Russia 090429

Basic Political Developments SWINE FLU

o Swine Flu 'May Hit Russia in A Week' - A senior virologist warned on Tuesday that the swine flu outbreak could reach Russia in a week and said the risk of a global pandemic was "very high." No cases have been reported in Russia. A Russian woman who recently visited Mexico was hospitalized in Moscow on Monday night, but doctors said Tuesday that she did not have the swine flu virus. Russia Disputes U.S. Claim Swine Flu Not Spread Through Meat

o Russia bans import of “contagious” American pork, beef, poultryo Russia Expands Meat Ban - Russia has expanded the list of banned U.S.

meat imports. In addition to U.S. pork, they have also banned U.S. beef and poultry from certain U.S. states.

o Russia Bans U.S. Meat Amid Swine Flu Outbreako Russian ban on AZ pork called political - Russia has banned pork imports

from Arizona and a number of other states and all meat imports from Mexico, California, Texas and Kansas -- where cases of the swine flu have been confirmed.

o Belarus intensifying border sanitary control over swine flu - According to the country’s Chief Sanitary Doctor Valentina Kachan, Belarusian specialists are monitoring the situation with the aim of preventing the penetration and spread in the Belarusian territory of the swine flu virus and are working out a system of measures to enhance the republic’s readiness for possible pandemic.

Russia-NATO Council to hold official meeting in Brussels - Russia-NATO Council is due to have an official meeting at the level of ambassadors here Wednesday, the first official conference after the conflict in South Caucasus last August when Russia had to launch a peace enforcement operation against Georgia in response to that country's armed punitive action in South Ossetia.

NATO to resume formal contacts with Russia - Diplomats say ambassadors from Russia and NATO's 28 member nations will discuss a possible meeting of foreign ministers next month. The talks are being held under the framework of the NATO-Russia Council, a panel set up to improve relations between the former Cold War foes.

Afghanistan is the key to Russia-NATO relations - The future of Afghanistan and the whole Central Asian region is on the agenda of Russia-NATO cooperation because stability in neighbouring Iran and Pakistan is under question.

Lavrov to take part in Arctic Council ministers meeting in Norway - Problems of climate change in the Arctic region will be discussed in the Norwegian city Tromso on Wednesday by participants in a meeting of the Arctic Council. Foreign Minister Sergei Lavrov heads the Russian delegation at the forum.

Global Wake-up Call from Tromsø - Moscow says the upcoming session will have special significance in conditions of a rapidly evolving Arctic situation

owing to climate change and its consequences, greater international cooperation in the Arctic, and a sharp increase in attention to it in the world. Sergey Lavrov is also planning to submit the proposals of Russia on a number of new concrete projects of the Council. Later this year, in October, Lavrov invites his colleges from the Barents member countries to Murmansk for the Ministerial Barents Council meeting.

EBRD president arrives in Moscow for talks with Russian government - President of the European Bank for Reconstruction and Development (EBRD) Thomas Mirow arrived in Moscow on Tuesday for talks with the Russian government on the eve of an annual bank’ s meeting due in London on May 15-16, the Prime Tass economic news agency cited the EBRD’s press release.

Lavrov Warns EU - Foreign Minister Sergei Lavrov warned the European Union against meddling with former Soviet republics Tuesday

Lavrov, Solana discuss Iran’s nuclear program - EU foreign policy chief Javier Solana and Russian Foreign Minister Sergei Lavrov held talks on leading international issues, including Iran’s peaceful nuclear program, in Luxembourg on Tuesday. The two sides also exchanged views on developments in the Middle East, Kosovo, Moldavia and disputed regions in Europe.

Russia urges closer EU cooperation on security - Russian Foreign Minister Sergei Lavrov urged the EU Tuesday to work with Russia on a new European security project, insisting that the forum for Moscow's security ties with NATO needs revision.

Are EU-Russia Relations Stuck In A Loop? - The Czech foreign minister and current EU chairman, Karel Schwarzenberg, told journalists in Luxembourg after a morning of talks with his Russian counterpart Sergei Lavrov on April 28 that after a "very frank and open discussion," he has "better knowledge of the views [of] and prospects for cooperation" with Russia.

Russian, Ukrainian premiers to discuss energy in Moscow Ukraine to offer Russia small pipeline deal - Ukraine will offer to revive a $350

million project with Russia to jointly build a new pipeline for Russian gas, Russian daily newspaper Kommersant reported today.

Ukraine to offer Russia $350 mln gas project – paper Ukrainian premier to discuss cooperation issues in Moscow Putin, Timoshenko May Agree Pipeline Overhaul, Kommersant Says Ukraine to pay $270.95 for natural gas in Q2 Russia seeks Ukraine PM's assurances after gas rows Greek PM Karamanlis, Putin phone talks on energy issues -     Karamanlis noted

the Greek side's desire to continue cooperating with Russia in the vitally important energy sector and his satisfaction with the progress of negotiations between Gazprom and Greece's DESFA (Hellenic Gas Transmission System Operator S.A.) for the Southstream natural gas pipeline.

President Medvedev: Bulgaria Relations Back on Track Putin Strikes South Stream Deal With Sofia - As a result of the deal, Russia

dropped its intention to use Bulgaria's existing pipelines to transit gas to Europe as part of South Stream, instead agreeing to consider other options, Putin and

Stanishev said without naming them. Putin downplayed bilateral contentions in the matter.

Central Asia Water Talks Break Down - A rare Central Asia summit on how to share scarce water resources broke down in bitter disagreement on Tuesday after the region's five leaders failed to find any common ground in one of the world's driest regions.

Russian ship Admiral Panteleyev detains Somali pirates' boat Russian Warship Captures 29 Pirates, Vessel Off Somali Coast Russian destroyer captures 29 Somali pirates: reports Russian destroyer detains about 30 Somali pirates Meeting between Patriarch, Pope should not be result of opportunistic motives -

Moscow Patriarchate Criminal case instituted over killing of policeman in N Caucasus Citizens of nine countries arrested in Dagestan for popularization of “nurculuk”

Islam extremism Russia has nearly 10,000 extremists, most are students – official Gen Alexander Ivanov appointed acting Moscow police chief New governors to be appointed by parties - Political parties will play a key role in

the appointment of new governors, a decree from President Dmitry Medvedev states.

Medvedev gives go ahead for 'curfew' law for under 18s Medvedev amends law on main guarantees of child’s rights Site Owners Must Prove Identity - Internet regulators are cracking down on

domain owners who publish illegal information on web sites by requiring them to provide their passports or another form of verifiable identification.

NTV Pulls Political Show - NTV television will shut down the political talk show "K Baryeru," hosted by prominent radio and television journalist Vladimir Solovyov, from May 1, Interfax reported Tuesday.

Conviction of Activist Who Protested Baptism of Tatar Infants Decried - Last Friday’s conviction in a Naberezhny Chelny court of a Tatar activist who had spoken out against the baptism of Tatar infants by a Russian Orthodox priest without the permission of their parents or guardians has sparked protests from the Tatar Social Center (TOTs) as well as from human and religious rights groups elsewhere.

WSJ: Kremlin Shows Rare Openness on Crash - When photos surfaced of a January helicopter crash in Siberia that appeared to involve government officials on an illegal hunt, wildlife campaigners assumed the Kremlin would hush up the incident.

Moscow tested by tensions in outer regions - The events underline the balancing act that characterises relations between Moscow and Russia's outlying regions spread across 11 time zones, which is being tested as the economy contracts this year for the first time in a decade and federal subsidies to places such as Dagestan face cuts.

National Economic Trends Citigroup Revises Russia Economy Outlook to Contraction of 6.5% Russian per capita income falls for first time in decade

Nomura: Russia - Deep recession without a crisis Money supply drops 9.5% YoY in March Russian tax cut stimulus equal to RUB600-700bn for 2009

Business, Energy or Environmental regulations or discussions Russian Stocks Rise, Snap Three-Day Drop; OGK-3, Gazprom Gain Interest rate caps to turn VEB loans into "capital of last resort;" non-strategic

businesses could see higher rates as a result RBC Information Systems: Rosbank AM files $46mn suit against RBC

shareholders Energy Ministry on project delays; Mosenergo's missed 2009 earnings Tariff Increases: Slowing Down? Russia's OGK-3 told to sell Norilsk stake –paper Audit Chamber suggests OGK-3 cancel its recent acquisition deals Mosenergo Says Prices Are Unfair - Mosenergo, Gazprom's main electricity

asset, will earn 1 billion rubles ($30 million) less than it planned this year because of "unfair" capacity pricing by state-controlled Market Council, making it difficult for the generator to build new stations, Denis Fyodorov, head of Gazprom's power assets, said on Tuesday.

Polymetal Acquires Mayskoye Gold Deposit From Highland Gold Highland Gold Mining 2008 IFRS preview Unilever Buys Buys Russian Sauces Business Baltimor Unilever Buys Baltimor’s Sauces Business in Russia (Update1) Sistema-Hals posts FY 2008 Net Loss of $381.1 million Russia's Sistema Q4 net loss $713.9 mln Sistema announces unaudited financial results for the fourth quarter and the full

year ended December 31, 2008 Acron posts FY 2008 Net Profit of 9.89 billion Roubles Vimpelcom: Court Once More Rules Against Telenor Two Russian companies included on world’s most expensive brands list Cushman & Wakefield comment: High demand for Russian agricultural land - In

spite of the current macroeconomic situation, we continue to see high demand for agricultural land in black earth regions of the Russian Federation, with foreign investment funds some of the most active of our clients.

INTERVIEW-Soviet toxic legacy still poisoning Russia

Activity in the Oil and Gas sector (including regulatory) Russia to raise oil export duty from $110 to $137.7 per ton Government to block private oil field development - Russia's Energy Ministry has

sent to the government proposals on assigning oil fields to the state oil reserve. The ministry does not support the idea of making a reserve by accumulating the oil produced, because building and running storage facilities will cost too much.

Oil independents in play: Even at a premium to current share prices, independents offer majors cheap reserves

Cost of Ukraine's gas in 2Q09 to be $270.95 per 1,000 cubic meters TNK-BP Partners to Extend Acting Chief Executive's Contract

TNK-BP expects to report its annual US GAAP audited financial statements for 2008 on 29 April and its results for the 1st quarter of 2009 late May.

Kamennoye Progress Pleases TNK-BP YUKOS unit wins $389 mln Dutch ruling vs Rosneft –paper Tender for Shtokman power plant in Teriberka Blocks Offered in Nenetsk Autonomous Area and Sakhalin Region Oil company fires 1000 in Nenets AO Kharyaga partners might have to cut spending Eurasia Drilling reports 2008 results, EBITDA exceeds our expectations COMMENT: Eurasian pipelines - a forecaster's nightmare: The world's leading

experts who gathered at Columbia University's Harriman Institute for the conference, "The Architecture of Energy Export System of the Caucasus and Central Asia," believe that future uncertainties jeopardize western control of much of Eurasian energy.

Chris Weafer, Uralsib: Pipeline Politics

Gazprom Agreement with Gazprom will be signed in May /ROUNDUP/ - Bulgargaz and

Gazprom will sign the agreement on South Stream gas pipeline in the middle of May. This was announced after the end of the talks in Moscow.Bulgarian PM paid a three-day working visit to Moscow.

GDF Denies It Was in Talks To Buy Stake in Nord Stream Hungarian EMFESZ to buy gas from RosGas instead of RosUkrEnergo:

Hungarian-based gas and electricity supplier EMFESZ Kft has agreed to buy natural gas from RosGas, "a company in Gazprom's network of business interests," due to the problems its former supplier, Swiss-based gas trader RosUkrEnergo, is facing, EMFESZ said in a statement.

Gazprombank Reports 2008 Net Loss of 60.1 Billion Rubles Russia's Gazprombank reports 2008 loss

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Full Text Articles

Basic Political DevelopmentsSWINE FLU

Swine Flu 'May Hit Russia in A Week'http://www.themoscowtimes.com/article/600/42/376673.htm

29 April 2009 By Maria Antonova and Alexandra Odynova / The Moscow Times

A senior virologist warned on Tuesday that the swine flu outbreak could reach Russia in a week and said the risk of a global pandemic was "very high."

But passengers greeted by mask-wearing health officials at Moscow's Sheremetyevo

Airport brushed off concerns about swine flu, which has been linked to 149 deaths in Mexico and has been confirmed in the United States, Canada, Scotland, Spain and New Zealand.

The Agriculture Ministry expanded a ban on raw meat imports from the United States on Tuesday to include meat products carried in passengers' carry-on luggage and food served on planes and ships.

No cases have been reported in Russia. A Russian woman who recently visited Mexico was hospitalized in Moscow on Monday night, but doctors said Tuesday that she did not have the swine flu virus.

"The risk of a pandemic in the world is very high. It could reach Russia in a week," Dmitry Lvov, head of the Institute of Virology at the Russian Academy of Sciences, said at a news conference.

No vaccine is available for the virus, with scientists saying the earliest one will be ready will be in the fall. Lvov said people could protect themselves in the meantime by taking anti-viral drugs like Tamiflu.

"We should have masks everywhere. I would advise against participating in large events and would also advise taking anti-viral medicines ... as a preventive step," he said.

Lvov, however, criticized airport checks and meat bans as ways of preventing swine flu from reaching Russia.

The World Health Organization -- which raised its alert level for swine flu by a notch Monday to indicate that the virus is capable of significant human-to-human transmission -- said Tuesday that it was not recommending travel restrictions and border closures. Infected people may not show symptoms at the airport, so travel limitations are ineffective, WHO spokesman Gregory Hartl told reporters in Geneva, Reuters reported. "Border controls don't work. Screening doesn't work," he said.

At Sheremetyevo Airport, health officials wearing white cloaks and face masks met passengers arriving on an Aeroflot flight from New York on Tuesday afternoon.

A "visual control" has been set up on board all flights landing in Sheremetyevo, said Artur Bunin, the chief doctor for the airport.

"A flight from New York to Moscow takes about 11 hours. During this time, our well-trained plane staff are able to detect an infected passenger on board," Bunin told reporters in the airport's arrival hall.

Airport custom officers could be seen through the gateway glass wearing face masks, too.

"We are fearful because we are very serious about this," Bunin said.

Passengers, however, seemed unconcerned about the virus, and several said they hadn't noticed any officials wearing masks at other airports.

Timur Uzbekov, who arrived from New York, was the only passenger who could be seen wearing a mask at Sheremetyevo on Tuesday afternoon.

"I just thought it would be safer," Uzbekov said. "I went from Los Angeles to New York and expected see panic and people in masks but didn't notice anything like that."

He said he had not experienced any additional hassle at Sheremetyevo other than "some people in white asked what kind of food passengers were carrying in their bags."

Passengers arriving from Europe were smiling and relaxed. A few on a plane from Athens said they had not heard about swine flu. "Can you see a swine here?" they joked when approached by a group of reporters.

The Federal Consumer Protection Service asked travel agencies on Tuesday to alert people planning trips to the Americas about the "possible risk of contacting the flu-like disease," Interfax reported.

Meat products will be more thoroughly checked at Moscow's markets, said the city's veterinary committee, Interfax reported. Uncooked meat from Mexico and the United States will be isolated, the committee said.

The Agriculture Ministry's health watchdog widened the ban on raw meat imports from some U.S. states and Mexico, prompting a protest by the U.S. Embassy, which said there was no reason for the restrictions because the virus spreads from person to person, not from meat. "We look forward to a quick resumption of normal meat trade with Russia," the embassy said in a statement.

"It's an understandable reaction but an overreaction by Russia," said Andrew Somers, president of the American Chamber of Commerce in Russia. "But Russia is not acting out of the ordinary."

The European Union said Tuesday that it would not restrict imports of U.S. meat. "We have no plans to ban any meat, pork or food products from the U.S. since there is no connection between food and the flu at present, and such a move would be unjust," a European Commission official told Reuters.

Russia Disputes U.S. Claim Swine Flu Not Spread Through Meathttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=azx6bBxkimdU

By Alex Nicholson

April 28 (Bloomberg) -- Russia, the fourth-largest consumer of U.S. pork, disputed the Obama administration’s contention that the deadly strain of swine flu first detected in Mexico can’t be transmitted by meat.

The U.S. Embassy in Moscow today urged Russia to overturn a partial ban on American meat because of the outbreak, saying “there’s no evidence that the virus is transmitted by meat.”

The Americans “are protecting the interests of their exporters and this is all,” said Alexei Alekseenko, a spokesman for Russian veterinary watchdog Rosselkhoznadzor, by phone from Brussels.

Russia on April 26 banned all meat imports from three U.S. states and pork products from eight others and extended the blanket ban today to New York and Ohio. Russia also suspended meat shipments from nine South American countries and Mexico, where as many as 152 people have died from the disease.

The U.S. Centers for Disease Control and Prevention, “the World Health Organization and the World Organization for Animal Health all state that there is no evidence that this virus is transmitted by meat,” the U.S. Embassy said in the statement.

Prime Minister Vladimir Putin yesterday urged the Russian government to “monitor the situation closely” and intensify trade sanctions if necessary to protect the population.

Russia this week began screening all air passengers and crew arriving from the Americas for flu-like symptoms, quarantining one woman who returned from Mexico until tests showed she wasn’t infected. No cases of swine flu in humans have been confirmed in Russia.

The ban on U.S. meat “is an absolutely justified measure that, incidentally, the United States uses when something presents a biological danger,” Alekseenko said. “The virus was found in the tissue of those who died in Mexico. It’s the same with animals, it’s one of the variants for how the disease spreads.”

To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net.

Russia bans import of “contagious” American pork, beef, poultryhttp://www.mosnews.com/money/2009/04/29/pork/

Today, 09:57 PM

Russia banned imports of US pork from 13 states and halted shipments of beef and poultry from five of them, following the outbreak of swine flu, Bloomberg reports Wednesday. China, Kazakhstan and St. Lucia also imposed pork bans.

Imports of all three meats from California, Texas, Kansas, New York and Ohio were halted by Russia as of April 21, according to a statement today on the US Department of Agriculture’s Food Safety and Inspection Service Web site.

Russia also won’t accept pork or pork products from Alabama, Arizona, Arkansas, Georgia, Louisiana, New Mexico, Oklahoma and Florida, the USDA said in the statement. Russia was the largest importer of US poultry and the fourth-largest buyer of US pork last year, according to USDA data.

US government officials are concerned that the flu will prompt countries to ban pork unnecessarily. Restrictions “resulting from the recent outbreak do not appear to be based on scientific evidence and may result in serious trade disruptions without cause,” Trade Representative Ron Kirk and Agriculture Secretary Tom Vilsack said today in an e-mailed statement.

The US Embassy in Moscow urged Russia to overturn a partial ban on American meat because of the outbreak, saying “there’s no evidence that the virus is transmitted by meat.”

The Americans “are protecting the interests of their exporters and this is all,” said Alexei Alekseenko, a spokesman for Russian veterinary watchdog Rosselkhoznadzor, by phone from Brussels.

Russia Expands Meat Ban

http://www.porkmag.com/directories.asp?pgID=675&ed_id=7454

By Pork news staff  |  Wednesday, April 29, 2009

Russia has expanded the list of banned U.S. meat imports. In addition to U.S. pork, they have also banned U.S. beef and poultry from certain U.S. states.

The bans apply to meat and poultry produced in California, Kansas, New York, Ohio and Texas, where cases of influenza have been reported.

U.S. Meat Export Federation quickly denounced Russia's decision. USMEF President and chief executive officer Philip Seng described it among the "demonstrated overreactions" by certain trading partners.

The American Meat Institute also is trying to spread the word. In a statement, AMI quotes Keiji Fukuda of the World Health Organization as saying, " Right now we have zero evidence to suspect that exposure to meat leads to infections."

U.S. Trade Representative Ron Kirk on Tuesday urged all trading partners to base their decisions on scientific evidence per international obligations.

Last Updated: April 28, 2009 11:00 EDTRussia Bans U.S. Meat Amid Swine Flu Outbreakhttp://www.allheadlinenews.com/articles/7014964064

April 28, 2009 4:21 p.m. ESTJulie Farby - AHN ReporterMoscow, Russia (AHN) - Russia is extending its ban on raw meat imports due to the outbreak of swine flu in the U.S. states of New York and Ohio, as well as on all cooked meat products that could be carried in the form of personal luggage of airplane passengers and crew.Russia's top veterinarian said on Monday that the country, which had already banned meat imports from some countries hit by the virus, including from top poultry meat supplier, the United States, could introduce new bans depending on where the disease spreads.Starting last Sunday, the ban applied to all types of meat from Mexico, Texas, California, and Kansas, and to raw pork from from Alabama, Arizona, Arkansas, Georgia, Louisiana, New Mexico, Oklahoma and Florida, countries of Central America and the Caribbean.Confirmed outbreaks of the swine flu in Mexico, where some 149 people have died, has prompted health authorities in the United States, Canada and Europe to put customs officers on alert.According to the report, cases of the new pig flu virus, which has components of classic avian, human and swine flu viruses but has not actually been documented thus far in pigs, were also suspected in France, Italy and Israel.

Russian ban on AZ pork called politicalhttp://ktar.com/?nid=6&sid=1143696

by KTAR Newsroom (April 28th, 2009 @ 9:17am)

PHOENIX -- The Arizona Pork Council said Russia's decision to ban Arizona pork is more of a political decision than one related to concerns about swine flu.

Russia has banned pork imports from Arizona and a number of other states and all meat imports from Mexico, California, Texas and Kansas -- where cases of the swine flu have been confirmed.

Tom Miller with the Arizona Pork Council said people cannot get swine flu from eating pork and the ban is unnecessary.

"We're hoping that we can calm the nerves of the people in Russia and get everybody calmed down because banning pork coming into the country is not going to prevent this disease from coming. People are going to bring it in, not pork."

Miller believes the decision is a political one.

