Russia 110520

Basic Political Developments Russia insists on legal security guarantees over U.S. missile shield U.S. ANTI-MISSILES DEPLOYED IN EAST EUROPE WILL BE ABLE TO HIT RUSSIAN

INTERCONTINENTAL BALLISTIC MISSILES AFTER 2015 - GENERAL STAFF European missile shield could include Gabala, Armavir radars - Russian defense official Russia, US to continue talks on Euro-ABM – official Libya not developing missile technologies - Russian General Staff - "Argentina, Egypt,

Libya and a number of other countries have renounced the development of missile technologies," Russian Army General Staff spokesman Vyacheslav Kondrashov told a conference in Moscow

MOSCOW HAS NO KNOWLEDGE ABOUT MISSILE TECHNOLOGY SWAP BETWEEN IRAN, N.KOREA - RUSSIAN FOREIGN MINSITRY

Russian General Staff: DPRK missiles do not pose a serious risk Moscow missile defense system could be nucleus of European missile shield - Space

Forces Russia develops new attack systems against space threats - ministry Armavir radar to enter service in 2012 – ministry: "After its completion and test run in

2012, the two-segment radar station in Armavir will be able to detect ballistic targets in a sector with the width of 240 degrees azimuth and 70 degrees in elevation," Morozov told a missile defense conference at the Military Academy of the Russian General Staff on Friday.

United States to keep anti-dumping duties on Russian hot-rolled steel Russian-American cooperation in plutonium recycling no threat to Russia – diplomat Pakistan-killed insurgents carried Russian passports - Police in the Pakistani city of

Quetta have shown reporters the Russian passports that were found on the bodies of the terrorists who were wiped out on Tuesday.

Putin, Fischer to discuss Russian-Austrian economic cooperation - Russian Prime Minister Vladimir Putin will hold talks with visiting Austrian President Heinz Fischer in Moscow on Friday, which will focus on trade and economic cooperation between the countries, including joint energy projects.

Austrian president to visit Tatarstan - Fischer will meet Tatarstan’s leader Rustam Minnikhanov and participate in the Tatarstan-Austrian business forum, Minnikhanov’s press service said.

Belarusian opposition begs Russia not to give money to Lukashenko regime Russia Attaches Strings To $3 Billion Loan Offer To Belarus Gov’t reviewing Russia defense ties after expulsion - The deportation of Israel’s military

attaché to Moscow continued to raise concerns within the defense establishment on Thursday, amid calls for a review of military ties with Russia.Russia supports candidacy of Grigory Marchenko to IMF- Russia supports the candidacy of the head of the National Bank of Kazakhstan, Grigory Marchenko, to the post of Managing Director of the International Monetary Fund (IMF).

S.Ossetia president's cousin killed in Vladikavkaz - police source

Kokoity’s cousin shot down in quarrel at Vladikavkaz club South Ossetian president's bodyguards killed in Russia Two S. Ossetians killed by kickboxer after row at Vladikavkaz cafe – source World Tourism Organization head calls on Russia to ease visa rules Russia's Proton-M carrier rocket to launch U.S. satellite on Friday Russia monitors radiation levels in Far East FE seas radiation monitoring expedition returns to Vladivostok Russian Black Sea spa to welcome Japanese kids for rest Russian law center opens in India Billionaire banker quits job to join Putin’s Popular Front Russian tycoon Lebedev joins Putin's People's Front - The Our Capital movement

headed by Russian businessman Alexander Lebedev has joined Prime Minister Vladimir Putin's recently created People's Front, the movement said on Friday.

PM Putin on Eurasian integration- By 2013, the countries of the Customs Union (Russia, Belarus, Kazakhstan) will prepare agreements for the deeper integration of the Eurasian Economic Union.

Ingushetian leader praises release of Domodedovo bomber’s sister Amnesty International Says Khodorkovsky Not A 'Prisoner Of Conscience' Mironov goes to lower house Helicopter show in Moscow facilitates international cooperation - The state-owned

Russian Helicopters company revealed at the exibition that it will deliver the first batch of 15 Mil Mi-17 helicopters to India by the end of 2011 as a part of its 80 helicopter deal with India.Russia wins cathedral - A French court Thursday rejected a claim by an Orthodox group that it owns a grand cathedral ceded to the Russian state in the French Riviera town of Nice.

Moscow authorities ban gay pride parade on May 28 Where is the 'reset'? - a few days ago Washington and Bucharest announced plans to

deploy a new missile base in Deveselu, in the south of Romania. This decision is at odds with the entire logic of the Russian-American missile defense dialogue which has been going on for months. By Valentin Zorin

Russian nuclear power plants are declared safe - Preliminary inspection results are available Vladimir Dzaguto

The Vienna dozen- Despite the fact that the main topic of the talks was bilateral cooperation, Austrian journalists, apparently “inspired” by their Russian counterparts, continued the main theme of the Russian president’s big press conference: could we hope that after the 2012 presidential election Medvedev would be the direct partner of the president of Austria?

Medvedev's Challenge to Putin: Oh, Never Mind – by By Simon Shuster / Moscow Fathers, Sons, and Russian Power Games - The sons of Putin allies land in key positions

at state companies, to Medvedev's chagrin Russian nationalists, leftists and Chechens debate future of North Caucasus

National Economic Trends Russia not planning to place more Eurobonds in any currencies this year -

Storchak (Part 2) Central Bank sells Sperbank share capital State's NCSP stake soon to be auctioned? Kremlin seeks bankers to help build Russia's infrastructure

Business, Energy or Environmental regulations or discussions Kovalchuk’s Media Group and RTL May Swap Assets, Kommersant Says Polyus Gold may merge with a global player in 2011 Russia's TMK recommends 0.85 rbl/shr dividend HMV To Sell Waterstone's To A&NN Capital Fund For GBP53M Yandex plays down Russian roots for IPO Yandex Says Nyet to Google and Da to Nasdaq - Russia's homegrown search

engine is going public with a $1 billion IPO Russian consolidation: Lenders join forces to get bigger share of sector Acron to leave 2H11 fertilizer prices for domestic agro producers unchanged RMK copper firm to float 20-25% shares in London IPO Russian Copper eyes $1.2 bln London IPO-paper

Activity in the Oil and Gas sector (including regulatory) Tax cuts for new oil fields are possible with oil below USD 95/bbl Sechin notes the possibility of a new independent refinery, comments on tax

reform LUKOIL has wiped off a debt fully on Shah Deniz Project and SCP LUKoil Trades in Fuel Oil Solving Moscow/Beijing oil price spat would smooth gas talks: Russia deputy PM Rosneft's Disappointing Dating Scene - By LIAM DENNING

Gazprom Gazprom and CNPC accelerating negotiations Gazprom to double gas storage capacities in Europe PFI - Gazprom goes for the hat trick- South Stream invites banks; Nord Stream

parties in Florence tonight; CPC seeks funds too

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Full Text Articles

Basic Political Developments

05/20 11:59   Russia insists on legal security guarantees over U.S. missile shield http://www.interfax.com/

May 20, 2011 10:51U.S. ANTI-MISSILES DEPLOYED IN EAST EUROPE WILL BE ABLE TO HIT RUSSIAN INTERCONTINENTAL BALLISTIC MISSILES AFTER 2015 - GENERAL STAFFhttp://www.interfax.com/news.asp

News of 20.05.11European missile shield could include Gabala, Armavir radars - Russian defense officialhttp://www.militarynews.ru/EMAIN.ASP

Russia, US to continue talks on Euro-ABM – officialhttp://english.ruvr.ru/2011/05/20/50561434.html

May 20, 2011 11:43 Moscow TimeRussia and the United States will continue talks on setting up a Euro-ABM system, says the Deputy Chief of the Russian General Staff Valery Gerasimov. He was speaking during a press conference involving foreign military officials. Our doors are not closed, we are prepared for dialogue, he said. But he also pointed out that the United States is currently building Euro-ABM as part its own global missile defence system irrespectively of the earlier reached US-Russian agreements to that end. Moscow suggests using the so-called sector approach to Euro-ABM, with each party assigned its own sector of responsibility.

May 20, 2011 11:33

Libya not developing missile technologies - Russian General Staffhttp://www.interfax.com/newsinf.asp?id=245221

MOSCOW. May 20 (Interfax-AVN) - Libya is among the states that renounced the development of missile technologies, Russian Army General Staff spokesman Vyacheslav Kondrashov told a conference in Moscow

"Argentina, Egypt, Libya and a number of other countries have renounced the development of missile technologies," he said.

Of the 30 countries that have their own missile technologies, 18 possess operational-tactical and tactical Soviet 'Skad' class missiles with a firing range of about 300 kilometers, he said.

Operational-tactical and tactical missiles "posing a threat on a regional scale only" have become widespread. "The proliferation of medium-range missiles and ICBMs is extremely limited and characterized by a downward trend," Kondrashov said.

05/20 11:50   MOSCOW HAS NO KNOWLEDGE ABOUT MISSILE TECHNOLOGY SWAP BETWEEN IRAN, N.KOREA - RUSSIAN FOREIGN MINSITRYhttp://www.interfax.com/

GOOGLE TRANSLATIONRussian General Staff: DPRK missiles do not pose a serious riskhttp://www.bbc.co.uk/russian/rolling_news/2011/05/110520_rn_north_korea_missiles.shtml

Last Updated: Friday, May 20, 2011, 07:18 GMT 11:18 MCKThe General Staff of Russia sees no serious danger in the missile program of North Korea.According to Deputy Chief of General Staff, Vyacheslav Kondrashov, there is evidence that North Korea has ballistic missiles with a third stage (as in Russian "Bulava") and a nuclear warhead.Also, in his words, there is no evidence of Pyongyang's missiles at long range shooting.These circumstances, according to the Joint Staff, argue that "the DPRK's missile capability is small and can not threaten neighboring states. "

05/20 11:56   Moscow missile defense system could be nucleus of European missile shield - Space Forces http://www.interfax.com/

05/20 11:52   Russia develops new attack systems against space threats - ministry http://www.interfax.com/

May 20, 2011 12:27

Armavir radar to enter service in 2012 – ministryhttp://www.interfax.com/newsinf.asp?id=245255

MOSCOW. May 20 (Interfax) - A new-generation radar station built near Armavir will be added to the Russian ballistic missile early warning system in 2012, Col. Igor Morozov, head of the Space Troops Operational Command headquarters, said on Friday.

"After its completion and test run in 2012, the two-segment radar station in Armavir will be able to detect ballistic targets in a sector with the width of 240 degrees azimuth and 70 degrees in elevation," Morozov told a missile defense conference at the Military Academy of the Russian General Staff on Friday.

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 May 20, 201111:03United States to keep anti-dumping duties on Russian hot-rolled steelhttp://www.interfax.com/news.asp

 

May 20, 2011 12:12

Russian-American cooperation in plutonium recycling no threat to Russia – diplomathttp://www.interfax.com/newsinf.asp?id=245245

MOSCOW. May 20 (Interfax) - The Russian-American agreement on recycling plutonium declared as no longer needed for defense purposes, as well as on handling it and on cooperation in this sphere, is of a parity nature and is no threat to Russian security, Russian Deputy Foreign Minister Sergei Ryabkov said.

"These documents are of an absolutely parity nature," he said in a report in the State Duma, which is hearing a bill on the ratification of a protocol to this agreement.

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Pakistan-killed insurgents carried Russian passportshttp://english.ruvr.ru/2011/05/20/50564292.html

May 20, 2011 12:27 Moscow TimePolice in the Pakistani city of Quetta have shown reporters the Russian passports that were found on the bodies of the terrorists who were wiped out on Tuesday. Meanwhile

the Russian Embassy in Pakistan has so far failed to confirm this. According to earlier reports, the car that was making for the Quetta airport on May 17th failed to comply with a police demand and pull up at a checkpoint. Instead, the five extremists in the car opened fire on the policemen and were killed by the return fire. According to preliminary reports, the criminals penetrated Pakistan from the North Caucasus via Afghanistan.

Putin, Fischer to discuss Russian-Austrian economic cooperationhttp://en.rian.ru/russia/20110520/164127008.html

02:53 20/05/2011

Russian Prime Minister Vladimir Putin will hold talks with visiting Austrian President Heinz Fischer in Moscow on Friday, which will focus on trade and economic cooperation between the countries, including joint energy projects.

Fischer arrived in Russia on an official visit on Wednesday and held talks with his Russian counterpart Dmitry Medvedev on Thursday. Their talks also focused on economic cooperation between the countries, particularly related to Russia's South Stream gas pipeline project, designed to diversify the country's gas supply routes and reduce its dependence on transit nations.

Austria joined the South Stream project, which is widely seen as a rival project to the EU-backed Nabucco, in April 2010. The South Stream pipeline is designed to carry more than 60 billion cubic meters of Russian natural gas a year across the Black Sea to Bulgaria and further on to Italy and Austria.

The Russian president told his Austrian counterpart on Thursday that energy cooperation between the countries should not be limited to hydrocarbon supplies, but also focus on alternative energy projects. Russia needs Austrian experience in the sphere, he said.

Joint investments were also in the focus during talks between Medvedev and Fischer. Austria has invested $4,2 billion in Russia's economy as of late 2010, including $2,4 billion in direct investments, becoming the country's 12th largest investor. Trade turnover between Russia and Austria stood at $3,48 billion in 2010, with export accounting for $1,02 billion and import for $2,46 billion.

Austria's possible participation in the creation of a touristic cluster in Russia's North Caucasus and the construction of facilities for the 2018 FIFA World Cup is also among the priorities of the two countries' business cooperation. Austrian companies have already been involved in the construction of facilities for the 2014 Winter Olympics in Russia's Black Sea resort of Sochi.

Besides this, Russia and Austria are also involved in the construction of a broad-gauge railway from Kosice in eastern Slovakia to Vienne, as well as in the creation of a logistics center on the Danube River.

