Russia 100514

Basic Political Developments IANS: Bangladesh to sign n-power pact with Russia - “On May 21, Yeafesh

Osman (state minister for science and information and communication technology) will sign with Russia a framework agreement on peaceful use of nuclear technology,” she told reporters here.

Helsinki Times: Russia's Putin to visit Finland in May - Vladimir Putin, the Russian prime minister, is to visit Lappeenranta in Finland on 27 May to negotiate amongst other issues, the extension of the lease agreement for the Saimaa Canal, according to information received by STT on Wednesday.

RIA: Russian, Brazilian leaders to discuss energy and aviation projects - Presidents of Russia and Brazil will meet in Moscow on Friday to discuss joint projects in energy and aviation industry, as well as the use of national currencies in reciprocal payments, a Kremlin source has said.

Bangkok Post: Abhisit plans trip to Russia - Prime Minister Abhisit Vejjajiva is planning an official visit to Russia next month despite intensifying political instability at home, says Vachara Panchet, the Thailand Trade Representative.The prime minister intended to visit Russia from June 4-7 after official visits to countries including Australia, the United States and Vietnam were cancelled earlier, Mr Vachara said yesterday.

BarentsObserver: Arkhangelsk senator to mediate in Kyrgyzstan - President Dmitry Medvedev has appointed Arkhangelsk senator Vladimir Rushailo his new special representative in Kyrgyzstan.

RIA: Russia, U.S. say new START treaty marks end of 'Cold War' Russia Today: Warsaw Treaty hits 55 RIA: UN General Assembly to discuss piracy at informal meeting RIA: Sailors from Russian tanker to return home this month after pirate attack Russia Profile: Pirates Vow Bloody Revenge - Russian Marines Could Have Just

Changed the Rules of Somali Piracy Dailymirror.lk: Russia, Sri Lanka to fight religious extremism - Vladimir. P.

Makailo of the Russian Embassy in Sri Lanka said that Russia would invite Sri Lanka to a conference on extremist religious groups sometime soon.

Expert Club: Ukraine does not intend to recognize Abkhazia and Tskhinvali - Ukraine will not recognize the independence of Abkhazia and so-called South Ossetia, the Foreign Minister of Ukraine Konstantin Gryshchenko said in an interview to Kommersant-Ukraina.

RIA: Ukrainian leader says no fears over rival South Stream pipeline Oil and Gas Eurasia: Ukrainian President Jokes: We'll Take 50 Percent Of

Gazprom Miami Herald: U.S. court orders Russian detainee freed from Guantánamo VOR: Israel resorts to pressure on Russian Air Transport Agency VOR: Georgia asks for charter flights to Moscow News.az: Recent 'positive changes' in relations between Russia and Azerbaijan VOR: Atlantis to blast off to ISS RIA: Russia to launch first carrier rocket from Kourou on December 17

RASPADSKAYA MINE ACCIDENTo Bloomberg: Raspadskaya to Flood Parts of Mine to Cut Gases; Rescue

Haltedo RIA: Methane delays search efforts at Siberian mine for at least 1 weeko Itar-Tass: Rescuers leave coalmine due to explosion threat

Interfax: Moscow police investigating why the cameras around homes of dead pensioners, did not work.

RIA: Russia eliminates terrorist cell in West Siberia - Russian security services have uncovered an underground terrorist cell of the Islamic organization Hizb ut Tahrir al-Islami, which is considered a terrorist group by Russian authorities.

Jamestown: Government Authorities Fail to Provide Security in the North Caucasus

VOR: Duma briefs Russians on deputies’ incomes Bloomberg: Billionaire Kerimov Declares $247,000 Income, 1-Room Apartment Moscow Times: Professional Director Incomes Capped VOR: Russia bids for 2018, 2022 World Footbal Cup Russia Today/Vedomosti: Editorial: You are back in the army - Russia is turning

away from a quality, professional army. This conclusion may be drawn based on a number of statements, made by the top generals.

Russia Today/Kommersant: President – period: Russian-language domain names become operational. The first ever Internet domain to use a national language script became the Cyrillic (.рф) domain. The workings of the first websites, outside of the Latin alphabet zone -- президент.рф (president.rf) and правительство.рф (government.rf) --were tested at a meeting of the Commission for Modernization and Technological Development of the Economy of the Russian Federation by President Dmitry Medvedev. Aleksandr Malakhov

Russia Today: Russians are spending twice as much on bribes - The cost of the average bribe in Russia has nearly doubled in the last 4 years, the Levada analytical center reports.

Moscow News: Motoring maneuvres upset Russian army - After trying to infiltrate a military convoy on the Minskoye Shosse, a Just Russia Duma representative Anton Belyakov found himself exchanging verbal volleys with the traffic police. 