"They're not a big importer of U.S. pork," he said. "In fact, we've been trying to work our way into that market and that's why I say some of this is politically motivated, because they've been trying to get past some of the Russian politics to get pork into that country in the first place."

Miller doubts the Russian ban will have a huge economic impact on Arizona unless other countries follow suit.

Belarus intensifying border sanitary control over swine flu

http://www.itar-tass.com/eng/level2.html?NewsID=13887850&PageNum=0

MINSK, April 29 (Itar-Tass) - Belarus is intensifying sanitary control at its international airport and on the border in connection with the swine flu outbreak in the world.

According to the country’s Chief Sanitary Doctor Valentina Kachan, Belarusian specialists are monitoring the situation with the aim of preventing the penetration and spread in the Belarusian territory of the swine flu virus and are working out a system of measures to enhance the republic’s readiness for possible pandemic.

“As of today, there are no official data that the virus is transmitted through meat and meals. But together with the Ministry of Agriculture and Food we will discuss a complex of preventive measures that should be taken if necessary,” Kachan said on national television on Tuesday.

She also noted that specialists “will be monitoring single cases of the disease and group contraction of the disease and will draw a plan of preparation for the swine flu pandemic.”

Meanwhile, the World Health Organisation (WHO) said in its Interim WHO guidance for the surveillance of human infection with swine influenza A(H1N1)virus that in order to understand the severity of the disease it is very important that comprehensive data collection and follow up is carried out for all probable and confirmed cases of swine influenza A(H1N1) virus infection. WHO’s data requirements are detailed in the Global Surveillance during an Influenza Pandemic Version 1 Updated draft April 2009 (Comprehensive Assessment, Clinical characteristics: Database of information for 100 cases). Many countries and territories will have already developed questionnaires for influenza A(H5N1) related investigation. These can be adapted and used for the investigation of individuals for whom swine influenza A(H1N1) virus infection is considered.

Confirmed and probable cases reported are to be attributed to the country or territory in which they are currently located or where they have died. Changes in case classification from probable to confirmed, as well as determination of the final outcome of the disease, should be signalled when reporting and will be reflected in the updates to be published by WHO.

According to a UN press release, with increasing numbers of people contracting the deadly swine flu virus, the United Nations health agency on Monday elevated the international pandemic alert to phase 4, on a six-point scale, for the first time since the current warning system was introduced in 2005 in response to the avian influenza crisis.

The increase in the alert level signals an outbreak of human to human transmission in at least one country, which increases the risk of a global epidemic, but does not mean a pandemic is inevitable.

“Given the rapidly evolving situation [it was felt] that it was important to give a strong signal to countries that now is a good time to strengthen preparations for possible pandemic influenza,” World Health Organization (WHO) Assistant Director-General Keiji Fukuda told reporters in Geneva.

Mr. Fukuda explained that the emergency committee of health experts, set up to deal with the recent outbreak of the swine flu virus, raised the alert level because the virus had already spread to the United States, Mexico, and Canada, with a verified case in Spain.

He underscored the importance for authorities to protect the health of individuals and to focus their efforts on mitigating the disease rather than attempt to stop its spread, stressing that “containment is not a feasible consideration.”

WHO would not recommend the closing of borders or the restriction of travel, which would have little to no effect in stopping the movement of the virus, Mr. Fukuda said.

Phase 5 of the WHO pandemic alert levels is characterized by human-to-human spread of the virus into at least two countries in one WHO region, according to the UN release.

“The declaration of Phase 5 is a strong signal that a pandemic is imminent and that the time to finalize the organization, communication, and implementation of the planned mitigation measures is short,” says the agency’s website.

Noting that flu season is now kicking into gear in the southern hemisphere, Mr. Fukuda said it is prudent to continue production of general influenza vaccines that prevent severe illness and death from seasonal influenza.

However, the emergency committee also advised WHO to “take all steps to facilitate production and development of a swine flu influenza vaccine that would be effective in [treating] people against this new virus.”

A new vaccine would normally take four to six months to develop and for the production of initial batches. The manufacture of significant amounts of the vaccine would require further months, by which time the threat of pandemic could be over, warned Mr. Fukuda.

In an unscheduled address to the press this afternoon, Secretary-General Ban Ki-moon told reporters “The UN system is responding, quickly and effectively, with the Director General of the World Health Organization [WHO], Dr. Margaret Chan, taking the lead.”

Announcing that the World Bank and other UN development and humanitarian agencies will provide funding to countries needing additional resources to combat an epidemic, UN Secretary-General Ban Ki-moon said that the poorer nations must not be hit disproportionately hard by a potential health crisis. “So far, our response has been an example of multilateral cooperation at its best. I am confident that it will continue to be so,” he added.

Meanwhile, a team of experts from the UN Food and Agriculture Organization (FAO) is helping to determine if the new virus strain has a direct connection to pigs. FAO will also dispatch a team of animal health experts to Mexico this week to help the Government assess the origin and transmission of the infection in the pig production sector, the release says. So far, the spread seems to be solely humans to human. Evidence that the virus entered the human population directly from pigs has not yet been established.

“There is no evidence of a threat to the food chain; at this stage it is a human crisis and not an animal crisis, but we have to be alert and prepared,” said FAO Chief Veterinary Officer Joseph Domenech. He added that FAO and others must first “ascertain if the new strain is circulating in pigs, establish if there are any direct linkages between the illness in the human population and animals and explain how this new virus has obtained genetic materials from human, bird and pig influenza strains.”

Russia-NATO Council to hold official meeting in Brussels

http://www.itar-tass.com/eng/level2.html?NewsID=13887868&PageNum=0

BRUSSELS, April 29 (Itar-Tass) - Russia-NATO Council is due to have an official meeting at the level of ambassadors here Wednesday, the first official conference after the conflict in South Caucasus last August when Russia had to launch a peace enforcement operation against Georgia in response to that country's armed punitive action in South Ossetia.

Moscow will be represented at the meeting by the ambassador to NATO, Dmitry Rogozin.

"The task for today is to give the go-ahead to a gradual and weighed-out restoration of relations between Russia and NATO and to consider the areas of practical cooperation," he said.

According to Rogozin, this meeting will open up the road to a session of the council at the level of foreign ministers, due in Brussels May 19.

"I don't think the discussion will develop smoothly, as new irritating factors have surfaced of late," he said. "NATO's exercise in Georgia, even though it was scheduled well in advance can't help causing our concern and part of the reason is that some NATO representatives view these war games as an over demonstration of support for the Georgian regime."

"But still we hope that the discussion will unfold in a balanced key and we'll be able to consider the necessary questions regarding the future," Rogozin said.

"One of the things to be discussed here is a quality rebooting of the council's operations," he said, adding that Russian diplomats have held a long range of consultations at NATO headquarters in the past few weeks.

These discussions centered around the mechanisms for improving the Council's performance.

"Along with it, a group of NATO countries put forward a package of interesting initiatives, which are too early to specify yet," Rogozin said.

He indicated that these initiatives aim to improve practical cooperation between the two sides.

"We must see to it that the Russia-NATO Council work without interruptions and be unaffected by fly-by-night political whiffs," Rogozin said.

"It must become an active instrument in solving the problems of military and political security in the Euro-Atlantic space," he said.

He singled out interaction in Afghanistan as a practical area where both sides are ready to develop joint efforts right away.

"On the regional plane, it embraces Pakistan and other regional states," Rogozin said.

"We must attain cooperation between NATO and member-nations of the Shanghai Cooperation Organization," he said.

NATO to resume formal contacts with Russia

http://www.jpost.com/servlet/Satellite?cid=1239710817678&pagename=JPost%2FJPArticle%2FShowFull

Apr. 29, 2009Associated Press , THE JERUSALEM POST

NATO and Russia are set to resume formal contacts following an eight-month freeze caused by last year's war between Russia and Georgia.

Diplomats say ambassadors from Russia and NATO's 28 member nations will discuss a possible meeting of foreign ministers next month. The talks are being held under the framework of the NATO-Russia Council, a panel set up to improve relations between the former Cold War foes.

Formal ties were suspended following the five-day Georgian war. NATO nations accused Moscow of using disproportionate force to eject Georgian forces that had occupied the capital of the breakaway province of South Ossetia.

Still, relations have improved significantly since then. NATO and Russia have cooperated closely in areas such as the war in Afghanistan and anti-piracy patrols off Somalia.

Afghanistan is the key to Russia-NATO relationshttp://www.russiatoday.ru/Politics/2009-04-29/Afghanistan_is_the_key_to_Russia-NATO_relations.html

29 April, 2009, 10:42

The future of Afghanistan and the whole Central Asian region is on the agenda of Russia-NATO cooperation because stability in neighbouring Iran and Pakistan is under question.

It would be difficult for NATO to deal with all the obstacles in Asia without Russia. So both NATO and Russia, which has its own interests in the region, are now trying to mend the relations that suffered after last year’s war in South Ossetia, says political analyst Sergey Utkin from the Institute of World Economy, and the president of the New Eurasia Institute Andrey Kortunov.

Lavrov to take part in Arctic Council ministers meeting in Norway

http://www.itar-tass.com/eng/level2.html?NewsID=13888689

TROMSO (Norway), April 29 (Itar-Tass) - Problems of climate change in the Arctic region will be discussed in the Norwegian city Tromso on Wednesday by participants in a meeting of the Arctic Council. Foreign Minister Sergei Lavrov heads the Russian delegation at the forum.

According to Russian Foreign Ministry spokesman Andrei Nesterenko, this ministerial meeting “will be of special importance in the conditions of quick developments in the Arctic region in connection with climate change and its aftermath, in connection with the strengthening of international Arctic cooperation and the sharp growth of attention to the region in the world.”

“We expect the approval of Russian initiatives put forward earlier on the creation in the Arctic of a system of prevention of technogenic catastrophes, as well as search and rescue

systems,” the diplomat noted. He also said that “Sergei Lavrov is planning to introduce Russia’s proposals on new projects of the Council.”

The Arctic direction occupies an important place among Russian foreign policy priorities. “The ‘RF state policy guidelines in the Arctic for a period up to 2020 and further’ approved by the President of Russia in September 2008 determine preservation of the Arctic as a zone of peace and cooperation as one of the main Russian national interests,” Nesterenko recalled.

Russian Foreign Ministry’s Ambassador at Large Anton Vasilyev noted that Russia “is satisfied with the development of cooperation within the framework of the Arctic Council, which fulfils its tasks.” “The Council has shown that it is capable of flexibly adapting to changing conditions,” the diplomat stressed.

He highly assessed the work of the Council under the Norwegian presidency. “All the set tasks have been fulfilled,” he said. “During the Norwegian presidency considerable attention was given to the problems of climate change and the study of the vulnerability of the region’s residents to climate change has been completed,” the diplomat added.

In Tromso Norway will hand over its presidency in the Arctic Council to Denmark.

Vasilyev noted that “the problem of ice melting in this region both from the viewpoint of security and from the viewpoint of opportunities for business activities in particular, the issue of the Northern Sea Route has major importance” for Russia.

He also stressed that Moscow “sees no need in militarization of the territory of the Arctic Ocean and the Arctic region.” “The situation in this region is calm, stable and predictable,” the ambassador noted. “We are far from making abrupt decisions,” he added. Russia “will keep in the North, the same as before, just the needed group of general-purpose forces, and we do not envisage the creation of any special Arctic troops,” the diplomat specified.

The Arctic Council founded in 1996 brings together Russia, the United States, Canada, Norway, Denmark, Iceland, Sweden and Finland. The Council’ s ministerial meetings are called once in two years.

The Arctic Council said in a press release that the Ministerial Meeting marks the end of the Norwegian Chairmanship. Denmark is going to take over the chairmanship for the next two years. Ministerial meetings shall be held biennially, or at such other times and locations as may be agreed upon by the Arctic States in consultation with the Permanent Participants. Last Ministerial Meeting was held in Salekhard, Russia in the autumn 2006.

The organisers of this year’s meeting expect more than 300 participants representing the member states, the Permanent Participants and observer states and organisations. The venue will be the Rica Ishavshotel in the harbour of Tromso. The Ministerial Meeting will be held back to back with the former US Vice President Al Gore’s and the

Norwegian Minister of Foreign Affairs Jonas Gahr Store’s conference: Melting Ice; Regional Dramas, Global Wake-Up Call.

The first step towards the formation of the Council occurred in 1991 when eight Arctic countries signed the Arctic Environmental Protection Strategy (AEPS). The Ottawa Declaration of 1996 formally established the Arctic Council as a high level intergovernmental forum to provide a means for promoting cooperation, coordination and interaction among the Arctic States, with the involvement of the Arctic Indigenous communities and other Arctic inhabitants on common Arctic issues, in particular issues of sustainable development and environmental protection in the Arctic. The Ottawa Declaration named eight members of the Arctic Council. Canada, Russia, Norway, Denmark, Iceland, The United States, Sweden and Finland.

The Arctic Council convenes approximately every six months at a site within the host Chair's nation for a Senior Arctic Officials (SAO) meeting. SAO’s are high level representatives of each of the eight member nations - sometimes Ambassadors, often just senior foreign ministry officials entrusted with staff-level coordination. Representatives of the six Permanent Participants and the official Observers also are in attendance.

At the end of the two-year cycle, the Chair hosts a Ministerial-level meeting, which is the culmination of the Council’s work for that period. Most of the eight member nations are represented by a Minister from their Foreign Affairs, Northern Affairs or Environment Ministry.

Global Wake-up Call from Tromsøhttp://www.barentsobserver.com/global-wake-up-call-from-tromsoe.4586214-16174.html

2009-04-29 Fight against climate changes will be on the top agenda when the Arctic Council’s Foreign Ministers meet in Northern Norway today. The official Arctic Council meeting starts in Norway’s Arctic capital Tromsø today, but many of the Foreign Ministers and delegates, meet already Tuesday and discussed the impacts of melting ice in Antarctica, the Arctic and mountain areas worldwide. The conference Melting Ice: Regional Dramas, Global Wake-Up Call was co-hosted by Norway’s Foreign Minister Jonas Gahr Støre, while the main star-speaker was Nobel Peace Prize winner and former US Vice President Al Gore.- There is indeed a risk that we will be among the last to live in a time of bountiful ice and snow; but such a future is not inevitable. I sincerely believe that today will mark one important step towards a different future, one where longing for the first winter’s snow remains a basic part of the human experience, Foreign Minister Støre said during his opening speach of the conference.On behalf of Norway, Foreign Minister Støre will at today’s Arctic Council meeting end the Norwegian two and a half year long chairmanship of the council. Denmark takes over the chairmanship for the coming next two years.Denmark is - through its administration of Greenland, one of the countries in the world that will be most affected by climate changes. Earlier in April, BarentsObserver.com

reported that melting of the Greenland ice sheet contributes more to rising sea level than previously assumed.There are also serious worries about the impact of climate changes in the Barents Sea area. BarentsObserver.com reported last week that the temperature in the air over the Barents Sea was four degree Celsius warmer than average this winter.From Russia, both Foreign Minister Sergey Lavrov and Deputy Foreign Minister Vladimir Titov will participate at the Arctic Council meeting. A pre-statement from the Russian Ministry says Moscow is gratified by the development of international cooperation in the Arctic and supports the further strengthening of key regional multilateral intergovernmental organizations, the Arctic Council and the Barents Euro-Arctic Council.Moscow says the upcoming session will have special significance in conditions of a rapidly evolving Arctic situation owing to climate change and its consequences, greater international cooperation in the Arctic, and a sharp increase in attention to it in the world.Sergey Lavrov is also planning to submit the proposals of Russia on a number of new concrete projects of the Council. Later this year, in October, Lavrov invites his colleges from the Barents member countries to Murmansk for the Ministerial Barents Council meeting. Murmansk and Tromsø are friendship cities.

EBRD president arrives in Moscow for talks with Russian governmenthttp://www.itar-tass.com/eng/level2.html?NewsID=13887265&PageNum=0

MOSCOW, April 28 (Itar-Tass) -- President of the European Bank for Reconstruction and Development (EBRD) Thomas Mirow arrived in Moscow on Tuesday for talks with the Russian government on the eve of an annual bank’ s meeting due in London on May 15-16, the Prime Tass economic news agency cited the EBRD’s press release.

The EBRD annual meeting of shareholders, including Russia, will map out the bank’s anti-crisis strategy in 30 partner countries, Prime Tass said.

In Moscow, Mirow will meet with Russian Economic Development Minister Elvira Nabiullina, who represents Russia in the EBRD Board of Governors.

He will also meet with Russian Deputy Finance Minister and EBRD Alternate Governor Dmitry Pankin, Prime Tass cited the document.

Mirow is accompanied by EBRD Business Group Director for Russia Alain Pilloux.

During his visit, Mirow will meet with President of the Russian Union of Industrialists and Entrepreneurs (RUIE) Alexander Shokhin to sign a framework agreement, which would set up principles of cooperation between EBRD and RUIE, Prime Tass said.

The bank and the union plan to conduct joint work, thus designating projects, which meet the terms of the EBRD financing in Russia and other bank’s partner countries, Prime Tass cited the press release.

The EBRD is the largest foreign resource for medium and long-term funding in Russia.

While excluding guarantees granted in compliance with a trade support program, the bank invested more than one billion U.S. dollars in the funding of Russian projects by the end of March 2009 from the beginning of the crisis, which came to the country at the end of August 2008, Prime Tass said.

In 2008, EBRD investments in Russia’s economy reached roughly 2.5 billion U.S. dollars, Prime Tass said.

This year’s investments are expected will make up about three billion U.S. dollars.

Lavrov Warns EUhttp://www.themoscowtimes.com/article/1010/42/376674.htm

LUXEMBOURG -- Foreign Minister Sergei Lavrov warned the European Union against meddling with former Soviet republics Tuesday.

An EU summit with six former republics "should not get in the way of the post-Soviet area," Lavrov told reporters after meeting EU officials. "Some of the comments we've heard about this initiative from the European Union side do worry us."

Leaders of the six countries -- Belarus, Ukraine, Moldova, Georgia, Armenia and Azerbaijan -- and the EU will meet in Prague on May 7.

EU foreign policy chief Javier Solana said he briefed Lavrov on his trip to Moldova last week and the EU's invitation to Belarussian President Alexander Lukashenko to next week's gathering.

"We have some disagreements," Solana said. "All these things we do in a transparent manner, because we don't have anything to hide." (Bloomberg)

Lavrov, Solana discuss Iran’s nuclear programhttp://www.tehrantimes.com/index_View.asp?code=193361

MOSCOW (IRNA) -- EU foreign policy chief Javier Solana and Russian Foreign Minister Sergei Lavrov held talks on leading international issues, including Iran’s peaceful nuclear program, in Luxembourg on Tuesday. The two sides also exchanged views on developments in the Middle East, Kosovo, Moldavia and disputed regions in Europe.

Ways to dismantle weapons of mass destruction and reduce arms race were also among

other issues discussed by Solana and Lavrov.

As a veto-wielding member of the UN Security Council, Russia supports Iran’s peaceful use of nuclear technology.

It had announced that based on International Atomic Energy Agency (IAEA) documents, Iran’s nuclear activities have no military purposes.

Russia’s foreign minister recently said that the five permanent members of the Security Council -- Russia, China, France, Britain and the U.S. -- plus Germany plan to hold talks with Iran on the nuclear issue.

The 5+1 group should open talks with Iran to help the UN nuclear watchdog settle remaining issues, he said.

Russia urges closer EU cooperation on security http://georgiandaily.com/index.php?option=com_content&task=view&id=11282&Itemid=65

April 28, 2009Russian Foreign Minister Sergei Lavrov urged the EU Tuesday to work with Russia on a new European security project, insisting that the forum for Moscow's security ties with NATO needs revision.Speaking to reporters in Luxembourg, Lavrov said the EU-Russia "permanent partnership council" -- which meets twice a year at the level of foreign ministers -- could be the forum in which to develop security relations."I feel that this is a very useful mechanism although I'm convinced that further development" is needed, he said after talks with senior EU officials.NATO and Russia work together on security issues and air their differences in the so-called NATO-Russia Council, but top level talks in that forum were frozen after the war in Georgia last year and only resume formally Thursday.Lavrov said the operating "principles" of the body Russia shares with the military alliance "are further advanced than our dialogue here".But he underlined: "The basis for NATO-Russia Council (NRC) is not working very well, and that is something we are going to have to discuss with our partners."Lavrov and his NATO counterparts are set to debate ways to revitalise the NRC at talks in Brussels on May 19.Russia last year called for a new, legally binding security pact in Europe to replace what it says are outdated arms control treaties from the Cold War and to help avoid crises such as the war in Georgia.But the idea has been largely rebuffed by the EU and NATO.Moscow is deeply concerned about NATO expanding ever closer to its borders and the possibility that neighbours like Georgia or Ukraine might be allowed to one day join the world's biggest military alliance.

An EU diplomat said Russia had been pushing the security aspect in the framework of discussions with Europe on a new basis for their ties, particularly since Moscow contributed to an EU peacekeeeping mission in Chad.Russia wants "to do a whole lot more" with it, he said.The diplomat said that Moscow is playing a "political game" and "probably wants to escape from its little tete-a-tete with NATO" on security issues. 

April 28, 2009

Are EU-Russia Relations Stuck In A Loop? http://www.rferl.org/content/Are_EURussia_Relations_Stuck_In_A_Loop/1617662.html

by Ahto Lobjakas

Curiously, each successive EU-Russia meeting increasingly gives the impression of being the first.

At their own admission -- more palpably on the EU's part -- the two sides continue to know little about each other.

The Czech foreign minister and current EU chairman, Karel Schwarzenberg, told journalists in Luxembourg after a morning of talks with his Russian counterpart Sergei Lavrov on April 28 that after a "very frank and open discussion," he has "better knowledge of the views [of] and prospects for cooperation" with Russia.

The statement comes after more than eight years of biannual EU-Russia summits, and 12 years during which one Partnership and Cooperation Agreement between the two sides has lapsed and another, more "strategic" accord, is in the process of being negotiated.

