Russia 110303

Basic Political Developments US Vice President Joe Biden to visit Moscow - US Vice President Joe Biden is

expected to visit Moscow on the 9th of March to continue the resetting of bilateral ties, the White House National Security Council spokesman Bob Jensen told journalists. However, he declined to comment on whether Mr. Biden`s visit will focus on preparing an official visit by President Barack Obama to Russia.

Hillary Clinton declares international information war - Clinton said existing private channels are not good enough to handle the job, naming as rivals Al Jazeera, China's CCTV and RT – which she watches, she added.

Moscow finishes evacuating Russians from Libya Efforts underway to free Russian doctor - Security source in Shabwa has asserted

that the efforts are underway to free a Russian doctor kidnapped on Monday, Interior Ministry said on Thursday.Iran's Mehr News Agency Launches Russian Language Service

Japan, Russia discuss territorial row at strategic dialogue - Japanese Vice Foreign Minister Kenichiro Sasae and Andrei Denisov, Russian first deputy foreign minister, also talked about bilateral economic exchanges and cooperation in seeking the denuclearization of North Korea, Japanese officials said.

Japan refuses to reinvestigate Russian flag desecration Japanese interest for Shtokman - Japan’s Mitsubishi Corporation is interested in

taking part in Russia’s Shtokman gas project. More Japanese freight to flow via Trans-Sib - A delegation of Japanese

businessmen has visited the far-eastern port of Nakhodka to look into the details of a project that would be an alternative to freight transportation by sea through the Suez Canal.

NATO welcome proposal by Dmitry Medvedev - NATO welcomes the decision of Russian President Dmitry Medvedev on the establishment of a Special Representative of the Russian Federation on missile defense. This was reported by the the Russian envoy to NATO Dmitry Rogozin.

No neutralization of strategic capability - Russia will not allow the formation of a European missile defense system, which will neutralize the guarantor of its sovereignty, its strategic nuclear capability.

Russia may host NATO-Russia Council meeting in June – envoy NATO Has No Plans to Conquer Libyan Oil: Russia Reassures the International

Community Russia to boost chopper sales in Asia-Pacific - Russia will increase helicopter

aircraft supplies to Asia and the Pacific, a spokesman for the Helicopters of Russia company has told reporters.

Russia and France in deadlock over Mistral cost: report - "The two sides have a number of issues where they disagree in principle, primarily on the price of the ships that are being bought," Kommersant cited a source involved in the long-running negotiations as saying.

o Price debate stalls Mistral assault ship talks – report: Russia is ready to offer no more than 990 million euros for two vessels, while France insists

that the price should be at least 1.15 billion euros, newspaper’s sources say. No official confirmation or denial of the news has come so far.

Alstom, EADS Will Invest in Vekselberg Project, Echos Reports o France, Russia to cooperate closely on Skolkovo

Russian warship to visit Seychelles port - On March 7, the Admiral Vinogradov, which is taking part in the international anti-piracy mission off Somalia, will set off for the Gulf of Aden. 

Russian investigators probe ‘illegal’ drillship loan to Norway - The ministry said on Thursday that the state Arktikmorneftegazrazvedka (Arktik) company rented out the ship to the Norwegian companies ARBA AS and Venture Drilling AS in 2005 without permission from the Federal Property Management Agency.

Tajikistan and Russia continue border consultations o Russia has no plans to re-deploy guards to Tajik-Afghan border

Tbilisi urges Moscow not to use force - Tbilisi urges Moscow to take none-use of force commitment. Georgian delegation is expected to raise the issues at the 15th round of Geneva talks on Thursday.

Azerbaijan, Tatarstan discuss cooperation - "In Tatarstan, we use the Global Navigation Satellite System or GLONASS to coordinate the actions of all services of the Emergency Ministry and medical and police services. This would also be useful for Azerbaijan," Rustam Minnikhanov said. He said that although industry was developing well in Tatarstan, agriculture had been badly affected by the unprecedently hot summer.

Bout hearing today - Hearings on Russian businessman Viktor Bout, who was extradited from Thailand to the U.S., will be held today in federal court in New York.

Talks with Putin to include South Stream, Banatski Dvor and other issues - The official visit of Russian Prime Minister Vladimir Putin to Serbia will include talks about construction plans for South Stream gas pipeline and underground gas storage Banatski Dvor, Director General of Srbijagas Dusan Bajatovic stated on Wednesday.

o Russian PM will discuss South Stream on Serbian visit this month Putin hails acquisition of Russian stakes by French corporation Putin to hold meeting on coal industry safety

o Putin to chair meeting on health and safety in coal industry Space Forces of Russia: Rokot missile launch suspended Defense Ministry still trying to establish contact with lost military satellite Russia's fifth-gen jet off to flying start

o The second T-50 fighter jet had a successful flight Police attacked in Chechnya, Dagestan Sochi environmental problems to be discussed - Environmental issues during the

preparation for the Olympic Games in Sochi will be discussed today by the representatives of Sochi 2014 and experts of the UN Environment Programme (UNEP).

Russian Press at a Glance, Thursday, March 3, 2011 Moscow authorities plan to fight traffic with Korean experience - Experts don’t

expect to see positive changes on the roads before 2012

Russia marking 150th anniversary of serfdom abolition Patriarch Kirill pays tribute to Gorbachev's contribution to ensure cooperation

between Church and state Perestroika Syndrome - Gorbachev’s Recent Criticism of the Government May

Reflect a Shift in His Role at Home Russian tycoon buys 'Putin's palace' near Black Sea - Russian tycoon Alexander

Ponomarenko has bought a multi-million dollar Italianate villa allegedly being built near a Black Sea resort for Prime Minister Vladimir Putin, the Russian Kommersant daily reported on Thursday.

o 'Putin Palace' sold for $350 million: Report

National Economic Trends Russia Revises 2010 Budget Deficit To 4.1% Of GDP From 3.9% Russian Feb. Service Sector Growth Slows Russia’s Services Sector Fails to Build Growth, PMI Data Shows Russia’s consumer inflation rate tops 3% by February 28 – statistics Rosagrolizing to sell or lease agricultural equipment at half price The government seeks to raise as much as $2.6 billion a year in fees and taxes

by leasing as many as 6,500 ponds and lakes to private fishing operators, Rossiiskaya Gazeta said Wednesday.

Russian Raw Sugar Production Rises 41%, Union Says

Business, Energy or Environmental regulations or discussions Russian markets -- Factors to Watch on March 3 Goldman Sale of Bank of Moscow Stake Blocked, Vedomosti Says Ford, GM get chummy with Russian automakers Euroset, Svyaznoy rivalry threatens survival of small retailers Severstal's IFRS net loss narrows in 2010 Russian steelmaker Severstal, which entered at the top of the U.S. market in 2008,

is selling Wheeling-Pitt mills and other steel assets Sberbank in talks to buy Charlie Ryan’s UFG wealth unit Still No Franchising for McDonald's MOSCOW BLOG: Retail hopes

Activity in the Oil and Gas sector (including regulatory) Total enters into a strategic partnership with the independent gas company

Novatek Total to buy Novatek stake for $4bn Rosneft increases exchange trading of petroleum products A trap for BP - Vedomosti learned that it will be hard for British Petroleum to

decline TNK-BP’s proposal to take its place in deal with Rosneft. TNK-BP Move To Replace BP In Rosneft Deal Unlikely To Succeed TNK-BP Seeks To Buy Algerian Assets Despite Ongoing Turmoil It’s all about Russian Arctic energy - It looks like 2011 really is becoming the

year of Russian strategic energy partnership deals.

Gazprom Kommersant: Gazprom Neft entering the Balkan market by Serbian NIS International Natural Gas Price Boosts Gazprom and Statoil

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Full Text Articles

Basic Political Developments

US Vice President Joe Biden to visit Moscowhttp://english.ruvr.ru/2011/03/03/46879054.html

Mar 3, 2011 12:05 Moscow Time

US Vice President Joe Biden is expected to visit Moscow on the 9th of March to continue the resetting of bilateral ties, the White House National Security Council spokesman Bob Jensen told journalists.

However, he declined to comment on whether Mr. Biden`s visit will focus on preparing an official visit by President Barack Obama to Russia.

The US State Department announced last week that next meeting between the two leaders is expected on the sidelines of the G8 summit in French Deauville in late May.

Hillary Clinton declares international information warhttp://rt.com/news/information-war-media-us/print/

Published: 3 March, 2011, 02:23Edited: 3 March, 2011, 12:23

The US is losing the global information war, Secretary of State Hillary Clinton declared while appearing before a congressional committee to ask for extra funds to spread US propaganda through new media.

Clinton said existing private channels are not good enough to handle the job, naming as rivals Al Jazeera, China's CCTV and RT – which she watches, she added.

Clinton was defending her department’s budget in front of the House’s Committee on Foreign Affairs on Wednesday.

Clinton said the US should step up its propaganda effort and get back “in the game” of doing “what we do best.”

“During the Cold War we did a great job in getting America’s message out. After the Berlin Wall fell we said, ‘Okay, fine, enough of that, we are done,’ and unfortunately we are paying a big price for it,” she said. “Our private media cannot fill that gap.”

“We are in an information war and we are losing that war. Al Jazeera is winning, the Chinese have opened a global multi-language television network, the Russians have opened up an English-language network. I’ve seen it in a few countries, and it is quite instructive,” she stated.

Things have changed a lot since the days when Western media outlets, including BBC and CNN, had a monopoly on the coverage of world news. More and more viewers across the world tune into various foreign media to get a fresh take on events.

It is all in the numbers. For instance, RT’s presence on YouTube is a real hit: almost 300 million views, when CNN is struggling to reach 3 million.

RT’s constantly growing audience is an indication that the days of media monopoly are over and that people are demanding more multi-polar thinking.

One of the latest examples is Al Jazeera’s coverage of the unrest in the Middle East and North Africa, which by most accounts outshone the US media’s presentation of events.

Not everyone, however, is happy with the wider variety of media options. The head of the federal agency that manages the US’s government-run international broadcasting has basically called all those foreign media enemies.

Last year Walter Isaacson, who heads the federal agency that manages the US’s government-run international broadcasting, including the Voice of America, warned against the influence of foreign media.

“We can’t allow ourselves to be out-communicated by our enemies,” he said, in a now-infamous pitch to get his agency more funding. He did, however, later backtrack on his statement, saying that he was misunderstood.

Journalist and filmmaker Danny Schechter says the US can no longer maintain a monopoly on information.

“The United States feels defensive in part because it can no longer monopolize not only the terms of authority in these countries, but also the terms of the debate,” he said. “There is other information out there. There are other points of view and those points of view are profoundly damaging to a country that believes that its point of view is the only point of view.”

Moscow finishes evacuating Russians from Libyahttp://www.kyivpost.com/news/russia/detail/98808/

Today at 09:57 | Interfax-Ukraine Russia's government has finished evacuating Russians from Libya as the last group of evacuees arrived in Moscow on Wednesday, the Emergency Situations Ministry said.

The 126 Russians were brought to Moscow by an Emergency Situations Ministry aircraft from Malta, where they had been taken from the North African country by ferry. Also, 21 citizens of other member countries of the Commonwealth of Independent States arrived in the Russian capital aboard the same Ilyushin Il-62 plane, the ministry's press service told Interfax.

Altogether Russia evacuated more than 500 people, including 467 Russian nationals, from Libya. Emergency Situations Ministry aircraft have made eight flights to the Libyan capital, Tripoli, two flights to the Libyan city of Sirte, and one flight to Malta.

Read more: http://www.kyivpost.com/news/russia/detail/98808/#ixzz1FWfXfJv4

Efforts underway to free Russian doctorhttp://www.sabanews.net/en/news236951.htm

[03/March/2011]

SANA'A, March 03 (Saba) - Security source in Shabwa has asserted that the efforts are underway to free a Russian doctor kidnapped on Monday, Interior Ministry said on Thursday.

The investigations revealed that the Russian doctor has been abducted by members of "AL Bakazim" tribe in Abyan governorate on grounds of tribal demands.

Sources in Ataq Hospital, where the abductee works, said that they have received a phone call from the doctor and assured that he is in a good health condition.

AF/AF

March 03, 2011 15:07 PM

Iran's Mehr News Agency Launches Russian Language Service

http://www.bernama.com/bernama/v5/newsworld.php?id=568118

TEHRAN, March 3 (Bernama) -- Iranian Foreign Minister Ali Akbar Salehi has congratulated Mehr News Agency (MNA) on the launching of its Russian language

service, reports Mehr News Agency (MNA).

He described the move as a very positive step since the Russian language is among the six top international languages in the world.

The Mehr News Agency officially launched the Russian-language news service on Tuesday, bringing the agency's foreign language services to seven.

The six other languages are Persian, English, Arabic, Turkish, Urdu and German.

The Foreign Ministry spokesperson, ambassadors from the Commonwealth of Independent States including the Russian ambassador, charge d'affaires, cultural attaches, and foreign news agencies' bureau chiefs in Tehran attended the opening ceremony.

MNA's first Southeast Asia Regional Bureau is located in Kuala Lumpur, Malaysia. It was launched on Sept 22 last year.

-- BERNAMA

Japan, Russia discuss territorial row at strategic dialoguehttp://mdn.mainichi.jp/mdnnews/news/20110303p2g00m0dm005000c.html

TOKYO (Kyodo) -- Japan and Russia discussed Wednesday a bilateral territorial row at a vice-ministerial strategic dialogue in Tokyo, following up on a meeting between the two countries' foreign ministers last month in Moscow.

Japanese Vice Foreign Minister Kenichiro Sasae and Andrei Denisov, Russian first deputy foreign minister, also talked about bilateral economic exchanges and cooperation in seeking the denuclearization of North Korea, Japanese officials said.

The strategic dialogue, which was launched in 2007 and last held in January 2010, came at a time when bilateral ties have reached the lowest point in years over a rekindled dispute over the four Russian-held islands off Hokkaido.

Foreign Minister Seiji Maehara and his Russian counterpart Sergei Lavrov remained apart in their meeting in February over the decades-old territorial spat, which was reignited after Russian President Dmitry Medvedev visited one of the four islands last November as the first Russian leader to do so.

Sasae and Denisov agreed that the next round of the strategic talks will be held in Moscow and that the schedule will be coordinated through diplomatic channels.