A declaration signed by the Russian and Austrian presidents during the talks states that the countries will work towards the easing of the EU-Russia visa regime and the subsequent introduction of visa-free travel between Russia and the EU.

MOSCOW, May 20 (RIA Novosti)

05:35 20/05/2011Top News

Austrian president to visit Tatarstanhttp://www.itar-tass.com/en/c32/146444.html

KAZAN, May 20 (Itar-Tass) —— Austrian President Heinz Fischer will visit predominantly Muslim Republic of Tatarstan on Friday.

Fischer will meet Tatarstan’s leader Rustam Minnikhanov and participate in the Tatarstan-Austrian business forum, Minnikhanov’s press service said.

He will also visit the Kazan University, which is one of the oldest in the country and was opened in 1804, to meet students and lecturers.

The Austrian president will also tour the Kazan Kremlin which is a UNESCO monument and has an Orthodox cathedral and a mosque close to each other to symbolize tolerance.

RT News line, May 20

Belarusian opposition begs Russia not to give money to Lukashenko regime

http://rt.com/politics/news-line/2011-05-20/#id10501

11:19

A Belarusian opposition leader has addressed Russian authorities, asking them to withdraw financial aid from President Lukashenko, Moskovsky Komsomolets daily writes. "Our economy is being turned into a joke, and so is our currency. I want to tell Russian diplomats: do not offer money to criminals. If you do it, we are going to have more hostages," said Nikolay Statkevich, one of Aleksandr Lukashenko’s rivals at the presidential election of December 2010. Statkevich, like dozens of other Belarusian opposition activists, is on trial for staging mass protests in Minsk on December 19. His statement comes just as Russia agreed to give Belarus a loan of $3.5 billion. During the

trial, Statkevich has also appealed to the West to abstain from economic co-operation with Lukashenko’s regime.

Russia Attaches Strings To $3 Billion Loan Offer To Belarus http://www.rferl.org/content/russia_belarus_loan_conditions/24180748.html

May 20, 2011 Russia has offered Belarus a desperately needed $3 billion loan, with significant conditions attached, amid talks between President Alyaksandr Lukashenka and Russian Prime Minister Vladimir Putin.

Russia's finance minister, Aleksei Kudrin, says a major condition will be attached to a possible three-year, $3 billion loan for Belarus in the form of Minsk selling off certain national assets.

At a meeting of government of former Soviet nations in the Belarusian capital on May 19, Kudrin said his country would decide early next month whether to approve the credit based in part on Minsk's commitment to privatization.

Kudrin made the comments after a meeting of leaders of former Soviet states, also attended by Putin.

Belarus is in a deep economic crisis, stemming largely from lavish public spending before controversial presidential election in December that led to a brutal crackdown on the opposition and further soured relations with the West.

Belarus's central bank has responded by lifting exchange-rate controls, which in turn sent the local currency plummeting.

Officially, the Belarusian ruble's exchange rate remains at roughly 3,000 to the U.S. dollar. On the black market, however, the Belarusian ruble reached a record low on May 19, trading at a reported 8,000-9,000 rubles to the dollar at some exchange booths.

That means the currency has lost a stunning two-thirds of its value over the past 10 days.

The Short And Long Terms

A Russian-backed loan could help stem the ruble's devastating losses, but over the long term, it could also cost Belarus some of its most valuable assets.

Russia is thought to be seeking to capitalize on Belarus's vulnerability by acquiring major stakes in energy assets such as Beltransgaz, the state-owned gas pipeline network that

supplies domestic homes and forwards the gas to Europe.

Kudrin said talks on Beltransgaz were imminent, and ominously said that Belarus is in no position to turn Russia down. Kudrin said if Belarus isn't able to raise up to $9 billion through selloffs, it would be forced to turn to the International Monetary Fund (IMF), which has loan conditions that Belarus is ill equipped to meet.

Russia and Belarus have been in talks for weeks, and Lukashenka had high hopes of clinching the badly-needed loan deal during this visit by Putin.

Speaking shortly after a telephone conversation with Russian President Dmitry Medvedev on May 18, he voiced confidence that Moscow would help rescue his nation's economy.

"Judging by all our negotiations, they are ready to react urgently if necessary," Lukashenka said. "This represents about $3.1 billion, provided we sign the relevant agreements with them."

Kudrin had echoed his remarks, saying an agreement was close and could be reached on May 19. But he denied the cash would come directly from Russia, which appears intent on weakening Lukashenka after years of subsidizing Belarus' Soviet-style economy in return for political loyalty and delivery of Russian oil to Europe.

Instead, Kudrin said the $3 billion loan would be issued by the Eurasian Economic Community (Eurasec), a Russia-dominated regional grouping that includes Belarus, Kazakhstan, Kyrgyzstan, and Tajikistan.

He added that the funds would be paid out over a three-year period and not right away, as Lukashenka had hoped.

Belarus's economic woes represent an opportunity for Russia to seize control of strategic Belarusian state firms. Analysts say Moscow has long been eyeing Belarus' two big oil refineries, its gas pipeline system, its main mobile phone provider and Belaruskali, a top potash producer.

Lukashenka does not have the luxury of choice. By jailing political opponents after the peaceful protests over his re-election, the authoritarian leader has perhaps wrecked his chances of receiving further aid from the IMF.

Gov’t reviewing Russia defense ties after expulsion http://www.jpost.com/DiplomacyAndPolitics/Article.aspx?id=221425

By YAAKOV KATZ AND HERB KEINON20/05/2011

Military attaché to Moscow Col. Vadim Leiderman was helping Israeli defense industries illegally obtain sensitive technology, report says.

The deportation of Israel’s military attaché to Moscow continued to raise concerns within the defense establishment on Thursday, amid calls for a review of military ties with Russia.

Col. Vadim Leiderman was arrested last Thursday by Russian security services and questioned about allegations that he had been spying on Israel’s behalf. He was told he had 48 hours to leave the country, and he returned to Israel last weekend, two months before the end of his term.While Israel denied that Leiderman had been involved in espionage, the Russian news agency Novosti reported on Thursday that the Israel Air Force officer had been helping Israeli defense industries illegally obtain sensitive technology.

“This deals entirely with industrial espionage – or rather, his overly active work on behalf of certain Israeli companies on the Russian market,” a Russian security source was quoted in the media as saying.

Russia’s Foreign Ministry issued a statement on Thursday saying Leiderman was caught “red-handed... receiving secret information from a Russian citizen.”

Israeli-Russian defense ties have improved in recent years, as Moscow canceled the delivery of the S300 Air Defense System to Iran, and in return Israel agreed to sell Russia the rights to manufacture unmanned aerial vehicles developed by Israel Aerospace Industries.

Israel is reviewing several Russian requests to buy Israeli military hardware, and it is possible that Leiderman’s deportation will have affect the deliberations.

Israeli drones sold so far to Russia – which issued a requirement document for unmanned aerial vehicles after its war with Georgia in 2008 – have been older models due to concerns the technology would be transferred to Arab countries.

Russia has expressed interest in Israel Aerospace Industries’s more advanced drones, such as the Heron, which can stay airborne for more than 24 hours and has a range of thousands of kilometers, as well as the ability to carry many types of payloads.

It is also interested in additional Israeli-made intelligence platforms, as well as command- and-control systems to upgrade communications within its military.

The IDF and the Defense Ministry are discussing whether they should send a new attaché to Moscow or keep the position empty to protest Leiderman’s expulsion.

“Everything is under consideration,” a senior defense official said on Thursday. “We will hold discussions over the coming days and hope to be able to put this behind us as soon as possible.”

The Foreign Ministry declined all comment.

A Russian diplomatic source said he did not believe the incident would permanently cloud relations between the countries because neither was looking for a fight.

“I think everyone wants to forget about this as fast as possible,” he said.The source, referring to Israeli security and diplomatic officials who were expelled from Ireland, Australia and Britain last year following the hit on top Hamas military commander Mahmoud al-Mabhouh in Dubai, said those steps did not damage Israel’s bilateral ties with the countries.

“This will be in the news for a couple of days, and then everyone will forget,” he said.

Russia supports candidacy of Grigory Marchenko to IMFhttp://english.ruvr.ru/2011/05/20/50551240.html

May 20, 2011 04:01 Moscow Time

Russia supports the candidacy of the head of the National Bank of Kazakhstan, Grigory Marchenko, to the post of Managing Director of the International Monetary Fund (IMF).

Consultations on the final candidate will be conducted with the BRIC countries (Brazil, Russia, India and China), said Finance Minister Alexei Kudrin who also called Marchenko a specialist at the international level whom he appreciates greatly.

In an election to include all countries of the IMF one candidate will need to be agreed upon. Mr. Kudrin said he felt very positive about Marchenko’s position.

May 20, 2011 10:58

S.Ossetia president's cousin killed in Vladikavkaz - police sourcehttp://www.interfax.com/newsinf.asp?id=245200

TSKHINVALI. May 20 (Interfax) - The South Ossetian president's cousin and the South Ossetian prime minister's chief bodyguard have been killed in Vladikavkaz, the South Ossetian Interior Ministry has reported.

"The persons killed in Vladikavkaz are the South Ossetian prime minister's chief bodyguard and President Eduard Kokoity's cousin, not the president's bodyguards, as was reported earlier," a source in the South Ossetian Interior Ministry told Interfax on Friday.

"The two men were killed in the heat of the moment," he said.

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11:22 20/05/2011Top News

Kokoity’s cousin shot down in quarrel at Vladikavkaz clubhttp://www.itar-tass.com/en/c32/146581.html

VLADIKAVKAZ, May 20 (Itar-Tass) —— South Ossetian President Eduard Kokoity’s cousin, who was the deputy chief of Kokoity’s guard and an officer of the state guard service, was shot down in a quarrel at a Vladikavkaz club, the press service of the North Ossetian Interior Ministry told Itar-Tass on Friday.

A suspected killer of Kokoity’s relative Alim Kabulov and of his 32-year-old fellow security guard Oleg Ikayev surrendered voluntarily in the Vladikavkaz police department, the press service said.

According to preliminary reports, the security guards behaved aggressively and threatened to kill a Vladikavkaz resident in a quarrel that sparked up in the club. The man seized a pistol APS from the hands of the security guard and gunned down both security guards.

The CCTV video records were confiscated from the crime scene. The eyewitnesses were interrogated.

South Ossetian president's bodyguards killed in Russiahttp://en.rian.ru/russia/20110520/164132350.html

11:55 20/05/2011

MOSCOW, May 20 (RIA Novosti) - Two bodyguards for the president of the breakaway Georgian republic of South Ossetia were shot dead on Friday morning in a night club in Russia's volatile North Caucasus region, police said.

Alim Kabulov, 30, and Oleg Ikaev were shot during an argument in the Retro nightclub in Vladikavkaz, the capital of the North Ossetia republic. Witnesses say the attacker grabbed a gun from one of the bodyguards and shot them both.

Kubilov was also the cousin of South Ossetian President Eduard Kokoity.

"Preliminary investigations have shown that both men were in Vladikavkaz on their own initiative. Their presence there was not connected to their official duties" the South Ossetian President's office said.

Police have arrested a 35-year-old resident of Vladikavkaz in connection with the shooting.

May 20, 2011 12:02

Two S. Ossetians killed by kickboxer after row at Vladikavkaz cafe – sourcehttp://www.interfax.com/newsinf.asp?id=245235

ROSTOV-ON-DON. May 20 (Interfax) - Two South Ossetia residents became victim of a row that erupted at a cafe in Vladikavkaz, a source in the republic's Interior Ministry told Interfax.

"The incident occurred in the early hours of this morning. A kickboxing champion, Albert Tszgoyev, and two residents from South Ossetia, who sat at a nearby table, began a row. The athlete tried to settle it by sending his opponents a bottle of champagne, but this had no effect, and one of them pointed a gun at the athlete. As a result, the conflict sparked with new vehemence, and Albert Tszigoyev hit the South Ossetians several times and then seized the pistol from one of them and shot them," the official said.

After the incident Tszgoyev went to the police and surrendered himself. The incident was captured by a CCTV camera.

An inquiry into the incident is under way.

It was reported earlier that the South Ossetian president's cousin and the South Ossetian prime minister's chief bodyguard have been killed in Vladikavkaz.

"The persons killed in Vladikavkaz are the South Ossetian prime minister's chief bodyguard and President Eduard Kokoity's cousin, not the president's bodyguards, as was reported earlier," a source in the South Ossetian Interior Ministry told Interfax on Friday.

"The two men were killed in the heat of the moment," he said.

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World Tourism Organization head calls on Russia to ease visa ruleshttp://en.rian.ru/russia/20110520/164129679.html

07:52 20/05/2011

The Russian government should review its strict visa policies and take more efforts to make travelling in Russia easier in order to attract more tourists, the head of the World Tourism Organization (UNWTO) said.

"Every country in the world has ability to adjust its procedures and regulations to encourage more visitors," Taleb Rifai said in an interview with RIA Novosti during the global tourism summit in Las Vegas. "There is need in Russia to make visiting Russia easier."

Russia in the last 5 to 7 years has become a major tourism player in the world, Rafai said.

"Everybody looks at Russia as at very valuable source market," the UNWTO head said. "Over 40 million of Russian travel every year but the more impressive figure is that of inbound into Russia as well. Last year Russian outbound market grew about 26 percent which is very impressive result," he said, adding that the growth was almost as big as in China.

While travelling around the world, he said he can "feel how everybody is interested in Russia now."

In order to make it easier for tourists to come to Russia, the country's government should act on two levels: "one is a level of visas, and the other is a level of airlines," Rafai said, adding that in his opinion, the first issue was more important than the second.

Rafai said he had visited Moscow in mid-March, at the same time with U.S. Vice President Joe Biden. During talks with Biden, Russian Prime Minister Vladimir Putin proposed scrapping visas between Russia and the United States.

"I was very happy to see the statement of Prime Minister Putin when he said: let's not only talk about free trade, let's talk about free visa regime," he said. "This is the attitude we like to see Russia leading in the world."

