Russia 110315

Basic Political Developments G8 fails to agree on possible armed intervention in Libya Iran, Russia stress launch of Bushehr N-plant in set time RUSSIA IS CONCERNED ABOUT LACK OF BREAKTHROUGH IN ISSUE

OF GUARANTEES THAT U.S.-NATO MISSILE DEFENSE SYSTEM DOESN'T TARGET RUSSIAN NUCLEAR FORCES – RYABKOV

Russia concerned about Euro ABM system in Europe Air defense systems capable of fighting ballistic missiles will be provided to

Russian army - Defense Ministry Russia prepared for dialog on peace treaty with Japan – Lavrov

o Embassy helping Russians leave area near Fukushima NPP (Part 2)o UDPATE 1-Radiation level rises slightly in Russia's Far Easto Geiger counter sales soar in Far Easto Radiation level remains at normal level in Kamchatkao No rise in radiation levels registered in Far East – Roshydrometo Hourly radiation monitoring introduced in Khabarovsk Kraio Russia rescuers start work in Japan emergency zoneo Russian rescuers start search efforts in disaster-stricken Sendaio Russian rescuers search for survivors, bodies in Sendai o Russian helicopter brings 25 rescuers from Far East to Japano Japan no Chernobyl says top Russian scientisto Russian fishing companies in search of buyers as Japanese firms withdraw o Mechel, Evraz stand to benefit from increased Japanese demand for coal,

steel - Nomura Uranium futures have fallen by 8% - negative for Russian names N.Korea ready to renew six-party nuke talks without 'preliminary conditions'

o N Korea ready to discuss RF proposals if 6-way talks resumeo N. Korea not opposed to discussing uranium enrichment in six-party talks

N. Korea ready to discuss uranium programme Russia, U.S. make joint intelligence flight over Sweden Russia thanks Malta for evacuation assistance Deadlock slowing ties: Russian ambassador - BEIRUT: Russia is awaiting the

stabilization of the political situation in Lebanon, seeing it as a prerequisite of intensifying promised cooperation, Russian Ambassador to Lebanon Alexander Zasypkin said Monday.

Turkish prime minister to arrive in Moscow for talkso Russia, Turkey to take final step in visa-free regimeo Gas and Nuclear Plant Top Agenda of Turkish Premier

PMs of Russia, Belarus and Kazakhstan to meet in Minsk Azerbaijan, Russian brain centers sign memo of cooperation Kyrgyzstan: Moscow, Riled over Nationalization, Fires Shot Across Bishkek’s

Bow Bilateral military cooperation plan signed between Serbia and Russia

Russian-Norwegian agreement on delimitation in the Barents Sea for discussion in Russia`s Parliament

Medvedev approves instructions on state employment policy Medvedev makes personnel reshuffles in Fed Drug Control Service 7 policemen wounded in Dagestan Policeman wounded in attack on police department in Dagestan Power of the explosion of ATS Kizilyurt was 20 kg of TNT NASA buys 12 seats aboard ISS-bound Russian spacecraft

o Russian Rocket Ride: $63 Million Per US Astronaut Prosecutors will probe illegal casinos - Prosecutor General's Office Activists demand “prisoner of conscience” status for Mikhail Khodorkovsky Reuters PRESS DIGEST - Russia - Mar 16 RIA Russian Press at a Glance, Tuesday, March 15, 2011 Authorities Play Down Consecutive Explosions Near FSB Headquarters in

Moscow A Green Revolution - Green Technologies in Russia Are Developing Thanks to

Its Middle Class, While State Policy Remains Focused on Raw Material Exports

National Economic Trends Finance and economic development ministers comment on the economic situation Russia unlikely to return to deficit-ridden grain market before winter - analysts Russia's croplands are being irrigated with the tears of farmers

Business, Energy or Environmental regulations or discussions Russian resource plays are soaring Raspadskaya Falls After Ruling It Broke Russian Anti-Trust Laws Norilsk Nickel buys 100% stake of Nordavia airlines from Aeroflot. The purchase

of the Northern air carrier is estimated at $230 mln. Inter RAO UES back in the black in 2010 Domestic steel prices rise in March Russia's Polyus Gold $509 mln deal with Assaubayev family hit by financial

problems Polyus Gold: Payment not received for KazakhGold mines Sistema's India unit sees tripling customer base by 2013: CEO Standard Bank lost in Russia after trading in Troika stake?

Activity in the Oil and Gas sector (including regulatory) Russia May Raise Export Tax 16% to Highest Since September 2008 Novatek's Mikhelson, Timchenko To Execute Gazprombank Option Total To Buy Entire 19.4% Novatek Stake From Mikhelson, Timchenko Novatek in Yamal LNG buy Slavneft Increases Oil and Gas Reserves Calculated Under SEC Criteria BP May Find Russian Solution Expensive - The assumption seems to have been

that oligarch-backed Alfa Access Renova, with 50% of TNK-BP, would simply roll over in the face of Kremlin support for BP's $16 billion share swap with the state-owned Rosneft.

Rosneft asking for extension to Vankor tax breaks

State mulling tax preferences for Tatneft and Bashneft

Gazprom Italy’s Eni aims to sell Česká rafinérská stake to Gazprom Gazprom and the Rule of EU Law - Europe should hold its ground against

Russia's ex-imperial arrogance. Gazprom: The Call on Russian Gas

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Full Text Articles

Basic Political Developments

G8 fails to agree on possible armed intervention in Libya

http://www.itar-tass.com/eng/level2.html?NewsID=16045531

15.03.2011, 11.46

PARIS, March 15 (Itar-Tass) - The countries, integrated in Group Eight (G8), have failed so far to reach agreement on a possible armed intervention in the developments in Libya, French Foreign Minister Alain Juppe said on Tuesday.

He admitted that he had failed to convince his partners by negotiations of the need for starting a combat operation against Libyan Jamahiriya.

Iran, Russia stress launch of Bushehr N-plant in set timehttp://www.isna.ir/ISNA/NewsView.aspx?ID=News-1735139&Lang=E

ISNA - Tehran Service: Foreign Policy

TEHRAN (ISNA)-Iranian and Russian presidents stressed launch of Iranian Bushehr power plant in set time.

Iranian President Mahmoud Ahmadinejad and his Russian counterpart Dmitry Medvedev in a phone call pointed to the significance and importance of expansion of mutual ties and operation of Bushehr power plant in a predetermined time.

"The Islamic Republic of Iran hails expansion of bilateral ties in all domains. There are many fields to be worked on mutually. Launch of Bushehr plant in set time serves interests of the two countries." Ahmadinejad said.

Medvedev on his part highlighted mutual relations and said his country is firm to run the nuclear facility in the predetermined time.

End Item

03/15 10:45   RUSSIA IS CONCERNED ABOUT LACK OF BREAKTHROUGH IN ISSUE OF GUARANTEES THAT U.S.-NATO MISSILE DEFENSE SYSTEM DOESN'T TARGET RUSSIAN NUCLEAR FORCES – RYABKOVhttp://www.interfax.com/

Russia concerned about Euro ABM system in Europe http://english.ruvr.ru/2011/03/15/47428443.html

Mar 15, 2011 12:30 Moscow TimeRussia is concerned about the lack of progress as regards guarantees that the US-NATO ABM system is not aimed at Russian nuclear arsenals. This came in a statement for the Interfax news agency today by Deputy Russian Foreign Minister Sergei Ryabkov. Washington’s stand on the issue remains intact, Ryabkov said in a comment on pronouncements by US Vice-Presidents Joe Biden on setting up a unified European ABM during his recent visit to Moscow. The main differences have failed to be thrashed out, so we continue making efforts to settle them, he said.    

12:08Air defense systems capable of fighting ballistic missiles will be provided to Russian army - Defense Ministryhttp://www.interfax.com/news.asp

03/15 12:18   Russia prepared for dialog on peace treaty with Japan – Lavrovhttp://www.interfax.com/

March 15, 2011 12:12

Embassy helping Russians leave area near Fukushima NPP (Part 2)http://www.interfax.com/newsinf.asp?id=228697

MOSCOW/TOKYO. March 15 (Interfax) - The Russian Embassy in Tokyo is helping Russian citizens leave the danger zone near the quake-stricken Fukushima nuclear power plant in Japan.

"We are doing everything in our power to assist Russian citizens, primarily those stranded in the area located near the nuclear power plant. Employees of the embassy's consular department are working there to help Russian citizens leave the zone that is really harmful to human health and life," embassy spokesman Sergei Yasenev told Interfax.

The website of the Russian Embassy in Japan also offers recommendations due to the situation at the Fukushima nuclear power plant.

UDPATE 1-Radiation level rises slightly in Russia's Far Easthttp://www.reuters.com/article/2011/03/15/japan-quake-russia-idUSLDE72E0A020110315

3:47am EDT

(Adds military evacuation, details)

VLADIVOSTOK, Russia, March 15 (Reuters) - Radiation levels rose slightly in Russia's Far East on Tuesday but stayed within normal levels, officials said, as Japan struggled to cope with the worst nuclear accident since the 1986 Chernobyl disaster.

Radiation in Vladivostok, some 800 km (500 miles) northwest of Japan's Fukushima nuclear plant, were 1 microroentgen per hour higher at 0400 GMT than six hours previously, the regional interior ministry said.

Russia's military said it was on alert to evacuate people if required from Russia's Sakhalin island and the Southern Kuril island chain which is at the heart of a territorial dispute with Japan, Interfax news agency reported.

Called the Northern Territories by Japan, they are inhabited by Russians and one of the islands, Tanfilyeva, is a mere 6 km (4 miles) from Japan's coast.

Japan warned radiation levels had become "significantly" higher around a quake-stricken nuclear power plant after explosions at two reactors.

Japanese Prime Minister Naoto Kan urged people within 30 km (18 miles) of the facility north of Tokyo to remain indoors and conserve power, underscoring the dramatic escalation of Japan's nuclear crisis, the world's most serious since the Chernobyl disaster in Soviet Ukraine in 1986. (Writing by Amie Ferris-Rotman, editing by Guy Faulconbridge)

Geiger counter sales soar in Far Easthttp://themoscownews.com/international/20110315/188494653.html?referfrommn

by Andy Potts at 15/03/2011 12:07

 

Anxious residents of Russia’s Far East are rushing to buy Geiger counters as they wait for the impact of Japan’s nuclear crisis.

Despite official reassurances that Russia does not face an imminent threat of radioactive contamination following the leaks from the Fukushima-1 plant, many residents are keen to get their own information.

And in Petropavlovsk-Kamchatsky, the largest town on the remote Kamchatka peninsula, staff at the “Medtekhnika” chain said Geiger counters and badge-style dosimeters had been flying off the shelves.

After selling all their existing stock, new arrivals were also going fast, a source told Interfax: “Half the new batch has gone before they even appeared in store: people are pre-ordering devices for themselves.”

The dosimeters, which can be worn like a badge, cost 5,300 roubles ($185). “People are willing to spend so much money to ensure that they and their loved ones are not threatened by radiation,” the salesperson added.

 

No background radiation rise

Authorities in Kamchatka said that they were monitoring radiation levels and regular checks showed nothing untoward.

Emergency services staff said that the rate at 2 am Moscow time (10 am local time) on Tuesday was 11 micro-roentgen per hour, Interfax reported.

Similar numbers were reported by other regions, including Sakhalin, Khabarovsk and Primorye.

But many remain sceptical of official data: on Sakhalin, where dosimeters were not readily available, a flurry of online orders was recorded.

Meanwhile subscribers to a local web forum have been warned against scaremongering and spreading rumours, with moderators saying anecdotal reports and unverified claims will be removed and the people posted them barred from accessing the site.

Meanwhile, although many residents are nervously dissecting each scrap of information coming from Japan, one of Tuesday morning’s other prominent threads was discussing the highlights of Spartak’s shock 4-0 football defeat in Rostov.

 

Army on standby

As fears grow that a disastrous explosion could destroy one or more of the reactors at Fukushima-1, RIA Novosti reported that the military is preparing to evacuate the Kurils and Sakhalin if the situation gets worse.

Officers in the Eastern Military District believe it is perfectly feasible to get the population – close to 600,000 people in total – off the islands quickly in the event of a serious rise in radiation levels.

Meanwhile there is increased seismic activity off the Kamchatka coast, although experts are not linking this with the tremors which have rocked Japan in recent days.

The epicentre of the quake, which struck just before midnight, Moscow time, was 280 km south of Petropavlovsk, Itar-Tass reported.

There are no reports of damage caused by the tremor, which measured 4.6 on the Richter Scale, and no tsunami warning was issued.

But Viktor Chebrov, of the Kamchatka branch of the Russian Geophysical Service, warned of bigger earthquakes to come.

Within the next year he warned of a possibly 7.0-scale quake, and gave a 50-50 chance of a 7.5 magnitude event in the next five years.

Radiation level remains at normal level in Kamchatka

http://www.itar-tass.com/eng/level2.html?NewsID=16045383&PageNum=0

15.03.2011, 11.18

PETROPAVLOVSK-KAMCHATSKY, March 15 (Itar-Tass) -- The radiation level remains at the normal level in Kamchatka. According to the latest reports, the radiation level makes from seven to nine micro-roentgens/hr with the normal level at 14-15 micro-roentgens, a source in the EMERCOM department in the Kamchatka Territory told Itar-Tass on Tuesday.

The environmental monitoring was tightened on the peninsula over a breakdown and the blasts at the Fukushima-1 nuclear power plant in Japan. The radiation level was not exceeded in Kamchatka since March 11, the source said.

The Kamchatka weather forecasting service reported that the air masses from the Japanese coast had not reached the peninsula yet. The air masses are moving eastwards in the Pacific and the weather situation will not change within the next two days, the Kamchatka weather forecasting service told Itar-Tass.

“Nothing threatens the local residents in case of an unpredicted situation in Japan,” the chief of the EMERCOM department in the Kamchatka Territory Anatoly Plevako said earlier.

March 15, 2011 10:21

No rise in radiation levels registered in Far East – Roshydromethttp://www.interfax.com/newsinf.asp?id=228654

MOSCOW. March 15 (Interfax) - Higher than allowed radiation levels have not been registered in Russia's Far East following a new explosion at a quake-damaged nuclear power plant in Japan, a spokesman for the Russian Federal Hydrometeorology and Environmental Monitoring (Roshydromet) told Interfax on Tuesday.

"Seventy-one stations are operating in the Far East, where stepped up round-the-clock monitoring of background radiation levels is under way due to the events in Japan," he said.

Specialists from Roshydromet are working in close cooperation with teams of the Emergency Situations Ministry, as well as military units deployed in the region, he said.

"So far no increase in radiation levels has been registered in Primorye, Kamchatka and the Far East as a whole," he said.

Hourly radiation monitoring introduced in Khabarovsk Krai

http://www.itar-tass.com/eng/level2.html?NewsID=16044671&PageNum=0

15.03.2011, 08.03

KHABAROVSK, March 15 (Itar-Tass) - The regime of hourly radiation monitoring was introduced in the Khabarovsk Territory on Tuesday on the recommendation of the territorial commission for the prevention of and response to emergencies, the Russian Emergency Situations Ministry’s (EMERCOM) main department for the Khabarovsk Territory told Itar-Tass. Prior to that, the radiation level was measured every three hours.

According to the emergencies department, “The situation is normal, there is no threat to people’s health.” “Readings indicate that as of March 15 the radiation background in different zones of the region is from 8 to 15 micro-roentgen per hour with the norm 25 micro-roentgen.”

According to updated information of the Far Eastern department of the hydrometeorology service, easterly winds will persist in the coming days in the emergency zone in Japan, so the air masses will move emissions from the emergency nuclear power plants into the Pacific Ocean.

The gamma radiation level is permanently reported through the media. Russian Emergency Situations Ministry’s main department for the Khabarovsk Territory opened a round-the-clock telephone hotline for informing the public: 8 (4212) 90-42-42, calling which the population can learn about changes in the radiation background and situation in the territory.

