Russia 090427

Basic Political Developments PM Stanishev opens trade & industry exhibition in Moscow - The Bulgarian

prime minister Sergei Stanishev will open the Bulgarian national trade-industrial exhibition, which is part of the program for the marking of the Year of Bulgaria in Russia.

Prime Minister Sergey Stanishev on work visit to Moscow - . In Moscow, Sergey Stanishev will confer with Russian President Dmitri Medvedev; his counterpart Vladimir Putin; and Moscow’s mayor Yury Luzhkov.

Bulgarian PM pays visit to Moscow Bulgaria’s Delegation in Moscow with Three Options for South Stream

Agreement Bulgarian PM Negotiates Energy Projects in Moscow - The main topics that

Stanishev is going to negotiate include the construction of the South Stream pipeline, the financing of Bulgaria’s second NPP in Belene, as well as the proposed new contract with Gazprom.

Bulgaria president sees deal with Russia on South Stream pipeline by end-May Pravda: Bulgaria turns into center of big play between Russia and West Bulgaria in energy play between East and West, comments in Russian press

/ROUNDUP/ Russia is ready to extend a loan of 3.8 billion euros ($5.92 billion) to Bulgaria by

the end of the year for the construction of the country's second nuclear power plant in Belene, Russia's Energy Minister Sergei Shmatko said

Bulgarian Summit Sets Up Tense Talks in Moscow - Russia and Bulgaria will soon bridge differences over Sofia's participation in a Moscow-backed pipeline project to bring gas to Europe and sign a final deal, Energy Minister Sergei Shmatko said Saturday.

Russia minister upbeat on gas deal with Bulgaria - Sergei Shmatko told a news conference at an energy security summit in Sofia that both sides should be ready to compromise and reminded Bulgaria to live up to its political promise to join the South Stream project.

Parvanov Won by Standing up against Moscow Travelers Arriving From U.S. To Be Checked for Swine Flu - All passengers

arriving in Russia from the United States or Mexico will have their temperatures tested to make sure that they are not carrying a deadly strain of swine flu, Gennady Onishchenko, head of the Federal Consumer Protection Service, said Sunday.

Mexican, US imports banned - RUSSIA, fearing the spread of swine flu, on Sunday banned meat imports from Mexico, several US states and nine Latin American nations, a spokesman for Prime Minister Vladimir Putin said.

Major joint projects to help RF, China overcome crisis – Lavrov: The Chinese foreign minister arrived in Moscow for a visit on Sunday for talks with his Russian counterpart Sergei Lavrov.

Lavrov talk on EU eastern influence 'nonsense': EU - The Czech EU presidency said Russian Foreign Minister Sergei Lavrov was talking "nonsense" in accusing the European Union of seeking a sphere of influence in the former Soviet Union.

EU hits back at Russian "nonsense" over Eastern initiative: Top European Union diplomats on Monday dismissed as 'nonsense' a claim by Russian Foreign Minister Sergei Lavrov that the EU is planning to build a sphere of influence in the former Soviet Union, just 24 hours before a meeting with him.

Brazil, Russia, India, China offer IMF financial aid for wider policy role Developed countries resist IMF reform-Russia's Kudrin Russian warships arrive in Gulf of Aden for anti-piracy mission Azerbaijan, Russia, Iran to unify efforts to strengthen security in Caspian Sea -

Heads of the three countries' border services reached this agreement during bilateral and trilateral meeting in Baku, the Azerbaijan State Border Service reported on April 25

Astrakhan - Russia's gateway to the Caspian and Iran: Russia’s Deputy Minister of Industry and Transport, Vladimir Dergunov says “we need to capitalize on our position as a transport hub – by road, rail, air, and sea. Ultimately, we want to overtake the Suez Canal as the major North-South transit corridor, linking Europe with Iran and India.”

Russia to build 6 Kilo-class diesel submarines for Vietnam Russia to sell 6 submarines to Vietnam, not Venezuela – paper: The St.

Petersburg naval dockyard Admiralteyskye Verfi and Vietnam will shortly sign the contract, worth $1.8 billion, AFP quoted the daily Kommersant as reporting Monday. The paper was citing sources close to Russian arms export agency Rosoboronexport.

Russia’s search for new arms markets in South America: New SIPRI data on global arms transfers published today reveal that Russia remains the second largest arms exporter in the world, accounting for a quarter of global exports of major conventional arms.

US journalist arrested in Russian Olympic City - An American journalist with the New Yorker magazine was briefly arrested at a polling station in the Russian city of Sochi on Sunday, Associated Press reports.

New Yorker writer arrested in Russia: report United Russia's Pakhomov to win Sochi mayor vote - election head Pakhomov wins landslide victory in Sochi mayor elections Idealism Amid the Cynicism of Russian Politics - Winning Candidate From

Ruling Party Renounces Fraudulent Victory Russian Mayor Walks Into Chess Master’s Trap Medvedev to meet Council of Trustees of Rus Olympians Foundation Su-35 fighter model crashes, pilot catapults in Khabarovsk terr High-ranking police officer guns down 2, injures 7 people Policeman murders three people in south Moscow store FSB Under Fire for List Of Terrorist Tactics - The nearly 1,000-word document,

titled "About Tactics Used For Diversionist-Terrorist Acts," was apparently only recently added to the FSB's web site under the heading "Professional Advice,"

which also contains articles advising citizens how to behave in a terror attack or a hostage situation.

Military Relaunches Operations in Chechnya - Federal commanders reintroduced the security restrictions associated with counterterrorism operations in the Shali, Shatoi and Vedeno districts near the Caucasus Mountains in the region.

Gordon M. Hahn: Averting the Caucasus Jihad - Russia is the only country besides Pakistan (and perhaps India) that has both a viable jihad movement and stockpiles of chemical, biological and nuclear materials and weapons. Russia's jihad movement is something the West should not ignore.

Paul Goble: Medvedev ‘Imitates’ Political Reform to Defend Putin’s System, Moscow Commentator Says

Between Assertiveness and Insecurity: Russian Elite Attitudes and the Russia-Georgia Crisis

State Demography Policy Won't Work, UN Warns - Presenting the results of the 2008 United Nations Human Development Report for Russia, the report's authors said the government needed to take more than just fertility into account if it wanted to mitigate the effects of a demographic crisis.

Russia must overcome racism to boost population: U.N.

National Economic Trends Russia Plans to Sell Bonds in 2010, Seeks Loans From World Bank - Banks and

pension funds are likely to be the chief buyers of Russian bonds, Kudrin said today in an interview broadcast on the state television channel Vesti. Russia’s budget deficit may be wider than the government’s estimate of 7.4 percent of gross domestic product, Kudrin said in Washington on April 24.

World Bank says Russia asks for VEB bond guarantee - Russia has asked the World Bank to provide a partial guarantee on a bond issue by the state lender VEB, the World Bank's country director for Russia Klaus Rohland said on Monday.

Risks of inflation higher than 13% forecasted by govt minimal in 2009 – Kudrin UBS: Russia: How bad or likely is -9.5% contraction? Rencap: New official forecast: 6% GDP decline in 2009 UralSib - Economics: Russia's foreign debt improves Rencap: Russian unemployment reaches 9.5% in 1Q09, investment down 15%

YoY CBR auction REPO rates drop nearly 100 bpts CBR could resume buying on forex market this week

Business, Energy or Environmental regulations or discussions No changes planned to electricity market liberalization timetable –Shmatko Liberalisation of the electricity markets might be delayed until 2013 Ministry Wants Delay Of Utility Rate Hikes - The Economic Development

Ministry wants to put a brake on price rises for electricity, gas and rail transport, Interfax reported Friday, as officials try to ease the cost burden on crisis-hit domestic industry.

Economic Development Ministry slows tariff increases for power and gas companies in 2010-2012

Russian Media Highlights From VTB Capital Forum – Summary of VTB Capital Forum: Russia Calling on 21-23 April.

Evraz: 2008 IFRS preview: and glimpse at 1Q09 Acron officially starts Oleny Ruchei phosphate project Hyundai seeks $331 mln borrowing for Russia plant Car production in Russia down by two-thirds Sberbank in BTA Talks Sberbank considering purchase of 53% stake in BTA Bank VTG Seeks Russian Partner - VTG, which runs Europe's largest fleet of privately

owned railway cars, is close to finding a Russian partner to expand its tank-container transport business there and in neighboring regions.

INTERVIEW: SDM Bank counts its conservatism as its strength Magnit - attracting consumers: Russia's leading regional supermarket chain

Magnit is expecting to end this year by setting a new sales record and is one of the few Russian companies that is still expanding fast.

Russian market set to be one of world's best performers this year and next - Peter Halloran of Pharos Financial Group comment

Western Gray Whales Get a Break From Noisy Oil Development - The decision by Sakhalin Energy, which is developing the Sakhalin II project, followed a recommendation today by an international scientific panel to halt further noisy seismic testing in the whales' feeding area near Piltun Bay on the western edge of the Sea of Okhotsk.

UPDATE: Sakhalin Energy Halts 09 Seismic To Protect Whales Sakhalin Energy gives chance to gray whales - Conservation organizations have

won agreement from the Sakhalin Energy consortium to end seismic work in Russian waters, near the only feeding ground of a critically endangered population of gray whales.

Activity in the Oil and Gas sector (including regulatory) Oil should rise to $70-80/bbl in 2010: Russian minister New gas tariff growth rates proposed for 2010 Korea, Russia to Push Gas Pipeline - President Lee Myung-bak and visiting

Russian Foreign Minister Sergei Lavrov on Saturday discussed Korea importing Russian natural gas via gas pipelines running through North Korea. Lee said the project could be of great help to North Korea as well, because it would earn it a huge amount of money.

PetroChina to boost storage for Russian oil PetroChina to raise storage capacity for Russian oil Tatneft to post operating loss for 4Q08 Modified Izmeron Complexes Help Increase Oil Production in TNK-BP and

Rosneft TNK-BP consolidates geoscience experience of Tyumen and London Universities CEE oil and gas - better up than down - With signs of the oil price and emerging

European economies stabilising, it might be tempting to plough back into the region's oil and gas stocks. Analysts say that would be jumping the gun a bit, but if you do, better to invest upstream than downstream.

Gazprom Sberbank lends Gazprom $3 bln for oil arm buy-back Transgaz representatives to attend meeting with Gazprom - According to a media

release, the minister of Economy and representatives of gas producer Romgaz and gas transporter Transgaz (TGN) will meet on May 20-21

Bulgaria President: Gazprom May Not Interfere with Our Sovereignty Turkmenistan: The Bell Tolls For Gazprom’s Dominance Of Caspian Energy

Market Gazprom saves on dividends - For the first time in years, Russian energy giant Gazprom plans to reduce dividend payments by more than 50%. Gazprom's oil arm buys 16.95% of Britain's Sibir Energy Sibir Energy Confirms Gazprom Neft Bought 17% Stake

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Full Text Articles

Basic Political Developments

PM Stanishev opens trade & industry exhibition in Moscowhttp://international.ibox.bg/news/id_110701798

Updated on: 27.04.2009, 09:4

The Bulgarian prime minister Sergei Stanishev will open the Bulgarian national trade-industrial exhibition, which is part of the program for the marking of the Year of Bulgaria in Russia.

The exhibition will be in the “Gostnii dvor” complex from today till 30th April 2009.

Afterwards it will be exhibited in Kazan, Ekaretinburg and Hanti-Mansiisk in the period May-June 2009, informed the press centre of the Ministry of economy and energy.

The national exhibition in Moscow will be the biggest presentation till today of the Bulgaria export potential and will aim at the development of the trade and economic ties and partnerships between the business of the two countries. 

Bulgaria will be presented as a full member of the EU and a reliable partner offering competitive prices and services, corresponding to the high European and world quality requirements. 

Prime Minister Sergey Stanishev on work visit to Moscow http://www.focus-fen.net/?id=n179058

27 April 2009 | 00:24 | FOCUS News Agency

Sofia. Bulgarian Prime Minister Sergey Stanishev is on a work visit to Moscow, Bulgarian National Radio reported. There he is going to open the Bulgarian National Trade and Industry Exhibition as part of Year of Bulgaria in Russia initiative and will welcome participants to Bulgarian-Russian business forum. In Moscow, Sergey Stanishev will confer with Russian President Dmitri Medvedev; his counterpart Vladimir Putin; and Moscow’s mayor Yury Luzhkov. Stanishev is expected to discuss with them issues related to cooperation in energy sector; balancing of economic relations by increasing Bulgarian exports to Russia; as well as participation of Bulgarian construction companies in building sports facilities for the Olympic games in Sochi in 2014. Before leaving Moscow, Stanishev will meet with Russian Patriarch Cyril.

Bulgarian PM pays visit to Moscow http://www.focus-fen.net/index.php?id=n179113

27 April 2009 | 07:47 | FOCUS News Agency Moscow. Bulgarian Prime Minister Sergey Stanishev’s working visit to Moscow continues, the government’s press service announced.On Monday he is to be awarded the title Honorary Doctor of Diplomatic Academy of Ministry of Foreign Affairs. Stanishev is to deliver a lecture titled Bulgarian-Russian Dialog in the Context of the European Idea. Together with the academy rector professor Alexander Panov the prime minister is to unveil a documentary exhibition called The foundations of Bulgarian Parliamentarism and Beginning of Bulgarian-Russian Diplomatic Relations. The exhibition has been prepared by Archives State Agency.

Bulgaria’s Delegation in Moscow with Three Options for South Stream Agreementhttp://paper.standartnews.com/en/article.php?d=2009-04-27&article=27358

MONDAY, 27 April 2009

“Bulgaria is not ready to sign the South Stream agreement at all costs,” will be the motto of Bulgarian PM Sergey Stanishev’s delegation that landed in Moscow yesterday to spend three days in talks over the South Stream pipeline project. There are three options for the Bulgarian diplomats: they either sign the agreement, or don’t, or simply keep a low profile until there is another political decision which is again a way out of having to seal the deal mandatorily. Stanishev will be discussing the agreement with Russia’s President Dmitry Medvedev and counterpart Vladimir Putin. Bulgaria’s ministers of economy – Petar Dimitrov – and EU affairs – Gergana Passy - as well as an array of deputies will be there to support their premier in the negotiations. Belene Nuclear Power Plant’s construction and a potential loan from the Russian state to complete are going to be two other issues on the agenda.Last evening Stanishev met with the Bulgarian community in Moscow.

08:52 - 27.04.2009Bulgarian PM Negotiates Energy Projects in Moscow

http://www.bgnewsnet.com/story.php?lang=en&sid=24026

Bulgarian Pm Sergei Stanishev who is on an official visit to the Russian capital of Moscow is going to have talks with Vladimir Putin and Dimitry Medvedev on the cooperation in the energy sector Monday.

Stanishev’s program includes a meeting with President Medvedev, the mayor of Moscow Yuri Luzhkov and whole two meetings with Vladimir Putin.

The main topics that Stanishev is going to negotiate include the construction of the South Stream pipeline, the financing of Bulgaria’s second NPP in Belene, as well as the proposed new contract with Gazprom.

Stanishev will also discuss guarantees for the involvement of Bulgarian companies in the major construction projects around the upcoming 2014 Winter Olympics in Sochi.  /bnn/

Bulgaria president sees deal with Russia on South Stream pipeline by end-Mayhttp://businessneweurope.eu/users/subs.phpbneApril 27, 2009

Bulgaria should sign a deal with Russia's Gazprom on the construction of the EUR10bn South Stream gas pipeline by the end of May to avert delays to the project and should retain ownership of its existing pipeline network in the deal, Bulgarian President Georgi Parvanov said on Saturday.

"It is not fatal if signatures are not put now," Parvanov told a news conference at the end of a two-day international gas summit in Sofia, referring to a three-day visit of Bulgaria's Prime Minister Sergei Stanishev to Moscow that starts on Sunday. "Of course, I would not recommend to wait after the end of May because then an election campaign will be underway in Bulgaria."

In January 2008, Parvanov and Russia's Prime Minister Vladimir Putin, who was president at the time, signed a political agreement on the South Stream, a joint project of Gazprom and Italy's ENI, designed to carry 30 billion cubic metres of Russian gas yearly to Austria and Italy under the Black Sea and via Bulgarian territory.

Pravda: Bulgaria turns into center of big play between Russia and West http://www.focus-fen.net/?id=n179125

27 April 2009 | 10:22 | FOCUS News Agency Moscow. The EU’s poorest member state Bulgaria has turned into a center of a big play between Russia and the West, Russian Pravda daily writes.Moscow plans to build South Stream gas pipeline on Bulgarian territory, which will bypass problematic Ukraine. For its part the West, which fears excessive gas dependence on Russia, wants to build Nabucco gas pipeline. It is to cross Turkmenistan under the

Caspian Sea, via Caucasus countries, Turkey and Bulgaria, reducing the dependence of the EU 27 on Russian natural gas.On April 24th and 25th, the daily recalls, at the initiative of President Georgi Parvanov Bulgaria hosted an international summit Natural Gas for Europe: Security and Partnership. The main topic was Europe’s energy security. It was attended by the representatives of 28 countries from Europe, Black Sea region, the Caucasus, Central Asia, Middle East, Russia, the U.S. and many western financial institutions. One of the major problems under discussion was how to avoid the repetition of the January gas war between Russia and Ukraine, which hit European consumers. The West has an answer to this question – Nabucco. Actually, the answer is virtual because it exists only on paper. The problem is that investors are not certain whether Nabucco will be enough.

Bulgaria in energy play between East and West, comments in Russian press /ROUNDUP/ http://www.focus-fen.net/?id=n179126

27 April 2009 | 10:36 | FOCUS News Agency Moscow. The EU’s poorest member state Bulgaria has turned into a center of a big play between Russia and the West, Russian Pravda daily writes.Moscow plans to build South Stream gas pipeline on Bulgarian territory, which will bypass problematic Ukraine. For its part the West, which fears excessive gas dependence on Russia, wants to build Nabucco gas pipeline. It is to cross Turkmenistan under the Caspian Sea, via Caucasus countries, Turkey and Bulgaria, reducing the dependence of the EU 27 on Russian natural gas.On April 24th and 25th, the daily recalls, at the initiative of President Georgi Parvanov Bulgaria hosted an international summit Natural Gas for Europe: Security and Partnership. The main topic was Europe’s energy security. It was attended by the representatives of 28 countries from Europe, Black Sea region, the Caucasus, Central Asia, Middle East, Russia, the U.S. and many western financial institutions. One of the major problems under discussion was how to avoid the repetition of the January gas war between Russia and Ukraine, which hit European consumers. The West has an answer to this question – Nabucco. Actually, the answer is virtual because it exists only on paper. The problem is that investors are not certain whether Nabucco will be enough. Immediately after the end of the international conference in Sofia, Bulgarian Prime Minister Sergey Stanishev arrives in Moscow. Russia expects that a preliminary agreement on the construction of the Bulgarian section of South Stream gas pipeline will be signed, but on the background of the growing competition of European project Nabucco, Sofia insists on signing a new agreement on supplying Russian gas to Bulgaria under conditions that are more beneficial for it, Russian Kommersant daily writes.Vremya Novostei daily notes that as early as on Tuesday evening after a meeting with Russian Prime Minister Vladimir Putin it will be clear whether Russian-Bulgarian gas interests will agree and last week’s scandal will be erased. As it was announced, Putin’s visit to Sofia for the international energy summit was canceled because of Bulgaria’s unwillingness to sign the agreement on the design and construction of South Stream gas pipeline. The comments of Bulgarian authorities show that it will be hard to overcome the differences.

It is apparent, the daily comments, that the pressure on Sofia from Brussels, which does not plan to give a priority to 'pro-Russian pipeline', will be growing day by day.

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSLR2770520090427Russia is ready to extend a loan of 3.8 billion euros ($5.92 billion) to Bulgaria by the end of the year for the construction of the country's second nuclear power plant in Belene, Russia's Energy Minister Sergei Shmatko said. (Dnevnik, Klasa).

Bulgarian Summit Sets Up Tense Talks in Moscowhttp://www.moscowtimes.ru/article/600/42/376603.htm

27 April 2009 Combined Reports

Russia and Bulgaria will soon bridge differences over Sofia's participation in a Moscow-backed pipeline project to bring gas to Europe and sign a final deal, Energy Minister Sergei Shmatko said Saturday.

Bulgarian Prime Minister Sergei Stanishev was scheduled to arrive in Moscow on Monday for a three-day working visit, which will include a meeting with President Dmitry Medvedev on the first day and talks with Prime Minister Vladimir Putin on Tuesday.

The talks in Moscow follow two-day gas negotiations in Sofia. Putin canceled his attendance after Bulgaria declined to give in to Gazprom's demands on the South Stream pipeline, Bulgarian Foreign Minister Ivailo Kalfin said, the 24 Hours newspaper reported Saturday.

Shmatko told a news conference that both sides should be ready to compromise and reminded Bulgaria to live up to its political promise to join South Stream. Bulgargaz, the country's state-run gas utility, said it was demanding a direct gas supply contract with Gazprom, which would enable Sofia to seek compensation for losses caused by gas cuts.

Bulgargaz chief executive Dimitar Gogov told reporters that the company was negotiating a new agreement with Gazprom to replace the current deal, which expires in 2010. Gazprom's external affairs director, Stanislav Tsygankov, said his company wanted to eliminate Bulgargaz from the talks.

"I kindly ask Gazprom not to determine with whom they will work in Bulgaria," Bulgarian President Georgi Parvanov told reporters.

Sofia is reluctant to sign a final deal on the 900-kilometer South Stream unless Moscow agrees to pay transit fees for the option of using existing pipelines, officials say. The Balkan country is opposed to Russia's plan to use its gas network to reduce the project's 10 billion euro ($13.2 billion) cost, arguing that this would undermine its goal of diversifying routes.

"Both sides must have reasonable positions and readiness for a compromise," Shmatko said after meeting Stanishev.

"We must not allow economic and company logic to dictate the political agenda," he said, speaking through an interpreter. "We believe that in the near future, we would reach an agreement."

South Stream, led by Gazprom, has been criticized in private by U.S. and European Union officials who are concerned that it will raise Europe's dependence on Russian gas. The EU, which relies on Russia for a quarter of its gas, is instead promoting the rival Nabucco pipeline to use gas from the Caspian Sea region but has not secured supplies so far.

Western diplomats in Sofia said the United States was unhappy to see Russia cementing its presence in the Balkans, possibly gaining a political and strategic foothold as well as an economic one.

Government officials in Sofia deny any involvement of Washington or Brussels in their position on South Stream, saying Bulgaria is simply defending its interests.