Moscow News: Russians labeled “intolerant” by new survey - Regardless of your creed or colour, it seems likely that you're going to end up annoying your neighbour at some point.

Jamestown: Propaganda Overwhelms Russian Society VOR: Press review

o The Moscow-based daily Izvestia reports that Russia has directed a Candidature File to the FIFA to brief the Association on what preparations Moscow would make if trusted with hosting a 2018 or 2022 world football championships.

o According to the Vremya Novostei daily, scholars from CIS countries will write a common textbook on the Great Patriotic War.

o Russians will be able to visit Turkey visa-free for up to 30 days as of this summer under an agreement reached during President Dmitry Medvedev’s recent visit to Ankara, the Rossiiskaya Gazeta reports.

o Russia has launched its national Cyrillic Internet domain, registered as “.рф

o The Russian pavilion at the 63rd Cannes International Film Festival welcomed its first visitors on Thursday.

National Economic Trends Dow Jones: Russia Funds See Outflows For First Time In 12 Weeks Alfa: April budget deficit better than expected on strong tax collection Reuters: Russia may not borrow abroad at all in 2011-12-INTERVIEW Reuters: Russian rouble down on oil, severe drop unlikely Alfa: Corporate loans up 1.7%, retail up 1.0% m-o-m in April RenCap: Inflation has been stable for the past two months

Business, Energy or Environmental regulations or discussions Bloomberg: Gazprom, Severstal, OAO Rosneft: Russia Stock-Market Preview RenCap: Putin and Shvets discuss the distribution business VTB Capital: LSR wins RUB 3.6bn government contract to construct

110,000sqm in St Petersburg RenCap: Sberbank plans to set up management company by 1 July VTB Capital: Russian air authorities to tighten rules for charter carriers Steel Guru: Russian aluminium exports in Q1 increases by 6pct Bloomberg: Rusal Says Aluminum Demand Is Very Strong, Swings to Profit Reuters: UC RUSAL posts $247 mln Q1 net profit Bloomberg: Severstal Quarterly Loss Widens to $785 Million on Italian Unit Moscow Times: Google Plans to Hire Sales, Operations Staff in Russia Interfax: UTair flies 57.5% more passengers in Jan-Apr RBC: Sistema to offer new communications standards RIA: Hyundai to launch press forging unit at Russian plant – paper Moscow Times: IKEA Masters Rules of Russian Business Reuters: REFILE-Global ad industry eyes boost from mobile devices

Activity in the Oil and Gas sector (including regulatory) Aton: BashTEK Companies Boards Recommend Insignificant Dividends for 2009 Standart: LUKoil Upgrades its Neftochim Refinery Oil and Gas Eurasia: LUKOIL Begins Construction on $1 BN South-West Gissar

Project Oil and Gas Eurasia: TNK-BP: 24 Million Rubles For Geological Work In

Saratov Region Oil and Gas Eurasia: Environmentalists Disapprove Of Shtokman Profile Business Insider: Russia Backtracks On Black Sea Oil Exports, Because The Real

Market Is In Asia - Russia’s energy chief, Deputy Prime Minister Igor Sechin, has disclosed that the Black Sea oil export plan he launched in Milan last October,

with much applause from Turkish and Italian interests, is going nowhere fast – err, I mean, slow.

Gazprom RIA: Gazprom to open regional office in Brazil before year's end - Kremlin Moscow Times: Gazprom Gets Closer to Landing China as Customer RIA: Ukrainian Naftogaz to consolidate with Russian Gazprom only on basis of

parity Moscow Times: Gazprom Backs Ukraine Bid Ukrainian Journal: Naftogaz/Gaprom merger talks progressing Naviny.by: Gazprom is not seeking majority stake in gas pipeline operator,

official says BarentsObserver: Meeting on Shtokman field development

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Full Text Articles

Basic Political Developments

IANS: Bangladesh to sign n-power pact with Russiahttp://www.thaindian.com/newsportal/sci-tech/bangladesh-to-sign-n-power-pact-with-russia_100363626.html

May 14th, 2010 - 3:02 pm ICT by IANS –

Dhaka, May 14 (IANS) Bangladesh will sign an agreement with Russia on peaceful use of nuclear technology, including the setting up of a nuclear power plant, Foreign Minister Dipu Moni has said.“On May 21, Yeafesh Osman (state minister for science and information and communication technology) will sign with Russia a framework agreement on peaceful use of nuclear technology,” she told reporters here. This will end a 50-year-old quest.

A nuclear power plant under the pact will help deal with the power crisis in the long run, she said.