Russia rescuers start work in Japan emergency zone

http://www.itar-tass.com/eng/level2.html?NewsID=16044713&PageNum=0

15.03.2011, 08.32

MOSCOW, March 15 (Itar-Tass) - Russia’s rescuers have begun to work in the quake-hit emergency zone in Japan, RF Emergency Situations Ministry’s spokeswoman Irina Andrianova told Itar-Tass.

“A combined unit of Russian rescuers has deployed a base camp near Sendai, 4 kilometres north of the city boundary. The specialists have started reconnaissance,” she said.

A meeting of the emergency response headquarters with representatives of the local police and authorities is currently underway, which will determine the exact location of the search and rescue operations.

March 15, 2011 09:04

Russian rescuers start search efforts in disaster-stricken Sendaihttp://www.interfax.com/newsinf.asp?id=228642

MOSCOW. March 15 (Interfax) - Rescuers of the Russian Emergency Situations Ministry have joined the rescue effort in the quake-stricken region of Japan, the ministry's spokeswoman Irina Andrianova announced on Tuesday.

"A combined Russian rescue team has deployed a camp outside Sendai, 4 kilometers north of the city limits," she said.

The rescue team is currently meeting with local police and government officials to define the area of search and rescue operations, she said

Reports said earlier that the first team of Russian rescuers has arrived in the epicenter of the disaster, Sendai, in the northeastern part of Honshu, Japan, hit the hardest by a series of powerful earthquakes and a tsunami wave.

The group leader, deputy director of the Emergency Situations Ministry's fire fighting and rescue force Andrei Legoshin, said on Monday that the rescue team had covered 500 kilometers from Tokyo to Sendai and were deploying a camp in the northern sector of the city at an international rescue camp near the stadium.

The group of 54 rescuers have three rescue vehicles at their disposal, as well as rescue equipment, hydraulic tools and all they need to work autonomously for two weeks in the disaster area - inflatable modules, diesel generators, food, fresh water, medicines and communication means, he said.

Sd

Russian rescuers search for survivors, bodies in Sendaihttp://en.rian.ru/world/20110315/163011101.html

Russian rescuers are searching for survivors and bodies in the Japanese city of Sendai, most damaged by an earthquake and tsunami that hit the country last week, the head of the rescue group, Andrei Legoshin, said on Monday.

"The search is ongoing, there are some difficulties there," Legoshin said adding that centralized meetings are also ongoing.

Russian rescuers are working in the area near the city's airport, as Japanese authorities defined, Legoshin said.

An 9.0-magnitude earthquake and ensuing tsunami hit Japan on Friday, claiming thousands of lives. A series of blasts that ripped through the Fukushima Nuclear Power Plant have raised fears of a nuclear disaster.

Earlier it was reported the earthquake registered 8.9 on the Richter Scale, however on Tuesday the U.S. Geological Survey Service upgraded its intensity.

Japanese police said Tuesday that over 6,000 people are dead or missing after the disaster.

There are currently 79 Russian rescuers, who have brought rescue vehicles and other equipment.

Legoshin earlier said he hoped the group would be able to find people trapped under the rubble, adding that the next "4-5 days" were critical.

MOSCOW, March 15 (RIA Novosti)

Russian helicopter brings 25 rescuers from Far East to Japan

http://www.itar-tass.com/eng/level2.html?NewsID=16044310&PageNum=0

15.03.2011, 04.55

MOSCOW, March 15 (Itar-Tass) - A helicopter of the Russian Ministry for Emergency Situations has brought rescuers to the quake-stricken Japan, a source at the Ministry’s press service told Itar-Tass.

He said that a Mi-26 helicopter had arrived in the city of Fukushima with 25 rescuers as well as rescue equipment and an emergency vehicle on board.

Fifty Russian rescuers from the Tsentrospas detachment of the Russian Ministry for Emergency Situations have earlier arrived in Japan. They are expected to work near the city of Sendai, which was worst hit by the disaster.

Andrei Legoshin, the head of the Ministry for Emergency Situations operational group and the deputy head of the Department of fire-fighting and rescue forces of the Russian Ministry for Emergency Situations, said that the Russian rescuers would have three rescue vehicles, search equipment, hydraulic instruments, instruments for breaking through concrete and other tools – inflatable modules, generators and means of communication – necessary for autonomous work for two weeks.

Besides, the Russian Ministry for Emergency Situations is planning to dispatch another three rescue teams to Japan. They include approximately 50 experts from the Centre for high-risk operation known as the Leader, 25 employees of the Siberian regional centre and another 25 rescuer from the Russia Far Est.

A total of 180 Russian rescuers will be working in Japan in the near future.

Japan no Chernobyl says top Russian scientisthttp://www.abc.net.au/am/content/2011/s3164026.htm

Norman Hermant reported this story on Tuesday, March 15, 2011 08:12:00

TONY EASTLEY: Russian scientists who experienced the world's worst nuclear accident say what's happening now in Japan does not approach the seriousness of what occurred at Chernobyl.

Moscow correspondent Norman Hermant reports.

NORMAN HERMANT: The world is watching Japan's nuclear nightmare and with images of huge blasts rocking its troubled nuclear power plant in Fukushima, it's no wonder many have been quick to compare the events there with those in Chernobyl 25 years ago, when an explosion in a Soviet reactor sparked the worst ever civilian nuclear accident.

The events seem similar but according to Russia's leading atomic scientists, they're not.

Professor Leonid Bolshov is with the Nuclear Safety Institute of the Russian Academy of Sciences.

When you hear these comparisons to Chernobyl, what do you think about?

LEONID BOLSHOV: I think it's misinformation. The knowledge of reactor design even, general features is something that is very limited.

NORMAN HERMANT: In fact, when it comes to reactor design and safety systems, Fukushima and Chernobyl aren't even close. The Chernobyl reactor had no containment structure, just a thick concrete layer over the top of the fuel rods.

When the reactor exploded, highly radioactive fuel was released directly into the atmosphere.

The Japanese reactors are housed in pressure vessel tanks that are then encased in a reinforced containment structure. It's designed to stay intact even if the fuel begins to melt - a so-called meltdown.

All of that, in turn, is housed in a secondary containment building. Those were the structures destroyed when steam vented from the reactors caused hydrogen explosions.

Some 200,000 people have been moved away from the plant as a precaution.

That is another big difference from Chernobyl. In 1986, the evacuation of the nearby

town of Pripyat didn't even start for a day and half after the blast.

For those such as Sergey Zaitsev, their lives would never be the same. He was sent to work at Chernobyl a month after the accident. He's suffered the health effects ever since.

(Sergey Zaitsev speaking)

"No one at that time understood how serious it was", he says. "They even told us what happened there but no one actually understood what it was".

That's far from the case now in Japan, where the risks of this nuclear crisis are all too clear.

This is Norman Hermant in Moscow reporting for AM.

Russian fishing companies in search of buyers as Japanese firms withdrawhttp://en.rian.ru/russia/20110315/163012242.html

11:24 15/03/2011

Fishing enterprises in Russia's Far East are in frantic search of new customers as most of their Japanese partners cancelled orders following a devastating earthquake.

Mikhail Kotov, who heads the major Far Eastern fishing enterprise Morskoi Volk, said "all [trade] ties with Japan, our largest fish buyer, have been suspended at the moment."

"[Our] Japanese partners informed us that they have to cut imports significantly after the devastating earthquake. We used to supply up to 70% of our products to Japan," he said.

"We can only hope that China and [South] Korea will buy our products. We also expect to sell our fish to the United States," Kotov added.

A devastating 9.0-magnitude earthquake and tsunami have killed nearly 6,000 people and left thousands missing in Japan.

MAGADAN, March 15 (RIA Novosti)

11:18Mechel, Evraz stand to benefit from increased Japanese demand for coal, steel - Nomura

http://www.interfax.com/news.asp

Uranium futures have fallen by 8% - negative for Russian names

http://www.bne.eu/dispatch_text14468

MetropolMarch 15, 2011

Five month natural uranium futures fell by 8.1% to USD 62 per lb on concerns of a meltdown at the Fukushima nuclear plant in Japan following last Friday's major earthquake. Nine month futures declined by 8.4% to USD 62.50 per lb. Futures prices are at the lowest level since December 2010.

Countries call for reviews of atomic energy programs The earthquake and devastating tsunami that struck the Fukushima plant have prompted officials in many countries to call for reviews of their atomic energy programs. In particular, China and India, which have the most nuclear plants under construction, have called for reviews of their programs. In Europe, Chancellor Angela Merkel put plans to extend the life of Germany's reactors on hold for three months. The British government ordered a review of nuclear safety, while Switzerland halted plans for new reactors.

Pressure on Russian nuclear industry names This news is negative for Russian nuclear sector stocks, both uranium miner Priargunsk Plant and fuel assembly manufacturers Novosibirsk Chemical Concentrates Plant and Mashinostroitelny Zavod. China and India's reviews of their atomic energy programs could negatively influence production outlooks for Russian companies while a prolonged decline in natural uranium futures prices could negatively influence the long-term contract price for ARMZ Holding, which sells natural uranium for export. Although atomic energy programs are actually essential for the world's long-term energy generation, we believe that the current nuclear reactor crisis could have a negative impact both short-term and over the longer horizon.

Andrey Rozhkov

N.Korea ready to renew six-party nuke talks without 'preliminary conditions'http://en.rian.ru/world/20110315/163010319.html09:12 15/03/2011

North Korea is prepared to renew six-party talks on its nuclear program without any "preliminary conditions," South Korea's Yonhap news agency reported on Tuesday.

A representative from North Korea met with Russian Deputy Foreign Minister Alexei Borodavkin in Pyongyang and said that if such a meeting were to be held, then the North would count on a "principle of reciprocal actions."

The Russian Foreign Ministry said in a statement on Monday that North Korea should return to nuclear negotiations and allow the International Atomic Energy Agency (IAEA) access to the country's nuclear facilities.

In order for the resumption of negotiations, North Korea should take constructive steps: "announce its readiness to return to the six-party talks without preliminary conditions based on the joint statement by China, North Korea, Russia, South Korea, the United States and Japan from September 19, 2005, impose a moratorium on production and testing of nuclear weapons, and on launches of rockets with ballistic technologies, agree on the inspection by IAEA experts of facilities for enriching uranium and on the inclusion of North Korea's uranium dossier into the agenda of talks, invite IAEA inspectors to the nuclear center," the ministry said.

North Korea has been subjected to several rounds of UN Security Council sanctions since it declared itself a nuclear power in 2005. The state broke off talks with South Korea, China, the United States, Japan and Russia on its nuclear program in April 2009, after the United Nations Security Council passed a resolution condemning its missile tests.

MOSCOW, March 15 (RIA Novosti)

N Korea ready to discuss RF proposals if 6-way talks resume

http://www.itar-tass.com/eng/level2.html?NewsID=16044735&PageNum=0

15.03.2011, 08.36

PYONGYANG, March 15 (Itar-Tass) - North Korea ready to discuss at the six-party talks, if they are resumed, Russia’s proposals in accordance with the joint statement of September 19, 2005 and “on the basis of interaction principle,” an official of the country’s Foreign Ministry said here on Tuesday, commenting on the outcome of negotiations with Russian Deputy Foreign Minister Alexei Borodavkin who was in Pyongyang on a visit.

Among these proposals there is a moratorium on the production and testing of ballistic technology, consent to inspection of North Korea’s uranium enrichment facility by IAEA experts and putting the “uranium dossier” of the country on the agenda of the talks.

The Russian diplomat told Itar-Tass before flying to Moscow that “the invitation for IAEA inspectors to return to the nuclear centre in Yongbyon” could become a positive step of North Korea.

The six-party talks were suspended in December 2008.

(2nd LD) N. Korea not opposed to discussing uranium enrichment in six-party talks 2011/03/15 15:46 KSThttp://english.yonhapnews.co.kr/northkorea/2011/03/15/93/0401000000AEN20110315006100315F.HTML

By Sam KimSEOUL, March 15 (Yonhap) -- North Korea said Tuesday it told a visiting top Russian diplomat that Pyongyang does not oppose discussing its uranium enrichment activity in the stalled six-party nuclear talks once they resume.

   The comments by an unidentified North Korean foreign ministry spokesperson improve the prospect for the resumption of the denuclearization-for-aid talks that were last held in late 2008.

   North Korea told Russian Deputy Foreign Minister Alexei Borodavkin that Pyongyang was ready to rejoin the talks "without any precondition" and hopes to work "on the principle of simultaneous action," its official Korean Central News Agency (KCNA) said.

   In November last year, North Korea unveiled a uranium enrichment plant that could be used to make nuclear arms apart from its plutonium program. Pyongyang claims it only seeks to generate electricity.

   South Korea and the U.S. have said they will seek a U.N. Security Council presidential statement to condemn the move before resuming the talks also involving the North, China, Japan and Russia.

   China, North Korea's top communist ally, wants the uranium issue to be dealt with in the six-party talks. Russia, another key player in the talks, has been openly critical of North Korea's uranium enrichment activity.

   The KCNA said Borodavkin insisted that the North "take constructive measures" such as a halt in nuclear and missile tests, allowing visits by monitors to a nuclear plant and the discussion of uranium enrichment within the framework of six-party talks.

   North Korea "expressed its stand that it can go out to the six-party talks without any precondition, it is not opposed to the discussion of the above-said issue at the six-party talks," the KCNA said, quoting an unidentified North Korean foreign ministry spokesperson.

   Borodavkin, Russia's top envoy to the six-party talks, visited North Korea for four days

ending on Monday, according to the KCNA.

   During his visit, Russia suggested the two Koreas could work with Moscow to link railways, gas pipelines and power lines among the three countries, saying that such an economic cooperation project could help ease tension on the Korean Peninsula, the KCNA said.

   The North "expressed support for the projects of the Russian side for tripartite economic cooperation and manifested its willingness to positively examine the proposal," the KCNA said.

   The project, if pushed for, would fall in line with South Korean President Lee Myung-bak's election campaign pledge to link the three countries and boost energy and other economic cooperation.

   South Korea's foreign ministry said Tuesday that its deputy nuclear envoy Cho Hyun-dong has left for Moscow to meet with Borodavkin to discuss the North Korean issue.

   The relations between the two Koreas are at the worst point in at least a decade after the North bombarded a South Korean island last year, killing four people. No high-level negotiations have been held between the sides since Lee came to power in 2008 with a pledge to push the North to end its nuclear arms programs.

   North Korea bolted from the six-party talks in 2009 when it drew world condemnation for its long-range rocket launch, seen as a missile test in essence. The country has since shown a willingness to return to the talks, pledging to work toward denuclearization.

   South Korea, Japan and the U.S. demand the North first show through action its guarantee that it will not relapse into provocative behavior or resume nuclear arms development.

   In an earlier KCNA report Tuesday, an unnamed North Korean representative to the disarmament talks in Switzerland said last week that his "nuclear-armed" country would work toward denuclearization only if nuclear threats against it are irreversibly removed.

   "We believe it is an urgent priority to produce an international legal apparatus that thoroughly bans the use and threat of nuclear arms," the envoy was quoted as saying, adding that Pyongyang maintains the right to the peaceful use of nuclear energy.

   North Korea has long claimed that it has no choice but to develop nuclear arms because of persisting threats of a nuclear invasion by the U.S, which has 28,500 troops stationed in South Korea.

   The two sides remain technically at war with each other after the 1950-53 Korean War ended in a truce.

   Analysts believe the North is increasingly pressured into making concessions as its food shortages deepen. They say North Korea also needs to improve its relations with the outside world in an effort to create a setting favorable to its hereditary power succession.

   samkim@yna.co.kr

N. Korea ready to discuss uranium programmehttp://www.channelnewsasia.com/stories/afp_asiapacific/view/1116578/1/.html

Posted: 15 March 2011 1354 hrsSEOUL: North Korea has told a Russian envoy that it is willing to discuss its uranium enrichment programme and a suspension of nuclear tests if six-party disarmament talks resume, state media said Tuesday.