Gazprom pumps 17.8 billion cubic meters per year to Turkey, Greece and Macedonia via Bulgaria under a 30-year contract that started in 2006. About 3.5 bcm of that is consumed by Bulgaria, which gets all of its gas from Russia under a separate agreement that expires next year.

Bulgaria was the EU country worst hit by a two-week disruption of Russian gas supplies via Ukraine in January. Russia has rejected claims, saying Bulgaria's supply contract is with three of Gazprom's foreign subsidiaries, Bulgargaz's Gogov said.

Parvanov said Bulgaria should not rush into a deal but that it should also not postpone it beyond May, because the country would enter an election period that might delay the whole South Stream project. Bulgaria is due to hold parliamentary elections in July.

The intergovernmental South Steam agreement signed by Russia and Bulgaria in 2008 envisions building a separate pipe, Parvanov said Saturday.

"We will work to implement the South Stream agreement under the terms that we signed with Mr. Putin in 2008," Parvanov said.

Russia minister upbeat on gas deal with Bulgariahttp://uk.reuters.com/article/gc07/idUKTRE53O1EC20090425

Sat Apr 25, 2009 1:36pm BST

SOFIA (Reuters) - Russia and Bulgaria will soon bridge differences over Sofia's participation in a Moscow-backed pipeline project to bring gas to Europe and sign a final deal, Russia's energy minister said on Saturday.

Sergei Shmatko told a news conference at an energy security summit in Sofia that both sides should be ready to compromise and reminded Bulgaria to live up to its political promise to join the South Stream project.

Bulgaria is reluctant to sign a final deal on South Stream unless Moscow agrees to pay transit fees for the option of using existing pipelines, officials say.

The Balkan country is opposed to Russia's plan to use its gas network for the new 10 billion euro pipeline in order to reduce the project's cost, arguing this would undermine its goal of diversifying routes.

"Both sides must have reasonable positions and readiness for a compromise," Shmatko said after meeting Bulgaria's Prime Minister Sergei Stanishev.

"We must not allow economic and company logic to dictate the political agenda," he said, speaking through an interpreter. "We believe that in the near future we would reach an agreement."

South Stream, led by state-owned Russian gas giant Gazprom (GAZP.MM: Quote, Profile, Research), has been criticized in private by U.S. and European Union officials, who are concerned it will raise Europe's dependency on Russian gas.

The EU, which depends on Russia for a quarter of its gas, is instead promoting the rival Nabucco pipeline scheme to use gas from the Caspian Sea region but has not secured supplies so far.

Western diplomats in Sofia said the United States was unhappy to see Russia cementing its presence in the Balkans, possibly gaining a political and strategic foothold as well as an economic one.

Government officials in Sofia deny any involvement of Washington or Brussels in their position on South Stream, saying Bulgaria was simply defending its interests.

Bulgaria, the country worst hit by the cut-off in Russian gas supplies in January, is eager to diversify routes and supplies and is taking part in both South Stream and Nabucco.

Prime Minister Sergei Stanishev will fight for better terms for Bulgaria's participation in the Russian project when he meets his counterpart Vladimir Putin in Moscow on April 28.

The lack of readiness to sign a deal was behind Putin's decision to pull out of the gas conference in Sofia this week.

Shmatko said Moscow did not insist on sealing an agreement during Stanishev's visit next week but expected one in the near future.

President Georgi Parvanov told reporters at the Sofia summit that Bulgaria should not rush into a deal but should also not postpone it beyond May because the country entered a election period and it might delay the whole South Stream project.

Bulgaria is due to hold parliamentary election in July.

Parvanov said his country would not deviate from its position that South Stream should build its own pipeline on Bulgarian territory as agreed over a year ago.

(Reporting by Anna Mudeva, Daniel Fineren and Tsvetelia Ilieva, editing by Mike Peacock)

Parvanov Won by Standing up against Moscowhttp://paper.standartnews.com/en/article.php?d=2009-04-27&article=27357

Prof. Atanas TasevEnergy expertMember of Bulgaria’s Parliamentary Committee on Energy  

“Natural Gas for Europe. Security and Partnership” forum was definitely a success. For the first time all participants voiced their problems, Bulgaria in particular, as it presented all conclusions drawn after the January gas crisis. It became clear that even if all pipeline projects were actually developed – I am referring to South Stream, Nabucco, North Stream and ITGI – they would not have been able to meet Europe’s constantly increasing demand. Europe does need all these projects to be implemented. Meanwhile, President Georgi Parvanov reacted very properly against Gazprom’s sharp statements. Given the broad participation of 29 different representatives this response was absolutely adequate as Russia’s demands contradict Bulgaria’s national legislation. I believe that Prime Minister Sergey Stanishev’s visit to Moscow will be yet another step towards strengthening the resolve of the Bulgaria and a continuation of the firm stand of President Parvanov, who made it plain enough that Bulgaria will be working solely for defending its national interests. This could be only beneficial when the time to sign the final contract comes.

Kristian Kosturkov 

Travelers Arriving From U.S. To Be Checked for Swine Fluhttp://www.moscowtimes.ru/article/1009/42/376609.htm

27 April 2009 The Moscow Times

All passengers arriving in Russia from the United States or Mexico will have their temperatures tested to make sure that they are not carrying a deadly strain of swine flu, Gennady Onishchenko, head of the Federal Consumer Protection Service, said Sunday.

"All airline passengers from Mexico and the United States will be passing through a contact-free heat sensor," he said, Interfax reported.

The World Health Organization has said more than 80 people have died in Mexico from the disease, which previously had been known to spread from direct contact with pigs. The outbreak, believed to be spreading from human to human, has led to confirmed cases in three U.S. states and a suspected outbreak at a school in New York.

The outbreak also led to a new round of pork bans, Nikolai Vlasov, a deputy head of Russia's veterinary health watchdog, said Sunday. Effective immediately, uncooked pork from Mexico, California, Texas and Kansas will be stopped at the border because of confirmed swine flu cases there.

Vlasov said additional attention would also be paid to passengers' hand luggage.

"If our American colleagues react quickly ... and guarantee that deliveries will be safe and if we find those guarantees sufficient, the ban could be lifted next week," he said, Interfax reported.

Vlasov said it was possible that the virus would appear in Russia but that it was critical to delay it for as long as possible to give health officials time to prepare.

Russia has had periodic outbreaks of African bovine fever in the Caucasus region, which is not dangerous to humans. Onishchenko warned on Sunday that the oncoming warm weather could lead to new outbreaks of the H5 avian flu, which has been a problem in Russia in recent years.

April 26, 2009Mexican, US imports bannedhttp://www.straitstimes.com/Breaking%2BNews/World/Story/STIStory_368932.html

MOSCOW - RUSSIA, fearing the spread of swine flu, on Sunday banned meat imports from Mexico, several US states and nine Latin American nations, a spokesman for Prime Minister Vladimir Putin said.

It imposed the immediate ban after PM Putin ordered the establishment of a special commission to deal with the threat of swine flu, although no cases have yet been reported in Russia.

Imports of all raw meat and meat products from Mexico and the US states of Texas, California and Kansas shipped after April 21 are banned 'until special instructions,' health officials said.

Banned, too, are imports of raw pork from Guatemala, Honduras, Dominican Republic, Colombia, Costa Rica, Cuba, Nicaragua, Panama and El Salvador shipped after April 21.

Pork imported from the US states of Alabama, Arizona, Arkansas, Georgia, Kansas, Louisiana, New Mexico, Oklahoma and Florida is also banned.

Health officials worldwide went on alert Sunday as a flu strain that has killed dozens of people in Mexico appeared to have spread as far as New Zealand, underscoring warnings of a potential pandemic.

Russia's top public health official Gennady Onishchenko, said in televised comments that the ban represented a 'first adeaquate reaction.'

Putin's spokesman, Dmitry Peskov, told AFP that the special commission 'would make corrections ... depending on the situation.' -- AFP

Major joint projects to help RF, China overcome crisis – Lavrov

http://www.itar-tass.com/eng/level2.html?NewsID=13879406

MOSCOW, April 27 (Itar-Tass) - The implementation of major joint projects will help Russia and China to overcome the effects of the global economic crisis, Russian Foreign Minister Sergei Lavrov said on Monday at talks with his Chinese counterpart Yang Jiechi.

“The sides will discuss the state of their strategic partnership,” the Russian minister noted. “We value interaction with China that is increasingly being transferred to the practical actions’ channel. The implementation of large-scale projects will help our states to endure the hardships that are consequences of the global financial crisis,” Lavrov said.

“We give special attention to the development of the humanitarian component of our cooperation, in which our countries’ citizens are taking a growing interest,” the RF foreign minister pointed out. He also said that “at the talks the sides will discuss the schedules of contacts for the future period at the summit and high levels.”

Yang Jiechi noted for his part that the “strategic partnership and cooperation between the RF and China is successfully advancing.” “This year the sides are marking the 60th anniversary of the establishment of diplomatic relations,” the minister said. “Our meetings in the first half of the year are important for the discussion of issues of the bilateral relations’ strengthening and deepening of practical cooperation,” Yang said.

The Chinese foreign minister arrived in Moscow for a visit on Sunday for talks with his Russian counterpart Sergei Lavrov. Sergei Lavrov believes that Russia and China should use the current crisis to search for new opportunities to build up bilateral economic cooperation and use them to the benefit of the two countries in these difficult times.

“Trade and economic cooperation between our two countries has been growing in recent years. At the same time, the structure of trade needs to be improved. First of all, we need to increase the share of engineering and hi-tech products and improve a mechanism of mutual settlements,” Lavrov said earlier.

The RF foreign minister also noted progress and success in relations between the two countries. “This can be proved by the recently signed agreement on the construction of a branch of the Eastern Siberia-Pacific Ocean (ESPO) oil pipeline in the direction of China, long-term deliveries of crude oil to China and the granting of a 25-billion-dollar loan to Russia by China, ” he stated.

A programme of cooperation of the Russian Far East and the Trans-Baikal area with China’s North Eastern provinces will produce a feedback that will step up the economic development of neighbouring territories. The foreign ministers of Russia and China talked to each other by telephone earlier in April when North Korea launched a rocket. “The ministers called on all the parties concerned to exercise restraint,” the Russian Foreign Ministry reported.

Sergei Lavrov and Yang Jiechi noted that Russia and China held similar views on the need to find a settlement aimed at preserving stability in North-East Asia and to resume the six-party talks on denuclearisation of the Korean peninsula. The ministers agreed to continue close consultations and interaction on this problem. The Russian foreign minister said he did not foresee any breakthroughs in the settlement of the North Korean nuclear problem but noted that in his view the crisis may be overcome.

“The situation is complicated,” Lavrov said during his recent visit to North Korea. “All the parties involved in the process should be focused on the need to find solutions that would allow renewing this process,” the Russian foreign minister indicated.

Lavrov talk on EU eastern influence 'nonsense': EUhttp://www.google.com/hostednews/afp/article/ALeqM5gQmW4yAj97A9qlPPnVftulgUMY8A

21 minutes ago

LUXEMBOURG (AFP) — The Czech EU presidency said Russian Foreign Minister Sergei Lavrov was talking "nonsense" in accusing the European Union of seeking a sphere of influence in the former Soviet Union.

It was the latest broadside in the row over EU plans to form an 'Eastern Partnership' with six former Soviet states; Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.

Last month Lavrov suggested Europe was seeking an eastern "sphere of influence" while the West accused Russia of attempting to do the same thing with its neighbours.

"He knows himself it's a nonsense," said Czech Foreign Minister Karel Schwarzenberg, whose country holds the rotating EU presidency, as he arrived to host a meeting of EU foreign ministers in Luxembourg.

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

The EU wants "to develop these countries 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," he added.

His comments came a day before he was due to host Lavrov in Luxembourg for a Russia-EU "permanent partnership council."

Swedish Foreign Minister Carl Bildt, arriving for the EU meeting, said Lavrov's comment in March "speaks for itself that he thinks in terms of influence immediately."

The Eastern Partnership "is our answer to the wishes expressed by the nations themselves to come close to European integration," he said.

"It's their choice that they want integration with us. It's a sign of the great engagement that we have in our immediate neighborhood."

He admitted that the EU did have "influence" in the region but stressed that this was "due to the magnetism of European integration."

The Eastern Partnership was one of the items to be discussed by the foreign ministers Monday as preparations continue for the first meeting with the six ex-Soviet states in Prague next month.

EU hits back at Russian "nonsense" over Eastern initiative

http://www.monstersandcritics.com/news/europe/news/article_1473228.php/EU_hits_back_at_Russian_&quotnonsense&quot_over_Eastern_initiative_

By DPAApr 27, 2009, 7:27 GMT

Luxembourg - Top European Union diplomats on Monday dismissed as 'nonsense' a claim by Russian Foreign Minister Sergei Lavrov that the EU is planning to build a sphere of influence in the former Soviet Union, just 24 hours before a meeting with him.

On March 21, Lavrov said that the EU was trying to build a 'sphere of influence' in Eastern Europe by setting up a so-called 'Eastern Partnership' with Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.

But Lavrov 'knows himself that's nonsense. We strongly defend the point of view that there should be no spheres of influence, neither for the Russians, nor for us,' said Czech Foreign Minister Karel Schwarzenberg, whose country holds the rotating EU presidency, ahead of a meeting with EU counterparts in Luxembourg.

The EU's top diplomat, Javier Solana, said that Lavrov's accusation was simply 'not true.'

'We have a group of countries with which we have a special relationship because of neighbourhood, because of trade, because of so many things. We want to establish a mechanism of relationship which is more stable, more institutional, and that has nothing to do with our relationship with Russia,' he said.

Swedish Foreign Minister Carl Bildt, whose country proposed the partnership and is set to take over the EU presidency in July, said that it was Russia, not the EU, which thought in imperialist terms.

'It speaks for itself that he (Lavrov) thinks in terms of spheres of influence immediately. This (the partnership) is our answer to the wishes expressed by these nations themselves to come closer to European integration,' he said.

The partnership is intended to strengthen the EU's political and commercial ties with the six countries in question, and to ask for pro-democracy and free-market reforms in return. EU and partnership leaders are set to launch it at a summit in Prague on May 7.

Sweden and Poland proposed the partnership in early 2008 to counterbalance the EU's planned Union for the Mediterranean. After Russia invaded Georgia in August, EU members agreed to make the partnership a top priority in a bid to forestall any future conflicts.

On Tuesday, Lavrov is set to meet EU diplomats in Luxembourg for long-scheduled talks. The partnership is due to be one of the main points on the agenda.

Brazil, Russia, India, China offer IMF financial aid for wider policy rolehttp://www.theaustralian.news.com.au/business/story/0,28124,25391494-643,00.html

Bob Davis | April 27, 2009

A PUSH by Brazil, Russia, India and China to have the International Monetary Fund issue its first bonds has become part of a strategy by developing nations to gain a bigger say at the IMF.

At the fund's annual meeting for the northern spring, the four countries said they were willing to contribute to a previously announced quadrupling of IMF resources to $US1 trillion ($1.38 trillion), mostly by purchasing bonds.

The bonds would be denominated in the IMF's quasi currency, called special drawing rights, have a maturity of about one year, and be sold only to central banks. If the so called nations of BRIC have their way, the bonds could also be sold on secondary markets to make the instruments more liquid.

The proposed purchase is meant to send a double-message, said Eswar Prasad, a former IMF official who remains close with the Chinese and Indian officials.

The countries of BRIC are willing to contribute to the IMF, but they won't contribute heavily to longer-term fund resources until the world body increases their voting shares substantially. "They don't want to get locked into providing more money until they get their (shares) increased," Mr Prasad said.

The issue of voting rights and IMF bonds were at the forefront of the group’s meetings, where discussions also explored the state of the global economy and providing support for low-income countries.

In a statement on Saturday to the IMF's main advisory committee, Brazilian Finance Minister Guido Mantega said the world body "still has to address its original sin: its democratic deficit".

Egyptian Finance Minister Youssef Boutros-Ghali, the chairman of the advisory group, said in an interview that he wanted to get national leaders involved in remaking the IMF voting system.

IMF voting shares are supposed to generally reflect global economic power, but now give far greater weight to countries that were powerful after World War II, especially smaller European ones.

In March 2008, after lengthy negotiations, the IMF announced that developing nations' voting shares would increase by 5.4 percentage points and the body said it revisit the issue in 2013.

For Brazil, that meant its voting share increased by 0.3 points to 1.7 per cent. China's voting share was boosted 0.9 percentage points to 3.8 per cent. Even those increases were not yet in effect. (The voting rights for Belgium and the Netherlands equal China's, even though China is a much larger economy.)

The IMF now is committed to looking into the issue next year. But the BRIC countries believe the IMF's need for funds gives them additional leverage.

At the summit of leaders of the Group of 20 industrialised and developing nations early this month, British Prime Minister Gordon Brown said China was ready to lend the IMF $US40 billion. But China never committed to that amount and is now balking, said IMF and other finance officials.

Instead, the Chinese are looking at contributing perhaps half that much, which would be in line with its voting share, and providing additional money through bond purchases, which are seen as less significant by the IMF because they are for a limited time; Brazil, India and Russia were also pushing bond purchases.

The US generally backs the BRIC effort to get greater representation. But some US officials believe the BRIC bond strategy could backfire because they would be seen to have played politics rather than contributing fully to the IMF during an economic crisis.

Indeed, Western European countries, which have pledged $US100 billion to the IMF, were now considering boosting that amount to $US160 billion, one official said, in part to help justify Europe's bigger stake in the IMF.

Nearly every IMF plan to revamp the voting structure foresees a smaller role for European counties, especially smaller ones like Belgium and the Netherlands. In an interview with Reuters, Belgian Finance Minister Didier Reynders said that the country should keep its seat on the IMF's 24-member governing board because European countries contributed heavily to the IMF.

Developed countries resist IMF reform-Russia's Kudrinhttp://www.reuters.com/article/companyNewsAndPR/idUSLQ52530720090426

Sun Apr 26, 2009 9:00am EDT

WASHINGTON, April 26 (Reuters) - Developed countries are resisting the reform of the International Monetary Fund's (IMF) representation quotas, Russia's Finance Minister Alexei Kudrin said on Sunday.

Emerging nations, led by Brazil, Russia, India and China, also known as BRIC, want to increase their representation in the IMF, aiming for agreement on reforms by January 2011.

"We already meet cool attitude and even resistance (to reform plans)," Kudrin told reporters in Washington. "The leading countries are not in a hurry... This was the main discussion, the nerve of the IMF meeting."

(Reporting by Gleb Bryanski; editing by Elaine Hardcastle)

Russian warships arrive in Gulf of Aden for anti-piracy missionhttp://en.rian.ru/russia/20090427/121321254.html

VLADIVOSTOK, April 27 (RIA Novosti) - A new task force from Russia's Pacific Fleet has joined operations against Somali piracy off the Horn of Africa, a fleet spokesman said on Monday.

The Admiral Panteleyev destroyer, a salvage tug and two tankers have replaced a task force led by the Admiral Vinogradov destroyer, which has been involved in the anti-piracy operation off the coast of Somalia since the beginning of January.

"The task force led by the Admiral Panteleyev destroyer has arrived in a designated area in the Gulf of Aden and started to form a convoy of commercial ships to be escorted to a secure shipping lane," Capt. 1st Rank Roman Martov said.

During its recent mission in the Gulf of Aden, the Admiral Vinogradov destroyer escorted 12 convoys comprising a total of 54 ships from 17 countries, and thwarted several pirate attacks on various vessels.

Both ships are Udaloy-class missile destroyers, 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.

Azerbaijan, Russia, Iran to unify efforts to strengthen security in Caspian Sea http://news-en.trend.az/politics/enforcemen/1461265.html25.04.09 16:01

Azerbaijan, Baku, April 25 /Trend News, K.Zarbaliyeva/ 

Azerbaijan, Russia and Iran will unify their efforts to strengthen security in the Caspian Sea. Heads of the three countries' border services reached this agreement during bilateral and trilateral meeting in Baku, the Azerbaijan State Border Service reported on April 25.

Azerbaijani Border Service Chief Elchin Guliyev, Iranian Border Police Commander Qasem Rezai and Head of Russian Border Service and First Deputy of Federal Security Service Vladimir Pronichev discussed the issues to develop cooperation in the border field and border check points. The sides also mulled the issue to combat international terrorism, illegal migration, smuggling and illegal actions in borders, the press-service reported.

The parties reached an agreement to develop proposals to cooperate and hold a meeting amongst the Caspian countries' border service specialists.

Astrakhan - Russia's gateway to the Caspian and Iranhttp://www.russiatoday.ru/Top_News/2009-04-27/Astrakhan_-_Russia_s_gateway_to_the_Caspian_and_Iran.html

27 April, 2009, 10:42

Astrakhan is the administrative center of a region that is almost the size of Denmark. Home to more than a million people, the area is hoping for much-needed economic development after oil was recently discovered here.

Bounded on its Eastern shore by the Caspian Sea, Astrakhan is Russia’s gateway to the region. It bridges the Middle East to the Volga, Europe’s longest water course that carries half of all Russia’s river freight through to the Black Sea, the Baltic, and Moscow.

Russia’s Deputy Minister of Industry and Transport, Vladimir Dergunov says “we need to capitalize on our position as a transport hub – by road, rail, air, and sea. Ultimately, we want to overtake the Suez Canal as the major North-South transit corridor, linking Europe with Iran and India.”

Tehran is one of Moscow’s biggest trading partner with approximately 5 to 7 million tons of cargo, primarily metal, being exported to Iran each year across the Caspian.

Federal money is being pumped into the sea’s docking and port facilities, to facilitate increased volumes, and speed of transit.

Despite being hard hit by the global economic crisis, development of Astrakhan’s main international port, the Olya, is still a major project here. Last year, some 1 million tons of cargo passed through its terminals, 80% of that being steel; but the aim is to expand the port into a mini-city, capable of exporting and importing over 30 times that amount of cargo.

It’s a tall order for a region reeling from falling world steel prices that have directly impacted its ports’ annual profits.

There’s also a severe lack of skilled workers here, and once you leave the region’s center, badly maintained roads are a major issue.

But the region’s leaders are not worried. They say another economic lifeline is about to be thrown up.

“We know the Caspian basin contains vast oil reserves, and as Russia’s border region, Astrakhan’s ready to become the headquarters of exploration,” claims Astrakhan Governor Alexander Zhilkin,

After years of trawling Russia’s Northern Caspian, Lukoil finally announced two years ago that they would struck black gold.

Meaning local industry is primed for an oil-fuelled energy revival.

Construction of off-shore oil rigs has become a major area of industry in Astrakhan. Building work on rigs commissioned by oil giant Lukoil began in 2006, and directors say it will be ready to be shipped out onto the Caspian to begin exploratory drilling in July of this year.