The foreign minister said as part of the agreement, the two countries would forge other deals necessary for setting up the proposed Rooppur nuclear plant in Pabna district. Several attempts have been made since 1961 to set up the Rooppur nuclear power plant.

The International Atomic Energy Agency (IAEA) has agreed to provide Bangladesh with technical assistance, including the site safety standard, officials told New Age newspaper.

On May 13 last year, the two countries signed a memorandum of understanding in Dhaka agreeing to enhance cooperation for peaceful use of nuclear energy.

According to power ministry, Bangladesh produces up to 4,000MW of electricity everyday against a minimum daily demand for 6,000MW.

Helsinki Times: Russia's Putin to visit Finland in May http://www.helsinkitimes.fi/htimes/domestic-news/politics/11071-russias-putin-to-visit-finland-in-may-.html

Friday, 14 May 2010 10:06

Vladimir Putin, the Russian prime minister, is to visit Lappeenranta in Finland on 27 May to negotiate amongst other issues, the extension of the lease agreement for the Saimaa Canal, according to information received by STT on Wednesday.

Mr Putin is also scheduled to discuss the fast Allegro-train connection between Helsinki and St Petersburg that is to open during the coming winter and to meet with Matti Vanhanen, Finland's prime minister.

The previous visit to Finland by Mr Putin took place in February this year.

RIA: Russian, Brazilian leaders to discuss energy and aviation projectshttp://en.rian.ru/russia/20100514/159010235.html

02:0914/05/2010

Presidents of Russia and Brazil will meet in Moscow on Friday to discuss joint projects in energy and aviation industry, as well as the use of national currencies in reciprocal payments, a Kremlin source has said.

Brazilian President Luis Inacio Lula da Silva and Russian President Dmitry Medvedev will discuss participation of Russian companies in projects to build hydroelectric and thermal power stations in Brazil and possible production of Embraer ERJ-145 regional airliners in Russia.

"A special emphasis at the forthcoming talks will be placed on boosting bilateral cooperation, including the implementation of large-scale joint projects in high-tech spheres," the source said.

Shortly after da Silva's visit to Moscow began on Thursday, the source announced that the Russian energy giant Gazprom planned to open a regional office in Brazil's Rio de Janeiro by the end of 2010.

In 2008, Medvedev said Brazil was chosen for the creation of Gazprom's regional office as it is more centrally located in Latin America.

The two leaders will also discuss bringing bilateral trade, which stood at $4.6 billion in 2009, to the pre-crisis level of $6.8 billion. The trade between the two states quadrupled in 2004-2008, but dropped 32% last year.

"Developing a mechanism of using of national currencies in reciprocal payments has crucial importance in boosting trade and economic cooperation," the source said.

The forthcoming meeting between Russian and Brazilian leaders is second in the past few weeks. In mid-April the two presidents met in the Brazilian capital during the summit of the BRIC countries (Brazil, Russia, India and China).

MOSCOW, May 14 (RIA Novosti)

Bangkok Post: Abhisit plans trip to Russiahttp://www.bangkokpost.com/business/economics/37296/abhisit-plans-trip-to-russia

Published: 14/05/2010 at 12:00 AM

Newspaper section: Business

Prime Minister Abhisit Vejjajiva is planning an official visit to Russia next month despite intensifying political instability at home, says Vachara Panchet, the Thailand Trade Representative.

The prime minister intended to visit Russia from June 4-7 after official visits to countries including Australia, the United States and Vietnam were cancelled earlier, Mr Vachara said yesterday.

Russia is one of the emerging economies that offer great potential for Thai export products he said.

Mr Vachara said the government aimed to reduce trade obstacles, especially customs procedures, and promote trade and investment with Russia. Target industries include jewellery, herbal products and food additives, furniture, auto parts, construction and finance.

Ahead of Mr Abhisit's official visit, the TTR plans to lead a group of about 50 representatives of six industries to Russia from May 19-25 to discuss trade issues as well as business matchmaking opportunities.

The trade representative said he expected two memoranda of understanding would be signed between Thailand and Russia. One would cover collaboration in the jewellery industry and the other joint investments in the food supplement business.

BarentsObserver: Arkhangelsk senator to mediate in Kyrgyzstanhttp://www.barentsobserver.com/arkhangelsk-senator-to-mediate-in-kyrgyzstan.4783855-16174.html

2010-05-14 President Dmitry Medvedev has appointed Arkhangelsk senator Vladimir Rushailo his new special representative in Kyrgyzstan.

Rushailo, a former Russian minister of interior and secretary of the country’s Security Council, will be the Russian President’s special representative in Kyrgyzstan, Medvedev announced in a press release on 13 May.

The main task of the senator will be to assist the interim government in the country ahead of the October elections, newspaper Kommersant reports.