"(North Korea) expressed its stand that it can go out to the six-party talks without any precondition," Pyongyang's foreign ministry said in a statement published by the official Korean Central News Agency (KCNA).

The move adds momentum to diplomatic efforts to defuse tensions on the Korean peninsula, which soared with the North's shelling of a frontier island in November that killed four South Koreans and sparked brief fears of war.

At talks last weekend with Russian Deputy Foreign Minister Alexei Borodavkin, the North said it would not oppose talks on the uranium enrichment programme at the six-party forum, a ministry spokesman was quoted as saying.

Russia called for "constructive" measures from Pyongyang including a moratorium on nuclear tests and ballistic missile launches and allowing international experts access to uranium enrichment facilities, KCNA said.

The North said it was willing to discuss issues already hammered out in a nuclear deal in 2005 "on the principle of simultaneous action" if the talks are resumed, it said.

The deal, which Pyongyang has so far failed to implement, calls for the North's denuclearisation in return for economic aid, diplomatic recognition and the establishment of a permanent peace regime.

The Russian envoy visited Pyongyang between Friday and Monday, meeting Foreign Minister Pak Ui-Chun and other North Korean officials, KCNA said.

The trip comes as South Korea deepens efforts to gain international condemnation of the North's nuclear programme. Cho Hyun-Dong, the South's deputy nuclear envoy, left for Russia Tuesday to meet Borodavkin.

Pyongyang sparked security fears in November when it disclosed an apparently

functional uranium enrichment plant to visiting US experts.

The North said it was a peaceful energy project but experts said it could hand Pyongyang a second route to making atomic bombs on top of its existing plutonium stockpile.

Experts estimate that Pyongyang has enough plutonium to build possibly six to eight small atomic weapons.

Six-party talks grouping the two Koreas, Japan, Russia, the United States and China have been deadlocked since Pyongyang walked out in April 2009 and staged its second nuclear test a month later.

Seoul wants the UN Security Council to address the North's uranium programme, but an attempt last month to publish a UN report criticising the North failed amid opposition from Beijing, Pyongyang's strong ally.

Russia has backed South Korea's call for the Security Council to debate the North's uranium programme. China says the uranium programme should be handled at the six-party talks.

-AFP/ac

Russia, U.S. make joint intelligence flight over Swedenhttp://www.barentsobserver.com/russia-u-s-make-joint-intelligence-flight-over-sweden.4897928-58932.html

2011-03-15 Russia and the United States have embarked on their first joint inspection flight over Sweden as part of the Open Skies Treaty.

On March 14-18, Russia and the United States will make a joint flight over Swedish territory onboard a Russian An-30B aircraft and take photos of the territory, the Russian Foreign Ministry’s web site reads.

The flight completes a series of mutual aerial monitoring missions between Russia, the U.S. and Sweden. In 2008 Russia and Sweden made inspection flights over the United States, and Sweden and the U.S. monitored Russia in 2009.

In 2008, Russian territory was photographed from the air by Finland and Germany, and Finland was monitored from the air by Russia and France, as BarentsObserver reported.

The Open Skies Treaty, signed in 1992 at the initiative of U.S. President George Bush Sr., established a regime of unarmed aerial observation flights over the territories of its 34 member states to promote openness and transparency of military forces and activities.

The Open Skies regime covers the territory over which the State Party exercises sovereignty, including land, islands, and internal and territorial waters. The treaty specifies that the entire territory of a State Party is open to observation. Observation flights may only be restricted for reasons of flight safety; not for reasons of national security. Imagery collected from Open Skies missions is available to any State Party upon request.

Text: Trude Pettersen

Tuesday, 15th March 2011 - 09:49CET

Russia thanks Malta for evacuation assistancehttp://www.timesofmalta.com/articles/view/20110315/local/russia-thanks-malta-for-evacuation-assistance

The Russian government has thanked Malta “for the invaluable help and effective assistance” provided by the Maltese authorities in the evacuation of Russians from Libya.

In a letter to Foreign Minister Tonio Borg. Russian Foreign Minister Sergey Lavrov said that due to the comprehensive support provided by the Civil Protection Department, the Foreign Affairs Ministry and the immigration police, hte complex humanitarian operation was accomplished promptly and in an organised way.

“Our successful cooperation in resolving this crisis situation has clearly demonstrated a truly friendly character of Russian Maltese relations based on the principles of mutual respect and solidarity,” he said.

Deadlock slowing ties: Russian ambassadorhttp://www.dailystar.com.lb/article.asp?edition_id=1&categ_id=1&article_id=126007#axzz1GeNJWo00

Stabilization seen as a prerequisite for mutual interests, including arms and investmentBy Simona Sikimic Daily Star staffTuesday, March 15, 2011

BEIRUT: Russia is awaiting the stabilization of the political situation in Lebanon, seeing it as a prerequisite of intensifying promised cooperation, Russian Ambassador to Lebanon Alexander Zasypkin said Monday.

In November Russia and Lebanon agreed to radically step up collaboration following a visit by caretaker Prime Minister Saad Hariri to Moscow. However, the delivery of

pledged weapons, in addition to assistance with energy provision, transportation and communications, has since been delayed due to the political impasse in the country.

The arms – consisting of helicopters, tanks and munition – are “practically on hold,” explained Zasypkin.

“Until the full stabilization of the situation I think it is counterproductive and difficult to solve this issue,” he told The Daily Star.

Moscow announced its intention to deliver 10 fighter jets free of charge in 2008 but changed the order to helicopters, reportedly at the request of the Lebanese government.

The helicopters are seen as a goodwill gesture between two governments.

“It is our principal position to ensure the state of Lebanon and the army as a part of the state to ensure defense capacity and security,” Zasypkin said.

Military buildup, however, is envisaged only within a much larger package.

“I am not emphasizing the importance of military aid over anything else. The whole atmosphere of our cooperation is unitary,” Zasypkin said.

The scope of mutual interests is thought to be large. Russian firms and the government are all bidding to build-up Lebanon’s economy.

Top priority has been given to a gas pipeline, which would run along the coast and connect Lebanon to the international energy markets.

“This is our main interest and also the Lebanese interest because they need gas from Russia and they want to modernize the electricity in the country,” Zasypkin added.

The newly appointed ambassador only presented his credentials to President Michel Sleiman in December but as a fluent Arabic speaker and former ambassador to Yemen and minister-counsellor to Syria, he is considered a veteran of regional politics.

“We only have one choice, which is to support the Special Tribunal for Lebanon because that is the decision of the Security Council and Russia is a permanent member of the council, as well as a key player in the international community,” Zasypkin said.

“From the beginning we have emphasized [that we are against attempts to politicize the tribunal],” Zasypkin added, while denouncing various media leaks surrounding the STL.

All parties must withhold judgment on the court, tasked with investigating the 2005 assassination of former Prime Minister Rafik Hariri, until it published its indictment, he said.

The indictment was handed to the STL pretrial judge for review in January. It is expected to be published soon and is widely rumored to implicate Hezbollah members in the murder. Tensions over the STL facilitated the collapse of Hariri’s government on Jan. 12.

“The most important goal of Russia in Lebanon is to preserve civil peace and not to disturb the situation and to maintain good relations with all political forces,” Zasypkin said. “That is why we considered the government of national unity under the direction of [Hariri] as a good example for Lebanon.”

Zasypkin has since met with the Prime Minister-designate Najib Mikati, winning assurances that Mikati would seek to form an “effective government.”

“[We know] the new candidate Mikati to be a very good professional in economy and policy. He is a very big businessman and Russia has an experience of cooperation with him.”

Mikati is backed by the pro-Syrian March 8 camp, which has been criticized for allowing Iranian and Syrian influence to grow in Lebanon.

“We consider that the Lebanese must take decisions on their internal problems by themselves,” Zasypkin said.

Russia come under fire in 2010 for selling a large amount of advanced weapons, including fighter jets, to Syria, which Israel said could make its way into Hezbollah hands.

Zasypkin has denied the allegations, saying all military contracts were conducted “within the confines of international law” and special care was taken to guarantee the non-transfer of arms.

Turkish prime minister to arrive in Moscow for talks

http://www.itar-tass.com/eng/level2.html?NewsID=16044665&PageNum=0

15.03.2011, 03.24

MOSCOW, March 15 (Itar-Tass) -- Russian President Dmitry Medvedev and Turkish Prime Minister Recep Tayyir Erdogan, who’s arriving in Moscow for a working visit, will hold negotiations on Tuesday. They will discuss bilateral economic cooperation and urgent world problems.

Tuesday’s meeting will pass in the format of a working lunch. On Wednesday, the leaders will hold a second meeting of the Russian-Turkish High Level Cooperation Council.

Later on Wednesday, Erdogan is scheduled to meet Prime Minister Vladimir Putin.

The Kremlin press service told Itar-Tass that trade and economic issues would occupy central place at the talks.

“Based on the previous agreements and rich experience of effective interaction, the sides intend to give a new powerful impetus to multi-dimensional partnership between Russia and Turkey,” the Kremlin press service emphasized.

“The sides are expected to discuss the possibility of stepping up joint work in hi-tech sectors of the economy such as aviation and space programs,” the Kremlin press service went on to say.

”Considerable attention at the talks will be paid to key international issues, including the situation in northern Africa and the Middle East, Iran’s nuclear program, reform of the European security architecture and a number of regional issues,” the Kremlin press service emphasized.

The presidential administration notes that in recent years Russia and Turkey have substantially increased their cooperation in the world arena. A joint strategic planning group led by the foreign ministers of the two countries has become a new effective mechanism of coordination of foreign policy approaches.

Last year Russia was Turkey’s second largest foreign trade partner. Turkey ranks seventh in foreign trade with Russia. Reciprocal trade exchanges accounted for more than 25 billion dollars and grew by 29%.

Moscow sources say that cooperation is particularly active in the energy sector. The Blue Stream project has been functioning successfully. A number of new projects designed to strengthen regional energy security are on the agenda. They include the South Stream project, the Samsun- Ceyhan oil pipeline and the construction of the first nuclear power station in the Turkish territory.

Significant progress has been made in ferrous metallurgy, telecommunications, the production of building materials and household electronics.

The Kremlin has stressed the importance of expanding Russian-Turkish cultural and humanitarian ties. A forum of the Russian and Turkish Public set up under the auspices of the High Level Cooperation Council is to give a new impetus to these ties.

Turkey continues to be one of the most popular tourist destinations for Russia. More than three million Russian tourists visited Turkish sea resorts in 2010.

Russia, Turkey to take final step in visa-free regimehttp://news.az/articles/turkey/32912

Tue 15 March 2011 06:36 GMT | 7:36 Local Time

Erdogan to meet Medvedev, Putin.

The final official step in the process of introducing a visa-free regime between Black Sea neighbors Russia and Turkey will be taken during Turkish Prime Minister Recep Tayyip Erdogan's three-day visit to Russia. In January Turkish and Russian officials signed in Moscow a readmission agreement in a step towards a visa-free travel regime between their countries. With the foreign ministries of the two countries having now completed all necessary bureaucratic procedures, the two sides will now exchange notes, which will pave the way for 30 days of visa-free travel within a 90-day period for the citizens of both nations, the Anatolia news agency reported on Monday. The implementation will commence around 30 days after the exchange of notes, on April 20, the agency said.

During Erdogan's visit, the second meeting of the High-Level Cooperation Council between Russia and Turkey -- an intergovernmental cooperation mechanism -- will be held with Erdogan and Medvedev co-presiding the meeting. Russia and Turkey agreed last year during Medvedev's May visit to launch the High-Level Cooperation Council and held the first meeting then. Accordingly, Medvedev and Erdogan will meet annually to review ties.

While in Moscow, Erdogan will also hold talks with his Russian counterpart, Vladimir Putin, and will address a meeting of the Turkish-Russian Business Forum. On Wednesday evening he will proceed to Kazan, the capital of Tatarstan, a federal subject of Russia. He is expected to return home on Thursday.

Ahead of the visit, Russian Foreign Minister Sergei Lavrov praised Turkey's democratic maturity, when he spoke of the latest upheavals in a number of North African and Middle Eastern countries.

Experience shows very clearly that Islam and democracy can live together and Turkey is the best example of this, Lavrov said in an interview with a Russian radio station, Anatolia reported on Monday. Arguing that the upheavals in a number of North African and Middle Eastern countries are not related to “radical Islamists,” Lavrov said people in those countries have been asking for democratic changes in regimes, but not the implementation of Shariah law. “Radical Islamist powers,” in every country might be willing to use these upheavals in their own interests, Lavrov noted.

“However, despite this, the situation should not be dramatized. Experience has shown

that Islam and democracy are quite compatible with each other. Turkey is the best example for this,” he was quoted as saying by Anatolia.

Erdogan's visit coincides with the 90th anniversary of the Treaty of Moscow, signed on March 16, 1921, a pact concluded in Moscow between the government of the Turkish Assembly -- before the Turkish Republic was founded in 1923 -- and the Soviet Union.

The timing of the visit has sparked reactions from the Armenian media and hard-line Armenian politicians.

Today's Zaman

Gas and Nuclear Plant Top Agenda of Turkish Premier http://www.themoscowtimes.com/news/article/gas-and-nuclear-plant-top-agenda-of-turkish-premier/432537.html

15 March 2011Reuters

ISTANBUL — The price of Russian gas and the future of several energy projects, including a $20 billion Russian-built nuclear plant, loom over a visit by Turkish Prime Minister Tayyip Erdogan to Moscow this week.

Accompanied by Foreign Minister Ahmet Davutoglu and Energy Minister Taner Yildiz, Erdogan is due to meet both Prime Minister Vladimir Putin and President Dmitry Medvedev during the visit that begins Tuesday and ends Thursday.

Turkey is a major player in the $10.8 billion Nabucco project, backed by the European Union, to pipe gas from Turkmenistan to Europe, while Russia has proposed the rival South Stream pipeline, under the Black Sea and through Turkish and Bulgarian territorial waters.

Putin indicated last week that Russia might drop plans to lay the underwater section and build a liquefied natural gas plant instead because of risks posed by new European energy rules.

"The South Stream project will be discussed," Putin's spokesman Dmitry Peskov said. "Energy dialogue is a very important part of our bilateral relations. All aspects of our energy dialogue will be discussed."

Turkey buys 64 percent of its gas from Russia, 40 percent of its oil and a large amount of coal too. As a result, Russia's total exports to Turkey in 2010 were $21.6 billion, whereas Turkey's exports were just $4.6 billion.

While Gazprom has already offered discounts to some Western customers, discounts for Turkish state pipeline operator Botas have not been settled, with discussions focused on the "take-or-pay" element in the contract.

Competing against other states to secure supply, Turkey had contracted to buy more gas than it actually uses and now wants to move to more flexible terms. It also wants a new formula to determine prices and move off the oil index.

Botas will sell its contracts to import 6 billion cubic meters of Russian gas to private-sector firms, and a Gazprom unit is among the companies interested. Gazprom also wants to build underground gas storage units in central Turkey.

On crude oil, Russia may supply 25 million tons per year, or about half of the capacity of a planned pipeline from the Black Sea to the Mediterranean that is strongly backed by the government. No deal has been signed.

Energy analysts say Turkey must weigh the benefits of interdependence against the risks of overdependence.

"There is a danger that Turkey could become too overly dependent on Russia for energy," said Gareth Winrow, director of research at Sidar Global Advisers. "It's not just the natural gas; it's the nuclear, when Turkey will become dependent on imports of enriched uranium from Russia and on Russian nuclear technology."

Necdet Pamir, an Ankara-based energy analyst, criticized a deal agreed upon last May for Russia to build Turkey's first nuclear power plant on the Mediterranean coast.

Pamir said the terms lack technology transfer, power from the plant would be too expensive, and it would increase overall dependency on Russia.