The first 17,000 ton platform is bigger and more complex than any previously built locally. Project directors hope that if successful, it will bring Astrakhan international recognition as experts in offshore engineering.

“We’re the architects who’ve led this project from the initial designs, right through to when the rig is finally fixed into position at sea; and we are training up the next generation of Astrakhan engineers, as we believe in the long-term future of Caspian oil exploration,” says Ilya Kokarev, Director-General of the Caspian Energy Company.

Lofty aspirations for a region whose economic development only really began in ‘91 with the breakup of the Soviet Union.

Russia to build 6 Kilo-class diesel submarines for Vietnamhttp://en.rian.ru/russia/20090427/121320414.html

MOSCOW, April 27 (RIA Novosti) - Admiralty Shipyards in St. Petersburg will build six Kilo class diesel-electric submarines for delivery to Vietnam, the Russian business daily Kommersant said on Monday.

The paper quoted company general director Vladimir Aleksandrov as saying that Russia's state arms exporter Rosoboronexport would soon sign a contract with a foreign state, and that Admiralty Shipyards had been chosen to fulfill this contract.

Sources in Rosoboronexport later confirmed that Russia and Vietnam had been negotiating a $1.8 billion deal on the delivery of six Kilo-class submarines to the Vietnamese navy for about a year.

Admiralty Shipyards is currently building two Kilo class submarines for Algeria to be delivered in 2009 and 2010.

Kilo class submarines, nicknamed "Black Holes" for their ability to avoid detection, are considered to be among the quietest diesel-electric submarines in the world.

The submarine is designed for anti-submarine warfare and anti-surface-ship warfare, and also for general reconnaissance and patrol missions.

The vessel has a displacement of 2,300 tons, a maximum depth of 350 meters (1,200 feet), a range of 6,000 miles, and a crew of 57. It is equipped with six 533-mm torpedo tubes.

As of November 2006, 16 vessels were believed to be in active service with the Russian Navy and eight submarines were thought to be in reserve. Another 29 vessels have been exported to China, India, Iran, Poland, Romania and Algeria.

Russia to sell 6 submarines to Vietnam, not Venezuela – paperhttp://www.mosnews.com/military/2009/04/27/1323/

Today, 10:41 PM

Russia is going to build six submarines for the Vietnamese navy, instead of selling them to the Venezuelan fleet as planned, a Russian paper reports.

The St. Petersburg naval dockyard Admiralteyskye Verfi and Vietnam will shortly sign the contract, worth $1.8 billion, AFP quoted the daily Kommersant as reporting Monday. The paper was citing sources close to Russian arms export agency Rosoboronexport.

"Initially it was expected that the submarines would be bought by Venezuela, but Rosoboronexport refused to clinch the deal with that country, largely due to a recent meeting between Venezuelan President Hugo Chavez and his American counterpart Barack Obama," Kommersant said.

Chavez, a ferocious foe of the United States under former US President George W. Bush, showed signs of warming to Obama during the Americas conference earlier this month, telling the new US president: "I want to be your friend."

Russia’s search for new arms markets in South Americahttp://en.rian.ru/analysis/20090427/121322702.html

Mark Bromley and Paul Holtom, SIPRI,  for RIA Novosti.

New SIPRI data on global arms transfers published today reveal that Russia remains the second largest arms exporter in the world, accounting for a quarter of global exports of major conventional arms.

However, deliveries to China, Russia's main recipient for past decade, remain stagnant. Mega-deals with Algeria and Venezuela have helped to maintain Russia's position in the global ranking of arms exporters, SIPRI data show that overall Russian efforts to capture the North Africa and South American arms markets have yielded limited results thus far. 

According to official data, Russian arms exports were worth $8.35 billion in 2008, compared with $3.7 billion in 2000. The latest SIPRI data, which measure the volume of

arms deliveries, also show a rise, indicating that that exports were 14 per cent higher in 2004-2008 than 1999-2003. Although this increase has been driven mainly by China and India, significant contributions have been made by states that had not been significant recipients in the previous decade, such as Algeria and Venezuela. However, SIPRI data released today confirms that the volume of major conventional weapons transferred from Russia to China is in decline. The passing of the hey-day for big ticket orders from China has been know of in Russia's arms industry circles for some time. In response, Russian industry and government officials have sought to secure larger export orders from Russia's traditional clients in recent years, while also expanding into new markets.

As noted by Rosoboronexport Anatoly Isaikin in July 2008, one of the regions that Russian has targeted for arms exports is South America. Russia's decision to increase efforts in the South American arms market has been well-timed. Although South America accounted for only 6 per cent of international arms imports in 2004-2008, the net volume of arms imported by states in the region was double the volume for 1999-2003. This is a much higher increase in arms flows than the 15 per cent global average. Reflecting Russia's strong push into the region, Russian President Dmitriy Medvedev and Russian foreign minister Sergey Lavrov visited several South American and Caribbean states in 2008, with military-technical cooperation high on the agenda in meetings with Brazil, Ecuador, Peru and Venezuela.

Between 1999-2003 and 2004-2008, the percentage of Russian arms exports going to Latin America has increased from 1 per cent to 7 per cent with major conventional weapons supplied to Colombia, Uruguay and Venezuela. However, Russia's drive into the Latin American defence market is neither as new nor as overwhelmingly successful, as has been claimed.

Russia has long been an important supplier to several countries in South America, which has long been a region that sourced weaponry from a range of different suppliers. Peru has traditionally favoured weapons from Russia and the former-Soviet Union and was the first non-socialist South American country to acquire weapons from the Soviet Union. Five countries have ordered or received arms from Russia in the past decade: Brazil, Colombia, Peru, Uruguay and Venezuela. Military helicopters have proven particularly popular. Despite its close ties with the United States, Colombia received 20 Mi-17 transport helicopters from Russia between 1997 and 2007 and placed an order for 5 more in 2008. At the end of 2008, Brazil placed placed a $150 million order for 12 Mi-35M combat helicopters. Argentina and Bolivia were also reportedly interested in acquiring military-transport helicopters from Russia in 2008.

The increase in Russian deliveries to South America in recent years has largely been the result of one country's purchases: Venezuela. Until 2005, Venezuela's main suppliers of military equipment were the United States and Western Europe, which together accounted for 79 per cent of Caracas' imports for 1990-2005. Following the break-off in relations between Venezuela and the United States, and the imposition of an arms embargo by Washington, Caracas signed arms deals worth over $4.4 billion with Russia for 10 Mi-35 combat helicopters, 3 Mi-26 heavy transport helicopters, 40 Mi-17 multi-

role helicopters, 100 000 AK-103 rifles, and 24 Su-30MK combat aircraft. The resulting deliveries account for 98 per cent of Russian transfers to Venezuela over the last five years. With 7 per cent of Russian arms exports, Venezuela was the fourth largest recipient of Russian exports, behind China (42 per cent), India (20 per cent) and Algeria (8 per cent)

Beyond, Venezuela, Russia has had little success in signing big-ticket deals with South American buyers. In the wake of Medvedev's visit in late 2008, Russia lost out to France for €8.6 billion ($11.3 billion) worth of orders from Brazil for the licensed production of helicopters and conventional and nuclear submarines, with French technology transfers regarded as more attractive. Russia was also cut from the shortlist of candidates for Brazil's multi-billion dollar F-X2 fighter aircraft competition in late 2008.

Of even greater concern for Russia could be that with most of the Venezuelan purchases now been delivered, there are question marks over whether Caracas will go ahead with long-discussed follow-on orders. Since 2007, there have been persistent rumours that a raft of new orders are to be placed with Russia for: Su 35 combat aircraft, An 74 and Il 76 transport aircraft, Mi 28 combat helicopters, Kilo class submarines, BMP-3 armoured vehicles, Mi-28NE helicopters, T-72 tanks and various air-defence systems. However, despite Russia reportedly agreeing to grant $1billion in credit for arms purchases in November 2008, no deals with Moscow were signed in 2008, leading some to question whether the fall in oil prices has forced Chavez to curb his ambitions. The biggest Venezuelan deal announced in 2008 was an order for an estimated 18-24 K-8 combat trainer aircraft from China.

With Russian arms transfers to China drying up, much has been made of Moscow's recent push into the South America defence market. In truth, this has been a market that Russia has been present in for many years. At the same time, the prospect of the region developing into an effective surrogate for the large sums generated by the trade with China look slim. South America will continue to look to a range of suppliers, and will never develop the monopolistic ties that Moscow has previously enjoyed with Beijing.

A selection of Russian exports of major conventional weapons to South America, 1999-2008

 

Country Type of conventional weapon

Order and delivery period

Number ordered

Number delivered

Brazil Mi-35 combat helicopter 2008 12  

Colombia Mi-17 transport helicopter 2001-2008 15 10

  BTR-80* 2005-2008 100 (8)

Peru MiG-29 combat aircraft 1998-1999 3 (3)

  R-73EL air-to-air missiles 1999 (40) (40)

  R-77 air-to-air missiles 1998-1999 (12) (12)

  Il-103 light aircraft 2000-2001 6 (6)

  9M133 Kornet anti-tank missile

2008 244  

Uruguay GAZ-3937 Vodnik APC 2005-2006 48 48

Venezuela Mi-35 combat helicopter 2005-2006 8 8

  Mi-26 helicopter 2005-2008 3 3

  Mi-17 helicopter 2005-2008 40 40

  Su-30MK combat aircraft 2006-2008 24 24

  KAB-500/1500 guided bomb

2006-2008 (200) (200)

  Kh-29 air-to-surface missile 2006-2008 (50) (50)

  Kh-31P anti-ship missile 2006-2008 (50) (50)

  Kh-59ME air-to-surface missile

2006-2008 (50) (50)

  R-27 air-to-air missile 2006-2008 (100) (100)

  R-73 air-to-air missile 2006-2008 (150) (150)

(...) Brackets are used to indicate that the number of items ordered or delivered is an estimate

* Licensed production arrangement

Source: SIPRI Arms Transfers Database, http://wwwarmstrade.sipri.org>/contents/armstrad/at_data.html

US journalist arrested in Russian Olympic Cityhttp://www.mosnews.com/politics/2009/04/27/1322/

Today, 10:39 PM

An American journalist with the New Yorker magazine was briefly arrested at a polling station in the Russian city of Sochi on Sunday, Associated Press reports.

Keith Gessen was arrested during the mayoral vote there, which is being seen as a test of Moscow's democratic credentials.

He was detained when he turned up after polling closed with representatives of opposition candidate Boris Nemtsov, a former deputy prime minister who is now a prominent Kremlin critic.

According to an official from the local electoral commission, cited by the news agency, Gessen was carrying neither a press card nor accreditation allowing him access to cover the vote.

After his passport and identity had been checked Gessen was released, RIA Novosti says.

"Keith Gessen has explained the reasons for his being in the polling station after it had closed. He has decided now to go to Boris Nemtsov's headquarters to continue his work," a local police spokesman was quoted as saying.

He recalled that under Russian law anyone without official authorization from the electoral commission is barred from polling stations after they have closed.

The Black Sea city has been placed under the media spotlight since it won a bid to host the 2014 Winter Olympics.

Ahead of the games the city is expected to see $12 billion worth of investment.

Nemtsov's campaign said the journalist was the victim of a bureaucratic mix-up.

Late Sunday, a commission official told AFP that the pro-Kremlin candidate was way ahead in the vote with four fifths of ballots counted.

Incumbent Anatoly Pakhomov, standing for Prime Minister Vladimir Putin's United Russia Party, had picked up "almost 77 percent of votes cast," an official with the electoral commission told AFP.

Nemtsov was running at 13.5 percent in the palm-tree lined coastal resort, where Putin regularly goes skiing.

At the start of the campaign, more than 20 candidates had declared their intention to run, including a porn star, a ballet dancer, a press magnate and a former KGB agent.

But most gradually dropped out and opposition candidates who remained complained about irregularities including the refusal of local media to run their political advertisements.

According to official figures earlier Sunday, the turnout was about 38 percent of the electorate

New Yorker writer arrested in Russia: reporthttp://www.google.com/hostednews/afp/article/ALeqM5hvOf2qErkCIgW5qj9xf1QJv5Tp0A

8 hours ago

SOCHI, Russia (AFP) — An American journalist with the New Yorker magazine was briefly arrested at a polling station in the Russian city of Sochi on Sunday, Ria-Novosti news agency reported.

Keith Gessen was arrested during a mayoral vote here, which is being seen as a test of Moscow's democratic credentials.

He was detained when he turned up after polling closed with representatives of opposition candidate Boris Nemtsov, a former deputy prime minister who is now a prominent Kremlin critic.

According to an official from the local electoral commission, cited by the news agency, Gessen was carrying neither a press card nor accreditation allowing him access to cover the vote.

After his passport and identity had been checked Gessen was released, Ria-Novosti said.

"Keith Gessen explained the reasons for his being in the polling station after it had closed. He has decided now to go to Boris Nemtsov's headquarters to continue his work," a local police spokesman was quoted as saying.

He recalled that under Russian law anyone without official authorisation from the electoral commission is barred from polling stations after they have closed.

The Black Sea city has been placed under the media spotlight since it won a bid to host the 2014 Winter Olympics.

Ahead of the games the city is expected to see 12 billion dollars worth of investment.

Nemtsov's campaign said the journalist was the victim of a bureaucratic mix-up.

Late Sunday, a commission official told AFP that the pro-Kremlin candidate was way ahead in voting with four fifths of ballots counted.

Incumbent Anatoly Pakhomov, standing for Prime Minister Vladimir Putin's United Russia Party, had picked up "almost 77 percent of votes cast," an official with the electoral commission told AFP.

Nemtsov was running at 13.5 percent in the palm-tree lined coastal resort, where Putin regularly goes skiing.

At the start of the campaign, more than 20 candidates had declared their hand, including a porn star, a ballet dancer, a press magnate and a former KGB agent.

But most gradually dropped out and opposition candidates who remained complained about irregularities including the refusal of local media to run their political advertisements.

According to official figures earlier Sunday, the turnout was about 38 percent of the electorate.

United Russia's Pakhomov to win Sochi mayor vote - election headhttp://en.rian.ru/russia/20090427/121320327.html

SOCHI, April 27 (RIA Novosti) - The acting mayor of the Russian Black Sea resort of Sochi has an unassailable lead in the 2014 Winter Olympics host city's mayoral vote, the head of the local election commission said on Monday.

With 80% of votes counted, Anatoly Pakhomov had 77% of the vote, Yury Rykov said, citing preliminary results.

"The remaining uncounted votes will not affect the results of the polls," Rykov said.

Pakhomov, a member of the ruling United Russia party, is followed by Boris Nemtsov, a former deputy prime minister, with 13.5% of the vote, and Yury Dzaganiya, the first secretary of the Sochi Communist Party, on 7%.

Six candidates were on the ballot, while several were removed over problems with paperwork in the run-up to the poll, which was one of the most followed in recent years.

The campaign in Sochi has been in the spotlight as the city prepares to host the 2014 Winter Olympics. The new mayor will likely have a major say in how billions of dollars in government funding for the Games are spent.

Pakhomov wins landslide victory in Sochi mayor elections

http://www.itar-tass.com/eng/level2.html?NewsID=13878216&PageNum=0

SOCHI, April 27 (Itar-Tass) -- Anatoly Pakhomov won a landslide victory in the Sochi mayor elections on Sunday. Pakhomov received 77% of votes, after about 80% of votes had been counted at the moment the news report was wired, chairman of the Sochi City Elections Commission Yuri Rykov said.

According to the preliminary results, candidate Boris Nemtsov polled 13.5%, candidate from the Communist Party Yuri Dzagania – about 7%, other candidates failed to receive even one percent of votes.

Already after all polling stations had been closed the City Elections Commission received no complaints from observers with demands to recount the votes and applications from voters about violations of their suffrage right. According to Yuri Rykov, the count of the remaining votes will not change the election returns.

By Monday morning the Sochi Elections Commission will have received the elections results from district election committees. The Sochi Elections Commission will take a decision on the final election results at its meeting on Monday.

Idealism Amid the Cynicism of Russian Politicshttp://www.washingtonpost.com/wp-dyn/content/article/2009/04/26/AR2009042602651.html

Winning Candidate From Ruling Party Renounces Fraudulent VictoryBy Philip P. PanWashington Post Foreign Service Monday, April 27, 2009

ST. PETERSBURG -- In a country where complaints of vote-rigging are common -- and commonly ignored -- Anton Chumachenko's stands out: The authorities say he won an election, but he insists he lost.

A first-time candidate for office and a member of Vladimir Putin's ruling United Russia party, Chumachenko won a seat on a local legislative council in St. Petersburg last month. Three weeks later, he publicly renounced his own victory, expressing disgust that votes had been falsified in his favor.

"I don't need this kind of victory!" the recent college graduate wrote in an open letter to residents. "I don't want to begin my political career with a cynical mockery of rights, laws and morality."

Chumachenko's stand took authorities by surprise and caused an uproar, challenging the nation's crooked electoral system in a way no member of the opposition could. But it also stunned the government's critics, many of whom could hardly believe that a young man who came of age in Putin's Russia might choose idealism over the cynicism that pervades politics here today.

Chumachenko, a mid-level manager in a local hotel firm, seemed like a reliable United Russia man when he began campaigning for a seat on the municipal council of St. Petersburg's Morskoy district. He had been a member of the party since 2006, when he joined its fiercely pro-Kremlin youth wing, the Young Guard, and he was running on a ticket with four other United Russia candidates.

In a recent interview, he exhibited that youthful mix of earnestness and ambition so familiar in official Washington. The skinny 23-year-old with thick, arched eyebrows, a dark two-button suit and a degree in public relations said it was a "childhood dream" to seek office, adding that he hoped to fix roads, organize street patrols to fight crime and make St. Petersburg a more attractive tourist destination.

As for his selection of a political party, Chumachenko said he didn't have much choice. "I understood that only this political party would give me the power and opportunities to change things," he said. "If I worked with any other party, it would be just words, and I think it's better to do something than just criticize."

A Work in Progress

As president and now as prime minister, Putin has worked to weaken Russia's opposition parties while concentrating power in United Russia, whose members hold the vast majority of the nation's elected posts, including more than two-thirds of the seats in parliament.

But the ruling party established in 2001 remains a work in progress. It has struggled in particular to contain infighting in municipal elections, one of the few remaining venues for open political competition in Russia.

In St. Petersburg, for example, Chumachenko's ticket was backed by a prominent city legislator, while its main competition in the March 1 election was another United Russia team endorsed by the Morskoy district chief. There was also a slate of opposition and independent candidates campaigning against government plans to build a highway and port in the neighborhood, which lies on an island in the Neva River.

The hotly contested race produced a high turnout, exceeding 35 percent of the voters in some areas, compared with about 10 percent in past years. Each slate of candidates sent observers to the polling stations to watch as residents cast ballots and election workers counted them.

At the end of the night, after the observers called in results, Chumachenko added the figures and realized he had lost, placing sixth in a race in which the top five vote-getters won seats. The four others on his United Russia ticket prevailed, along with one of the opposition candidates, Boris Vishnevsky, a leader of the pro-democracy Yabloko party.

But the next morning, the election commission announced different results. Chumachenko suddenly gained 80 votes, edging out Vishnevsky by two votes.

Vishnevsky filed a court challenge. Chumachenko kept silent, unsure what to do. "For me, it was like, what's up? What happened?" he recalled. "We thought maybe it was a misprint."

Chumachenko said that he never considered accepting the falsified votes, but that he worried he might be punished if he objected. After the official results were published March 16, he consulted with the other United Russia candidates on his ticket. They agreed to back him if he spoke out. Four days later, he released his letter without notifying party superiors in advance, he said.

"I am sincerely convinced that my colleagues in the party will support my position and make all efforts to make sure that the rule of law prevails," he wrote. "The party's strength lies not in exaggerated percentages of support, but in its ability to stand up for the truth."

Chumachenko also pointed out problems in a neighboring precinct where the vote count had changed overnight and knocked out two independent candidates.

'Emotional' but 'Noble'

The letter caught the government off guard. An election official, Alexei Gromov, responded that someone had probably faked it and forged Chumachenko's signature. But prosecutors were shamed into opening an investigation, and a United Russia spokesman eventually issued a statement calling Chumachenko's action "emotional" but "noble."

The opposition was also surprised, reacting at first with suspicion. Some suggested Chumachenko was simply trying to boost his own profile. Others wondered whether he was following orders and playing a role in a feud between local politicians, or in a scheme to improve United Russia's image.

Tatiana Krinitskaya, 71, one of the independent candidates in the nearby precinct who was cheated out of a council seat, said she was astonished when Chumachenko showed

up and asked her to help distribute copies of his letter, in part because he had belittled her during the campaign as too old for office.

"People said it was a public relations move, or maybe there's a struggle," said Krinitskaya, an environmentalist who has been fighting the development project planned for the island. "But if he really did this on his own, I would be proud of him."

Others said Chumachenko's actions were more important than his motives.

"It's the first time I can remember that someone who stood to gain from election fraud has spoken out," said Vishnevsky, 43, a veteran activist who has run in more than 25 elections and won a Moscow legislative race in 1990 after Soviet leader Mikhail Gorbachev's political reforms.

"Elections have become less and less fair since then," he said, noting that most of Yabloko's candidates were barred from the ballot here last month. "If these kind of things happened back then, the Communist Party would still be in power."

Grigory Golosov, a politics scholar who runs a program that trains election observers in St. Petersburg, said the Morskoy race was unusual only because the cheating was so thoroughly exposed.

He said the Kremlin evaluates local officials partly on their performance in elections, and it sets goals that "everyone knows can't be reached without fraud." At the same time, he said, the government has passed new laws toughening penalties against vote tampering.

"It means they want the fraud to be done professionally and not be so blatant," Golosov said. In St. Petersburg, where United Russia won 77 percent of the vote -- the goal was 70 percent -- and in the Morskoy district, in particular, the problem was that "they didn't do the fraud well," he added.

Chumachenko said he had heard complaints about election fraud but never expected votes to be falsified so brazenly. He also said he is disappointed the authorities limited media coverage of the case.

But he said he remained loyal to United Russia and hoped his stand would encourage others in the party to come forward. "It's a big organization with a lot of members, and I can't speak for all of them," he said. "But I believe the position of the party is to uphold the law and the rights of voters."

Chumachenko has provided evidence to the court and urged it to transfer his mandate to Vishnevsky. A ruling is pending. Meanwhile, prosecutors have sought to examine the original ballots. Election officials say they were damaged when a water pipe burst, an explanation that has been used before in Russia to stall investigations into election irregularities.