He also mentioned Turkey as an example of a country that has benefited from its decision to scrap visas for Russians. The number of Russian tourists increased threefold since Turkey announced the decision a couple of years ago, he said.

Rafai also called on Russian airlines to increase the number of flights to Russian cities other than Moscow and St. Petersburg and to lower flight prices.

He suggested that a lack of high-level touristic services and Russia's underdeveloped infrastructure was a problem, but not a major obstacle for travelling in the country.

The Russian government should take more efforts to advertise the country, its touristic opportunities, and especially its food, Rafai said, adding that Russian Borscht was the "best soup" he has ever eaten.

MOSCOW, May 20 (RIA Novosti, Maria Tabak)

Russia's Proton-M carrier rocket to launch U.S. satellite on Fridayhttp://en.rian.ru/russia/20110520/164128451.html

05:22 20/05/2011

Russia's Proton-M carrier rocket with the U.S. Telstar-14P communication satellite on board will be launched from the Baikonur space center in Kazakhstan late on Friday, a spokesman for Russian space agency Roscosmoc said.

"A launch of the Proton-M heavy class carrier rocket with the U.S. Telstar-14P communication satellite is planned for 11.15 p.m. Moscow time (19:15 GMT) on May 20," the spokesman said.

Telstar 14R is a commercial communication satellite produced by the U.S. Space Systems/Loral company for leading satellite operator Telesat. The satellite will strengthen the signal of the Estrela do Sul (Telstar 14) satellite and then replace it at its 63 degrees West orbital location.

The satellite has 46 active transponders with coverage in Latin America, the United States, the Gulf of Mexico, the northern and southern Caribbean Sea, and the northern and central Atlantic.

The 5-ton satellite is designed to operate for at least 15 years.

Friday's mission will be the first for Proton-M this year.

MOSCOW, May 20 (RIA Novosti)

Russia monitors radiation levels in Far East http://english.ruvr.ru/2011/05/20/50555674.html

May 20, 2011 10:00 Moscow Time

The expedition of the Russian Geographical Society that has monitored radiation levels in the Far East following the Fukushima plant accident aboard The Pavel Gordienko research vessel over the past month has returned to Vladivostok. Taking part were Members of the Russian Academy of Sciences, staff members of the Emergencies Ministry and of the Weather Forecasting Service. According to the expedition, radiation levels in the atmosphere in the Russian Far East are within normal. Radionuclides have only been registered off Japan’s coast. The situation is similar as regards the sea water, says the supervisor of studies Alexander Nikitin.

08:47 20/05/2011Top News

FE seas radiation monitoring expedition returns to Vladivostokhttp://www.itar-tass.com/en/c32/146489.html

VLADIVOSTOK, May 20 (Itar-Tass) —— The Russian Geographical Society expedition, which aboard the research vessel Pavel Gordiyenko monitored radiation in the Far East for a month, returned to Vladivostok on Friday.

The expedition of specialists from the Russian Academy of Sciences, research institutes, the Russian Emergencies Ministry and the hydro-meteorological service studied the situation in the Sea of Japan, the Sea of Okhotsk and the Bering Sea after the Fukushima-1 nuclear power plant disaster.

"If to speak about air radiation contamination, we did not detect radionuclides from Fukushima-1 in the Far East. We met them only near Japan. But there as well, their content is such that nothing threatens to the Far East. For the sea water, the situation is the same," scientific expedition head Alexander Nikitin assured.

The expedition started out from Vladivostok on April 22 and went across the Sea of Japan to the strait between the islands of Honshu and Hokkaido and then along the Kuril Islands to Petropavlovsk-Kamchatsky. On the route, the researchers took radiation measurements and collected meteorological information.

Scientists for two months will thoroughly analyse the gathered information and examine the samples. Then, supposedly in August, they will begin the second phase of the research to study the environment and Far Eastern marine life species.

A source at the Emergencies Ministry's regional centre noted that the radiation monitoring would continue. Currently, in the Sea of Japan it is being conducted by the sailing vessel Nadezhda, aboard which researchers and environmentalists are working. Their programme is coordinated with the Russian Geographical Society. The expedition

has already checked the radiation situation in the southern part of the Sea of Japan on its 1,500-mile route along the Korean Peninsula, across the Korean Strait, off the Tsushima Islands, along the western coast of Japan's Islands to the Wakasa Bay. The research is underway in the northern part of the Sea of Japan between the coasts of the Primorsky Territory and Sakhalin Island.

05:00 20/05/2011Russia

Russian Black Sea spa to welcome Japanese kids for rest http://www.itar-tass.com/en/c34/146436.html

KRASNODAR, May 20 (Itar-Tass) — The Black Sea spa of Anapa which is famous for its children’s health improvement and rehabilitation facilities, will welcome 270 children from earthquake and tsunami devastated Japan in August.

“We shall do everything possible so that Japanese children properly rest in Anapa, receive treatment and forget the horrors of the earthquake and tsunami which they experienced,” city Mayor Tatyana Yevsikova told Tass on Thursday.

Anapa has rehabilitated children from the area of Chernobyl nuclear disaster, after the devastating earthquake in Armenia, and from South Ossetia after the Georgian armed invasion.

Yevsikova said she asked local spa directors to consider welcoming Japanese children right after the news about the earthquake and tsunami broke out.

“I did not even have to convince them as everyone expressed readiness to render all possible assistance,” Yevsikova said.

Russian law center opens in Indiahttp://english.ruvr.ru/2011/05/20/50551127.html

May 20, 2011 03:35 Moscow Time

The public will be able to become acquainted with any of the 1.7 million legal documents of Russia which will be available at the center of public access to legal information of the Russian Federation, which opened in the Indian capital.

It will operate in the library of the Russian Center for Science and Culture in New Delhi.

Starting now Russian compatriots, Indian scientists, schoolchildren and students, or businessmen who plan to work in Russia, can access all legal acts of the Russian Federation.

These centers are to be updated automatically in the event of changes in the law.

RT News line, May 20

Billionaire banker quits job to join Putin’s Popular Fronthttp://rt.com/politics/news-line/2011-05-20/#id10503

11:54

Russian tycoon Aleksandr Lebedev, who heads the National Reserve Bank, had announced his decision to quit business activities and dedicate himself to public service. In particular, Lebedev, who is the leader of the anti-corruption Our Capital movement, wants to join the Popular Front, an organization recently established by Vladimir Putin. "I do not find it possible to continue in the banking business," said Lebedev, who has posted a video online, exposing Russian law enforcement’s schemes for laundering money through the country’s banks. "The Popular Front’s door is said to be open for everyone who wants to work for Russia’s benefit. Isn’t our movement’s fight against corruption beneficial for Russia?" the banker inquired.

Russian tycoon Lebedev joins Putin's People's Fronthttp://en.rian.ru/russia/20110520/164132443.html

12:06 20/05/2011

MOSCOW, May 20 (RIA Novosti) - The Our Capital movement headed by Russian businessman Alexander Lebedev has joined Prime Minister Vladimir Putin's recently created People's Front, the movement said on Friday.

"At a meeting of the Our Capital movement, a decision was taken to join the People's Front, which was set up by Prime Minister Vladimir Putin," Our Capital said in a statement.

Lebedev, the owner of Britain's Independent and Evening Standard newspapers, had been seen as something of an opposition figure in Russia. The billionaire is co-owner with

Mikhail Gorbachev of the liberal Novaya Gazeta paper, which is frequently critical of the Kremlin, and the offices of his National Reserve Bank were raided by masked police last November.

In announcing that he was signing up with Putin's new project, Lebedev said his movement has a lot of experience in anti-corruption investigation and may help in the fight against corruption.

"Our Capital was in tough opposition to the city's authorities when Yury Luzhkov was Moscow's mayor," Lebedev said. "Today we are ready not only to cooperate with the Moscow leadership but also to support the People's Front."

Long-serving Luzhkov, 74, was fired by President Dmitry Medvedev's on September 28 after weeks of speculation about his worsening relations with the Kremlin and his imminent resignation or dismissal. The new mayor, Sergei Sobyanin, took office October 21.

Putin first announced the creation of the All-Russia People's Front, whose name echoes popular communist movements, on May 6. It is intended to broaden the party's electoral base with "non-party people," including trade unions, NGOs, business associations and youth groups.

Some analysts see the front's creation as an attempt by Putin to boost his United Russia party's flagging popularity and head off a potentially damaging poor showing in parliamentary elections due in December.

PM Putin on Eurasian integrationhttp://english.ruvr.ru/2011/05/20/50549470.html

May 20, 2011 00:26 Moscow Time

By 2013, the countries of the Customs Union (Russia, Belarus, Kazakhstan) will prepare agreements for the deeper integration of the Eurasian Economic Union.

This was stated by Prime Minister Vladimir Putin at a meeting of the Eurasian Economic Community, Interstate Council in Minsk.

According to Prime Minister Vladimir Putin, the Eurasian Economic Union will provide for mutually beneficial cooperation with member countries and international and regional economic associations, including the European Union.

The strategic objective of Eurasian Economic Union is creating a common economic space within the Eurasian Community said Prime Minister Putin.

RT News line, May 20

Ingushetian leader praises release of Domodedovo bomber’s sisterhttp://rt.com/politics/news-line/2011-05-20/#id10497

10:48

The president of Ingushetia, Yunus-Bek Yevkurov, has praised the investigators’ decision to release the younger sister of the suicide bomber who struck at Moscow’s Domodedovo Airport in January, killing 36 people and injuring close to 200. He also warned parents to look after their children and not allow them to become engaged in terrorist groups, which are active in the North Caucasus. Fatima Yevloyeva, 16, and Akhmed Yevloyev, 23, were detained in February on suspicion of assisting their brother Magomed Yevloyev in carrying out the murderous attack. While Fatima has been released, Akhmed remains in custody.

Amnesty International Says Khodorkovsky Not A 'Prisoner Of Conscience' http://www.rferl.org/content/amnesty_international_khodorkovsky_prisoner_of_conscience/24180782.html

May 20, 2011 MOSCOW -- Amnesty International has ruled not to recognize former Russian oil-tycoon Mikhail Khodorkovsky and his associate Platon Lebedev as prisoners of conscience, RFE/RL's Russian Service reports.

In March, 45 prominent Russian writers, actors, and journalists sent an open letter to Amnesty International asking it to consider Khodorkovsky and Lebedev prisoners of conscience.

Khodorkovsky, the former Yukos oil giant chief, and Lebedev, were detained in 2003 and found guilty of tax evasion two years later, receiving eight-year sentences.

In December 2010, Khodorkovsky and Lebedev faced additional fraud charges and their prison terms were extended through 2017.

Opposition and human rights activists in Russia consider the case against Khodorkovsky and Lebedev to be politically motivated.

An author of the letter to Amnesty International, St. Petersburg writer Nina Katerli, harshly criticized the decision made by the human rights watchdog, calling it "a betrayal of not only Khodorkovsky but all political prisoners in Russia."

Katerli told RFE/RL on May 19 that Amnesty's decision is politically motivated as the "Western countries do not want to have problems with Russian authorities, with a Russia that has oil and gas."

Meanwhile, Tatyana Lokshina, a Moscow representative of the international rights group Human Rights Watch, told RFE/RL that Amnesty International considers all of those in jail who were imprisoned for defending their viewpoints by peaceful means to be prisoners of conscience.

Lokshina added that the case of Khodorkovsky and Lebedev might be politically motivated but it does not mean that the former oil tycoons are prisoners of conscience.

Denis Krivoshein, of Amnesty International's Moscow office, told RFE/RL that a prisoner of conscience is a person who was sentenced for his or her views or beliefs.

He said Amnesty International sometimes used the term "political prisoner" but it is not a status.

Krivoshein said anyone who might be involved in wrongdoing or even crimes, but whose case was launched only for political reasons, can be called a political prisoner but not a prisoner of conscience.

Mironov goes to lower househttp://www.themoscownews.com/politics/20110520/188681218.html

Source Tom Washington at 20/05/2011

Sergei Mironov, ousted from the speaker’s chair of the St Petersburg Federation Council on Wednesday, is taking up a new position in the lower house until December’s parliamentary elections.

Mironov, the power behind the throne in A Just Russia, a pro-Kremlin party, said eight State Duma deputies were willing to give up their seats for him.

However, Nikolai Levichev, head of A Just Russia's Duma faction, said it was not clear yet which of the Duma deputies were willing to give up their seats to Mironov.

“The procedure has been launched. It will take some time,” Levichev told RIA Novosti.

Mironov’s ouster follows his denunciation of St. Petersburg Governor Valentina Matviyenko and the ruling United Russia party, which dominates the national and regional legislatures.

He said he would step up his criticism of the political establishment now that he was no longer constrained by his status as upper house speaker.

Helicopter show in Moscow facilitates international cooperation http://english.peopledaily.com.cn/90001/90777/90853/7386779.html

14:23, May 20, 2011The fourth International Helicopter Industry Exhibition "HeliRussia 2011" opened Thursday with a number of sales already in the works.

The state-owned Russian Helicopters company revealed at the exibition that it will deliver the first batch of 15 Mil Mi-17 helicopters to India by the end of 2011 as a part of its 80 helicopter deal with India.

"There is probably another contract on sale of 59 more helicopters," said Dmitry Petrov, general director of Russian Helicopters.

Petrov also said the first AgustaWestland helicopter will be assembled in Russia with an Italian license in 2011.

"A plant to assemble AgustaWestland AW139 helicopters is under construction in Tomilino. We think we will start up the plant in August and assemble the first helicopter this year," he said.

During the first day of the show, Russian Helicopters also signed a contract with the French Turbomeca company. More than 40 helicopter engines made by Turbomeca will be supplied to Russia' s Ka-62 in coming years.

Some 161 companies from 16 countries have participated in the exhibition and displayed their helicopters, including the well-known Mi-38 and Ka-32. Swiss helicopter SKYe SH09 even made its European debut in Moscow.