In a related move, Chief Cabinet Secretary Yukio Edano said earlier in the day that Japan is closely watching Russian military developments in the country's Far East region, following a report on Moscow's plan to deploy antiship cruise missiles near Hokkaido.

Edano told a press conference that Maehara agreed with Lavrov that the two countries should boost defense exchanges and not engage in "an unnecessary arms race" in the Asia-Pacific region.

Interfax news agency reported Tuesday that Russia will deploy antiship cruise missiles and an advanced air defense system in its Far East region, including the four islands off Hokkaido claimed by Japan.

Japan and Russia are at odds over the sovereignty of the islands of Etorofu, Kunashiri and Shikotan, as well as the Habomai islet group. They were seized by the Soviet Union following Japan's surrender in World War II on Aug. 15, 1945.

The islands are known as the Northern Territories in Japan and as the Southern Kurils in Russia. The dispute has prevented the two countries from signing an official peace treaty to end their World War II hostilities.

(Mainichi Japan) March 3, 2011

Japan refuses to reinvestigate Russian flag desecrationhttp://en.rian.ru/world/20110303/162839864.html

Japan does not believe it necessary to reopen a probe into the desecration of a Russian flag by right-wing campaigners in the country, Chief Cabinet Secretary Yukio Edano said.

Japanese right-wing campaigners dragged the Russian flag along the ground outside the Russian Embassy in Tokyo on February 7, demanding the return of a group of the disputed Kuril Islands in Russia's Far East.

"The desecration of the national flag is regrettable, but there was no violation of Japanese legislation," Edano was quoted by the Kyodo news agency as saying.

The embassy sent a protest note to the Japanese Foreign Ministry just after the incident and Russia later imposed an entry ban on the heads of two Japanese companies over the incident.

Two Japanese extremist organizations, the Brotherhood Community Devoted for Great Japan and the Solidarity League for the Return of the Northern Territories, have been banned from entering Russia.

Russia issued a diplomatic protest to Japan on Wednesday after Tokyo dismissed Moscow's demand for criminal proceedings .

Japan stands firmly by its position that the extremists desecrated not the Russian flag, but "a self-made object," resembling a flag, the Russian Embassy in Japan said.

Both Japan and Russia have laid claims to the South Kuril Islands, called the Northern Territories by the Japanese, since they were annexed by the Soviet Union at the end of World War II. The dispute has prevented the two countries from signing a peace treaty to formally end hostilities.

TOKYO, March 3 (RIA Novosti)

Japanese interest for Shtokmanhttp://www.barentsobserver.com/japanese-interest-for-shtokman.4891964-16178.html

2011-03-03

Japan’s Mitsubishi Corporation is interested in taking part in Russia’s Shtokman gas project.

- We are closely monitoring the development of the Shtokman field and Mitsubishi would like to become a participant, says the Japanese corporation’s Moscow Office General Manager Makoto Nakazato.

Mitsubishi has a 33.5 percent stake in the Japanese company Chiyoda, which designed and built a LNG plant on the Sakhalin Island in Russia’s Far East. According to Nakazato Chiyoda could offer to build and supply equipment to the planned Shtokman LNG plant, PRIME-TASS reports.

Text: Trude Pettersen

More Japanese freight to flow via Trans-Sibhttp://english.ruvr.ru/2011/03/03/46877481.html

Mar 3, 2011 11:50 Moscow Time

Japan is considering higher freight volumes to western Russia through the Trans-Siberian railway.

A delegation of Japanese businessmen has visited the far-eastern port of Nakhodka to look into the details of a project that would be an alternative to freight transportation by sea through the Suez Canal.

The delegation’s leader Tsuji Hisako said that instability in the Middle East was forcing Japan to reroute its export flows in which Nakhodka port facilities could have a key part to play, the Nakhodka administration reports.

NATO welcome proposal by Dmitry Medvedevhttp://english.ruvr.ru/2011/03/03/46866228.html

Mar 3, 2011 10:06 Moscow Time

NATO welcomes the decision of Russian President Dmitry Medvedev on the establishment of a Special Representative of the Russian Federation on missile defense. This was reported by the the Russian envoy to NATO Dmitry Rogozin.

The Alliance believes this is a demonstration of the extreme interest in Moscow on the issue of creating a missile defense system in Europe, Rogozin said, at the end of a meeting of the NATO-Russia Council.

The diplomat noted that the organization expressed its full readiness to cooperate with Moscow during the period of development of the architecture EUROPRO. It is not yet known what the new system will be like, but in any case it must not create a threat to NATO countries or create new walls between Russia and the West, said Rogozin.

No neutralization of strategic capabilityhttp://english.ruvr.ru/2011/03/03/46866754.html

Mar 3, 2011 06:02 Moscow Time

Russia will not allow the formation of a European missile defense system, which will neutralize the guarantor of its sovereignty, its strategic nuclear capability.

This was stated by Russia's permanent representative to NATO, Dmitry Rogozin, after the end of the last joint meeting.

Rogozin said that it was not a "minor" but a fundamental difference if NATO countries refuse to designate an equal role for Russia in the general construction EUROPRO.

According to him, the situation is unacceptable for Moscow, if Russia is asked to join an already "finished product", which was developed without Russian participation.

Russia may host NATO-Russia Council meeting in June – envoyhttp://en.rian.ru/world/20110303/162838116.html

03:20 03/03/2011

An ambassadorial-level meeting of the NATO-Russia Council could be held in June, Russia's envoy to NATO Dmitry Rogozin said.

On Tuesday, Rogozin handed NATO Secretary General Anders Fogh Rasmussen, who heads the Council, an official letter confirming Russian President Dmitry Medvedev's decision to host a Council meeting in the southern Russian resort of Sochi.

"We hope the meeting will be held immediately after June's ministerial meeting of the NATO-Russia Council that will initially consider a report on the possible combination of Russian and NATO missile defense potentials," he said.

Russia and NATO agreed to cooperate on the European missile defense system at the Lisbon summit in November 2010. NATO insists there should be two independent systems, while Russia favors a joint system.

Rogozin said the final decision on the date will be made when the Russian and NATO foreign ministers meet in April.

BRUSSELS, March 3 (RIA Novosti)

NATO Has No Plans to Conquer Libyan Oil: Russia Reassures the International Communityhttp://hamsayeh.net/world/416-nato-has-no-plans-to-conquer-libyan-oil-russia-reassures-the-international-community.html

Thursday, 03 March 2011 09:15

Hamsayeh.Net - Russian representative to NATO reassured the World Community that Western-based alliance does not plan any military moves on oil-rich Libya.

Following a meeting with NATO secretary general Andres Fogh Rasmussen, the Russian envoy to NATO, Dmitry Rogozin told reporters that he was informed that NATO forces now closing in on Libyan coastline do not have any plans to infringe the Libyan territory - a move considered illegal under international conventions.

Earlier NATO’s secretary general said NATO has held two meetings to discuss crisis in Libya and the organization but has not yet fully decided on a concrete course of action at this time.

Russian and Chinese representative to the UNSC were reluctant to condemn the Gaddafi government for deteriorating situation in Libya when the UNSC members met a few days ago.

Libya is Africa’s largest oil holder. The nation of over six million people has vast quantities of high-quality light oil suitable for production of gasoline – an important fuel that most Western countries heavily depend on. At the same time Russia which holds a monopoly over natural gas supplies to Western European consumers is worried over any sudden change of energy supplies to its most important market.

Russia to boost chopper sales in Asia-Pacifichttp://english.ruvr.ru/2011/03/03/46877371.html

Mar 3, 2011 11:48 Moscow Time

Russia will increase helicopter aircraft supplies to Asia and the Pacific, a spokesman for the Helicopters of Russia company has told reporters.

Roman Kirillov said that there were currently 1,500 Russian helicopters in the region.

Easy to operate, reliable, with a large load lifting capacity and capable of flying at high altitudes, they are in great demand, especially in China, Malaysia, Indonesia and Vietnam. 

3/3/2011 9:28:28 AMRussia and France in deadlock over Mistral cost: reporthttp://www.thenewage.co.za/11787-1020-53-Russia_and_France_in_deadlock_over_Mistral_cost_report

Russia and France have hit deadlock in talks over a deal for Moscow to buy Mistral helicopter carriers, with the two sides unable to agree on a price, a report said on Thursday, citing Russian sources.

Russia insists it will pay no more than $980 million (706 million euros) for two Mistral-class ships, while France insists on a contract worth at least $1.15 billion, the Kommersant business daily reported.

"The two sides have a number of issues where they disagree in principle, primarily on the price of the ships that are being bought," Kommersant cited a source involved in the long-running negotiations as saying.

The Russian leadership may have to hold fresh talks on the deal with French President Nicolas Sarkozy after talks in Paris last week ended in an impasse, sources said.

The Russian agencies that sent delegates to the talks, including the arms export monopoly, Rosoboronexpert, and the industry and trade ministry, declined to comment to Kommersant.

Russia and France signed a landmark agreement in January on equipping the navy with four of the helicopter carriers, two of which would be largely built in France and two of which would be built in Russia.

Russia''s top general said last month that Moscow could deploy the ships, which can also carry tanks, in the disputed Kuril islands, which are claimed by Japan.

The deal to build the Mistral for Russia would secure jobs in the French shipyards, but France''s NATO allies have expressed concern about arming Russia with modern Western weaponry.

Price debate stalls Mistral assault ship talks – reporthttp://rt.com/news/price-assault-talks-report/print/

Published: 3 March, 2011, 11:16Edited: 3 March, 2011, 11:36

The talks between France and Russia over the purchase of Mistral-class amphibious assault ships have hit a dead-end due to a disagreement about the price terms, reports Russian business daily Kommersant.

Russia is ready to offer no more than 990 million euros for two vessels, while France insists that the price should be at least 1.15 billion euros, newspaper’s sources say. No official confirmation or denial of the news has come so far.

Kommersant puts the blame for the difficulties on Russia’s Defense Ministry and particularly the Navy’s negotiator Vice-Admiral Nikolay Borisov. Borisov signed a preliminary protocol stating the price of the future contract at 1.15 billion euros, even though he was not authorized to do so.

The newspaper speculates that the conflict may force the deal to be taken back to the governmental level for re-negotiation, which would overshadow relations between Moscow and Paris.

Alstom, EADS Will Invest in Vekselberg Project, Echos Reports http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aLHB2ZRnzyQQ

By Gregory Viscusi

March 3 (Bloomberg) -- Alstom SA and European Aeronautic, Defence & Space Co. will invest in a Russian “Silicon Valley” being developed west of Moscow, Les Echos reported, citing an interview with Viktor Vekselberg, a Russian financier heading the project.

EADS will concentrate on communication projects, and Alstom on clean energy, Vekselberg said, according to the newspaper. He controls holding company Renova Group.

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net.

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net.

Last Updated: March 3, 2011 01:59 EST

France, Russia to cooperate closely on Skolkovo

http://www.itar-tass.com/eng/level2.html?NewsID=16007072&PageNum=0

03.03.2011, 02.59

PARIS, March 3 (Itar-Tass) -- France and Russia have agreed to cooperate closely in implementing the Skolkovo project.

Memorandums on such cooperation were signed on Wednesday evening in Paris by and between EADS and Alstom, on the one hand, and the Skolkovo Fund, on the other hand.

The signing ceremony was held in the presence of Russian First Deputy Prime Minister Alexander Zhukov and Russian Ambassador to France Alexander Orlov. Earlier in the day, they were received by the Elysee General Secretary Xavier Musca, who assured them of “full support” for the project.

“This is an historical day in relations between France and Russia,” Zhukov said. he pointed out that the Skolkovo project had evoked increased interest among France political, business and academic circles. The presentation of the centre in Paris took place with the active assistance of the Movement of the French Enterprises (MEDEF).

“We were pleasantly surprised by that. Such leading European concerns as EADS and Alstom joined the project readily,” he said.

At the same time, Zhukov noted that the doors remained open to small and medium-sized French enterprises as well. “We will create the most favourable conditions for Skolkovo investors, including tax benefits and no bureaucratic barriers,” he promised.

Similar assistance will be extended to young scientists. The government has already provided 700 million U.S. dollars for grants to them. “Since we are talking about scientific start-ups, this is a rather large sum,” he told Itar-Tass.

Skolkovo Endowment Fund President Viktor Vekselberg emphasised innovative aspects of cooperation with EADS. “Relying on the previous experience, EADS will provide consultative assistance to the future Skolkovo International Technological University in developing new educational programmes, as well as technical support,” he said.

Projects to be undertaken by the companies working at the Skolkovo innovation centre will have to meet stringent requirements, Vekselberg said.

He named two of them: “projects that will be implemented through co-financing” and mandatory participation of “both Russian universities and academia, and foreign partners and foreign specialists, including individuals, who would be a factor of support to some extent.”

Speaking of foreign venture companies that have an interest in Skolkovo, Vekselberg, said the process of familiarisation was underway and “more systemic” relations were being formed with companies that have experience of working in Russia.

“It is very important for us to emphasise the level of trust, comfort and understanding. Russia is an interesting market, it's an environment where venture capital can exist. This is fundamentally important for us,” he said.

Vekselberg also stressed that projects would have to meet “a rather high level of requirements”.

Russian presidential aide Arkady Dvorkovich called for finding a correct balance between two key tasks when implementing the Skolkovo project: being an innovation centre and acting as a driving force for innovation development of Russia as a whole.

“This is especially important at the initial stage because the projects to be implemented by the Skolkovo Fund will not be physically located at the innovation centre,” Dvorkovich, who is the chairman of the Skolkovo Endowment Fund Board of Trustees, said earlier.

“It is important that the structure of management and the structure of financing match this vision. This is a key question today,” he said.

The Skolkovo Endowment Fund created in May 2010 is the management company for the future innovation centre.

When creating the Skolkovo high-tech centre, “it is important not just invite giants like Cisco or Apple over there, because they will go there anyway just in order to have a presence in Russia, but it is important that small companies start working there,” President Dmitry Medvedev said earlier.

He suggested creating individual working conditions in Skolkovo, but noted that labour legislation should not be amended for that purpose.

“This is the most conservative part of legislation,” he added.

“Clearly, a nine to six working day is not good for innovative activities: but don't think that it can be changed so easily. It's a question of social stability, if you like,” he said.

Medvedev said that one of the most challenging tasks in Skolkovo is the creation of modern infrastructure.

“One of the biggest problems is infrastructure. In Skolkovo it can be created from scratch using the experience of developed territories. Otherwise, we will not succeed,” he said.