The root cause of the problem is that there is very little the EU and Russia can agree on. Schwarzenberg found it necessary after the latest meeting to reiterate the most basic of tenets held dear by the EU.

"It is well known that the EU attaches great importance to issues of freedom of expression and association, activities of civil society, independent media and judiciary," Schwarzenberg said.

Profound disagreements over basic political precepts are accompanied by disputes over fundamental rules of economic conduct. The EU has failed to make any significant inroads toward lowering Russian resistance to free-market principles in its economy.

Issues Of Trust

The deepest dissent is currently reserved for discussion of the neighborhood the two sides share, which is riven by worsening political and economic instability.

"We need to restore trust" between the EU and Russia after the war in Georgia in August

2008 and the protracted gas dispute between Russia and Ukraine in January 2009, Schwarzenberg said.

Moscow has trust-related issues of its own. Speaking in Brussels last month, Lavrov accused the EU of trying to carve out a "sphere of influence" on the territory of the former Soviet Union with its Eastern Partnership initiative, designed to facilitate closer ties between the bloc and Belarus, Ukraine, Moldova, Georgia, Armenia, and Azerbaijan.

Schwarzenberg responded on April 27 at an EU foreign ministers' meeting by denying any such intention and attacking the overall notion of a sphere of influence.

"We strongly defend the point of view that there should be no spheres of influence, neither for the Russians nor for us," Schwarzenberg told reporters.

Prodded on the issue the next day, Lavrov confirmed EU representatives were trying to assuage Moscow's concerns.

"Indeed, we hear from Brussels assurances that it is not an attempt to create a new sphere of influence, that it is not a process which is directed against Russia," Lavrov said. "We would like to believe these assurances."

Avoiding 'Russian Route'

Poland and Sweden first floated the idea of an Eastern Partnership in June 2008 in a bid to secure greater EU attention and finances to its eastern neighbors.

But in the wake of the Russian-Georgian war, the project acquired a new kind of urgency.

Policymakers in Brussels and EU capitals began talking of the need to provide an "alternative" to Russian influence for governments on the bloc's eastern borders.

It is not difficult to deduce how the EU sees the difference between what it and Moscow have to offer their neighbors. Even as Schwarzenberg dismissed the notion of "spheres of influence," he noted that the EU wants to develop the Eastern Partnership states "because it is in our interests that these countries don't lag too far behind the European Union -- because that would create difficulties in the future."

"Stability" is another key word often used in Brussels in respect to the Eastern Partnership.

In other words, the EU cannot afford to let the countries take the Russian route.

Lavrov's outburst in Brussels in March gave a tantalizing glimpse into the Russian side of the story. Referring to the EU's insistence that none of its eastern partners follow Moscow's lead in recognizing as independent the Georgian provinces of South Ossetia and Abkhazia, the Russian foreign minister asked if the Eastern Partnership is in reality

"about pulling countries from the positions which they are supposed to take freely?"

The fact that none of the six countries invited to participate in the Eastern Partnership has caved in to Moscow's pressure and recognized Abkhazia and South Ossetia is a particularly irritating reminder for Russia of the limits of its current power.

Russia's resentment of the EU's eastern outreach attempts -- despite its admittedly limited objectives, which fall far short of the membership track -- seems to have two sources. On the one hand, Russia's leaders themselves continue providing ample evidence that the country has yet to come to terms with the loss of its Soviet (and the preceding tsarist) empire.

Offering Alternatives

On the other, Russia craves respect and inclusion which it appears to believe it is owed. Lavrov on April 28 reiterated President Dmitry Medvedev's ambitions to develop a "new security architecture" for Europe, describing it as giving "full participation" to all countries.

Vladimir Putin, while still president, spoke of Russia as one of the three pillars of "Euro-Atlantic civilization," alongside the United States and Europe.

The EU's visa regime for Russians remains the most humiliating reminder of how far Russia's putative partners are from recognizing its ambitions. Symptomatically, the removal of the EU visa barrier remains Russia's top priority in bilateral relations with the bloc.

Russia's frustration extends to the EU's new, ex-communist member states, whom Moscow tends to regard as usurpers -- obstacles on the path to its own rightful place in Europe.

Even before the EU's enlargement in 2004, Moscow was putting in place a policy of cultivating direct contacts with the EU's largest western capitals. Quoting the poet Aleksandr Blok, a Russian strategist described the strategy as an appeal to "Gallic reason" and "Teutonic genius."

Russia has managed to sow some dissension within the EU's ranks, but has so far failed to thwart the bloc's slow expansionist drift.

Russian, Ukrainian premiers to discuss energy in Moscowhttp://en.rian.ru/russia/20090429/121362440.html

MOSCOW, April 29 (RIA Novosti) - Russian Prime Minister Vladimir Putin will meet with his Ukrainian counterpart Yulia Tymoshenko on Wednesday to discuss bilateral cooperation with the focus on energy.

Russia postponed government consultations with Ukraine, which were due to be held in late March, over a controversial deal between Kiev and the EU to modernize the ex-Soviet state's aging gas pipeline network.

However, Russia, which transits about 80% of its Europe-bound gas via Ukraine, was angry about the deal claiming it was excluded from the talks in Brussels.

The Kommersant business daily said Tymoshenko is ready to invite Gazprom to sign a new intergovernmental agreement to increase the capacity of Ukraine's Soviet-era gas pipelines.

Tymoshenko's energy advisor, Oleksandr Hudyma confirmed the reports saying that the deal would allow an extra 30 billion cubic meters of gas, estimated at $350 million, to be pumped through the pipeline network.

Ukraine's prime minister said on Monday she would push for amendments to the country's gas supply contract with Russia, to reduce the amount the country imports.

Ukraine, which has experienced a severe economic decline amid the global credit crunch, has imported just half of the contracted amount of gas from Russia since the start of the year.

Tymoshenko told reporters ahead of the meeting: "We will discuss the issue of reducing Ukraine's natural gas consumption. I am sure that the consumption plan will be corrected."

Under the contract signed in January which followed a dispute that interrupted Europe-bound supplies, state gas company Naftogaz is entitled to seek a reduction of up to 20%. The contract covers supplies from 2009 to 2019.

Ukraine's Ekonomicheskie Izvestia daily quoted officials as saying the countries were already working on the contract amendments.

Sergei Pashinsky, a Ukrainian lawmaker from the Tymoshenko bloc, told the paper: "Bilateral working groups are currently drafting an intergovernmental agreement based on principles of equality, partnership and coordination of strategic plans."

Ihor Didenko, first deputy board chairman at Ukraine's energy company Naftogaz, earlier said: "The contract signed in January is currently being streamlined. Our goal is to sign an extra agreement within a few weeks so that politicians have no doubt about contract provisions."

Ukrainian President Viktor Yushchenko has criticized the contract as "mutually disadvantageous."

Ukraine to offer Russia small pipeline dealhttp://www.upstreamonline.com/live/article177049.ece

Wire services

Ukraine will offer to revive a $350 million project with Russia to jointly build a new pipeline for Russian gas, Russian daily newspaper Kommersant reported today.

Russian Prime Minister Vladimir Putin is due to meet his Ukrainian counterpart Yulia Tymoshenko today for the first time since a winter gas row between the two countries halted supplies to Europe in early January.

Ukraine, which last month snubbed Moscow by striking a deal with the European Union to upgrade its pipeline network, will offer Russia a smaller project to boost its capacity by 30 billion cubic metres, Kommersant reported.

The two countries agreed on a similar project in 2003 but put it off indefinitely a year later. Ukraine's new offer might not interest Moscow, the newspaper wrote.

"Russia considers it necessary to cooperate on the whole gas shipping system (of Ukraine), not just a new pipeline," Kommersant wrote, reported Reuters.

Wednesday, 29 April, 2009, 06:24 GMT  | last updated: Wednesday, 29 April, 2009, 06:26 GMT

Ukraine to offer Russia $350 mln gas project – paperhttp://www.mosnews.com/money/2009/04/29/1370/

Today, 10:55 PM

Ukraine will offer to revive a $350 million project with Russia to jointly build a new pipeline for Russian gas, Russian daily newspaper Kommersant reported on Wednesday.

Russian Prime Minister Vladimir Putin is due to meet his Ukrainian counterpart Yulia Tymoshenko on Wednesday for the first time since a winter gas row between the two countries halted supplies to Europe in early January.

Ukraine, which last month snubbed Moscow by striking a deal with the European Union to upgrade its pipeline network, will offer Russia a smaller project to boost its capacity by 30 billion cubic metres, Kommersant reported.

The two countries agreed on a similar project in 2003 but put it off indefinitely a year later. Ukraine's new offer might not interest Moscow, the newspaper wrote.

"Russia considers it necessary to cooperate on the whole gas shipping system , not just a new pipeline," Kommersant wrote.

Ukrainian premier to discuss cooperation issues in Moscowhttp://www.itar-tass.com/eng/level2.html?NewsID=13887617&PageNum=0

KIEV, April 29 (Itar-Tass) – Ukrainian Prime Minister Yulia Timoshenko leaves for Russia later Wednesday to take part in the fourth session of the Joint Committee for Economic Cooperation.

Aircraft manufacturing projects will dominate her discussions with Russian officials.

Ukraine’s Minister of Industrial Policies, Vladimir Novitsky, and Russia’s Minister of Industry and Trade, Viktor Khristenko are expected to sign a protocol on supplies of equipment and component parts for aircraft technologies.

Also, they will sign a protocol on supplies of commodities in the framework of industrial cooperative operations.

A political decision will likely be taken on continuing works on the Antonov-70 airlift turboprop.

In addition to this, the two sides will consider cooperation in nuclear power, although a long-term agreement on deliveries of Russian fuel for Ukrainian nuclear plants after 2010, although the ancillary documents on uranium purchases and the setting up of a facility for manufacturing fuel assemblies will not be signed, in all probability.

One more energy sector problem Timoshenko and her Russian interlocutors will discuss is the pumping of 19.5 billion cubic meters of natural gas into underground gasholder farms on the Ukrainian territory.

Putin, Timoshenko May Agree Pipeline Overhaul, Kommersant Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aNtzfFgcLiFs

By Kateryna Choursina

April 29 (Bloomberg) -- Ukrainian Prime Minister Yulia Timoshenko may agree on the joint construction of a natural gas pipeline or overhauling her country’s existing network with her Russian counterpart Vladimir Putin today, Kommersant-Ukraine reported.

The new $350-million link could add 30 billion cubic meters of capacity, the Kiev-based newspaper said, citing Oleksandr Hudyma, Timoshenko’s energy adviser.

The two countries may also discuss a so-called gas transport group to help guarantee supplies to Europe, the newspaper said. A draft agreement also includes an increase in the transit fee, according to Kommersant.

To contact the reporter on this story: Kateryna Choursina in Kiev kchoursina@bloomberg.net

Last Updated: April 29, 2009 01:36 EDT

Ukraine to pay $270.95 for natural gas in Q2http://finchannel.com/index.php?option=com_content&task=view&id=35846&Itemid=2

28/04/2009 13:32  (20:46 minutes ago) The FINANCIAL -- In the second quarter of the year 2009, the price of gas, bought by Naftohaz Ukrayiny from Gazprom, will make $270.95 for a thousand cubic meters. According to an UNIAN correspondent, Naftohaz deputy chairman Ihor Didenko said this to journalists on April 28. He also forecasted that, in April, Ukraine will buy 2.3 billion cubic meters of natural gas.

Russia seeks Ukraine PM's assurances after gas rowshttp://uk.reuters.com/article/oilRpt/idUKLS52582220090428

Tue Apr 28, 2009 5:58pm BST

By Sabina Zawadzki

KIEV, April 28 (Reuters) - Russia expects Ukrainian Prime Minister Yulia Tymoshenko to soothe its anger over an EU gas pipeline plan when she visits Moscow on Wednesday to secure support for her presidential election bid in October.

Tymoshenko will meet Russian Prime Minister Vladimir Putin for the first time since a winter gas row between the two countries halted supplies to Europe in early January.

She helped broker a deal to end the dispute but then upset Moscow in March by backing a deal with the EU to modernise Ukraine's gas pipeline network.

The EU deal lost her Putin's trust and delayed March talks on a $5 billion loan to help Ukraine's struggling economy pay gas bills.

Analysts will also be looking for any future threat to European energy security from the turbulent relations between the two former Soviet states.

But any positive signals could hint at Moscow's future attitude to Tymoshenko, should she win Ukraine's presidential election after 4-1/2 years of strained relations with the country's pro-Western leaders.

"Russia will want to know from Tymoshenko what Ukraine will be like in a year," said Oleksander Todichuk, head of the Ukrainian-based International Energy Club think tank.

Ukraine's presidential election has been set by parliament for Oct. 25. with pro-NATO President Viktor Yushchenko, long at odds with Putin, set to run again despite low popularity ratings.

After Russia's brief war with Georgia last August, speculation emerged that Moscow may switch from supporting ally and former Prime Minister Viktor Yanukovich to Tymoshenko.

While Yushchenko slammed Russia during the Georgia war, Tymoshenko's comments were muted.

Observers also noted the warmth between Putin and Tymoshenko when they met last October, following mutual suspicion after the 2004 Orange Revolution which was sparked by a fraudulent presidential election initially won by Yanukovich.

But any understanding fell apart on Jan. 1, when Russia cut gas supplies over unpaid bills and Kremlin watchers queried if Tymoshenko offended Putin with other demands to those agreed in October.

Tymoshenko has said she would suggest cutting volumes of Russian gas imports this year, set in January's supply contract. The contract was signed after a three-week stand-off over prices that left millions across Europe without heat.

Any concession will allow Ukraine save billions of dollars and help its ailing state energy firm Naftogaz, just as the country's finances are strained by a sharp economic crisis. (Additional reporting by Pavel Polityuk in Kiev and Simon Shuster in Moscow)

Karamanlis, Putin phone talks on energy issues

http://www.ana-mpa.gr/anaweb/user/showplain?maindoc=7548733&maindocimg=7542846&service=6

   Prime Minister Costas Karamanlis had a 20-minute phone conversation with Russian Prime Minister Vladimir Putin on Tuesday afternoon, which focused on energy issues and ways to further develop the already close bilateral relations between Greece and Russia.

    Karamanlis noted the Greek side's desire to continue cooperating with Russia in the vitally important energy sector and his satisfaction with the progress of negotiations between Gazprom and Greece's DESFA (Hellenic Gas Transmission System Operator S.A.) for the Southstream natural gas pipeline.

    He assured Putin that Greece will take all necessary steps for the completion of these negotiations.

    Regarding the Burgas-Alexandroupolis oil pipeline, the Greek premier stressed the need to update a study for the project and the two leaders expressed conviction that work on the pipeline will proceed according to existing schedules.

    In terms of bilateral relations, Karamanlis said that Greece sees in Russia a "major friend and strategic partner", while Putin underlined the importance placed by Russia on relations with Greece and its desire to further deepen and expand these.

    They agreed that cooperation had been further strengthened through the Greek chair of the Organisation for Security and Cooperation in Europe (OSCE), during which Russia's supportive and constructive stance had been crucially important in resolving outstanding matters that concerned the organisation.

President Medvedev: Bulgaria Relations Back on Trackhttp://www.novinite.com/view_news.php?id=103200

Diplomacy | April 29, 2009, Wednesday

Bulgarian PM Sergey Stanishev's delayed meeting with Russian President Dimitry Medvedev took place late Tuesday in the Barbihka residence near Moscow.

The half-hour meeting took place after the two delegations from Russia and Bulgaria had finished day long talks in Moscow. Medvedev informed Stanishev that he was aware of the success of the talks stating, "The difficulties have been cleared".

Stanishev explained that the negotiations between Gazprom and the Bulgarian Energy Holding on energy project 'South Stream' had ended successfully.

"I know that all negotiations are complicated, especially the ones held on corporative levels as each part defends its own interest. But it is the politicians who resolve the disputes," added Stanishev.

Stanishev expressed before President Medvedev his content that Russia had accepted all Bulgaria's proposals.

Stanishev left 'Barbikha' residence and made for Moscow to meet with Moscow mayor Yuri Luzkhov in his last official Russian engagement.

Stanishev's visit to Russia had begun in controversy after Medvedev had cancelled their scheduled Monday meeting and after the international Energy Summit in Sofia, which was boycotted by Russia's Prime Minister, Vladimir Putin.

Putin Strikes South Stream Deal With Sofiahttp://www.themoscowtimes.com/article/1010/42/376675.htm

29 April 2009 By Anatoly Medetsky / The Moscow Times

Russia and Bulgaria bridged their differences over the planned South Stream pipeline after two days of intensive high-level diplomacy, Prime Minister Vladimir Putin and his Bulgarian counterpart Sergei Stanishev said Tuesday.

Putin also said Russia saw no point in continuing to be a signatory to the European Energy Charter after it failed to regulate Moscow's dispute with Ukraine over transit to Europe in January.

In addition, Moscow will also consider lending Sofia several billion euros to fund construction of a 4 billion euro ($5.2 billion) nuclear power plant in Bulgaria by a Russian company, Putin said.

South Stream appeared to have consumed most of the diplomatic efforts during Stanishev's visit, which saw two days of talks with Putin over the issue and a delay in meeting President Dmitry Medvedev.

As a result of the deal, Russia dropped its intention to use Bulgaria's existing pipelines to transit gas to Europe as part of South Stream, instead agreeing to consider other options, Putin and Stanishev said without naming them. Putin downplayed bilateral contentions in the matter.

"How did we overcome the tensions?" he said, repeating a question from a Bulgarian reporter at a news conference, before adding, "With our inherent laid-back brilliance. It was easy. ... We didn't even notice them. There were no tensions."

Stanishev was more reserved in his assessments. "It may not be with brilliance, but we are coping successfully," he said at the same news conference.

Under a contract running to 2030, Bulgaria now handles 17 billion cubic meters of gas from Russia every year, transporting most of it on to Greece, Turkey and Macedonia and keeping 3.5 bcm for domestic needs.

South Stream, to be laid on the bottom of the Black Sea and to surface in Bulgaria, is planned to have an annual capacity of 31 bcm. Gazprom and partner Eni of Italy want to complete constructing the undersea stretch in 2013.

Bulgaria insisted that Gazprom must build a new pipeline to carry South Stream's gas, saying it needed the existing network to continue handling the current transit and remain

available for any alternative supplies from projects such as Nabucco.

Putin said further talks were needed on transiting gas in excess of the current amount. He suggested a solution during a Monday meeting with Stanishev, and they came to a preliminary agreement, Putin said. He did not elaborate on the nature of the deal. Stanishev said only that the agreement comprised all the points that Bulgaria had pressed for.

Gazprom and the Bulgarian Energy Holding company will sign the deal by mid-May, the prime ministers said.

Putin used the news conference to suggest again that Russia might withdraw from the European Energy Charter, apparently to give more weight to a recent proposal by Medvedev that the international community adopt a broader alternative energy security pact. "Today, it's possible to say definitely and expressly that we don't see a point in maintaining our signature under that document," Putin said.

Central Asia Water Talks Break Downhttp://www.themoscowtimes.com/article/1009/42/376690.htm

29 April 2009 Reuters

ALMATY, Kazakhstan -- A rare Central Asia summit on how to share scarce water resources broke down in bitter disagreement on Tuesday after the region's five leaders failed to find any common ground in one of the world's driest regions.

Water sharing is a contentious issue in Central Asia, an arid, mainly Muslim region where water-thirsty crops like cotton are the main livelihood for most of its 58 million people.

Bickering over water has intensified in recent years as severe weather fluctuations -- from record cold winters to devastating floods and droughts -- cause additional friction.

Seen as a source of instability, the dispute has worried the West, which sees Central Asia as part of its alternative supply route for U.S. and NATO troops fighting in nearby Afghanistan.

The one-day summit in Kazakhstan was officially designed to discuss the disappearing Aral Sea but was seen as a chance to openly discuss cross-border water sharing.

The main stumbling block, however, was the agenda of the summit itself as the presidents of Kazakhstan, Tajikistan, Turkmenistan, Kyrgyzstan and Uzbekistan sat down for talks.

On one side were Kyrgyzstan and Tajikistan, two poorer nations abundant in hydro resources that sought to use the meeting to raise national grievances over water use.

The other camp, represented by Uzbekistan and Kazakhstan, the region's biggest economies and key water consumers, sought to restrict all talks to the safer subject of the Aral Sea.

"Let me tell you about the problems that concern Kyrgyzstan the most, the problems that should be at the heart of activities of this [summit]," said Kyrgyzstan's leader, Kurmanbek Bakiyev.

"Over the last 16 years, this has been the only venue uniting all Central Asia countries to discuss not only ecological but also water and energy-related problems. We need ... appropriate measures to solve this critical situation [over water use]."

Bakiyev's address, which focused on Kyrgyz concerns such as energy shortages and the need to construct new power stations, triggered an angry reaction from Uzbek President Islam Karimov.

"We agreed that during this summit we would discuss issues only concerning the Aral Sea," Karimov said. "There is no point creating a whole discussion about it [water sharing] ... here."

The region's most populous country, Uzbekistan, is worried that the upstream states like Kyrgyzstan will gain political leverage by regulating water flows through new hydro plants.

During the meeting, which was open to reporters, Kazakh President Nursultan Nazarbayev sided with Karimov, while the Turkmen leader showed a more neutral position. A previous Aral Sea water summit took place in 2002.

In Soviet times, water distribution was regulated by Moscow planners who ran an elaborate cross-border system of barter exchange to swap water for commodities like electric power -- an arrangement that fell apart along with the Soviet Union.

Central Asian leaders themselves know that how much stability in their ethnically diverse region depends on the availability of water. But no agreement appears to be in sight.

The most emphatic symbol of the problem is the Aral Sea -- once the world's fourth-largest lake -- that has shrunk by 70 percent as Moscow planners siphoned off water for cotton-irrigation projects in Uzbekistan.