Source: Xinhua

Russia wins cathedral 

French court awards title Agence France-Presse May 20, 2011 3:25 AM

Read more:

http://www.ottawacitizen.com/life/Russia+wins+cathedral/4814001/story.html#ixzz1MsMYdcIm

A French court Thursday rejected a claim by an Orthodox group that it owns a grand cathedral ceded to the Russian state in the French Riviera town of Nice.

The appeal court in nearby Aixen-Provence confirmed an earlier ruling that the Saint Nicolas Cathedral was Russian state property, according to a copy of its decision obtained by Agence France-Presse.

The cathedral was built by the last Czar, Nicolas II, in the early 1900s before the Russian Revolution. An Orthodox association that has occupied it since the 1920s claims ownership.

However, the court ruling said that "the state of the Russian Federation is entitled to retake possession" of the cathedral, which contains hundreds of precious icons, since the original lease expired in 2007.

The association's lawyer, Antoine Chatain, said it would take the case to the highest appeal court. He said the modern Russian state could not claim the cathedral since the Czar built it with his own money.

© Copyright (c) The Ottawa Citizen

20 May 2011, 10:01

Moscow authorities ban gay pride parade on May 28 http://www.interfax-religion.com/?act=news&div=8467

Moscow, May 20, Interfax - Moscow authorities have rejected an application from the mother of gay community leader Nikolay Alexeyev for staging a gay pride parade and a rally in support of tolerance towards and respect for the rights and freedoms of homosexual people in Russia.

"We have just received a call from the city hall and been told about its decision not to allow the rallies planned on May 28," Alexeyev told Interfax.

The decision was motivated by the fears of city officials that the gay rallies will prompt public protests and could lead to mass disturbances, he said.

"Today, as soon as we receive a formal reply, we will file a complaint with the Tverskoy

court of Moscow, which apparently will be considered along with our yesterday's complaint against the decision to ban the rallies in Bolotnaya Square," said the representative of Russia's sexual minorities.

Where is the 'reset'?http://english.ruvr.ru/2011/05/20/50511250.html

Valentin ZorinMay 20, 2011 10:00 Moscow Time

What the world has come to understand by ‘reset’ is the political course aimed at putting US-Russian relations on a new track, as coined by President Obama as he waived George W. Bush’s much beloved project of deploying American missiles in close proximity to Russia’s borders on the territory of Poland and the Czech Republic. That was a serious move, paving the way for settling a number of other, equally important issues, in relations between Russia and the United States.

The signing of the START 3 Treaty marked a major step in this direction. Good will and political honesty are needed if this reset is going to be more than a catchy phrase and become a full-blown political program.

However, a few days ago Washington and Bucharest announced plans to deploy a new missile base in Deveselu, in the south of Romania. This decision is at odds with the entire logic of the Russian-American missile defense dialogue which has been going on for months. Prime Minister Vladimir Putin expressed his disappointment in connection with the plans, saying that Russia had voiced its position concerning missile defense bases in Europe on many occasions and it seemed that Moscow had managed to come to accord with Washington that there would be no anti-missile facilities in Poland and the Czech Republic. And right out of the blue, Putin said, comes the news that the missiles will be deployed in other countries of Eastern Europe. Given the circumstances a good question to ask is: Where is the ‘reset’?

This is an unreasonable position for Washington and would be dangerous for Russian-US relations and for the US as such.

A total of 230 large military bases are currently stationed in 70 countries, not to mention 5,500 smaller permanent deployment bases for the US military, all beyond the borders of the US. These bases are home to more than 250,000 army soldiers. The Pentagon keeps silent on what it costs to maintain the bases. Along with poisoning international relations, new bases in Eastern Europe would create new problems and mildly speaking, would do nothing to reduce an astronomical 14-trillion dollar state debt which is threatening to draw the US economy into an abyss.

The ‘reset’ in bilateral relations which calls for abandoning claims for global supremacy is not a whim of the presidential team that came to power in the US three years ago but a political reality. Any deviation from these policies is unwise and fraught with danger.

Russian nuclear power plants are declared safehttp://rt.com/politics/press/kommersant/nuclear-power-reactors-safe/en/print/

Published: 20 May, 2011, 06:46Edited: 20 May, 2011, 06:51

Preliminary inspection results are available Vladimir Dzaguto

Safety inspections at Russia’s nuclear power plants have not revealed any serious problems. In future Russia’s nuclear power plant operator, Rosenergoatom, will be able to start the removal from operation of the old generating units with first-generation reactors at the Kola, Novovoronezh, and Bilibino nuclear power plants (NPP). But Deputy General Director, Vladimir Asmolov, notes that the old nuclear plants continue to be some of the best in the atomic energy industry. They will lose their economic value only after the construction of new nuclear power plants say experts.

The inspections of the plants have shown a high-degree of emergency preparedness, particularly among the staff, Deputy General Director of Rosenergoatom, Vladimir Asmolov, said yesterday. He is referring to the inspections conducted under the aegis of the World Association of Nuclear Operators (the organization of energy companies that own nuclear power plants). According to Mr. Asmolov, this conclusion is included in the draft document containing the inspection results. The senior executive added that he will insist on the publication of the report’s final draft, which could happen as soon as June 3.

However, the deputy head of Rosenergoatom did not exclude the possibility that, in future, a number of old power-generating units will be shut down. A month ago, while speaking about the conditions for the extension of the operating life of NPPs, the head of the Russian Technical Supervisory Authority (Rostekhnadzor), Nikolay Kutyin, said that it is necessary to bring the power-generating units “to a condition that is in line with the modern safety requirements.” According to him, the operating life of some of the units has been extended, and some of the units “are questionable.” In particular, Rostekhnadzor gave permission to operate one of the power-generating units “without going to full capacity.”

Rostekhnadzor has not made a decision to shut down any of the nuclear power plants’ power-generating units, Vladimir Asmolov said yesterday. Nevertheless, in his opinion, terminating the operation of units with the first-generation VVER-440 reactors is

possible. In Russia these reactors are running at the Kola and Novovoronezh nuclear power plants (NVAES). At the NVAES two units with VVER-440 reactors (the first of their kind) have already been shut down. Vladimir Asmolov explained that the first and second units of the Kola NPP and the third and fourth units of the Novovoronezh NPP are part of the first generation. But currently these are Russia’s best power-generating units, he noted. The same unit, which functions in Finland, constantly makes it onto list the top-ten generation units in the world, added the deputy head of Rosenergoatom.

The Bilibino NPP in Chukotka was named by Vladimir Asmolov as another candidate for closure. This experimental nuclear plant has four generation units with low-capacity EGP-6 reactors, the first of which was built in 1974; the operation life of the units has already been extended in the past. Rosenergoatom’s executive did not exclude the possibility that the decision of extension may be revised. The main challenge with closing of this NPP, says Mr. Asmolov, is the fact that “the removal of fuel alone costs as much as the plant itself”. Moreover, he noted that it is possible to shut down the old research reactors, such as VK-50 at the Research Institute of Atomic Reactors in Dimitrovgrad.

Extending the operating life of power-generating units at NPPs is a worldwide practice, which requires an inspection of the reactors and confirmation that they do not pose a threat. For example, the domestic VVER-1000 reactors (located at the NVAES, Balakovo, Kalininskaya, and Rostov NPPs) were initially designed for a lifespan of 30 years, but after expiration their licenses were extended. The use of the first two power generating units of the Kola NPP, the third and fourth units of the NVAES, and the Bilibino plant have also already been extended. Two more VVER-440 units at the Kola station are awaiting extension of operating life. Note that the in-service 30-year term of the third generation unit at the Kola NPP runs out in 2011-2012, and the question regarding the extension of its operation needs to be resolved today.

The Director of the Institute for Nuclear Safety and Development, Leonid Bolshov, says that a decision regarding closure needs to be made based on the results of serious analysis. He also did not rule out that, since the accident at the Fukushima-1 nuclear power plant, it will be more difficult to continue extending the operating life of old power-generating units. The editor-in-chief of Atomino.ru, Aleksandr Uvarov, believes that there is no need to shut down old generation units in the upcoming months or even in one to two years, because they have been subject to some serious compensatory measures to improve safety. But the expert adds that with the introduction of new NPPs and with the advent of replacement capacity, it would be economically practical to shut down some of the old power generating units.

The Vienna dozenhttp://rt.com/politics/press/rossijskaya-gazeta/austria-medvedev-president-fischer/en/

Published: 20 May, 2011, 05:02Edited: 20 May, 2011, 06:50

Dmitry Medvedev holds talks with the Austrian president Ekaterina Vlasova, Konstantin Zavrazhin

On Thursday, the Russian president hosted his Austrian counterpart, Heinz Fischer, in Moscow. The results were a productive dialogue, an invitation to visit Austria, signed agreements – and hope.

Despite the fact that the main topic of the talks was bilateral cooperation, Austrian journalists, apparently “inspired” by their Russian counterparts, continued the main theme of the Russian president’s big press conference: could we hope that after the 2012 presidential election Medvedev would be the direct partner of the president of Austria? And again, Medvedev, like any good lawyer or actor, showed how well he can hold a pause: “I hope you are familiar with the content of yesterday’s discussion with reporters. I clearly explained my position on what decisions should be announced and when. If by asking your question, you are asking whether or not you can hope, then, you absolutely can hope.” As for the remaining topics of discussion, Medvedev’s answers were clear and concrete. Medvedev and Fischer discussed the Russian-EU relations, the investment climate, and the situation in North Africa.

Today, Austria is Russia’s 12th largest foreign investor. The “dozenth” place does not suit Vienna or Moscow, who are ready to increase the pace of cooperation. Medvedev hopes that an improvement in the investment climate will help in this regard and bring Russia to the more developed European states. “We recognize the problems. I will openly say that we are not satisfied with everything, with the way the situation is unfolding in the investment sphere,” acknowledged the head of state. Medvedev believes that the “creation of a normal investment climate is the primary goal; everything else Russia already has.” In the way of tackling “the primary goal”, according to the president, are a number of obstacles. The main ones are corruption and the shortcomings of the legal system, as well as “administrative procedures that create problems for our partners.”

Medvedev is also dissatisfied with the pace at which the fight against corruption is taking place, but he does acknowledge that “we have managed to establish a legal framework and to teach (officials – Rossiyskaya Gazeta) a few things.” Civil servants must report income, law enforcement agencies are learning to correctly enforce anti-corruption laws, but the laws themselves call for improvement. “However, that does not mean that we do not have them. The problem is not with the quality of the laws, but in the way they are applied,” noted the president. Fischer reacted to Russia’s problems with understanding and cited the results of international studies: “There isn’t a single country that is unfamiliar with the word ‘corruption’.” He noted that Austrian anti-corruption legislation also needs improvement.

Medvedev and Fischer have agreed on a number of economic sectors for cooperation. The Austrian president suggested applying the experience of Austrian medical and

automotive firms in Russia. “Technologies in the energy and transport sectors are extremely important. We have some fairly advanced relations in the field of energy efficiency with a number of European states, and we would like to develop them with Austria as well,” the Russian leader said. Moreover, Russia“would like to study Austria’s experience in the field of green energy and sign some relevant agreements.” He also invited the Austrian partners to participate in Russia’s large-scale projects, including his favorite brainchild, the SkolkovoInnovationCenter. “An entire set of opportunities has been laid out on the table before our partners. We will be happy in their involvement,” stressed Medvedev. Fischer, in turn, wished Russians good health: “In Austria, many medical technologies have been developed, and we are able to offer them to Russian hospitals.”

The two presidents also discussed international affairs. Medvedev stressed the importance of using the new “window of opportunity” in regulating the situation in the Middle East: “The thing is, the dramatic changes that have occurred this year in the Middle East and North Africa can, on the one hand, encourage the development of these states, but on the other hand they could create additional problems in international affairs and the situation in the continent. The situation in Libya can be settled only by peaceful means, through renunciation of the use of military force by both sides,” stressed Medvedev. During a closed-door discussion with Fischer, Medvedev suggested the possibility of holding a conference on a Middle East settlement.

The leaders of the two states signed several documents at the end of the talks. The main agreement was the Declaration of Partnership for Modernization, supplemented by a joint program of action for the development of Russian-Austrian cooperation. Also, in the framework of the visit, agreements were signed on scientific-technical cooperation and collaboration in the field of competition policy. Moscow and Vienna stressed their “readiness to constructively participate in talks aimed at the completion of the dialogue on the abolition of the visa regime between the RF and the European Union.” The leaders believe that “by eliminating visa barriers, economic and social collaboration will, both on the bilateral level and between the RF and the EU, become more efficient.”Russia and Austria spoke in support of “a successful completion of the talks on a new framework agreement between the RF and the EU that would reflect the strategic nature of their relations.”

Thursday, May. 19, 2011

Medvedev's Challenge to Putin: Oh, Never Mindhttp://www.time.com/time/world/article/0,8599,2072675,00.html

By Simon Shuster / Moscow

It was impossible to pinpoint the exact moment of the transformation, but by the time Russian President Dmitri Medvedev left the podium after his first big press conference on Wednesday, he had morphed into a lame duck. The problem was not so much that he failed to state his plans for re-election next year, but, as some members of his own circle now admit, the President seemed to be courting a constituency of just one man — Prime Minister Vladimir Putin, who will alone decide whether Medvedev stays or goes.

That is not how the dynamic between them has recently been judged. Perhaps naively, many of Medvedev's supporters had started to believe that the President was not only an independent leader but a possible rival of Putin in the presidential race. They based this view on a series of increasingly heated spats between them, with the fiercest one coming on March 21, when Putin lashed out at the West for the bombing of Libya. (Watch a viral video of Medvedev.)