Another important task is the creation of an appropriate atmosphere. “This cannot be done by decree. It's about the environment and whether one can do research, commercialise projects and have a good team. This is more difficult than filing it with equipment and money,” the president said.

Medvedev spoke against copying Silicon Valley in the high-tech centre Skolkovo outside Moscow and suggested creating conditions that would attract innovative companies using American experience.

“No one is going to copy Silicon Valley. It's impossible,” he said.

At the same time, he believes that the Silicon Valley experience and some principles of its work “would be good to borrow”.

“Ideally, Skolkovo should become a system that entices people, a place where one wants to go, that absorbs like a sponge, and this is cannot be done by an order,” the president said.

Russian warship to visit Seychelles porthttp://english.ruvr.ru/2011/03/03/46873114.html

Mar 3, 2011 10:42 Moscow Time

Russia’s Admiral Vinogradov heavy anti-submarine ship of the Pacific Navy will arrive at Port Victoria in the Seychelles on March 4 on a four-day visit during which its crew will meet with the Russian ambassador to the Seychelles and local officials.

On March 7, the Admiral Vinogradov, which is taking part in the international anti-piracy mission off Somalia, will set off for the Gulf of Aden. 

Russian investigators probe ‘illegal’ drillship loan to Norwayhttp://en.rian.ru/russia/20110303/162842294.html

11:46 03/03/2011

Russian Interior Ministry investigators are looking into the case of the federally-owned drillship Valentin Shashin, which they say was illegally rented out to a Norwegian company.

The ministry said on Thursday that the state Arktikmorneftegazrazvedka (Arktik) company rented out the ship to the Norwegian companies ARBA AS and Venture Drilling AS in 2005 without permission from the Federal Property Management Agency.

Investigators say the companies renamed the vessel Deep Venture, in violation of international law, and subleased it.

“The contract specified the vessel rental price as $21,000 a day, but the real rental cost…should have been be more than $50,000 a day. Foreign companies rented the ship out for $340,000 – $550,000 per day,” a statement by the ministry’s Investigative Committee said, adding that the deal had cost the Russian government $10 million.

The Valentin Shashin was returned to Russia in February 2011.

A criminal case has been opened.

MOSCOW, March 3 (RIA Novosti)

CORRECTED GOOGLE TRANSLATION

Tajikistan and Russia continue border consultations

http://www.bbc.co.uk/russian/rolling_news/2011/03/110303_rn_tajikistan_russia_border.shtml

Last Updated: Thursday, March 3, 2011, 06:43 GMT 09:43 MCK The second round of consultation started in DUshanbe on new draft agreement on cooperation on border issues between Tajikistan and Russia, according to BBC reports. Agreement between Russia and Tajikistan on cooperation on border issues was signed in Dushanbe in 2004. Tajikistan has a 1,344 km common border with Afghanistan, which accounts for more than 90% of world production of opiates. Until 2005, the Tajik-Afghan border was guarded by Russian border guards.

Russia has no plans to re-deploy guards to Tajik-Afghan border

http://www.itar-tass.com/eng/level2.html?NewsID=16007712&PageNum=0

03.03.2011, 11.57

DUSHANBE, March 3 (Itar-Tass) - Russia has no plans to re-deploy border guards to the Tajik-Afghan border, Russian Ambassador to Tajikistan Yuri Popov sad to the Business and Politics weekly on Thursday, in comments in the reports in local and foreign media on the on-going Russian-Tajik border cooperation talks in Dushanbe.

"A broader basing of Russian border guards on the Tajik-Afghan border is not on the agenda, and neither Moscow nor Dushanbe will be raising the issue," the Russian diplomat underlined.

"Russia and Tajikistan are coordinating a draft agreement on border issue cooperation at the expert level, with the view of optimising the parameters, forms and guidelines for interaction in this important sphere," he noted.

The term of the inter-government agreement, signed in 2005 and ratified by the parliaments of the two countries, expires in April 2011.

The document regulated the conditions of the functioning in Tajikistan of a group of border troops of Russia's Federal Security Service, represented by a small group of advisers after Russia's withdrawal of its border troops from Tajikistan in the summer of 2005.

Russian border guards protected the Pyandzh frontier for almost 110 years. They have protected southern borders of the Commonwealth of Independent States for the past 13 years.

From 1992 through 2005, Russian border guards in Tajikistan detained more than 3,000 border violators.

There were 535 clashes on the Tajik Afghan border in 13 years, and 1,378 times of shelling of border guards squads and outposts. Over this period, border guards seized 1,003 units of firearms - from shoulder-fired anti-aircraft missiles to machine guns and assault rifles, and more than 447,000 rounds of various ammunition.

They destroyed 335 weapons and ammunition caches. The Russian border guards made a significant contribution to the fight against drug trafficking. They seized and destroyed over 30 tons of narcotics, with heroin making one-third of the haul.

In rebuffing terrorists' attacks, 161 border guards were killed, and another 362 were injured. Seventeen of them received top decorations (Hero of Russia). A majority was given that award posthumously.

At present, Russia and Tajikistan continue military and border cooperation. Military historian Viktor Dubovistky said in an interview to Itar-Tass that 230 Tajik students study at Russian military colleges, and that 25 Tajik officers are trainees at the Border Guard Troops Academy in Moscow.

Last year alone, Russia pilots transported 2,376 passengers who were Tajik servicemen, and delivered over 75 tons of cargos to border outposts in Pamir highlands.

Tbilisi urges Moscow not to use forcehttp://www.news.az/articles/georgia/32317

Thu 03 March 2011 08:27 GMT | 9:27 Local Time

Georgian governmental delegation left for Geneva.

Tbilisi urges Moscow to take none-use of force commitment. Georgian delegation is expected to raise the issues at the 15th round of Geneva talks on Thursday.

The Georgian side is expected to demand access of international peace forces and police to the occupied territories and return of IDPs to places of their origin with dignity in Switzerland.

Issues of cultural heritage and human rights violation are also expected to be considered at the meeting. Representatives of Tbilisi intend to raise issues of protection of properties of IDPs.

Georgian governmental delegation chaired by the State Security Secretary Giga Bokeria left for Geneva this morning to participate in the fifteenth round of the international talks on Georgia-Russia crisis. Georgian side plans to raise the issue of non-use of force by Russia, accession of international security mechanisms on occupied territories and the repatriation of IDPs to their homes.

Georgia has no intention to sign a cooperation agreement with the Abkhazian and South

Ossetia puppet regimes; instead, it plans to call upon Russia to cooperate with Georgia in the process of investigation the series of terror attacks, which were organized by a Russian military servicemen serving in Abkhazia.

Rustavi2

Azerbaijan, Tatarstan discuss cooperationhttp://www.news.az/articles/politics/32290

Thu 03 March 2011 06:15 GMT | 7:15 Local Time

Azerbaijani President Ilham Aliyev has received the leader of the Russian Republic of Tatarstan, Rustam Minnikhanov.

Ilham Aliyev highly appreciated the fact that Rustam Minnikhanov was visiting Azerbaijan soon after his election as head of the Republic of Tatarstan.

The president said that bilateral relations between Azerbaijan and Russia were developing well and hoped that new areas of cooperation would be determined during Minnikhanov's visit.

Rustam Minnikhanov, in turn, said he was glad to visit Azerbaijan and to have the opportunity to meet President Ilham Aliyev.  He said that close relations between the former president of Tatarstan, Mintimer Shaimiev, and former president of Azerbaijan, Heydar Aliyev, had created a firm basis for bilateral cooperation.

The Tatar leader paid a one-day working visit to Azerbaijan on Wednesday. He met the chairman of Azerbaijan's parliament, Ogtay Asadov, and Prime Minister Artur Rasizade.

Over dinner, Rasizade and Minnikhanov discussed the prospects for developing economic cooperation.

Rustam Minnikhanov and Azerbaijan's emergencies minister, Kamaladdin Heydarov, discussed cooperation in preventing and tackling emergencies.

"In Tatarstan, we use the Global Navigation Satellite System or GLONASS to coordinate the actions of all services of the Emergency Ministry and medical and police services. This would also be useful for Azerbaijan," Rustam Minnikhanov said.

He said that although industry was developing well in Tatarstan, agriculture had been badly affected by the unprecedently hot summer.

Kamaladdin Heydarov stressed the need for cooperation between the relevant ministries of Azerbaijan and the Russian Federation. He said that climate change was a crucial problem.

"Floods did a great deal of damage in Azerbaijan, too, so cooperation in this area will be useful to both sides," Heydarov said.

Rustam Minnikhanov met members of the Tatar community of Azerbaijan at Tatarstan's permanent representative office in Baku.

The chairwoman of the society, Elmira Ilyazova, said that Tatars living in Azerbaijan enjoyed peace and stability and were able to develop their culture and save the Tatar language and traditions.

The Republic of Tatarstan, located on the Volga River, is part of the Russian Federation. The ethnic Tatar people are Turkic, as are ethnic Azerbaijanis.

AzerTAj

Bout hearing todayhttp://english.ruvr.ru/2011/03/03/46866135.html

Mar 3, 2011 04:13 Moscow Time

Hearings on Russian businessman Viktor Bout, who was extradited from Thailand to the U.S., will be held today in federal court in New York.

The new lead counsel for the Russian citizen, Albert Dayan, who was approved by the court on Monday, is requesting that the court change the regime in which Bout is being held, because the conditions are too extreme and could interfere with being able to fully defend his client, the defendant.

The counsel will also request the postponement of the trial, which is supposed to begin on September 12th.

The Russian businessman is accused of conspiring to murder Americans, selling weapons and supporting terrorism.

Bout insists on his innocence.

Talks with Putin to include South Stream, Banatski Dvor and other issues http://www.emg.rs/en/news/serbia/148804.html

03. March 2011. | 09:10

Source: Tanjug

The official visit of Russian Prime Minister Vladimir Putin to Serbia will include talks about construction plans for South Stream gas pipeline and underground gas storage Banatski Dvor, Director General of Srbijagas Dusan Bajatovic stated on Wednesday.

The official visit of Russian Prime Minister Vladimir Putin to Serbia will include talks about construction plans for South Stream gas pipeline and underground gas storage Banatski Dvor, Director General of Srbijagas Dusan Bajatovic stated on Wednesday.

Bajatovic said that it is possible that the talks between Putin and Serbian top officials will announce the arrival of insurance company SOGAS and Gazprombank. In a statement for journalists at the Kopaonik Business Forum, Bajatovic recalled that SOGAS and Gazprombank are in partnership with Srbijagas.

Bajatovic announced the possibility of joint venture that is joint investments in the area of establishment of gas power plants, adding that Srbijagas has already informed the Serbian government that it is interested in joint investing in such projects.

Putin will arrive on an official visit to Belgrade on March 23.

Serbian Foreign Minister Vuk Jeremic announced last week that during Putin's visit to Belgrade the talks will focus on economic issues and initiation of new strategic projects in the areas of energy and infrastructure

Russian PM will discuss South Stream on Serbian visit this monthhttp://www.balkans.com/open-news.php?uniquenumber=95790

B92 - 03.03.2011

When Russian PM Vladimir Putin visits Serbia this month he will discuss construction plans for the South Stream pipeline and underground storage Banatski Dvor. This is according to Director General of the state-owned natural gas company Srbijagas Dušan Bajatović. Bajatović said that it is possible that the talks between Putin and Serbian top officials will announce the arrival of insurance company SOGAS and Gazprombank. 

Putin hails acquisition of Russian stakes by French corporation

http://www.itar-tass.com/eng/level2.html?NewsID=16006652&PageNum=0

03.03.2011, 00.38

NOVO-OGARYOVO, near Moscow, March 3 (Itar-Tass) – Russian Prime Minister Vladimir Putin believes that the acquisition of stakes in the Russian companies Yamal

SPG and NOVATEK by the French energy corporation Total holds out much promise in business terms.

“Total has a long enough record of working with our leading energy corporations – Gazprom, Rosneft, Zarubezhneft, and now NOVATEK,” Putin said about Total’s acquisition of a 12% stake in the latter company.

An agreement on the transaction was signed earlier Wednesday.

Under the provisions of the document, Total is getting a 12% stake in NOVATEK, which is one of the ten largest public companies in the world as regards the amount of natural gas reserves.

The French corporation plans to build up its stake to 19.4% over the next three years.

The memorandum on Total’s joining the project for production of liquefied natural gas /LNG/ in the Yamal Peninsula suggests that Total gets a 20% stake in the venture that offers technological expert assessments and experience in the field natural gas liquefaction.

Putin voiced the confidence that “this will be expansive proper work,” adding that the reserves of natural gas in Yamal exceed 16 trillion cubic meters.

Yamal SPG is an essential project, said Leonid Mikhelson, the CEO of NOVATEK, which is Yamal SPG’s mother company.

“We’re glad to welcome a partner as professional and reliable as Total,” he said, adding to it that the companies have already pooled their efforts in developing the Termokarstovy gas deposit.

NOVATEK has 51% in Yamal SPG that was set up to implement the project of a facility for liquefying the natural gas produced at the South Tambeisky group of deposits in Yamal.

The reserves of this deposit exceed 400 billion cubic meters of gas and 15 million tons of gas condensate. The project envisions a plant for the production of 15 million tons of LNG.

The facility will be commissioned in three turns due to be launched in 2016, 2017 and 2018.

Investment in the project is estimated at around $ 20 billion.

Another feature envisioned by the Yamal SPG project is the construction of a seaport and a fleet of ice-rated tankers.

Total, which boasts an experience of 40 years in LNG production, is engaged in several major LNG-related projects across the world.

It has a 25% stake in one more Russian hydrocarbon development – the Shtokmanovsky in the Barents Sea.

NOVATEK is the largest independent producer of natural gas in Russia. It produced some 38 billion cubic meters of gas in 2010.

Putin to hold meeting on coal industry safetyhttp://en.rian.ru/russia/20110303/162837602.html

Russian Prime Minister Vladimir Putin will hold a meeting on Thursday on coal industry safety.

Twenty-two accidents that killed 135 people occurred at coal mining enterprises in Russia in 2010.

The meeting will be attended by Deputy Prime Minister Igor Sechin, Energy Minister Sergei Shmatko, Health Minister Tatyana Golikova and other officials.

A total of 323 million metric tons of coal was produced in Russia in 2010.