"We have very smart pipes," Chumachenko said with a grin. "They know exactly where to leak."

Russian Mayor Walks Into Chess Master’s Trap http://www.nytimes.com/2009/04/27/world/europe/27kasparov.html?_r=1

By ELLEN BARRYPublished: April 26, 2009

SOCHI, Russia — For all the intrigue that had surrounded the mayoral elections in Sochi, Acting Mayor Anatoly N. Pakhomov managed to avoid confronting his critics — or even acknowledging their existence — until Friday, when he was outfoxed by a grandmaster.

Mr. Pakhomov, who has the support of the Kremlin, appeared to sail to victory in Sunday’s election and would lead the city during the 2014 Winter Olympics here. With little time left in the campaign, he attended a ceremony on Friday in a village near Sochi commemorating the Armenian genocide during World War I, a crucial gesture to the city’s large Armenian population. He delivered a short address that was respectful, if a bit wooden, and then stepped back to polite clapping, making room for a row of schoolgirls to recite verses that they had memorized.

But an animated gray-haired man had edged his way alongside the podium, and then he stepped onto it, sending whispers through the crowd. It was Garry Kasparov, the former world chess champion, who was in Sochi promoting the campaign of Mr. Pakhomov’s archrival, Boris Y. Nemtsov.

Mr. Kasparov, born to an Armenian mother, had been sitting quietly, signing autographs, for nearly two hours. He was mobbed by admirers, men in their 40s and 50s who had loved him since childhood. When an organizer for Mr. Pakhomov’s United Russia Party tried to get Mr. Kasparov removed from the premises, saying his presence amounted to political campaigning, the head of the village’s administration glowered and snapped, “He is my idol!”

Mr. Kasparov’s remarks began innocently enough. He made an offhand mention of Mr. Nemtsov, so subtle that it was easy to miss. Then he began to sling arrows at Moscow, saying Soviet Russia had supported Turkey at the time of the massacres.

Mr. Pakhomov, standing behind him on the podium, looked as if he had eaten a lemon.

Two minutes and 33 seconds into Mr. Kasparov’s speech, a local official stepped forward and said his time was up. Mr. Kasparov turned to the crowd with an incredulous look.

“What’s happening?” he said loudly. “I cannot speak? Maybe it’s better to be silent?”

They shouted “No!” and erupted into applause. He went on, at leisure, to criticize the rise of racist violence in Russia, saying that “genocide doesn’t just appear out of nowhere,

and to put it mildly the government is doing very little to stop this debauch of nationalism.” He said Moscow had prevented generations of Armenians from connecting with their roots, and then he went further.

“The authorities are the source of problems,” he said. “The K.G.B. was behind the Armenian pogroms in Baku. The K.G.B. set nations against each other. We should never give in to these provocations.” He finished up — “I love you, and we are one family” — and the crowd applauded long and hard.

In the audience, Vartyan S. Mardirosyan, a lawyer, was chuckling delightedly at the spectacle. He said the authorities in Sochi had cracked down so hard on dissent that it reminded him of Soviet times, when people were too afraid to express their political opinions outside their own kitchens. The ceremony had been an “undeclared competition,” said Mr. Mardirosyan, 68, with Mr. Kasparov both the underdog and the undisputed winner.

He began walking home, a broad smile plastered on his face.

“He didn’t just play chess,” Mr. Mardirosyan said. “That was a checkmate.”

Medvedev to meet Council of Trustees of Rus Olympians Foundation

http://www.itar-tass.com/eng/level2.html?NewsID=13878307&PageNum=0

MOSCOW, April 27 (Itar-Tass) -- Russian President Dmitry Medvedev will hold a meeting of the Council of Trustees of the Russian Olympians Foundation on Monday. The president intends to keep his promise to hold the foresaid meeting. Medvedev gave this pledge at a meeting of the Presidential Council for Development of Physical Culture and Sport in Sochi a month ago.

“This instrument (the Russian Olympians Foundation – Itar-Tass) proved its effectiveness quite well, and we intend to preserve it anyway,” the president said then. “Therefore, I think that it will be necessary soon for me as the chairman of this foundation to meet with its founders, members and to discuss the working schedule for the near future, the procedure of financing our Olympic hopefuls and some other issues,” Medvedev said.

The Russian Olympians Foundation is a non-profit charity organisation, which was established in July 2005 with the participation and support of Russian statesmen and public personalities, as well as prominent Russian athletes. The Foundation works on donations of its founders. The Foundation aims at developing and building up the Russian Olympic movement, achieving better results in Olympic sports in Russia, the support to athletes, coaches and specialists, who work in Russian national teams in Olympic sports.

The Council of Trustees chaired by Medvedev also includes speaker of the Duma in the Chukotka autonomous area Roman Abramovich, business tycoons (Pyotr Aven, Vagit Alekperov, Viktor Vekselberg, Oleg Deripaska, Vladimir Yevtushenkov, Vladimir

Potanin), famous athletes and coaches (Larisa Latynina, Irina Rodnina, Vladislav Tretyak, Vyacheslav Fetisov).

Su-35 fighter model crashes, pilot catapults in Khabarovsk terrhttp://www.itar-tass.com/eng/level2.html?NewsID=13878457&PageNum=0

KHABAROVSK, April 27 (Itar-Tass) -- A model of the state-of-the-art fighter Su-35 crashed at the airfield of the Komsomolsk-on-Amur aviation production integrated works on Sunday, unofficial sources said on Monday.

The incident occurred during the run-up of the fighter. Before the takeoff the fighter could have collided with some obstacle and caught fire. The pilot managed to catapult and survived. The fighter skidded off the runway and fell apart.

The foresaid aviation production integrated works neither confirmed nor reject the fact of the crash. The officials still refrain from comments.

High-ranking police officer guns down 2, injures 7 peoplehttp://www.itar-tass.com/eng/level2.html?NewsID=13878487

MOSCOW, April 27 (Itar-Tass) -- The chief police officer of the Tsaritsyno district police department, who gunned down two people and injured another seven people from his pistol, was detained in southern Moscow, an informed source in the Moscow police told Itar-Tass on Monday.

According to the source, the high-ranking police official was driving home by his official car, but the latter instigated a conflict with his driver.

“The police officer shot down the driver from a pistol, got out of the car in Shepilovskaya Street. He went to a nearby shop, where he opened sporadic fire at ordinary people. He killed two people and injured another seven people,” the source said.

Policeman murders three people in south Moscow storehttp://en.rian.ru/russia/20090427/121319716.html

MOSCOW, April 27 (RIA Novosti) - A senior police officer shot three people dead during the night and injured six others in a store in southern Moscow, Russia's top investigators said on Monday.

"At about 00:30 Moscow time, Denis Yevsyukov killed the driver of a Chevrolet Lanos who dropped him at the store," Investigation Committee spokesman Vladimir Markin

said. "The police officer then entered the supermarket and opened fire, killing a female cashier and a man, and injuring six others. He was arrested."

Earlier reports said Yevsyukov, police chief of the capital's Tsaritsino district, had killed two people.

Investigators have not given information on possible motives for the shooting spree.

A police source told RIA Novosti that Yevsyukov has been taken to a psychiatric clinic for examination.

FSB Under Fire for List Of Terrorist Tacticshttp://www.themoscowtimes.com/article/1010/42/376598.htm

27 April 2009

By Nikolaus von Twickel / The Moscow Times

The Federal Security Service has published a detailed list of terrorist tactics and activities on its web site that it says are typical of recent attacks.

But some critics say the document could serve as a how-to manual to would-be terrorists, telling them exactly what they should focus on and what to avoid.

The nearly 1,000-word document, titled "About Tactics Used For Diversionist-Terrorist Acts," was apparently only recently added to the FSB's web site under the heading "Professional Advice," which also contains articles advising citizens how to behave in a terror attack or a hostage situation.

The authors say the document is the result of FSB investigations into recent, unspecified terrorist attacks.

The tactics list includes a collection of indications of a terrorist plot, like the purchasing of nuts and bolts for bomb-building, and an overview of the advantages of suicide bombings, high number of victims and high publicity.

The document also contains a checklist of how terrorists plan attacks, starting with intelligence gathering at the target, choosing able candidates to carry out the attack, preparing them psychologically and planning emergency solutions like "liquidating the executor."

"The arsenal of methods to carry out attacks is very broad," the document says, and includes home-built explosive devices in cars and apartments, roadside bombs, suicide bombings and airline hijackings.

The Newsru.com news web site, which first reported about the document Friday, said the

analysis could be viewed as detailed instructions on how to conduct attacks.

An FSB spokesman reached by telephone refused to comment on the document and asked for questions in writing. The FSB did not reply to faxed and e-mailed questions.

Andrei Soldatov, an expert on the security services who runs the Agentura.ru web site, expressed skepticism that the FSB document could teach terrorists information that they could not learn elsewhere.

"You can find plenty of better documents and instructions in the Internet," he said.

Soldatov added that terrorists preferred videos for instruction. "They are much easier to understand than reading and writing," he said.

The fuss about the FSB document is reminiscent of the reaction that followed a decision by the U.S. Justice Department to publish the so-called "Al-Qaida Manual," a document containing detailed instructions for would-be Islamist terrorists on how to wage war.

The guide was originally found by British police in 2000 when it raided an abandoned apartment in Manchester. An edited translation of the Arab original was later published on the U.S. Department of Justice's web site. The document is still searchable on the Internet, despite calls by British politicians to have it withdrawn.

Military Relaunches Operations in Chechnyahttp://www.themoscowtimes.com/article/1010/42/376596.htm

27 April 2009 Reuters

The military launched new counterterrorism operations in at least three districts of Chechnya on Friday, just over a week after it ended similar missions across the whole region, Interfax reported.

Federal commanders reintroduced the security restrictions associated with counterterrorism operations in the Shali, Shatoi and Vedeno districts near the Caucasus Mountains in the region.

"Militants are intensifying their activities in the Shali, Shatoy and Vedeno districts of the republic," Interfax reported, citing an official report. "We have received information on terrorist attacks planned against executive authorities and law enforcement officials."

Officials could not be immediately reached for comment.

Chechen President Ramzan Kadyrov declared victory in the war against rebels after the Kremlin lifted security restrictions on April 16.

The Kremlin ordered soldiers into Chechnya in 1999 to end the republic's de facto

independence won in a 1994-96 war.

Sporadic fighting has occurred in Chechnya since the counterterrorism operation ended, and gunmen killed three federal soldiers last week.

Averting the Caucasus Jihadhttp://www.moscowtimes.ru/article/1016/42/376612.htm

27 April 2009 By Gordon M. Hahn

Nuclear disarmament has emerged as the first issue to reset U.S.-Russian relations in 2009. Both sides have expressed a willingness to negotiate a new strategic arms reduction treaty to replace the START I treaty that is set to expire in December. Although this is one of the most urgent items on the agenda, it is not the most important.

For the foreseeable future, a nuclear attack by a rogue state or Islamic terrorist group will be the gravest threat to the United States, its allies and partners like Russia. Thus, nonproliferation and the war against the global jihad movement should be a top priority on the U.S.-Russia security agenda.

Russia is the only country besides Pakistan (and perhaps India) that has both a viable jihad movement and stockpiles of chemical, biological and nuclear materials and weapons. Russia's jihad movement is something the West should not ignore.

In November 2007, the "jihadization" of the Chechen and allied separatists in other regions of the Caucasus reached its climax. Doku Umarov, Chechnya's self-proclaimed "Emir of the Caucasus," declared a "Caucasus Emirate" stretching from the Caspian Sea to the Black Sea. Umarov's main goal is to liberate all Muslim lands on Russian territory. He has also pledged to fight a jihad against the United States, Britain and Israel.

Several thousand jihad terrorists concentrated in the North Caucasus have cooperated with global jihad movements like al-Qaida. Since the 2004 Beslan school massacre, the Caucasus jihadists have concentrated on killing members of the military, security and police as well as civilians in the North Caucasus, averaging several hundred attacks per year. Their operations in Ingushetia have intensifed over the past years, while operatives, affiliates and independent Islamist and jihadist franchises have also appeared in Tatarstan and Bashkortostan.

Caucasus-based jihadists have also been found fighting U.S. forces in Iraq and Afghanistan. In the future, they could target U.S. and allied interests in the Caucasus and Russia, including embassies, the Baku-Tbilisi-Ceyhan oil pipeline, NATO and U.S. supply routes to Afghanistan running from Latvia through Russia. It is therefore imperative that U.S.-Russian cooperation be strengthened against the proliferation of weapons of mass destruction and in the war against jihadism.

On the supply side, joint nonproliferation efforts in Russia must be strengthened to

exclude even the possibility that jihadists in the Caucasus could obtain weapons of mass destruction. Increased funding for guaranteeing the safety and security of nuclear transport and for processing highly enriched uranium in Russia is also crucial.

In addition, the United States and Russia should team up to promote the establishment of an international nuclear fuel bank. This bank would keep nuclear power secure and help halt proliferation by preventing states from developing their own enrichment facilities.

On the demand side, the United States and Russia should step up cooperation in the war against jihadism on all fronts. A good first step from the U.S. side would be to include Umarov and his so-called Caucasus Emirate on the U.S. State Department's official list of terrorist organizations. This could help push Moscow to support the idea of returning U.S. air bases to former Soviet republics in Central Asia as part of the larger battle against the Taliban in Afghanistan.

Joint efforts in -intelligence gathering, police and anti-narcotics training, military maneuvers and eventually joint military operations should be pursued on the Central Asia-Afghanistan-Pakistan front and along the Iraq-Azerbaijan-North Caucasus corridor where both sides have an interest in eliminating the jihadi threat. A joint NATO-Collective Security Treaty Organization center for the study of jihadism, terrorism and counterinsurgency operations could also be useful.

The development of a robust U.S.-Russian security agenda is an imperative for international security and the security of both countries and their allies. With the arrival of new leaders in Washington and Moscow, it is time to strengthen and broaden this agenda.

Gordon M. Hahn is visiting assistant professor at the Graduate School of International Policy Studies, Monterey Institute of International Studies.

Medvedev ‘Imitates’ Political Reform to Defend Putin’s System, Moscow Commentator Sayshttp://georgiandaily.com/index.php?option=com_content&task=view&id=11255&Itemid=65

April 26, 2009

Paul Goble

Despite a series of much-publicized events that some commentators in Moscow and the West suggest represent significant “breakthroughs” to “liberalization,” a Russian commentator argues that Dmitry Medvedev is in fact offering “the imitation of political reform” in order to defend Vladimir Putin’s authoritarian system.

In an article in today’s “Gazeta,” Vladimir Milov, the head of the Moscow Institute of Energetic Politics, says that during April, President Medvedev has “thrown out to society

a whole bouquet” of “’signals’” suggesting a dramatic change in the political climate in Russian toward a more liberal order (www.gazeta.ru/column/milov/2976296.shtml).

But a careful consideration of what the Russian president has said and even more of the sources of his comments and actions suggests that “there is no basis to expect serious changes in the policy of the ruling clan” and that any “hopes for the softening of the [current] political course are once again premature.”

Indeed, Milov says, “there is no doubt that we are dealing with the latest playing with liberal society, the goal of which consists of the neutralization of any outburst of freedom-loving attitudes as a result of the sharpening of the crisis and the ineffectiveness of government anti-crisis measures.”

As in the past, the Moscow analyst says, Medvedev’s words into which so many have invested so much do not point to anything “concrete.” Instead, they suggest yet again that “the president has taken upon himself the role of the good cop,” with the task of keeping off balance and parrying those “dissatisfied with the authoritarianism of the representatives of the elite.”

This “tactic,” which Medvedev has practiced so long that one could call it a strategy, “was most clearly formulated in a report of the Center for Political Technologies on ‘Democracy: the Development of the Russian Model.” That paper “denied the need for a significant liberalization of the social-political system and the creation of conditions for pluralism.”

“On the contrary,” Milov notes, that paper called for the continuation of the existing system and its defense through the elaboration of “a certain kind of pseudo-democratic accessories” such as the use of government-controlled “opposition” parties and the creation of possibilities for their representation in the parliament.

Such actions do little or nothing to change the system, however much many want to believe otherwise, but they do make for good public relations, Milov argues. And they can under conditions of economic crisis distract the attention of those who are suffering but who want to be offered some hope for the future.

Public reaction even to the efforts of Boris Nemtsov to raise certain “sharp” questions in his campaign for mayor of Sochi demonstrated to the siloviki and the bureaucracy, the Moscow analyst continues, just how dangerous for them would be any “weakening of control over politics and the media.”

The powers that be, he argues, understand that their “extraordinarily egoistic defense of interests of the narrow ruling clan over the last ten years” could under those circumstances open the way to a more general attack on their leaders and themselves, a risk that none of them is now prepared to take.

It is of course “possible” that Medvedev would like to change things – indeed, the plausibility of the idea that he would makes him more effective in his current role – but he is surrounded by people who do not want change because any change would be a threat to their power and property. And consequently, Milov says, they remain in a position to block it.

Meanwhile, in today’s “Yezhednevny zhurnal,” Aleksandr Podrabinek provides details about one of Medvedev’s efforts to present himself as committed to some kind of liberalization, his meeting last week with those human rights activists who have been “co-opted” into the Presidential Council for Supporting the Development of Civil Society and Human Rights.”

From Medvedev’s perspective, the meeting was clearly “successful” because it showed off “as it were the human face of the current Russian powers that be” and “showed Russian society that even the enemies of authoritarian power – the human rights activists – are very successfully being integrated into the power vertical” (www.ej.ru/?a=note&id=8994).

Moreover, Podrabinek continued, this unusual and much-covered meeting “gave the human rights activists the chance to melt in an ecstasy of love and gratitude to President Medvedev and gave Medvedev the rare chance to present himself as a man of broader views with a great political future.”

In remarkably brutal terms, Podrabinek attacks those who attended the meeting and concludes that “it is becoming shameful to call oneself a human rights activist when others who do so in an obsequious fashion run to the Kremlin to say flattering words to a nonentity who is occupying a post other than his own.”

Podrabinek’s comments about those human rights activists who did attend are certainly too sharp. Many of those at the meeting could and would certainly respond that they did so not because of what Medvedev and his mentor Putin have done but rather because they are committed to exploiting any remaining chances they have to improve the situation.

But Podrabinek’s comments are appropriate for those not there who celebrated that meeting and several other recent Medvedev actions as turning points in the history of the country. They, unlike the rights activists Podrabinek criticizes, are not only deceiving themselves but serving precisely the interests of those whose policies they claim to oppose.

Between Assertiveness and Insecurity: Russian Elite Attitudes and the Russia-Georgia Crisishttp://georgiandaily.com/index.php?option=com_content&task=view&id=11252&Itemid=132

April 26, 2009

Current Russian elite attitudes exhibit a striking dualism: confidence,bordering on arrogance, about Russia’s growing influence on theinternational stage as a global energy superpower combined with anxietyand indeed insecurity about Russia’s political future. These seeminglycontradictory attitudes are manifested in Russia’s increasing assertivenessin the international arena, on the one hand, and in a relentless and almostobsessive effort to control the domestic political environment and preemptany potential sources of opposition, on the other. While insecurity is hardlya novel feature of Russian politics, its sources have changed in recent years,and the assertiveness is altogether new. This article will explore the majorsources of both assertiveness and insecurity, their expression in the newideological construct “sovereign democracy,” and how they have cometogether in the recent crisis in Russian-Georgian relations.The central and all-consuming issue engaging Russia’s political eliteis the uncertainty surrounding the year 2008, when Vladimir Putin’s currentpresidential term comes to an end. The prospect evokes extremeconcern because of the extent to which the entire system has come torevolve around the figure of the president. No clear mechanism of successionhas been developed apart from the decisions of the president himself,which an election will simply ratify. And because power is highly concentrated,personalistic, and not deeply institutionalized, policy outcomes willbe significantly shaped by who is selected. Moreover, in the absence ofclearly defined rules of the game the future direction of the system is thesubject of acute and continuing struggles and personal rivalries within theelite over power, policy, and especially property; fundamental questionsof redistribution and social justice remain far from settled.This article will focus not on the competing schemes that have beenput forward—all of which contemplate the continuing influence ofVladimir Putin—or on the strengths and weaknesses of potential successors,but on several broader social and political developments that arefeeding elite insecurity as well as assertiveness and are driving key policyagendas in the lead-up to the critical elections. These include the perceivedthreat of “color revolutions,” of Islamic radicalism, and of intensifiedcontestation over Russia’s identity, all of them a reflection of the massivetransformations still under way in Russia today…1Freeman Spogli Institute of International Studies, Stanford University. This is an updatedand revised version of the author’s presentation at the Ed A. Hewett Memorial Roundtableat the 2006 National Convention of the American Association for the Advancement of SlavicStudies (AAASS), Washington, DC, November 17, 2006.

State Demography Policy Won't Work, UN Warnshttp://www.themoscowtimes.com/article/1010/42/376593.htm

27 April 2009By Jessica Bachman / The Moscow Times

The United Nations cautioned Friday that the government's demographic policy would fall far short of its goal of stabilizing a rapid decrease in the country's population, which could contract by 10 million to 20 million people over the next 16 years.

Presenting the results of the 2008 United Nations Human Development Report for Russia, the report's authors said the government needed to take more than just fertility into account if it wanted to mitigate the effects of a demographic crisis.

"We need to overcome the widely held and simple idea that fertility rates are easy to control and will change according to the amount of social investment put into the promotion of birth," said Sergei Zakharov, deputy director of the Institute of Demography at the High School of Economics.

Central to Russia's demographic policy, which was adopted in 2007, are "family capital" provisions. For every second child, a mother now receives 300,000 rubles ($9,040) in so-called maternity payments. The funds, however, cannot be used immediately. They must remain in the bank for three years, or, as of this year, be used in full to pay off mortgages.

While Russia saw the number of births in 2007 rise slightly, the UN report says the money-for-birth model "usually causes only short-term surges and shifts in timing of births. ... International experts regard such payments as least efficient from the point of view of long-term influence on fertility."

The vast majority of Russians are also unswayed by the payments. In a survey included in the report, 81 percent of Russian respondents said the maternity payments and other pro-family measures adopted in 2007 have "no effect" on their decisions to have children. Only 1 percent said, "We will surely have more children than planned before."

The report also emphasized the need for the state to focus on increasing the low life expectancy of Russian males, improving its migration policy to help compensate for dwindling birth rates and adapting its institutions to better serve a mushrooming aging population.

By 2025, the State Statistics Service estimates, the country will lose 14 million people from its working-age population, while the number of retirees will increase by 5 million people.

The population fell by more than 12 million people from 1992 to 2008, making the current population about 142 million.