That same day, Medvedev donned a leather jacket with the emblem "Commander in Chief" and went before the cameras to defend the opposite point of view. Top ministers quickly fell into line behind him, and a rift seemed to show in the political elites as officials began listing toward one or the other leader. By that time, members of Medvedev's camp had already made their vision of the 2012 vote clear. Igor Yurgens, a presidential adviser and the chairman of a think tank headed by Medvedev, said in January that Putin should not even run, as "everyone is tired of looking at the same face."

But Evgeny Gontmakher, a board member at Medvedev's think tank, the Institute of Contemporary Development, now says the game is over. "There was this idea that Medvedev could land out of thin air and introduce American notions of competition into the Russian political system. This was a silly idea," he tells TIME. "Medvedev's goals and plans have faced very serious limitations that were made clear to him recently." He declines to elaborate on how exactly they had been made clear, saying only that "the limitations are linked to the fact that [Medvedev] has no political force, no party that he can rely on."

Putin on the other hand has a sound base as chairman of the United Russia party, which dominates the bureaucracy and virtually every elected body in the country. "Whatever Putin says, United Russia will do," says Gontmakher. "If Putin tells them to support Medvedev [in the elections], then that is what it will do. If Putin says don't, then Medvedev will simply be ousted. That is the reality."

In looking for his own political base, Medvedev could have turned to Fair Russia, a pro-Kremlin party which holds a sizable minority in both houses of Russia's parliament. Last year, a few of its leading members even created an alliance of bureaucrats and politicians to cheer on Medvedev's policies, offering themselves as a base of support. But Medvedev refused to have any ties with that group, and on Wednesday, the leader of Fair Russia, Sergei Mironov, was stripped of his seat as speaker of the upper house of parliament, robbing the party of its highest political office. Bizarrely, Medvedev endorsed the move during Wednesday's press conference, saying it was "nothing out of the ordinary."

"Sooner or later, every statesman's career comes to an end, and that also includes the president," Medvedev told the 800 journalists in attendance. It was a tone of defeatism not to be heard from Putin heading into this election cycle. (See pictures of Putin and Medvedev's ski vacation.)

On May 6, the Prime Minister re-asserted his role inside United Russia by creating what he called the All-Russian People's Front, an alliance of labor unions and civil society groups meant to shore up support for the party and, by association, for Putin himself. It was an obvious pre-election maneuver, and at Wednesday's press conference, everyone was waiting for Medvedev to make some retort, to announce his own political movement or suggest some counterweight to United Russia's dominance. There was nothing of the sort.

"Even the most modest expectations were let down," says Masha Lipman, a political analyst in Moscow. Not only was Medvedev's rhetoric dry, Lipman says, but it seemed to have been purged of any challenges to Putin. Even his position on Libya was brought closer into line with the Prime Minister's, and when he was asked about his intention to run for re-election, Medvedev rattled off a series of almost meaningless platitudes — "we do our work in order to meet our goals" — before stating that the decision on his candidacy would be made "in fairly short order."

But judging by Thursday's morning headlines, the Russian press was quick to make the decision for him. The financial newspaper RBK Daily ran a lead story saying that investors — the bookmakers of global politics — had placed their bets on Putin to return to the presidency in 2012, while the Vedomosti daily proclaimed in a headline, "Medvedev held his first press conference as if it were his last."

Over the next few months, Russians will be looking for the official announcement of United Russia's candidate for the 2012 vote, and Gontmakher says it will likely come soon, even if it now seems like a formality. "In Russia a president cannot be allowed to be a lame duck for long. It creates too much confusion among the elites.... So this has to be resolved." It is still possible that Medvedev will stay on as president, but only if Putin endorses him the way he did in 2008, when he ceded the Kremlin to Medvedev. In any case, one thing is already clear: the decision will be up to Putin.

Governance May 19, 2011, 5:00PM EST

Fathers, Sons, and Russian Power Gameshttp://www.businessweek.com/magazine/content/11_22/b4230014956456.htm

The sons of Putin allies land in key positions at state companies, to Medvedev's chagrin

By Henry Meyer and Ilya Arkhipov

In early April, Russian President Dmitry Medvedev announced that top government officials—many of them allies of Prime Minister Vladimir Putin—had to relinquish their board seats at Russia's state-controlled companies. It seemed like a shrewd way to improve corporate governance in one stroke. Putin, the former President and possible candidate for the presidency in 2012, said nothing in public about the order, which the Prime Minister has to carry out.

The friends of Putin, it turns out, have adult children who can fill in for their fathers and their allies. Sergei Ivanov is Deputy Prime Minister under Putin and a member of Putin's inner circle. His son, Sergei Jr., was until April a top executive at Gazprombank, an arm of the state-controlled energy giant. Sergei Jr. is now Putin's candidate to replace First Deputy Prime Minister Viktor Zubkov as head of the Russian Agricultural Bank's supervisory board. Zubkov, another close associate of Putin's, was one of the eight top officials ordered by Medvedev to vacate their board seats.

The Kremlin is "not satisfied" with all the candidates to replace the eight top officials in the 17 board positions, says Arkady Dvorkovich, the President's economic aide. He declined to endorse Ivanov's appointment. According to Putin's spokesman, Dmitry Peskov, however, Sergei Jr.'s appointment has been approved by Putin's Cabinet. All the offspring mentioned in this story declined to comment.

The Ivanov episode is a reminder of how close-knit the ruling class is. "There are 50 families that rule Russia," says Marina Litvinovich, a political activist who formed a think tank that reports on family connections in the power structure. "These are families of Putin administration officials, Putin's friends, presidential administration officials, and some businessmen."

Putin's move angers Alexei Navalny, a minority shareholder activist who campaigns for better governance at state companies. "This problem is extremely serious because it creates a feudal regime," says Navalny. "I'm skeptical that this decision to remove officials from state company boards will have an effect because all these companies under state control are turning into the personal property of these officials through their children." Navalny himself is under investigation for allegedly causing losses at a state company, a probe he says is meant to discredit him.

At the Russian Agricultural Bank, the 31-year-old Ivanov would be working with Chief Executive Officer Dmitry Patrushev, whose father leads Russia's Security Council. The older Patrushev once worked as a director of the Federal Security Service (FSB), the main successor agency to the Soviet-era KGB, while Sergei Ivanov Sr. was a colleague of Putin in the KGB itself. Sergei Jr.'s brother, Alexander, is the head of structured and

credit financing at Vnesheconombank, a state-controlled development bank. Their father sits on the bank's supervisory board.

There are other examples. The son of the head of the FSB holds a top job at Russia's No. 2 bank. Pyotr Fradkov, the deputy chairman of Vnesheconombank, is the son of the head of the Foreign Intelligence Service, which replaced the KGB's foreign intelligence department.

Medvedev, a 45-year-old former corporate lawyer, is trying to improve business practices and turn Moscow into an international financial hub. If he could weaken the 50-family structure, he would push Russia further toward a more transparent system that would appeal to investors, says Litvinovich. Putin spokesman Peskov says the number of state company officials related to government members is small and no worse than elsewhere. Besides, he adds, "They all have to prove themselves from a professional point of view."

Medvedev has powerful associates, too. Dvorkovich's wife, Zumrud Rustamova, sits on the board of state-run Sheremetyevo airport and is an executive at Polymetal, a gold producer. Rustamova says she earned her status through "hard work and luck" and built her career before she met her husband.

The President's struggle to block Ivanov's appointment is an indication of the limits to his authority, says Alexei Mukhin, director of the Moscow-based Center for Political Information. "Dmitry Medvedev, according to the constitution, is an independent politician, but he doesn't have real autonomous power," he says. Putin, who stepped down as President in 2008 because of a ban on serving more than two consecutive terms, earlier this month formed a nationwide coalition of supporters who will field candidates in December parliamentary elections. Both he and Medvedev say they may run for President.

The sons of the elite are not necessarily ill qualified. Sergei Ivanov Jr. is "a smart guy, and he's got a good track record," says Michael Kart, a managing partner at Moscow-based Marshall Spectrum, an emerging markets equity manager. Yet Kart adds: "It would definitely be a great advantage to promote somebody else outside of the inner circle. A state company shouldn't be regarded as a family business."

Russian politicians' clans play a role similar to those in Asia, Africa, and Latin America, says Yelena Panfilova, the head of Berlin-based Transparency International's local office. One comparison, Panfilova says, is Indonesia under Suharto, who ruled for three decades until street protests ousted him in 1998 and whose family had extensive business activities. In Russia, the practice extends to the regions, where children of governors often dominate local enterprises. Says Panfilova: "It's a serious problem, and it's very harmful to the economy."

The bottom line: The sons of Putin's allies have started to assume important positions in Russia's corporate power structure.

Meyer is a reporter for Bloomberg News. Arkhipov is a reporter for Bloomberg News.

Russian nationalists, leftists and Chechens debate future of North CaucasusYesterday at 21:32 | Paul Goble At a roundtable organized by the Moscow Institute of Innovative Development, Russian nationalists, members of leftist groups, and representatives of the Chechen Republic joined in a lively debate about what each group sees as the future relationship of the North Caucasus and the Russian Federation.

The participants were unusually blunt. Dmitry Bakharev, the head of the Slavic Force Movement, opened the debate by arguing that “over the course of centuries, [his] ancestors had assembled these lands with their blood, worked and defended them,” pointedly asking “and what contribution to the general development of Russia has been made by the Chechen people?”

Arguing that the Russians, not the Soviets had defeated Hitler, Bakharev enquired “how can [we] build relations if we know about the disappearance of several dozen Russians in Grozny, about the bestial murders of Russian soldiers in Chechnya? [and] ifin Moscow, there is a street named for a man who called for killing as many Russians as possible.

Zelimkhan Musayev, the Chechen minister for foreign ties, nationality policy, press and information, disputed Bakharev’s argument. He argued that the Soviet Union won in World War II “only thanks to the trust among peoples.” Moreover, he pointed out, “the Caucasus war did not last a century; it lasted only 25 years”.

Moreover, the Chechen minister continued, “Russian General Yermolov “who pacified the Caucasus destroyed Chechen settlements completely” because that struggle “was not a war of Russians and Chechens; it was a war of two civilizations. But most strikingly, Musayev defended Chechen actions since 1991.

The Chechens Have “nothing to be ashamed of,” he said. “Akhmad Kadyrov with arms in his hands defended his people, and the war itself was a ‘bestial provocation’ of the Yeltsin-Dudayev corrupt regime.” Moreover, it often happened that “Chechen women covered Russian soldiers with their bodies, thus saving the soldiers from shooting.”

What his opponent is doing, Musayev suggested, is seeking to “justify his own excesses by searching for the bad in his opponent. We are prepared for positive dialogue. The problem is that unfortunately, the Russian Federation does not have a national ideology.” Instead, what is on offer is extreme nationalism and chauvinism.

Another Chechen, Professor Yavus Akhmadov turned on the nationalists and said that “You as people who did not pass through the war certainly do not understand one thing. You think that it can’t get worse than it is and that it is necessary to take power and so on.

We also thought that way when we supported the first revolt against Dudayev’s regime.”

“I assure you,” Akhmadov said, if you act in the same way, “it will get worse.”

According to Akhmadov, most Chechens “identify themselves as citizens of Russia. But they are supporters of a state of a ‘feudal-imperial type,’ a strong power, a strong president, and a strong Russia.”

Vladimir Lakeyev, the first secretary of the Moscow city committee of the KPRF and a representative of leftist groups, Novy region reported, “tried” to bridge the gap by arguing that what matters is not nationality but the structure of the state. “To a complete degree, friendship of the peoples will work only under socialism,” he added.

Aleksandr Batov, the coordinator of leftist ROT-Front, argued that “in Chechnya there is only the appearance of peace” and that “in other national regions there is the basis for the renewal of a war,” with new outbreaks of “separatism and nationalism because conflicts like Chechnya were “profitable for [leaders on] both sides” although deadly for the people.

“Nationalism, the establishment of an [ethnic] Russian state, and the separation of the Caucasus are a path to nowhere,” Batov argued. That is because there are in reality only two nationalities: “the nationality of honest people who toil honestly and the nationality of thieves,k bandits and the like who now rule in our country.”

Another nationalist speaker, however, took a different view. Aleksandr Belov who had led the now-banned Movement Against Illegal Immigration (DPNI) said that he “personally did not feel any antipathy toward Chechens” and that “none of the Russian nationalists consider the Chechens as anything but fully valued people.”

But Belov said, “objective reality is such that Russian society experiences a definite fear of the Chechens and the majority of Russians do not associate Chechenya with Russia.” Given that and the absence of assimilation, ‘how should the Russian and Chechen peoples exist together?” The answer is that the divide between them is too great to bridge.

Rustam Tapayev, the president of the Union of Chechen Youth, called on the Russian nationalists to provide evidence that they were seeking a resolution. “Otherwise, in his words, all will conceive them as an organization which ‘exists while there is a conflict … Bothers can argue but they need to find common aspects and not disagreements.

Vladimir Tor, the representative of the Russian Social Movement (ROD), dissented from the idea that one could call “brothers” all those at the table But he suggested that did not mean that there could not be a discussion. However, he insisted that the Chechens must explain why they deserve many times the subsidies from Moscow that Russians get.

He said that was the most important question that had to be answered, although he suggested that two others – the bad behavior of Chechens in Russian cities and “the

genocide of ethnic Russian in the Caucasus” – require resolution as well. And he reminded the group that “genocide is a crime which does not have a statute of limitations.”

That prompted a response from Akhmadov. He suggested that “not a single kopeck or ruble has Chechnya received at the expense of the Russian or Khanty-Mansiisk land. Everyone knows the expression of our president [Ramzan Kadyrov]: “Give us the possibility to pumpt oil and we won’t need money from the federal budget.”

After a sharp exchange on these and other issues, Viktor Militaryev, the coordinator of ROD, said there were two additional problems which had to be discussed: “the monopolization of small and mid-sized business by the peoples of the Caucaus” and “the protection of ‘their own’ by national diasporas.”