MOSCOW, March 3 (RIA Novosti)

Putin to chair meeting on health and safety in coal industry

http://www.itar-tass.com/eng/level2.html?NewsID=16007045&PageNum=0

03.03.2011, 07.00

MOSCOW, March 3 (Itar-Tass) -- Prime Minister Vladimir Putin will chair a meeting on Thursday, March 3, that will focus on health and safety problems in the coal industry.

He will also hear reports on the implementation of his earlier instructions and orders concerning safety in the coal industry, which were held in Kuzbass on May 11 and June 24, 2010 after an accident at the Raspadskaya coalmine.

Energy Minister Sergei Shmatko, Minister of Health and Social Development Tatyana Golikova, Federal Service for Environmental, Technological and Nuclear Supervision Head Nikolai Kutyin, officials from other ministries and agencies, as well as representatives of coalmining companies and their trade unions will attend the meeting.

The coal industry has the worst health and safety indicators in the country. Last year, 22 accidents occurred at coalmining enterprises, resulting in the death of 135 people. The total number of deaths increased considerably after the accident at Raspadskaya on May 9, 2010, which killed 91 coalminers and rescuers.

Of the 22 accidents, 17 occurred in Kuzbass.

In order to improve safety in the industry, the Federal Service for Labour and Employment, the Energy Ministry, the Interior Ministry, the Prosecutor General’s Office, the Federal Service for Environmental, Technological and Nuclear Supervision, and the coal industry trade union carry out scheduled inspections at coalmining enterprises. Such inspections have already been carried out at 148 coalmines.

In keeping with instructions issued by the president and the government, the Federal Service for Environmental, Technological and Nuclear Supervision, the Energy Ministry, the Ministry of Health and Social Development, and the Industry and Trade Ministry continue to correct legislation in order to improve health and safety in the coal industry.

Mining tax benefits have been granted in order to encourage measures aimed at improving health and safety at coalmining enterprises.

The Emergencies Ministry is creating a national training centre for coalminers and coalmine rescuers to teach them how to act in emergencies, use individual means of protection, and work safely.

A long-term programme for the development of the coal industry up to 2030, ordered by Putin, is being drafted.

In 2010, coal production in Russia increased by more than 20 million tonnes to 323 million tonnes. Investments in the fixed capital of coal companies increased to 60 billion roubles. Monthly labour productivity continues to grow in the industry: more than 200 tonnes per worker a month in 2010.

Last year, 190.6 million tonnes of Russian coal were shipped to domestic consumers (up 8.2 percent from 2009). Coal export increased by 8.8 percent from 2009, reaching 115.3 million tonnes.

CORRECTED GOOGLE TRANSLATION

Space Forces of Russia: Rokot missile launch suspended

http://www.bbc.co.uk/russian/rolling_news/2011/03/110303_rn_rokot_starts.shtml

Last Updated: Thursday, March 3, 2011, 07:28 GMT 10:28 MCK Space rocket (ILV) Rokot launch is suspended pending clarification of the circumstances of an unsuccessful launch of the rocket in early February, the satellite "Geo-IK-2 Russian Space Forces official Alexei Zolotukhin said. Geodetic spacecraft for military purposes, "Geo-IK-2 was launched in early February from the Plesetsk cosmodrome, but the estimated time is not on the phone again. Later it was discovered on a nonisobaric orbit.

March 03, 2011 10:30

Defense Ministry still trying to establish contact with lost military satellitehttp://www.interfax.com/newsinf.asp?id=226203

MOSCOW. March 3 (Interfax-AVN) - Contact could still be established with the Geo-IK-2 geodetic military satellite, Russian Defense Ministry spokesman for the Space Forces Lt. Col. Alexei Zolotukhin told Interfax-AVN.

"Efforts aimed at establishing contact with the Geo-IK satellite continue in full at the moment because there is still a chance of establishing contact with it if we manage to secure a positive energy balance," he said.

The Geo-IK-2 was lost earlier because of problems with its power supply, Zolotukhin said.

"It has tentatively been established that the absence of contact with the Geo-IK stems from the satellite's negative energy balance, which was caused by a drop in on board electricity supply levels," he said.

A group made up of specialists from various departments has been formed to investigate and analyze the reasons behind the loss of contact with the satellite.

Russia's fifth-gen jet off to flying starthttp://english.ruvr.ru/2011/03/03/46870559.html

Mar 3, 2011 10:02 Moscow Time

Russia has successfully tested a second model of its fifth generation fighter jet.

It took off from an airport in Komsomolsk-on-Amur in Russia’s Far East and its flight lasted for about an hour.

According to Sergei Bogdan who piloted the jet, the machine`s airborne equipment functioned perfectly.

The new jet was designed to be unseen on rivals` radars and has the autopilot control system.

The jet was first tested in January, 2010.

CORRECTED GOOGLE TRANSLATION

The second T-50 fighter jet had a successful flight

http://www.bbc.co.uk/russian/rolling_news/2011/03/110303_rn_russia_jet_fighter.shtml

Last Updated: Thursday, March 3, 2011, 05:28 GMT 08:28 MCK The second prototype fifth-generation fighter jet T-50 has successfully made its maiden flight, Russian media reported. The fighter jet is produced in Komsomolsk-on-Amur, at the aircraft production association named Gagarin (KnAAPO is part of the holding Sukhoi). T-50 - is a fifth-generation heavy class fighter jest with a takeoff weight of more than 30 tons.

March 03, 2011 10:53

Police attacked in Chechnya, Dagestanhttp://www.interfax.com/newsinf.asp?id=226214

MOSCOW. March 3 (Interfax) - An unidentified attacker stabbed a police officer in the Nozhai-Yurt district of Chechnya, a law enforcement source told Interfax on Thursday.

"The assailant stabbed a police officer in the stomach in the town of Zandak and fled from the scene. The policeman was hospitalized," the source said.

In a separate incident, a district police sergeant was beaten up in the Khunzakh district of Dagestan's Karabudakhkent region.

The attackers seized the police officer's Makarov pistol with 16 cartridges and fled from the scene, the source said.

sd mj

Sochi environmental problems to be discussedhttp://english.ruvr.ru/2011/03/03/46866182.html

Mar 3, 2011 04:15 Moscow Time

Environmental issues during the preparation for the Olympic Games in Sochi will be discussed today by the representatives of Sochi 2014 and experts of the UN Environment Programme (UNEP).

Among the key themes of the forthcoming meeting are cooperation in the fields of assessment, minimization and compensation for environmental impact during the construction of Olympic facilities.

Russian Press at a Glance, Thursday, March 3, 2011http://en.rian.ru/papers/20110303/162841103.html

10:16 03/03/2011

POLITICS

In a sign of parties losing their cool ahead of this month's regional elections, Russia's ruling United Russia party has accused the Communists of trying to stage an attack on its campaigners with air guns and pepper spray.

(Moscow Times)

ECONOMY & BUSINESS

A London court has seized shares in the Bank of Moscow that Russia's second largest lender, VTB is trying to buy from Goldman Sachs.

(Vedomosti)

Russia's state development corporation Vnesheconombank (VEB) will fund a project to develop fast streetcars and roads in Moscow.

(Vedomosti)

SOCIETY

RIA Novosti is celebrating the 1941 foundation of its earliest predecessor, the Soviet Information Bureau.

(Moscow Times)

A Russian court sentenced a man who used the Internet to steal donations meant for a sick girl to six months in prison.

(Rossiiskaya Gazeta)

WORLD

Waste from a chemical refinery has turned part of a city in southern Ukraine into a Martian landscape

(Moscow Times)

DEFENSE

The Russian Defense Ministry has bought a deployable field camp from a German firm, marking the latest military purchase from a Western country.

(Moscow Times)

Russian-French talks on the purchase of four Mistral helicopter carriers have ground to a halt over price disagreements.

(Kommersant)

IT

Russian mobile retailer Svyaznoy says it hopes to earn more in 2012 than competitor Euroset. The two companies are embroiled in a fierce battle for dominance on the handset market.

(Vedomosti)

Taxpayers will be able to pay all state bills, including taxes, via cash machine or the Internet as early as in the end of this year.

(Rossiiskaya Gazeta)

Moscow authorities plan to fight traffic with Korean experiencehttp://rt.com/politics/press/kommersant/moscow-authorities-traffic-korean/en/

Published: 3 March, 2011, 08:56Experts don’t expect to see positive changes on the roads before 2012

Aleksandr Voronov

Moscow Deputy Mayor Nikolay Lyamov announced yesterday that Seoul’s experience will be actively implemented in the battle against traffic: the Mayor’s Office will place its bets on public transportation, and authorities have already allocated 6.5 billion rubles for the purchase of new buses and trolley cars. In order to eliminate “free-riders” (or turnstile jumpers) in Moscow, the fine for an unpaid ride on buses and trolleys will increase to 1,000 rubles, turnstiles will be disassembled, and ticket inspectors will return. Citizens will have the option of leaving their personal cars at intercepting parking lots on the outskirts of the Moscow Ring Throughway. The construction of these parking lots should begin “in the next two years”, promised the official. Simultaneously, test runs of a new express streetcar have been promised, and large supply freight deliveries will be switched to a night schedule. However, experts say we should not expect to see improvements on Moscow’s roads before the spring of 2012.    

“Seoul residents prefer public transportation, that’s why the city is moving,” Nikolay Lyamov said yesterday, and noted that the Korean capital “is just like Moscow”: 10.5 million residents and 2 million visitors. According to the official, the Mayor’s Office has already allocated 6.5 billion rubles for the purchase of 200 new trolley cars and 500 buses which meet the Euro-4 and Euro-5 standards. As for trolleys, the first step will be to renovate and upgrade all the tracks, with the cars to follow. In 2012-2013, the authorities will replace all the aged and out-of-date trolleys with “modern, comfortable, and noise-free” cars. Meanwhile, this year officials will collect “the best railway vehicles” in order to test them on the express railways. “We’ll see what happens,” said Nikolay Lyamov. It has been proposed to increase fines for unpaid rides from 100 to 1,000 rubles. “This will eliminate the desire to try and get a free ride,” said the deputy mayor, and added that ticket inspectors will return within two months. Finally, the turnstiles will be disassembled and removed from the cabins, because as soon as they appeared, acknowledged Nikolay Lyamov, passenger flow was reduced by nearly a third. What will come to replace them is unclear. Moscow’s main transport official suggested that it "will be a device that opens and closes”.        

Press secretaries of the Moscow authorities regularly make statements about the impending improvement of transport conditions in the city. We recall that the task of dealing with the traffic problem was assigned to Sergey Sobyanin by President Dmitry Medvedev. Last year, the Mayor’s Office had developed a plan for eliminating traffic jams in the upcoming years by allocating 203 billion rubles to meet these goals in 2011. The document focused on road construction and the development of public transportation. In February of 2010, the Mayor’s Office and the Ministry of Transportation had presented a draft document examining Moscow’s predicted population growth until 2020, which included provisions for the construction of a new transportation hub with 91-connections and intercepting parking lots, as well as 1,500 km of new roads in Moscow and the surrounding areas (Kommersant reported on these

developments February 15). The document emphasized moving people from personal vehicles to railway transport.          

Yesterday, Nikolay Lyamov reiterated the idea of building intercepting parking lots by the Moscow Ring Throughway, which the city’s former mayor, Yury Luzhkov, had also wanted to do. Authorities are expecting that parking lot construction for the region’s residents will be a “massive” project, but construction will only start at some point “within the next two years”. At the present time, the Mayor’s Office is still determining what lots will be used for construction. The official stated that the Seoul authorities have created 1.5 million parking spaces to resolve the problem of traffic, and the Moscow authorities will be forced to create up to 3 million parking spaces. The deputy mayor failed to specify where sufficient space for such parking lots might be found in the overpopulated city, and restricted himself to promising that the Russian capital will not be taking Beijing’s route, where a person buying a vehicle must first provide documents certifying he has acquired parking space. Finally, Nikolay Lyamov said that the authorities plan to transfer large supply and freight transportation to a night-time schedule, so that the unloading trucks do not create traffic disruptions. According to him, the Mayor’s Office has already discussed this matter with representatives of major supply depots in the capital.             

We remember that soon after assuming office, Mayor Sergey Sobyanin promised that the first real improvements in traffic conditions would be seen by the spring of this year. However, according to the director of the Scientific Research Institute for Transport and Public Road Systems Mikhail Blinkin, city residents won’t see any improvements before the spring of 2012. This year, says the expert, Muscovites will only be able to see some improvements in the traffic flow of public transportation due to the emergence of dedicated bus lanes.

Russia marking 150th anniversary of serfdom abolition

http://www.itar-tass.com/eng/level2.html?NewsID=16007265&PageNum=0

03.03.2011, 09.11

MOSCOW, March 3 (Itar-Tass) - Russia is marking the 150th anniversary of abolition of serfdom in Russia.

On March 3 (February 19, old style) Russia’s Tsar Alexander II signed the Emancipation Manifesto to free 22 million serfs of the Russian Empire.

The country’s leading politicians and public figures will hold commemorative events and will pay the tribute to the memory of Russia’s Tsar also known as Alexander the Liberator.

Flowers will be laid at the grave of Alexander II in the Peter and Paul Fortress in St. Petersburg and at his monument near the Cathedral of Christ the Saviour in Moscow.

A commemoration meeting will be held at the Cathedral of the Christ the Saviour that will bring together prominent politicians, diplomats, historians, Russian and foreign scientists. The event is organized by the Russian Orthodox Church and Russky Mir Foundation.

03 March 2011, 11:42

Patriarch Kirill pays tribute to Gorbachev's contribution to ensure cooperation between Church and statehttp://www.interfax-religion.com/?act=news&div=8245

Moscow, March 3, Interfax - Patriarch Kirill of Moscow and All-Russia congratulated the last Soviet leader Mikhail Gorbachev on his 80th anniversary.

"The end of the 20th century has seen a number of changes in this country. The cooperation between the government authorities and the Russian Orthodox Church was substantially facilitated by your decisions," Patriarch's telegram posted Wednesday at the Moscow Patriarchate' official website is quoted as saying.

According to Patriarch, such cooperation encouraged "people to come back to the spiritual and moral sources of their national life."

"In the meantime, the government adopted the much sought-after law to guarantee the freedom of religion," he recalled.

Patriarch Kirill wished former President Mikhail Gorbachev and his family members health, success and happiness.