Vladimir Rushailo was appointed the representative of Arkhangelsk Oblast in the Federation Council in late 2007.

RIA: Russia, U.S. say new START treaty marks end of 'Cold War'http://en.rian.ru/world/20100514/159012782.html

09:3714/05/2010

The new strategic arms reduction treaty marks the official end of the "Cold War" and must be ratified as soon as possible, Russia and the United States have announced in a joint statement.

"The Treaty ushers in the transition to a higher level of cooperation between Russia and the U.S. with respect to disarmament and non-proliferation" the statement said on Thursday. "It lays the foundation for qualitatively new bilateral relations in the strategic military field and, in effect, marks the final end of the "Cold War" period."

The new START treaty, signed on April 8 in Prague, replaced the 1991 pact that expired in December 2009.

The document stipulates that the number of nuclear warheads be reduced to 1,550 on each side over seven years, while the number of delivery vehicles, both deployed and non-deployed, must not exceed 800.

The statement talked of increased security and improved relations between the two powers.

"We believe that the newly agreed reductions in strategic offensive armaments will strengthen the security of both Russia and the U.S. and will make relations between our countries more stable, transparent, and predictable," the statement said.

"The Treaty, therefore, is not only in the interests of our two countries, but of the entire world community. Everyone will win as a result of its implementation."

U.S. President Barack Obama informed his Russian counterpart Dmitry Medvedev earlier on Thursday that the treaty had been forwarded for ratification to the U.S. Senate. The Kremlin immediately confirmed it was ready for simultaneously ratification.

The pact must be ratified by both houses of the Russian parliament and by the U.S. Senate to come into force.

WASHINGTON, May 14 (RIA Novosti) 

Russia Today: Warsaw Treaty hits 55http://rt.com/Top_News/2010-05-14/warsaw-treaty-hits-55.html/print

14 May, 2010, 07:20

After NATO was formed in 1949, the Soviet Union built up its own military alliance, the Warsaw Pact. The Soviet Union and seven European socialist states joined the treaty on May, 14, 1955.

Together with the Soviet Union they rehearsed possible scenarios of a third world war.

Kossa, 60 kilometers from Leipzig, Germany, seems to be an idyllic forest with majestic pines and surprisingly wide asphalted paths in between. It is a site of a popular tourist attraction: the now declassified Warsaw Pact main bunker, which is currently a museum.

However, during the Cold War the place used to be the location of a top secret control center with unique technology.

Kossa was fully-equipped to become the command bunker of the Warsaw Pact. Heavy weaponry was brought in. A hospital and an intelligence shelter were set up beneath the earth.

The center would get the mobile signal from the troposphere in case a nuclear cloud covered the Earth. The Kossa bunker was built to deal with any attack, including a nuclear one.

In case of an attack, the allies could easily reach Western Europe.

“The plan was to reach the Rhein in three days. To achieve this goal it was necessary to build a bunker right on this place,” says Olaf Strahlendorff, director of the Kossa Military Museum.

NATO also rehearsed the war.

But many question whether it has stopped the game now, two decades after the Warsaw Pact seized to exist.

“The ongoing expansion of NATO is wrong. It breaks the agreement between Gorbachev and the then-Western leaders, that there would be no troops on the territory of former East Germany. Now the whole of Germany is in NATO and other countries, too. Of course, Russia is nervous about being encircled. Especially after some of the former Soviet republics, such as Georgia, rose in arms against Russia,” said Wojciech Jaruzelski, the former communist leader and president of Poland from 1981 to 1990.

Mateusz Piskorky, president of the European Center for Geopolitical Studies, represents a new generation of politicians in Poland.

For him the 55th anniversary of the signing of the Warsaw Oact is nothing to celebrate.

“The Warsaw Pact, just like NATO, are leftovers of the Cold War. We live in an absolutely new world, in new realities. These military blocs are useless now. As for the Warsaw Pact, it should be the ground for debates between historians, but not politicians,” said Piskorsky.

RIA: UN General Assembly to discuss piracy at informal meetinghttp://en.rian.ru/world/20100514/159010537.html

03:0714/05/2010

The UN General Assembly will gather on Friday for an informal meeting to discuss piracy, the UN said in a concept note.

"The President of the General Assembly is convening on 14 May 2010 an informal meeting of the General Assembly to provide an opportunity for all Member states to discuss the problem of international maritime piracy in a comprehensive manner to effectively address the issue," the note said.

The UN said, citing recent statistics from the International Maritime Bureau, that pirates attacked 217 ships and hijacked 47 of them in 2009. They received over $60 million in ransom, the largest ever payment on record.

Russia has earlier urged other General Assembly members to "focus on the legal aspects of fighting piracy," namely on establishing an international tribunal to "ensure that the states and the world community carry out concerted and efficient actions to prosecute those involved in piracy."