Russia, which wants to play a role in regional water resources, was not invited to the meeting.

Russian ship Admiral Panteleyev detains Somali pirates' boat

http://www.itar-tass.com/eng/level2.html?NewsID=13887589&PageNum=0

MOSCOW, April 29 (Itar-Tass) -- Crew of the Russian antisubmarine ship Admiral Panteleyev detained and examined a boat with Somali pirates aboard Tuesday night.

The detention took place at 18:10 Moscow Daylight Saving Time /14:10 GMT/ some 15 miles east off Somalia’s coast in the zone of intensive commercial navigation.

“During the inspection, the crew found seven Kalashnikov guns, handguns of various brands, aluminum ladders for ascending aboard, navigation equipment, including the satellite one, reserve tanks with fuel, and a big amount of empty cartridge cases,” a source at the Russian Defense Ministry said.

“These finds give grounds to suppose that precisely this group of pirates made two abortive attempts to seize the TF Commander tanker with the Russian crew that was passing the area with a consignment of crude oil to Singapore Tuesday,” he said.

The ship waved the Liberian flag.

“The total number of detained people is 29,” the spokesman said. “Investigative actions decreed for such situations have begun.”

Russian Warship Captures 29 Pirates, Vessel Off Somali Coasthttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aCPsSX.wXbg8

By Michael Heath

April 29 (Bloomberg) -- A Russian warship captured a suspected pirate vessel with 29 people on board off Somalia after they had attempted to board a Liberian-flagged oil tanker, state media reported, citing the Defense Ministry.

The Admiral Panteleyev anti-submarine destroyer seized the pirates 15 miles (24 kilometers) off Somalia’s east coast at 6:12 p.m. Moscow time yesterday, state broadcaster Vesti said. A search of the ship uncovered seven Kalashnikov rifles, pistols, an aluminum ladder and satellite navigation equipment.

“This allows us to assume that this group of pirates undertook two failed attempts to seize the TF Commander tanker with a Russian crew” in the region, the Defense Ministry said, Vesti reported on its Web site.

Russia is one of several countries that have deployed warships to try to halt spiraling pirate raids off the Horn of Africa. Attacks by armed gangs operating from havens in Somalia soared 10-fold to 61 in the first three months of 2009, the International Maritime

Bureau says. The waters off Somalia accounted for more than half of the 102 attacks worldwide.

Armed gangs succeeded in hijacking 14 ships so far in April, a monthly record, the bureau said.

NATO said last week it will put more naval firepower in the seas off Somalia to fight piracy in the shipping lanes that handle a 10th of the world’s trade.

Combating piracy shot up the U.S. agenda when American snipers, acting on President Barack Obama’s orders, killed three pirates to free a U.S. ship captain taken hostage off Somalia’s coast earlier this month

Civil unrest and the absence of a functioning government in Somalia have driven 3 million people into exile and turned the lawless state into a breeding ground for pirates.

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net.

Last Updated: April 28, 2009 20:57 EDT

Russian destroyer captures 29 Somali pirates: reportshttp://www.google.com/hostednews/afp/article/ALeqM5imxWY_7KRnx-W8u_FkchQptRQpVw

9 hours ago

MOSCOW (AFP) — A Russian naval destroyer on Tuesday seized 29 suspected pirates off the coast of Somalia, the defence ministry said, according to Russian news agencies.

"The Admiral Panteleev (destroyer) captured Tuesday at 1412 GMT a boat carrying pirates. In total, 29 people were arrested," the ministry said in a statement.

"Seven Kalachnikov machine-guns, handguns of different calibres, equipment including satellite navigation devices and a large number of empty shells were discovered on board the boat," the ministry said, adding that an investigation has been opened.

These arrests would dwarf the numbers seized in other recent operations by international military forces patrolling the waters off the Gulf of Aden in the last year.

The question of where any eventual trial for the 29 might take place will also come to the fore.

Trials relating to a spiralling upsurge in pirate attacks in the region over the last year are largely being hosted by Kenya, following agreements with the European Union, the United States and Britain.

Eleven Somalis are currently awaiting trial in the Kenyan port city of Mombasa for piracy after their high-seas arrest by the French navy deny.

But a Somali teenager captured by US forces in a high-seas drama is to stand trial in New York on piracy charges -- the first in the US for a century -- that could put him in jail for life.

Despite international naval missions -- including from NATO and the European Union -- ransom-hunting Somalis have tackled ever-bigger and more distant prizes.

Without an effective central government since 1991, Somali pirates are currently holding at least 16 ships and more than 250 seamen to ransom.

According to the International Maritime Bureau, pirate attacks off the lawless Horn of Africa nation increased tenfold in the first three months of this year compared with the same period in 2008, jumping from six to 61.

Russian destroyer detains about 30 Somali pirateshttp://en.rian.ru/russia/20090429/121361953.html

MOSCOW, April 29 (RIA Novosti) - Russia's Admiral Panteleyev missile destroyer has detained a boat carrying 29 suspected pirates off the Somali coast, the Russian Defense Ministry said on Wednesday.

A new task force from Russia's Pacific Fleet led by the destroyer joined anti-piracy operations on Monday off the Horn of Africa.

"A search of the detained vessel resulted in the discovery of seven Kalashnikov assault rifles, several handguns, portable navigation equipment, fuel canisters, and a large number of spent cartridges," the ministry said in a statement.

"This leads us to believe that these pirates could have been involved in two unsuccessful attacks on a Liberian-flagged tanker with a Russian crew on board, which passed through this area on Tuesday with a shipment of oil en route to Singapore. The total number of people detained is 29," the statement said.

The Russian maritime journal Sovfrakht reported on Tuesday that the NS Commander tanker, partly owned by Russia's Novoship company, had been attacked by Somali pirates on Monday about 120 miles east of the Yemeni island of Sokotra.

The 23-men crew successfully repelled the attempted hijack and the ship continued on its way to its destination.

At the time of the attack, the tanker was about 130 miles from the Admiral Panteleyev, which is an Udaloy-class missile destroyer armed with anti-ship missiles, 30-mm and 100-mm guns, and Ka-27 Helix helicopters.

Around 20 warships from the navies of at least a dozen countries are involved in anti-piracy operations off Somalia. According to the United Nations, Somali pirates carried out at least 120 attacks on ships in 2008, resulting in combined ransom payouts of around $150 million.

29 April 2009, 10:10

Meeting between Patriarch, Pope should not be result of opportunistic motives - Moscow Patriarchatehttp://www.interfax-religion.com/?act=news&div=5981

Brussels, April 29, Interfax - The Russian Orthodox Church says a meeting between Patriarch Kirill of Moscow and All Russia and Pope Benedict XVI should not be prompted by short-term opportunistic motives.

"It should not be a kind of show in front of TV cameras but should be a result of a very serious and thoughtful discussion on the existing problems, and this meeting should not serve as a trigger for their resolution but should be a result of serious consultations," Archpriest Antony Ilyin, an acting representative of the Moscow Patriarchate at European international organizations, said Interfax-Religion in commenting on Belarusian President Alexander Lukashenko's remark that the Patriarch and the Pope could meet soon.

Fr. Antony suggested that now, unlike in the period at the end of Pope John Paul II's pontificate, "the understanding of importance of common testimony and strategic partnership in Europe in defending traditional values is growing from year to year."

Criminal case instituted over killing of policeman in N Caucasus

http://www.itar-tass.com/eng/level2.html?NewsID=13887525&PageNum=0

NAZRAN, April 29 (Itar-Tass) - A criminal case has been instituted in Russia's North Caucasus region of Ingushetia over the murder of Beslan Khuchbarov, a serviceman of the regional president's guard, spokespeople for the regional Investigations Committee said.

The case cites articles of Russia's Criminal Code on 'A murder of two or more people' and 'Illegal possession and carrying of weaponry and ammunitions'.

The incident occurred around 19:10 Tuesday at a filling station located at a crossing of a federal highway and an important regional road.

A quarrel broke out between policemen and unidentified civilians at the filling station. It grew over into a fight with the use of weaponry.

As a result of wounds Beslan Khuchbarov and Magomed Kodzhoyev, a local resident, died on the spot.

Another policeman, Mussa Korigov was taken to hospital where physicians gave him the required assistance.

Citizens of nine countries arrested in Dagestan for popularization of “nurculuk” Islam extremismhttp://www.axisglobe.com/article.asp?article=1811

28.04.2009

Russian Federal Security Service (FSB)Dagestan directorate and Anti-Extremism Office agents of the Dagestan Interior Ministry detained a group of members of the Nurcu Muslim religious movement, citizens of nine countries, including 7 citizens of Azerbaijan and one Turkish citizen, in the city of Izberbash, APA news agency reports. These persons attempted to involve people in the “nurcu”/Nurdzhular religious organization banned in Russia, news agency expands. Arrested Turkish citizen Ali Ihsan Erdemr, 44, was a coordinator of “nurcu” supporters in Russia. Erdemir reportedly visited Moscow, St. Petersburg, Kaliningrad, Kostroma, Yaroslavl, Kazan and Krasnoyarsk and discussed the further plans with “nurcu” supporters. "Police have zeroed in on an address in the town of Izberbash, at which members of this religious organization held meetings," news agency ITAR-TASS cites a FSB directorate’s spokesman.$72 000 account bills of expenditures for popularization of the movement and number of literatures were found were found in the place of “nurcu” meetings. There were books banned by the court decision as an extremist literature among the found literature, news agency adds. Russian Supreme Court characterized “nurcu” movement as an extremist movement and officially banned its activity in August, 2008.

Russia has nearly 10,000 extremists, most are students – officialhttp://www.interfax.com/3/490888/news.aspx

YEKATERINBURG. April 29 (Interfax) - There are more than 200extremist organizations in Russia, with almost 10,000 members. These arethe data cited by Russia's deputy prosecutor general Viktor Grin. These groups consist mainly of young men aged between 16 and 25,all of them students at higher-education institutions and vocationalschools, he said at an anti-extremism conference in Yekaterinburg onWednesday. The Army of the People's Will, the National-Socialist Society, theMovement against Illegal Immigration, the Slavic Union of NorthernBrotherhood are the most influential of these groups, the ProsecutorGeneral's Office says. One of the factors facilitating the spread of extremist views are

the emissaries from various foreign religious organizations which openlyoperate in Russia, the Prosecutor General's Office says. "As practicehas shown, our education system is the most vulnerable element in ourflawed legislation," Grin said. For a long time, the Tatarstan government invited teachers fromTurkey to teach at a local religious school. They were trying to instillon their students the supremacy of all things Turkish while downplayingRussia's role. "These teachers did not speak Russian, so lessons weretaught either in Turkish or in English. Turkish teachers were deportedafter prosecutors had to intervene," said the deputy prosecutor.

Gen Alexander Ivanov appointed acting Moscow police chief

http://www.itar-tass.com/eng/level2.html?NewsID=13888269

MOSCOW, April 29 (Itar-Tass) -- Major-General of Police Alexander Ivanov was appointed acting Moscow police chief, the press center of the Russian Interior Ministry told Itar-Tass on Wednesday.

Russian Interior Minister Rashid Nurgaliyev signed the corresponding decree after the dismissal of Moscow police chief Vladimir Pronin on Tuesday evening.

Up to now Alexander Ivanov occupied the post of the first deputy chief of the Moscow main police department and was in charge of the criminal investigation department.

New governors to be appointed by partieshttp://www.barentsobserver.com/new-governors-to-be-appointed-by-parties.4586194-16174.html

2009-04-28 Political parties will play a key role in the appointment of new governors, a decree from President Dmitry Medvedev states.

According to the decree signed by Medvedev on 23 April, political parties will significantly strengthen their role in the processes of appointing new governors. The decree reads that the biggest political party in the respective regions will be entitled to nominate a minimum of three governor candidates. The president will subsequently be the one choosing the preferred candidate, and this person will also have to be approved by the regional parliament.

The president will be entitled to reject all nominated candidates, Rossiiskaya Gazeta reports.

The new procedures will significantly strengthen the powers of the dominating political

party in the regions. Today, government-loyal United Russia will be the one benefiting from the new law.

United Russia from before has a major level of control over Russian regional politics. With only a handful of exceptions, the Russian governors are members of the party. The recent dismissal of Murmansk Governor Yury Yevdokimov illustrates the party’s zero-tolerance on governor loyalty towards the party structures.

From before, it was formally the presidential aides in the seven federal districts which nominated candidates for governor, whereupon the president chose his preference and the regional parliament approved the nominee.

Medvedev gives go ahead for 'curfew' law for under 18shttp://en.rian.ru/russia/20090429/121362945.html

MOSCOW, April 20 (RIA Novosti) - Russian President Dmitry Medvedev has approved a law that could see minors effectively barred from leaving their homes without being accompanied by an adult after 10:00 p.m., the Kremlin said on Wednesday.

The law gives regional authorities the power to bar unaccompanied under 18s from some public places, "for example, in the street, stadiums, parks, squares, public transport and Internet cafes" between 10:00 p.m. and 6:00 a.m.

The amendments to the law on children's rights will also ban minors from visiting night clubs, bars, restaurants and other places which sell alcohol, as well as sex shops, although the age of consent in Russia is 16. The law also gives local authorities the right to draw up a list of other places that could harm children's "physical, spiritual and moral development."

Police officials have said the move could also help tackle the problem of neglected and homeless children, as police will have to either return them to their homes or place them in orphanages, and it will force parents to take greater care of their children.

Children's rights groups have criticized the law as an infringement of children's rights and freedom. In Russia, children are considered full-fledged citizens after 14, when they are granted passports.

Some ombudsmen said the law demonstrated the authorities' inability to curb criminal activity, and doubted it would be observed by minors.

The amendments, approved by the upper and lower houses of parliament earlier this month, give regional authorities the right to cut the upper age bracket to 16 years and delay the "curfew" hour "in line with seasonal and climatic conditions."

The amended law also obliges authorities to encourage education, sport and other appropriate pastimes for children and stipulates punishment for parents whose children are not at home after 10:00 p.m.

Medvedev amends law on main guarantees of child’s rightshttp://www.itar-tass.com/eng/level2.html?NewsID=13888263&PageNum=0

MOSCOW, April 29 (Itar-Tass) - Russian President Dmitry Medvedev signed the federal law on introducing several amendments in the federal law on the main guarantees of child’s rights in the Russian Federation, the Kremlin press service reported on Wednesday.

The State Duma approved the law on April 15, and the Federation Council approved it on April 22, 2009.

The law describes measures to contribute to physical, intellectual, psychological, spiritual and moral development of children, to teach them to lead a healthy lifestyle, including corresponding duties of state authorities. Federal constituent territories are also empowered with due account of local traditions and peculiarities to enforce laws to take measures to avert the negative impact on physical, intellectual, psychological, spiritual and moral development of children.

The law also holds that federal constituent territories can enforce laws in order to prevent children from staying in places, which can be harmful for health, physical, intellectual, psychological, spiritual and moral development of the child, to prevent children from staying outdoors at nighttime not accompanied by the parents (people, who temporarily replace the parents), as well as without people, who organize some events involving children at public places.

The law also stipulates that federal constituent territories can lawfully reduce the age of children, but not more than by two years, under which children cannot stay at the foresaid public venues without the mentioned above people; can establish the procedure to notify parents and other people, as well as the police if a child is found at the foresaid public venues and the procedure of bringing this child back to the parents and other people; can bring parents and other people to administrative responsibility for violating the requirements on several measures contributing to physical, intellectual, psychological, spiritual and moral development of children and averting any harm to them.

Site Owners Must Prove Identityhttp://www.themoscowtimes.com/article/600/42/376691.htm

29 April 2009By Natalya Krainova / The Moscow Times

Internet regulators are cracking down on domain owners who publish illegal information on web sites by requiring them to provide their passports or another form of verifiable identification.

The regulating body, the Coordination Center for TLD RU, will require people to provide a copy of their passport, driver's license or work pass to the registrar, Ru-Center, coordination center spokeswoman Maria Mokina said Tuesday.

The new rules are to be unveiled next month and may come into force in June, she said.

"It will be easier to fight unscrupulous domain owners, and there will be fewer of those who would want to violate the law," Ru-Center spokesman Andrei Vorobyov said.

Ru-Center already can cancel the registration of a web site if it obtains proof that the personal information provided by the domain owner is false, a process that takes up to three months, Vorobyov said.

Currently, "very many" domain owners provide false personal information to the registrar and then use their web sites to publish information that violates copyright laws or contains pornography, libelous information or other material that violates the law, Vorobyov said.

Because domain owners don't confirm their personal data, it is hard for police to track them down, he said.

In one example, Vorobyov said, unidentified people registered the domain Yanclex.ru under false names in late 2007.

They used the domain to get access to the logins and passwords of Money.Yandex.ru users, profiting from the similarity between the Yanclex and Yandex names.

The Interior Ministry's department fighting Internet-related crimes has opened a criminal case on fraud charges, and the domain's registration was canceled, but the fraudsters have not been found, Vorobyov said.

NTV Pulls Political Showhttp://www.themoscowtimes.com/article/1010/42/376674.htm

NTV television will shut down the political talk show "K Baryeru," hosted by prominent radio and television journalist Vladimir Solovyov, from May 1, Interfax reported Tuesday.

The show -- one of the few that has provided a platform for opposition politicians such as Boris Nemtsov, Eduard Limonov, Vladimir Ryzhkov and Sergei Mitrokhin -- is being shut down for "corporate" reasons, NTV's press service told Interfax, without elaborating.

"K Baryeru," which has been on-air for six years, allowed viewers to express support for one of two interlocutors in a live debate on an issue of the day.(MT)

Conviction of Activist Who Protested Baptism of Tatar Infants Decriedhttp://www.themoscowtimes.com/article/1328/42/376669.htm

28 April 2009By Paul Goble / Special to The Moscow Times

Last Friday’s conviction in a Naberezhny Chelny court of a Tatar activist who had spoken out against the baptism of Tatar infants by a Russian Orthodox priest without the permission of their parents or guardians has sparked protests from the Tatar Social Center (TOTs) as well as from human and religious rights groups elsewhere.

On Friday, the court found TOTs leader Rafiz Kashapov guilty of provoking interethnic and inter-religious hostility (under Section 1 of Article 282 of the Russian Criminal Code) for his article “No to Christianization!” in which he protested the baptism of infants of Tatar nationality, a traditionally Muslim people, and gave him a suspended sentence of 18 months.

The article appeared on Kashapov’s blog shortly after a Russian Orthodox priest baptized the children on January 16th of this year without the knowledge or agreement of their parents. His article led to protests in several cities of Tatarstan, and his blog was subsequently suppressed by the authorities.

Now, following Kashapov’s conviction and protests by several rights groups, his own Tatar Social Center has issued an appeal to human rights groups, social and political organizations, and the media of Tatarstan and Russia, denouncing this action and demanding that the authorities reverse course.

It is a measure of the extent to which the Russian government is in control of the media that the appeal has so far appeared only on other blogs — see, for example, the complete text here — or on websites hosted beyond the borders of Russia.

The declaration, signed by A.Sh. Zalyalutdinov, the chairman of the regional TOTs Assembly, and M.A. Shakirova, the secretary of that group, provides a remarkable portrait of the increasingly frequent misuse of Russia’s anti-extremist laws and also the increasingly frequent cases of official and especially judicial malfeasance in the country.

After outlining the history of Kashapov’s own protest, the declaration states that the investigation of his case occurred “with crude violations of the law,” including moves by officials that prevented the accused attorneys from gaining access to information gathered by the government.

The trial itself, the declaration continues, was “closely controlled by the Moscow FSB and the court was subject to strong pressure from the prosecutor.” Moreover, the court’s decision reflected only the testimony of “experts” from Moscow and Kazan because the judge refused to consider “the declarations of independent experts” that were offered by Kashapov.

Both the facts of the case and these violations of judicial procedure, the authors of the declaration say, provide the basis for contending that “the sentence of the court is both without foundation and illegal.” They say that lawyers for the accused will appeal the decision to the Supreme Court of Tatarstan.

“Many human rights activists, public figures and journalists,” the declaration continues, not only in Tatarstan and Russia but in foreign countries, "have raised their voices in defense of Rafiz Kashapov, an important public figure who has stood up for the rights and interests of the Tatars and other peoples.”

“We express our deep gratitude to them!” the appeal concludes, especially since some of them, like Ulyanovsk journalist Sergey Kryukov, have themselves become the object of Russian government persecution as a result. Kryukov’s location at the present time, the appeal notes, is unknown.

The Kashapov case, as tragic as it is for him and the Tatars, highlights two more widespread problems in the Russian Federation, both of which have been well-documented in recent times. Firstly, Russian courts, as Moscow statistics show, are ever more willing to convict anyone the regime brings charges against.

And secondly, the Russian government, for all the talk about “a thaw” under Dmitry Medvedev, appears to be increasingly willing to control reporting about what is actually going on, either by taking down websites, as in Kashapov’s case, or by directly corrupting journalists.

In Soviet times, the Western media could be counted on to report such things, but unfortunately, their interest in doing so for whatever reason has declined. And as a result, those who do notice such abuses in Russia, especially beyond Moscow’s ring road, have a special obligation to try to bring them to the attention of others.

APRIL 29, 2009

Kremlin Shows Rare Openness on Crash http://online.wsj.com/article/SB124096243592265969.html

By ANDREW OSBORN

MOSCOW -- When photos surfaced of a January helicopter crash in Siberia that appeared to involve government officials on an illegal hunt, wildlife campaigners assumed the Kremlin would hush up the incident.

Yet state-run media covered the story, a senior official in the region resigned, and federal prosecutors investigated. Earlier this month, they concluded the local government had failed to enforce environmental laws.

The Kremlin's unexpected openness about the accident handed a rare moment in the public eye to Russia's fledgling green movement, which often struggles to be heard. But Kremlin-watchers say there's more to it.