Perestroika Syndrome

Gorbachev’s Recent Criticism of the Government May Reflect a Shift in His Role at Home

http://russiaprofile.org/politics/33100.html

By Andrew Roth Russia Profile 03/02/2011 An exhibition of photographs titled “Mikhail Gorbachev: Perestroika” is currently on display at the Manezh Exhibition Hall. The central location opposite the Kremlin has led some to say that there is a growing acceptance of Gorbachev in Russia. But the exhibition is located on the bottom floor, underneath a honey fair and sharing space with a large sale of fur coats.

The exhibition begins with a striking young Gorbachev wearing a fedora, before moving quickly to his early days leading the Soviet Union. “There was a lot of hope in this period, when Gorbachev first became the head of the party and many younger people saw an opportunity for change. I myself was hoping for more possibilities to travel,” said Natalya, a lawyer from Moscow who has taken a day off to come see the exhibition. When Gorbachev came to power, he succeeded Konstantin Chernenko, the third in a line of elder secretary-generals that had seen Russia through a period of prolonged economic stagnation. Gorbachev unleashed a series of reforms over several years, which were designed to revitalize the Russian economy and encourage more open political and social debate. The result was an upheaval of the Russian economy and a rapid evolution of Russian society.“Gorbachev’s time was a period of change – not so much of environment, because when his time began there was nothing on the shelves in the market and when it ended there was still nothing on the shelves – but what happened in people’s consciousness was a colossal change in direction,” said Olga Sviblova, the director of the Moscow House of Photography and curator of the exhibition. “What had earlier been forbidden, say a certain hairstyle worn to an event, was suddenly allowed, and in Gorbachev’s time everything began to flower. And people, like mushrooms after a heavy downpour, begin to peek out from below ground.” Along the walls, young people with spiked haircuts and tracksuits begin to appear, but they are next to pictures of the homeless and long lines in front of shops – all reminders of the economic turmoil that accompanied social change.By the early 1990s, the economic reform policies had taken their toll and criticism, now openly permitted, was mounting. A critical shift of power in Russia took place when political hard-liners attempted, and ultimately failed, to stage a coup in August of 1991. Boris Yeltsin, then head of the Russian Soviet government, famously gave a speech from a tank turret against the leaders of the putsch, while Gorbachev was held under arrest at his dacha and returned to find the coup suppressed but his own authority severely compromised. In a color photograph near the end of the exhibition, Gorbachev stands in front of the jet that brought him back from his dacha after the coup. He is flanked by a pair of journalists holding microphones. Gorbachev wears a deep frown through pencil-thin lips and stares at the ground in front of him. “I think he knows it’s over,” said Dmitry Nikolayev, a young graduate student at the exhibition.“One aspect of Gorbachev’s legacy, which is still relevant to Russian politics, is what I would call Perestroika syndrome,” said Fyodr Lukyanov, the editor in chief of Russia in Global Affairs. “When the current Russian leadership witnessed with its own eyes what happened in the late 1980s and early 1990s, and they experienced how quickly it can go from very good intentions to total collapse, they became paralyzed to change. They are afraid that if they start to change a system which is showing signs of stagnation already, they could end up like Gorbachev did.”But Gorbachev found his way back into Russian headlines recently when he attacked Vladimir Putin for conducting an “imitation” democracy and accused him and Dmitry Medvedev of leading the country back into a Soviet style system of one-party rule under United Russia. This criticism shows an important break for Gorbachev, who supported Putin in an interview with The Times in 2007. “He brought stabilization to Russia,” said

Gorbachev at the time. “Not everyone would have been able to cope with the kind of legacy that he inherited from Boris Yeltsin.” But Gorbachev’s political criticisms don’t carry much weight, and so far he has not succeeded in establishing an independent political party, despite several attempts. Gorbachev’s larger problem may lie in the fact that while he was integral in the fall of the Soviet Union, he did not play a role in building its successor state, Russia. “The problem with the perception of Gorbachev is that he is seen as the person whose actions led to the destruction of the country they considered to be their natural home,” said Lukyanov. “Yeltsin might be seen in the future as the creator of the new Russian state. Not only as the destroyer of the Soviet Union, but a creator of the Russian state. But unfortunately Gorbachev as a political result will retain a negative association.”Nonetheless, the exhibition at Manezh inspires a sense of nostalgia among visitors. “I admire him, I think mostly for the fact that he was able to simply give up power,” said Dmitry. But whether he may be able to one day regain his lost status remains to be seen. “I’m absolutely sure that he’ll be revered one day,” said Natalya. “I hope I live to see it.”

Russian tycoon buys 'Putin's palace' near Black Seahttp://en.rian.ru/russia/20110303/162841478.html

Russian tycoon Alexander Ponomarenko has bought a multi-million dollar Italianate villa allegedly being built near a Black Sea resort for Prime Minister Vladimir Putin, the Russian Kommersant daily reported on Thursday.

Photos of the 750,000 sq m palace, which features a casino, swimming pools, a gym and helipads, were first released in December by the Ruleaks.ru whistle blowing website.

Ponomarenko said the project was to be a hotel and commercial complex and dismissed the nickname "Putin's palace" as "rumors and journalist fiction."

He said the cost of the project was $350 million and that it was "70-80 percent complete."

Sergei Kolesnikov, a Russian businessman formerly involved in the project, wrote an open letter to President Dmitry Medvedev in December saying the project, which he claimed was worth $1 billion, was being funded on "corruption, bribery and theft." The president has not responded.

The controversy was reignited last month after the liberal Novaya Gazeta newspaper published what it claimed to be a copy of the original contract for the palace signed by Kremlin property manager Vladimir Kozhin in 2005.

Kozhin denied the allegations, as did Putin's spokesman.

Putin's supporters say the allegations about the palace are part of a smear campaign against him ahead of the 2012 presidential elections, in which the premier has hinted he may try to return to the Kremlin.

 

MOSCOW, March 3 (RIA Novosti)

'Putin Palace' sold for $350 million: ReportAFP, Mar 3, 2011, 12.27pm IST

Read more: 'Putin Palace' sold for $350 million: Report - The Times of India http://timesofindia.indiatimes.com/world/europe/Putin-Palace-sold-for-350-million-Report/articleshow/7617820.cms#ixzz1FWNmjiOxMOSCOW: A lavish holiday complex on Russia's southern Black Sea coast that has been linked to Prime Minister Vladimir Putin has been sold to a wealthy investor for around $350 million, a report said Thursday.

Alexander Ponomarenko, the former owner of the Black Sea port of Novorossiisk, bought the complex for a sum close to $350 million (250 million euros) through a Cyprus-based company that he controls, he told Kommersant business daily.

Whistleblower businessman Sergei Kolesnikov wrote an open letter to President Dmitry Medvedev in December alleging that the Italianate villa was being built for Putin's "private use."

An investigation by the liberal Novaya Gazeta found documents that linked the building in the Krasnodar region to the Russian government, although officials have denied this.

Earlier this month, environmental activists were briefly detained at the complex and posted a video on the Internet showing that police and federal protection service officers were guarding the construction site.

The buyer of the complex, Ponomarenko, dismissed links to Putin as "rumours and journalists' fantasies" to Kommersant.

He said he bought the complex from three owners after they asked him to invest because they had run out of money.

Ponomarenko said that he bought the complex, which he described as a "holiday centre", from Nikolai Shamalov, a friend of Putin, and two of his partners.

Kolesnikov told the newspaper he believed the sale of the complex, which is still being constructed, was a reaction to his open letter.

He conceded that Ponomarenko bought it from the formal owners, but questioned where the money had come from to build the complex and extend infrastructure including roads.

"The main question remains: where did the money come from for construction. Secondly, the purchase does not change the situation around infrastructure, which the state built at its own expense," he told Kommersant.

National Economic Trends

MARCH 3, 2011, 3:46 A.M. ET

Russia Revises 2010 Budget Deficit To 4.1% Of GDP From 3.9% http://online.wsj.com/article/BT-CO-20110303-702841.html

MOSCOW (Dow Jones)--Russian Finance Minister Alexei Kudrin Thursday revised upward the country's 2010 budget deficit to 4.1 % of gross domestic product from a previous figure of 3.9%.

"In regards to the budget deficit, there must be a slight revision," Kudrin told a meeting of the Finance Ministry's Treasury Committee.

The revision was prompted by slightly lower-than-expected gross domestic product growth of 4% last year.

Russia expects a 3.6% of GDP deficit this year, although Kudrin has said that number may be cut to under 2% amid higher oil prices.

-By Ira Iosebashvili, Dow Jones Newswires; +7 495 232-9192, ira.iosebashvili@dowjones.com

Russian Feb. Service Sector Growth Slowshttp://www.rttnews.com/Content/EuroEconomicNews.aspx?Id=1566980&SM=1

3/3/2011 12:39 AM ET(RTTNews) -  Russia's service sector grew at a slower pace in February amid relatively muted rise in new workloads, a new survey showed Thursday.

The seasonally-adjusted Markit-HSBC business activity index fell to 53.4 in February from 54.2 in the previous month. A reading above 50 indicates expansion, while one below shows contraction.

Meanwhile, the composite output index, covering both services and manufacturing, rose to 55.2 from 54.6 in January. The manufacturing output index increased to 58.5 during the month.

"Economic growth momentum has strengthened close to its historic average level in February," Alexander Morozov, Chief Economist (Russia and CIS) at HSBC said. "Structurally, manufacturing grows faster while services expansion remains weaker than its long-term trend."

by RTT Staff Writer

Russia’s Services Sector Fails to Build Growth, PMI Data Shows http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ar4YcqN7a4z0

By Ilya Khrennikov

March 3 (Bloomberg) -- Russia’s services sector indicated a continued failure to build growth momentum in 2011 despite robust growth in manufacturing production, HSBC Holdings Plc said.

The seasonally adjusted Business Activity Index fell to 53.4 in February from 54.2 in January, HSBC said in a report today, citing data compiled by Markit Economics. The survey- based index indicates a contraction when it is below 50 and growth with a figure above 50.

“Manufacturing grows faster while services expansion remains weaker than its long-term trend,” Alexander Morozov, chief economist at HSBC in Moscow, said in the statement. “Modest growth of private consumption seems to be restraining output growth in the services sector.”

To contact the reporters on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net.

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net.

Last Updated: March 3, 2011 00:14 EST

Russia’s consumer inflation rate tops 3% by February 28 – statistics

http://www.itar-tass.com/eng/level2.html?NewsID=16007029&PageNum=0

02.03.2011, 20.19

MOSCOW, March 2 (Itar-Tass) -- Russia’s inflation has reached 3.2 percent by February 28 since the beginning of the year, the Prime Tass economic news agency said on Wednesday, quoting an official report of the Federal State Statistics Service.

The Statistics Service reported 0.1-percent inflation rate in the week from February 22 to February 28, Prime Tass said, adding that the indicator has grown by 0.8 percent since the beginning of February.

Proceeding from the report, Russia’s daily inflation has made up 0.028 percent in February 2011, the economic news agency said.

In the week from February 22 to February 28, the Statistics Service reported the biggest growth of average retail prices for buckwheat and millet, which reached 1.7 percent and 1.5 percent respectively, Prime Tass said.

In the period under review, average price of lamb meat grew by 0.8 percent, the economic news agency said, adding that prices of biscuits and beef edged up by 0.5 percent.

In the reporting period, prices of fruit and vegetables increased by 0.4 percent on average across the country, Prime Tass said, adding that prices of onions grew by 1.1 percent, prices of carrots went up by 0.6 percent, and prices of cabbages increased by 0.5 percent.

In the period from February 22 to February 28, average gasoline prices went down by 0.2 percent versus the previous week, while fuel oil prices decreased by 0.3 percent, Prime Tass quoted the statistics.

Besides, housing and public service tariffs continued their growth in the week under review, Prime Tass said, adding that the rent for the state and municipal flats, as well as charges for heating and water supplies and water sewage edged up by 0.3 percent in the designated period.

The report was drafted on the basis of weekly monitoring of retail prices for 62 socially important goods and services, which the Federal State Statistics Service carried out in 271 Russian cities and towns.

According to the Federal Statistics Service, Russia’s inflation rate increased by 8.8 percent in 2010, Prime Tass said, adding that this year’s inflation is projected at seven to eight percent.

Rosagrolizing to sell or lease agricultural equipment at half price

http://www.itar-tass.com/eng/level2.html?NewsID=16006638&PageNum=0

03.03.2011, 00.21

TAMBOV, March 3 (Itar-Tass) -- Russian State Agricultural Leasing Company (Rosagrolizing) will sell or lease agricultural equipment that has piled up at warehouses at half price, Prime Minister Vladimir Putin said.

The prime minister made the announcement at the 22nd congress of the Association of Farmers and Agricultural Cooperative Workers in Tambov.

He said this would cost the budget four billion roubles.

03 March 2011

The government seeks to raise as much as $2.6 billion a year in fees and taxes by leasing as many as 6,500 ponds and lakes to private fishing operators, Rossiiskaya Gazeta said Wednesday. (Bloomberg)

http://www.themoscowtimes.com/business/article/for-the-record/431993.html

Russian Raw Sugar Production Rises 41%, Union Says (Correct) http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aAUMrSAx_HeE

By Marina Sysoyeva

(Corrects type of sugar in headline and first paragraph in story published on March 1.)

March 1 (Bloomberg) -- Russia’s production of raw sugar grew 41 percent to 169,600 metric tons in the first two months of this year compared with 120,200 tons a year earlier, the country’s Sugar Producers’ Union said on its website today.