Turkish officials expect some discussion on the phasing and Turkish firms' involvement during this week's meetings.

PMs of Russia, Belarus and Kazakhstan to meet in Minsk

http://www.itar-tass.com/eng/level2.html?NewsID=16044446&PageNum=0

15.03.2011, 06.13

MINSK, March 15 (Itar-Tass) - The Inter-State Council of the Eurasian Economic Community – the highest body of the Customs Union – will be held in Minsk at a ministerial level on Tuesday. It’ s planning to discuss and to adopt vital decisions on economic cooperation between Belarus, Kazakhstan and Russia.

Prime Minister Vladimir Putin will represent Russia.

The Belarusian capital will also host a meeting of the Council of Ministers of the Union State of Belarus and Russia.

The prime ministers of three countries of the Customs Union will consider questions related to the formation of the Common Economic Space, improvement of the activities of supra national bodies and the organization of the work of the EurAsEC Court, a common migration policy with regards to third countries.

The agenda of the meeting of the Council of Ministers of the Union State of Belarus and Russia includes about 30 issues, such as economic cooperation, the balance of fuel and energy resources of the Union state for 2011 and preparation and implementation of union programs.

A Belarusian-Russian inter-governmental agreement on cooperation in the construction of the first nuclear power plant in the Belarusian territory.

Azerbaijan, Russian brain centers sign memo of cooperation

http://www.news.az/articles/politics/32896

Tue 15 March 2011 05:30 GMT | 6:30 Local Time

The Center for Strategic Studies under Azerbaijani President and Russian Institute of Strategic Research (RISI) has signed a memorandum in Moscow.

SAM Deputy Director Gulshan Pashayeva and RISI Director Leonid Reshetnikov signed the memorandum. The main purpose of signature of the memorandum is to create atmosphere for free view exchange of experts of leading brain centers of the two countries over Russian-Azerbaijani relations, international policy, geopolitical situation in the region.

“Brain centers” of both countries collaborate for more than two years. Signature of the memorandum will create atmosphere for logical continuation of this cooperation and providence of mutual activity of experts. Within the framework of the cooperation RISI prepared big research for Azerbaijan. And now this research has been renewed by Azerbaijani and Russian experts. Moreover, experts of both countries conducted investigation in connection with the international humanitarian forum to be held in October of current year in Baku.

After the signing of the memorandum, roundtable on “Role of Russia and Azerbaijan in the maintenance of security in the Caucasus” was held at RISI. Gulshan Pashayeva, Senior Adviser of the Political Analyses and Informational Provision Department of the

Presidential Administration of Azerbaijan Republic Farhad Mammadov, expert of SAM Heydar Mirza, RISI Director Leonid Reshetnikov and several other experts gave attention to existing political, economic and cultural ties between the two countries and exchanged views on development perspectives of the relations.

On March 15, the delegation of SAM will take part in the next event on “South Caucasus in the context of Azerbaijani-Russian relations” to be organized at Moscow State Institute of International Relations. Within the visit, SAM delegation will hold meetings with famous Russian experts and hold wide discussion over strategic projects of regional importance.

APA

Kyrgyzstan: Moscow, Riled over Nationalization, Fires Shot Across Bishkek’s Bow http://www.eurasianet.org/node/63068

March 14, 2011 - 2:28pm, by Cholpon Orozobekova

As the ouster of former president Kurmanbek Bakiyev demonstrated last spring, Russia is not afraid of meddling in Kyrgyzstan when the Kremlin feels its interests are at risk. These days, Moscow appears to be using energy exports as leverage against the Kyrgyz government.

The current source of Russian displeasure is connected with the nationalization of one of Kyrgyzstan’s largest companies, mobile service provider Megacom. The row is shaking Kyrgyzstan’s disjointed coalition and has the potential to seriously damage the country’s fragile economy. Yet, Kyrgyz officials, despite the country’s economic dependence on Russia, aren’t obsequiously acceding to the Kremlin’s wishes.

For Kyrgyzstan, the stakes are high in the nationalization deal. On March 14, government advisor Farid Niyazov confirmed that a deal to lift the tariff on Russian fuel imports was being delayed. From the start of 2011 up until February 15, Russia had been delivering duty-free petrol, a development that had spurred a 25 percent price reduction at gas pumps in Kyrgyzstan, while boosting confidence in the Kyrgyz economy.

But the delivery deal was never finalized, and no fuel has arrived since February 15, MP Akylbek Japarov confirmed to EurasiaNet.org. Drawing parallels to the days before Bakiyev’s ouster in April of last year, Japarov -- a member of the opposition, but pro-Russian, Ar-Namys Party -- said that Moscow’s hesitation to end the tariffs indicated that “Russia no longer holds any trust in this government.”

Prime Minister Almazbek Atambayev is scheduled to travel to Moscow on March 18 to discuss the delay.

On top of rampant inflation, the collapse of the tariff-elimination agreement could deliver a knockout blow to Kyrgyzstan’s weak governing coalition, fostering a sense of uncertainty and social discontent. Speculation about the collapse of Kyrgyzstan’s governing coalition began building after two prominent Russian politicians, while on a visit to Bishkek, lashed out at one of the coalition leaders, along with the government’s handling of the Megacom nationalization.

At a March 9 news conference, Alexey Ostrovsky, chairman of the State Duma’s CIS Committee, complained of a “dirty struggle” over Megacom and accused First Deputy Prime Minister Omurbek Babanov of trying to defraud Russian investors. “We have seen that there is a dirty struggle to misappropriate the property owned by Russian businessmen,” he said. “Difficulties attracting Russian investments to Kyrgyzstan may arise in connection with the situation around Megacom.”

Semyon Bagdasarov, a member of the State Duma’s International Affairs Committee, also warned that the Megacom controversy had seriously damaged Kyrgyz-Russian ties. “The situation that existed in the country prior to the April [2010] events is starting to repeat itself,” he said. “Back then, certain bureaucrats mixed up personal interests with state [interests] and were preoccupied only with deeply self-interested aims. It would seem that, after the revolution, such people should have given things some thought in order not to repeat the mistakes of the former authorities. However, today we see a group of people taking advantage of their privileges. [For example,] take Megacom.”

After the April uprising, Kyrgyzstan’s interim government nationalized the company, which was allegedly owned by interests connected to Maxim Bakiyev, the former president’s son. The Ministry of State Property currently holds 51 percent, which the younger Bakiyev had allegedly obtained from Moscow-based Eventis Telecom in 2006. In early February, two Russian directors of Megacom were charged with abuse of power for failing to declare $10 million in profits and fled Kyrgyzstan. Eventis has been attempting to get its shares back since the post-Bakiyev interim government came to power.

Megacom’s vice president for judicial affairs, Ilim Karypbekov, told EurasiaNet.org that the company, seized from Maxim Bakiyev, should fully belong to the state. “Here we have to defend state interests. Megacom is the second biggest company in Kyrgyzstan … and all 100 percent of the shares must be nationalized. This is only a legal issue, not politics. Intervention by Russian parliamentarians in this case is unacceptable. We are sovereign country and Kyrgyzstan is able to resolve such problems itself.”

Members of the ruling coalition shrug off the episode. Media reports on worsening relations with Moscow are exaggerated, says MP Galina Skripkina, a member of Atambayev’s Social Democratic Party. “I consider the Russian parliamentarians’ statements their own private opinion,” she said. “As for conditions for foreign investors, there is no pressure on Russian businessmen. We have equal conditions for all investors.”

But opposition leaders contend that the Megacom case is spoiling relations with one of Kyrgyzstan’s most important partners, if not its prime patron.

MP Omurbek Tekebayev, leader of the opposition Ata-Meken Party, says the State Duma officials’ visit was designed to demonstrate Russian “anger” with the new government. Russian President Dmitry Medvedev and other top Kremlin officials have long been on record as being opposed to Kyrgyzstan’s move to a parliamentary democratic system in late 2010.

“This is first time when senior Russian officials came to Kyrgyzstan and openly expressed sharp criticism of parliament. The Kyrgyz government has promised a lot of things to Moscow,” Tekebayev told EurasiaNet.org, but too frequently “changes its mind.”

Megacom, however, is not the only irritant in relations between Bishkek and Moscow.

In 2009, Bishkek promised the Kremlin 48 percent of the Dastan naval munitions factory in exchange for $193 million in debt relief and over $2 billion in investments and credit. Moscow transferred $150 million, but never received the shares.

After the April 2010 change in power, Kyrgyzstan’s new leaders confirmed their intentions to transfer the Dastan shares to Russia. But, following a February visit to Bishkek by Turkish Prime Minister Recep Tayyip Erdogan, local reports said Atambayev had discussed selling the shares to Turkey. Calling Russia Kyrgyzstan’s most important partner, Atambayev denied the reports, which were given considerable play in the Russian media.

The governing coalition is also feeling internal strains, as members begin to jockey for position ahead of a presidential election slated for this fall. Ata-Meken’s Tekebayev, who has said he was left out of the coalition because he has poor relations with Moscow, sees the Russian pressure as the price for allowing the Kremlin too much control over how the coalition formed. “This is not surprising. At the beginning [after parliamentary elections last fall], these ruling parties handed their destiny to the Kremlin,” he said. “They have become puppets in [Russian Prime Minister Vladimir] Putin’s hands.”

Editor's note: Cholpon Orozobekova is a Kyrgyz freelance journalist. She was formerly the editor-in-chief of De Facto, an independent newspaper in Bishkek.

Bilateral military cooperation plan signed between Serbia and Russiahttp://www.balkans.com/open-news.php?uniquenumber=97481

Balkan Business News Correspondent - 15.03.2011

At the first military consultations between the Ministries of Defense of Serbia and Russia in Moscow, a bilateral military cooperation plan for 2011 was signed. As announced on the Serbian Defense Ministry website, both sides agreed that bilateral military cooperation is below the required level and that there is interest and room for its improvement. It is emphasized that the agreement includes the exchange of visits at the highest level, continued education of the Serbian Army officers in military schools in the Russian Federation, the presence at military exercises and participation in courses organized by the Russian Ministry of Defense. The Serbian Defense Ministry delegation was headed by the Head of the Directorate for International Military Cooperation Milorad Peric, while Colonel Alexander Alexandrovich Kshimovski from the General Directorate for International Military Cooperation was at the helm of the Russian delegation. Source; Radio Srbija

Russian-Norwegian agreement on delimitation in the Barents Sea for discussion in Russia`s Parliamenthttp://russia-media.ru/generalnews/morenews.php?iditem=2495

The Russian-Norwegian agreement on delimitation of maritime space will put an end to the 40-year-long territorial dispute between the countries and a moratorium on the extraction of hydrocarbons, according to Russia’s plenipotentiary ambassador. Roman Kolodkin. The diplomat who also was central in the Russian delegation in talks with Norway on the issue, announced the topic to the State Duma on Monday, RT.com reports. [15.03.11]

The Russian-Norwegian agreement on delimitation of maritime space will put an end to the 40-year-long territorial dispute between the countries and a moratorium on the extraction of hydrocarbons, according to Russia’s plenipotentiary ambassador. Roman Kolodkin. The diplomat who also was central in the Russian delegation in talks with Norway on the issue, announced the topic to the State Duma on Monday, RT.com reports.

“The delimitation is regarded as fair by both parties,” the diplomat said, adding, though, that the document does not settle the dispute concerning maritime space around Spitsbergen.

He also said that apart from delimitation the area, the agreement has detailed provisions for Russia-Norway cooperation in hydrocarbons extraction. This refers to deposits which will be exploited jointly by Russia and Norway.

“The disputed area, especially its southern part, is thought to be rich in hydrocarbons,” Kolodkin explained. He added that both countries saw good prospects for a partnership with Oslo in the field.

Russia and Norway signed the agreement in September 2010 in Murmansk, central in the development of the Shtokman gas field in the Barents Sea. The Norwegian parliament ratified it on February 8. It set the countries’ sovereign rights and also establishes the framework for oil extraction and fishing in the border zone. On February 10, the agreement was submitted to Russia’s lower house, the State Duma for ratification.

Speaking at the Duma hearing on Monday, the presidential envoy to the North and South Poles, Artur Chilingarov, noted the importance of the document for international law purposes. He said that apart from Russia and Norway, other countries have demonstrated close interest to the area. Not only has US, Canada and Denmark expressed interest, but Germany, France and China which are not geographically linked to the polar region has as well, Chilingarov said.

“All those states are ready to step into the ring and fight for the hydrocarbon resources of the Arctic continental shelf,” he stressed. “The agreement and our practical activities will bring order to that arena.”

Medvedev approves instructions on state employment policy

http://www.itar-tass.com/eng/level2.html?NewsID=16045389&PageNum=0

15.03.2011, 10.44

MOSCOW, March 15 (Itar-Tass) -- Russian President Dmitry Medvedev approved the list of instructions made after a meeting on the state employment policy on March 1, 2011, the Kremlin press service reported on Tuesday.

Medvedev gave the following instructions to the Russian government to fulfill before April 15, 2011.

Medvedev instructed to table the proposals for the development of the employment measures and the mechanisms of their fulfillment starting from 2012, particularly the professional training of workers for the production modernization and the implementation of investment projects; targeted measures to improve the employment situation in Russian federal constituents due to a tense situation on the labour market; the assistance to unemployed people if they launch their business; the rights to women, who are on a delivery leave, to pass the professional training courses provided by the recruitment agencies; broader employment opportunities for unemployed disabled people, the parents, who raise disabled children and the families with many children.

The president also instructed to coordinate the efforts to support small business, including the support program for small and medium businesses, the self-employment measures for unemployed people and the support for small rural economic entities and small innovative businesses.

The president also gave the instructions to make the proposals to include in the curriculum the special production training at vocational educational institutions of all levels; to develop the procedure to assess the quality and accessibility of public services to improve the employment situation.

Medvedev makes personnel reshuffles in Fed Drug Control Service

http://www.itar-tass.com/eng/level2.html?NewsID=16045393&PageNum=0

15.03.2011, 11.01

MOSCOW, March 15 (Itar-Tass) - Russian President Dmitry Medvedev signed a decree on dismissal and appointment of employees of the Federal Drug Control Service (FSKN).

In accordance with the decree, the Kremlin press service reported on Tuesday, the following officials will be relieves from their duties: Police Major General Victor Latypov - head of the FSKN department for the Republic of Karelia, Police Major General Yevgeny Mokhov - deputy head of the organisational and control unit of the FSKN organisational-administrative department - head of Inspection, Police Major General Alexei Sukhov - assistant to the FSKN director.

The president made a decision to appoint: Police Colonel Valery Ponomarev as deputy chief of the organisational control unit of the FSKN organisational-administrative department - head of Inspection, Police Colonel Igor Semochkin – as deputy chief of staff of the FSKN - head of the FSKN department for the Urals Federal District.

“This decree shall enter into force upon signature,” the Kremlin press service specified.

The Federal Drug Control Service of the Russian Federation is a federal body of executive authority responsible for drafting state policy, legal regulation, control and monitoring in the sphere of combating trafficking drugs, psychotropic substances and their precursors, according to the RF government website. The Federal Drug Control Service of the Russian Federation is specially authorized to address and solve problems in the sphere of traffic in narcotic drugs, psychotropic substances and their precursors, as well as in the field of combating their illicit trafficking.

The FSKN is specially authorized to address and solve problems in the sphere of traffic in narcotic drugs, psychotropic substances and their precursors, as well as in the field of combating their illicit trafficking. The FSKN sharing concurrent jurisdiction with the

FSB (Federal Security Service) and MVD (Interior Ministry), it also has sole responsibility for coordinating and pursuing Russian drug investigations abroad, especially in Central Asia.

The First Anti-Drugs Independent Russian Agency was born in 24 September, 2002 under the name “The State Committee to combat the illicit trafficking in narcotic drugs and psychotropic substances under the Ministry of Internal Affairs of the Russian Federation” (UNON MVD).