In late April the UN Security Council unanimously adopted the Russian-initiated resolution on the possibility of setting up international tribunals to try pirates.

The UN News Centre said last week that a UN-supported centre to prosecute pirates may be established in Seychelles, an island nation in the Indian ocean which has recently become "a prime target" for pirates operating off the Horn of Africa.

Last week Russia had to release ten pirates captured during an operation to free its Moscow University tanker, citing a lack of proper international legal base to carry out prosecution procedures against pirates.

MOSCOW, May 14 (RIA Novosti)

RIA: Sailors from Russian tanker to return home this month after pirate attackhttp://en.rian.ru/russia/20100514/159009941.html

01:0914/05/2010

A dozen of sailors from the Moscow University tanker, which was briefly seized by Somali pirates last week, will return to Russia this month, the mother of a crew member has told RIA Novosti.

Ten pirates were captured and one killed in an operation on May 6 to free the Moscow University tanker, captured the day before.

"They will return in May. The exact date is unknown. Maybe, next week," Lyudmila Ivanova said.

The rescue operation raised discussions in Russia and worldwide over as the Russian military officials were forced to release the hijackers citing a lack of proper international legal base to carry out prosecution procedures against pirates.

The captured pirates had been disarmed and set adrift in a rubber boat without navigation equipment. The Russian military concluded that the hijackers perished as their boat disappeared from radars an hour after they were released.

KRASNODAR, May 14 (RIA Novosti)

May 13, 2010Russia Profile: Pirates Vow Bloody Revengehttp://www.russiaprofile.org/page.php?pageid=International&articleid=a1273776014

By Roland OliphantRussia Profile

Russian Marines Could Have Just Changed the Rules of Somali Piracy

The Russian Navy’s daring rescue of the hijacked tanker Moscow University last week was the kind of display of power Russians like best - strong, decisive, and an example to ineffectual western anti-piracy efforts. Dmitry Rogozin, Russia’s ambassador to NATO, tweeted with evident satisfaction that Russia should advise NATO on how to deal with “sea robbers.” But Somali sources now claim that rather than capturing and releasing the hijackers, the Russian marines shot them and set the bodies adrift in a boat. If true, the “heroism” of the Russian marines may have actually endangered anyone captured in future by violating the unwritten rule that pirates will not be killed if they don’t harm the hostages.

When Russian marines stormed aboard the hijacked tanker MV Moscow University on May 6, they were the heroes of the hour. The commander of the EU-led naval mission in the region praised their “professionalism,” President Dmitry Medvedev ordered medals for them, and Dmitry Rogozin, Russia’s bombastic ambassador to NATO, promised to “share our experience of fighting sea robbers with NATO.” “I'm proud of our sailors who put to shame Somali pirates!” he tweeted.

But after speculation in the Russian press, and the emergence of a “pirate spokesperson,” the headlines are threatening to change from “Heroic Marines in Daring Rescue,” to “Racist Russians in Somali Pirate Massacre.”

It was, to be fair, an impressive operation and a rare example of the multi-national naval force getting the better of the pirates. The Russian owned, Liberian flagged oil tanker was on its way to China with 86,000 tons of oil when it was hijacked in the Gulf of Aden on May 5. The crew managed to barricade themselves in the rudder compartment and radio for help, and a Russian ship – the Marshal Shaposhidov – was soon in pursuit.

Because the Russians knew the crew was safe and the pirates could not use them as hostages, the marines were able to go ahead with a boarding operation. In just 24 hours commandos had boarded the tanker, and by their own account killed one pirate and taken another 10 prisoner. None of the hostages or rescuers were harmed.

But what happened to the pirates next is hazy. The Russians originally said they would take the survivors back to face trial, but then changed their minds, citing “imperfections” in international law. Then on Tuesday the Ministry of Defense said they had resorted to a traditional form of maritime justice – setting them adrift to make their own way back to shore. Medvedev’s take was that without a proper legal framework, the only way to deal with them was “as our forefathers did.”

The marooned pirates have not been seen since. And yesterday an anonymous “pirate spokesperson” told the Somalilandpress.com Web site that at least 10 of his men had been killed by Russian forces.

“The Russians never released the young men instead they shot them point-blank range then loaded their lifeless bodies back on the boat,” the Web site quoted him as saying. “We condemn the action of the Russians, it’s driven by racism and hate for black people and Africa, it’s the face of the new Russia.”

Of course, this is hardly conclusive testimony. As Artur Davydenko of the Russia’s Sovfracht Marine Bulletin points out “it’s totally possible that the pirates simply didn’t reach the coast.”