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

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

Last Updated: March 3, 2011 03:01 EST

Business, Energy or Environmental regulations or discussions

Russian markets -- Factors to Watch on March 3http://www.reuters.com/article/2011/03/03/russia-factors-idUSLDE72202L20110303

Thu Mar 3, 2011 2:11am EST

MOSCOW, March 3 (Reuters) - Here are events and news storiesthat could move Russian markets on Thursday. You can reach us on: +7 495 775 1242 STOCKS CALL (Contributions to moscow.newsroom@reuters.com): Uralsib: The high oil price continues to drive the roubleand shares in the oil and gas sector in particular. Thatmomentum is likely to stay strong today with the news that Total(TOTF.PA) is to take a direct equity stake in Novatek (NOTK.MM)and in the Yamal LNG project. VTB: The pullback at the start of the week proved to beshort-lived as fresh highs in crude drove key Russian stockindices to new post-2008 highs of their own. Total's agreement ... is a welcome addition to the steadily improving sentimenton Russian energy sector. Troika: We are opening our prices this morning up 0.7-1.0percent. EVENTS [RU-DIA] (All times GMT): ST PETERSBURG, Russia- Russian President Dmitry Medvedev toattend a conference on Russian reforms and modernisation. MOSCOW- Russia's Finance Ministry Treasury Committeemeeting, chaired by Finance Minister Alexei Kudrin. MOSCOW- Russia's Severstal (CHMF.MM) to announce Q4 andfull-year financial results. IN THE PAPERS [PRESS/RU]: Vedomosti reports that a London court has seized a 3.88percent stake in Bank of Moscow (MMBM.MM) shares whichstate-controlled bank VTB (VTBR.MM) had agreed to buy fromGoldman Sachs -- a stake that is key to secure control over theMoscow lender. TOP STORIES IN RUSSIA AND THE CIS [RU-NEWS]: COMPANIES/MARKETS:* Total joins Arctic project, buys Novatek stake [ID:nLDE7212H0]* TNK-BP floats spoiler against BP-Rosneft pact [ID:nLDE7210I5]* Rouble at 26-mth highs, Russia widens corridor [ID:nLDE72109F]* Russia OFZ auction demand boosted by rouble [ID:nLDE7211VZ]* Renco buys 3 Severstal U.S. mills for $1.2 bln [ID:nLDE7211HL]* Severstal seen posting $288 mln Q4 net profit [ID:nLDE721072]* Sberbank sees 2011 net up at 230-250 bln rbls [ID:nLDE721204] ECONOMY/POLITICS:* Russia weekly inflation slows, risks remain [ID:nLDE7211RL]* POLL-Russia Feb services PMI hits 5-mth low [ID:nSLA2EE7QL]* Japan regrets Russian buildup plan for isles [ID:nTOE721073]* Gorbachev, turning 80: Putin should not run [ID:nLDE7210QV]* Three charged in connection with Moscow bomb [ID:nLDE721222]

ENERGY:* Russia Feb oil output up at 10.23 mln bpd [ID:nLDE7210I4]* SOCAR seeks some of BP's stake in Caspian field[ID:nLDE6BC0FK]* TABLE-Russian oil output up, exports fall [ID:nLDE7210NR]* TABLE-Russian Feb seaborne exports fall m/m [ID:nLDE7210TZ]* TABLE-Russian Feb gas production down 0.7 pct [ID:nLDE7210R3]* TABLE-Russia Jan coal exports rise on Murmansk [ID:nLDE7210FY] COMMODITIES:* Russia may extend grain export ban til end-'11 [ID:nLDE721212]* Russia pledges subsidies on farm equipment [ID:nLDE7211OG] MARKETS CLOSE/LATEST: RTS .IRTS 1,998.1 +0.34 pct MSCI Russia .MIRU00000PUS 1,043.2 +1.63 pct MSCI Emerging Markets .MSCIEF 1,123.3 +0.89 pct Russia 30-year EurobondRU011428878= yield: 4.637 pct EMBI+ Russia 11EMJ 168 basis points over Rouble/dollar RUBUTSTN=MCX 28.3350 Rouble/euro EURRUBTN=MCX 39.3170 NYMEX crude CLc1 $101.62 -$0.60 ICE Brent crude LCOc1 $115.68 -$0.67 For Russian company news, double click on [E-RU] Treasury news [M-RU] Corporate debt [D-RU] Russian stocks [.ME] Russia country guide RUSSIA All Russian news [RU] Scrolling stocks news [STXNEWS/EU] Emerging markets top news [TOP/EMRG] Top deals [TOP/DEALS] European companies [TOP/EQE]

Goldman Sale of Bank of Moscow Stake Blocked, Vedomosti Says http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a8pSt7ef1Zu4

By Ilya Khrennikov and Denis Maternovsky

March 3 (Bloomberg) -- Goldman Sachs Group Inc.’s sale of shares in Bank of Moscow to VTB Group was blocked by a London court, Vedomosti reported, citing unidentified people familiar with the matter.

A company affiliated with Bank of Moscow Chief Executive Officer Andrei Borodin petitioned the court to stop the deal, saying it has the right of first refusal to buy the shares, the Moscow-based newspaper reported today, without identifying the company.

VTB agreed to pay the city of Moscow 103 billion rubles ($3.6 billion) for its 46.5 percent of Bank of Moscow on Feb. 22, and then agreed to buy Goldman Sachs’s 3.88 percent for 7.14 billion rubles to boost its stake to more than 50 percent, according to Vedomosti. Kommersant newspaper said March 1 that Borodin and other Bank of Moscow executives agreed to sell their combined 20 percent stake to VTB, citing VTB.

Vadim Sukhoverkhov, a spokesman for VTB, declined to comment, as did Elena Zakrevskaya, a Goldman Sachs spokeswoman, and Oleg Fedorchenko, a spokesman for Bank of Moscow.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Brad Cook at bcook7@bloomberg.net

Last Updated: March 3, 2011 01:44 EST

Last Updated: March 03. 2011 1:00AM

Ford, GM get chummy with Russian automakershttp://www.detnews.com/article/20110303/AUTO01/103030343/1148/Ford--GM-get-chummy-with-Russian-automakers

Nation's new rules prompt Ford, GM to partner with localsChristine Tierney / The Detroit News

General Motors Co., Ford Motor Co. and their global rivals are sidling up to Russian carmakers in a courting ritual spurred by new rules aimed at developing Russia's outdated industry.

Some of the budding partnerships reflect longstanding ties between automakers, while others are new, such as Ford's preliminary tie-up with Russian carmaker Sollers.

Announced on Feb. 18, the same day Fiat SpA revealed its talks with Sollers had ended, the Ford-Sollers combination illustrates the hurried, secretive deal-making taking place.

The Russian government, in an effort to modernize the nation's carmakers and parts suppliers, is requiring foreign automakers to increase their output in Russia to qualify for tax and tariff breaks on imports.

Previously, they had to produce 25,000 vehicles a year in Russia, with 30 percent local content. The new threshold is at least 300,000 vehicles, with 60 percent local content.

The fastest and cheapest way for carmakers to augment their output and comply is to pair up with Russian manufacturers with under-utilized factories.

"It's good for both sides," said Ewald Kreid, Moscow-based head of Boston Consulting Group's automotive practice for Russia and other former Soviet states. "The Russian players gain access to technology and can modernize their sites, and global automakers save on investment."

Sales rebound in Russia

Russian carmakers have capacity to build 1.5 million vehicles a year but use 80 percent of it in the best years — half of that during the global downturn.

Of the so-called BRICs — the emerging markets of Brazil, Russia, India and China — "Russia has been the most volatile," Kreid said. But demand is recovering, helped by a Russian version of "cash for clunkers."

Sales in Russia rebounded 30 percent last year to 1.9 million light vehicles after a 50-percent plunge in 2009. In January, sales were up 72 percent.

Boston Consulting predicts the market will recover to its pre-crisis levels of 3 million vehicle sales a year in 2013 and expand to 4 million by 2020. "It will not be a straight line," Kreid said. But "it will be a key strategic market for global players."

The biggest grouping now is the partnership between Paris-based Renault SA and Russia's No. 1 automaker AvtoVAZ. Renault owns 25 percent plus one share of AvtoVAZ, and Prime Minister Vladimir Putin has proposed that it raise its stake to a reported 50 percent.

Renault Chief Executive Carlos Ghosn said in February that he hoped to conclude a deal this year. Renault, its partner Nissan Motor Co. and AvtoVAZ hold nearly 40 percent of the Russian market.

Among the recent tie-ups, billionaire Oleg Deripaska's GAZ is pairing up with Volkswagen AG to make cars in Russia.

GAZ, Russia's second-largest automaker, was in talks on and off with GM for years. Deripaska at one time owned a stake in GM and has agreed to produce Aveo models.

GM could up capacity

GM said this week it intends to meet the local regulations and build up to 350,000 vehicles a year in Russia.

It has a plant in St. Petersburg that can make 60,000 vehicles a year. It could increase capacity or team with local partner Avtotor, said Ewa Root, London-based analyst at IHS Automotive. Avtotor, based in Russia's n Kaliningrad, is expanding from assembling kits to full assembly of vehicles.

Warren Browne, a retired GM executive who formerly headed GM Russia and is now a consultant, said AvtoVAZ, GAZ and Sollers were owned by powerful Russians. Avtotor owner Vladimir Scherbakov, a first deputy prime minister under Mikhail Gorbachev, is highly regarded and respected, he said.

In addition to helping automakers save on investment, Browne said, "these deals align you politically with forces inside Russia."

ctierney@detnews.com

Euroset, Svyaznoy rivalry threatens survival of small retailers

http://www.rbcnews.com/free/20110303121748.shtml

      RBC, 03.03.2011, Moscow 12:17:48.The rivalry between two major cellular retailers Euroset and Svyaznoy, which are fighting for selling space and have dramatically cut prices, may hurt small retailers, the RBC Daily newspaper reported today.

      According to research agency TelecomDaily, the average price of a mobile phone at the stores of Svyaznoy and Euroset has dropped to RUB 3,700 (approx. USD 129) at present down from RUB 4,300 (approx. USD 150) as of November 2010. Small retailers will be hard pressed to survive in such a fiercely competitive price environment, TelecomDaily CEO Denis Kuskov noted. Small players have about a 20 percent share of the market outside Moscow and St. Petersburg, he added.

Severstal's IFRS net loss narrows in 2010

http://www.rbcnews.com/free/20110303105831.shtml

      RBC, 03.03.2011, Moscow 10:58:31.Severstal's net loss under IFRS dwindled 44.4 percent year-on-year to $577m in 2010, the Russian steelmaker announced today. Revenue increased 41.5 percent to $13.57bn.

      The net loss includes impairments from the discontinued operations of Lucchini and the three North American steel mills that Severstal recently agreed to sell, according to the company's statement. Severstal's operating profit tripled to $2.5bn, profit from continuing operations amounted to $1.43bn, and EBITDA doubled to $3.26bn. EBITDA margin rose to 24 percent from 16.6 percent in 2009.

Russian steelmaker Severstal, which entered at the top of the U.S. market in 2008, is selling Wheeling-Pitt mills and other steel assetshttp://www.post-gazette.com/pg/11062/1129254-28.stm

RetrenchmentThursday, March 03, 2011By Len Boselovic, Pittsburgh Post-Gazette

Russian steelmaker OAO Severstal is selling former Wheeling-Pittsburgh Steel mills as part of a $1.2 billion divestiture, marking a significant retreat from its high-priced foray into the U.S. market.

In addition to the Wheeling-Pitt mills along the Ohio River, Severstal North America is selling a mill in Warren, Ohio, that in a prior incarnation was WCI Steel and a Sparrows Point, Md., mill once part of bankrupted Bethlehem Steel.

Many of the plants have been idled or operated on limited schedules since the recession touched ground in the fall of 2008, shortly after Severstal purchased the properties for $2.2 billion.

The buyer is WCI's former owner, the Renco Group. It will pay Severstal $125 million in cash and take on a $100 million secured note from Severstal.

Renco will also assume $317 million in debt and $650 million in employee-related and environmental liabilities.

Severstal expects to complete the transaction this month following approval by antitrust regulators and ratification of a tentative labor agreement between Renco and the United Steelworkers union.

USW District 1 director David McCall said the union was ready to do whatever it takes "to ensure the profitability of these plants."

"Our workers are ready to focus again on making steel safely and efficiently, as they have in all of these communities for generations," Mr. McCall said.

Tuesday's announcement culminates what industry analysts said were months of negotiations between Severstal and Renco. It comes as U.S. steelmakers are returning to profitability after a long, slow recovery from a recession that began shortly after Severstal completed its shopping spree in the summer of 2008.

U.S. mills are currently operating at 75 percent of capacity. While they are benefitting from stronger order books and prices that have escalated nearly 50 percent since October, their prospects are tempered by sharply higher raw material prices.

Domestic steelmakers' ability to fully capitalize on the higher steel price tags could be compromised as Renco resumes production at the Wheeling-Pitt and Sparrows Point mills, giving steel buyers more options.

Renco's startup schedule could be delayed because of the higher prices it will have to pay for iron ore and coke, said Tony Taccone of First River Consulting in Pittsburgh. Both raw materials are needed to fuel blast furnaces at Wheeling-Pitt and in Maryland that currently are idle.

"While they will have to buy their way back into the market, they'll have an issue with raw materials," Mr. Taccone said.

New York City-based Renco Group's other business interests include the King's Jewelry stores headquartered in New Castle; AM General, the maker of the Humvee; magnesium and lead and material handling equipment.

Renco owned WCI Steel when it filed for bankruptcy protection in September 2003.

Three years later, it agreed to assume responsibility for WCI's underfunded pension fund as part of the steelmaker's court-approved reorganization.

WCI's failure came near the end of a wave of bankruptcies that plagued the domestic steel industry and led to its consolidation. Wheeling-Pitt's operations and Bethlehem's Sparrows Point mill also changed hands as part of the massive restructuring.

Severstal aspired to be one of the consolidators.

Building on its initial position as owner of the former Rouge Steel plant in Dearborn, Mich., it acquired Sparrows Point in May 2008 from ArcelorMittal, the world's largest steel producer, as part of a U.S. Justice Department-ordered divestiture.

It acquired Wheeling-Pitt and WCI three months later.

The divestiture will leave Severstal with the Dearborn mill and another in Columbus, Miss.

Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.

Sberbank in talks to buy Charlie Ryan’s UFG wealth unithttp://www.emergingmarkets.me/2011/03/sberbank-in-talks-to-buy-charlie-ryan%E2%80%99s-ufg-wealth-unit/

March 3, 2011

By Andrei Skvarsky.

Russia's biggest lender Sberbank is negotiating the takeover of Charlie Ryan’s UFG wealth unit in a bid to boost its efforts to diversify into asset management and investment banking.

Ryan, UFG’s co-founder and chief owner, may stay at the helm of the company after its possible buyout by Sberbank, according to a RBC Daily report. Sberbank announced on Tuesday it was launching its first brokerage services while  talks continued about taking out  Troika Dialog, Moscow's oldest investment bank.

The timing of the Sberbank-UFG negotiations may be a back-plan should the Troika deal fail to materialise. Troika Dialog has its own wealth management business so UFG's would be an overlap.