In March 11, 2003 the State Committee for combating illicit trafficking in narcotic drugs and psychotropic substances under the Ministry of Internal Affairs of the Russian Federation is transformed into the State Committee of Russian Federation to monitor the trafficking of narcotic drugs and psychotropic substances (GOSNARCOCONTROL) that becomes to Federal Drug Control Service of Russia, to the chairman of the committee appointed Viktor Cherkesov. The Committee passed the material base and the majority (40,000 units), staff number of the abolished Federal Tax Police Service of the Russian Federation. The Committee began its work on July 1, 2003.

On June 6, 2003, the State Duma lower house of parliament approved the Regulations on the State Committee of Russian Federation for the control of narcotic drugs and psychotropic substances. In March 9, 2004 The Russian Federal Drug Control Service was renamed the Federal Service of the Russian Federation for the control of narcotic drugs and psychotropic substances and in 28 July, 2004 the Russian Federal Service for Control over Traffic in Narcotic Drugs and Psychotropic Substances renamed the Russian Federal Service for Drug Control. On May 12, 2008 by a Decree of the President of Russia Viktor Cherkesov was dismissed as director of Russian Federal Drug Control Service. In May 15, 2008 by Presidential Decree of Dmitry Medvedev former KGB general Viktor Ivanov was appointed Director of the Russian Federal Drug Control Service.

7 policemen wounded in Dagestanhttp://english.ruvr.ru/2011/03/15/47417089.html

Mar 15, 2011 09:35 Moscow Time

Seven police officers were wounded after unknown gunmen opened fire on a police department in Russia's North Caucasus republic of Dagestan, a local police spokesman said on Tuesday.

The attackers then abandoned their car and fled the scene of crime. The car exploded shortly after they disappeared, the spokesman added. Police are investigating.

Policeman wounded in attack on police department in Dagestanhttp://en.rian.ru/crime/20110315/163006741.html

02:43 15/03/2011

A policeman has been wounded after unknown suspects opened fire on a police department in Russia's North Caucasus republic of Dagestan, a local police spokesman said on Tuesday.

The suspects, he said, attacked a police department in the Kyzylyurt district of the republic late on Monday night. The wounded policeman was hospitalized, he added.

"The criminals abandoned their car and fled the scene of crime. The car exploded shortly after they disappeared," the spokesman said.

Terrorist attacks and shootouts with police are common in Russia's troubled North Caucasus republics, especially Dagestan and neighboring Chechnya and Ingushetia.

MAKHACHKALA, March 15 (RIA Novosti)

GOOGLE TRANSLATION

15.03.2011   09:09

Power of the explosion of ATS Kizilyurt was 20 kg of TNT http://www.vesti.ru/doc.html?id=436383&cid=8

Power of the explosion in the Dagestan Kizilyurt, which were wounded and shell-shocked law enforcement officers, amounted to 20 kg of TNT. As reported in the law enforcement agencies of the republic, "in the hospitals were brought seven law enforcement officers, two of whom received shrapnel wounds and five were shell-shocked." A criminal case under several articles of the Criminal Code, including: "Encroachment on the life of a law enforcement officer" and "Illicit trafficking in weapons and explosive devices." According to the interlocutor of the agency Itar-Tass on Monday at 23:15 Moscow time on Lenin Street "crooks drove in two cars VAZ-2106 and VAZ-21099. The last two cars came from automatic weapons fired at an Interior Ministry building, then relocated at the WHA sixth model and fled. After a few seconds VAZ-21099 exploded, injuring police officers. Were also smashed windows and damaged roof in a building of ATS and prosecutors. As noted in the Dagestan Interior Ministry, "hide themselves in a car criminals on the street Gamzat Tsadasy from rifles fired at a private home, and then 10 meters from the

gate of the house planted an explosive device." It did not work. Both machines (exploded and that in which the criminals fled), according to Interior Ministry listed as a wanted man. On-site work of the investigation group. In the city to clarify the circumstances of what happened came to the Minister of Internal Affairs of Dagestan Abdurashid Magomedov.

NASA buys 12 seats aboard ISS-bound Russian spacecraftToday at 10:51 | Interfax-Ukraine Washington, March 15 (Interfax-AVN) - NASA announced on March 14 that it had signed a contract with the Russian Federal Space Agency (Roscosmos), paying $753 million for 12 seats on board Russia's Soyuz manned spacecraft to ferry astronauts to the International Space Station (ISS) between 2014 and June 2016.

This price will cover the cost of training astronauts ahead of these flights, flight operations, the return of astronauts to the Earth after six-month missions on board the ISS, as well as their evacuation from the landing site, NASA said.

The deal allows NASA to send six astronauts to the orbiting outpost on board Soyuz spacecraft in 2014, and six more in 2015. Besides, each astronaut will be permitted to bring 50 kilograms of cargo to the ISS, as well as will return 17 kilograms of cargo to the Earth and will remove around 30 kilograms of waste from the station.

A $335-million deal signed by NASA and Roscosmos in April 2010 requires Russia to ferry six astronauts to the ISS in 2013.

A similar contract worth $306 million allowing six NASA astronauts to travel to the ISS on board Russia's Soyuz spaceships in 2012 was signed in May 2009.

Read more: http://www.kyivpost.com/news/russia/detail/99837/#ixzz1GetN1684

Russian Rocket Ride: $63 Million Per US Astronauthttp://abcnews.go.com/Technology/wireStory?id=13134958

Russian rocket price hike for US astronauts, Soyuz spacecraft seat soaring to $63 million

CAPE CANAVERAL, Fla. March 14, 2011 (AP)

The Russians are hiking the price of rocket rides again for U.S. astronauts — to nearly $63 million.

The price goes up in 2014 for an astronaut to fly to and from the International Space Station on a Russian Soyuz spacecraft. NASA announced the news Monday.

The previous contract charged just under $56 million apiece

The contract extension with the Russian Space Agency totals $753 million. That covers trips for a dozen astronauts from 2014 through 2016.

NASA officials say inflation is the reason for the latest price increase.

NASA chief Charles Bolden says it's critical for U.S. companies to take over this transportation job. Space shuttles used to do that job. They're being retired this summer

March 15, 2011 11:49

Prosecutors will probe illegal casinos - Prosecutor General's Officehttp://www.interfax.com/newsinf.asp?id=228686

MOSCOW. March 15 (Interfax) - The Russian Prosecutor General's Office will probe the information on illegal casinos published on Internet sites.

"Prosecutor General Yury Chaika has ordered prosecutors to conduct additional probes into the observance of the legislation on the gambling business," Marina Gridneva from the Prosecutor General's Office told Interfax.

Activists demand “prisoner of conscience” status for Mikhail Khodorkovsky http://rt.com/news/line/2011-03-15/#id5411

04:57

A 45-strong group, which includes Russia’s prominent culture and public figures, have asked the human rights organization Amnesty International to name imprisoned former oil tycoon Mikhail Khodorkovsky and his business partner Platon Lebedev “prisoners of conscience”.  According to the group, which has sent a letter to the Russian office of the organization, the former Yukos CEO Mikhail Khodorkovsky deserves the status of political prisoner as a person “convicted solely for expressing his beliefs”. The letter stressed that the status of “prisoners of conscience” could attract additional attention to

Khodorkovsky’s case.  Amnesty International received similar requests earlier but declined them, saying it does not have enough evidence that could prove that Michail Khodorkovsky was imprisoned only due to his political activity.

PRESS DIGEST - Russia - Mar 16http://www.reuters.com/article/2011/03/15/press-digest-russia-mar-idUSLDE72E0F820110315

4:43am EDT

MOSCOW, Mar 16 (Reuters) - The following are some of the leading stories in Russia's newspapers on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.

KOMMERSANT

www.kommersant.ru

- The head of a major concrete company in Karachay-Cherkessia in Russia's North Caucasus was shot dead by a sniper on Monday, the paper writes, adding that Islamist militants are not beleived to be behind the attack.

- Russian authorities are creating a working group to prepare amendments to existings mass media laws, the daily says.

VEDOMOSTI

www.vedomosti.ru

- Russia's state patenting body has refused to register the trademark "Volodya and bears", the paper says. The patenting body sayd it may damage Russia's image and the image of its ruling tandem, referring to Prime Minister Vladimir Putin's nickname "Volodya" and President Dmitry Medvedev, whose last name has the Russian word for "bear" in it.

- The daily runs an interview with the new director general of Uralkali (URKA.MM: Quote, Profile, Research, Stock Buzz), Vladislav Baumgertner.

- The number of mortgage loans granted in 2010 in Russia's second city of St Petersburg doubled compared to 2009, the paper says.

KOMSOMOLSKAYA PRAVDA

www.kp.ru

- Threat of nuclear contamination from the Japanese nuclear crisis is causing panic in Russia's Far East, the daily writes.

NEZAVISIMAYA GAZETA

www.ng.ru

- Russia will assign between $15-20 million to Moldova's Transdniestria breakaway region this year, the daily writes.

Russian Press at a Glance, Tuesday, March 15, 2011http://en.rian.ru/papers/20110315/163009988.html

08:30 15/03/2011

A brief look at what is in the Russian papers today

POLITICS

United Russia scored an unconvincing victory in Sunday's regional vote with an average 46%, leaving analysts in doubt whether it could perform better in the decisive battle for the State Duma in December(The Moscow Times, Kommersant, Nezavisimaya Gazeta)

President Dmitry Medvedev banned Libyan leader Muammar Gaddafi and his family from entering Russia(Kommersant, the Moscow Times)

Russia and Ukraine might review their current agreements on natural gas and Russia’s Black Sea Fleet presence in Ukraine(Nezavisimaya Gazeta)

Russia has provided Moldova’s breakaway republic of Transdnestr with financial humanitarian aid intended to be distributed among pensioners(Nezavisimaya Gazeta)

ECONOMY & BUSINESS

The conflict between United Company RusAl and Interros over control of Norilsk Nickel took an unexpected turn as billionaire Alisher Usmanov's Metalloinvest announced plans to increase its stake in the nickel producer and help develop the company jointly with RusAl(The Moscow Times)

WORLD

In repairing ties with Japan, Russian President Dmitry Medvedev scrambled to send energy supplies to the devastated country, three planes were dispatched with humanitarian aid, and Foreign Minister Sergei Lavrov laid flowers at the Japanese Embassy in Moscow(The Moscow Times)

Russian rescuers rushed to help with the emergency situation at Japan’s quake-hit Fukushima Nuclear Power Plant(Kommersant)

Ales Milhalevich, a former Belarusian presidential candidate from an opposition party, says he has secretly fled the country(Kommersant)

DEFENSE

The Russian government and the Defense Ministry have jointly worked out a program for Army and Navy development until 2020(Nezavisimaya Gazeta)

India, the biggest arms importer in the world, says Russia, which accounts for 82% of this import, is the most reliable partner in this sphere(Nezavisimaya Gazeta)

CRIME

A Master-Bank executive was charged with participating in a money laundering ring that involved state companies and saw a daily turnover of 500 million rubles ($17 million). Industry players say more people are likely to be charged(The Moscow Times)

A St. Petersburg professor faces up to two years in jail over his ties to the banned National Bolshevik Party. Andrei Pesotsky is accused of creating a local branch of the party in 2009. The party was banned for extremism in 2007(The Moscow Times)

Authorities Play Down Consecutive Explosions Near FSB Headquarters in Moscowhttp://www.jamestown.org/programs/edm/single/?tx_ttnews[tt_news]=37643&tx_ttnews[backPid]=27&cHash=5c2fb6f1e4c0b887d7c9b54a107b7cdc

Publication: Eurasia Daily Monitor Volume: 8 Issue: 50March 14, 2011 02:42 PM Age: 31 minCategory: Eurasia Daily Monitor, North Caucasus Analysis, Home Page, Terrorism, Military/Security, Domestic/Social, The Caucasus, North Caucasus , Russia By: Valery Dzutsev

On March 11, two explosions took place in northern Moscow about 5-10 minutes apart. The bombs reportedly contained 0.3-0.4 kg of TNT along with fragments of nails to cause injuries. No one was hurt since the bombs detonated early in the evening, when there were few people around. The windows in a multistory apartment block were broken between the fifth and ninth floors. Adding an element of intrigue to the situation was the fact that the apartments belonged to the Federal Security Service (FSB) which, according to a tradition dating back to Soviet times, builds housing for employees (www.lifenews.ru, March 11). Also, Margarita Simonian, the editor-in-chief of the Kremlin’s propaganda TV channel that targets foreign audiences, Russia Today, apparently resided in the apartment block built by the FSB for its employees (www.kp.ru, March 11).

The two blasts were preceded by another similar explosion near the FSB academy in Moscow. The latter explosion, equivalent to 0.5 kg of TNT, also did not claim any casualties, but damaged several nearby cars (Interfax, March 9). The Chechen militant group known as Riyadus-Salikhin claimed responsibility for the explosion near the FSB academy. The group, known for numerous suicide and hostage-taking attacks, especially during the final years of Shamil Basaev, stated the attack was retaliation for Russian policy in the North Caucasus. The statement in particular addressed two recent incidents in the North Caucasus. On March 1, police in Kabardino-Balkaria blew up a suspect rebel’s house under the pretext of a demining failure (EDM, March 7). On March 3, the security services in Ingushetia blew up the houses of a rebel leader’s relatives (EDM, March 9).

Investigators and officials in Moscow were skeptical that the North Caucasus rebels were involved in the attacks. An investigation into the incidents was launched under the article of the Russian criminal code covering hooliganism, even though a source in the Investigative Committee said the incidents might be “reassessed” (Interfax, March 11). The chairman of the State’s Duma committee for security, Vladimir Vasiliev, who has a background in the Russian interior ministry, stated the attacks were meant “to complicate the situation on the eve of the elections.” Vasiliev claimed the attackers did not intend to kill anyone so the blasts took place in “uninhabited areas” (http://www.rusnovosti.ru/news/136491/). However, all the explosions took place near FSB facilities and at least some of the explosive devices were packed with nails, apparently to inflict casualties. So it was hardly the harmless event that officials try to portray.

March 13 was the day that all due municipal, regional and other elections took place throughout Russian Federation. This is the last election cycle before the Russian parliamentary elections in the fall 2011. A number of observers pointed to the recurrent

pattern in Russian politics of a tangible increase in terror attacks before elections. Whether the North Caucasian rebels, political opportunists or Russian nationalist radicals were behind the attacks, the bottom line is not affected much since it means in any case an increase in political volatility and the government’s inability to ensure order.

In a special statement on March 11, Russia’s foreign ministry hailed the United Nations Security Council’s decision to adopt sanctions against Doku Umarov, the Caucasus Emirate leader, along with al-Qaeda and the Taliban. Moscow regarded this decision as the international community showing solidarity against the spread of terrorism (http://www.mid.ru/brp_4.nsf/0/9DD5ED24F614D501C32578500062C247).

Along with violent attacks, there has been an increase in conventional political protests in the North Caucasus. On March 10, a group of people dissatisfied with the distribution of land in the suburbs of Makhachkala, Dagestan’s capital, staged a protest in front of government buildings in the city. The protestors rallied under such slogans as “Down with the president of the Russian Federation Medvedev” and “Down with Putin’s government” (www.ndelo.ru, March 11). It is understandable that the protesters were trying to attract as much attention to their problems as possible in order to press the government to decide the case in their favor. But, at the same time, the internal logic of Putin’s power vertical means that every local problem can now be blamed on the central government in Moscow.

Meanwhile, casualties in the North Caucasus are mounting unusually rapidly. In February alone, 59 people died and at least 66 more were injured in the region. Among the dead there were 32 suspected rebels, 15 law enforcement agents, 10 civilians and two members of local governments. While Dagestan suffered 22 deaths, Kabardino-Balkaria lost 17 people and Chechnya experienced nine violent deaths in insurgency-related violence. In terms of the number of arrests, the same regions differed significantly: 22 rebel suspects were apprehended in Chechnya, 14 were arrested in Dagestan and five arrested in Ingushetia. No one was arrested in Kabardino-Balkaria in February (www.kavkaz-uzel.ru, March 7).