Russia must overcome racism to boost population: U.N.http://www.reuters.com/article/GCA-Russia/idUSTRE53N3YK20090424

Fri Apr 24, 2009 11:14am EDT

By Amie Ferris-Rotman

MOSCOW (Reuters) - Russia's fast dwindling population could be boosted if the world's largest country overcame its xenophobic tendencies and took in more migrants, the United Nations said in a report presented on Friday.

"We're now at the peak of our demographical crisis... International migration could help fill in our gaps," Anatoly Vishnevsky, co-author of the report, told a media briefing.

Russia's population shrunk by more than 12 million between 1992 and 2008, taking its present population to just over 142 million, and is forecast to fall to around 131 million by 2025.

Health experts say key factors in the decline are poor diet leading to heart disease, heavy drinking among Russian males and the high incidence of violent deaths. The average Russian man lives for 60 years, 13 years less than the average American man.

The U.N. said on average women and men live to 80 and almost 72 respectively in the violence-ridden southern Russian region of Ingushetia, which is mainly Muslim and where alcohol consumption is relatively low.

The Kremlin, alarmed by the falling population, is trying to tackle the problem with initiatives such as family support packages and a road accident prevention scheme. Road accidents kill 100 people a day, President Dmitry Medvedev has said.

Russia's population slump in the last 16 years has been partially offset by the inflow of almost 6 million migrants, most of whom find work in construction and are from ex-Soviet republics, but more immigration is critical.

At an estimated 10 million, Russia hosts the world's second largest number of migrants after the United States, but racist crime and xenophobia remains a barrier, the U.N report said.

"Russian public opinion is infected with migrant phobia... and increasing levels of prejudice," it says, citing a 2007 poll by the independent Levada center showing that only 12 percent of Russians have a positive or sympathetic attitude to migrants.

SOVA, a Russian NGO that tracks racist crime, estimates there were 632 racially motivated attacks and 67 murders in Russia in 2007. Most attacks are on dark-skinned immigrants, many of them Muslims from the Caucasus and Central Asia.

While a law exists against inciting racism, it is rarely applied, say anti-racism groups, and most hate crimes are classified only as hooliganism by the authorities.

(Editing by Louise Ireland)

National Economic Trends

Russia Plans to Sell Bonds in 2010, Seeks Loans From World Bankhttp://www.bloomberg.com/apps/news?pid=20601087&sid=aK1vbEdJtOSs&refer=home

By Paul Abelsky

April 27 (Bloomberg) -- Russia plans to borrow money on the international market next year and may arrange loans from the World Bank to help cover its budget shortfall, Finance Minister Alexei Kudrin said.

Banks and pension funds are likely to be the chief buyers of Russian bonds, Kudrin said today in an interview broadcast on the state television channel Vesti. Russia’s budget deficit may be wider than the government’s estimate of 7.4 percent of gross domestic product, Kudrin said in Washington on April 24.

“It’s too early to speak about the market and about pricing,” Kudrin said in comments broadcast on Vesti. “It depends on how we cope with this difficult year before the future bond issue.”

The government expects revenue to drop by 30 percent this year as the economy enters its first recession in a decade. Russia may borrow $5 billion next year in the government’s first international bond sale since the 1998 default, Arkady Dvorkovich, President Dmitry Medvedev’s top economic adviser, said on April 14.

The Russian government may also seek “billions of dollars” over the coming years from the World Bank, Kudrin said. The country’s Reserve Fund, one of its two sovereign wealth funds, may be exhausted by the end of this year, he said. The fund will be replenished if oil prices stay above $50 a barrel, according to Kudrin.

To contact the reporter on this story: Paul Abelsky in St. Petersburg at pabelsky@bloomberg.net.

Last Updated: April 27, 2009 04:17 EDT

World Bank says Russia asks for VEB bond guaranteehttp://www.guardian.co.uk/business/feedarticle/8475561

Reuters, Monday April 27 2009

By Gleb BryanskiWASHINGTON, April 27 (Reuters) - Russia has asked the World Bank to provide a partial guarantee on a bond issue by the state lender VEB, the World Bank's country director for Russia Klaus Rohland said on Monday.

Russian corporate borrowers, including state owned firms, have lost access to international capital markets amid Russia's worst economic downturn in a decade while the domestic debt market has ground to a halt."(Finance Minister) Alexei Kudrin wants us to help VEB raise the money in the market," Klaus Rohland told reporters. VEB, also known as the Development Bank, is a state-owned institution created to finance infrastructure projects."At the start it can be hundreds millions of dollars, if the first issue is successful it could be billions," said Kudrin, adding that VEB issue could be considered as pilot for other Russian state firms.The bank, which lacks a formal banking licence and therefore does not report to the central bank, was also used by the government to throw a lifeline to indebted firms and support the domestic stock market.Rohland said a guarantee from the World Bank would help VEB borrow on more favourable conditions than if it were to tap capital markets on its own and obtain a higher rating for the issue which may even exceed the sovereign "BBB" rating.Rohland said the World Bank would guarantee the bond's cash flows after a certain year, enabling VEB to extend the maturity of the bond by several years. He said the issue may amount to about $500 million.He said the World Bank's guarantee will also knock several percentage points off the bond's yield, reducing VEB's borrowing costs. He said the World Bank will require a sovereign counter-guarantee in order to go ahead.The funds raised with the issue will go towards infrastructure projects and support for small and medium sized enterprises.Rohland said it was still under discussion whether VEB will do a domestic issue or a Eurobond. Kudrin said Russia would also ask the World Bank for help in financing some of the projects it can no longer afford."Since Russia is entering a period of deficit budget and in the next three years the deficit will be significant we are ready to consider a realisation of some projects with the World Bank's financing," Kudrin said after meeting World Bank President Robert Zoellick.Kudrin said the discussion was about "billions of dollars". Rohland said the World Bank was also in discussion with the state railroad monopoly Russian Railways, which is seeking to raise funds for its three-year investment programme."The World Bank's funds are long-term and cheap. It matches our financing tasks," Kudrin said, pointing housing utilities as a one possible area of cooperation with the World Bank. (Editing by Tomasz Janowski)

Risks of inflation higher than 13% forecasted by govt minimal in 2009 – Kudrin

http://www.itar-tass.com/eng/level2.html?NewsID=13877804&PageNum=0

WASHINGTON, April 26 (Itar-Tass) -- Risks of inflation higher than 13% forecasted by the Russian government for this year are minimal, Vice-Premier and Finance Minister Alexei Kudrin said on Sunday.

“Risks are minimal so far; inflation is on decline,” he said.

If the federal budget deficit grows too large and influences inflation, the inflation risk may also grow, Kudrin added.

Russia is not considering possible external borrowings in 2009, Vice-Premier and Finance Minister Alexei Kudrin said on Sunday.

External borrowings are possible in 2010, he remarked.

Kudrin found it difficult to specify the possible amount of external borrowings. He said the amount of Russia’s possible Eurobond issue will depend on their profitability.

Director of the Finance Ministry’s Debt Department Konstantin Vyshkovsky said earlier that Russia might borrow $5 billion with Eurobonds. “There may be one issue of this amount,” Kudrin said. “There may be more issues. Everything will depend on the market.”

Russia: How bad or likely is -9.5% contraction? http://businessneweurope.eu/users/subs.php

UBSApril 27, 2009

__ Min Econ thinks Russia's GDP contracted by 9.5% in 1Q The Deputy Minister of the Economy, Andrei Klepach, said yesterday that GDP shrank in his estimate by 9.5% y-o-y in 1Q and could shrink by 8.7%-10% in 2Q09 and that a 6% contraction of Russia's economy in 2009, as forecast by the IMF, is quite realistic. The Ministry's previous estimate was that the economy contracted by c7% in 1Q09.

__ We think that domestic demand excl. inventories was only down 4% y-o-y The monthly data on retail sales, the budget and investment allow us to estimate most components of GDP prior to the official estimates. According to the data available, retail sales and thus household consumption fell by around 2% y-o-y in 1Q09, fixed investment fell by 15% and government consumption was probably about flat. This suggests that domestic demand short of inventory adjustments was down by around 3.5%-4%. With domestic demand short of inventories, contributing to 90% of GDP, the contribution to growth of this factor is around 3.6%.

__ The contribution of net exports in the official data is difficult to estimate The monthly data on exports and imports is only available in USD and up to February. Imports in USD for the first two months were down 35% y-o-y in USD.

This suggests to us that even allowing for price and exchange rate effects, imports were probably down 20%-25% in constant prices. Given that imports are subtracted from GDP, this should lead to a massive positive contribution from imports to GDP growth. Unfortunately, Rosstat does not publish the share of imports in GDP in constant prices

and it is hence difficult to know the contribution to GDP growth of the import contraction, but with the share of imports in GDP being at around 17% in 2008 in current prices, the contribution to growth of the import contraction could be around 3.5%.

__ Sharp contraction in GDP must be disproportionately due to stock adjustments and exports The combined contribution from fixed investment, consumption and fixed investment to GDP growth is, according to the above estimates, just slightly negative. For GDP to have fallen by 9.5%, exports and/or inventories must have contributed close to 9 ppt of the contraction. Although we do have monthly data on exports, it is difficult to translate export growth in USD terms into growth in volumes, given the sharp adjustment in commodity prices. However, bottom up we think exports contracted possibly by around 15% y-o-y volume wise. Translating this into contributions to growth is again difficult because we do not know the official share of exports in GDP in constant prices. Taking again last year's share in constant prices of around 33% of GDP (which is likely to be an overestimate) would give us a contribution of 5%. This suggests that around 4 ppt of the decline in GDP should be due to inventory adjustments. (Please see more commentary on the next page).

__ Gas exports will be the key for data going forward We think that most of the negative contribution from exports and from inventories is due to gas exports. Gas exports in our view were down by up to 40% y-o-y in volume terms and on top of this the adjustment in their storage tanks is typically the biggest factor in inventory movements in the economy, we believe. Thus, how quickly the official GDP data will turn around is in our view very much a question of how quickly the demand for gas exports will pick up. Most of the decline is clearly temporary, due to inventories both in Western Europe and Russia and due to the fact that gas prices only peaked in 1Q due to the fact that they are linked to oil prices with a 6-9 month lag and hence customers are likely to have economised heavily on gas.

__ Limited downside risk to our GDP forecast We forecast GDP growth of -4% in 2009, with oil being at USD40 per barrel on average for the year. Given the 1Q estimate, there is probably some downside risk to our forecast. However, given the likely source of the sharp contractions, we think that they are far less likely to be repeated in the upcoming quarters and the impact on our forecast is likely to be mainly backwards looking (i.e. adjusting the forecast for the 1Q contribution).

New official forecast: 6% GDP decline in 2009http://businessneweurope.eu/users/subs.php

Rencap, RussiaMonday, April 27, 2009

On Friday (24 Apr) Reuters reported that the Ministry of Economic Development (MET) downgraded its 2009 macroeconomic forecasts. The MET now expects the economy to

shrink 6% this year, almost three times more than its previous forecast of a 2.2% decline in 2009 (made in Mar 2009). The MET expects industrial production to drop 9.1% this year (from a previously forecast 7.4% decline); fixed investment to decline 21.1% (from a previous figure of 13.8%); and retail sales will decrease 4.9% (from a growth forecast of 0.3%).

We think that the main reason for lowering forecasts revisions is the poor performance of the Russian economy in 1Q09. According to MET estimates, GDP dropped 9.5% YoY in 1Q09. The MET had initially estimated GDP would decline 5-6% YoY in 1Q09 (this estimation was used for the MET's previous macro forecasts). The new macroeconomic forecast will be considered by the government budget committee at the end of May.

Economics: Russia's foreign debt improveshttp://businessneweurope.eu/users/subs.php

UralSib, RussiaApril 27, 2009

Most of the commentary on Russia's debt talks only about the absolute size of this debt - about $450bn, of which something under $200bn is due this year. It's a lot. However, the experts say that some of this debt will be rolled over or restructured so this problem can be reduced. The commentators say that the credit markets are closed, but this is not true, as this report below shows. Creditors are well aware that they cant simply foreclose on all debt that comes due but it is not paid as they will simply lose their money. Restructuring/refinancing at least offers some hope of getting their money back eventually. Just how much of this debt can be refininaced is open to debate. Experts in the Russian bank sector are using the working assumption of 50%, but this is one of the those tipping point moments - the equity investors have shown a lot more enthusiasm for Russia's prospects than the commentators and the more debt that is restructured, the lower the external debt falls, the easier it is to pay and the less danger Russia is in - hence the easier it becomes to refinance or roll over debt. Are we there yet? Probably not, but while the debt will cause wobbles, as we point out in our May cover piece (out next week) Russia and CEE is in a much happier place than it was only two months ago and while there will be some wobbles on the road ahead, none of these will derail the recovery. END

Debt statistics point to success in debt roll-overs ... On Friday, the Central Bank released an update on Russia's foreign debt schedule, as it stood on 1 January 2009. In comparison to the previous update, as of 1 October 2008, there have been some significant changes, in particular a major decrease in the volume of principal debt owed to foreign creditors. Also, changes in the schedule point to some success attained by Russian companies in their attempts to refinance debt payments during the critical period of 4Q08. Both trends are very positive and help to alleviate the acuteness of one of the major investor concerns, namely the high foreign debt burden of Russia's private sector.

... and a large fall in principal foreign debt. In the six months of the crisis, between 1 October 2008 and 1 April 2009, Russia's outstanding foreign debt fell by $87 bln or more than 16%. The most notable falls in debt positions were recorded in the banking sector: the CBR's own debt was cut by 79%, while the foreign debt of commercial banks fell by almost 26%. In the same period, the Russian government reduced its debt by 13% and that of the non-financial private sector dropped by 8%. On 1 April 2009, Russia owed $453.5 bln to the rest of the world compared to $540.5 bln on 1 October last year.

Russian unemployment reaches 9.5% in 1Q09, investment down 15% YoYhttp://businessneweurope.eu/users/subs.php

Rencap, RussiaMonday, April 27, 2009

While the situation in Russia has improved in big things like the external debt, companies have stepped back from the abyss and the rate of collapse of the economy has slowed, the really big problem is this rising unemployment. Consumers became the biggest driver of the Russian economy in recent years and as long as the situation continues to get worse the chances of a faster than expected recover recede. The rising unemployment highlights the Kremlin's failure to push diversification. (In Ukraine where the economy is more diverse, the rate in the rise of unemployment has slowed in March and so that country is moving into a position where it may recover faster than Russia - certainly there have been lots of optimistic notes on Ukraine recently). Think of Russia's problems this way: all the things were the state has control can act have got better (external debt, corporate debt, sectors where the state has a big stake) but where sectors are "free" and rely on the open economy - most of the middle weight industries - where the companies are too small to come up on the state's radar, all these have seen their situation get worse. To its credit the Kremlin is marching about shouting about SMEs in the last few weeks, but you can "promote SMEs" you can only create an environment in which they flourish; the Kremlin has started on this far to late and it will be ages (years?) until any of the badly needed measures they are talking now actually make a difference. Certainly changes to boost SMEs made now will not stop unemployment falling in the coming months. END

According to Rosstat data (issued on 20 Apr), investment in Russia declined 15.4% YoY in Mar 2009 and 15% YoY in 1Q09. The numbers indicate that construction shrank more significantly, by 20.2% YoY, in March, and 19% YoY in 1Q09.

Retail trade decreased 4% YoY in March and 1.1% YoY over the quarter.

The data indicate that unemployment increased to 9.5% in 1Q09, and amounted to 7.1mn, representing a significant rise on the 8.5% recorded in Feb 2009 and a very significant jump from the 5.3% indicated in Sep 2008. Real wages declined 5.7% in Mar 2009 and 2.3% in 1Q09. Real disposable income remained stable in March, and was down 2.3% YoY in 1Q09.

All available data show that Russia's economic development was worse in March than in

1Q, signalling that the situation is deteriorating. In 2Q09, we expect the Russian economy to show declines in all major sectors of the real economy similar to those observed in 1Q09.

CBR auction REPO rates drop nearly 100 bptshttp://businessneweurope.eu/users/subs.php

Rencap, RussiaMonday, April 27, 2009

In the run-up to the end-of-month tax payments, demand for CBR refinancing instruments firmed slightly at the end of last week. On Friday, banks borrowed some RUB30bn from the regulator at overnight REPO auctions. Friday's rate used by the CBR to provide liquidity was much lower, a result of its decision to cut key interest rates 5 bpts (click here to view CBR lowers key interest rates dated 23 Apr 2009). Specifically, overnight REPO rates at Friday's auction were 10.82% and 11.02%, vs 11.77% and 11.91% the day before, a de facto reduction of almost by 100 bpts.

CBR could resume buying on forex market this weekhttp://businessneweurope.eu/users/subs.php

Rencap, RussiaMonday, April 27, 2009

Last week's (20-24 Apr) downturn in the rouble appears to have been shortlived. As early as the middle of last week, the rouble began strengthening. By the close of trading on Friday, the rouble/basket rate was close to the Central Bank of Russia's (CBR) bid (38.00). We think the oil price, at $50/bbl, the euro rallying on the forex market and improved sentiment on international markets will most likely trigger a further wave of sell-offs in the dollar on the Russian market this week. Furthermore, we think investors' appetites for rouble liquidity will increase as the usual end-of-month tax payments (VAT and income tax) fall due early this week. We estimate the aggregate amount of tax payments at RUB100- 120bn.

Business, Energy or Environmental regulations or discussions

No changes planned to electricity market liberalization timetable –Shmatkohttp://www.interfax.com/3/490317/news.aspx

MOSCOW. April 27 (Interfax) - No changes to the schedule forliberalization of the electricity market are planned, Energy MinisterSergei Shmatko told journalists on Monday. "The Energy Ministry is jointly discussing with the regions, on an

emergency basis, the issues of the effect of the liberalization on theretail electricity market. But it's premature to speak of thecancellation of the liberalization's timeframe," Shmatko said.

Liberalisation of the electricity markets might be delayed until 2013http://businessneweurope.eu/users/subs.php

CitiApril 27, 2009

Full electricity market liberalisation might be delayed until 2013 from 2011, Interfax reported on Friday, citing an unidentified source familiar with a new '09-12 economic forecast by the Economy Ministry.

At present, 30% of electricity output is being sold at free market prices while the rest is sold under the regulated tariffs. Starting July 2009 the threshold for electricity sold at the free market was to rise to 50%, from Jan '10 to 60%, from July '10 to 80% and starting 2011 (Citi's current forecast as well) the wholesale electricity market should have become fully liberalised.

Under the new proposal by the Economy Ministry, a 50% liberalisation threshold would only be reached starting 2010, while '11-'12 liberalised market share would be limited to 75% with full liberalisation coming into force apparently from 2013. The proposal is yet to be submitted to the government in May with expected deadline for governmental approval set for end of May.

We notice that the schedule of the electricity market liberalisation is one of the key terms negotiated with strategic investors in the Russian utilities sector during privatisation of TGKs/OGKs. If the government changes the terms at this stage, this would allow investors to cancel their obligations for the new capacity introductions signed off under the capacity supply agreements. This could make the government reluctant to change the liberalisation pace. At the same time it is unclear how easily TGKs and OGKs would be able to cancel their contractual obligations with equipment suppliers for already contracted capacity.

We also believe that the market liberalisation itself will not necessarily lead to significant escalation of electricity prices as 1) declining electricity demand has increased reserve margins in the system, 2) lower than originally indicated gas tariff hikes will help to limit electricity price increases at the free market, 3) liberalisation improves efficiency in the system by increasing loads on more efficient power plants and thus driving out inefficient thermal power plants from the market.

The news is negative for thermal gencos (TGKs and OGKs) in our view as the bulk of the value of thermal gencos, especially efficient ones, depends on the timely introduction of a full-scale liberalised market.

Alexander Korneev

Ministry Wants Delay Of Utility Rate Hikeshttp://www.themoscowtimes.com/article/1009/42/376606.htm

27 April 2009 Combined Reports

The Economic Development Ministry wants to put a brake on price rises for electricity, gas and rail transport, Interfax reported Friday, as officials try to ease the cost burden on crisis-hit domestic industry.

If the ministry's proposal to slow price growth by more than 75 percent for some utilities goes through, the companies supplying them could face revenue shortfalls, analysts said.

But with the financial crisis forcing large consumers of power and gas to cut costs as much as possible, the state may decide to help them by suspending the price increases set out in 2007, when Russia was on the cusp of an oil-driven boom.

Under the ministry's proposal, the price of gas for industrial consumers would be allowed to rise by only 5 percent, not the 27.7 percent initially planned, the news agency reported, citing a source in the government.

Electricity tariffs for industrial consumers could be increased by 5 percent next year, instead of the 22 percent that was expected, while heat prices could be increased by 5 percent instead of 18 percent, Interfax reported.

The liberalization of the wholesale market for electricity could also be delayed for at least a year, the report said.

The proposal is also to amend the cost of rail freight, allowing it to grow by 10 percent instead of a planned hike of up to 13.7 percent, Interfax said.

Late last year, some of Russia's largest companies lobbied the government to ease their costs by slowing the growth of utility prices. This led to an outcry from electricity firms and other utilities, saying they needed the scheduled hikes to make a return on their investments.

Private investors, such as Italy's Enel and Finland's Fortum, purchased controlling stakes in electricity assets as the government dismantled its monopoly in 2007 and 2008.

The government settled on a compromise, allowing gas and rail transport prices to rise more gradually while leaving unchanged its plans to hike electricity tariffs.

Energy Minister Sergei Shmatko offered another possible concession to power companies on April 15, saying they may be allowed to alter investment plans, including construction

delays or moving plants. Much of the new planned capacity was to be built around industrial enterprises that have been shelved because of the economic crisis.

The Interfax report cited a proposal that must still be presented to various state agencies for review.

Economic Development Ministry slows tariff increases for power and gas companies in 2010-2012http://businessneweurope.eu/users/subs.php

Alfa, RussiaMonday, April 27, 2009

According to various sources, Russia's Economic Development Ministry has developed a new economic forecast that assumes a significant downward revision of tariff increases for natural monopolies, including gas and electricity companies. The newly-proposed tariff increases for gas, electricity and heating are summarized below along with the old numbers (according to the Economic Development Ministry's forecast of August 2008)

As can be seen, the ministry proposes reducing the average increase in regulated electricity tariffs in 2010 by almost half to 9.5-11% from the previously planned 22.0%. The heating business, which in Russia is 100% regulated, will be even more affected: 2010 tariff increases might be cut by more than two-thirds.

Tariffs for gas, which is the major determinant of electricity tariff increases, as it makes up 70% of the power sector's fuel mix, are also proposed to be significantly cut.