Mikhail Voitenko, a former Sovfracht editor and “piracy expert” who fled Russia after breaking the story of the disappearance of the Arctic Sea, a freighter that went missing in the Baltic Sea in August 2009, concurred. “As soon as I saw them I knew they’d been released, and I immediately thought they would perish at sea. When the Russian media started speculating about their fate, and it was clear they had died, I knew I was right all along.”

So maybe the pirates were alive when they were loaded into the boat. But there are still strange inconsistencies in the Russian account. While it’s true that prosecuting pirates can be inconvenient, it is perfectly possible. Under the United Nations Convention on the Law of the Sea (UNCLOS), each state has jurisdiction to try anyone apprehended for piracy on international waters – regardless of the attackers’ nationality, and as a signatory to the convention on Suppression of Unlawful Acts at Sea (SUA), Russia may take action if its nationals are the victims of piracy or terrorism.

Furthermore, Russia has itself used this law to arrest and prosecute the alleged hijackers of the Arctic Sea. And on May 7 – the day after the Moscow University was rescued – one of the Arctic Sea suspects, Estonian Andrei Lunev, was sentenced to five years for piracy by a Moscow court.

“Yeah, it’s funny,” said Voitenko, speaking by phone from Thailand. “And you can’t even begin to think why they didn’t do that. They could at least have detained them for a week as suspects without charging them, and then delivered them to some country, maybe Yemen, for prosecution.”

Is setting people adrift in a dingy without navigational aids 300 miles from land better than shooting them at point blank range? It’s not likely to make much difference in the eyes of the vengeful pirate spokesperson, who warned that “in future, if we capture Russians they will meet the same fate as those they executed.”

If his threat is to be taken seriously, it means that the stakes have been raised considerably in the battle with piracy off Somalia. Traditionally there is an unwritten agreement that pirates are safe as long as they do not harm their hostages. By violating

that understanding, future hostage takings could get much more dangerous – though Davydenko thinks threats to kill hostages are self defeating.

“The pirates’ main incentive is money, and it’s much harder to get people to pay a ransom if you’ve killed the crew,” he noted.

But the Russian contingent in the EU-led anti piracy force that operates off Somalia has certainly acquired a reputation for over-zealousness. On Tuesday the Novaya Gazeta newspaper reported that Yemeni fishermen staged a “sit down strike” over the Marshal Shaposhidov’s sinking of seven fishing boats in the past month.

For balance, Voitenko points out that the same complaint has been leveled at the Indian Navy, and that the Chinese have a similar reputation for “not being interested in whether a boat is really a pirate vessel or not. They just sink it.” According to Novaya Gazeta, the Yemeni government has sent notes of protest to Russia, the EU, China and the United States, all of which have ships in the anti-piracy mission. In November 2008 the Indian Navy had to issue an apology after it sank a Thai trawler that it mistook for a “pirate mothership” in the Gulf of Aden.

The frustration is understandable. “It’s a huge, huge problem that all the navies in the world haven’t been able to solve,” said Voitenko, “you could call it a maritime Afghanista

Dailymirror.lk: Russia, SL to fight religious extremism http://www.dailymirror.lk/print/index.php/news/news/10598-russia-sl-to-fight-religious-extremism.html

Friday, 14 May 2010 01:46

Vladimir. P. Makailo of the Russian Embassy in Sri Lanka said that Russia would invite Sri Lanka to a conference on extremist religious groups sometime soon.

This was conveyed to the Prime Minister D.M. Jayarathna by the Ambassador who stated that extremist religious groups have become problems to society at large.

Therefore he said that they had blocked all opportunities for their growth in Russia.

Mr. Makailo expressed his satisfaction about the steps taken by Sri Lanka to fight drug use. He said that Russia could learn something from Sri Lanka on how to combat the drug menace and suggested that a joint effort be launched to stop drug trafficking within the zone and promised Russia’s support towards this end.

The Prime Minister stated that it has been possible to create an alcohol free society because of the “Mathata Thitha” programme launched as a result of it being a part of the Mahinda Chinthana concept of President Mahinda Rajapaksa.

As Minister of Buddha Sasana, the P.M. said that every action would be taken to ensure the success of this programme.

Expert Club: Ukraine does not intend to recognize Abkhazia and Tskhinvali http://eng.expertclub.ge/portal/cnid__4573/alias__Expertclub/lang__en/tabid__2546/default.aspx

14/05/2010 10:27

Ukraine will not recognize the independence of Abkhazia and so-called South Ossetia, the Foreign Minister of Ukraine Konstantin Gryshchenko said in an interview to Kommersant-Ukraina.

When responding to a question whether possibility of recognition of these regions is being discussed Grishchenko said: "For us the issue of territorial integrity and inviolability of borders is a matter of principle. Full stop."