Ryan is the most successful foreign banker to have worked in post-Soviet Russia. He sold 40% of UFG investment bank for $70m to Deutsche in 2004, and the remaining 60% for a reported $600m in 2006.

In 2008, Ryan and his partner Boris Fedorov collected about $65m following the sale of a 40% stake in UFG Asset Management to Deutsche. Ryan is now leading UFG following Fedorov's death in November 2008 and is its driving force in fundraising for a new private equity fund.

Ryan's former head of investment banking at UFG, Ilya Sherbovich, is advising Sberbank on its negotiations about taking control of Troika.

Still No Franchising for McDonald's http://www.themoscowtimes.com/business/article/still-no-franchising-for-mcdonalds/431978.html

03 March 2011By Khristina Narizhnaya

McDonald's, one of the biggest franchisers in the world, will continue to directly own all of its Russian restaurants for the near future, Khamzat Khasbulatov, the corporation's president in Russia and Eastern Europe, said Wednesday.

"We have a successful operation, we don't have the motivation to franchise," Khasbulatov said.

Khasbulatov touted the company's franchise model in use worldwide, but said there are some risks involved in applying it to Russia. "There are judicial risks," he said, without elaborating.

Although the franchise model is widely used in Russian business, the law does not recognize the term. The legal code only has a clause about "commercial concessions." A new bill is under review at the State Duma that will make franchising official.

Russian Franchise Development Association president Alexander Mailer compared the vague legal situation around franchising to the often quoted talk show when a female citizen maintained that there is no sex in the Soviet Union — meaning the activity was never publicly discussed in the U.S.S.R.

Franchising requires a healthy small business environment with entrepreneurs who have access to large amounts of startup capital — which is in short supply in Russia. Lack of training and intellectual property protection also stands in the way of successful franchising operations.

Last year, the fast-food giant opened 31 restaurants in the country, mostly in Moscow and St. Petersburg and regions surrounding the cities, and has expanded as far south as Belgorod. The total number of McDonald's in Russia at the end of 2010 was 275. All restaurants are in the European part of the country. Khasbulatov said this is because of logistics and infrastructure challenges.

Local restaurants serve about 700,000 customers a year on average, one of the highest numbers for McDonald's in the world. In 2010, roughly 200 million people ate at outlets in Russia.

The company plans to open 40 more restaurants in 2011 — at least half of them in Moscow, St. Petersburg and surrounding regions. A McDonald's is slated to open in a few weeks in Veliky Novgorod, an ancient city 530 kilometers northwest of the capital.

The company has invested heavily in building and training its local supply chain — at one point even owning its own factory. Now McDonald's sources about 80 percent of its ingredients domestically, but said it plans to increase that to 100 percent eventually.

McDonald's has enough cash flow to finance expansion and improvement of existing facilities, Khasbulatov said.

Last year, the company invested 5 billion rubles ($176.2 million) to open new restaurants and modernize facilities. This year McDonald's expects to spend even more, but exact figures are not available.

Russia may not be an ideal franchising landscape, Mailer said, but the main reason for the company's reluctance is that they are so successful here. The chain attracts a record number of customers and has virtually no competitors.

"What's the point of sharing profit with an outsider?" Mailer said.

McDonald's has successfully franchised in nearby countries including Georgia, Moldova and Latvia. The corporation might come up with a franchise strategy for Russia in about two years, Khasbulatov said

MOSCOW BLOG: Retail hopes http://www.bne.eu/storyf2548/MOSCOW_BLOG_Retail_hopes

bne March 3, 2011

I was at the Adam Smith "Russian outlook 2011-2014" on March 1, where all the talk was about innovation and education in Russia.

The room was filled largely by executives of fast moving consumer good (FMCG) and the mood was pretty optimistic in sharp contrast with that in the rest of the world - but then everything looks optimistic compared to this time a year ago. On balance, Russia is clearly out of the hole it fell into in February 2009, but the recovery process, while going forward, is neither strong nor smooth.

This conference was run by Daniel Thorniley, who used to run the Economist Intelligence Unit's (EIU) emerging European operations (and was my boss in the 1990s) and was a pre-eminent consultant for FMCG companies in the region. He broke away from the EIU several years ago to set up his own shop, DT Global Business Consulting, and consults for most of the multinationals working in Russia.

Top down, Russia looks in great shape. GDP growth is coming back nicely (as widely expected). The budget deficit will come in this year at under 2% (and possibly under 1%), which is way ahead of the government's expectation a year ago. Total foreign investment is almost back to pre-crisis levels, says investment bank Uralsib, coming in at $114.7bn in 2010, up 40% from the year earlier. And the government officially announced in late February that it was going to start siphoning off tax revenues into the Reserve Fund again, as well as cutting some RUB300bn-400bn from its RUB1.5 trillion ($50bn) borrowing plans this year; the expectation had been that the Reserve Fund would run dry this year with domestic and foreign borrowing plugging the state's spending gap.

But bottom up, things are much less rosy. The problem is that domestic demand is sputtering and Russia's economy can't grow without this, as consumption already accounts for just over half of GDP. The statistics from January point to a sharp slowdown in economic activity as domestic demand was hit by the sharp rise in inflation, inspired by the double whammy of rising commodity prices and soaring food costs. The effect

was to depress real disposable incomes – down 5.5% when analysts were looking for an increase of 3.5% - which pulled down the other consumer-related numbers and even led to a slight increase in unemployment.

These results have unsettled commentators, but it could well be that these are just the

"funny numbers" that is normally associated with January - a month most Russians take off. But Thorniley, who spends all his waking hours talking to the likes of the senior management at PepsiCo and French supermarket chain Auchan, says the FMCGs are reporting the same thing. "These companies had stellar results in the last months of last year," says Thorniley, "but then sales dropped off a cliff at the start of this year. Clearly the demand is not stable."

Back to 2000

These problems are probably only temporary. The unrest in North Africa will almost certainly keep oil prices high (the events in Libya has caused a little bit more than a 1m-barrel-a-day oil supply shock, only the eighth worst on record), which will only improve Russia's macro situation further. But high oil prices are not going to solve the dearth in demand.

Ultimately, the current situation is reminiscent of the start of 2000. Then the gloom caused by the 1998 ruble crisis still hung over Russia, but people had cash in their pockets rather than the IOUs that companies used in lieu of wages for much of the 1990s with its "virtual economy" and started to shop. By the end of that year, the economy was clearly booming.

This time, Russia will start from a much higher base, but like then it will take three to four years for the average person get over the very nasty shock that the crisis brought. And hopefully as the last big crisis is still so fresh in everyone's memory, it could take a little less time this time round, which means sentiment could change fast this year.

The early signs are already there. Bank lending has already begun to pick up with retail loans leading the way. Car purchases on credit are also already back to pre-crisis levels, according to Rusfinance. Investments in Russian real estate are approaching pre-crisis levels, up over 50% in 2010, according to VTB Capital, and mortgage financed sales have been doubling each month since last summer.

All of this is indicative of a building recovery, but no one is expecting the economy to go back to the boom it enjoyed in 2008 and most companies are rethinking their strategy for lower, more sustainable growth, which is probably a good thing in the long run. "The challenge in Russia is for companies to move away from a good profit model to a model which gives strong top-line growth. This is still a challenge in Russia and globally," says Thorniley.

However, whatever the economists say, Russian companies seem to have a lot more faith in the Russian consumer than most analysts. A survey conducted by the Thorniley's DT

Global Business Consulting last year found:

• 70% of pharmaceutical companies said they would return to 2006-07 levels of business in 2010;

• 65% of food companies said the same, and 25% reported that this level would be regained in the first half of 2011;

• 65% of consumer product companies see recovery to this level in late 2010, while the remainder expect this to happen in early 2011. The laggards were in consumer electronics;

• 50% of industrial companies anticipate a late-2010 recovery, but 45% see this happening in 2011 and 5% expect to wait until early 2012;

• Some 40% of IT companies look for a similar recovery in late 2010, 45% in 2011 and 20% expect to wait until 2012;

• Most companies in the automotive sector foresee a full recovery starting in the second half of 2011; others are looking at 2012;

• Construction and real estate will come back from deep lows. But construction companies expect a sustainable recovery to start meaningfully in the second half of 2011 and into 2012;

• The banking sector is recovering as assets and deposits improve and profits are already starting to turn positive and expect to lending to resume in 2011.

Now it is over to the Russian government. It successfully contained the worst of the crisis with massive spending and has produced a solid macro base on which to build. But to really boom and restore confidence the state needs to deliver on its reform promises. Still, even if it's business as usual, it's already clear it will be a good, if bumpy, year for Russian companies.

Activity in the Oil and Gas sector (including regulatory)

Total enters into a strategic partnership with the independent gas company Novatekhttp://www.youroilandgasnews.com/total+enters+into+a+strategic+partnership+with+the+independent+gas+company+novatek_60235.html

Thursday, Mar 03, 2011

Christophe de Margerie, Total’s Chairman and Chief Executive Officer, was invited to meet the Russia’s President Dmitry Medvedev this afternoon in Moscow. It gave them the opportunity to review the overall activities of Total in Russia. Christophe de Margerie highlighted the dynamism of relationships of the Group with Russian partners and expressed its optimism concerning Total’s future in Russia.

In the evening, in presence of Russia’s Prime Minister Vladimir Putin, Christophe de Margerie signed with Leonid Mikhelson, Novatek’s Chairman and one of the main shareholders, two Memorandums of Cooperation to develop the cooperation between Total and the Russian company Novatek and its main shareholders.

The cooperation will be developed around two transactions:

Total will become the main international partner on the Yamal LNG project holding a 20% share. Novatek will hold a 51% interest in the project.

Total will take a 12.08% shareholding in Novatek with the intent of both parties to increase the share to 15% within 12 months and to 19.40% within 36 months.

The Yamal LNG project will develop the South Tambey field located in the arctic area of the Yamal peninsula. The resources of this condensate and gas field are estimated at approximately 44 trillion cubic feet of gas (1,250 billion cubic meters), allowing production of more than 15 million tons of liquefied natural gas (LNG) per year The project was declared of national interest by the Russian authorities, who took in 2010 a number of decisions to facilitate its implementation. With this project, Total (20%) will have access to proved and probable reserves of approximately 800 million barrels of oil equivalent (boe) within the licence duration and to a plateau production of about 90,000 boe per day in the next decade.

The Memorandum of Cooperation related to Yamal LNG outlines the main terms and conditions for the partnership on the Project and envisages the parties’ intent to close the deal by July 2011.

Novatek is the largest independent gas producer in Russia and supplies approximately 10% of the domestic market. Its 2010 production reached 37.8 billion cubic meters of gas per year (750,000 boe per day including condensates). Novatek’s portfolio of resources is made of several giant fields that underlie Novatek’s strong potential for growth. Since 2009, Total and Novatek are jointly developing the Termokarstovoye field.

The 12% stake will be acquired by Total from Novatek’s two main shareholders based on stock market quotations. The transaction is expected to be closed by April 2011 and amounts to approximately 4 billion dollars. Total will appoint a representative to the Board of Directors of Novatek. Through this acquisition, the Group will have access to an equity production of 120,000 boe per day and to proved and probable reserves of about 1 billion boe.

Commenting these agreements, Christophe Margerie highlighted that “Total is delighted with this strategic alliance with Novatek, which will accelerate the Group’s development in Russia. This agreement adds to the close cooperation built with Gazprom since 2007 on the Shotkman project. In becoming the first international investor to participate in the development of the giant gas resources of the Yamal Peninsula, Total pursues its strategy aimed at establishing partnerships in producing countries with national players and confirms its leading position in the liquefied natural gas business.”

Total Exploration & Production in Russia

Total has been present in Russia since 1989. Total is operator of the Kharyaga field located in the Nenets Autonomous Region with a 40% interest. The development plan for phase 3 of the Kharyaga field was approved in December 2007. In 2010, Total’s equity production reached 10,000 boe per day.

In July 2007, Total and Gazprom signed an agreement regarding the first phase of development on the Shtokman giant gas and condensates field located in the Barents Sea. Shtokman Development AG (Total 25%) was established in February 2008 to design, construct, finance and operate the first development phase of the project. The Shtokman first development phase will produce 23.7 billion cubic meters per year. About half (7.5 million tons per year) will be exported in the form of liquefied natural gas.

Total’s Commitment to Russia

In Russia, as in other host countries, Total is committed to promoting local development. In every project in which it participates, Total creates sustainable jobs and trains employees to manage operations safely and efficiently.

Total also supports public health, education and cultural programs. Notably, it financed the construction of a school in Narian-Mar, the administrative center of the Nenets Autonomous District, and participated in the restoration of the St. Petersburg’s famous Marinsky Theater. 

Source: Total

Total to buy Novatek stake for $4bnhttp://www.upstreamonline.com/live/article246752.ece

French oil giant Total became the third energy company to forge an alliance in Russia this year, agreeing to pay $4 billion for a stake in top gas independent Novatek and joining its Arctic gas project.

Staff & news wires  02 March 2011 20:26 GMT

The foray by the French company follows strategic offshore exploration alliances struck in January by state-controlled oil major Rosneft with Britain's BP and US ExxonMobil.

The deals, all signed under the patronage of Prime Minister Vladimir Putin, represent a major shift in Russia's energy strategy away from the knockabout oligarchic capitalism of the 1990.

Now, companies either controlled by or allied with the Kremlin, are contributing reserves and keeping control, while foreign partners get minority stakes in return for contributing know-how and experience.

The latest deal, under discussion since the middle of last year, fits that pattern, with Total signing a memorandum of understanding to acquire 12.08% in Novatek at a cost of $4 billion, with a view to raising its holding to 19.4% within three years.

Under a second memorandum, signed by company bosses Christophe de Margerie and Leonid Mikhelson, Total will acquire a 20% stake in Yamal LNG, contributing its technical expertise to one of Russia's most ambitious liquefied natural gas projects. Novatek will hold a 51% interest in the project.

"This is a very good deal which has huge prospects," Reuters quoted Putin as saying at the ceremony.

The Yamal LNG project will develop the South Tambey condensate and gas field in the Arctic area of the Yamal peninsula.

South Tambey holds an estimated 44 trillion cubic feet of gas, allowing production of more than 15 million tons of LNG per year, Total said in a statement announcing the deal.