But Denis Zommer, a leader of the Union of Communist Youth, summed up the meeting with what may be a common view: “It is wrong to dance the lezginka at the tomb of the unknown soldier, but it is also wrong to drink beer there.” With that, the groups appear to have agreed to meet again, next time in Grozny.

Paul Goble is a longtime specialist on ethnic and religious questions in Eurasia, he can be contacted directly at paul.goble@gmail.com. You can read all his blog entries at http://windowoneurasia.blogspot.com/

Read more: http://www.kyivpost.com/news/opinion/op_ed/detail/104819/#ixzz1MsANgDMv

National Economic Trends

May 20, 2011 10:18

Russia not planning to place more Eurobonds in any currencies this year - Storchak (Part 2)http://www.interfax.com/newsinf.asp?id=245185

ASTANA. May 20 (Interfax) - Russia does not plan to place any more Eurobonds denominated in rubles or other currencies this year, Deputy Finance Minister Sergei Storchak told journalists.

"No, not for now," Storchak said as to whether Russia would place more ruble-denominated Eurobonds this year.

Regarding Eurobonds denominated in other currencies, Storchak said that no such issues are planned. "The minister has said that we will not be borrowing [on foreign markets]," he said. The Finance Ministry does not consider issuing ruble-denominated Eurobonds as foreign borrowing, he added.

"That's correct. We will place additionally within the OFZ curve," he said.

Russia has placed 50 billion rubles worth of additional Eurobonds, he said, the first time Eurobond placement in the national currency has exceeded initial issue volume (40 billion rubles).

Asked if issuing ruble-denominated Eurobonds was a higher priority for Russian than issuing in other currencies down the road, Storchak said that would likely not be the case. "I don't think so. The priority is always diversification [in borrowing]," he said.

The creation of a Russian Financial Agency is still on the agenda, and the Finance Ministry and government are working through the legal details, he said. "This has not been removed from the agenda. We are still working on the legal details," Storchak said.

Central Bank sells Sperbank share capitalhttp://themoscownews.com/business/20110520/188681151.html

Source Tom Washington at 20/05/2011

 

Prime Minister Putin has approved the planned sale of 7.58 per cent of Sberbank’s share capital by the Central Bank of Russia. The stake reduces the bank’s stake to 50 per cent plus one share, the government announced on Thursday.

The order was signed on May 17, a statement on the government website said, RIA Novosti reported.

The selloff of the 7.58 per cent stake in Sberbank is part of a three-year privatisation plan of the state savings bank, which is the largest bank in Russia and accounts for around half of private deposits in the country.

The bank’s management has repeatedly said that the privatisation process will start in the autumn.

State's NCSP stake soon to be auctioned?

http://www.bne.eu/dispatch_text15389

Renaissance CapitalMay 20, 2011

Event: Prime-TASS yesterday (19 May) reported that the Russian government's 20% stake in Novorossiysk Commercial Sea Port (NCSP) will in the near future be put up for auction. NCSP's stake is included in the Russian 2011 state privatisation programme and will be put up for sale after the stake valuation is over, according to Russian State Property Fund (Rosimushchestvo) Head Yuri Petrov.

Action: We think this sale could be a major driver for the stock.

Rationale: The auction of the stake (announced in 2010) was previously scheduled for 1Q11 but was delayed. We think the auction could be held this year, although until there is an official announcement on the exact dates, uncertainty will persist. We believe that among the potential buyers are the NCSP shareholders Transneft and Summa Capital. According to Russian Railways (RZD) CEO Vladimir Yakunin, RZD will not participate in the auction (despite previously expressing an interest). In our view, a transfer of control, from the government to a large shareholder, will be supportive for NCSP, as it will increase shareholder incentive to help the port succeed and the stock appreciate.

Ivan Kim

Kremlin seeks bankers to help build Russia's infrastructure

http://www.bne.eu/dispatch_text15389

bneMay 20, 2011

The Kremlin is looking to hire as many as 30 investment bankers to run its new private equity fund, reports Bloomberg, as the PR drive to attract foreign investors to jump into bed with the state to help build Russia's infrastructure continues.

The fund, announced by President Dmitry Medvedev in January in a bid to encourage foreign investment and help reduce the economy's dependence on raw materials, will begin hiring in June, unnamed sources told the news agency. The state plans to put $10bn into the fund - which will be managed by state development bank VEB - over the next five years, with hopes that foreign buyout firms, pensions managers and sovereign wealth funds will pump in another $40bn, said Kirill Dmitriev, who was appointed to head the project on Wednesday.

"Foreign funds with several trillion dollars under management are hovering and considering making investment in Russian private equity," Dmitriev claimed, adding that names would be released in June. The fund will buy minority stakes in companies and offer the same share to investors from "a club," Dmitriev said. Investors will not be obliged to take part and can do so on a case-by-case basis.

Russia's government is finding it difficult to lure international private-equity firms, even as investors increasingly look to emerging markets. Russian private-equity managers raised $1.4bn over the last three years, the least among the Bric countries, but are seeking $4bn this year and next, according to the Washington-based Emerging Markets Private Equity Association. The figure for China in the same period was $28.6bn, followed by $15bn for India and $5bn for Brazil.

Dmitriev, who said the fund will focus on infrastructure, telecommunications, pharmaceuticals and aerospace, said one of the main goals of the fund is to reduce the "unfair perception" of Russia as risky. "Experienced investors understand that the Russian economy is growing very rapidly and can provide very higher returns," he claimed.

"There are major opportunities to modernize infrastructure and some very big checks will be written," Dmitreiv said. "Toll roads, ports, bridges need to be built and these might be more interesting for sovereign funds and pension funds who have a longer investment horizon."

Prime Minister Vladimir Putin, who is seeking investors to join the fund, yesterday introduced Dmitriev to representatives from Goldman Sachs, Blackstone Group LP (BX), Abu Dhabi Investment Authority and other funds from the US, Europe, Asia and the Middle East, Dmitry Peskov, the premier's spokesman, said.

Business, Energy or Environmental regulations or discussions

Kovalchuk’s Media Group and RTL May Swap Assets, Kommersant Sayshttp://www.bloomberg.com/news/2011-05-20/kovalchuk-s-media-group-and-rtl-may-swap-assets-kommersant-says.html

By Marina Sysoyeva - May 20, 2011 6:39 AM GMT+0200

National Media Group, controlled by Russian billionaire Yury Kovalchuk, and Luxembourg-based RTL Group are close to completing an asset-swap transaction, Kommersant reported, citing an unidentified person familiar with the matter.

National Media may get 30 percent of Russia’s REN TV, making it the channel’s sole owner; RTL may get 7.5 percent of National Media’s shares and a place on its board, the newspaper said. An RTL representative declined to comment and National Media’s general director, Alexander Ordzhonikidze, neither confirmed nor denied the information about the transaction, Kommersant said.

To contact the reporter on this story: Marina Sysoyeva in Moscow msysoyeva@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

Polyus Gold may merge with a global player in 2011http://in.reuters.com/article/2011/05/20/gold-polyus-merger-idINLDE74J0GE20110520

1:39pm IST

MOSCOW, May 20 (Reuters) - Russia's biggest gold producer Polyus Gold (PLZL.MM: Quote, Profile, Research) (PLZLq.L: Quote, Profile, Research) may merge until the end of 2011 with a global gold market player, the company's co-owner said on Friday.

"It (the deal) is possible until the end of the year," Mikhail Prokhorov told reporters. He added that the short list of possible candidates has already been defined. (Reporting by Polina Devitt, writing by Aleksandras Budrys; Editing by Andrey Ostroukh)

Russia's TMK recommends 0.85 rbl/shr dividendhttp://af.reuters.com/article/metalsNews/idAFLDE74J06N20110520

Fri May 20, 2011 6:25am GMT

MOSCOW May 20 (Reuters) - The board of TMK (TRMK.MM), Russia's largest pipe producer for the oil and gas sector, recommended on Friday a dividend of 0.85 roubles ($0.03) per ordinary share from 2010 net profit.

The total payout would amount to 796.95 million roubles ($28.48 million) and is to be approved by the company's annual shareholder meeting on June 28.

TMK suspended dividends during the downturn in order to preserve cash. (Writing by Andrey Ostroukh; Editing by Maria Kiselyova) ($1=27.98 Rouble)

MAY 20, 2011, 2:29 A.M. ET

HMV To Sell Waterstone's To A&NN Capital Fund For GBP53M http://online.wsj.com/article/BT-CO-20110520-701237.html

LONDON (Dow Jones)--U.K. entertainment retailer HMV Group PLC (HMV.LN) said Friday it has conditionally agreed to sell its Waterstone's bookstore business for GBP53 million in cash to A&NN Capital Fund Management Ltd., a company controlled by a trust in which Russian billionaire Alexander Mamut has an interest.

The sale of Waterstone's will enable HMV management to reduce its borrowing requirements in the short term in order to achieve a satisfactory refinancing, HMV said. It will also enable the company to focus more closely on executing the turnaround at HMV and continuing to develop the HMV customer offering, it added.

The disposal is conditional on the retailer getting approval from shareholders, as well as from the pension trustee, the Pensions Regulator, and consent from its lending banks including a renegotiation of the group's lending facilities.

HMV expects completion by the end of June.

Waterstone's operates 296 stores across the U.K. and Ireland, employing 4,500 people. It generated revenue of GBP514 million and trading profit before exceptional items of GBP2.8 million in the 52 weeks ended April 24, 2010. Waterstone's had gross assets of GBP283 million at the same date.

HMV also gave a trading update in which it said it expects group pretax profit before exceptional items for fiscal 2011 to be around GBP28.5 million. Net debt at the April 30 fiscal year end is expected to be around GBP170 million.

Shares closed Thursday at 10 pence.

-By Iain Packham, Dow Jones Newswires; 44-20-7842-9269; iain.packham@dowjones.com

Yandex plays down Russian roots for IPOhttp://www.ft.com/cms/s/2/0c432424-823b-11e0-961e-00144feabdc0.html#axzz1MmBVbsBT

By Courtney Weaver in Moscow

Published: May 20 2011 01:37 | Last updated: May 20 2011 01:37

Walking into the headquarters of Russian search engine Yandex, the first thing you notice are the plants, then the hammock, then the drum set.

The funky atmosphere brings the internet group closer to Silicon Valley, the spiritual home of technology companies, than to Moscow’s grim corporate landscape. “When you walk through the door, you feel like you’re not in Russia any more,” agrees a western banker.

Yandex’s non-Russianness is something the internet group and its advisers are trying to emphasise ahead of its initial public offering on New York’s Nasdaq market early next week, as they seek to distinguish Yandex from the sea of oligarch-owned, natural resource companies that have come before it.

The company, which is due to price the offering late on Monday, will try to raise up to $1.1bn by selling a stake of up to 18 per cent. The price range is $20-$22 a share, valuing the group at $6.1bn-$6.7bn.

The Yandex offering will follow a flurry of New York tech listings this month, including Renren, the Chinese social network. Both will have got in ahead of the much-anticipated market debut of Facebook.

Arkady Volozh and Ilya Segalovich, Yandex’s founders, this year made their debut on Forbes’ list of the 200 richest Russians. They co-founded Yandex in 1997 and will retain most of their collective 25 per cent stake in the company, as will Baring Vostok Capital Partners, a Russia-focused private equity fund that owns a similar-sized stake.

The company has a 65 per cent share of the Russian internet market.

According to Uralsib, the Moscow investment bank, the company’s price range implies a future price to earnings multiple of between 14.8 and 16.3, a discount of up to 20 per cent compared with its international peers.

While Mail.ru, which listed in London last year, has stakes in the country’s largest social networking site and is the country’s largest e-mail provider, Yandex is Russia’s biggest internet company by revenue.

It does not have an established oligarch shareholder.

Alisher Usmanov, the steel magnate, owns 25 per cent of Mail.ru, while Alexander Mamut, a Russian tycoon, owns Sup Media, an internet holding company.

Last year, Yandex revenue was up 43 per cent on the previous year, at $440m.

Over the next four years, internet penetration in Russia is expected to increase from 40 per cent to 70 per cent according to Russia’s Public Opinion Foundation, a Moscow-based polling agency.

The country’s online advertising market will almost triple, making it the fastest-growing online advertising market in the world, analysts say.

Interest in Yandex’s IPO has been intense, with people close to the deal saying the order book was full at the end of its first day, early this month.

However, despite its growth prospects, the company has faced negative publicity during the pre-IPO roadshow after its payment site, Yandex Money, provided Russia’s security service with some users’ personal information after they used the site to donate to an anti-corruption organisation.

People close to Yandex say the company had had no choice but to comply with government regulations, but the issue has highlighted concerns that the Kremlin may yet decide to clamp down on internet use.

But for US tech investors, eager for emerging markets exposure, corporate governance concerns may not weigh that heavily, says Sumeet Jain, a venture capitalist with CMEA Capital in San Francisco.

“The issues around how [an internet group’s] country is governed and the practices of the company are important but not as important as the growth figures and profitability of the company,” he says.

Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

Search May 19, 2011, 5:00PM EST

Yandex Says Nyet to Google and Da to Nasdaq http://www.businessweek.com/magazine/content/11_22/b4230039033239.htm

Russia's homegrown search engine is going public with a $1 billion IPO

By Julia Ioffe

Arkady Volozh, the founder and chief executive officer of Russia's dominant search engine, Yandex, seems comfortable being the outsider. He's one of Moscow's wealthiest people yet still drives his own car, a Volvo SUV, in a city of chauffeured Bentleys and Maybachs. Despite Russia's penchant for nepotism, for years Volozh refused to hire his oldest son and insisted he find a job on his own. He "is not very ostentatious or grandiose at all, which is why he wears well," says Esther Dyson, a venture capitalist and Yandex board member.