Fifty-nine deaths is a large number for a winter month in the North Caucasus, since the militants normally become active in the summer, when it becomes easier for the insurgents to hide. So if February saw such a surge in the death toll in the North Caucasus, the months ahead are likely to become even deadlier. If there is a link between the frequency and scope of terrorist attacks and the Russian election cycle, the coming summer is going to be an especially hot one, since it will be the last warm season in the mountains before the Russian presidential elections in early 2012.

A Green Revolutionhttp://russiaprofile.org/culture_living/33577.html

Green Technologies in Russia Are Developing Thanks to Its Middle Class, While State Policy Remains Focused on Raw Material ExportsBy Svetlana Kononova Special to Russia Profile 03/14/2011

From forest fires and abnormal heat in summer to ice storms in winter, the weather in Russia continues to complicate the lives of its citizens. Ecologists say forest fires are expected again this summer, but despite these alarming trends it seems that only Russia’s small middle class is interested in improving the situation and developing a “green economy.”

In Western Europe a “green economy” has been actively developed due partly to a lack of energy resources. Forced to buy oil and gas abroad, the governments of Western European countries started to develop energy-saving and other green technologies several decades ago to decrease their dependence on foreign energy suppliers. In Asia other factors have lead to an “ecological boom.” For example in China, the rapid development of green technologies is ascribed to the country’s dependence on the demand for its domestically produced goods abroad.

However, Russia follows its own course. “The global green economy develops due to competition on the world market. Countries that export consumer goods benefit as long as their goods meet ecological standards. But Russia is in a different position because most of its exports are raw materials, and not final products,” said Evgeny Shvarts, the director of conservation policy at World Wildlife Fund (WWF) Russia.

The sale of raw materials is still a very profitable business in Russia, which makes it more important than trying to preserve nature. “For example, in the United States and in many EU countries there are laws that presuppose punishment for companies selling illegally felled wood. It really works because nobody wants to be fined and to risk their reputation. But Russia doesn’t have such a law. Therefore, unlawfully felled wood is being sold abroad. The volume of this market is estimated at billions of dollars,” Shvarts said.

However, while the state and large corporations share profits from the export of raw materials, green technologies in Russia develop because the end consumers demand them. Paradoxically, the reason for such “modernization” is often technological backwardness. This is clearly illustrated by an inchoate market for alternative energy sources in the country. “Households are interested in technologies that decrease their energy expenses much more than companies, which can afford to buy the best modern equipment and recover the costs quickly. The most in demand are technologies providing heat and hot water from alternative energy sources, such as heat pumps and solar panels,” said Irina Korsakova, a spokesperson for EnergyEco, a firm that specializes in technical equipment for autonomous energy systems. “In many cases families buy or build a home and notice that it is technically impossible to supply it with gas. The engineering infrastructure of most small towns and villages in Russia is absolutely undeveloped. So they turn to alternative energy technologies,” she added.

Korsakova believes that the market for alternative energy technologies in Russia is very promising, but complains about the lack of governmental support. “In Western Europe people who use alternative energy sources receive some benefits from the state, such as tax breaks or cheap loans for equipment. But unfortunately, this practice doesn’t exist in Russia. Moreover, there is an acute lack of information. Most people simply don’t know about alternative energy technologies,” she said.

Experts say there are few people in Russia who use “green technologies” in everyday life, but this number is growing. Most people who lead an eco-friendly lifestyle in Russia are highly-educated. They have middle-class or high incomes, travel a lot and have a cosmopolitan mindset. “While ten years ago, people who built homes for themselves were only interested in prices, now their priorities have changed. They value the environment in which they live. They prefer homes made from natural materials: wood, thermal insulation from fleece and no chemical or synthetic materials at all,” said Dmitry Abramov, the CEO of the GarantStroy building company.

Another trend is the growing popularity of environmental assessment of real estate. “When we started work in Russia in 2002, environmental assessment was exotic. Only large Western companies applied for it. But now the situation has changed. The number of assessment requests has increased ten times since then,” said Nikolay Krivozertsev, the business development director at EcoStandard, which works in the field of ecological consulting.

Most clients request an environmental assessment of their homes or flats when they face some problem – feeling unwell or suffering from an allergy. But there is a new group of people who believe that checking property before buying it is necessary. “These people want to protect themselves when they buy real estate. For them requesting an environmental assessment is as much of a must as regular workouts. And this group is growing every year,” Krivozertsev said.

Experts say that such an attitude toward real estate in Russia stems from necessity, and is not just a popular trend. In big cities about 70 percent of buildings don’t meet ecological standards. The most common problems are noise, chemical pollution and electromagnetic fields.

Another characteristic of Russian eco-friendly lifestyle followers is that they value their families and care about the future of their children. “Most people who buy organic food in Russia are parents of small children. They want to provide their children with the best, including foodstuffs without coloring or preservatives, hormones or chemicals,” said Marina Goldinberg, a marketing director at the BioMarket organic retail chain. Goldinberg pointed out increased interest in eco-friendly lifestyles in Russia as well. “When we opened our first store in 2006, only a few people knew what organic food was. But now there are organic food departments at many big supermarkets. And sales are growing every year,” she said.

A green revolution in Russia has definitely started, but for now it is only confined to big

cities because millions of people with relatively high incomes live there. Green technologies are in demand in Moscow, St. Petersburg and in a few Siberian cities, but the provinces are still not interested. A poll conducted by the Public Opinion Research Center (VTsIOM) found that only 16 percent of Russians find environmental issues important.

National Economic Trends

Finance and economic development ministers comment on the economic situation http://www.bne.eu/dispatch_text14468

Renaissance CapitalMarch 15, 2011

Yesterday (14 March), Minister of Economic Development Elvira Nabiullina and Minister of Finance Alexey Kudrin commented on fiscal policy and the economic situation in Russia.

• Kudrin announced that with an average oil price of $115/bbl, the 2011 budget will be balanced. The no-deficit oil price seems to have been revised upwards from $109/bbl. This announcement followed proposals from Prime Minister Vladimir Putin that the government may consider an extraordinary increase in public sector pay in the autumn. Therefore, we believe this decision seems to have been already taken into account by the Ministry of Finance (MinFin).

• Nabiullina said that the Ministry of Economic Development (MED) will consider a revision of the pension tax rate for small businesses to 14% by May, because small businesses try to avoid tax payments at the current rate of 26%. In order to compensate for the shortfall in income, the MED may consider stepwise increases in alcohol, tobacco and other excises. The MED is also considering changes in the pension tax rate scale for other businesses. We believe there may be future clashes between MinFin and MED, since the former considers excise increases as providing the source of financing for modernising the armed forces by 2020.

Anton Nikitin

Russia unlikely to return to deficit-ridden grain market before winter - analystshttp://en.rian.ru/analysis/20110315/163012990.html

12:06 15/03/2011

By Agata Sherem

Russia is unlikely to lift its grain export ban until the end of the year and may even extend it into 2012 to ensure the country has enough grain to cover its own needs, analysts say.

A prolonged heat-wave and drought in summer 2010 cut Russia’s grain production by 36% and forced the government to ban wheat, barley, rye, corn and flour exports for the first time in the post-Soviet period. The embargo was initially in force until December 2010, but was later extended to June 30, 2011.

Agriculture Minister Yelena Skrynnik said in February that discussions about lifting the export ban could begin in October when it is clear how much grain Russia has harvested. Russia needs an 85 million ton harvest to lift the embargo, she said.

First Deputy Prime Minister Viktor Zubkov later said he did not rule out an extension beyond the end of 2011.

Analysts forecast Russia's 2011 grain production at 80-85 million tons, while domestic consumption is expected at 73-77 million tons.

"Since some carry-over stocks are left at about 7.5 million tons, we can accumulate some export potential, but it will be limited," said Institute for Agricultural Market Studies analyst Oleg Sukhanov, who forecasts the harvest at about 80 million tons.

"But the government believes it necessary to make sure the crop is first harvested, then counted and sorted by grain class by each region. This means that in theory the ban could be lifted in November or December, or from January 2012."

Local Russian prices increased despite the export ban as fears of the effects of a global food crisis encouraged producers to hold onto their grain.

Before last summer’s crisis, Russia held a secure position in the top four global grain producers, largely thanks to a record 108 million ton harvest in 2008, which slashed internal prices and made local grain more competitive.

In the 2009/2010 agricultural year, Russia harvested 97 million tons of grain and exported 21.3 million tons, mostly food wheat and barley, worth about $3.6 billion, or 13% of the world market share.

Russia exported just 3.7 million tons between July 1 and August 15, 2010. The United States, France and Australia took over Russia’s share after the ban was imposed.

"In the nearest future, we will not have enough export potential to return to the volumes of 2008/2009 or 2009/2010. It will certainly not happen next season," says Sukhanov.

Analysts say the hungry market would welcome Russian grain. The market first started to experience a shortage in 2008 as emerging economies increased consumption, while storms and droughts in leading agriculture producers such as Australia damaged supplies.

The International Grains Council expects wheat production in the July 1, 2010/June 30, 2011 season to fall by 30 million tons, and carry-over stocks to decrease by 7 million tons. Wheat consumption is expected at 661 million tons, which is 12 million tons more than in 2009/2010.

"The world food market and most cereals markets have been deficit-ridden for many years,” says Tatyana Bobrovskaya, a consumer goods analyst at Moscow-based bank IFC Metropol . “International grain reserves are decreasing, demand for grain will be high and Russia is unlikely to need special measures to find consumers for its grain. To what extent Russia recovers its position as an exporter depends entirely on the harvest."

MOSCOW, March 15 (RIA Novosti)

Russia's croplands are being irrigated with the tears of farmershttp://www.rusbiznews.com/news/n1014.html

14.03.2011 — Analysis

Fewer grains were planted in the Sverdlovsk region in 2010. Less farmland was sown with other crops as well, and the harvest of potatoes and vegetables decreased. Officials in the region blame the agricultural problems on the weather. And it's true that Russia experienced record-breaking heat last year. But farmers have convinced this columnist for "RusBusinessNews" that it is an adverse business climate that is at fault, not Mother Nature. The government only claims to support farming - the truth is the laws have little effect in the countryside, and the land is being used in the interests of organized crime.

Last year, 47,000 fewer hectares were sown with pulses in the Central Urals. The overall grain harvest decreased by almost 20% - 12% fewer vegetables and 36% fewer potatoes. Of course, the arid summer of 2010 was much to blame, but farmers hold government officials more accountable than nature for the poor yield.

At an expanded regional government meeting, Andrei Savchenko, the chairman of the Farm Association of the Sverdlovsk region, cited several reasons hindering the growth of agriculture: corruption, arbitrary actions taken by officials, high inflation, and the lack of economic incentives for business. He claims that farmers are unable to afford agricultural equipment and that the price of electricity, fuels, and lubricants has risen 65-80% in the last year.

But there is another factor that is even more significant - farmers are operating in a chaotic environment, which bears little resemblance to a market economy. Agricultural producers constantly find themselves in limbo, since Russia lacks a pricing policy, an established market infrastructure, and functioning, reliable industrial relations. As a result, Mr. Savchenko claims, farmers do not know what to produce, what to do with their products, and most important, are unable to predict the prices of agricultural commodities.

Igor Kovpak, the owner of the Kirovsky trade network, notes that market competition has not yet taken hold in agriculture, and thus the prices of products rise without real justification. For example, the price of potatoes went up 40% in December, although taxes and utility costs didn't rise until after New Year. According to Mr. Savchenko, the cost of fuel does not significantly affect the price of commodities. Taxes and wages make up as much as 60% of farming expenses, and another 12% goes for utilities. Thus, potatoes should not have gone up more than a ruble or two, but in fact their price increased by 10 rubles. Igor Kovpak believes that when things like this happen, it is the government's responsibility to reconcile the interests of all the market players, but officials are not doing that very well.

Businessmen claim that the Sverdlovsk region has approved an unrealistic rate of taxation on land. It is impossible to understand the logic of officials who assign the same assessed value to land parcels of completely different quality. It seems like local officials were driven only by a desire to extract as much revenue as possible. And the situation is only getting worse - in 2011, municipalities imposed the maximum land payment rates, and another tax increase is expected in 2012, due to the approval of new rates on the value of inventoried land. Obviously, the business community is expecting a sharp jump in land payments.

Responding to the protests of business owners, Aleksandr Misharin, the governor of the Sverdlovsk region, agreed that clear rules are needed, particularly regarding the allocation of land. He believes that everyone who wants to run a farm should have the opportunity to do so, but he also pointed out that in some areas only a quarter of the arable land is being cultivated. Businessmen told the governor that if the authorities want to develop the economy, they should pay more attention to those who create jobs, pay taxes, and fill the government's coffers - in other words, to them.

Russian farmers do not consider themselves to be stewards of the land, and officials, with or without cause, encourage this attitude. Andrei Savchenko claims that the Russian Land Code passed in the first decade of the 21st century failed to clarify the legal relationship between farmers and the government. For example, the head of the Revda urban district notified one of the local farmers that the municipality was planning to sell the irrigation system that ran two meters underneath the land the man was leasing. Neither the land nor, for that matter, the irrigation system belonged to the municipality, but that did not stop them from digging up the land plot from one end to the other. Neither the courts nor the Prosecutor's office defended the farmer's rights.

Andrei Savchenko believes that this kind of lawlessness does nothing to enhance the government's credibility. And he has no doubt that the fly-by-night firm, that dug up similar irrigation systems in three other areas of the Sverdlovsk region, has powerful protectors. They aren't even frightened by Russian President Dmitry Medvedev's emotional suggestion to "chop off the hands" of those who sell irrigation systems that were installed back in Soviet days. "The country's leaders say all the right things, but it is the local officials and law enforcement who run the show in the provinces, and they are quite chummy with one another", - notes Andrei Savchenko. And one shouldn't expect record harvests from Russian farmers under those conditions.

Vladimir Terletsky

Business, Energy or Environmental regulations or discussions

Russian resource plays are soaringPosted 3/15/2011 2:08 AM by Emerging Moneyhttp://community.nasdaq.com/News/2011-03/russian-resource-plays-are-soaring.aspx?storyid=61977

Gazprom soared yesterday and if the overnight news is any indication, it will continue to see real buying interest along with other resource plays. Gazprom ( OGZPY , quote ) jumped almost 4% yesterday as traders bank on the prospect that natural gas will be a near-term substitute for nuclear power in East Asia -- or even the entire world's electrical needs. While OGZPY does not distribute gas into Japan, it is in position to prosper if other gas vendors with assets more conducive to operating in the Pacific Rim find demand for their product increasing in the near term. Given the global nature of the commodity markets and the prospect of pipelines or liquefied natural gas, eventually increased demand for gas in Asia should support prices in Europe as well, which is where OGZPY comes back into play. Likewise, Russian steel and coal names like Mechel ( MTL , quote ) jumped 3.4% today to erase all their year-to-date losses. Coal shipments to Japan could be raised substantially in the future, not only to power a new generation of non-nuclear power plants but to stoke the steel mills that will now need to produce a lot more girders and other construction materials as the country rebuilds from the disaster.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Raspadskaya Falls After Ruling It Broke Russian Anti-Trust Lawshttp://www.bloomberg.com/news/2011-03-15/raspadskaya-falls-after-ruling-it-broke-russian-anti-trust-laws.html

By Jason Corcoran - Mar 15, 2011 9:27 AM GMT+0100

OAO Raspadskaya (RASP) slid to its lowest intraday level in more than three months after Russia’s Anti- Monopoly Service said the coal producer broke antitrust rules by charging different prices for coking-coal concentrate depending on the customer.

The stock lost as much as 3.8 percent to 182.69 rubles, its lowest intraday level since Nov. 26, and traded down 1.1 percent at 187.86 rubles as of 11:14 a.m. in Moscow.