We do not expect the performance of thermal GenCos to be significantly damaged by the lower electricity and heating tariff increases because they come in the wake of revisions to the planned increase in gas prices, which are the main driver of GenCos' operating expenses. However, the 2010 tariff proposals are substantially lower than the expected inflation (our in-house forecast is 13%), which could somewhat undermine the earnings of power companies across the board. From 2011 onward, the proposed tariff increases are close to expected inflation.

Given all the abovementioned considerations, we consider the news as slightly NEGATIVE for power stocks. The lower tariff increases, in conjunction with proposals to slow the liberalization process (see our other story in today's brief), could lead to some profit-taking in these names given their strong recent performance.

Russian Media Highlights From VTB Capital Forum http://businessneweurope.eu/users/subs.php

VTB CapitalApril 27, 2009

Management from all three public Russian Media companies participated in our VTB Capital Forum: Russia Calling on 21-23 April.

We summarise the key takeaways from the meetings with them below.

CTC Media. Management confirmed that it sees the 1Q09 top line declining 5-10% (in rouble terms) on the back of flattish pricing and the inventory sell-out ratio exceeding 80%. The top 10 Russian corporates still account for 40% of CTC Media's revenues and the share of the big advertisers is now increasing at the expense of small companies, which are trying to save money on advertising. This is positive given CTC Media's strong exposure to FMCG advertisers (the share of automakers and financial institutions, which have suffered most from the crisis, has always been low).

In 2009, the company targets flat YoY operating costs (in rouble terms), including the amortisation of programming rights (65% of all above-EBITDA costs). We thus expect a slight 1-2pp dilution in the company's EBITDA margin (down from 44% in 2008) on a marginal decrease in revenues this year. On the positive side, later this year the company might consider changing its amortisation policy on sitcoms (the majority of prime airtime) which might potentially provide marginal support for the company's EBITDA profitability.

The company's financial standing is strong, with marginal net cash, and it does not expect any acceleration in the repayment of its USD 90mn debt in 2009. The stock trades at 5.7x 2009F EBITDA, on par with Eastern European peers and at a 35% discount to Western peers' average of 8.6x.

Rambler Media. The company remains positive on its top line in 2009:

management continues to see sales flat YoY (in rouble terms) in 2009 and does not rule out the possibility of revenues marginally increasing in 2009.

Management expects revenue growth to be supported by some growth in inventory (2.5bn monthly page views in 2008) and flattish pricing. The average Russian internet player's sell-out ratio remains at 20% and players are trying to keep stable prices. The competition is focused on offering more additional services and increasing inventories rather than on diluting prices (which would be a no-win situation for all the parties).

Rambler Media does not see any dramatic change in advertisers' infrastructure (e.g. the advertisers who might potentially have swapped to the internet from falling print or outdoor) and its top-5 advertiser segments remain unchanged:

autos (25% of current sales), telecom service, gadgets, FMCG and finance.

Management admits that with the arrival of a new CEO, Rambler Media might introduce changes to its strategy and positioning (for now it focuses on news, mail and

entertainment).

The company's short-term focus is on cost-cutting, including further staff redundancies (by the end 2008, it had already fired 15% of its staff and frozen salaries). This is likely to provide further support for the company's EBITDA profitability up from the 14% posted in 2008.

Rambler Media has a strong financial standing with zero debt and USD 29mn cash on the balance. This could potentially be used to: i) buy internet players in Russia (although they are still asking very high, pre-crisis prices); ii) invest in its own paid search/or other infrastructure; and iii) conclude a partner agreement with a large searcher in the Russian market (which might lead to dependence on the partner and dilute the company's margins).

At current prices, the company trades at 5.3x 2009F EBITDA compared with the 10-11x 2009F EBITDA of its US and Chinese peers.

RBC. Management expects revenues to fall dramatically in 2009 because of the crisis and the company's internal debt/financing problem. However, the underperformance would not be so severe had RBC not had its own internal problems. As soon as advertisers get evidence that the company is a going concern and realise that the situation is getting clearer (not the case over the past six months) this would likely be a positive sign both for the market and investors.

Management estimates current debt at USD 210mn which translates into a debt/2009 EBITDA ratio of 10-11 (as estimated by the company). The main items of the company's debt include i) a Barclays CLN of USD 45mn (expired in November last year); ii) a Dresdner Bank CLN worth USD 43.5mn (matures in June this year); and iii) two rouble bonds worth RUB 1.5bn (USD 42mn) (first matured on 24 March and the one will mature on 9 June this year).

The arrival of an investor with a cash inflow of around USD 30mn and a debt restructuring scheme is crucial for the company to survive. RBC does not have enough cash to pay out debt and to cover all opex needs in 2009. Thus, without external help, it is likely to remain a going concern issue in the near future.

Evraz: 2008 IFRS preview: and glimpse at 1Q09http://businessneweurope.eu/users/subs.php

UralSib, RussiaApril 27, 2009

2008 IFRS results and 1Q09 trading update. Tomorrow, at 10:00 am Moscow time, Evraz (EVR - Buy) will release 2008 IFRS results and a 1Q09 trading update. We expect revenues to rise by 65% YoY to $21 bln and EBITDA to increase by 59% YoY to $6.7

bln, implying an EBITDA margin of 32%. We also expect to see a number of significant one-offs from the revaluation of inventories, forex losses and goodwill writedowns which will distort the net income line. As of the end of 1H08 Evraz had goodwill in excess of $4 bln on its balance sheet from acquisitions of foreign assets and may write down a significant part of this. We stress, that the above one-off items are almost impossible to accurately predict.

Thus our 2008 net income projection of $3.6 bln excludes these write-offs.

Focus on performance of overseas assets. We believe the market will look closely at Evraz's 1Q09 trading update which will be released simultaneously with its 2008 IFRS results. While we expect to see around 10% QoQ increase in steel volumes from its Russian operations in 1Q09, the performance of Evraz's foreign assets (both volumes and prices) remains our major concern, as European and North American steel markets are operating at only 50% capacity vs. 70% in Russia. Domestic steel prices were 30-40% lower QoQ. With regards to Evraz's mining asserts, we expect to see relatively high production volumes from its coal operations, as in 1Q09 the company opted to cover almost all coking coal for its Russian steel operations via its Coal subsidiary Yuzhkuzbassugol instead of buying coal from Raspadskaya.

Profit taking after strong rally. We believe that some of the one-offs may distort the headline EBITDA number, which could be lower than our projection ($6.7 bln) and Bloomberg consensus ($6.8 bln). In our view, the 2008 IFRS financials will prove to be insignificant for the markets, as investors should focus on the company's 1Q09 operating results and management guidance. But given the recent strong performance in the name - the stock has rallied by more than 50% since the beginning of April - investors may use the weak results as a trigger for profit taking.

Michael Kavanagh

Acron officially starts Oleny Ruchei phosphate projecthttp://businessneweurope.eu/users/subs.php

Troika, RussiaMonday, April 27, 2009

Acron reported on Friday that it has officially started construction at its major greenfield phosphate project Oleny Ruchei, located in Murmansk Region. To remind, under the feasibility study the project is to be launched in 2011 12 with output of 300 kt of phosphate rock concentrate (Stage 1) via open pit mining and should reach target capacity of 1.8m tonnes of concentrate toward 2018, with 6m tonnes of ore extracted both from open pit and underground (Stage 2). Acron's subsidiary Northwestern Phosphate Company has already invested $30m in the asset and completed basic infrastructure projects, such as roads, site clearing and an accommodation camp.

The company expects to launch Stage 1 by end 2011.

Oleny Ruchei is a critical project for Acron, as its current contract with rival PhosAgro to supply phosphate rock concentrate, a key ingredient for the production of compound fertilizers, expires in 2012 and it is imperative that the company ensure its own feedstock base by that time.

Oleny Ruchei will require around $500m in investment, with roughly $350m to be invested during Stage 1. Considering its overall debt burden at this stage (some $800m), we do not believe that Acron will have the necessary funding capacity and instead believe that the company will eventually be forced to seek external financing. A possible JV with the state to develop Oleny Ruchei and another greenfield asset - the Talitsky potash project, as recently discussed with state officials - appears the most advantageous solution and should be regarded as positive should it eventually materialize.

Mikhail Stiskin

Hyundai seeks $331 mln borrowing for Russia planthttp://www.google.com/news?q=&sourceid=navclient-ff&ie=UTF-8&rlz=1B3GGIC_enMK269MK276

Mon Apr 27, 2009 4:08am BST

SEOUL, April 27 (Reuters) - Hyundai Motor Co (005380.KS: Quote, Profile, Research), South Korea's top automaker, is seeking to borrow 250 million euros ($331.3 million) to finance a new plant in Russia, a company official said on Monday.

"We visited some banks to discuss financing the Russsia plant. But nothing has been decided yet," the official told Reuters, asking not to be identified as he was not authorised to speak to the media. ($1=.7546 Euro) (Reporting by Cheon Jong-woo; Editing by Jonathan Hopfner)

Car production in Russia down by two-thirds

http://en.rian.ru/analysis/20090424/121301886.html

Kommersant

In the first quarter of 2009, car output in Russia dropped by three times, while sales declined by just 40%. The downtrend has been experienced not just among domestic brands, but also by foreign makes, although their industrial assembly production is least of all crisis-dependent. The industry could show an annualized 30% fall.

According to ASM-Holding, production of vehicles (both cars and trucks) fell in January-March by 65%, down to 139,200 units. In other words, output at Russian plants fell by

2.9 times. Trucks showed the greatest decline (75%), with cars falling by 62.8%. At the same time, car sales in Russia in the first quarter, according to the Association of European Business, did not fall so rapidly - the drop was 40%.

The greatest slump was seen at plants that do not use industrial assembly methods (which allow them to import automotive components at low customs tariffs): Avtotor, TagAZ, AMUR and Derways. Their production fell by 70% to 80%. Plants using industrial assembly techniques to produce foreign models have suffered least of all from the crisis - their output dropped by 32.2%.

Mikhail Lyamin from the Bank of Moscow said that most auto plants (both Russian and foreign) were idle in January, and operated at intervals in February. Figures for the second quarter might be better, because the plants, although on shorter hours, are still operating, the analyst said. ASM-Holding's forecast is that car production across Russia will fall by an annualized 30% - down to one million units.

Lyamin's explanation why industrial assembly plants had showed the least production downturn is that they, unlike AvtoVAZ, did not produce directly = to store stock. He said foreign auto-makers began gradually to decrease their output in November-December, 2008, as the market felt the first impact of the crisis, trying at the same time to sell their stock reserves. AvtoVAZ, on the other hand, built up a stockpile of 100,000 vehicles (two-months' output), which allowed it to stay idle all through January.

Sberbank in BTA Talkshttp://www.themoscowtimes.com/article/1009/42/376600.htm

Sberbank is holding talks on buying a 53 percent stake in Kazakhstan's BTA Bank, RIA-Novosti said Friday, citing a source familiar with the negotiations.

Raushan Nayzabayeva, a spokeswoman for BTA, declined to comment. Bonds issued by BTA plunged Friday after the lender said it would stop principal payments on its debt and Fitch Ratings downgraded it to "restricted default."(Bloomberg)

Sberbank considering purchase of 53% stake in BTA Bank http://businessneweurope.eu/users/subs.php

Visor CapitalApril 27, 2009

No significant bond or share impact is expected for BTA Bank or Sberbank.

According to a statement from RIA Novosti (RIA), Sberbank (SBER RU) is holding talks on the purchase of a 53% stake in BTA Bank (BTAS KZ). A spokesman for RIA said it was too early to provide confirmation of the deal because the decision rests on the result of negotiations over debt restructuring for BTA Bank. As previously reported, the Chairman of BTA Bank stated that, at present, there are no other potential buyers of BTA

other than Sberbank.

We do not expect any significant share impact for BTA Bank or Sberbank, as the negotiations had been previously discussed in the media. We currently have BTA Bank under formal research coverage, available to our clients.

Renat Syzdykov

VTG Seeks Russian Partnerhttp://www.themoscowtimes.com/article/1009/42/376600.htm

VTG, which runs Europe's largest fleet of privately owned railway cars, is close to finding a Russian partner to expand its tank-container transport business there and in neighboring regions.

Discussions are in an "advanced stage," chief executive Heiko Fischer said in an interview. He declined to identify the company.(Bloomberg)

INTERVIEW: SDM Bank counts its conservatism as its strength http://www.businessneweurope.eu/story1568/INTERVIEW_SDM_Bank_counts_its_conservatism_as_its_strength

Ben Aris in Moscow April 27, 2009

The planned purchase of Russia's SDM Bank by the Israeli financial powerhouse Hapoalim was amongst the first victims of the global crisis. The two banks worked together for more than a decade and half, and after this long courtship decided to finally tie the knot in July, with Hapoalim offering to pay $111m for a 78% stake with an option to buy the rest after two years. Then the crisis struck.

"Hapoalim stopped the deal, as they didn't get the permission of the central bank [of Israel] to close the deal," says Anatoly Landsman, SDM's chairman. "We understood that Hapoalim's position was significantly associated with their internal problems, whereas the position of the Bank of Israel was based on the negative reminiscence of its governor about the Russian crisis in 1998."

But Landsman hints that the Israeli central bank's decision might have come at the prompting of Hapoalim, which would have been obliged to pay a large retraction fee if it had broken off the deal on its own, but doesn't have to pay anything if it can't get permission for the deal. Who knows? No one is sure what really happened.

Good match

It would have been a match made in heaven. Over the last few years, banks have been the hot M&A item. For international banks or private equity firms on the prowl for stakes in second-tier banks in the CIS, one name kept coming up: SDM Bank. A small Moscow-based bank, SDM has stood out amongst the 1,000-odd small and medium-sized banks as amongst the most attractive acquisition targets in Russia.

There is nothing particularly special about the bank. It is based in Moscow's suburbs and specialises in catering to the needs of medium-sized businesses, but not much more. However, it is the very mundane nature of its business that makes it so appealing. "We are very conservative," says Landsman. "The point is to be a solid bank and not just a big bank. We only have the deposits of our customers and no money from the international or domestic capital market. But this meant that during the recent crisis we didn't have to turn to the Central Bank of Russia for help or loans, although we were included in the list of banks eligible for help."

Some investors passed the bank by, as it didn't seem to be cashing in on the double-digit growth of the financial services sector. All bankers claim to be conservative, but few Russian bankers were able to avoid the temptation to chase growth while the sector was booming. Western bankers have filled hotel rooms for several years dishing out easy credit to all-comers. Likewise, raising money in the ruble bond market, awash with cash, was so easy that Renaissance Capital's chief economist, Alexei Moisseev, likened the boom to the dot.com bubble at the start of the millennium. Even amongst the truly conservative Russian bankers who eschewed these easy sources of funding, few were able to resist the temptation of retail banking and invested heavily into branches or express loan businesses.

Landsman did none of these things. Instead he concentrated on building up his relations with medium-sized business and catering to all their banking needs – but not much more. The bank does some retail banking, providing payroll services to a total of 100,000 employees working for his clients, but while most banks have used payroll as a platform from which to launch a retail businesses, Landsman never went beyond the simple payroll function. "All our retail clients have debit cards, but we never offered them loans. Many banks have handed out many retail loans and now they have many headaches," says Landsman.

Where SDM has worked hard is making sure it has a wide base of customers and making sure they are happy: no one customer has more than 1% of the bank's liabilities. So why be so cautious when everyone around you is making money hand over fist? "Already, at the start of 2007, it was clear that our economy was overheating, plus the ruble was very strong, so some sort of internal crisis was becoming increasingly likely. Still, I didn't expect it to take on global proportions," says Landsman.

When push came to shove in October last year, all this work paid off, as while companies and customers fled from their banks, SDM saw a relatively mild outflow. "We saw a 15% outflow in October and November," says Landsman, "but thanks to our conservative policy, we didn't really have any real problems in this period so it didn't affect us too

badly."

Who else in Russia can say that? Not many.

Magnit - attracting consumers http://www.businessneweurope.eu/story1567/Magnit__attracting_consumersTom Daly in Moscow April 27, 2009

The global crisis has crushed most Russian companies, but one firm is blessing the meltdown because it has driven consumers through its doors in droves: Russia's leading regional supermarket chain Magnit is expecting to end this year by setting a new sales record and is one of the few Russian companies that is still expanding fast.

The Krasnodar-based discount retailer just reported first-quarter results that show sales are up by over a third year on year, an almost unique result in Russia at the moment. Moreover, not only is the company not scaling back on its investment plans for 2009, it is actually increasing them: the company said in February it was going ahead with spending of $660m of investment to add 400 new discount stores this year, up from the 371 stores it opened in 2008.

The company's performance has barely blipped in the midst of the global crash. Magnit's net profit almost doubled in 2008, even counting in the sharp economic slowdown that kicked in from the autumn of last year. And management says it can maintain its current growth momentum for all of 2009. Analysts are universally tipping the company's stock as a top performer for this year.

So why is the company doing so well? The logic is simple: in a crisis consumers cut spending on all their little luxuries, however, the last thing they cut is food. Indeed, in crises food sales usually go up as people simply stay in and eat at home more. On top of this trend is the fact that Magnit has targeted the lower end of the market and sells predominately Russian-made food. A devaluation of the ruble over the last six months has driven up the cost of imported food by about 40% and the Russian population has switched en masse to the cheaper home-made produce that Magnit sells.

Milking the regions

Magnit was set up in 1994 as a distributor of household products and cosmetics before moving into food retail. Its well-known motto – "always low prices" – is now a mantra for the whole shopping populace, but has always appealed to its core markets in Russia's regions.

While most of the company's competitors started life in Moscow and then moved out to the 13 so-called millionki (Russian cities with a population of more than a million people), from the start Magnit targeted regional cities with less than 500,000 people,

home to three-quarters of the Russian population, avoiding the megalopolises such as Moscow and St Petersburg.

With incomes putting in double-digit gains for nearly a decade, all the supermarket chains have been racing to build up their branch networks in an effort to take market share while it was still up for grabs. Magnit now boasts a total of 2,676 stores and is continuing to expand aggressively.

All the supermarket chains have done well because of the crisis. Budget chain rival Pyaterochka, controlled by Alfa Group's X5, boosted sales by 28% in the first quarter and Seventh Continent, another big player in the supermarket business, saw sales up by 11%, according to VTB Capital. But Magnit outstripped them all, posting net sales up by 36% in the same period to RUB38.2bn ($1.37bn) and opened 94 new discount stores between January and March. "I think what helps it is that Magnit doesn't have a supermarket format," Anna Kochkina, consumer and retail analyst at UniCredit Securities, says. "It focuses on the mass-market formats – hypermarkets and discounters."

While the other chains fell over each other to capture a share of the admittedly rich Moscow market, Magnit has been largely left alone to develop the larger, albeit more diluted, regional market. But its virtual monopoly on the small regional towns has meant the company has a lot of bargaining power, so what it loses in the economies of scale of big cities, it gains in lower costs. "Due to the scope of their business, they get very good purchasing terms from their suppliers," says Ivan Kushch, consumer analyst at VTB.

"When disposable income falls, people switch from supermarkets to discount stores and hypermarkets. Basically, the trend we see is that people are trading down in terms of baskets. Russians' average cheque remains, but they buy cheaper products and usually domestic products - less yoghurt, more milk." Flying off the shelf

Magnit's business model is strong, but analysts also like the company's management. Russia is famous for its oligarchs and corporate governance abuses, but Russia's wide boys have mostly gone into the cash-rich sectors – things like oil and metals – leaving the hard work of high-volume, low-margin retailing to Russia's true entrepreneurs. "The owner knows the company very well. He's a shareholder and has a role in its senior management, so has a vested interest," says Kochkina, referring to 41-year-old Magnit founder and CEO Sergey Galitsky, who is also chairman of local football team FC Krasnodar. Said to be an admirer of US discount chain Wal-Mart, Galitskiy took Magnit public in Moscow in 2006 and last year listed it on the London Stock Exchange.

Still, despite the company's recent strong performance, Galitsky has been hit in the pocket like everyone else. He dropped off Forbes magazine's annual rich-list of billionaires for 2009. (He was ranked joint-652nd last year with an estimated net worth of $1.9bn.)

But the performance of his firm and its stock has nonetheless given him a lot more to smile about than his peers. Valuations on Russia's stock market have been crushed by the global crisis, but recently the market bounced back since the lows of February, putting in a 50% gain; in the same period, the value of Magnit's stock has increased an astounding four-fold, rising from a low of RUB206 set in November to close at RUB1,075 as of April 16. Even with this phenomenal rally, analysts expect the stock has further to go. "Magnit is our top pick and is the clear leader in terms of like-for-like sales growth and net retail sales increase, while growing in line with X5 in terms of net selling space increase," VTB's Kushch says.

COMMENT: Russian market set to be one of world's best performers this year and next http://www.businessneweurope.eu/story1566/COMMENT_Russian_market_set_to_be_one_of_worlds_best_performers_this_year_and_next

Peter Halloran of Pharos Financial Group April 27, 2009

It seems that each year the Russian market finishes as either the world's best or worst performer. In 1998, it fell by 83% and promptly rallied 246% in 1999. With an estimated 2009 price/earnings of only 5.1 times, it ranks today as among the world's cheapest. After last year's complete freefall, we believe the Russian market is set to become one of the world's best performers both this year and next. Our conservative assumption is that 2009 earnings will drop by more than one-third from last year's level with ample room for growth to follow in 2010.

The drivers to this year's outperformance will be the perceived bottoming of the commodity markets together with the recognition that a newly competitive ruble has made Russia the low-cost supplier of gas, nickel, steel, aluminum, fertilizer and other metals. Meanwhile, the credit markets will spend 2009 in continued disarray, but could become a driver to domestic demand by 2010.

The investment case for Russia is quite straightforward. So long as the oil price is above $41 per barrel then the fiscal budget balances, the current account is positive and the ruble is stable. Current market valuations discount far worse outcomes, to say nothing of the upside potential from a more broad recovery in commodity markets. While Russia needs badly to diversify its economy and reform its institutions for longer term prosperity, its near-term recovery is far more sensitive to outside factors.

Inevitable spikes

Having endured the crash of 1998, the Pharos investment funds have consistently pursued risk management techniques that reflect the inevitable spikes in volatility common to all emerging markets. Last year, we enjoyed a strong outperformance relative to the indices and our peers. In fact, our long-term performance tells a story of providing about half the market volatility while enjoying nearly all of the upside. Over the past five years, our annualized return has been 10.2% while the market has shown an annualized loss of 7.5%.