He may be tempted to live a little larger after May 24, when Yandex is expected to raise around $1 billion in an initial public offering on Nasdaq (NDAQ). Most of Russia's successful companies are those that dig—for oil, nickel, aluminum. Others are tainted by accusations of corruption or intellectual-property theft. Yandex seems to be an exception: a homegrown market leader that leveraged Russia's math and engineering talent in pursuit of technological breakthroughs. According to research group LiveInternet, its search engine now accounts for 64 percent of the Russian market to Google's 23 percent, and Yandex is hinting at ambitions abroad. For foreign investors, the question will be whether the Kremlin leaves the company alone.

Volozh and his high school friend, Ilya Segalovich, started working on search in the early 1990s. Their Internet search engine went live in 1997, and Yandex, which stands for "yet another indexer," became an independent company in 2000. Revenue has doubled every year since, and in the first quarter of this year, Yandex brought in $137 million, almost entirely from ads, according to its prospectus.

Part of the explanation for Yandex's success is first-mover advantage. Google (GOOG) didn't open a Russian office until 2005. Volozh and Segalovich began work on their indexing technology before Sergey Brin and Larry Page had even met, and they added maps, news search, and Web mail to Yandex's offerings years before Google did. Yandex "has outpaced the big, brand-name Internet companies," says Web pioneer Anton Nossik, who founded popular Russian news sites. It "did this by thinking about what was needed here, in the domestic market, and not what was already available."

Being native Russian speakers helps. Yandex's algorithm accounts for the intricacies of Russian grammar, where the same word can have dozens of different endings depending on its place in a sentence. It can, for instance, recognize the word "field" ("polye") even when it appears in a phrase like "lilies of the field" ("polevye lilii"). Google couldn't do the same until 2007.

Talk of a Yandex IPO first surfaced in the summer of 2008 but was stymied by the global economic crisis, when Yandex reported that ad revenues fell by more than 40 percent. Yandex executives would not comment for this story because of Securities and Exchange

Commission rules requiring a quiet period before the IPO. In its prospectus, Yandex warns investors that "well-funded, well-connected financial groups" in Russia occasionally use "economic or political influence or government connections" to take over independent companies. "Our ability to thwart such efforts may be limited," the prospectus reads.

Yandex would know. In 2008, Alisher Usmanov—an Uzbek mining oligarch and longtime ally of Russian President Dmitry Medvedev—said he tried to buy a 10 percent stake in Yandex but was rebuffed. According to local press reports, the following year the Kremlin forced Yandex to sell a "golden share" to a state-owned bank for one euro. The share gave the bank, and by extension, the Kremlin, power to veto any acquisition by a foreigner of more than 25 percent.

There was more Kremlin interference in 2009, when a video showing the beheading of a Russian soldier by rebels in the restive North Caucasus made it into Yandex's top blog search results. According to a top Yandex executive, the Kremlin's first deputy chief of staff, Vladislav Surkov, called Volozh to complain about the material because it was unpatriotic. Volozh replied that the search results were automatically generated. Surkov was not convinced, according to the same source, and forced Yandex to remove the blog rankings. Afterward, Surkov toyed with the idea of creating a "national" search engine controlled by the Kremlin, according to local press reports. Surkov's office did not respond to requests for comment. A Yandex executive interviewed in December 2009 says the company was slow to grasp the importance of lobbying but has begun to take it seriously; Volozh now meets regularly with Surkov.

Yandex says in its prospectus that some of its IPO funds will be used to expand internationally. Asaf Homossany, who heads Nasdaq's global markets, says it could be a new era for Russian enterprise. "We've passed the peak of these giant resource companies entering the global market," he says. Up next are the Russian tech companies.

The bottom line: Yandex has stepped up its lobbying to cope with political pressures at home. Some of its IPO funds will be used for international expansion.

Ioffe is a Bloomberg Businessweek contributor.

Russian consolidation: Lenders join forces to get bigger share of sectorhttp://www.ft.com/intl/cms/s/0/5b9e7bc2-80ec-11e0-8351-00144feabdc0.html#axzz1MmBVbsBT

By Courtney Weaver in Moscow

Published: May 19 2011 17:28 | Last updated: May 19 2011 17:28

Since September 2008 Russian bankers and analysts have foretold of a consolidation of the banking sector. It seems they may finally be getting it.

While the Kremlin staved off the demise of hundreds of banks during the crisis in an attempt to preserve the stability of the system, in the years since the number of lenders in Russia has gradually fallen from more than 1,000 to about 900. Executives at the country’s top banks say the figure will fall even further in the next five years as smaller banks fail to meet new capital adequacy requirements, and bigger players pour money into mergers and acquisitions.

“Consolidation of the banking sector [in Russia] is inevitable and a good thing. It’s just a question of how it happens,” says Dimitri Demekas, assistant director in the International Monetary Fund’s monetary and capital markets department.

Over the next five years analysts expect to see the gradual disappearance of Russia’s so-called pocket banks, which serve as treasury offices for a single company or businessman.

“The regulator is talking about increasing capital requirements which makes it increasingly expensive for these smaller banks to operate. The core shareholders would have to commit more cash to the business,” says Simon Nellis, an analyst at Citibank.

What will happen among the medium-sized and big players is more uncertain, he says.

Leading the consolidation of the sector have been state-owned lenders Sberbank and VTB.

Sberbank, Russia’s largest bank with 50 per cent of the country’s deposits, announced this year it would move into investment banking through acquiring Russia’s oldest brokerage Troika Dialog, while VTB has cemented its number two-position after buying TransCreditBank and the Bank of Moscow.

During the crisis state banks were the main beneficiaries of the government’s bail-out efforts, and have maintained their pole position since, says Vladimir Savov, an analyst at Otkritie, the Moscow investment bank.

“To minimise the damage of the crisis, the government provided a huge amount of liquidity to keep the banking system afloat in the initial stages and long-term capital to the biggest banks,” he says.

While the measures helped prevent hundreds of Russian banks from going bust, it has given the state-controlled banks an advantage in terms of capital and the consolidation process.

“The big players [in the sector] are in an even stronger position than they were a few years ago. They’ve come out of the crisis in better shape than many competitors,” says Michael Bott, head of banking at Linklaters in Moscow.

For Mr Bott, the most visible change has been in corporate restructurings where western banks have largely given way to state banks as the underwriters of large billion-dollar-plus deals.

“What we saw during some of the big restructurings was the state banks ... stepping into the shoes previously occupied by the western banks [and doing big corporate debt restructurings] ... You now see the likes of VTB and Sberbank underwriting big tickets,” he says.

Mr Nellis says Sberbank and VTB have also started lending to small and medium Russian enterprises as that sphere tends to be dominated by higher returns than lending to larger corporates.

“Sberbank has started to be much more active in trying to target these higher-margin, lower-ticket segments,” Mr Nellis says.

“Banks’ margins have been under a lot of pressure as interest rates have come down and the big banks are getting more aggressive in niche areas. The competitive environment is heating up.”

Nonetheless, he believes there is still a place in the system for large, privately owned Russian banks, many of which are competing with the state lenders as platforms for consolidation.

Nomos Bank, Russia’s eighth largest lender by assets, raised more than $700m (€490m, £430m) in a London initial public offering this year and plans to use the capital to fund acquisitions.

Meanwhile Uralsib, another private lender, is considering teaming up with a foreign bank in Moscow to solidify its position.

One executive at a private Russian banks says privately owned lenders may even have an advantage over state banks in the coming months. Sberbank already has 50 per cent of the market and cannot expand much further, he argues, while VTB will need time to digest and integrate its two acquisitions.

“VTB is like a snake that has swallowed two rabbits,” the executive jokes.

Mr Demekas argues the state must try to help private lenders increase their share of Russian deposits as they were successfully doing before the crisis. “The fact that the system is dominated by big banks that are too big to fail creates moral hazard,” he says.

But levelling the playing field will not be easy. “There is no silver bullet to help the government increase competition in the [banking] sector or any other sector of the economy,” he adds.

Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

Acron to leave 2H11 fertilizer prices for domestic agro producers unchangedhttp://www.bne.eu/dispatch_text15389

Alfa BankMay 20, 2011

Yesterday, Acron announced that it will leave mineral fertilizer prices for domestic agro producers in 2H11 at the same level as in 1H11. Reportedly, the ammonium nitrate price (FCA plan, excluding transportation costs and VAT) is RUB6,310/t, the urea price is RUB9,230/t and the NPK price is RUB11,470/t.

We view the news as NEUTRAL for Acron. These price levels correspond to the Cooperation Agreement signed between the Russian Fertilizer Producers Association and the Russian Agro-Industrial Association and is fully in line with our model.

Georgy Ivanin

RMK copper firm to float 20-25% shares in London IPOhttp://en.rian.ru/business/20110520/164132172.html

11:44 20/05/2011

MOSCOW, May 20 (RIA Novosti) - Russkaya Mednaya Kompaniya (RMK), Russia's third largest copper maker, plans to sell 20-25 percent of its stock in an initial public offering in London to raise $900 million-1.2 billion, Kommersant business daily reported on Friday citing sources close to the deal and company management.

The offering will consist of RMK's existing stock owned by its parent firm Russian Copper Company Ltd, and new shares in equal proportions, two sources told the paper. Deutsche Bank and Credit Suisse will lead the IPO scheduled for the third quarter.

The company intends to use the capital to boost copper production to 205,000 tons in 2011 from 180,000 tons in 2010 and to double production capacity by 2015.

The firm hopes to increase EBITDA to $600 million in 2011 from $360 million in 2010 and to reach $1.5 billion by 2015.

If RMK implements its investment plans, it may could the leader of the Russian copper market. In 2010, Norilsk Nickel produced 365,700 tons of the metal, although it has recently announced plans to build a 400,000 ton smelter in Indonesia. Ural Mining and Metallurgical Company produced about 360,000 tons last year.

Russian Copper eyes $1.2 bln London IPO-paperhttp://af.reuters.com/article/metalsNews/idAFLDE74J05K20110520

Fri May 20, 2011 7:34am GMT

* To offer 20-25 percent of shares in Q3 2011-Kommersant

* Company valued at $3.6 bln to $4.8 bln

MOSCOW, May 20 (Reuters) - Russian Copper Co (RCC) plans to offer 20-25 percent of shares in a London float this year, anticipating a recovery in copper prices, business newspaper Kommersant said on Friday.

Russia's third-biggest copper producer could raise between $900 million and $1.2 billion through the IPO scheduled for the third quarter of the year, Kommersant said, citing sources close to the situation and RCC's shareholders.

The offering will comprise both new and existing shares in the company which has been valued at $3.6-$4.8 billion.

RCC declined to comment.

Copper prices CMCU3, often seen as a gauge of economic activity, have corrected on the back of weak U.S. data, and its recovery is in doubt due to a debt crisis in the euro zone and persistent concerns about global economic growth.

But some analysts predict a copper deficit of 400,000 tonnes this year, Kommersant said, meaning prices may rise again later in the year.

RCC is 80 percent owned by Igor Altushkin. Ruslan Baisarov became its second-biggest shareholder in February when he bought a 20 percent stake for $500 million.

Russian IPO candidates have had mixed results in 2011 to date, with $2 billion raised from four successful London floats while five planned floats have been called off. [ID:nLDE73S0J7] (Reporting by Maria Kiselyova in Moscow and Natalya Shurmina in Yekaterinburg; Editing by Greg Mahlich)

Activity in the Oil and Gas sector (including regulatory)

Tax cuts for new oil fields are possible with oil below USD 95/bbl http://www.bne.eu/dispatch_text15389

VTB CapitalMay 20, 2011

News: According to Deputy Prime Minister Igor Sechin, were the oil price (Urals) to fall below USD 95/bbl, the government would consider introducing tax concessions for new oil fields. Vedomosti speculates that under such a scenario, tax holidays might be reintroduced for three oil fields in East Siberia: Vankorskoye (Rosneft), Verkhnechonskoye (TNK-BP, Rosneft) and Talakanskoye (Surgutneftegaz).

Our View: While there is no guarantee that tax benefits would be reintroduced, Rosneft, TNK-BP and Surgutneftegaz would clearly benefit under such a scenario. At current production rates, if Urals fell to USD 90/bbl and the government re-established the reduced export duty rate for East Siberian fields, that would add USD 860mn a quarter to Rosneft's EBITDA and USD 200-230mn to TNK-BP's and Surgutneftegaz's.

Sechin notes the possibility of a new independent refinery, comments on tax reformhttp://www.bne.eu/dispatch_text15389

Renaissance CapitalMay 20, 2011

Event: Yesterday (19 May), Igor Sechin, deputy chairman of the Russian government, told journalists that building an independent refinery could be part of the solution to Russia's current petrol shortage. On tax reform, he added that with oil prices above $95/bbl, greenfield projects do not require special tax breaks, although the government would consider granting specific tax benefits for new fields if oil drops below $95/bbl.

Action: We view the lack of clarity on tax reform and regulation of the domestic product market as negative for the sector.

Rationale: While efforts to improve the situation in the domestic product market are welcome, we doubt the construction of an independent refinery could be seen as a serious solution to the problem. Drawing conclusions from recent examples, our main concern is related to the likely extended construction period and high capex vs international projects. Besides, we do not think a single refinery can balance the supply/demand situation in Russia, given the country's scale and associated high transportation costs,

which could make it a regional rather than a national benchmark for prices at best. Besides, the lack of developed crude and product transportation infrastructure could prevent an independent refinery from operating efficiently. We are also concerned about the lack of clarity on taxation, and particularly the lack of a single driving force in the government that could lead to the necessary taxes being implemented. We still hope the modified 60/66 regime could be approved this year, since it has found support among the key ministries.

Ildar Davletshin

LUKOIL has wiped off a debt fully on Shah Deniz Project and SCPhttp://abc.az/eng/news_19_05_2011_54320.html

Baku, Fineko/abc.az. Russia’s Lukoil and the EBRD have announced today that the financing for Shah Deniz, the largest offshore gas field development in the Caspian Sea, and South Caucasus Pipeline (SCP) had achieved full completion.

