 1992. A very telling hint.
    "The thermobaric air bomb, which is almost as powerful as a nuclear munition is, I think, a further development of Russia's fuel-air weapons," said General of the Army Anatoly Kornukov, a former commander of Russia's Air Force.
    "They are practically the same things. I once heard about such a development. A guided missile of about the same effect was designed to hit enemy ships. Today a thermobaric bomb can be delivered to any remote area only by air.
    "We do not yet have rockets capable of lifting it. But given weight reductions, such a munition could be stowed in a cruise missile. And then we would have a real ogre," he said.
    Why is it that the weapon known to a select few in the military defense sector 15 or so years ago has cropped up now?
    Some traced this to the current election drive. Others said the Russian defense industry has simply nothing else to demonstrate in its dispute with an American strategic missile defense shield intended for Europe.


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