RIA: Ukrainian leader says no fears over rival South Stream pipelinehttp://en.rian.ru/exsoviet/20100514/159010843.html

04:1514/05/2010

Ukrainian President Viktor Yanukovych said he was not concerned about the South Stream pipeline project, designed to pump Russian gas to Europe bypassing Ukraine, Russian media has said.

The South Stream pipeline will pump 63 billion cubic meters of Russian natural gas annually to Bulgaria, Italy and Austria and is part of Russia's efforts to cut dependence on transit nations, particularly Ukraine and Turkey.

"If it is a means of putting pressure on Ukraine, then we understand it. If it is a competitive struggle, then we are ready for it," Yanukovych told the Ekho Moskvy radio station.

He added that his country was ready to cooperate with Russia and the European Union on modernizing Ukraine's gas transit system, which is estimated to cost about $500-600 million.

Russian energy minister Sergei Shmatko said on Tuesday Russia considered South Stream to be "an issue of principle" and "a strategic entry to direct supplies for European buyers."

He also said that the possible merger of the Russian energy giant Gazprom and Ukraine's Naftogaz, proposed in late April by Russian Prime Minister Vladimir Putin, had no bearing on the South Stream project.

The Ukrainian leader said on Friday the merger should be carried out on a parity basis.

"If I had been there [at a meeting between Putin and his Ukrainian counterpart Mykola Azarov, during which the proposal was first voiced], I would have extended my hand to Putin [for a handshake] and said: I agree [for] the fifty-fifty [basis]," Yanukovych told Ekho Moskvy.

Talks on the merger began on Thursday, at a meeting between Gazprom CEO Alexei Miller and Ukrainian Fuel and Energy Minister Yuriy Boiko.

"The merger of the two companies will become an important component of increasing Europe's energy security, together with the diversification of gas routes to Europe," the gzt.ru news portal quoted Miller as saying. "In this respect, our South Stream construction plans remain unchanged."

Gzt.ru quoted Mikhail Korchemkin, director of the Pennsylvania-based consulting firm East European Gas Analysis as saying that the deal was unlikely, because if the Russian energy giant goes ahead with its South Stream project, the merger will be to Naftogaz's disadvantage.

"Yanukovych hopes that Moscow is bluffing while speaking of its commitment to the South Stream project, but that is not true - South Stream is lucrative for Gazprom," Korchemkin said.

MOSCOW, May 14 (RIA Novosti)

14.05.2010

Oil and Gas Eurasia: Ukrainian President Jokes: We'll Take 50 Percent Of Gazpromhttp://www.oilandgaseurasia.com/news/p/0/news/7310

Ukrainian President Viktor Yanukovuch said merging Gazprom and the Ukrainian state oil and gas company Naftogaz Ukrayiny is impossible, Gazeta.ru has reported. According to the website, Yanukovych said that Ukraine would be interested in merging Gazprom and Naftogaz "fifty-fifty"."I'd put it this way", he said, explaining his comment, "We understand that it is impossible to do it fifty-fifty, because Gazprom would never agree to that, and Russia would never agree. That was sort of a joke. As far as merging the two companies is

concerned, that is impossible". When asked to clarify if the companies could merge, Yanukovych said "Well, that is impossible. If you are talking about modernizing the gas transport system, then that is realistic, but it's also an issue which has to be thought through"."We have proposals ready and we see the stage for modernization and we feel that the EU, Russia and Ukraine can all participate in the project", Yanukovych said.Copyright 2010, Gazeta.ru. All rights reserved.

Posted on Friday, 05.14.10

Miami Herald: U.S. court orders Russian detainee freed from Guantánamohttp://www.miamiherald.com/2010/05/14/1628663/us-court-orders-russian-detainee.html

In the latest defeat for the U.S. government in Guantánamo cases, a federal court ruled that a Russian detainee captured in 2002 must be freed.

BY CAROL ROSENBERG

crosenberg@MiamiHerald.com

A federal court on Thursday ordered the Pentagon to set free from Guantánamo a former Russian Army ballet dancer turned devout Muslim whose plight captured the imagination of a Massachusetts college town.

Judge Henry Kennedy Jr. ordered the Obama administration to take ``all necessary and appropriate diplomatic steps . . . forthwith'' to release Ravil Mingazov, 42, an ethnic Tartar who was captured in Pakistan in 2002 and turned over to U.S. forces.

Thursday's midday ruling raised to 35 the number of Guantánamo detention cases the U.S. government has lost since the U.S. Supreme Court ruled two years ago that the war-on-terror captives can sue for their freedom in federal courts.

The Justice Department has so far successfully defended the indefinite detention of 13 Guantánamo captives.