“The Shah Deniz project is very important for the region, providing jobs and development opportunities not just in Azerbaijan, but more widely throughout the Caucasus region. In addition, this is a new source of gas not just for the domestic markets of Azerbaijan and Georgia, but also for the region, increasing diversification and stability of supplies," said Kevin Bortz, director of the EBRD’s Natural Resources Team.

"We’re very pleased with this result. This is the first gas project in the Former Soviet Union to achieve such important landmark as financial completion, showing the strength of what is truly world-class asset,” commented Ogtay Movsumov, deputy head of the Main Division of Treasury and Corporate Finance, head of Project and Structured Finance at the LUKOIL group.

LUKOIL’s investment in the Shah-Deniz Stage 1 project dates back to 2004. In July 2005, the EBRD provided USD 180 million in 12-year project finance for it.

LUKOIL’s share of the Project is 10%. The other partners are BP (25.5%), Statoil (25.5%), Total (10%), NICO (10%), SOCAR (10%) and TPAO (9%).

LUKoil Trades in Fuel Oil http://www.themoscowtimes.com/business/article/lukoil-trades-in-fuel-oil/437157.html

19 May 2011

LUKoil has bought its first ever Saudi fuel oil cargo, traders said Thursday.

LUKoil is starting fuel-oil trading in the Middle East, and the Saudi purchase comes less than a week after it won a tender to supply a 65,000-ton high-sulfur fuel-oil cargo to Pakistan State Oil.

Litasco also booked the Vega Star supertanker to sail to Singapore from Rotterdam next month, according to reports from five shipbrokers.

The ship, which can carry 2 million barrels of oil, was chartered for June 8 at a cost of $3.85 million, according to reports Wednesday including from Athens-based Optima Shipbrokers. One of the brokers said the tanker was carrying fuel oil.

(Reuters, Bloomberg)

 

Solving Moscow/Beijing oil price spat would smooth gas talks:Russia deputy PM http://www.platts.com/RSSFeedDetailedNews/RSSFeed/NaturalGas/8903017

Moscow (Platts)--19May2011/658 am EDT/1058 GMT

Talks between Moscow and Beijing on future supplies of Russian gas would be easier if the two first settled a dispute between Russian and Chinese companies over the price of current oil supplies, Russia's Deputy Prime Minister Igor Sechin was quoted Thursday as saying.

Russia's gas giant Gazprom is closely watching the talks over the oil price, Sechin said in the West Siberian settlement of Purpe, according to the Prime-Tass news agency.

Russia expects to discuss the issue with Chinese partners in late May when a delegation headed by China's Vice Premier Wang Qishan visits Moscow, Sechin said.

Russian companies Rosneft and Transneft export oil to China under initial agreements reached with China's National Petroleum Corp., Sechin was quoted as saying.

But CNPC wants to change a coefficient -- a transportation fee set by the Russian government -- used in the oil price formula, Sechin said.

He said the agreements were in contracts and Russian companies were protected by the documents under international law.

In April, Russia's Transneft said it had incurred a loss of more than $20 million a month due to underpayment by China for crude oil supplied via the ESPO pipeline to China since January. The Russian company did not rule out filing a lawsuit in London to

recover those losses.

Platts reported previously, citing a source familiar with the matter, that China unilaterally reduced the price it paid for the ESPO supplies as it believes transportation cost across Russia should be more than 6% lower than stated in the crude supply contract.

Meanwhile, Transneft has said it continues to supply crude in full.

Under an agreement signed in February 2009 by Transneft, Rosneft, CNPC and China Development Bank, Rosneft and Transneft agreed to supply 15 million mt/year (300,000 b/d) of crude to China over 20 years from 2011.

GAS TALKS

Separately, Gazprom and CNPC have mainly agreed on a gas price formula for future gas supplies to China, Gazprom's deputy CEO Alexander Medvedev said in Salzburg, Austria, Prime-Tass reported.

The formula is based on Japan's basket of oil products, Medvedev said.

At the same time, the partners are yet to agree on a number of issues related to the basis price, which is the key element of the formula and which is to be adjusted according to fluctuations of crude oil and oil products prices, Medvedev said.

Earlier in the day, Medvedev said Gazprom is to hold the next round of talks on future gas supplies to China next Tuesday.

Gazprom and CNPC hope to sign the gas contract by July.

The parties, however, have yet to reach a final agreement on the gas price, a key stumbling block since talks began in 2004.

In September 2010, Gazprom and CNPC signed a legally binding agreement on the supply of up to 30 billion cubic meters/year of Russian gas to China.

At the time, both sides were hoping to reach an agreement on the gas price by the middle of 2011 and sign a commercial contract by July.

If inked on schedule, supplies could start in 2015.

Earlier this month, Arkady Dvorkovich, chief economic adviser to Russia's president, said Russia still hoped to sign a final gas sales contract with China during the St Petersburg International Economic Forum, which is to take place June 16-18.

"The work is under way. We would like the work to be completed by the start of the forum," he said.

Chinese President Hu Jintao is expected to attend the forum, during which bilateral talks with Russia's president Dmitry Medvedev will take place, Dvorkovich said.

--Nadia Rodova, nadia_rodova@platts.com

HEARD ON THE STREET

MAY 20, 2011

Rosneft's Disappointing Dating Scene http://online.wsj.com/article/SB10001424052748704083904576333562787369934.html

By LIAM DENNING

When you are a Russian behemoth with ties to the Kremlin, dates can be hard to come by. But with its share swap and Arctic exploration deal with BP stymied for now, Rosneft needs to at least flick through its little black book.

Potential replacements would need three things: Scale, deep water development experience and a compelling reason to get into bed with Rosneft.

Few companies combine the scale needed to pay for development in such an inhospitable part of the world, as well as absorb potential setbacks, with deepwater skills. Other than BP, oil giants Exxon Mobil, Royal Dutch Shell, Chevron and Total—each valued at north of $125 billion—fit the bill. Petróleo Brasileiro is another possibility but is busy developing Brazil's offshore riches. Norway's Statoil is no stranger to the chilly depths, but with a market capitalization of less than $85 billion likely lacks the requisite scale.

Another stumbling block could arise if Rosneft pushes for a share swap from any other partner. Political sensitivities likely rule it out for Exxon and Chevron. Shell might be more amenable, but it also might balk at a monogamous relationship with Rosneft given an existing partnership with Gazprom.

Total could be a dark horse. It took a stake in Russian gas producer Novatek in March and is helping develop the next generation of gas fields in the country's far north. Politically, deeper Franco-Russian ties shouldn't be a problem. And Total could use a big exploration opportunity: Last year's reserve replacement rate of 81% compares poorly with BP's and Shell's 100%-plus rates.

Ultimately, though, only BP has the ideal combination of skills and strategic neediness matching Rosneft's requirements. The very shortness of the short-list of rival suitors may well provide the impetus for the two to reach a rapprochement.

Write to Liam Denning at liam.denning@wsj.com

Gazprom

Gazprom and CNPC accelerating negotiations http://www.bne.eu/dispatch_text15389

CitiMay 19, 2011

Interfax reports this morning that Gazprom and China's CNPC are accelerating negotiations on the long-awaited gas deal, hoping to complete it in time to be signed at the St Petersburg Economic Forum in mid-June. In reality, all major points of the contract have been agreed to, according to past reports in the local press, but the key question of price remains to be worked out. Even on that, the sides agreed earlier to tie the price to the Japanese crude cocktail, which is the benchmark for much of Asia's LNG trade. The real question is at what level, relative to that marker, will the price of Russian gas be set.

Our take: We expect that netbacks for Gazprom will be comparable to those for European sales, in spite of a heavy negotiating from the Chinese side. However, that may not be immediately apparent whenever the deal is announced, as it is quite likely that the economics of will be boosted by a large, low-cost loan from the Chinese to Gazprom to aid in the construction of the infrastructure necessary to deliver gas to China. We also think the likelihood the deal will be ready by mid-June are a bit better than even; it should be inked by year-end with first gas flowing by the end of 2015.

Ron Smith

Gazprom to double gas storage capacities in Europe

http://www.rbcnews.com/free/20110520120520.shtml

      RBC, 20.05.2011, Moscow 12:05:20.Gazprom plans to double the capacities of its underground natural gas storage facilities in Europe over the next four years, RBC Daily reported today, citing Gazprom Deputy CEO Alexander Medvedev. The expansion of storage facilities will ensure uninterrupted gas supplies amid growing demand in Europe, Medvedev said on Thursday at the European Gas Storage Conference in Austria.

      According to Gazprom, its gas storage capacities in Europe rose to 2.5bn cubic meters (bcm) in 2010 from 1.4bcm in 2006. Gazprom also revised up its gas export

plans to Europe in 2011 to 155bcm, up from the originally planned 151.5bcm. In 2010, the company exported 139bcm to Europe.

PFI - Gazprom goes for the hat trickhttp://af.reuters.com/article/energyOilNews/idAFLDE74I10Z20110519

Thu May 19, 2011 10:36am GMT

* South Stream invites banks

* Nord Stream parties in Florence tonight

* CPC seeks funds too

By Rod Morrison

LONDON (Project Finance International) - Russia's impressive run of financing its international gas pipeline projects faces it toughest challenge yet - something for the hoards gathered to celebrate the financing of the 10bn euros Nord Stream pipeline in Florence will be able to discuss tonight. Looking less perky is the rival Nabucco pipeline scheme. Gazprom (GAZP.MM) and Italian giant Eni (ENEI.MI) have sent out an invitation memo for banks to bid on the financial advisory mandate on the 25bn euros South Stream scheme. There were few, if any, details contained in the one-page invitation. Banks are being asked to bid individually for the mandate next Wednesday (May 25th) but in the past local Russian and international banks have been combined to form advisory teams.

Gazprom is now going for a Stream gas pipeline financing hat trick. First it was the Blue Stream pipeline, the Russia to Turkey gas pipeline developed with Eni that was perceived to be a huge technical challenge given that it ran north to south across the Black Sea. The scheme was backed by a corporate guaranteed style US$2bn debt financing in 2000.

Then it was Nord Stream, the Russia to Germany gas pipeline across the Baltic Sea, which received 6.5bn euros in project finance, split into two phases in 2010 and 2011. And now, next up, is South Stream, the Russia to Bulgaria gas pipeline running east to west across the Black Sea.

International pipeline schemes clearly take time to put together. For Nord Stream, it has been seven years since the financial advisory mandate was awarded to the final funders' celebration party. South Stream will perhaps be the most complex of the three schemes. Blue Stream was a trailblazer from a technical point of view and Nord Stream was more of a trailblazer from a financing point of view. South Stream will need to be both.

Cost estimates of the scheme range from 20bn to 25bn euros. The design capacity of the scheme is 2.2tr ft3 a year. The pipeline route is still being finalised across the Black Sea.

Once it lands at Varna in Bulgaria it will be able to ship gas to Italy via Greece and into Central and Western Europe via the Balkans. Gazprom says construction will start in 2013, although this could be optimistic.

The scheme is gathering momentum. EDF (EDF.PA) and BASF Wintershall (BASFn.DE) have signed MoUs on becoming involved in the scheme, with EDF looking to take a 10% stake and Wintershall looking to build the offshore pipe and take a 15% stake.

Gazprom is confident it can find the gas to fill the pipeline from its own resources and other parts of Central Asia. For Nord Stream, it will use gas from the Yuzhno Russkoye field, which has recently secured a 1.1bn euros project loan, CPs pending. BASF and E.ON (EONGn.DE) are the other shareholders in Yuzhno. For South Stream, Gazprom has SeverEnergia to supply gas, owned by itself, Novatak, Eni and Enel plus other parts of the its grid.

The drawback to the scheme is its cost and the fact that the European Union (EU), as a block, wants to diversify the supply sources of gas away from Russia.

The EU supports the Nabucco project across Turkey to Europe, led by RWE (RWEG.DE) and other Central European utilities, because it is both cheaper and fulfils the diversity criteria. However, it has received mixed publicity over past few weeks. Its construction start date has been put back a year to 2013, cost estimates have risen from 7.9bn euros to 12bn-15bn euros, according to the EU, and BP (BP.L), which has gas assets in Azerbaijan, said it favoured smaller scale pipelines. Nabucco, a merchant pipe, needs to source gas from a variety of areas in the Caspian and the Middle East to fill its 1.1trn ft3 pipe, which it has not yet done. HSBC is advising on its financing. The European Investment Bank (EIB), the European Bank for Reconstruction & Development (EBRD) and the International Finance Corporation (IFC) have signed mandate letters to look at providing up to 4bn euros in debt for the scheme.

When it comes to central Asian pipeline politics, the Russians have time, patience and local power on their side - as the Caspian Pipeline Consortium (CPC) oil pipeline from Kazakhstan scheme shows. The US$5.4bn CPC expansion project has been delayed for a long time by politics, as the Russian fought for control of the asset, but now the Russians are happy, work is due to start next month.

A beauty parade for financial advisers was held in Moscow last month and it is believed that Russian bank VTB Capital has won the mandate. The financing required is small in relation to the scheme, US$1bn.

The project had revenues totaling US$1.1bn last year and with the expansion these should rise to US$2.3bn pa. Therefore, the project company is a strong corporate in its own right and raising US$1bn of debt should be straightforward. One of the roles of the adviser will be to decide whether a bank or bond route will be chosen. CPC still says it has not finally decided on whether to raise the debt.

The selection of a Russian adviser could be linked to Russia being the largest shareholder in the scheme with 31%. Kazakhstan has 20.75% and Chevron leads commercial interests with 15%, with Lukoil having 12.5%. The pipe runs overland for 1,500km from Tengiz in Kazakhstan to Novorossiysk in Russia.

Technically the project is challenging. While the pipeline remains operational, it is being doubled in size to 67m mta, which is unprecedented. The expansion project will be officially launched in Kazakhstan next month and should be complete in 2015. In pipeline politics Russia got its way with CPC. Now it will be interesting to see who wins the new gas pipeline race.