We have bought index puts during market rallies while selectively shorting overbought securities. Our gross exposure has tended to be around 110-130%. However, as last year's crisis accelerated, we understood that credit risk had become the bigger concern, as all counterparties had become unreliable. Shrinking the balance sheet became our priority both to contain existing credit exposures, but also to anticipate that leverage could itself become unavailable.

We also reduced our long exposure outright to reflect the increase in market volatility. One of the classic mistakes we witnessed among other investors was the failure to adjust their capital at risk despite a spike in volatility. Old guidelines for capital usage rapidly lose relevance when there is a prolonged increase in volatility, as much less capital becomes required to achieve healthy return targets. We expect volatility to remain at nerve-wracking levels for at least another year, as the market grinds higher from here. For Pharos, this is the ideal environment.

Meanwhile, our growing optimism toward the market comes not only from the improving debt spreads and commodity markets, but also from the unexpected savvy displayed by the Russian government during the crisis. The Putin administration earlier had squirreled away roughly all of Russia's oil price windfall - amounting to about $750bn. Once the true nature of the global crisis became evident, Russia was among the first to announce sweeping plans to backstop its economy. The Central Bank of Russia injected liquidity into the banking system, while guaranteeing the interbank lending market. The fiscal

budget was expanded while taxes were cut.

Most controversially, $200bn was spent controlling the devaluation of the ruble. We believe much of that came as a transfer to the Russian private sector through the forex markets as they adjusted to the weakening ruble. Indeed, the correspondent account of Russian banks increased by about $120bn during this period. Given the troubled history of the ruble, such a strategy has proved highly effective in averting a possible panic that could have undermined the broader financial system.

Challenges

While Russia is not currently facing any major systemic risks, it does have serious challenges to getting its economy back on track. For example, corporate indebtedness to foreign lenders increased dramatically since 2006 creating a legacy of redemptions coming this year and next. So far, the willingness of these lenders to restructure this debt has been a positive catalyst to the markets from these depressed levels. Nevertheless, the debt markets will remain a drag on economic growth for the remainder of the year, and will almost certainly provide some headline-grabbing defaults along the way.

There are other risks that remain as relevant today as ever, such as the increasing role of the state in the economy and the inadequate protection of property rights. However, with the Kremlin's liberal reform team having gained much credibility from its handling of the crisis, Russia may be ready to embark upon a new period of reform. Indeed, every crisis since 1991 has been followed by a period of meaningful reform, which offers us a good reason to be optimistic toward Russia over the longer term.

Western Gray Whales Get a Break From Noisy Oil Developmenthttp://www.ens-newswire.com/ens/apr2009/2009-04-24-02.asp

GENEVA, Switzerland, April 24, 2009 (ENS) - An oil and gas consortium has agreed to suspend this summer's planned seismic testing off Sakhalin Island in the Russian Far East, the only feeding area for the critically endangered Western gray whale.

The decision by Sakhalin Energy, which is developing the Sakhalin II project, followed a recommendation today by an international scientific panel to halt further noisy seismic testing in the whales' feeding area near Piltun Bay on the western edge of the Sea of Okhotsk.

The agreement was reached during a meeting of the Western Gray Whale Advisory Panel today in Geneva.

Convened by the International Union for the Conservation of Nature, the 11-member panel of scientists met this week with representatives of Shell, Sakhalin Energy, Russian

government officials, project lenders and environmental NGOs to review the most recent science on the whales.

The Western gray whale is one of the world’s most endangered whale populations. These whales feed only in the summer at the very time and place used by oil and gas companies to conduct their development activities before severe winter weather again closes in around the northeastern part of the oil-rich Sakhalin shelf.

While Sakhalin Energy has agreed to a moratorium on seismic exploration near Piltun Bay this summer, that does not mean that the feeding ground will be quiet enough for the whales to eat and for mothers to teach their calves to forage near the mouth of the bay.

Other energy companies that have not joined in the panel process are continuing with their noisy development activities.

Said Aleksey Knizhnikov from WWF-Russia, "Major international giants BP and Exxon have completely ignored pleas to join the panel, disregarded advice on how to mitigate the impacts of their activities, and refused to provide even basic information on what their activities are in the region."

ExxonMobil holds 30 interest in the nearby Sakhalin-1 Project with other investors from Russia, Japan and India.

BP holds an interest in nearby Sakhalin V.

In a report issued today based on a multi-year photo record of the whales, the advisory panel identified two main feeding areas in proximity to the Sakhalin-1 and Sakhalin II oil and gas development projects - a nearshore feeding area adjacent to Piltun Bay, and an offshore area, east of Niyskiy Bay. Gray whales utilize these feeding areas during the ice-free season. More recently, western gray whales have also been identified feeding on the southeast coast of the Kamchatka peninsula.

The western Pacific population of gray whale, Esrichtiius robustus, is one of only two surviving populations of this species. Both populations were brought near to extinction by commercial whaling, but the eastern Pacific population, which migrates annually between Mexico and Alaska, has recovered and now numbers about 20,000 animals.

By comparison, the western Pacific population, which is believed to migrate between eastern Russia and China, is estimated at about 130 individuals, with only 25-35 reproductive females.

New research presented by the Western Gray Whale Advisory Panel shows "a significant decline in sightings and behavior changes of the whales in their primary feeding area near Piltun Bay," the scientific panel said.

Oil and gas exploration activities in the area appear to have displaced the whales to deeper areas offshore, making it more difficult for whale calves to feed. Since the Western gray whale only feeds in the summertime, such displacement could be devastating to the struggling whale population.

"WWF lauds the responsible and forward looking approach taken by Sakhalin Energy in heeding this call from the panel," said Knizhnikov. "The results seen today demonstrate that collaborative science based initiatives like this panel process can succeed – even on issues as complex as oil and gas development."

Doug Norlen from Pacific Environment, an international NGO that has monitored Sakhalin oil and gas projects for over a decade, called on BP, Exxon and the Russian state-owned oil company Rosneft to "abandon their reckless plans that threaten the western gray whales with extinction."

"Exxon is conducting acoustically loud pile driving, thrusting huge columns into the ground to build their facility at the exact time and place that the whales should be feeding," Norlen told ENS. "If you scare the Western gray whales off that place, the frightening thing is that they can go a whole year without proper feeding habitat."

"While we got a good outcome for this year from Sakhalin Energy, Exxon, BP and Rosneft are derelict in their responsibility to engage with science and independent scientists," Norlen said. "If there were an international court for environmental crimes, the executives of these companies would be in prison."

ExxonMobil holds 30 interest in the Sakhalin-1 Project, which includes three offshore fields and is one of the largest single foreign direct investments in Russia.

Operated by Exxon Neftegas Limited, the investors in the project include affiliates of Rosneft, RN-Astra (8.5%) and Sakhalinmorneftegas-Shelf (11.5%); the Japanese consortium SODECO (30%); and the Indian state-owned oil company ONGC Videsh Ltd. (20%).

On its website, the Sakhalin-1 Consortium says its support of the gray whale population research program amounted to US$17 million between 1997 and 2007, expanded the knowledge base about the species, and involved prominent Russian and Western whale scientists.

Sakhalin I says the project is "committed to ongoing support of the gray whale research program and continues to work with Russian marine research institutes and the industry to study the population, behavior and habitat use by the whales, as well as characterize the natural environment including ambient sound."

BP is involved in the Sakhalin V project

Norlen called the scientific panel's recommendations "absolutely precedent setting."

"It is precedent setting because," he said, "it means that if other companies such as Exxon, BP and Rosneft do not begin to cooperate with this process and do not abide by the moratorium, they will be complict in driving the Western gray whale closer to extinction."

UPDATE: Sakhalin Energy Halts 09 Seismic To Protect Whaleshttp://money.cnn.com/news/newsfeeds/articles/djf500/200904241241DOWJONESDJONLINE000740_FORTUNE5.htm

April 24, 2009: 12:41 PM ET

(Adds BP comment, background.)

LONDON -(Dow Jones)- Sakhalin Energy, which recently started up a large liquefied natural gas plant in Russia's far east, has canceled all planned 2009 seismic surveys following pressure from environmental groups and scientists seeking to protect the habitat of the Western Gray Whale, the Russian branch of the World Wildlife Fund said in a statement Friday.

WWF Russia called on other companies operating in the area - BP PLC (BP), ExxonMobil Corp. (XOM) and OAO Rosneft (ROSN.RS) - to take similar action.

A BP spokesman said the company's joint venture with Rosneft, called Elvary Neftegas, obeys all guidelines set by the Russian government for operating on Sakhalin Island and is currently engaged in a very low level of activity in the area. ExxonMobil and Sakhalin Energy weren't immediately available to comment.

The decision of Sakhalin Energy, which is a joint venture between OAO Gazprom (GAZP.RS), Royal Dutch Shell PLC (RSDB.LN), Mitsui & Co. Ltd. (8031.TO) and Mitsubishi Corp. (8058.TO), followed new research showing a significant decline in sightings, and behavior changes of the whales in their primary feeding area near Piltun Bay, the statement said.

Oil and gas exploration activities in the area appear to have displaced the whales to deeper areas offshore, making it more difficult for whale calves to feed, the WWF said.

"WWF lauds the responsible and forward looking approach taken by Sakhalin Energy in heeding this call from the panel," said Aleksey Knizhnikov, oil and gas environmental policy officer for WWF-Russia.

Following the sharp decline in the price of oil and gas in the last nine months, energy companies all over the world are conserving cash by cutting back on expenditure on exploration and development, including activities like seismic surveys.

Sakhalin-2, the 9.6 million-tons-a-year LNG plant operated by Sakhalin Energy, was accused of numerous environmental violations during the construction of a large pipeline

across the remote island, but all actions were dropped after Gazprom took over from Shell as operator of the project in 2006.

Company Web site: www.wwf.ru; www.sakhalinenergy.com

-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@ dowjones.com

Sakhalin Energy gives chance to gray whaleshttp://www.russiatoday.ru/Sci_Tech/2009-04-26/Sakhalin_Energy_gives_chance_to_gray_whales.html

26 April, 2009, 16:18

Conservation organizations have won agreement from the Sakhalin Energy consortium to end seismic work in Russian waters, near the only feeding ground of a critically endangered population of gray whales.

The cessation comes in response to independent research demonstrating how oil and gas exploration can alter the behavior of gray whales.

Alarming results

The Western Gray Whale Advisory Panel (WGWAP), set up by the International Union for the Conservation of Nature (IUCN) in 2005, said it was extremely concerned by the results of observations undertaken in 2008, and suggesting that whale distribution and behavior have changed.

The panel has concluded that all activities planned for 2009, including Sakhalin Energy’s seismic survey, should be postponed until the western gray whale population has been fully monitored and assessed.

According to IUCN.ORG, if the monitoring in 2009 reduces the uncertainty and concern over the western gray whale population, the panel may be able to accept a seismic survey in 2010.

The panel said the whale population in this area was affected by the activities of all companies in the region.

Reaction from oil and gas companies

A number of conservation organisations, including the WWF and Pacific Environment, praised the Sakhalin Energy consortium for its decision to abandon underwater seismic work, scheduled to take place off Sakhalin Island in 2009.

"The results seen today demonstrate that collaborative science-based initiatives like this panel process can succeed – even on issues as complex as oil and gas development," the BBC quotes Aleksey Knizhnikov, a WWF-Russia oil and gas programme coordinator.

The only feeding ground of the “critically endangered” western, or Okhotsk-Korean population, is in the Piltun Bay, in the Sea of Okhotsk, along the North-Eastern part of the Sakhalin shelf. Whales – including calves and pregnant females – come there in the summer to feed before the migration period.

Research reveals that the noise from oil and gas exploration has driven the whales into deeper waters, making it hard for their calves to feed and thrive.

The suspension of seismic work by Sakhalin Energy, in particular by Shell and Gazprom, might allow the whales to move in-shore, feed, and breed. However, according to the BBC, a number of other oil and gas firms operating in the region, including BP, Exxon, and Rosneft, are still planning to carry out their seismic work in 2009.

Critically endangered

The gray whale is known to be among the world’s most threatened mammals. It is listed as ‘critically endangered’ in the Red Data Book of Russia, and appears on the IUCN red list of endangered species.

The western population, feeding along the Sakhalin shelf, is near the brink of extinction: it numbers 130 individuals, with only 35 breeding females. Oil and gas exploitation, fishing nets, collision with ships, and occasional whaling by the Japanese, have greatly affected its numbers.

Activity in the Oil and Gas sector (including regulatory)

Oil should rise to $70-80/bbl in 2010: Russian ministerhttp://in.reuters.com/article/businessNews/idINIndia-39248820090425

Sat Apr 25, 2009 9:08pm IST

SOFIA (Reuters) - Oil prices of around $50 a barrel are not high enough to ensure exploration and production but crude prices should rise to $70-80 within 12-18 months, Russian Energy Minister Sergei Shmatko said on Saturday.

"We are interested in a fair price ... The current oil prices does not ensure sufficient funds for continuous oil production, extraction or the implementation of new technologies," he said, when asked by Reuters what price the world's second largest oil producer needed to get for its crude.

"This can bring a significant deficit in hydrocarbon production in coming years," he told reporters at an energy security conference in Bulgaria.

Shmatko said oil prices, which have tumbled during the global economic crisis, should recover.

"$70-80 a barrel is the price we should be expecting in the foreseable future, in about a year or a year and a half," he said. "We have good reason to believe that such a price level will be reached."

Russian oil output stood at 9.8 million barrels a day last month, up 0.5 percent from 9.76 million bpd in March 2008.

GAS CONTRACTS

Shmatko said that although the slump in crude prices from over $147 in July 2008 to around $50 had also slashed the price of gas Russia exports, the world's largest gas producer would stick with oil-linked supply contracts for now.

"In principle we cannot change anything," he said.

"We are holding talks with our partners," he said. "But for the time being Russia's gas prices will continue to reflect the global oil price."

The energy minister said low gas prices were putting state-run Russian gas export monopoly Gazprom, under more pressure than when oil prices were high in 2007-2008.

"But Gazprom's investment programme is sufficiently balanced and Russia does have the capacity to increase gas production by 50-60 bllion cubic metres, so there will be no problem," he said.

Gazprom, which supplies about a quarter of Europe's gas, said earlier this month it expects to produce 492 bcm of gas in 2009, down from around 550 bcm last year, because of shrivelling demand in Europe and at home.

The company's deputy chairman, Alexander Medvedev, said in March that exports were expected to fall to 140 billion cubic metres (bcm) in 2009, down from 179 bcm last year.

New gas tariff growth rates proposed for 2010http://businessneweurope.eu/users/subs.php

Rencap, RussiaMonday, April 27, 2009

Reuters reported on Friday (24 Apr) that the Ministry for Economic Development has proposed a substantial reduction of the 2010 gas tariff growth rates to just 5% for

industrial users and 20.8% for households (vs currently approved rates of 27.7% for industrial users and 30% for households). This change is being proposed as one of the anti-crisis measures, along with reduced tariff growth rates for electricity and railroads. For 2011-12, the ministry is proposing to cap gas tariff growth rates at 10%.

Although the proposed reduction in the headline industrial growth rate seems high, if recalculated on a year-average basis, the 5% growth in year-end tariff still implies a 15.3% average growth YoY in 2010, in line with 2009. Still, we believe these proposals are far from being approved. A slowdown in the domestic tariff growth, along with lower export volumes and prices, may hurt Gazprom's investment plans. Therefore, we believe the government will be very careful when making its 2010 tariff decisions.

Korea, Russia to Push Gas Pipelinehttp://english.chosun.com/site/data/html_dir/2009/04/27/2009042700852.html

President Lee Myung-bak and visiting Russian Foreign Minister Sergei Lavrov on Saturday discussed Korea importing Russian natural gas via gas pipelines running through North Korea. Lee said the project could be of great help to North Korea as well, because it would earn it a huge amount of money.

The two sides last September agreed on imports of Russian natural gas. North Korea stands to earn more than US$100 million per year in fees if it agrees to the project.

Lee urged Lavrov to make efforts to persuade North Korea despite the evident difficulties.

During his recent visit to Pyongyang, he failed to meet North Korean leader Kim Jong-il, a rare case for a Russian foreign minister. Commenting on the North's recent launch of a long-range rocket, Lavrov said Russia did not approve and "tried to dissuade North Korea from launching it." But he warned against harsher sanctions, saying, "We should find a solution rather than respond to the issue emotionally, because North Korea is currently like an isolated fortress."

englishnews@chosun.com / Apr. 27, 2009 12:31 KST

PetroChina to boost storage for Russian oilhttp://www.upstreamonline.com/incoming/article176913.ece

Wire services

PetroChina's largest Daqing oilfield will add eight large crude oil storage tanks by 2010 after having installed two such tanks for offloading Russian oil.

The 10 tanks alone, with planned capacity of 150,000 cubic metres each, will boost Daqing's crude oil storage capacity by nearly 10 million barrels, as China is set to ship in

more Russian oil following the recent oil-for-loan deals between the two countries, Xinhua news agency said in a report over the weekend.

China agreed this month to lend $10 billion to Russian oil pipeline monopoly Transneft and another $15 billion to state-run oil major Rosneft in exchange for supplies via pipeline shipment of 300 million tonnes of Russian oil over 20 years.

The planned pipeline that will be used to transport Russian oil ends at the Daqing oilfield. China currently gets most of its Russian oil supplies via rail.

Oil production at Daqing, China's top oilfield by output, has been on a decline after decades of extraction.

CNPC, parent of PetroChina, hopes for steady production from Daqing while making it an important oil stockpiling base, the Xinhua report said.

Monday, 27 April, 2009, 05:26 GMT  | last updated: Monday, 27 April, 2009, 05:26 GMT

PetroChina to raise storage capacity for Russian oilhttp://uk.reuters.com/article/oilRpt/idUKPEK36462820090427

Mon Apr 27, 2009 4:48am BST

BEIJING, April 27 (Reuters) - PetroChina's (601857.SS: Quote, Profile, Research) (0857.HK: Quote, Profile, Research) largest Daqing oilfield will add eight large crude oil storage tanks by 2010 after having installed two such tanks for offloading Russian oil, the official Xinhua news agency reported.

The 10 tanks alone, with planned capacity of 150,000 cubic metres each, will boost Daqing's crude oil storage capacity by nearly 10 million barrels, as China is set to ship in more Russian oil following the recent oil-for-loan deals between the two countries, Xinhua said in a report over the weekend.

China agreed this month to lend $10 billion to Russian oil pipeline monopoly Transneft and another $15 billion to state-run oil major Rosneft (ROSN.MM: Quote, Profile, Research) in exchange for supplies via pipeline shipment of 300 million tonnes of Russian oil over 20 years.

The planned pipeline that will be used to transport Russian oil ends at the Daqing oilfield. China currently gets most of its Russian oil supplies via rail.

Oil production at Daqing, China's top oilfield by output, has been on a decline after decades of extraction.

CNPC, parent of PetroChina, hopes for steady production from Daqing while making it an important oil stockpiling base, the Xinhua report said.

(Reporting by Jim Bai and Chen Aizhu, Editing by Jacqueline Wong)

Tatneft to post operating loss for 4Q08http://businessneweurope.eu/users/subs.php

Troika, RussiaMonday, April 27, 2009

Tatneft is due to report 4Q08 US GAAP results this week. We expect losses of $298m on the EBITDA line and $351m on the bottom line, on revenues of $2,911m. As a pure upstream oil producer, Tatneft was fully exposed to the 52% Q o Q decline in the oil price, which, accompanied by a slower reduction in export duties, meant that crude oil netbacks dropped by almost 80% Q o Q. The only tailwind was 11% Q o Q ruble depreciation, which should have helped reduce operating costs. Below the operating line, we are pricing in losses of about $100m on marked to market assets (such as a stake in Zenit Bank), balanced somewhat by about $90m in deferred tax gains.

Although the situation has changed completely since 4Q08, we believe that a large loss, especially on the operating line, would be taken negatively by the market. Therefore, this set of results provides downside risk for the shares, in our view.

Modified Izmeron Complexes Help Increase Oil Production in TNK-BP and Rosnefthttp://www.oilandgaseurasia.com/articles/p/97/article/885/

Today artificial lift methods are used on the well stock, which have been producing for several decades. In such wells the production casing is either in need of a full repair or very close to this state.

To prolong the wells’ service life, to reduce repair and insulation costs related to production casing leak elimination, and to increase the oil flow rate, oil may be produced from under a packer installed in a pay zone above the perforation interval. In this case the packer isolates production casing from the produced fluid, starting from the formation and up to the wellhead. However, the following challenges had to be overcome to make this technology work:

small production casing diameters (140-168 mm); lack of a reliable packer, through which the cable could be run from the ESP

below and which also would be convenient for operation during the running-in; gas escape from under the packer; hydraulic shocks from the periodic duty of pumping equipment (operational or

emergency start-ups and shutdowns).

   The NPF Izmeron Plant succeeded in resolving all these problems in March 2008 based on the experience of operation of a wide model and size range of packers installable mechanically or hydraulically for hydraulic fracturing, reservoir pressure maintenance, production casing repair and isolation, and also of manufacturing the first equipment sets for oil production from two intervals with the help of a single string Р the two zones flow production technology.

   The first packer with seals for electric cable from the ESP, which was to be installed below the packer, was manufactured in May 2008 (Patent #77634, issued July 10, 2008). Simultaneously, a bottom-hole assembly was designed to eliminate all problems related to oil production with the application of the above technique. This gave birth to the “Equipment Set for Oil Production from Below the Leak Interval (KDN NN), (Patent #76965, issued June 09, 2008).

The set includes:

a packer with a cable seal; a circulation or impact valve (for well killing and completion); a jet pump for gas evacuation from below the packer (at high GOR); a safety valve (to prevent hydraulic shocks during the ESP start); an electrical centrifugal pump fitted with an electric motor; 

   The equipment set was installed for test in Nizhnevartovsk in September in Well 3805, Cluster 42a, Van-Yogan Field, and it is still being tested. The equipment performance results are amazing.

   The underbalance in the well’s pay interval under the packer resulting from the ESP performance enabled increasing the pay zone permeability and the mobility ratio. Due to these factors, the flow rate also increased. That fact eliminated any doubt about the advantages of the equipment set, although some design elements, which proved to be insufficiently safe or inconvenient for assembly, would have to be modified. The most difficult problem, which had to be resolved, was the packer itself, namely its cable seal. The cable had to be sealed-off in the wellhead and the procedure took too much time Р nearly eight hours. Low ambient temperature made it even more complicated. Also, continuous start-ups and shutdowns of the ESP, which affected the cable seal during hydraulic shocks, had not been not taken into the account.