The company faces fines of between 1 percent and 15 percent of last year’s sales, the watchdog said on its website last yesterday.

To contact the reporter on this story: Jason Corcoran at Jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Norilsk Nickel buys 100% stake of Nordavia airlines from Aeroflot. The purchase of the Northern air carrier is estimated at $230 mln.

http://barentsnova.com/node/940

After the purchase, Nordavia may merge with Taimyr airlines that is also owned by Norilsk Nickel, informs Kommersant. The experts think that the new ownership may drop a number of passengers that were earlier secured by Aeroflot.

Officially the information is not yet confirmed by Aeroflot, though the new destination to the city of Norilsk opened by Nordavia on March 11 may bridge the connection to the purchase.

Earlier, the merge of Nordavia and Rossiya airlines was discussed, yet this deal would not be realised: Aeroflot management found the merge unprofitable and gave up the idea of establishing a unified air carrier in the North-West Russia.

In 2010, Nordavia transported 1,4 mln passengers (place 16 in the Russian rating of air carriers). The main airports of the company - Moscow (Sheremetyevo), Arkhangelsk and Murmansk.

Inter RAO UES back in the black in 2010

http://www.rbcnews.com/free/20110315105818.shtml

      RBC, 15.03.2011, Moscow 10:58:18.Inter RAO UES reported a net profit of RUB 2.7bn (approx. USD 94.2m) in 2010 after having posted a net loss of RUB 1.2bn (approx. USD 41.9m) in 2009 under RAS, the electric power import and export operator said today.

      The company attributed its net profit to a revenue of RUB 1.4bn (approx. USD 48.8m) from the revaluation of stocks purchased in 2010, a revaluation of foreign currency-denominated assets and liabilities, as well as higher earnings from the sale of electric power.

      The company's revenue increased 31.1 percent year-on-year to RUB 61.4bn (approx. USD 2.1bn) due to higher volumes of electric power supplies to domestic and international markets and higher prices. Pretax profit amounted to RUB 3.3bn (approx. USD 115.1m).

Domestic steel prices rise in March

http://www.bne.eu/dispatch_text14468

Troika DialogMarch 14, 2011

Russian steel companies increased their prices for the domestic market by 3-14% m-o-m in March, according to Chermet. The largest increase was achieved for HRC at 14%, or more than $90/tonne. The smallest gains of 3-4%, or $25-27/tonne, were for construction long products, rebars and H-beams. Such a significant divergence reflects the confusing situation on export markets. The Middle East crisis has shaved about $50/tonne off export quotes for Russian billets and rebars, making it more difficult for steelmakers to demand a price hike at home despite the approach of the construction season. At the same time, export prices for HRC have remained mostly stable, and even gained somewhat m-o-m. Domestic premiums have returned, looking especially hefty for rebar (even to a worrying degree).

The new prices stand above our full-year forecasts. We believe that global steel prices have already ripened for a correction, which could happen in mid-2Q11, repeating last year's pattern. This means that Russian prices may also weaken, though strong domestic demand should prevent a serious correction. Besides, one has to take into account the cost pressures from ruble appreciation, which have so far been stronger than we expected, buoyed by persistently high oil prices.

Consistent improvement of the situation on the local steel market would be a very important positive fundamental factor for Russian steel producers, ensuring increased free cash flow generation.

Russia's Polyus Gold $509 mln deal with Assaubayev family hit by financial problemshttp://en.rian.ru/business/20110315/163012414.html

KazakhGold, controlled by Russia's top gold miner Polyus Gold, said late on Monday its $509 million deal to sell some of its assets in Kazakhstan to the Assaubayev family had been put on hold over financing problems.

KazakhGold said that the Assaubayevs' AltynGroup had failed to raise the required amount of money to finance the first stage of the deal.

"KazakhGold notes that AltynGroup did not manage to raise the required financing prior to the first tranche cut-off date," Polyus Gold said in a statement.

KazakhGold said, however, it is still in discussions with the Assaubayev family on ways to ensure the deal goes through.

"As a result of the termination of the principal agreement, including its exclusivity provisions, the board of directors intends to explore other opportunities with respect to the sale of the company's assets in Kazakhstan," the company said in a statement.

In November, Polyus Gold agreed to sell KazakhGold's production assets to the Assaubayev family, settling a long-running dispute between the two sides.

MOSCOW, March 15 (RIA Novosti)

Polyus Gold: Payment not received for KazakhGold mines

http://www.bne.eu/dispatch_text14468

UralSibMarch 15, 2011

Sale agreement with Assaubaevs terminated due to failure to pay first tranche. Yesterday Polyus Gold issued a press-release saying that the former core shareholders of KazakhGold, the Assaubaev family, have not transferred the first tranche totalling $331 mln to the company (out of a total of $509 mln), as had been agreed in the principal agreement signed in December 2010. As a result, Polyus has decided to formally terminate the agreement, as AltynGroup (representing the Assaubaev family) was unable to raise the required financing prior to the first tranche cut-off date.

Polyus may wait for the Assaubaev's to gather the necessary funds or find another

Kazakh buyer. As we understand, the company will not yet resume court proceedings against the Assaubaevs in London (Polyus had put these on hold) and would rather wait a few weeks (as the Assaubaevs have reportedly gathered the $331 mln, but are unable to guarantee the $200 mln Eurobond issue). The other option under consideration is to find another Kazakh investor, which will help Polyus resolve its problems with the Kazakh Government (which reneged on the permis- sion it had previous granted for the reverse takeover deal) and buy KazakhGold's mining assets at a reasonable price.

KazakhGold risks will continue to negatively affect Polyus' share price, Hold reaffirmed. These difficulties were rather pre- dictable and could potentially result in some amendments to timeframe for the agreement with the Assaubaevs. For now, we reit- erate our assumption that eventually Polyus will get rid of these assets. In terms of the divestment price if a sale to another party takes place, it might actually come lower than the agreed $509 mln, but we calculate the potential impact on Polyus' fair value as marginal. We view this announcement as negative in terms of sentiment for Polyus and believe it should create another waive of nervousness around the stock in the near term. We reiterate our Hold recommendation for the company and recommend pur- chasing shares in Polymetal and Petropavlovsk instead.

Sistema's India unit sees tripling customer base by 2013: CEOhttp://www.reuters.com/article/2011/03/15/sistema-india-idUSWNAS135620110315

4:24am EDT

NEW DELHI, March 15 (Reuters) - Russian oil-to-telecoms group Sistema's (SSAq.L: Quote, Profile, Research, Stock Buzz) Indian mobile unit expects to triple its customer base and aims to be EBITDA positive by 2013, its chief executive said.

The company sees 30 million customers by 2013 from 10 million currently, Vsevolod Rozanov, chief executive of Sistema Shyam TeleServices said.

Sistema owns a 73.7 percent stake in Sistema Shyam, while India's Shyam group owns 23.8 percent. (Reporting by Devidutta Tripathy; Editing by Aradhana Aravindan)

Standard Bank lost in Russia after trading in Troika stake?

http://www.bne.eu/dispatch_text14468

bneMarch 15, 2011

Standard Bank claims it will remain in the Russian market after its stake in investment bank Troika Dialog is sold Sberbank. However, Africa's biggest financial player is unlikely to commit major capital to its presence in a market being consolidated by state-controlled domestic giants and major Western names.

Alongside Troika management's major share in Troika, Standard agreed to sell its 36.4% stake to Sberbank on Friday, after months of speculation. Whilst Standard CEO Jacko Maree told reporters on Friday that he was happy with the $372m his bank would get at the very least from the deal, and insisted that the Bric markets remain critical for Standard, he was far from clear on the way forward in a market in which the book runners for the $50bn or so in privatization deals anticipated over the next five years have already been set.

The deal which saw Standard buy the Troika stake in 2009 for $300m was symbiotic - and a symbol of the growing trend for emerging market players to work with one another, cutting out the more traditional Western players. The African bank gained exposure to the growing CIS market, whilst offering Troika an opportunity to leverage growth in Africa and the Middle East.

However, the partnership never really took off. Some investors have always been sceptical about the benefits for Standard, considering it had a minority stake which offered limited strategic influence, reports businessday.co.za. The writing was on the wall once it became clear that Troika's majority holder - Ruben Vardanian - was ready to sell to the state-controlled Sberbank. It didn't help much that one of Standard's point men at Troika - Peter Ghavami - was arrested in the US in December on wire fraud charges.

Meanwhile, with Troika now headed into the Sberbank stable, the segment now looks to be increasingly consolidated. Sberbank - the largest Russian retail bank by some distance - has been targeting an investment arm for some time, in a bid to join its state-controlled cousin VTB.

Having launched VTB Capital just four years ago by raiding Deutsche Bank for practically an entire office of staff, the bank has become the biggest player in Russian investment banking with astonishing speed. Meanwhile, the traditional leaders of the segment - the privately held local players such as Troika and Renaissance Capital - have lost ground, no little thanks to the financial crisis. At the same time, global giants such as Citi are reported to be busy bulking up in a bid to take the domestic players on. The tidal wave of privatization fees presumably heading for the sector over the next five years or so is the driving force.

No wonder then that Standard Bank is a little confused over the course to take. Market watchers said that the minority stake in Troika made Standard's position untenable, but now it looks to have few options in Russia.

Maree said on Friday that the cash from the sale might fund growth, but also offered an

option that it could be returned to shareholders, as put on a bullish front. "We invested $300m in 2009 and now we will be able to receive a cash payment of $372m which is our (stake's) current book value based on retained earnings," he said, adding that Standard will also "receive an earn-out payment of 8% of any increase in the value of Troika as at the end of 2013."

Pointing out that "We as Standard will continue therefore to be actively involved with Troika over the next three years," Maree insisted that Standard is not exiting the Russian market. However, he explained that the bank will adopt a different strategy this time round, probably through strategic partnerships that do not require capital commitments. "The Bric countries are very important for Standard but we want to operate through partnerships rather than (being) deep on the ground (with a) large capital commitment," he said.

"We have sold both our licence and our investment in Troika so we have to start from scratch (in Russia)," Maree pointed out. "We have to think of some legal structure, maybe open a representative office and employ a few people to manage our relationship with Sberbank.

Whatever form Standard evolves in Russia after Troika, it appears clear that it will be a far less ambitious project. Maree claimed that the sale reinforces Standard's strategy to shift its focus and concentrate mainly on expanding in Africa. That did little to deter rumours that Sberbank is also sniffing around Standard's Turkish operations, despite Maree's insistence that there has been no such discussion with the Russian giant.

Activity in the Oil and Gas sector (including regulatory)

Russia May Raise Export Tax 16% to Highest Since September 2008http://www.bloomberg.com/news/2011-02-15/russia-likely-to-raise-export-duty-5-3-after-urals-crude-gain.html

By Stephen Bierman - Mar 15, 2011 9:30 AM GMT+0100

Russia may raise its export duty on most crude oil shipments by 16 percent on April 1 to the highest level since the September 2008 financial crisis.

The standard tax rate will probably rise to $423.70 a metric ton ($57.80 a barrel) from $365 a ton in March, according to Bloomberg calculations based on Finance Ministry data. The discounted rate on oil pumped via Russia’s East Siberian-Pacific Ocean pipeline to Asia and from the Caspian Sea may climb to $191 a ton from $150.40.

Brent and Urals, Russia’s benchmark export blend, have traded above $100 a barrel during the past month, the highest since 2008, as unrest in Northern Africa and the Middle East disrupted some oil flows. Russia taxed oil exports at $495.90 a ton in August and September 2008.

Russia sets its export duties based on the average Urals price from the 15th day of one month to the 14th day of the next. Urals averaged $108.16 during the most recent monitoring period, Alexander Sakovich, a Finance Ministry adviser, said by phone today.

The export tax on light oil products may be increased to $283.90 a ton from $244.60 a ton. The duty on heavy products may rise to $197.90 a ton from $170.40 a ton.

Prime Minister Vladimir Putin must sign off on the duties for them to come into effect.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

Novatek's Mikhelson, Timchenko To Execute Gazprombank Optionhttp://www.automatedtrader.net/real-time-dow-jones/52559/novatek039s-mikhelson--timchenko-to-execute-gazprombank-option

First Published Monday, 14 March 2011 05:54 pm - © 2011 Dow Jones

MOSCOW -(Dow Jones)- The two main shareholders of Russia's biggest independent gas producer OAO Novatek (NVTK.RS) plan to exercise an option to buy 9.4% of shares from Gazprombank (GZPR.RS), Novatek Chief Executive Leonid Mikhelson said Monday.

"We won't wait too long before exercising the option," said Mikhelson who, with oil trader Gennady Timchenko, is a major shareholder in Novatek.

In December, state gas firm OAO Gazprom (GAZP.RS) sold the shares to its former banking unit Gazprombank, leaving Mikhelson and Timchenko with an option to buy the stake before the middle of 2012.

Mikhelson said Gazprom has no plans to sell its remaining 10% stake in Novatek.

French energy giant Total SA (TOT) said Monday it had agreed to buy its entire 19.4% stake in Novatek from the two main shareholders.

Total earlier this month formed a strategic partnership with Novatek--which includes buying 12% in Novatek from Mikhelson and Timchenko--with an intention to increase that stake to 19.4% in the next two years.

-By Jacob Gronholt-Pedersen, Dow Jones Newswires; +7 495 232 9197; jacob.pedersen@dowjones.com

Total To Buy Entire 19.4% Novatek Stake From Mikhelson, Timchenkohttp://www.automatedtrader.net/real-time-dow-jones/52543/total-to-buy-entire-194-novatek-stake-from-mikhelson--timchenko

First Published Monday, 14 March 2011 04:55 pm - © 2011 Dow Jones

MOSCOW -(Dow Jones)- French energy giant Total SA (TOT) will buy the entire 19.4% stake in Russian gas producer OAO Novatek (NVTK.RS) from the company's two main shareholders, a Total spokesperson said Monday.

Total agreed earlier this month to buy a 12% stake in Novatek from main shareholders Chief Executive Leonid Mikhelson and oil trader Gennady Timchenko, with an option to increase it to 19.4% in the next two years.

-By Jacob Gronholt-Pedersen, Dow Jones Newswires; +7 495 232 9197; jacob.pedersen@dowjones.com

Novatek in Yamal LNG buyhttp://www.upstreamonline.com/live/article248446.ece?WT.mc_id=rechargenews_rss

Russia's leading independent gas producer Novatek said today it will exercise an option to buy a 25.1% stake in Yamal LNG project in the near future.

News wires  14 March 2011 14:46 GMT

"We expect to exercise an option arrangement to purchase the remaining 25.1% in Yamal LNG in the nearest time frame," chief financial officer Mark Gyetvay told a conference call.

"The combined shares, inclusive of the equity stake acquired as part of the new option arrangement and the remaining shares from the execution of the first option arrangement, will eventually be sold to the other partners in the project," he added.

Earlier this month, French oil major Total signed agreements to acquire a 20% stake and become a strategic partner in Yamal LNG.

Novatek has said it would retain 51% in the project, Reuters reported.

Gyetvay also said that Russian gas monopoly Gazprom m will retain its 10% stake in Novatek.

Meanwhile, Novatek said fourth-quarter net profit increased 29% driven by higher gas production, rising prices and increasing domestic market share.

Novatek's net profit for the period rose to 12.11 billion roubles ($422.3 million) from 9.38 billion roubles a year earlier, according to calculations made by Dow Jones Newswires. That was largely in line with a Dow Jones Newswires survey of six analysts, who had estimated 11.96 billion roubles.

Revenue for the October-to-December period increased 23% to 34.14 billion roubles from 27.85 billion roubles, while earnings before interest, taxation, depreciation and amortisation rose to 16.25 billion roubles from 13.23 billion roubles.