President Dmitry Medvedev -- anxious about rising social unrest in regions where the economic crisis is putting hundreds of thousands out of work -- has used the incident as part of his effort to focus public anger on regional officials, analysts say.

"It's a signal to regional leaders," says Alexei Makarkin, an analyst at the independent Moscow-based Center for Political Technologies. "At a time of financial crisis, the Kremlin is clamping down on these kind of activities."

In recent months, Mr. Medvedev has fired four regional governors -- harsh even by the standards of his hard-line predecessor Vladimir Putin. Mr. Medvedev has devoted large chunks of his speeches on the economic crisis to chastising local officials.

In February, Mr. Medvedev told a meeting of regional governors in Siberia that their slow response to the crisis was unacceptable. "This is a moment of truth for the corps of governors itself," he said in comments broadcast on state TV.

The Kremlin denies that it used the helicopter incident for any political aim. "There are thousands of other incidents like this that don't cause such a stir," says one Kremlin official. "This one did, for some reason."

The hunt -- for endangered wild mountain sheep, or argali -- came to light after the helicopter carrying eleven people, including crew, crashed into a snowy mountainside in Siberia on Jan. 9. Among the seven dead were two regional officials and two federal officials, including Alexander Kosopkin, President Medvedev's representative in the lower house of parliament.

Soon after, a local Internet news service published photographs showing the helicopter wreckage ringed by several sheep carcasses that wildlife campaigners said were clearly the endangered argali. A knife protruded from the haunch of one of the dead animals, and gun cases were visible nearby -- a scene typical of helicopter hunting, in which the hunters shoot their prey, land and go up again.

A few days later, state news agency RIA Novosti ran an article reporting suspicions that the accident had happened during an illegal hunting trip.

The government-friendly newspaper Izvestia looked into the practice of VIP hunting, and business daily Kommersant, owned by a Kremlin-friendly oligarch, carried a story saying the hunters had "disgraced themselves."

At first, local officials denied the crash occurred during a hunt. Then they said it was a hunt, but that the party had licenses to kill goats and deer -- though not from the air, which is illegal.

The surviving pilot said the helicopter's engines had failed, but investigators who examined the helicopter's black boxes said that wasn't true.

An internal Federal Air Transport Agency telegram, leaked in the press and later confirmed by the agency, told a different story. It said the passengers had been shooting wild animals from the air. "As the helicopter went down to collect another shot animal, it hit the mountainside," the telegram said.

Demonstrators in Moscow and Siberia rallied to protest poaching. They directed their anger at local officials, rather than the late Mr. Kosopkin, perhaps hesitant to criticize someone who had been so close to the center of power. (Mr. Medvedev, in a short statement on the Kremlin's Web site, called Mr. Kosopkin's death "tragic," making no reference to the hunting.)

Anatoly Bannykh, deputy prime minister of the Altai Republic, the region where the accident took place -- and a crash survivor -- resigned. His spokeswoman said he had stepped down so as not to "discredit the authorities."

Federal prosecutors delved into the region's compliance with environmental laws, and earlier this month said they had found numerous violations, including poaching. The investigators criticized local officials for failing to enforce the law, calling for some to be punished.

Wildlife campaigners were ultimately disappointed with the government's response. Siberian prosecutors have yet to open a criminal investigation into illegal hunting, restricting their probe to alleged breaches of flight safety.

Many illegal helicopter hunts take place across Russia each year, says Igor Chestin, director of the Russian branch of the global World Wildlife Fund. He wants Mr. Medvedev to pronounce his moral judgment on the practice. "It would be a signal that the law is equal for everyone," he says.

A Kremlin official said the president couldn't comment until the circumstances of the crash had been officially and definitively clarified.

Moscow tested by tensions in outer regionshttp://www.ftd.de/karriere_management/business_english/:Business-English-Moscow-tested-by-tensions-in-outer-regions/506515.html

von Charles Clover (Makhachkala, Dagestan)

The downturn is challenging the Kremlin's ability to buy stability in distant republics

Vladimir Radchenko's first day on the job as acting chief tax inspector for Dagestan, a region in southern Russia, did not go smoothly.

As he stepped into the office on February 6, he was confronted by the son of the president of the autonomous republic, escorted from the building by two men with pistols, stuffed into a car, driven around the capital city for an hour and threatened with death if he ever set foot in the region again.

That was just the start of a very bad week. A lesser bureaucrat, faced with the same, would probably have put in for a transfer. But not Mr Radchenko, who stormed back to the tax inspectorate a few days later in the company, it seems, of a group of heavily armed men who work for a local governor, trying to gain entry to his office. Waiting there was a similarly armed gang who worked for a local bank, whose owner is friendly with Mukhu Aliev, the president of Dagestan.

Officials in both Moscow and Dagestan are still not sure what happened during the week-long standoff nor can they explain fully the bizarre behaviour by both sides. In the end, no shots were fired, Mr Radchenko is now in hiding, and Mr Aliev told a television interviewer that the official "will never work in Dagestan".

Eduard Urazayev, an adviser to Dagestan's prime minister, said: "I really should know what that was all about because I am in the government. But I have to say I really don't. The main thing is that nobody was killed."

Perhaps the most surprising thing of all, however, is that having been seemingly complicit in ejecting a senior federal employee from his territory at gunpoint, Mr Aliev's relations with Moscow do not appear to have been damaged.

Last week, Mr Aliev met Vladimir Putin, the prime minister, after meeting Dmitry Medvedev, the president, twice in the past month. Masha Lipman, an analyst at the Carnegie Moscow Center, said: "They kidnapped a senior official sent by Moscow. In any other country, this would be a serious problem. Only in Russia is this not a crisis."

The events underline the balancing act that characterises relations between Moscow and Russia's outlying regions spread across 11 time zones, which is being tested as the economy contracts this year for the first time in a decade and federal subsidies to places such as Dagestan face cuts.

In spite of the temptation to view it as such, Russia does not always function as a centralised, authoritarian state and the Kremlin often has limited resources to enforce its will across the 11 time zones.

Moscow frequently cuts deals with men such as Mr Aliev, local bosses who keep the peace in exchange for Kremlin support. But while Moscow has long been able to buy stability in its restive outer regions using windfall oil revenues, the strategy is being undermined by low oil prices, budget cuts, plunging economic growth and high unemployment.

Unable to agree

There seems to be a lack of consensus in the Kremlin about how to counter simmering instability in its outlying regions.

At times over the past few months, Moscow has responded to rising discontent with overkill: in the far eastern city of Vladivostok last December, for example, the Kremlin sent special forces by air from Moscow to quell a revolt by used car dealers angry about an increase in vehicle import duties. The net effect was to alienate the city's population and spark resignations by officials of the ruling United Russia party.

Mr Medvedev this month also fired the governor of the far northern province of Murmansk after he hinted publicly that a mayoral candidate backed by United Russia had used dirty tricks in an election campaign.

In other vulnerable regions, however, Moscow is hands-off. Nowhere is this more apparent than in the predominantly Muslim auto-nomous republics perched on the snowy northern slopes of the Caucasus mountains, such as Dagestan. These regions, which have a history of rebellion and fierce independence, are also more dependent economically on the federal budget than any other in Russia.

Chechnya, Dagestan's neighbour, is still convalescing from a decade of civil war fought between radical separatists and federal troops that destroyed much of the republic. Dagestan still has powerful Islamist separatist movements with which to contend.

Security forces this month fought a three-day pitched battle against a group of militants just 50km from the capital, using tanks and helicopter gunships, killing 17 and taking five dead themselves.

The unstable region shows the potential of the economic downturn to inflame simmering tensions. Moscow funds 70 per cent of Dagestan's local budget and 90 per cent of Chechnya's as well as a similar percentage in nearby Ingushetia.

Alexei Malashenko, an expert on the region, said: "There is no economy in the north Caucasus. It is all money coming from Moscow. So if this money stops, there will be an explosion in Dagestan, Chechnya and Ingushetia."

The Kremlin seems aware of the danger the plunging economy could pose for the region. This month, Ramzan Kadyrov, Chechnya's president, was engaged in a tense, if somewhat oblique, exchange with Mr Putin over the question of finances for rebuilding the autonomous republic.

According to a transcript posted on the Kremlin website, Mr Putin asked whether Mr Kadyrov's "discussion with the finance ministry was finished".

"Everything is great with the finance ministry now," Mr Kadyrov said.

"Friends?" Mr Putin asked.

"Friends, thanks to you, Vladimir Vladimirovich!" Mr Kadyrov replied, using Mr Putin's patronymic, the respectful form of address.

In Dagestan, the Kremlin seems to be giving Mr Aliev the benefit of the doubt.

Analysts say Mr Radchenko's appointment could have been an effort by Moscow to grab better control of local government spending and thus the response to the economic crisis.

Increase in crime

Unemployment in Dagestan is estimated to be anywhere from 18 to 50 per cent and likely to rise. Suleiman Udadiev, head of Dagestan's state television station, said Dagestanis losing jobs in more prosperous parts of Russia would return home and fuel at least part of the rise. And that would have consequences. "This is going to mean an increase in crime and an increase in the number of the men who go to the forests," he said, using the euphemism for joining Islamist groups.

Part of the problem for Mr Radchenko, it seems, was that the job of chief tax inspector has been given traditionally to an ethnic Lezgin, and he is Russian. "We have here what we call 'rotation'," said Mr Urazayev. "If a Lezgin, for example, loses his job to an Avarets [another local ethnic group], then an Avarets must give up his job somewhere else to a Lezgin. In this case, the protocol wasn't observed."

But kidnapping Mr Radchenko was an extreme response and the Dagestan president is not anxious to discuss it. "If Mr Radchenko was kidnapped, and I'm not saying he was, then it was only for about 45 minutes," says a senior official in the president's administration. Mr Aliev declined to be interviewed.

National Economic Trends

Citigroup Revises Russia Economy Outlook to Contraction of 6.5%http://www.bloomberg.com/apps/news?pid=newsarchive&sid=avl.IYkWiL6U

By Emma O’Brien

April 29 (Bloomberg) -- Russia’s economy will probably contract by at least 6.5 percent this year as the nation faces “a combination of shocks” amid declining capital inflows and sliding exports, Citigroup Inc. said.

The forecast replaces an earlier prediction for a 3 percent contraction, Elina Ribakova, Citigroup’s chief economist in Moscow, said in a research note e-mailed late yesterday. Should the government not move to swiftly recapitalize banks, gross domestic product growth is also likely to “stagnate” in 2010, she added.

Should oil prices not rise to a minimum $100 a barrel in 2009 and $87 in 2010, Russia’s budget probably won’t balance and devaluation pressures on the ruble are likely to return, Ribakova said. “Fiscal policy is constrained by the choice of a de-facto fixed exchange-rate regime.”

To contact the reporter on this story: Emma O’Brien in Moscow at eobrien6@bloomberg.net

Last Updated: April 29, 2009 02:43 EDT

Russian per capita income falls for first time in decadehttp://businessneweurope.eu/users/subs.php bneApril 29, 2009

The economic quagmire Russia finds itself in is feeding through to average incomes, have fallen for the first time in a decade over the last six months, reports Rosstat.

The per capita income of the Russian population was to RUR 15,280 ($456) in March. The per capita income a year previously prior to the recent devaluation was lower at RUB12,942, but worth more ($517).

According to headhunting company Cornerstone, the average wages in March were RUB17,440, which is 5.7% less in real terms than the year before, reports Interfax. However, these results are not as bleak as their appear. Average nominal wages are still rising, even if real wages are falling. Also the decline in income is less than in many of Russia's neighbours where falls in per capita income over the last six months have been north of 10%.

But the situation here will change too; typically employers start cutting pay for new hires after unemployment tops 10% as would-be workers become increasing desperate for a job after this point. With unemployment at 9.5% Russia is on the cusp of this point.

Russia: Deep recession without a crisishttp://businessneweurope.eu/users/subs.php

NomuraApril 28, 2009

Preliminary GDP data point to a large contraction of about 7% in the year to the first quarter.

Real consumption indicators are also indicative of the painful adjustment that the Russian economy is currently undergoing. Unemployment surged to 9.5% in March, the highest level since February 2004. The steep rise in unemployment and the precipitous fall in real wages have weighed heavily on consumption spending, which slumped by 4% in the year to March - the biggest decline since September 1999. In the post-1998 world, growth in Russia was exclusively driven by consumption and, therefore, the fast deterioration of the final consumption indicators paints a very bleak picture of Russia's ability to weather the storm.

What makes this worrying is that the three key elements that underpinned the V-shaped recovery in 1999 will not be able to provide a fillip to growth for the foreseeable future. During the sovereign crisis, GDP collapsed in the second half of 1998 but the recovery was already evident by the second half of 1999. This was greatly facilitated by a 50% depreciation of the real effective exchange rate (REER), which was brought about by a significant nominal devaluation, brisk import demand from CIS trading partners (Figure 2) and a vigorous run-up in oil prices.

The synchronised nature of the global recession makes it highly unlikely that this very benign combination of factors will emerge to support Russia. First, even though the terms-of-trade shock is at least twice as large now as it was 10 years ago, REER adjustment over November- March has been a modest 13%, underscoring the insufficient nominal exchange rate movement of the rouble. With the rouble effectively capped against the currency basket of USD and EUR, and inflation still running at elevated levels owing to a combination of fiscal loosening and continued rises in administered prices, the REER looks set to appreciate exactly at a time when a move in the opposite direction is required. Second, while oil prices rose by 38% in 1999 and by a further 47% in 2000, they are projected to rise by a much more modest 20% in 2010. Third, we judge that the global deleveraging process will ensure that the recession is prolonged, leading to very anaemic and sub-par growth over the next couple of years and, as a result, only subdued, if rising, import demand from trading partners. While the strong fiscal position during the upswing should provide enough room to pursue counter-cyclical policy in the downswing, thus ensuring that the deep recession will not be accompanied by a crisis similar to the 1998 default, we forecast a severe GDP contraction by 4% in 2009.

Money supply drops 9.5% YoY in March http://businessneweurope.eu/users/subs.php

VTB CapitalApril 29, 2009

In March, the money supply (M2) contracted 9.5% YoY (compared with the 8.1% YoY drop in February). However, it extended February's 0.3% MoM gain, increasing 0.8% MoM in March.

The drop in money supply is deeper and more prolonged than in 1998, when money growth only turned negative for one month (down 3.4% in August 1998). The recent stabilisation has likely come with the end of rouble depreciation. We expect money supply to continue increasing in April as the CBR has stepped up its interventions against rouble strength on the FX market and the Ministry of Finance has tapped the Reserve Fund to finance the budget deficit.

Laxer monetary conditions and relaunching credit to the economy is crucial; however, a surge in money supply would be destabilising for the rouble and could spur inflation expectations. Hence, we expect the CBR to continue decreasing the outstanding amount of unsecured loans to banks to sterilise monetary financing of the budget deficit.

Russian tax cut stimulus equal to RUB600-700bn for 2009http://businessneweurope.eu/users/subs.php

bneApril 29, 2009

Prime Minister Vladimir Putin said on Monday that the tax cuts planned for this year to stimulate the economy will be worth RUB600bn-RUB700bn to businesses in extra month.

Putin said that the government would continue to cut taxes on natural resources companies, which have seen their profitability rise dramatically in recent month.

However, most of the tax savings will be lost after the government carries through plans to increase the increase of the social taxes on workers to fund the pension and health schemes - but not for at least a year. Deputy Finance Minister Sergei Shatalov said the tax burden on companies will increase by RUB800bn-RUB850bn when the hikes go through in 2011.

Business, Energy or Environmental regulations or discussions

Russian Stocks Rise, Snap Three-Day Drop; OGK-3, Gazprom Gainhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aTLJjB2rOB68

By Denis Maternovsky

April 29 (Bloomberg) -- Russian stocks rose for the first time in four days, with the Micex Index rebounding from a one- week low.

The ruble-denominated Micex added 0.9 percent to 895.03 at 11:54 a.m. in Moscow. The dollar-measured RTS Index advanced 1.9 percent to 799.16.

OGK-3, and electricity producer owned by OAO GMK Norilsk Nickel, jumped as much as 7.6 percent and recently traded 6.6 percent higher at 0.84 rubles. Vedomosti reported that Audit Chamber recommended the Moscow-based company recoup about $1 billion from billionaire Vladimir Potanin’s Interros Holding Co.

Interros spokesman Andrei Kirpichnikov declined comment when contacted by Bloomberg News.

LSR Group, a Russia property developer and building- materials maker, rose 3.6 percent, the biggest gain in four days, to 290 rubles. JPMorgan Chase & Co. upgraded the stock to “overweight” from “underweight.”

OAO Gazprom, Russia’s gas export monopoly, gained 1.5 percent to 144.80 rubles, its first advance this week, before the company reports 2008 earnings today. Net income probably slid to 90.6 billion rubles ($2.7 billion) from 232 billion rubles in the fourth quarter, according to the median estimate of six analysts surveyed by Bloomberg News.

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

Last Updated: April 29, 2009 03:56 EDT

Interest rate caps to turn VEB loans into "capital of last resort;" non-strategic businesses could see higher rates as a resulthttp://businessneweurope.eu/users/subs.php

Unicredit, RussiaApril 29, 2009

Russian banks receiving new subordinated loans (Tier II capital) from Vnesheconombank (VEB) must lend this money at the Central Bank of Russia's refinancing rate (currently 12.5%) plus 3%, Prime Minister Vladimir Putin said, according to Interfax. The requirement concerns only new borrowings from VEB, which has approved R19bn (almost $600mn) in subordinated loans for 12 banks.

VEB started issuing subordinated loans at the end of last year and has placed R257bn ($8.8bn) with six banks, with the largest amounts going to VTB (R200bn, roughly $6.8bn) and Russian Agricultural Bank (R25bn, about $0.9bn). There were no specific requirements regarding the interest rates on the loans these banks underwrite. On April 22, Putin said VEB borrowers should cap interest rates; now it seems this cap is to concern only new borrowers from VEB.

Given the high level of bad loans in Russia (around 12% according to our estimates) and

the 8% rate for VEB's subordinated loans, lending at 15.5% makes little sense for the banks. We believe the requirement might eventually lead banks to turn down VEB money. By limiting the interest rate, the government in effect is discouraging banks from taking subordinated loans from VEB, making the latter the source of "capital of last resort." Only banks unable to find capital and liquidity from other sources are likely to take VEB loans, to transfer the funds subsequently to strategically important, but troubled companies. In order to compensate for possible losses, we believe those banks will have to increase interest rates on loans to other customers and to undertake riskier operations generally.

We appreciate the government's efforts to provide liquidity to the economy at a reasonable rate, but we are concerned that setting an interest rate cap from might force banks into risky lending, possibly leading to higher interest rates for businesses not deemed strategically important.

RBC Information Systems: Rosbank AM files $46mn suit against RBC shareholdershttp://businessneweurope.eu/users/subs.php

Unicredit, RussiaApril 29, 2009

Rosbank AM yesterday filed an R1.55bn (approximately $46mn) suit against Pralberto Ltd. in the Moscow Arbitration Court (MAC), the MAC disclosed on its website. Pralberto is an RBC shareholder, among its beneficial owners are RBC founders German Kaplun, Alexander Morgulchik, and Dmitry Belik. Rosbank AM demands that Pralberto to execute a repo transaction with RBC shares. Rosbank AM CEO Vladislav Bessarabov told Kommersant that his company purchased an 11.5% stake in RBC in April 2008; however, Pralberto failed to repurchase the asset on November 10, 2008, as stipulated in the contract, with the shares passing to Rosbank AM's book.

We note that Pralberto also owns 13.66% in Armada, which potentially might be seized in favor of Rosbank, Vedomosti speculates.

Our view: Although the suit relates to RBC shareholders' obligations and not the company itself, we believe the news could raise negative sentiment toward RBC shares, as it confirms the continuing public dispute between Rosbank AM and RBC's main shareholders. In March 2009, RBC's board of directors refused to register Rosbank AM representatives as candidates for the company's new board of directors.

We believe the implication for Armada of the potential exit of Pralberto from its shareholder list should be neutral for the stock.

Energy Ministry on project delays; Mosenergo's missed 2009 earningshttp://businessneweurope.eu/users/subs.php

Troika, Russia

Wednesday, April 29, 2009

The Energy Ministry has evaluated the key risks of investment project delays in electricity generation in 2009, Interfax reported yesterday. The initial plan implied the commissioning of 6.68 GW, but the adjusted forecast implies that just 3.657 GW can be launched this year (including 2.03 GW by state companies and 1.627 GW by private ones). OGKs and TGKs have undertaken construction of 861 MW under capacity supply contracts. Among the risks for delays is the financing deficit at Gazprom's Mosenergo and TGK 1 (2.032 GW). Also, general contractors and equipment suppliers are missing the deadlines (1.605 GW), and there is a lack of agreement on gas supplies for a total of 0.575 GW of capacity, as well as problems with connections to the grid for a total of 1.310 GW due to late applications from gencos.

The new forecast implies 65% less new capacity to be commissioned in 2009 by private gencos and 2% less by state companies, we estimate (i.e. this is already a delay, especially for the private gencos, which is positive). For example, Fortum has reported that the government is reviewing gencos' investment programs and the firm is considering the possibility of delaying some of its projects at TGK 10 for one to three years. To recap, Mosenergo did not sign a capacity supply contract and plans to delay its capex, which is positive for the company's valuation. Gazprom's OGK 2 and OGK 6 are the only gencos that have signed legally formalized contracts to the full extent, Interfax reported (the Accounting Chamber has prepared a report). Hence, their obligations should formally be legally binding, but in actual practice they should not be treated any differently, we expect; the Energy Ministry plans to develop new contracts anyway. The Vedomosti daily reports that the Accounting Chamber also concluded that OGK 3 spent R29bn inappropriately on a few deals and recommended that the genco get it back, which is positive for OGK 3 stock.