The project will give Total access to proved and probable reserves of about 800 million barrels of oil equivalent within the licence duration with a plateau production of about 90,000 boe per day in the next decade, the conmpany said.

It is expected to start producing LNG by 2016, with output to rise to 15 million metric tons per year, according to today’s documents.

The project needs $20 billion of investment, Bloomberg reported.

"Total's participation in the project gives us extra confidence that it will be implemented on time," Novatek chief executive Leonid Mikhelson said.

Novatek plans to invite as many as four partners for the planned LNG project, targeting companies with experience and market share, chief executive Leonid Mikhelson said in January in an interview in Davos, Switzerland.

He said today that Total would remain the largest foreign holder.

The deal is expected to close in July this year.

Published: 02 March 2011 20:26 GMT  | Last updated: 02 March 2011 22:17 GMT

Rosneft increases exchange trading of petroleum productshttp://www.youroilandgasnews.com/rosneft+increases+exchange+trading+of+petroleum+products_60254.html

Thursday, Mar 03, 2011

Rosneft sold 271,600 tonnes of petroleum products on the Saint Petersburg International Mercantile Exchange during February 2011 for 5.5 billion rubles. Sales on the Exchange represented 22.5% of total domestic sales of petroleum products by the Company during the month.

The share significantly exceeds the requirement of the Federal Antimonopoly Service, by which at least 15% of total domestic sales of petroleum products should be via exchanges.

Exchange sales by Rosneft in February included 58,300 tonnes of Regular-92 gasoline, 4,600 tonnes of Premium-95 gasoline, 50,900 tonnes of Arctic diesel, and 10,600 tonnes of jet fuel.

Fuel sold by Rosneft on the Saint Petersburg Exchange is produced at the Company’s four main refining facilities: Achinsk, Angarsk, the Samara Refinery Group, and Komsomolsk.

In 2008 Rosneft was the first vertically integrated Russian oil company to begin large-scale exchange trading of petroleum products, in compliance with Russian government recommendations. Much work has been carried out with counter-parties and potential customers since that time in order to maximize the number of organizations, which take part in exchange trading. Volumes have grown by several dozen times and the current objective is to increase direct involvement of end-users in trading.

The Saint Petersburg International Mercantile Exchange (SPIMEX) provides an organized and regulated venue for wholesale trading of petroleum products. The Exchange was founded by Rosneft, Transneft, Transnefteprodukt, Gazprom Neft, Zarubezhneft, Surgutneftegaz, Tatneft, Russian Railways, and a number of other companies.

Source: Rosneft

A trap for BPhttp://rt.com/politics/press/vedomosti/bp-deal-rosneft-tnk-bp/en/

Published: 3 March, 2011, 03:39Oksana Gavshina

Vedomosti learned that it will be hard for British Petroleum to decline TNK-BP’s proposal to take its place in deal with Rosneft.

Tomorrow in Berlin, the TNK-BP Board of Directors will once again try discussing “the positive recommendations” made by the company’s management on its involvement in the BP-Rosneft alliance. Last time, a meeting could not be held due to the lack of a quorum – BP directors failed to arrive on February 25, asking that the meeting be postponed for a week.

“BP is stalling, because it has virtually been cornered: regulations of the shareholders’ agreement don’t allow the company to vote either for the proposals of the TNK-BP management, or against them,” a source close to one of the TNK-BP’s shareholders told Vedomosti.

This was confirmed by a source close to another TNK-BP shareholder. Under the TNK-BP shareholders’ agreement, if one party blocks any type of a deal, it will be unable to independently participate in it itself, explains another source close to TNK-BP.

In January, BP and Rosneft agreed to conduct joint work on the Russian Arctic shelf and exchange shares (Rosneft’s 9.53% for BP’s 5%). But a Russian TNK-BP shareholder, the AAR consortium (Alfa, Access and Renova), challenged the deal in arbitration court in Stockholm, which ruled that the deal be stopped. This time, TNK-BP is proposing another alliance scheme with Rosneft: TNK-BP will buy 5% of BP’s shares, and exchange them for 9.5% of Rosneft’s shares, as well as work in BP’s place within a joint venture with Rosneft in the Arctic.

After voting against these proposals at the board of directors meeting, BP will put an end to its partnership with Rosneft, stated one of Vedeomosti’s sources. Representatives of the TNK-BP consortium and AAR declined to comment. Their colleague from BP, Vladimir Buyanov, simply stated that “members of the board of directors, representing BP, will assess the merits of the proposal and vote in accordance with their fiduciary duties as members of the board of directors of TNK-BP.”

Whether or not BP representatives will appear at the upcoming meeting of the board and how they will vote, Buyanov did not say. But he did note the “BP has some serious concerns regarding a number of financial, practical and strategic aspects of the TNK-BP management’s proposal to the company’s board of directors.”

The purchase of 5% of BP’s shares will cost more than $8 billion, estimated Denis Brisov, an analyst with the Bank of Moscow.

“We are confident that we will easily be able to attract the necessary funds to participate in the deal with Rosneft,” TNK-BP CFO Jonathan Muir said recently.

In 2010, TNK-BP’s free cash flow amounted to $6.15 billion, which means that TNK-BP could limit itself to borrowing the minimal amount, says Borisov. If BP does approve the proposals made by the TNK-BP management, then the joint partnership deal with Rosneft will not have an effect on ongoing projects, but the company will be forced to part with the idea of international expansion, something it has wanted to do for years, says Borisov.

The sacrifice may be in vain. Rosneft does not consider TNK-BP as being a possible participant in the strategic alliance of Rosneft and BP – a spokesperson for the president of the state-owned holding company, Eduard Khudainatov, said yesterday.

Rosneft’s main shareholder – the government – has approved and supported BP’s involvement with Rosneft because this company has the necessary competitive advantages over other market participants. Meanwhile, the idea for TNK-BP’s purchase of the Rosneft stake will hardly be supported by the Russian leadership, suggests a Rosneft employee.

TNK-BP Move To Replace BP In Rosneft Deal Unlikely To Succeedhttp://www.oilandgasinsight.com/file/96897/tnk-bp-move-to-replace-bp-in-rosneft-deal-unlikely-to-succeed.html

March 2011 | Project News

BMI View: TNK-BP's proposal to effectively replace BP in the latter's share-swap deal with Rosneft is an audacious move, but is unlikely to succeed given the poor relations between TNK-BP and BP and the lack of any obvious benefit for Rosneft.

Anglo-Russian joint venture (JV) TNK-BP has reportedly proposed an audacious move to replace British major BP in its US$16bn share swap deal with Russian state-owned oil giant Rosneft . The complex proposal would give TNK-BP a 10% stake in Rosneft, while BP would receive US$8bn from TNK-BP. Although the extra cash would help BP meet its liabilities from the Macondo oil spill, the proposal is unlikely to succeed as it would increase the company's dependence on TNK-BP in Russia and offers no obvious benefits to Rosneft.

The ongoing dispute between BP and TNK-BP began on January 14 2011, when BP and Rosneft announced a US$16bn share exchange and an agreement for the joint exploration of three blocks the South Kara Sea in the Russian Arctic, which is considered highly prospective. Under the share swap, the Russian company agreed to take a 5% stake in BP, while BP in return will receive a 10% stake in Rosneft. The deal would add to BP's existing 1.2% stake in Rosneft, which it acquired for US$1bn at a partial initial public offering (IPO) in 2006.

TNK Attack

Immediately after the agreement, however, the ...

TNK-BP Seeks To Buy Algerian Assets Despite Ongoing Turmoilhttp://www.oilandgasinsight.com/file/96898/tnk-bp-seeks-to-buy-algerian-assets-despite-ongoing-turmoil.html

March 2011 | Industry News

BMI View: Despite the ongoing upheaval across North Africa, upstream investors continue to eye long-term potential in Algeria and Tunisia. In the current climate, however, realising this potential is a non-starter.

It appears that unrest in Algeria has not dissuaded Russian joint venture TNK-BP from continuing to eye BP 's assets there. Maxim Barsky, TNK's deputy chief executive, said on March 1 2011 that the Russian firm is still interested in BP's Algerian assets, but that the company does not 'expect any breakthrough' in ongoing negotiations with the Algerian government.

BP's decision to exit Algeria was first revealed on September 30 2010 when Algerian energy minister Youcef Yousfi told Reuters that the British major had applied for permission to sell its assets, which are worth about US$3bn, to TNK-BP. However, subsequent delays on the Algerian side in facilitating this transaction strongly suggest that Algiers favours a takeover of these assets by state-run producer Sonatrach , which has the right of first refusal. Russia's energy minister said as much in comments to reporters in December 2010, after raising the possibility of an asset swap in order to speed up the deal.

Emergency Halt

Algeria has not been spared the anti-government protests ..

It’s all about Russian Arctic energyhttp://ftalphaville.ft.com/blog/2011/03/03/503566/its-all-about-russian-arctic-energy/

Posted by Izabella Kaminska on Mar 03 08:30.

It looks like 2011 really is becoming the year of Russian strategic energy partnership deals.

The latest to join the ever-growing Arctic-focused club is French oil major Total. The firm announced on Wednesday that it will pay $4bn for a stake in Russia’s top independent gas company Novatek, a move which allow Total to join its Arctic gas

project. As Reuters noted, the move follows similar Russia-focused deals by BP and ExxonMobil this year.

In Total’s case, however, the focus is set to fall on the natural gas side of the energy spectrum.

From the press release:

In the evening, in presence of Russia’s Prime Minister Vladimir Putin, Christophe de Margerie signed with Leonid Mikhelson, Novatek’s Chairman and one of the main shareholders, two Memorandums of Cooperation to develop the cooperation between Total and the Russian company Novatek and its main shareholders.

The cooperation will be developed around two transactions:

* Total will become the main international partner on the Yamal LNG project holding a 20% share. Novatek will hold a 51% interest in the project.

* Total will take a 12.08% shareholding in Novatek with the intent of both parties to increase the share to 15% within 12 months and to 19.40% within 36 months.

According to Total, Novatek is the largest independent gas producer in Russia and supplies approximately 10 per cent of the domestic market. Last year, production reached 37.8 bn cubic metres of gas per year.

It’s worth pointing out that Total has had a flavour of working with Russia before. From the release:

In July 2007, Total and Gazprom signed an agreement regarding the first phase of development on the Shtokman giant gas and condensates field located in the Barents Sea.

Although, it is not like Total is not taking a risk.

As Alfa Bank’s morning note points out, as things stand currently, the deal potentially brings more positives to Novatek than the other way around:

Russian resources’ attractiveness overshadows country risk. Novatek has chosen Total to be its partner in developing Yamal LNG, with the latter buying a 20% stake in the project and acquiring 12% of Novatek itself. Total received a 17% discount on Novatek’s shares, paying $4bn for the stake. We see the announcement as medium-to-long-term POSITIVE for Novatek: not only does it greatly increase the credibility of the Yamal LNG project, but it also gives the company a major international shareholder. Coupled with Novatek’s aggressive domestic growth, this development could open up growth opportunities not yet priced in by the market; in the short term, however, the stock could fall, though we see the risk of a prolonged dip as low.

We’ll bring you more comment as we get it.

Gazprom

Kommersant: Gazprom Neft entering the Balkan market by Serbian NIS http://www.focus-fen.net/index.php?id=n243610

03 March 2011 | 08:58 | FOCUS News AgencyHome / WorldMoscow. Deadline for bids of Gazprom Neft to minority shareholders in the Serbian NIS, which includes 4.7 million Serbian citizens, expires in mid-March. The Russian company acquired one of the first assets abroad in 2008 and plans to enter the Balkan market through NIS. How Serbia treats the Russian investor, who will be its partners in the region and is it now profitable to sell its shares all these questions are commented by Director General of NIS Kirill Kravchenko for Kommersdant newspaper. “Besides Serbia, the target company's priorities are also Bulgaria and Romania, where we will expand our commercial network with Gazprom Neft”, he said. The majority of petroleum products will be supplied from refineries of NIS. Markets from the second priority are those in Bosnia, Montenegro, Croatia and Hungary.

International Natural Gas Price Boosts Gazprom and Statoil http://seekingalpha.com/article/256043-international-natural-gas-price-boosts-gazprom-and-statoil

1   comment  |  by: Kurt Wulff March 02, 2011

Summary and Recommendation

Buy recommendations Gazprom (OGZPY.PK) and Statoil (STO) may be among the most important beneficiaries of a marked upturn in natural gas price outside North America as traced in 2010 fourth quarter results from buy recommendations ExxonMobil (XOM), Royal Dutch Shell (RDS.A) and ConocoPhillips (COP). Gazprom is concentrated 84% by value on Rest of World (ROW) natural gas, while Statoil is concentrated 34% by our estimates.

Oil price, after a time lag of six months or more, has traditionally been the main determinant of natural gas price in European and North East Asian markets. While buyers like lower price, results from XOM, RDS and COP suggest any reductions have not been noticeable. Meanwhile the high cost of new projects and the recent interruption of Egyptian production reinforces the contract price structure. New supplies offshore Israel may not be competitive as the government attempts to change taxes to as high as an 80% rate after the fact of discovery.

Natural gas helps propel Net Present Value (NPV) for Gazprom to $56 a share and for Statoil to $44 leading to McDep Ratios of 0.57 and 0.65 respectively. Enterprise values are among the lowest at 4.4 and 4.3 times unlevered cash flow. Gazprom stock is performing at the top of the range in Enterprise Value to 200 Day average. The Russian producer will likely report 2010 third quarter results according to international accounting on or before its investor presentations in Moscow, London and New York on February 15-17. Norwegian producer Statoil expects to report fourth quarter results on February 9.

Common Geopolitical Interests of Germany and Russia in Natural Gas

Strategic forecaster George Friedman, in his latest book The Next Decade, identifies natural gas as the most important future energy source. The choice fuel may form the basis for a strengthening relationship between two historic global powers. Russia has the natural gas Germany needs and Germany has the technology Russia needs. At the same time, Germany may meet its need for labor by building factories in Russia that employ underemployed Russians and help diversify Russia’s economy. On the downside, the author cautions against the combined countries becoming strong enough to impose their will on others. On the upside, we see global economic growth as a force for peace and investment opportunity.

U.S. Natural Gas Price Stable

While ROW natural gas price is moving up, the U.S. futures price for the next six years trades flat. Bored commodity traders are shifting their interests away from natural gas to more volatile metals markets according to Natural Gas Week.

Originally published on February 8, 2011.