   In 2008, the efforts resulted in the creation of a packer with a seal, which enclosed three insulated cable cores with operating temperature 230 C and 25 sq.-mm cross-section passing through the packer’s special chambers filled with dielectrical oil. That ensured safe electrical insulation and heat removal from the cable. Borets Plant had manufactured two standard sockets to be used in pumps. Having been installed in the packer, they eliminated the need for the cable seal assembly in the  well. To protect sockets from pressure drops occurring during the packer running-in, oil heating and underbalance below the packer during the ESP operation, a compensation system was used. In addition to the packer, a KDN NN set included a cable extension device ensuring the

compensation of length difference for the cable between the ESP and the packer, as well as the compensation of a length difference for the liner string between the packer and the ESP. All those modifications enabled to run-in the equipment set within 1 hour, including filling of cable seal chambers with oil (application for a patent #2008151387; favorable action for issue of a patent dated January 22, 2009). Currently the first four modified sets have been manufactured: two for the TNK-BP Nizhnevartovsk unit and two for the Rosneft’s Yuganskneftegaz.

   The above reveals that the packer with a cable seal, as well as the entire equipment set, is a complex unit to be operated by the skilled personnel. And so, experts of the plant conduct personnel trainings of the Customer and ensure technological support of the equipment at coach operation phase.

   Yet, its production may be of interest for service companies, which would be able to appreciate both the equipment’s unique design and potential advantages of cooperaВtion with the plant.

TNK-BP consolidates geoscience experience of Tyumen and London Universitieshttp://www.oilandgaseurasia.com/articles/p/97/article/891/

The oil and gas industry maintains stringent requirements for those who wish to be considered “Specialists”. 

Due to this fact, large companies in the Russian market have long made it part of their corporate policy to provide assistance to the country’s leading oil and gas universities. Such investments provide the industry with a pipeline of skilled workers for years to come.

   TNK-BP discovered a new opportunity for tapping the international market, prompting the company to open the Petroleum Geoscience Training Center at the end of October last year. The Center was established as an attempt to combine the professional experience of Tyumen State Oil and Gas University (TSOGU) with that of London’s Royal Holloway University (RHU). What knowledge will the future masters of geology obtain before they join TNK-BP? OGE’s reporter heard this story from the Center’s director Mikhail Dvoynikov.

   Oil&Gas Eurasia: Mikhail, could you tell us how the Petroleum Geoscience Training Center was established?

   Mikhail Dvoynikov: The decision to set up the Center, as well as to develop a fundamentally new training program, was preceded by a number of important resolutions. The most significant was the identification of the disciplines which are crucial for the business success of TNK-BP, the project’s main sponsor. Above all, the program was developed to meet the demand among Russian oil and gas companies for highly trained,

efficient workers, within multi-disciplined teams. These workers would also understand the common purpose of the performed work and the role of each member within a team.

   OGE: Why did TSOGU choose RHU as a partner?

   Dvoynikov: The university selection was a bilateral procedure, which took five years to complete. RHU offers the knowledge and the faculty professionalism that is a best match to TNK-BP’s requirements to employees.

   OGE:  What are the Center’s objectives and tasks today?

   Dvoynikov: Our first objective is to develop the current program, i.e. to increase the number of students while attracting new sponsors. Secondly, we plan to open an “Oil and Gas” school comprised of students from overseas universities. The Oil and Gas school will train the specialists in oil and gas field development and operation, well drilling, etc.

   OGE: Is the Center equipped in compliance with modern requirements?

   Dvoynikov: The Center is equipped with modern equipment. The computer rooms contain workstations with two 22-inch monitors, Roxar RMS, ArcGIS, Petrel, Geoframe, ISOLINE and BASPRO software for processing and interpretation of geological-geophysical data and modeling of oil and gas deposits. The IT-center is equipped with 3D-visualization of oil and gas deposit models. The lecture-rooms contain multimedia equipment and videoconferencing facilities.

   OGE: What are the key steps of training and what kind of practical work is provided?

   Dvoynikov: Upon graduation, the students receive an international certificate and are awarded a master’s degree in geological science. They also receive a TSOGU’s certificate of specialist’s retraining in geology and geophysics. The training is carried out as a one year post-graduate course and comprises six modules, including Tectonics and Lithosphere Dynamics;  Gеophysical Analysis; Structural Analysis; Sedimentology and Stratigraphy; Reservoir Quality Review and Petroleum Systems.The curriculum envisages field practice in the south of the Great Britain (Devon) and the accomplishment of an independent project.

   OGE: How many specialists will graduate each year?

   Dvoynikov: We are planning to bring the number of graduates to 50 before 2013.

   OGE: Do you see aspects of other centers, similar to your’s, that you would like to bring to the Center?

   Dvoynikov: We appreciate the experience of our colleagues from Tomsk Polytechnic University (TPU) that are implementing a joint training program in cooperation with Heriot-Watt University (Edinburgh).

   OGE: What international events are attended by the Center’s students?

   Dvoynikov: Five of our students will take part in the Imperial Barrel Award (IBA), which will take place in Prague, March 27-28, 2009. The IBA Program of AAPG (American Association of Petroleum Geologists) is an annual prospect evaluation competition for geology students. It contributes to AAPG’s mission of promoting geology and geophysics training and advancing the careers of geoscience students.

CEE oil and gas - better up than downhttp://www.businessneweurope.eu/story1564/CEE_oil_and_gas__better_up_than_down

Nicholas Watson in Prague April 27, 2009

With signs of the oil price and emerging European economies stabilising, it might be tempting to plough back into the region's oil and gas stocks. Analysts say that would be jumping the gun a bit, but if you do, better to invest upstream than downstream.

Certainly, Central and Eastern European energy stocks - principally Mol, PKN Orlen, OMV, Lotos Group and PGNiG – took a beating as the oil price plummeted from its high of $147 per barrel hit last summer and the global crisis forced economies into recession, cutting demand for the black stuff. Mol fell 65% from its high, PKN by 56% and PGNiG by 40%.

Beginning in March, however, the sector staged something of a recovery as the oil price recovered to stabilise in the range of $40-50 per barrel. Even so, the various stocks are still trading below their European peers on a price/earnings basis as well as the sector's long-term P/E average of 10 times. "Investors perceive CEE stocks as having high levels of risk and the stock prices were additionally under pressure thanks to the overall sell-off on financial markets," explains Jakub Zidon, an analyst with Erste Group.

While the sector is still experiencing significant headwinds and the beginnings of an economic recovery are far from assured, the cheaply valued stocks and a newfound commitment by the Organization of the Petroleum Exporting Countries (Opec) to continue making production cuts to lift the oil price back toward the $75 mark is being used by some analysts as the basis to recommend a selective return to the sector.

That said, few doubt that the oil price could, in the short run at least, face continued weakness. But a shift from the demand side – the oil consumer lobby the International Energy Association expects oil consumption to fall 1.6m barrels per day (b/d) in 2009 – to the supply side as production becomes increasingly cost-intensive, the massive amounts of capital expenditures required only come through at a fraction of the amount actually needed, and numerous oilfields pass their peak production, inevitably means higher prices in the longer run. "Given the more effective approach by Opec this time, there is a realistic prospect the current average of $43/barrel could be realised for the year

and Brent will end the year at between $50 and $60," says Chris Weafer, head of research at Russian investment bank Uralsib.

Longer term, a price toward $80/barrel is plausible. "The longer the oil price remains at $40 and below, the more rapid and extreme the future shortage will be, because investment and exploration programmes will have been postponed or cancelled at this level," reckons Erste's Zidon.

Up, up and away

Assuming a higher oil price, some of the pressure on the financial performance of the upstream part of the business should diminish. In this regard, the top picks in the sector are Hungary's Mol and Austria's OMV, both of which have significant upstream businesses. "We like Mol because, unlike its Polish peers, it trades at a significant valuation discount to [emerging market] peers, is projected to have a resilient financial performance, has upside risk in consensus, its balance sheet risk is overestimated and has a growth driver from the INA buy," Gergely Varkonyi, an analyst with Deutsche Bank, wrote in a recent report. "We expect Mol to have the most resilient financial performance, thanks among other things to its diversified, high-quality asset base."

Ironically, the risk for Mol comes from its very attractiveness: after OMV tried and failed to take over the firm, it then shockingly decided at the end of March to offload the 21% stake it had built in the Hungarian firm to the murky Russian oil company Surgutneftegas for a hefty €1.4bn. Surgutneftegas is run by Vladimir Bogdanov, who is believed to enjoy a good relationship with Russian Prime Minister Vladimir Putin, but its ownership structure is opaque, with shareholders thought to include senior Russian officials.

Mol management were understandably apoplectic when they learnt of this deal, and have since drawn up a list of proposals to strengthen the company's defences against a hostile takeover, which include requiring shareholders to reveal who their ultimate beneficial owners are, with failure to do so leading to the suspension of voting rights.

Where the troubles are expected to continue for CEE energy firms is in the downstream part of the business – in refining and petrochemicals. "Despite the revised figures on new capacities to be delivered to the market in the coming two to three years and lower cost inputs, the significant drop in demand for both refining and petrochemical products is the main factor behind the expected drop in downstream profitability," says Zidon. "We are, therefore, slightly negative on the CEE downstream segment, but positive on upstream players like OMV and Petrom."

This will particularly affect the Polish refiners, which are already considered to be pretty inefficient. PKN, for example, generated 84% of its cash flow in 2008 from the refining and petrochemical segments.

Concerns are also growing about many refiners' indebtedness. Fitch Ratings recently downgraded PKN, which actually

breached its bank covenants at the end of 2008, to junk status and left them on review for a further downgrade. Lotos is financing a huge modernization plan, which seems very ambitious in the current market environment. "Lotos’ indebtedness is high by any standards, while Mol's leverage is also high, although to us it seems the most manageable of the three," argues DB's Varkonyi.

"Overall, the high leverage of Polish refiners could cause problems for them, while both OMV and Mol reacted to the financial crisis by lowering their capital expenditure. Neither Unipetrol nor Petrom should have problems financing capex, as they have very strong balance sheets," says Zidon.

Gazprom

Sberbank lends Gazprom $3 bln for oil arm buy-backhttp://uk.reuters.com/article/oilRpt/idUKLR42164120090427

Mon Apr 27, 2009 7:57am BST

MOSCOW, April 27 (Reuters) - Russia's top lender, state-run Sberbank (SBER03.MM: Quote, Profile, Research) has provided gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research) with a $3 billion loan to help it buy-back a stake in its oil arm from Italy's Eni (ENI.MI: Quote, Profile, Research), Sberbank said on Monday.

Sberbank said the credit was provided for five years.

Gazprom agreed to buy-back 20 percent in Gazprom Neft (SIBN.MM: Quote, Profile, Research) from Eni in early April for over $4.1 billion and said the deal would be mainly financed by Russian state banks such as Sberbank, VTB (VTBR.MM: Quote, Profile, Research) and government agent VEB. [ID:nL7407475]

(Reporting by Oksana Kobzeva, writing by Dmitry Zhdannikov; editing by Melissa Akin)

Transgaz representatives to attend meeting with Gazpromhttp://businessneweurope.eu/users/subs.php

RZBApril 27, 2009

According to a media release, the minister of Economy and representatives of gas producer Romgaz and gas transporter Transgaz (TGN) will meet on May 20-21 representatives of Gazprom, the only supplier of import gas for Romania. Presumably, Romania's implication in the South Stream project could be discussed. As no details on the agenda of the meeting were made public we view the news as neutral.

Bulgaria President: Gazprom May Not Interfere with Our Sovereigntyhttp://www.novinite.com/view_news.php?id=103091

Energy | April 25, 2009, Saturday

The Bulgarian President Parvanov emphasized Friday that the Russian energy giant must respect Bulgaria's sovereignty.

"I request that Gazprom should not determine with whom they can be keeping in contact in Bulgaria, pretty please. Gazprom has to respect our sovereignty. I am only dealing with the leadership of the Russian Federation and not with some private company", Parvanov said explicitly at the closing press conference of the Sofia Energy Summit when asked about recent Gazprom comments on the arrangements of the South Stream gas pipeline.

Parvanov also explained the position of the Bulgarian side which insisted that the Russians agreed on a package energy deal in which the final agreement on the South Stream gas transit pipeline would be bound to Bulgarian demands for lower natural gas prices.

He reiterated the formal Bulgarian position that a separate South Stream pipe would run along Bulgaria's own gas transit network instead of the latter being used as a permanent part of the Russian-sponsored project.

"Journalists should not just write, they also must read", Bulgaria's President said to the press before reminding that this arrangement had been included in the South Stream agreement signed by him and former Russian President Vladimir Putin in Sofia in January 2008, and had not been changed.

"It's high time that Brussels, the European Commission realized that South Stream must have its place in the European energy system because it involves several EU member states as partners, and is executed by several EU companies", Parvanov also said.

Even though he made it clear Bulgaria was in no rush to sign the final agreement with Russia for South Stream, Parvanov also pointed out the deal would better be signed before the coming Parliamentary Elections in Bulgaria after which a new government will be in place, thus, practically setting the end of May 2009 as a deadline.

He did mention, however, that the South Stream agreement might be signed within a couple of days during Prime Minister Sergey Stanishev's trip to Moscow, even though Stanishev is going to the Russian capital as part of the cultural and economic program of the Year of Bulgaria in Russia, and specifically for energy talks.

At the end, Parvanov stated the status quo provided no energy security for Bulgaria, and that the country's energy security could only be guaranteed through combining a number of sources including South Stream, Nabucco, the inter-system gas connection to Greece, liquefied natural gas terminals, and new storage facilities, among others.

Turkmenistan: The Bell Tolls For Gazprom’s Dominance Of Caspian Energy Market

http://www.eurasianet.org/departments/business/articles/eav042409.shtml

Deirdre Tynan 4/24/09

The outcome of a two-day energy security conference, which concluded April 24 in the Turkmen capital of Ashgabat, has to be considered a disaster for Russia’s energy policy.

The Kremlin-controlled conglomerate Gazprom currently enjoys a near-monopoly of Turkmen natural gas exports. [For background see the Eurasia Insight archive]. But as a dispute between Ashgabat and Moscow over responsibility for an early April pipeline explosion continues to fester, Turkmen leader Gurbanguly Berdymukhamedov used the conference to proclaim Turkmenistan’s energy independence from Russia.

In comments to conference participants, Berdymukhamedov let it be known that Turkmenistan would no longer be cowed into going along with the Kremlin’s energy agenda, and that he was intent on loosening Gazprom’s vice grip on Turkmen energy exports.

"Today we are looking for conditions to diversify energy routes and the inclusion of new countries and regions," Berdymukhamedov said. "Turkmenistan must create a new system of relations with Europe. In the current situation, the diversification of energy routes could help to stabilize the global economy."

To compound Russia’s woes, Berdymukhamedov indicated that if Gazprom wanted to keep doing business with Turkmenistan, then the conglomerate could not expect any discounts. "It’s logical that the country of production determines the price based on the cost of gas production," the Russian newspaper Vremya quoted the Turkmen leader as saying on April 24.

Russia’s energy export agenda is largely predicated on its ability to obtain relatively low-cost gas from Turkmenistan. Without such access, the entire Russian economic edifice erected during the Vladimir Putin era is vulnerable to collapse.

The Ashgabat energy conference seemed to bring Russia’s current vulnerabilities into sharp relief. A high-level Russian delegation in attendance - led by Deputy Prime Minister Igor Sechin, Energy Minister Sergei Shmatko and Gazprom boss Alexei Miller - could only sit in silence as Berdymukhamedov sought to remake the Caspian Basin’s energy order.

According to a report distributed April 24 by the semi-official Turkmenistan.ru news website, Ashgabat will start pressing for a "fundamentally new, universal model for relations in the world energy market" that is based on the "multilateral balance of interests." In other words: Moscow will no longer be able to bully the countries of Central Asia into going along with the Kremlin’s wishes.

Berdymukhamedov’s comments were just what US and European Union officials have long been waiting to hear. A bevy of Western officials and energy executives participated in the conference, mainly to reaffirm their interest in doing deals with Ashgabat.

On April 24, US Deputy Assistant Secretary of State George Krol urged Turkmenistan to diversify its energy export routes. Washington is most interested in securing a Turkmen commitment to export via the long-planned trans-Caspian pipeline route. But in one of the more interesting tidbits to emerge from the conference, Krol indicated that the United States was open to the possibility of Turkmen gas being shipped westward via Iran.

Although the Ashgabat conference was ostensibly designed to mull energy security issues, in practice the gathering turned into a deal-making scrum, in which Turkmen officials and Western energy company representatives explored the parameters of potential ventures.

"The main task of the conference for Turkmenistan [was] to feel the ground for opportunities to supply gas to European partners and feel the readiness of western investors to be present in the Turkmen market," Valery Nesterov, an energy analyst at Moscow-based Troika Dialog, told EurasiaNet.

The coming weeks and months could prove critical for energy cooperation between Turkmenistan and Western companies, suggested Andrei Hrienko, an analyst at the Vector International Institute for Strategic Studies in Moscow. Ashgabat, despite its current posturing, will not make a move until it feels assured that it won’t suffer economically. "A big part of Turkmenistan’s income depends on reliable relations with Gazprom, but if the United States, EU and other countries can significantly compensate any economic loss if Turkmenistan was to stop interacting with Russia, [then Turkmenistan’s] geopolitical direction could change," Hrienko said.

If US and European entities can strike deals with Ashgabat, there may be little that Gazprom can do to stop them from going forward. Due to its recent economic difficulties, Gazprom is experiencing cash-flow problems, meaning the company may not have the financial flexibility to outbid the West for Ashgabat’s energy.

While the situation may appear bleak for Russia at the moment, Nesterov suggested that the Caspian energy game could still take an unexpected turn. Less than a year ago, he noted, Russia’s energy position in Central Asia seemed unassailable. But the onset of the global economic crisis quickly sapped Russia of its economic might. A source of encouragement at this stage for the Kremlin is the fact that Turkmenistan’s alternative Europe-bound gas export options exist only on paper and could take years to construct. Thus, the Kremlin still has time to snatch victory from the jaws of defeat. But Nesterov and other experts agree that it is late in the game for Russia and the clock is ticking.

Gazprom saves on dividends

http://en.rian.ru/analysis/20090424/121301886.html

Vedomosti, RBC Daily

For the first time in years, Russian energy giant Gazprom plans to reduce dividend payments by more than 50%.

Russia's second largest oil producer, LUKoil, plans to increase dividend payments by 19% despite a fall in profits in 2008.

LUKoil plans to pay 50 rubles ($1.48) per share, or a total of 42.5 billion rubles ($1.45 billion), up 19% compared to 2007. Gazprom will pay 1.28 rubles ($0.037) per share, or 30.3 billion rubles ($897 million), down 52% compared to 2007, said a source with inside information.

LUKoil's shareholders will meet on June 25 and Gazprom's on June 26. Both companies are due to close their registers on May 8.

LUKoil's dividends should account for at least 15% of its net profit calculated to US GAAP, $9.14 billion for 2008, nearly 4% less than the year before. According to the exchange rate in late 2008, the recommended dividends should amount to 15.8% of net profit, or $1.45 billion.

Gazprom's dividends, about 17.5%, are based on net profit calculated to Russian Accounting Standards. Unlike LUKoil, Gazprom did exceedingly well last year. The oil company sustained losses in the fourth quarter over a nearly 67% fall in oil prices, while Gazprom's revenue mainly comes from gas supplies to Europe.

Gas prices are linked to oil prices set six to nine months earlier. They were the highest in the fourth quarter, more than $500 per 1,000 cubic meters compared to $390 last summer.

Gazprom's prices for Europe increased by 52% in 2008, to $409, while the price of Urals crude grew merely by 37%, to $94.8 per barrel.

Calculated to RAS, Gazprom sustained losses from the depreciation of its liquid assets. Its net profit fell by 52%, to 173 billion rubles ($5.12 billion), which means that the recommended dividends amount to 17.5%.It is not clear if Gazprom's main shareholder, the government, will approve the recommendation. The press secretary of the prime minister, who instructs state representatives on Gazprom's board how to vote, was not available for comment.

"We will be happy if Gazprom increased dividend payments," said Wulf Bernotat, CEO of German utility E.ON, adding that his company was a minority shareholder and could not influence Gazprom's policies.

Dmitry Lyutyagin, an analyst with the Moscow-based Veles Capital investment firm, said: "Gazprom has always been a skinflint; it has always paid the lowest dividends in terms of percent [of its profit] in the oil and gas sector."

Gazprom's oil arm buys 16.95% of Britain's Sibir Energy http://en.rian.ru/business/20090427/121323071.html

MOSCOW, April 27 (RIA Novosti) - Gazprom Neft, the oil-producing arm of Russian energy giant Gazprom, has acquired 16.95% of Britain's Sibir Energy, which operates in Russia, the British company said on Monday.

Gazprom Neft has acquired 65.503 million ordinary shares of Sibir Energy to consolidate 16.95% of the company's shares, the British firm said.

Sibir Energy's main assets include a stake of almost 50% in the Moscow refinery and also 50% in the Salym Petroleum Development joint venture with Shell.

Gazprom Neft announced on Friday it had bought a minority stake in oil producer Sibir Energy, with the acquisition placing Gazprom's oil arm in control of some 16% of Sibir Energy, with a market value estimated at just 675.5 million British pounds ($992 million).

"Sibir Energy is a promising company with which we have been cooperating in oil processing at the Moscow Refinery," said Alexander Dyukov, Gazprom Neft board chairman.

APRIL 27, 2009, 3:10 A.M. ET

Sibir Energy Confirms Gazprom Neft Bought 17% Stake >SBE.LN http://online.wsj.com/article/BT-CO-20090427-701880.html

MOSCOW (Dow Jones)--London-listed oil firm Sibir Energy PLC (SBE.LN) Monday confirmed Russian oil major OAO Gazprom Neft (SIBN.RS) has acquired 65.5 million shares in the company, representing a 16.95% stake.

Last week, Gazprom Neft, the oil arm of state gas firm OAO Gazprom (GAZP.RS), offered to buy minority shares in Sibir Energy for 500 pence each, triumphing an earlier bid from BP PLC's (BP) Russian joint venture, TNK-BP.

Trading in Sibir Energy shares at London's Alternative Investment Market were suspended in February, pending an investigation into erroneous disclosures relating to controversial real estate dealings with core owner Chalva Tchigirinski.

Sibir operates a large oil field in Siberia with Royal Dutch Shell (RDSA) and owns a 50% stake in the Moscow refinery.

Company Web site: www.sibirenergy.com

-By Jacob Gronholt-Pedersen, Dow Jones Newswires; +7 495 937 8445; jacob.pedersen@dowjones.com