On a separate note, due to the low capacity tariffs set by the market regulator for Mosenergo's new capacity, the missed profits could reach R1bn in 2009 (they are already R300m in 1Q09, but the quarter was profitable as a whole due to lower gas prices), Interfax cited the head of Gazprom's utility arm, Denis Fedorov, as saying.

Mosenergo cannot realize the new investments, as the tariffs are below the breakeven point, he added. The Market Council suggests compensating for this next year, which would result in a threefold capacity tariff hike, Fedorov said. The R1bn is 7.6% of our 2009 EBITDA forecast. Fedorov's comment implied that EBITDA may not rise y o y in 2009; we model an 8.3% y o y contraction (in dollar terms, though). Compensation for the missed profits next year would be good news for Mosenergo.

Alexander Kotikov

Tariff Increases: Slowing Down?http://businessneweurope.eu/users/subs.php

Alfa, Russia

Tuesday, April 28, 2009

The proposed sharp slowdown in gas and electricity tariff increases could lower inflation by 3-5 ppts. Novatek's earnings would drop more than Gazprom's, and both suffer more than oil companies or utilities. Acron would see 2010 EBITDA margins boosted by 40%, while steel companies' margins rise only modestly. This news should not come as a surprise, and it reinforces our recommendation to favor oil over gas and, within the gas sector, Gazprom over Novatek.

Gas, electricity tariffs growth may slow rapidly: The new, preliminary revised plan for 2009-2011 developed by the Ministry of Economic Development proposes virtually freezing gas and electricity tariffs for industrial customers in 2010, with December-on-December industrial gas tariff growth reduced to 5% from the planned 27.7%, and tariff growth for households (16% of demand) reduced to 20.8% from 30%. Electricity tariff increases would be decreased to ~5% for industrial consumers from the previously planned 13-14%, and household tariffs would increase 10% rather than 25%.

Only a proposal, but the direction is clearly down: While this proposal will likely not be the last word, it is clear that the government is going to implement some measures to support industries and hold down inflation.

Therefore the full, planned tariff increases are now highly unlikely to be fulfilled. We estimate that the proposed changes would reduce consumer inflation by 3-5 ppts from our current forecast of 13%.

Negative for gas companies, if not unexpected: While not unexpected, this news is obviously NEGATIVE for Gazprom (U/W) and Novatek (U/W).

We have intentionally kept full tariff growth in our assumptions, though with numerous caveats and warnings of possible downgrades of that growth.

We think this has been the general practice on the Street, implying earnings revisions for both companies will now take place. Our models show the proposed tariff changes costing Gazprom ~$1.6bn, or 5% of 2010 EBITDA (vs. our below-consensus expectation of $30bn). Novatek loses a more severe $260m, or 21% of Alfa's projected EBITDA of $1.2bn. Oil companies are nearly indifferent, with the lower growth costing them less than 1% of EBITDA, buttressing our call to favor oil over gas.

Utilities will not be significantly affected: We do not expect the performance of thermal GenCos to be significantly damaged by the lower electricity and heating tariff increases, as utility tariffs grow in line with gas prices, the main driver of GenCos' operating expenses. However, the 2010 tariff proposals are lower than expected inflation, which could somewhat undermine the earnings of power companies across the board. From 2011 onward, the proposed tariff increases are close to expected inflation.

Impact on other industries muted: In brief, steel companies would see a modest $3/ton

decrease in cash costs, lifting sector EBITDA margins by only 2-3% (steel EBITDA is far more sensitive to steel prices and the R/$ rate). Fertilizer producer Acron (E/W) would see its gross margin increase from 34% to 41% and its EBITDA margin increase by 40% (from 17% to 24%), pushing its DCF-based fair value up by some 20%.

Russia's OGK-3 told to sell Norilsk stake –paperhttp://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSLT326220090429Wed Apr 29, 2009 2:41am EDT

MOSCOW, April 29 (Reuters) - State auditors have told Russian electrical power producer OGK-3 OKGC.MM to sell its stakes in metals miner Norilsk Nickel (GMKN.MM: Quote, Profile, Research, Stock Buzz) and other firms, Kommersant newspaper said on Wednesday.

It quoted an official of Russia's Audit Chamber who said OGG-3's purchases of stakes in Norilsk Nickel, gas company Rusia Petroleum and U.S. hydrogen power firm Plug Power constituted an improper use of funds designated for boosting power output.

"The Audit Chamber's recommendation is that the company must recover the improperly spent money," Kommersant wrote.

It said the auditors want OGK-3 to recover 29 billion roubles ($869 million). Norilsk Nickel owns 60 percent of OGK-3 which in turn owns 0.41 percent of the metals company, Kommersant said. (Writing by Olzhas Auyezov; Editing by Greg Mahlich)

Audit Chamber suggests OGK-3 cancel its recent acquisition dealshttp://businessneweurope.eu/users/subs.php

Alfa, RussiaWednesday, April 29, 2009

According to Vedomosti, the Audit Chamber has completed its audit of OGK-3's implementation of its investment program. One of its main conclusions was that the company has inappropriately spent R29m raised via the placement of additional shares in March 2007 and needed for the investment program. The company has raised R81.7bn in total. In particular, in October last year the company acquired a 25%-1 share stake in RUSIA Petroleum from Interros for around R15bn and 34.9% of Plug Power for R889m. In addition, OGK-3 purchased a 0.41% share of Norilsk Nickel for R1.253bn. As a result, the company's acquisitions total R17bn, and the Audit Chamber did not explain where the remaining R12bn came from.

We think the implication of this news for OGK-3 minorities is not straightforward. On the one hand, all these acquisitions had nothing to do with the company's core business, and their ability to create value for the acquirer's shareholders was very doubtful.

Therefore, if the company succeeded in cancelling the deals and returns the cash, it would be positive for minorities. Furthermore, the government's close monitoring of the company's purposeful usage of its cash aligns with the interests of minorities.

On the other hand, we have no idea where the remaining R12bn of the inappropriately spent R29bn went. At the same time, it is questionable whether the company will manage to cancel all these deals and what kind of government sanctions might be imposed if it fails to do so.

Alexander Kornilov

Mosenergo Says Prices Are Unfairhttp://www.themoscowtimes.com/article/600/42/376695.htm

29 April 2009By Nadia Popova / The Moscow Times

Mosenergo, Gazprom's main electricity asset, will earn 1 billion rubles ($30 million) less than it planned this year because of "unfair" capacity pricing by state-controlled Market Council, making it difficult for the generator to build new stations, Denis Fyodorov, head of Gazprom's power assets, said on Tuesday.

The price set by the Market Council for capacity from Mosenergo's recently built power plants was one-third lower than what Mosenergo had requested, which resulted in 300 million rubles ($9 million) of losses in the first quarter, Fyodorov said.

"Even though the prices had fallen because of a drop in consumption, the Market Council set the level of projected profits from electricity prices on the day-ahead market too high, thereby pushing down the capacity price," Fyodorov said on the sidelines of the Russia Power conference.

The Market Council calculates capacity prices in inverse proportion to the projected energy prices on the day-ahead market.

Power consumption fell by 6.7 percent in the first quarter, according to the Energy Ministry.

The fall in profitability, along with tightened access to credit, has made Mosenergo incapable of building new power stations as required by the Energy Ministry, he said.

The Energy Ministry on Monday announced a list of 19 power plants that must be built by 2014 regardless of the country's economic condition.

Mosenergo, 57 percent owned by Gazprom, is required to build three new stations in Moscow with a total capacity of 1.2 gigawatts by 2012, Deputy Energy Minister

Vyacheslav Sinyugin said in the presentation Monday.

"If we have a return on the investment of 2 percent to 10 percent, with bank rates varying from 17 to 20 percent, it simply doesn't make sense," Fyodorov said. "How can the ministry demand that we build new stations in this situation?"

Polymetal Acquires Mayskoye Gold Deposit From Highland Goldhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_NwN8wfSRFc

By Maria Kolesnikova

April 29 (Bloomberg) -- OAO Polymetal said it acquired the Mayskoye gold deposit with a group of Russian investors for a total consideration of $105 million, according to an e-mailed statement from the St. Petersburg-based company today.

To contact the reporter on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net

Last Updated: April 29, 2009 02:00 EDT

Highland Gold Mining 2008 IFRS previewhttp://businessneweurope.eu/users/subs.php

Troika, RussiaWednesday, April 29, 2009

Highland Gold Mining is due to post its 2008 IFRS results on Thursday at 10 am Moscow Time, accompanied by a conference call. We expect to see a robust set of results driven by higher realized gold prices (up 23% y o y) and slightly higher sales volumes (up 10% y o y) offsetting the cost pressures. We are looking for headline EBITDA of $46.2m and headline net income of $34.8m for the year, up 69% and 185% y o y, respectively.

Cost performance at the flagshipmV should be the center of attention in the results, and we forecast total cash costs (TCC) of $518/oz for the year, up 8% y o y, as cost initiates and cost deflation in 4Q08 should have partially offset the inflationary pressures during 9m08.

The company's funding position will be of primary importance, and we expect it to retain circa $160m in net cash at year end. As all of the development projects have been effectively mothballed (including Mayskoye, Taseevskoye and Novo) we would be very interested in hearing the new management's view on prospects for the assets and ways that the company is considering to utilize its current cash position, including possibly M&A activity.

Mikhail Stiskin

APRIL 29, 2009, 2:24 A.M. ET

Unilever Buys Buys Russian Sauces Business Baltimor >UL http://online.wsj.com/article/BT-CO-20090429-701681.html

LONDON (Dow Jones)--Unilever said Wednesday that it intends to acquire Baltimor Holding ZAO's sauces business, the ketchup business in Russia.

The acquisition consideration is made on a cash and debt free basis and is not material to Unilever overall, it said.

The transaction is subject to regulatory approval.

The acquisition includes ketchup, mayonnaise and tomato paste business under the Baltimor, Pomo d' Oro and Vostochniy Gourmand brands - accounting for annual turnover of around EUR70 million - and a production facility at Kolpino, near St. Petersburg.

It excludes Baltimor's branded vegetables, condiment, preserve and juices business and production facilities at Krasnodar and Khabarovsk.

Unilever Buys Baltimor’s Sauces Business in Russia (Update1)

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSQII5q1_ebw

By Maria Ermakova

April 29 (Bloomberg) -- Unilever NV, the world’s second- largest consumer-products company, agreed to buy ZAO Baltimor Holding’s sauces unit to add Russia’s biggest ketchup maker to its growing interests in the country.

The purchase includes Baltimor’s plant at Kolpino near St. Petersburg which makes ketchup, mayonnaise and tomato paste and has annual sales of about 70 million euros ($92 million), Unilever said in a statement today. The price wasn’t disclosed.

Unilever has identified Russia as a priority for expansion as it seeks to build on a decade-long growth record in the country. The company last year bought Inmarko, a Russian ice cream producer, and is building a plant in the Tula region to add to its seven existing sites in the country.

“Russia is a key market for Unilever and we believe the acquisition of Baltimor, which is already a strong ketchup brand in the region, will strengthen our position further,” Vindi Banga, Unilever’s president for foods and home and personal care, said in the statement.

The purchase excludes Baltimor’s vegetables and juices business, as well as production facilities at Krasnodar and Khabarovsk, the statement shows.

To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@bloomberg.net

Last Updated: April 29, 2009 03:16 EDT

Sistema-Hals posts FY 2008 Net Loss of $381.1 millionhttp://www.russiatoday.ru/Business/2009-04-29/Sistema-Hals_posts_FY_2008_Net_Loss_of__381.1_million.html

29 April, 2009, 10:25

Russian property developer and real estate company, Sistema-Hals, has posted a FY 2008 Net Loss of $381.1 million under U.S. GAAP.

In a stark underlining of the impact of the economic crisis on the property market, the bottom line marked a sharp plunge into the red after the company posted a Net profit of $34.7 million for FY 2007. FY 2008 OIBDA came in at minus $100.5 million after being positive $47.2 million for FY 2007, as Revenues slid from 423.6 million for FY 2007 to $362 million for FY 2008.

Sistema-Hals CFO, Andrei Solovyov, noted the combination of sliding property prices and the drying up of access to liquidity due to the financial crisis.

"The real estate and development industry was one of the sectors worst hit by the global financial crisis which had a negative impact on our financial and operational results in the traditionally strong Q4 and therefore in FY 2008. The liquidity crisis and limited access to credit facilities have forced us to adopt a package of anti-crisis measures in December 2008. The key measures were a substantial reduction in the development program and administrative and commercial expenses. Today our next immediate priorities are debt restructuring and raising capital to finance the projects under the adjusted production program. We expect that those measures will enable us to overcome the current crisis and maintain the projects portfolio for further development in the medium term future."

Russia's Sistema Q4 net loss $713.9 mlnhttp://www.reuters.com/article/technology-media-telco-SP/idUSLT85792520090429

Wed Apr 29, 2009 4:20am EDT

* Hit by asset impairment and forex losses

* Revenues fall 3.4 percent to $4.02 billion

* OIBDA falls 39.1 percent to $873.2 million

(Adds details)

MOSCOW, April 29 (Reuters) - Russian services conglomerate Sistema (SSAq.L: Quote, Profile, Research, Stock Buzz) reported on Wednesday a net loss of $713.9 million for the final quarter of 2008 after profit of $466.8 million a year ago.

Sistema said the results were hit by asset impairment losses of $239.4 million and a $794.8 million foreign exchange loss stemming from the depreciation of the rouble.

Consolidated revenues fell 3.4 percent to $4.02 billion, also due to the rouble devaluation, the company said.

Operating income before depreciation and amortisation

(OIBDA) decreased by 39.1 percent to $873.2 million, while the OIBDA margin was 21.7 percent, down from 34.5 percent in the fourth quarter of 2007.

Sistema said OIBDA was affected by asset impairment losses and $162.5 million of provisions for doubtful debts.

(Reporting by Maria Kiselyova, editing by Will Waterman)

((maria.kiselyova@reuters.com; +7 495 775 12 42; Reuters Messaging: maria.kiselyova.reuters.com@reuters.net)) Keywords: SISTEMA/

Sistema announces unaudited financial results for the fourth quarter and the full year ended December 31, 2008http://businessneweurope.eu/users/subs.php

Press release April 29, 2009

Sistema (the "Group") (LSE: SSA), the largest diversified public corporation in Russia and the CIS, which manages companies operating in the telecommunications, high-tech, oil and energy, radio and aerospace, banking, real estate, retail, mass-media, tourism and healthcare sectors, today announced its unaudited consolidated US GAAP financial results for the fourth quarter and the twelve months ended December 31, 2008. FOURTH QUARTER HIGHLIGHTS

• Consolidated revenues of US$ 4.0 billion

• OIBDA decreased by 39.1% year on year to US$ 873.2 million with OIBDA margin of 21.7%

• Operating income decreased by 63.2% year on year to US$ 319.2 million with operating margin of 7.9%

• Net loss of US$ 713.9 million FULL YEAR HIGHLIGHTS

• Consolidated revenues up 24.3% year on year to US$ 16.7 billion

• OIBDA up 11.1% year on year to US$ 5.5 billion with OIBDA margin of 32.9%

• Operating income was stable year on year and amounted to US$ 3.2 billion with operating margin of 19.0%

• Net income of US$ 62.0 million

• Total assets up 2.7% year on year to US$ 29.2 billion KEY CORPORATE HIGHLIGHTS AFTER THE END OF THE REPORTING PERIOD

• Acquired controlling stakes in Bashkir Oil and Energy Group for US$ 2.5 billion

• Signed an agreement with VTB Bank to sell a stake in Sistema-Hals and restructure debt of Sistema-Hals

• Sold 50% of voting shares in MTT to Synterra Group 2

• Successfully repaid a put option in the amount of RUB 4.5 billion (approximately US$ 130 million) on 75% of outstanding RUB 6 billion (approximately US$ 170 million) local bonds Leonid Melamed, President and Chief Executive Officer, commented: "Sistema demonstrated strong revenue and OIBDA growth in 2008, both at a Group level and across our business units. Despite the challenging market conditions, our core businesses reported strong operating and financial results. We had already introduced and begun implementing a programme to increasing efficiency levels across the Group prior to the downturn. As a result, our key businesses have increased their profitability levels and maintained or strengthened their leading positions in their respective markets. The cost optimisation programme has already saved a total of approximately US$ 700 million. Part of our dollar-denominated debt has also been converted into roubles, with the share of rubledenominated loans increasing year on year from 20% to 35%. This has reduced our dependence on foreign exchange fluctuations. In addition, our capital investment programmes have been reduced by US$ 700 million. We continue to actively manage our investment portfolio and to focus on projects that generate attractive returns on invested capital and healthy cash flows."

GROUP OPERATING REVIEW Sistema's consolidated revenues declined by 3.4% year on year in the fourth quarter as a result of Russian rouble devaluation, however were up

by 24.3% year on year in 2008. Sistema's performance for the full year reflected healthy results across the Group. The businesses outside of the Telecommunications unit accounted for 28.8% of total Group consolidated revenues in the fourth quarter and for 27.6% in 2008, compared to 32.2% and 28.2%, for the corresponding periods in 2007. Organic year on year growth for 2008, when excluding businesses acquired or divested since the end of the fourth quarter of 2007, was 23.1% year on year and amounted to US$ 3.1 billion. Selling, general and administrative expenses decreased by 7.8% year on year to US$ 874.7 million in the fourth quarter as a result of appreciation of the US dollar in the fourth quarter of 2008, and increased by 45.1% year on year to US$ 3,435.9 million for the full year 2008. Group OIBDA declined by 39.1% in the fourth quarter, and was up by 11.1% year on year in 2008. The Group OIBDA margin decreased from 34.5% in the fourth quarter of 2007 to 21.7% in the reporting quarter. The Group OIBDA in the fourth quarter was impacted by non-cash losses from asset impairment of US$ 239.4 million, and US$ 162.5 million of provision for doubtful debts. The Group OIBDA margin was lower at 32.9% for the full year 2008, compared to 36.9% for 2007. Depreciation and amortization expenses decreased by 2.2% year on year in the fourth quarter mainly due to appreciation of the US dollar and were up 32.6% year on year for the full year 2008, following the growth in the depreciable assets of the Group. Group operating income decreased by 63.2% year on year in the fourth quarter and by 0.7% in 2008, with an operating margin of 7.9% in the fourth quarter and 19.0% for the full year 2008, compared to 20.8% and 23.8% for the corresponding periods of 2007. Group interest expense was US$ 191.5 million in the fourth quarter and US$ 554.9 million for the full year 2008, compared to US$ 182.9 million and US$ 409.8 million for the corresponding periods of 2007. The effective tax rate was 43.1% for the full year 2008, compared to 29.4% for the corresponding period of 2007. The increase in the effective tax rate was due to the nondeductible losses from the impairment of long-term assets as well as goodwill and losses incurred by Sistema Hals. The Group reported a net loss of US$ 713.9 million in the fourth quarter and net income of US$ 62.0 million for the full year 2008, compared to net income of US$ 466.8 million and US$ 1,571.9 million for the corresponding periods of 2007. The Group net loss in the fourth quarter excluding of US$ 239.4 million of non-cash asset impairment losses and a US$ 794.8 million loss from foreign currency exchange amounted to US$ 56.0 million, after adjustment for minority interest.

Acron posts FY 2008 Net Profit of 9.89 billion Roubleshttp://www.russiatoday.ru/Business/2009-04-29/Acron_posts_FY_2008_Net_Profit_of_9.89_billion_Roubles.html

29 April, 2009, 11:53

Russian fertiliser producer, Acron, has posted a FY 2008 Net Profit of 9.89 billion Roubles under IFRS.

The bottom line is up 75% on the 5.67 billion Rouble Net Result posted for FY 2007, with EBITDA rising more than 100% to 17.48 billion Roubles, on the back of Revenues of 43.13 billion Roubles, up 39%.

The company was upbeat about the result pointing to the development of a distribution system in China, the acquisition of a dry bulk terminal in Estonia, and the development of a new mine at Oleniy Ruchey as laying strong foundation for Acron to weather the economic downturn and sustain future growth.

After weathering the marked deterioration of the fertiliser market in 4Q 2008, Alexander Popov, Chair of Acron’s Board of Directors was guardedly optimistic about the longer term outlook for demand and the ability of Acron to capitalise on any rebound in the market.

“We realize that the year ahead is going to be challenging. With the spring planting season underway, fertiliser demand has stabilised, but prices are still at 2006-2007 levels. Demand for organic and non-organic compounds is slipping. However, we believe this trend is temporary and expect demand to rebound in H2 2009. The Group plans to run its capacities at an average load of 80% throughout the year, which will enable our facilities to operate in a stable manner without interruptions."

Vimpelcom: Court Once More Rules Against Telenor http://businessneweurope.eu/users/subs.php

VTB CapitalApril 28, 2009

Interfax reported on Tuesday that the West Siberian Court (Tyumen) had dismissed Telenor's appeal to suspend the execution of the original Omsk Court decision made in February obliging Telenor to pay USD 1.73bn to Vimpelcom as compensation for the latter's entry into Ukraine being delayed (presumably by Telenor).

The news confirms once again that events are not unfolding in line with the best case scenario (which would be a decision to suspend the execution). Under the current situation, there is nothing to prevent the execution bailiffs from launching the procedure for selling Telenor's 26.6% stake in Vimpelcom. However, we remind investors that the bailiff of the process and Farimex's representative stated during the court hearings in the Moscow Arbitration Court on 14 April that they needed not less than one month from 13 April (when Telenor declined to pay USD 1.73bn to Vimpelcom voluntarily) to prepare the sale of Telenor's shares. We also note that since the beginning of the current stage of the hearings (end of 2008), there has not been a single decision in any Russian court in favour of Telenor, which might not be a good sign for the Norwegian operator.