Published: 14 March 2011 14:46 GMT  | Last updated: 14 March 2011 20:45 GMT

15.03.2011

Slavneft Increases Oil and Gas Reserves Calculated Under SEC Criteriahttp://www.oilandgaseurasia.com/news/p/0/news/10766

As of December 31, 2010, the volume of the Slavneft’s audited proved oil reserves calculated under the Securities and Exchange Commission’s methods (SEC LOF) (excluding the licenses validity) amounted to 1,635.8 mln bbl. The Company's proved reserves volume increased by 152.1 mln bbl, or 10.3% as compared to 2009.

The Holding’s oil reserves replenishment ratio (relation of the recoverable proved oil reserves increment (286.7 mln bbl) to the oil volume produced in 2010 (134.6 mln bbl)) achieved 213% under the SEC standards.

ОАО NGK Slavneft’s cumulative proved gas reserves under the SEC LOF criteria increased by 3.9% (10.4 bln cft) as compared to the previous year and amounted to 274.8 bln cft.

By December 31, 2010, the Company’s total proved oil reserves volume under the SEC LE criteria (including the licenses validity) achieved 1,586.9 mln bbl having increased by 38.5% (441.4 mln bbl) against the previous year. The proved gas reserves under the SEC LE standards increased by 36.8% (71.8 bln cft) and amounted to 267.1 bln cft over the reporting period.

The hydrocarbon reserves increment under the SEC criteria is ensured by high efficiency of exploration performed by ОАО NGK Slavneft. In 2010, the Company managed to discover new hydrocarbon deposits at 27 license areas. Application of up-to-date drilling, penetration and enhanced oil recovery technologies, fulfillment of a wide scope of well work activities at the fields under development significantly encouraged the reserves increment as well. Besides, the 2010 increment is related to validity prolongation of the licenses for development of some subsoil areas in the Khanty-Mansi Autonomous Area – Yugra.

Copyright 2010, Slavneft. All rights reserved.

MARCH 15, 2011, 4:34 A.M. ET

BP May Find Russian Solution Expensive http://online.wsj.com/article/SB10001424052748704893604576200841939959996.html

By ANDREW PEAPLE

In its rush to sign up with Rosneft to explore the Arctic, it increasingly looks like BP glossed over some thorny details.

Most important, that its partners in TNK-BP appear to have a right to insist that BP's Russian investments are channelled through the joint venture.

The assumption seems to have been that oligarch-backed Alfa Access Renova, with 50% of TNK-BP, would simply roll over in the face of Kremlin support for BP's $16 billion share swap with the state-owned Rosneft.

That could prove to be an expensive miscalculation. This past weekend, BP directors blocked a move by its Russian partners to have TNK-BP be the vehicle for the Rosneft deal instead.

AAR's case—that BP violated the TNK-BP shareholder agreement by not properly notifying AAR of its Rosneft deal—looks strong. BP has maintained it followed the agreement's spirit, but that mightn't prove enough for the court.

BP could end up having to pay compensation or agree to sell some of its other global assets to AAR. Citigroup suggests BP's share of future oil reserves it might develop with Rosneft in the Arctic could be 10 billion barrels of oil equivalent, with a net present value of $1 each. That gives AAR plenty to aim at.

Meanwhile, BP shareholders have been reluctant to ascribe any value to the Rosneft deal, given that production from the Arctic is at least a decade away. They would rightly worry about paying out cash upfront to keep such an uncertain deal on track.

Bill Dudley has made clear he is trying to move decisively beyond BP's disastrous Gulf oil spill since becoming chief executive. His rush to demonstrate BP's strength in Russia and its ability to secure new resources could now prove expensive—both monetarily, and for his reputation.

Write to Andrew Peaple at andrew.peaple@dowjones.com

Rosneft asking for extension to Vankor tax breaks

http://www.bne.eu/dispatch_text14468

Alfa BankMarch 15, 2011

Rosneft has once again asked for preferred export duties on crude oil produced and exported from Vankor to be extended. According to current plans, export duty breaks for Vankor expire on May 1; however, the company is asking for an extension until 2014 in order to pay back the second stage of CAPEX (RUB370bn) and bring production up to the planned 25mn tpa. The Ministries of Energy and Economic Development seem to support an extension of export duty breaks, Vedomosti states, while the Ministry of Finance is once again in opposition.

We believe the news is NEUTRAL at this point, and await the final outcome of the dispute with interest, as it is still unclear whether the Ministry of Finance will give in on this. If the Ministry accepts Rosneft's proposition, we believe the news will be positive for the stock, as it would allow the company to save over $3bn a year.

State mulling tax preferences for Tatneft and Bashneft http://www.bne.eu/dispatch_text14468

Alfa BankMarch 15, 2011

The state is considering compensating Bashneft and Tatneft for the increased tax burden on the downstream segment with preferential mineral production tax (MPT) rates at the companies' core fields, today's Vedomosti reports.

Bashneft has the highest refining coverage ratio in the Russian oil and gas universe, as its refining capacities are more than twice as high as its crude oil production. Therefore, Bashneft is one of the companies most vulnerable to increased downstream taxation. Reportedly, the government is considering additional MPT preferences for the low-debit fields in the Bashkirian region, which is planned to be in place until the Trebs and Titov field is launched in 2014-2015.

According to the copy of the minutes of the January meeting with Deputy Prime Minister Igor Sechin, Tatneft will be negatively affected by the substantial capital spending on its brand-new Taneco refinery. Tatneft operates a fairly depleted reserve base in Tatarstan, which requires substantial operating expenses and the implementation of advanced technology.

According to our estimates, Tatneft will benefit the most if the "60-66" tax reform scenario materializes, as its modern refinery allows the company to minimize the output of dark products in the future, although initially, the portion of dark output will be considerable (we estimate around 30%). The company will benefit from decreased taxation on light products (and will be unhurt by higher dark product taxation owing to the low share in the output of products of this kind) as well as decreased export duty on crude oil, which will further enhance Tatneft's profitability (Tatneft exports around 65% of its crude oil output). We estimate Tatneft's total saving in this case is around $190m (5.6% of EBITDA) under an $80/bbl oil price scenario.

In other news, Bashneft is reportedly close to reaching an agreement with LUKoil on joint development of the Trebs and Titov field in order to utilize LUKoil's extensive infrastructure in the region, which if coupled with tax breaks for Bashneft may be a positive catalyst.

Pavel Sorokin

Gazprom

Italy’s Eni aims to sell Česká rafinérská stake to Gazpromhttp://www.ceskapozice.cz/en/business/energy-green-biz/italy%E2%80%99s-eni-aims-sell-ceska-rafinerska-stake-gazprom

The Czech oil refiner’s other shareholders (Unipetrol and Shell) have right of first refusal, but Russia’s Gazprom has deep pockets

Tue 15. March 2011

Italy’s Eni is negotiating the sale of its 32.445 percent stake in Česká rafinérská, the leading Czech oil refiner, to Russia’s Gazprom, and has informed its partners in the joint venture of its intentions in a letter, Czech Position has learned from a Czech government source.

“Eni has informed the other shareholders, Unipetrol and Shell [Overseas Investments], that it is negotiating with Gazprom about the sale of its [Česká rafinérská] stake,” a senior

manager from a company in the sector operating on the Czech market confirmed. “We’ve known about this since last week.”

Česká rafinérská is the largest crude oil processing company in the Czech Republic and the largest domestic producer of oil products. It operates two refineries: one in Litvínov (Northern Bohemia) and another in Kralupy nad Vltavou (Central Bohemia).

Prague-listed Unipetrol — controlled by Poland’s PKN Orlen — currently holds a 51.22 stake in the Česká rafinérská joint venture while Shell Overseas Investments, a unit of Royal Dutch Shell, holds a 16.335 percent stake.

According to the terms of the joint venture, the companies have right of first refusal as regards the sale of shares. Relations between the Česká rafinérská stakeholders have been strained; they failed to agree on a new general director and board chairman at the Czech oil refinery’s Jan. 25 extraordinary general meeting, and so CEO Ivan Souček remains at the helm.

The Czech Republic has been eager to limit Russian holdings in its strategic energy and petrochemical sectors. In late 2009, Czech state-controlled oil pipeline operator Mero made an unsuccessful bid for the Shell unit’s 16.335 stake in Česká rafinérská, then valued at some $200 million, with the aim of increasing state control over the sector.

Lukoil — Russia’s largest privately owned oil company — has also negotiated to buy a stake in Česká rafinérská’s majority owner, Unipetrol.

Italo-Russo cooperation

Eni, Italy’s biggest oil and natural gas company by volume, and Gazprom, Russia’s natural gas export monopoly, are partners in the planned 900-kilometer South Stream pipeline across the Black Sea to Europe — bypassing transit states such as Ukraine.

In 2006, the Russian and Italian companies signed a strategic partnership through which they committed to jointly develop project in the entire gas chain: it was in the framework of this partnership that they launched the South Stream project and Eni entered Russia’s upstream sector.

Gazprom CEO Alexey Miller and Eni CEO Paolo Scaroni on Feb. 16 this year — with Russian President Dmitry Medvedev and Italian Prime Minister Silvio Berlusconi on hand — this signed an agreement paving the way for the future handover to Gazprom of half of Eni’s 66 percent stake (valued at $170 million) in a consortium developing the Elephant oilfield in Libya’s southwestern desert.

Eni and Gazprom this February also signed a gas sale agreement (GSA) for production from the Siberian fields of SeverEnergia, a company with which Gazprom, Eni and Enel are partners.

Several years ago, Eni was on a regional buying streak in Central Europe. In May 2007, it doubled its stake in Česká rafinérská after buying a stake from a ConocoPhillips unit and later that spring acquired 102 petrol stations in the Czech Republic, Slovakia and Hungary from a unit of Exxon Mobil Corp.

MARCH 15, 2011

Gazprom and the Rule of EU Law http://online.wsj.com/article/SB10001424052748703386704576186063881780854.html

Europe should hold its ground against Russia's ex-imperial arrogance.By ALAN RILEY

EU energy liberalization is clearly getting Gazprom hot under the collar. Already the prospect of an EU-inspired forced sell-off of Gazprom's pipeline assets in Lithuania has provoked outrage in Moscow. Last month Prime Minister Vladimir Putin was in Brussels seeking a special exemption for Gazprom from EU energy liberalization, brandishing the not-so-subtle threat of higher gas prices for Europe if he does not get his way. The EU has no need to entertain such demands. Other energy firms have been forced to liberalize, and the same rules should apply to Gazprom. If a U.S. official had demanded a special exemption for U.S. companies from EU law, it would have been denounced in Brussels as imperial arrogance. Russia's ex-imperial arrogance should equally be rejected.

Russian officials are openly dismissive of EU energy liberalization and are outraged at the idea that Gazprom's operations within the EU should be subject to EU competition and liberalization law. The deputy chairman of the Duma, Valeri Yazev, speaking to the Brussels press corps recently, argued that liberalization would inflict on Gazprom "direct economic prejudice," and demanded a change in the rules of the game.

EU energy liberalization has already sparked a furious row in Lithuania, where government proposals for unbundling the ownership of the partially Gazprom-controlled local gas company have prompted Gazprom to increase gas prices in Lithuania significantly compared to other Baltic states. The Lithuanians reacted by filing an antitrust complaint against Gazprom with the European Commission, alleging that it had abused its market dominance in the local market.

The EU should hold its ground. Europe's vertically integrated domestic energy monopolies, which follow the Gazprom model, have proven highly damaging to consumers. In parallel with its new energy liberalization rules, the Commission some years ago launched an inquiry into competition in Europe's energy sector, and found overwhelming evidence of anti-competitive behavior, from price-fixing to denials of third-party access to throttling of capacity, by almost all major energy incumbents.

The Commission's Competition department launched more than a dozen prosecutions on the back of this inquiry, and it is these prosecutions that are really forcing the pace of liberalization in Europe. Already E.ON and RWE, under threat of prosecution, have backed down and agreed to sell their electricity and gas networks and thus open up their markets.

Why, then, should Gazprom have its own special exemption from EU law? Gazprom can hardly argue that it is being prejudiced economically, as it would be able to sell off its networks, in Lithuania for instance, at full market value. Clearly, it may no longer reap super-monopoly profits, but EU competition law exists in large part to deny businesses the opportunity to do just that.

No one in the EU institutions should be entertaining Moscow's requests for legal exemptions for Russian companies on EU territory. The equal application of the law and the rule of law are fundamental European values. So why is the EU cringing before Russian demands? The core reason is that many EU and national officials really believe that Russia is essential to Europe's energy future, and that as the North Sea fields decline, Europe will have no choice but to go, cap in hand, to the Russians for gas.

But this argument does not stand up to close examination. Firstly, Gazprom depends on the EU far more than the EU depends on Gazprom. EU gas sales of around 140 billion cubic meters represent approximately two-thirds of Gazprom's revenues (and approximately one-third of total production). Any cut in production would harm Gazprom's revenues. Second, Gazprom should have learned from the 2006 and 2009 Ukraine-Gazprom conflicts that taking aggressive action against its customers only winds up shrinking its market. Since Gazprom's January 2009 cut-off, many EU states—and not just in Central and Eastern Europe—have taken steps to ensure they have access to greater storage facilities and alternative pipeline and liquefied natural gas supplies.

Third, there are now more and more new gas sources coming on stream. The shale gas revolution in the United States has seen the demand for liquefied natural gas collapse in America, causing a major supply diversion to Europe. As a result, the European spot-market price for gas has been below the key German border price for most of this year. Worse still for Gazprom, even more liquefied natural gas is coming onto the market, with global production set to soar to 410 billion cubic meters in 2013 from approximately 240 billion cubic meters in 2008.

In the medium term, shale gas discoveries across the planet, from India to China to Argentina, will likely hurt demand for liquefied natural gas further, which will lead to more liquefied natural gas dumping in Europe. This is all before actual shale-gas production starts in Europe, where well over 100 exploratory licences have now been granted.

Rather than looking for special exemptions from the EU, Gazprom should look at developing its own huge shale-gas resources. Much of the resource base is close to its existing pipeline infrastructure, meaning shale gas would be cheaper to develop than

Russia's Arctic Shtokman or Siberian Yamal fields. A liberalized market structure would encourage development and ensure a rapid build up of production. Then Gazprom too would be able to compete effectively on Europe's increasingly liberalized gas market.

Mr. Riley is professor of law, at City Law School, City University, Grays Inn, London.

Gazprom: The Call on Russian Gas

http://www.bne.eu/dispatch_text14468

VTB CapitalMarch 14, 2011

Gazprom might need to get ready to ramp up exports Nuclear power capacity damage in Japan equates to about 13bcm of annual gas consumption, which we estimate represents 9% of Gazprom's exports. The missing Libyan volumes amount to another 9bcm if annualised (6% of Gazprom's exports). However, Gazprom will probably not be able to provide all 22bcm of the needed supply, with other sources of gas and alternatives being available. Still, we estimate that recent developments could provide for a 10-15bcm (7 to 10%) higher call on Russian gas this year, potentially adding 3-5% to Gazprom's top line in 2011.

Term prices could surprise on the upside as wellPotential upward pressure on oil prices would affect Gazprom's term price as far as European contracts are concerned. With Gazprom's term prices currently in the USD 330-350/mcm range (likely heading to USD 400/mcm by mid-2011), and keeping in mind the recent oil price trends, the company's recent price guidance of USD 352/mcm for 2011 now appears to be on the conservative side.

Positive cross-read for the deal with ChinaWith gas becoming more important in the regional geopolitical context, Gazprom's chances to close the deal with CNPC on gas supplies to China are improved, in our view. Signing the final agreement by mid-2011, as was guided earlier, would pave the way for a major expansion of Gazprom's exports on a seven-year horizon.

Reiterating our positive view on Gazprom this yearRecent developments are strengthening our above-consensus view on Gazprom's earnings growth in 2011 and 2012. We see the stock as becoming more attractive amid recovering fundamentals, still cheap multiples and a likely agreement with China in the coming months.

Lev Snykov