The next hearing, at which Telenor will try to stop the execution of the sale, will be in the Moscow Arbitration Count on 30 April. This will be followed by the 26 May cassation in the West Siberian Court (Tyumen) to reverse the Omsk judgment of the deed. There is

only one court layer left to go to after this: the Supreme Arbitration Court.

The negative newsflow underpins a tactical overweight in MTS, which has lower leverage (USD 4.1bn vs. USD 8.9bn for Vimpelcom), a more predictable corporate governance risk profile and does not have a major stake pledged to the Russian government (unlike Vimpelcom, where Alfa has used its entire 44% stake as collateral for a USD 2bn facility from the Bank for Development).

Two Russian companies included on world’s most expensive brands listhttp://english.pravda.ru/business/companies/28-04-2009/107466-russian_brands-0

28.04.2009There are two Russian brands on the list of the world’s most expensive brands. Russia’s two major competitors on the market of cellular communication, MTS and Beeline, stand next to one another on the list, on the 71st and the 72nd places respectively. Google still keeps its leadership as the most expensive brand in the world. It added another 16 percent to its value and became the first brand in the world evaluated at over $100 billion - $100.039 billion to be more precise, The Vedomosti newspaper wrote with reference to the annual research conducted by Millard Brown Optimor.

The cost of the MTS brand, which originally appeared on the above-mentioned list on the 89th position in 2008, gained 14 percent to $9.189 billion. Another Russian company appeared on the list this year – Beeline (the brand of Vympelkom) worth $8.884 billion). China Mobile ranks first among other cellular communication companies with $61.283 billion.

The two above-mentioned Russian companies make major investments in their brands to contribute to their ability to bring profit within the shortest amount of time possible. The fact that many Russians started to spend less on cellular communication did not affect the cost of the brands since telephone connection has become an essential service in today’s world. The high price of the brand mirrors the high marketing activity of both MTS and Beeline, experts say.

MTS spent $111 million on advertising last year. The advertising spending of Vympelkom (Beeline) is evaluated at $122 million. Beeline has been the most expensive brand in Russia for four years in a row, Inter-Brand Company said.

Other Russian brands included on international lists are not so successful. For instance, Baltika (the brewing corporation, the brand cost: $1.126 billion) dropped on the list of brewing companies from the 15th to the 17th place. The first place is taken by Bud Light, a US brand evaluated at $6.655 billion.

Russia’s Lukoil dropped from the 8th to the 11th position on the list of oil companies ($701 million, -18%). Britain ’s BP is the leader ($5.936 billion).

COMMENT: High demand for Russian agricultural land http://www.businessneweurope.eu/story1578/COMMENT_High_demand_for_Russian_agricultural_landCushman & Wakefield April 29, 2009

In spite of the current macroeconomic situation, we continue to see high demand for agricultural land in black earth regions of the Russian Federation, with foreign investment funds some of the most active of our clients.

Purchases are made not for speculative aims, but for creating quality agriculture enterprises. These funds' interest is supported by the fact that agricultural land pricing is traditionally denominated in rubles and the Russian currency's devaluation has made it particularly attractive for purchases made in major foreign currencies.

We have also noticed serious interest from a number of Russian and international investment funds in buying agricultural land for the purpose of creating investment instruments based on rental income. For this group of investors, having a stable tenant plays a major role. The tenant can participate in funding and receive a dividend income.

Of note is also the activity of Russian agriculture funds, which have already acquired and farm large agricultural land plots. Such companies are unfreezing their investment programmes and are beginning to acquire more agricultural land. Their investment is directed towards growing their portfolio.

Thaw in the land market

The Moscow Region's land market is the most attractive for buyers and is clearly beginning to segment. Land plots for cottage construction are no longer popular and our forecast is that demand for these land plots won't increase over 2009.

However, land plots for commercial use (retail, logistics etc.) remain attractive and demand for this type of land is gradually increasing. Potential buyers are also showing particular interest in land plots located up to 30 kilometres from the Moscow Ring Road. Land plots further away have lost their appeal and we forecast that demand for these won't increase in 2009.

Buyers are currently a clearly defined group of companies acquiring land plots for business development purposes. Among these are retail chains, logistics operators and industrial companies. We also see interest from Russian producers of goods. High levels of tax for imported goods and the ruble's devaluation have made imported goods too expensive for Russians consumers, so now is a good time for Russian companies to develop their production facilities. Among companies interested in purchasing land plots are food processing companies, furniture makers etc.

We find it interesting that many land plot buyers are ready to take definitive steps to acquire land due to the current low prices. In January and February, there was little activity on the land market. In March and April, however, buyers have been increasingly active in signing letters of intent and undertaking legal and technical due diligence. We expect that many land plot deals will be finalized in July-August. We are currently working on 12 deals for the purchase of land plots.

As far as regional markets go, we note that cities with populations of between 500,000 and 1m have lost their attractiveness for many buyers. However, cities with populations of over 1m remain popular. The only exception to this is the Central Federal District, where cities with populations of fewer than 1m continue to be attractive. Buyers of regional land plots are mostly retail chains. Prices have fallen by up to 40% in comparison to pre-crisis levels and are currently almost $1m per hectare for cities with populations of over 1m and less than $600,000 per hectare for cities with populations of under 1m.

INTERVIEW-Soviet toxic legacy still poisoning Russiahttp://www.reuters.com/article/latestCrisis/idUSLS642704

Tue Apr 28, 2009 7:39am EDT

* Award-winning ecologist says Soviet pesticides poison soil

* Global economic crisis diverts attention from clean-up

* Delay to clean-up increases cost to people's health

By James Kilner

MOSCOW, April 28 (Reuters) - Pesticides still poison people in the ex-Soviet Union almost two decades after the fall of the Communist superpower when farm managers liberally sprayed chemicals over fields, an environmentalist said in an interview.

Olga Speranskaya -- who won an international award last week for her push to clean up the Soviet Union's toxic legacy -- also said the global economic crisis had diverted cash

from cleaning up chemical waste, including from Soviet-era factories.

"There is a lot of concern about toxic contamination. It's getting worse and especially because of this financial crisis," she told Reuters by telephone.

"Our governments show a lack of political will to tackle chemical contamination and now they have one more excuse because of the financial crisis."

Russia's ecology ministry declined to comment.

When the Soviet Union collapsed in 1991, warehouses and pits storing chemicals -- mainly pesticides -- littered the new but relatively poor republics. Chemical containers buried in the pits leaked, stockpiles were dumped or burnt.

Speranskaya estimated there are about 40,000 tonnes of dangerous obsolete pesticides in Russia and up to 25,000 tonnes in neighbouring Ukraine -- the worst affected areas.

She said many of the pits dug into the ground 30 to 40 years ago that held containers full of pesticides were poorly mapped and are only being discovered today, corroded and leaking.

"The consequences of not doing anything are very clear," she said.

Areas of high pesticide contamination record higher infant mortality rates, infertility, cancers and birth defects. This is accelerating as pesticides continue to poison the environment, Speranskaya added.

"Everybody is affected, even the babies in mothers' wombs," Speranskaya, a mother-of-two, said.

A trained geophysicist, Speranskaya won the Goldman Environmental Prize -- which honours six environmental activists every year -- for her work since the 1990s coordinating pressure on regional and national governments to clean up the waste.

BURNING WASTE

She made progress, pushing governments to sign up for international accords, dispose of thousands of tonnes of waste and reduce dependency on chemicals.

After the Soviet Union collapsed, Moldova sent its stockpiles of pesticides to France to be destroyed and Murmansk, a region in Russia's Arctic, cleaned up thousands of tonnes of its pesticides with help from the Arctic Council, an eight member group that binds together Arctic countries.

But the economic crisis has forced Russia and other ex-Soviet countries to divert funds

and spend billions propping up currencies, banks and industries.

"I doubt that under the current conditions of the financial crisis that local governments will address the problem of toxic waste," Speranskaya said.

Hastily created in the 1930s under Soviet leader Josef Stalin, collective and state farms often located in less fertile areas had to hit ambitious production targets set by bureaucrats in Moscow.

This forced farm managers to rely heavily on pesticides and fertilisers to boost yields, a practice which has been reduced.

In the Central Asian republic of Kyrgyzstan, Speranskaya said fertiliser use has dropped from up to 5,000 tonnes annually during the Soviet Union to around 94 tonnes now.

But she said 80 percent of Kyrgyzstan's agricultural land was now contaminated. Speranskaya also cited the former secret city of Dzerzhinsk in Russia that produced chemical weapons.

"For example near Dzerzhinsk in Russia there is a huge waste landfill site which is always on fire and this is a major problem," she said.

The burning waste releases chemicals into the air which contaminates food supplies. Speranskaya said eggs around Dzerzhinsk showed levels of toxins 14-times higher than the European Union limit.

She said a plan to close the landfill site has been scrapped because of a lack of cash.

"The financial crisis will end but chemical contamination will get worse and worse," she said. (Editing by Myra MacDonald)

Activity in the Oil and Gas sector (including regulatory)

Russia to raise oil export duty from $110 to $137.7 per tonhttp://en.rian.ru/russia/20090429/121364478.html

MOSCOW, April 29 (RIA Novosti) - The Russian government announced on Wednesday the raising of oil export duty from the current $110 to $137.7 per metric ton from May 1.

The figure was calculated proceeding from the average price of Russia's Urals blend at $47.8845 per barrel in the period of March 15 - April 14.

As of May 1, the duty on light petroleum products will rise to $105.1 per metric ton from the current $86.4 per ton and on heavy petroleum products to $56.6 per ton from the current $46.5 per ton.

Last year, the government abandoned its previously accepted bimonthly adjustments of export duties based on the price of the Urals blend on global oil markets and from December 1 switched to setting duties for oil and oil products on a monthly basis to respond more swiftly to changes in world oil prices.

The global financial crisis has forced Russia, which receives a large part of its revenues from oil exports, to gradually devalue the ruble amid capital flight and a fall in global oil prices, which declined from their peak of $147 per barrel in July 2008 to around $40 per barrel, rising in recent weeks to $50.

Government to block private oil field development

http://en.rian.ru/analysis/20090428/121355486.html

Kommersant

Russia's Energy Ministry has sent to the government proposals on assigning oil fields to the state oil reserve. The ministry does not support the idea of making a reserve by accumulating the oil produced, because building and running storage facilities will cost too much.

Analysts believe that the government intends to block the development of oil fields where state companies cannot control exports.

In June 2008, Deputy Prime Minister Igor Sechin issued an instruction to draft proposals on creating a state oil reserve, in order to be able to push domestic prices down with commodity interventions when global oil prices surge.

With the onset of the global economic downturn, the state reserve concept was reoriented to the international market. The potential Russian oil reserve was discussed with OPEC members in December 2008. However, a source in the ministry told Kommersant on Monday that the ministry did not support the idea of creating a reserve for the oil extracted.

Energy Minister Sergei Shmatko said that the concept currently under discussion in the government involves building a state reserve "in the broader sense." A ministry source added that about ten oil fields would be included in the reserve, such as the Trebs and Titov oil fields in the Nenets autonomous district.

The reserve made up of 10 "undistributed" fields is likely to be established, but not at all for influencing global oil prices.

"The government has suspended the oil fields producers are interested in," said Mikhail Krutikhin, a partner in Moscow's RusEnergy Consulting. "For example, exports from the

Trebs and Titov oil fields in the Timan-Pechora oil province would flow directly through the LUKoil terminal, bypassing Transneft and other government-controlled exporters."

LUKoil sources confirmed the company's interest in the oil fields. "We are not certain why such fields are included in the state reserve, but it means that prospecting will be suspended," they said.

Oil independents in play: Even at a premium to current share prices, independents offer majors cheap reserveshttp://businessneweurope.eu/users/subs.php

Unicredit, RussiaApril 29, 2009

 _ Buying an independent is a cheaper way for oil majors to boost their reserves. We estimate the average cost of finding and developing one barrel of oil for Russian oil majors at around $10/bbl (based on the 2008 SFAS 69). With most independents trading at less than one-third of this level, Russia's oil majors could pay substantial premiums for highquality independents, and still acquire reserves more cheaply than by investing in their own production.

_ Takeovers of Arawak Energy, Sibir Energy, Imperial Energy and Ritek have already been announced. Distressed debt market conditions and the oil price collapse have hurt small- and mid-cap independents, while making their valuations more attractive for larger sector players interested in quality stories and faced with the need to replenish their diminishing reserves.

Most mid-cap oil and gas valuations have fallen significantly from their two-year peaks, largely regardless of the underlying investment case, as investors' risk tolerance has plummeted. Since 3Q08, there has been a wave of consolidation, with offers made at significant premiums to market prices and most institutional investors happy to accept.

_ We believe the wave of consolidation may continue, with a focus on quality and accessibility. As oil majors and other sector players search for growth opportunities, many of the remaining independents are likely to receive interest in their more attractive assets. We see Zhaikmunai, JKX Petroleum, Regal Petroleum, BMB Munai and Caspian Services as most attractive to investors. Since 3Q08, Vitol has taken over Arawak Energy at a premium of over 200%, Gazprom Neft made a bid for Sibir Enregy stock at a 2.8X premium, and ONGC made an offer for Imperial Energy at a premium of over 60% (but this premium was before the crisis).

Reportedly some majors, including Lukoil, TNK-BP and Rosneft, are interested in second-tier names, as are national oil companies in countries short of oil and gas, namely China and India.

_ As many independents offer attractive upside on their own fundamentals, let alone any potential takeover premium, we recommend investors take a closer look at these names.

Cost of Ukraine's gas in 2Q09 to be $270.95 per 1,000 cubic metershttp://businessneweurope.eu/users/subs.phpbneApril 29, 2009

Ukraine will pay $270.95 per 1,000 cubic meters for Russian gas in the second quarter of this year, reports the national gas company Naftogaz Ukrainy's Acting CEO Ihor Didenko, says Interfax, against the $179.50 Ukraine paid last year.

He also predicted that Ukraine would import 2.3 billion cubic meters of gas in April and a total of 33 bcm this year, down from 55bcm last year.

Galt & Taggart said in a note: "The new price implies Ukraine will pay approximately US$ 620mn for April volumes, required before May 7. Despite the more attractive 2Q price, the amount is significantly higher than the US$ 343mn it paid in March because the month's 2.3bcm nearly matches the total import volume for all of 1Q. Owing to a larger payment amount and significant domestic debt arrears from regional companies like Kyivenergo (KIEN UZ), which reportedly owes UAH 480mn (US$ 62.3mn), the risk exists that Naftogaz may experience payment difficulties."

Ukrainian Prime Minister Yulia Tymoshenko arrives in Moscow today for talks with Russian state-owned gas monpolist Gazprom on reducing the amount of gas Ukraine is contractually obliged to import. Since the import deal was signed in January this year the crisis has lead to a massive reduction in demand for gas. However, Ukraine must pay for the contracted amount of gas even if it doesn't use it.

Galt & Taggart said: "Tymoshenko... is expected to ask the Russian side to waive take-or-pay penalties connected to lower-than-expected 1Q09 imported gas volumes, and agree on decreased volumes going forward. In return, the PM may offer Gazprom a role in the modernization of Ukraine's gas pipelines."

Ukraine imported just 1bcm of Russian gas in April, one-third of the volumes it had agreed to buy in January, reports the Moscow Times.

Russia's position on the lower volumes is so far unclear. Gazprom chief executive Alexei Miller suggested that the company could fine Ukraine for underbuying, while other officials have said no sanctions are planned.

TNK-BP Partners to Extend Acting Chief Executive's Contract http://online.wsj.com/article/SB124094351874564551.html

APRIL 28, 2009, 9:07 P.M. ET

By GUY CHAZAN and ALEXANDER KOLYANDR

BP PLC and its partners in Russian oil producer TNK-BP Ltd. have agreed to extend the contract of the joint venture's acting boss, Tim Summers, as they attempt to find a new chief executive.

Denis Morozov, who was long considered the lead candidate for the job, is now out of the running, according to people familiar with the matter. Talks with the former CEO of Russian metals producer OAO Norilsk Nickel broke down over pay. Mr. Morozov had been seeking compensation of as much as $25 million, partly linked to TNK-BP's planned initial public offering, according to people familiar with the matter.

Mr. Morozov couldn't be reached to comment, and BP said he is still one of a number of people being considered for the top job. AAR, the vehicle representing the Soviet-born billionaires who own the other half of TNK-BP, declined to comment.

The appointment of a new boss at TNK-BP, Russia's third-largest oil producer, was a key element of a peace deal signed between BP and AAR last year to settle a long-running dispute over control of the venture. The new CEO will succeed Robert Dudley, a U.S. citizen who fled Russia last summer complaining of official harassment and who stood down in December.

Since signing a new agreement to end their conflict, the two sides have restructured the TNK-BP board, appointing three independent directors-- Gerhard Schroeder, the former German chancellor; James Leng, former chairman-designate of Rio Tinto PLC; and Alexander Shokhin, head of an influential Russian business group.

But finding a successor for Mr. Dudley has proved harder. Mr. Summers, TNK-BP's chief operating officer, was tapped as interim CEO in December, but his contract is due to expire June 1. The partners will likely extend it for another few months. "If the new CEO is not in place by June 1, then AAR would support extending Tim Summers' powers as acting CEO until a new one is in place," said AAR Chief Executive Stan Polovets.

In an interview, BP Chief Executive Tony Hayward said BP and AAR are in no hurry to find a new boss for TNK-BP. "We don't want to run this to artificial deadlines," he said. "It's about getting the right person." Meanwhile, both partners think Mr. Summers was doing a good job. "Everyone is happy with how he's performing," he said.

TNK-BP

http://www.tnk-bp.com/press/releases/2009/4/109/

TNK-BP expects to report its annual US GAAP audited financial statements for 2008 on 29 April and its results for the 1st quarter of 2009 late May.

Any data reported meantime by BP in its published financial results is reflective of BP estimates, and is accounted for under IFRS rather than US GAAP accounting standards. As such TNK-BP data reported by BP does not represent a simple 50% of TNK-BP’s expected results

Kamennoye Progress Pleases TNK-BPhttp://www.tnk-bp.com/press/news/2009/4/1474/

April 28, 2009, Tuesday

TNK-BP says its Kamennoye field one of the oldest in west Siberia and only a decade ago widely viewed as impossible to develop — should soon provide a big boost to output growth.

Development of the 2bn bl field in the Khanty-Mansiyisk district is one of three projects on which TNK-BP is focusing this year, the others being the Uvat and Verkhnechonsk greenfields. The firm says making crude extraction from Kamennoye economically viable was particularly challenging as the geology is more complicated than at any of its more recent developments.

Since 2004, TNK-BP has invested $600mn in Kamennoye and plans to invest $700mn more in 2009—13,  including $250mn this year. These costs look rather low compared with  other new projects — possibly because it saved on exploration outlay by  using  Soviet-era data, Solid brokerage’s Denis Borisov says.

Kamennoye’s complicated geology impeded development during Soviet times. In the 1970s and 1980s, 100 exploration wells were drilled, but most did not yield high enough flow rates to justify large-scale development. The field was abandoned and resources diverted to other west Siberian fields that were easier to develop. A second effort to develop Kamennoye in the 1990s also failed, after 30pc of the 200 wells drilled proved dry. Those that were not dry only yielded 3—5 t/d.

The field’s main difficulty is its complex reservoir structure — typical of other Krasnoleninsk group fields, including Talinskoye and Em-Yoga. A significant proportion of reserves are focused in the transition zone — the area above the oil-water contact, but below the pure water level. This complicates hydraulic fracturing and the drilling of horizontal wells, TNK-BP says. The firm has had to adjust standard horizontal drilling and fracturing techniques, which were proving inefficient.

There are 320 producing wells at Kamennoye, with a combined output of 4,000 t/d. Production is expected to peak at 84,000 b/d in 2013, by when the firm plans to have added 250—300 more wells. More than 40pc of the 2009 investment TNK-BP has allocated for Kamennoye will be spent on infrastructure, with the remainder going on drilling, the firm says. It will also focus on rehabilitating idle wells, which now only constitute 10pc of the total, down from 45pc before.

In 2006—07 Kamennoye produced 16,000 b/d. This year, output is due to grow by 40pc to 36,000 b/d, from the 26,000 b/d produced in 2008. The field’s lower horizons hold significant reserves, but these are not presently profitable to exploit, TNK-BP says. Partly situated in a protected floodplain, Kamennoye is environmentally sensitive. Only minimal infrastructure is permitted, while well management, processing and metering are all automated.

YUKOS unit wins $389 mln Dutch ruling vs Rosneft –paperhttp://uk.reuters.com/article/oilRpt/idUKLT73368620090429

Wed Apr 29, 2009 7:43am BST

MOSCOW, April 29 (Reuters) - A Dutch court has ordered Russian state oil company Rosneft to pay 13 billion roubles ($389.3 million) to a former affiliate of bankrupted Russian oil giant YUKOS, Kommersant daily reported on Wednesday.

The business daily called the ruling, which would allow the court to seize Rosneft assets abroad, the first success in a foreign court for former YUKOS managers seeking redress after the state bankrupted the oil company for tax debts and sold off its assets.

Kommersant said YUKOS Capital, an ex-YUKOS affiliate now owned by former managers, had originally won a ruling from the arbitration unit of Russia's Chamber of Commerce ordering Rosneft, which bought production unit Yuganskneftegaz at auction, to pay back money lent to Yugansk by YUKOS Capital.

The ruling was overturned by Russia's Supreme Arbitration Court, but on Tuesday, a Dutch court of appeals ruled that the original ruling could still be enforced in the Netherlands, Kommersant said.

Former YUKOS owner Mikhail Khodorkovsky, jailed for eight years for tax evasion and fraud, is facing new charges in Moscow in a trial that is seen as a test of President Dmitry Medvedev's commitment to uphold the rule of law.

Khodorkovsky lawyers turned to a U.S. court in their bid to force Russian officials to testify at his trial, obtaining a notification from the District of Columbia federal court to Finance Minister Alexei Kudrin of a summons to Russian court.

Kudrin was served with the summons during a visit to Washington last week. (Writing by Melissa Akin, editing by Will Waterman)

Tender for Shtokman power plant in Teriberkahttp://www.barentsobserver.com/tender-for-shtokman-power-plant-in-teriberka.4586193-16178.html

2009-04-28 Shtokman Development has invited companies to a tender for building of a power plant in Teriberka, location for the Shtokman field LNG plant.

The tender is for a turn-key delivery of a complete 600 MW power plant 8 kilometers outside the Teriberka village. The plant will mainly consist of gas turbine generators of heavy duty type, each with minimum 110 MW generation capacity in open cycle. Two units shall be dual fuelled type (diesel and fuel gas) and one spare gas turbine generator shall be provided, the company writes on its web site.

Closing date for the tender is May 15.

Blocks Offered in Nenetsk Autonomous Area and Sakhalin Regionhttp://www.oilvoice.com/n/Blocks_Offered_in_Nenetsk_Autonomous_Area_and_Sakhalin_Region/7920cf59.aspx

Tuesday, April 28, 2009Written by Deloitte Petroleum Services

The Subsoil Management Department of the North-Western Federal District invited applications for the Korovinskiy block. Under this process the Korovinskiy block is offered for 25 years of exploration and production. The main criteria the authorities use to define the winning applications include; the scientific and technical subsoil programme, the contribution to the social and economic development of the region, project implementation time-frame and taking into account Russia national security interests. The deadline to submit applications and deposits is 27 April 2009. The application fee is set at RUB325,491 (USD9,490) and the deposit is RUB152,000,000 (USD4,456,916) (100% of opening bid). The results of the competitive process will be announced on 30 June 2009.

The Russian Subsoil Management Agency has also announced an auction, in which the Vostochno-Goromayskiy (Goromayskiy East) block is offered for 25 years of exploration and production. The deadline to submit applications and deposits is 15 May 2009. The application fee is set at RUB62,000 (USD1,818) and the deposit is RUB15,100,000 (USD442,760) (100% of opening bid). The auction will be held on 17 June 2009.

The Korovinskiy block lies within the Timan-Pechora Basin. The total acreage offered is 129 square kilometres. The block is located 90 kilometres to the north-east of Naryan-Mar. The nearest trunk gas pipeline is 530 kilometres away. The Korovinskoye gas-condensate field is situated within the block and has proved gas C1 total reserves 40.845 bcm and gas C2 total reserves 0.266 bcm and proved condensate C1 total reserves 0.996 million tons and condensate C2 total reserves 0.006 million tons, as of 2008. 26 wells, with a total length of 63,780 metres, were drilled within the Korovinskoye field.

The Vostochno-Goromayskiy (Goromayskiy East) block lies within the east part on

North Sakhalin. The total acreage offered is 49 square kilometres. The nearest oil pipeline is 40 kilometres away and the nearest gas pipeline is three kilometres from the block. The Vostochno-Goromayskaya (Goromayskaya East) and Vostochno-Boatasinskaya (Boatasinskaya East) prospects are located within the block. Probable C3 gas reserves are forecast at 7.62 bcm, as of 2008. Probable D1 localized gas reserves are forecast at 8.8 bcm and probable D1 localized condensate reserves are forecast at 1 million tons, as of 2002. Two exploration wells were drilled and 120 kilometres of 2D seismic were shot within the block area.

Oil company fires 1000 in Nenets AOhttp://www.barentsobserver.com/oil-company-fires-1000-in-nenets-ao.4586184-16178.html

2009-04-28 The oil company Naryanmarneftegaz – a joint venture of Lukoil and ConocoPhillips – is dismissing 1000 of its employees in the Nenets Autonomous Okrug. The Naryanmarneftegaz is one of several companies now dismissing employees in the sparsely populated and resource-rich region. According to Regnum, the company will cut 1000 of its people in the Nenets AO.

Also the Eurasia Drilling Company is dismissing personnel in connection with the moving of its regional headquarters to Usinsk, Komi Republic.

Together, the company cuts will significantly increase unemployment in the region, employment authorities say.

Kharyaga partners might have to cut spendinghttp://www.barentsobserver.com/kharyaga-partners-might-have-to-cut-spending.4586041-16178.html

2009-04-28 Regional authorities in the Nenets Autonomous Okrug together with the federal Ministry of Energy intend to push for a cut in 2009 spending in the Kharyaga oil project. In a recent meeting, Nenets AO Governor Igor Fyodorov and Deputy Head of the Energy Ministry Stanislav Svetlitsky agreed that the financial crisis should result in reduced spending in the oil field development, Regnum reports. The Kharyaga consortium – Total, StatoilHydro and the Nenets Oil Company – has adopted a 403.6 million USD project budget for 2009.

The Kharyaga project is one of three Russian petroleum fields operated on the principles of a production sharing agreement. That commits Russian federal authorities to party reimburse the field partners’ project spending.

The Kharyaga field is located in the oil-rich Nenets Autonomous Okrug. It has reserves of about 160 million tons of oil.

Eurasia Drilling reports 2008 results, EBITDA exceeds our expectationshttp://businessneweurope.eu/users/subs.php

Alfa, RussiaWednesday, April 29, 2009

Eurasia Drilling Company (EDC) reported 2008 and 2H08 financial and operating results yesterday. The company reports semiannually and therefore results are dominated by the buoyant business environment of the first three quarters of the year. Highlights are presented below:

EBITDA exceeded our expectations by 9.5% and largely reflect higher DD&A expenses, which were $102m as opposed to our forecast of $73m. We also underestimated revenue per meter drilled by 4%. Actual revenue per meter drilled was $513 compared to our forecast of $492. EDC has also increased its market share from 22.4% in 2007 to 26% in 2008. A further increase in market share is quite possible, as financially strong companies tend to attract a relatively larger share of business during times of distress.

In the 4Q08 it became clear that significant deterioration of the business environment was imminent. EDC reduced its investment program through cancellation or postponement of its commitments. Major efforts were made to preserve cash, improve A/R collections and jump-start cost reduction efforts.

The balance sheet as a reflection of financial strength is in good shape. The company's cash position exceeds total debt by $17m. At the end of last year it seemed that drilling volumes would decline by 30% or more, but in 1Q09 volumes actually slightly exceeded those registered last year. Drilling volumes still will decline this year, as the summer drilling season will not be as active as last year, but the MD&A lacks detail and we are looking forward to the conference call to help us establish appropriate expectations.

Finally, the EBITDA margin was 21.6% in 2008. Margins and their stability have major implications as far as the fair value of the stock is concerned, and we are looking for management's guidance for target margins this year and beyond. We are going to update our forecast following today's conference call.

COMMENT: Eurasian pipelines - a forecaster's nightmare http://www.businessneweurope.eu/story1577/COMMENT_Eurasian_pipelines__a_forecasters_nightmare

Ariel Cohen in New York

April 29, 2009

The world's leading experts who gathered at Columbia University's Harriman Institute for the conference, "The Architecture of Energy Export System of the Caucasus and Central Asia," believe that future uncertainties jeopardize western control of much of Eurasian energy.

The 1990s were a boom decade for Caspian oil. Western companies moved into the region in force. There were three important pipeline projects: Western and national oil companies built the Caspian Pipeline Consortium (CPC); the Baku-Supsa (both to the Black Sea); and the crown jewel, the Baku-Tbilisi-Ceyhan (BTC), to the Mediterranean.

The US was a major player in promoting pipelines that it saw as sources of revenue for the national development of Central Asian states as well as Georgia and Azerbaijan. International oil companies (IOCs) were anxious to control reserves as giant fields elsewhere approached exhaustion. And to a great degree, the 1990s Caspian oil were a success story for IOCs and for US geopolitics. Yet times have changed - natural gas remains mostly under Russian control.

Organized by Professor Jenik Radon, adjunct professor at the School of International and Public Affairs, the Columbia conference saw participants agree that the global economic recession, decline of European demand and the lack of available investment are among the key factors making westbound pipelines from Eurasia largely a pipedream. Add to that the increasing geopolitical "pull" of China, an increase in Russian clout in its so-called "near abroad" after the Georgian war and the possibility of a future Iranian route – if rapprochement with the US succeeds – and these uncertainties make the future pipeline map of 2019 a forecaster's nightmare.

Partners not threats

With the memorandum of understanding signed by the Azerbaijani National Oil Company (Socar) and Gazprom on March 27 as well as Presidents Ilham Aliyev and Dmitry Medvedev during energy talks in Moscow April 16-17, Azeri gas supply could also go to Gazprom.

Elin Suleymanov, consul-general of Azerbaijan in Los Angeles, indicated that in Baku Gazprom is perceived more as a partner, not as a threat, especially as Russia has promised to use its influence to help resolve Azerbaikjan's festering Nagorno-Karabakh territorial dispute with Armenia. Washington's strategic efforts to obtain significant Caspian gas for Europe could be simply too little, too late, as this option will have effectively been foreclosed by the Kremlin.

Martha Brill Olcott of the Carnegie Endowment pointed out that westward pipelines from Central Asia have improved the region's bargaining capacity. The reason that BTC and BTE could be built was because Russia had for many years grossly underpaid for the energy it took at the border and sold for market prices in Europe. However, today, Russia is paying a premium.

It is likely that Russia is paying the premium because domestic underinvestment and stagnant production have caused a shortage of available gas for export. Secondly, if Russia is overpaying for the gas – and the West dithers in building alternative pipelines - that will encourage Central Asian states to export gas via Russia. Finally, if Europe's top

priority is a unified energy market, insufficient commitment and effort going into future projects such as the Nabucco gas pipeline and the Trans-Caspian Pipeline will diminish their chances of being built.

Energy demand and declining prices due to the global economic crisis make high-cost Eurasian energy less attractive for investors. For project financing, oil at $50 a barrel is much less attractive than oil at $75.

With projects of great geopolitical complexity taking 10 years and more to negotiate, and with multi-billion-dollar financing not readily available at the current energy price levels, the chances that by 2019 we will see much oil and gas flowing West from East in general, and West Caspian in particular – under Western ownership - look slimmer than two years ago.

Yet the growth in Chinese demand remains constant. China is consistently winning energy bids in Central Asia, such as in Kazakh oil and Turkmen gas, and the forthcoming construction of the Russia-China oil and gas pipelines could decrease the availability of resources for exports to the West.

Much ignored, the role of Turkey in Eurasian energy transit is crucial. According to Giorgi Vashakmadze, a former executive of the Georgia International Oil Corporation, the Baku-Tbilisi-Erzurum (BTE) pipeline was supposed to be a joint venture between Azerbaijan, Georgia and Turkey. However, the pipeline essentially ends at the Turkish border. From there, Turkish national oil and gas pipeline company Botas took over, negating the chance of a broad international cooperation in the gas area. As a result, the offshore Shah Deniz gas project in Azerbaijan was delayed and reduced in size in Phase One; and shrunk to one-half of the planned capacity in Phase Two. Turkish demands to acquire large amounts of gas seem to be almost lethal for Nabucco.

Russia is pressing on with the Bluestream and South Stream projects across the Black Sea to Turkey in order to build influence and prevent Caspian gas from taking a market share – in Turkey and for exports to Europe. Gazprom is enhancing its influence in Ankara at the highest level.

The West has also missed the opportunity to build a relationship with Turkmenistan, opening the door to Russia to secure Turkmen gas supplies. Turkmenistan needed a strong commitment by the West to agree to build a Trans-Caspian Pipeline to link up with Baku-Tbilisi-Erzurum. A 30bn cubic metre a year pipeline – twice the size of the suggested Nabucco pipeline, had to be built, Vachkamadze suggested.

The lack of a strong private sector leader; absence of a coherent European strategy; low energy prices; and the rise of China and Russia all seem to be contributing to a negative outlook for Eurasian energy pipelines to Europe.

Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies at the Heritage Foundation and the author of Kazakhstan: The Road to Independence. Energy Policy and the Birth of a Nation (SAIS-Johns Hopkins, 2008)

Pipeline Politicshttp://businessneweurope.eu/users/subs.php

Chris Weafer, UralsibApril 29, 2009 Nabucco backers making big push. Following Prime Minister Putin's decision not to attend last week's energy conference in Sofia, Russia's energy relationships appear very strained again. The theoretically "neat" plan of dominating pipeline routes into Europe is currently under serious threat as the backers of the Nabucco pipeline make another serious effort to progress their project. There is a lot of pressure being applied internally (within the EU) on Bulgaria and towards Turkmenistan. The unfortunate explosion in the pipeline linking Turkmenistan with Russia has clearly infuriated Turkmenistan and given greater comfort to EU official that they might, after all, be able to gazump the proposed updated gas deal between Russian and Turkmenistan. That could, in theory, provide a source of enough gas to justify the Nabucco project. The authorities in Ashgabat are currently more inclined to think that the explosion was a deliberate action to avoid Gazprom having to buy gas that it does no t currently need because of demand falling in Europe and in the domestic market. For Nabucco, even if=2 0it can do a deal with Ashgabat, the critical problem remains how to get Turkmenistan gas to Europe, as without an agreement between the Caspian littoral states, a pipeline across the Sea will not be possible. Building it via Iran, and onwards to Europe via Turkey, will hardly calm security fears.  Bulgaria holding out. The Bulgarian PM has spent the past two days in Moscow negotiating a gas transit deal that Moscow hopes will be a critical piece of the South Stream pipeline network. Bulgaria is also part of the Nabucco consortium and, because it has options, appears to be in no mood to give much away. The Bulgarian PM is pushing a hard bargain with Moscow and with elections now scheduled for July 5th he cannot be seen to give an easy deal to Moscow. In fact, unless a deal is wrapped up quickly, the issue of gas transit risks becoming an issue in the July parliamentary elections and a very decisive issue between the pro EU and pro Russia factions. But, in a hopeful note, PM Putin said that he hopes that a deal can be signed between the two sides within two weeks. On top of all that, Ukraine PM, Yulia Tymoshenko, is scheduled to visit with PM Putin today to discuss, amongst other issues, the gas relationship. Russia has managed to be included in the discussions between the EU and Ukraine concernin g the proposal to upgrade the existing Ukraine transit pipeline. The big problem for Russia, of course, is that, should the upgrade go ahead without its involvement then Ukraine might eventually be the conduit for Azerbaijan gas - from the 2nd phase of its north Caspian gas project - via Georgia and the Black Sea.

Gazprom

Agreement with Gazprom will be signed in May /ROUNDUP/

http://www.focus-fen.net/index.php?id=n179287

28 April 2009 | 21:57 | FOCUS News Agency Moscow. Bulgargaz and Gazprom will sign the agreement on South Stream gas pipeline in the middle of May. This was announced after the end of the talks in Moscow.Bulgarian PM paid a three-day working visit to Moscow.Russia has accepted all Bulgarian arguments following the meeting between Bulgarian Prime Minister Sergey Stanishev and his Russian counterpart Vladimir Putin on Monday before the opening of Bulgaria’s national commercial exhibition in the Russian capital. Tuesday’s meeting between the two prime ministers lasted more than half an hour.

The signing of the agreement will settle the relations between the gas companies of the two countries – Bulgarian Energy Holding and Gazprom – until a joint stock company is set up. I am content that after my Monday’s talks with PM Vladimir Putin the negotiations assumed new dynamics; the experts worked a lot and I can announce today that yesterday’s disagreements have been resolved. I am content that the agreement takes into account items important for Bulgaria. Thus we can be optimistic that in the middle of May it will be signed since it was endorsed on Tuesday, said PM Stanishev.He says interests should be well balanced and the arguments of each of the parties should be taken into account so that a project could be strategically stable at all its levels. The two prime ministers discussed also Belene NPP project.The project is highly important for the energy independence of Bulgaria and the entire region. Up to now Bulgaria has provided some EUR 400 million for its implementation, Stanishev said.Bulgaria does not plan to decrease the amounts of gas it purchases from Russia, he said.The contract envisages the purchase of 17 billion cubic meters of gas annually between 2006 and 2030. No one plans to change this, Stanishev told a press conference after the meeting with his Russian counterpart.He added that a possible rise in the purchased gas is subject to other talks.The direct supplies of Russian gas to Bulgaria do not need political will, said Vladimir Putin. Asked whether political will was declared in relation to possible direct supplies of gas from Russia to Bulgaria as of the end of 2009, Putin said Gazprom was one of the founders of the mediating company and it made no difference to the Russian gas company whether it would deal with a private or state company. The Russian PM noted the requirements for the transition to direct supplies should be discussed to see whether they would not cause legal difficulties and losses to Gazprom. Immediately after his meeting with Vladimir Putin PM Stanishev held talks with Russian President Dmitry Medvedev. At the beginning of the talks Russian President said he was familiar with the details of Monday and Tuesday’s talks and welcomed the constructive dialog between the two countries.

GDF Denies It Was in Talks To Buy Stake in Nord Streamhttp://www.themoscowtimes.com/article/1009/42/376692.htm

29 April 2009Combined Reports

GDF Suez chief executive Gerard Mestrallet said Monday that the French utility was not in talks to buy a minority stake in the Gazprom-led Nord Stream gas pipeline.

Gazprom said last year that GDF expressed interest in taking a minority stake in the pipeline, which is due to start at the end of 2011. Reports have circulated that E.On was willing to sell part of its stake in the project. On April 14, Stanislav Tsygankov, head of Gazprom's external relations department, said the Nord Stream consortium had entered into talks with GDF.

GDF's talks with Gazprom are focused on securing additional long-term gas supply contracts, Mestrallet said on the sidelines of a conference in New York. It has held no talks with E.On, he said.

"We are just not interested in simply being in the pipe," Mestrellet said. "We are interested if, and only if, at some point we get long-term gas supply contracts."

GDF Suez was unsuccessful in becoming the sixth partner for the Nabucco gas pipeline project, which aims to pump Caspian gas to Europe and is viewed as a Nord Stream rival.

Russian gas supplies made up 14 percent of GDF's long-term supplies at the end of 2008, a percentage that Mestrallet has said could rise with little risk.

"As a supplier of gas, we can say that with the only exception of January 2008, when they stopped supplying through Ukraine, in the past 25 years Gazprom and Russia have been reliable, smart suppliers," Mestrallet said.

Last month, Gazprom CEO Alexei Miller met with French Ambassador Jean de Gliniasty, who "noted the importance of the successful completion of the Nord Stream project for Europe's energy security," according to a Gazprom statement.

Hungarian EMFESZ to buy gas from RosGas instead of RosUkrEnergohttp://www.kyivpost.com/business/40476

Yesterday, 19:46 | Interfax-UkraineKyiv/Moscow, April 28 (Interfax-Ukraine) – Hungarian-based gas and electricity supplier EMFESZ Kft has agreed to buy natural gas from RosGas, "a company in Gazprom's network of business interests," due to the problems its former supplier, Swiss-based gas trader RosUkrEnergo, is facing, EMFESZ said in a statement.

EMFESZ is owned by Ukrainian billionaire Dmytro Firtash, whose is a partner of Russia’s Gazprom in Rosukrenergo, the middleman company which was removed as the supplier of gas to Ukraine this January by virtue of an agreement between Ukrainian Prime Minister Yulia Tymoshenko, and her Russian counterpart, Vladimir Putin.

"The company [EMFESZ] has been supplied with gas from RosUkrEnergo, which is experiencing storing difficulties in Ukraine," reads the press release. "Thus EMFESZ is ensuring its gas supply in the future with the cooperation of RosGas."

According to the statement, the new gas acquisition system of EMFESZ is independent of Ukraine. Gazprom, whose interest is to keep EMFESZ consumers supplied with gas, has played a role in shaping the system.

However, Gazprom official spokesman Sergei Kupriyanov cast a cloud of doubt over the deal, saying there were no agreements and contracts for the supply of Russian gas to EMFESZ.

"Moreover, as it is known, the only export channel of Russian gas supplies is the Gazprom Export company. RosGas, which has been quoted by the Hungarian side in the statement today, has nothing to do with Gazprom and does not belong to the Gazprom group," he stressed.

Gazprombank Reports 2008 Net Loss of 60.1 Billion Rubleshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aAwwTchFIAyo

By Denis Maternovsky

April 29 (Bloomberg) -- OAO Gazprombank reported a net loss for last year of 60.1 billion rubles ($1.8 billion) on currency and securities trading losses.

The bank had net income in 2007 of 33.6 billion rubles, according to a statement posted on its Web site. The bank expects a gain of 16 billion rubles on a revaluation of its securities portfolio in the first quarter of this year.

Board members won’t receive bonuses for last year, the Moscow-based bank said.

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

Last Updated: April 29, 2009 02:10 EDT

Russia's Gazprombank reports 2008 losshttp://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSLT41457820090429

Wed Apr 29, 2009 3:16am EDT

MOSCOW, April 29 (Reuters) - Gazprombank, the banking arm of Russian state energy company Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz), reported a net loss of 60.1 billion roubles ($1.8 billion) for 2008, the first major Russian bank to report

a loss last year. The bank, which reported a 33.6 billion rouble profit in 2007, said the loss, calculated under International Financial Reporting Standards, occurred due to currency transactions and a revaluation of its securities portfolio after the rouble weakened and markets fell in the second half of 2008.

Gazprombank's main rivals, state-owned Sberbank (SBER03.MM: Quote, Profile, Research, Stock Buzz) and VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz), which are publicly traded, beat forecasts with 2008 profits earlier this month.

Gazprombank said that as a result of hedging it expected a profit of 16 billion roubles from foreign currency transactions in the first quarter of 2009. The bank said the profit from lending and commissions rose 11 percent in 2008.

Amid Russia's worst economic downturn in a decade, Russian banks' loan portfolios are rapidly deteriorating, threatening to wipe out their profits in 2009. (Reporting by Oksana Kobzeva, writing by Gleb Bryanski, editing by Will Waterman)