With the Pentagon still holding 181 foreign men at Guantánamo, dozens more habeas corpus petitions are yet to be heard.

Justice Department spokesman Dean Body said Thursday afternoon that government lawyers were ``reviewing the ruling,'' which was still being declassified. Kennedy gave the government until June 15 to report back.

The Guantánamo captive's Washington, D.C. attorney, Douglas K. Spaulding, said his client had yet to hear of the ruling but the lawyer had reached the captive's mother in

central Russia, where she was ``very gratified to hear that Judge Kennedy had entered this order.''

FLED HOMELAND

The son was a one-time ballet and folkloric dancer as a civilian in the Russian Army who became devout after the fall of the Soviet Union and fled his homeland in 2000, for religious freedom.

The mother, he said, is a ``former Soviet-era agro-economist now in her 70s who prays to live long enough to see her son.''

The Pentagon claimed that Mingazov was captured in a March 2002 security forces raid on a suspected terrorist safehouse belonging to an al Qaeda rival named Zayn Abdeen al Hussein, known as Abu Zubaydah.

It also said he had earlier undergone training at a terror training camp, which he had denied.

For his part, the Russian told a U.S. military panel in 2006 that he was captured in a guest house for refugees, not Abu Zubaydah's. He added that he didn't know Abu Zubaydah and nor had he seen Osama bin Laden.

Spaulding was seeking talks with the Obama administration to arrange for his client's release to a country other than his homeland because of the stigma of nearly a decade in U.S. detention. Seven other Russians, who were released from Guantánamo in 2004, were tortured, beaten, harassed and sent into hiding, according a Human Rights Watch study.

POLICIES OPPOSED

Liberal activists in Massachusetts showcased the tale of Mingazov and an Algerian man named Ahmed Belbacha in a campaign last year that condemned the detention policies of the Bush administration.

On Nov. 4, Amherst's 240-member Town Meeting voted to offer asylum to two Guantánamo captives cleared of wrongdoing who cannot go home.

Congress has since blocked any resettlement of cleared Guantánamo captives onto U.S. soil. The Obama administration has turned to Europe mostly to take in released captives.

In western Massachusetts, activist Nancy Talanian of a grass-roots group, ``No More Guantánamos,'' said Pioneer Valley residents were still eager to take in Mingazov for resettlement.

``Guantánamo detainees who cannot safely return home are really no different than other refugees whom western Massachusetts communities have welcomed in the past,'' she said.

If the Obama administration can tell Europe that former detainees ``would not pose any danger,'' she said, ``that should be sufficient assurance that we can be safe with some of them living here.''

Mingazov, he said, speaks some English and some Arabic aside from his Russian. Said Spaulding: ``He's very healthy. He's got a good sense of humor. He's a healthy, I would say, balanced individual. Folks in Amherst are ready to go, but I don't think that's going to happen.''

VOR: Israel resorts to pressure on Russian Air Transport Agency

http://english.ruvr.ru/2010/05/14/7811337.html

May 14, 2010 09:57 Moscow TimeIsrael’s Civil Aviation Department has admitted that it has delayed the departure from Tel Aviv of Russia’s Transaero air-carrier’s liner for many hours in a bid to force the Russian authorities to allow an Israeli charter flight from St. Petersburg to Moscow to take 260 passengers on board and set course for Tel Aviv. The incident of three days ago outraged Russia’s Federal Air Transport Agency, which banned the Israeli Arkia Airlines’ plane from flying to Moscow on the grounds that the plane crew had no Russian visas. It is only Russian and Israeli tourists that have been able to travel visa-free since 2008.  

VOR: Georgia asks for charter flights to Moscowhttp://english.ruvr.ru/2010/05/14/7808666.html

May 14, 2010 09:45 Moscow TimeThe Georgian air-carrier Airzena-Georgian Airways has asked for Russia’s Transport Ministry’s authorization of 12 direct charter flights from Tbilisi to Moscow in late May and early June. The Georgian Airways says that it is prepared to resume regular flights to Russia if the two governments make a political decision. Yesterday the Russian Foreign Minister Sergei Lavrov said that Russia saw no hindrance of principle in the way of resuming regular air travel between Russia and Georgia. He said that Russia was bending every effort to settle the humanitarian problems that the two countries’ citizens were concerned about. Direct flights between Russia and Georgia were cancelled following the August conflict of 2008.

News.az: Recent 'positive changes' in relations between Russia and Azerbaijanhttp://www.news.az/articles/15481

Fri 14 May 2010 | 07:51 GMT

Round table on the role of Russia and Azerbaijan in Middle East is underway at the Center of Strategic Research of Azerbaijan in Baku.

The event is held with participation of the leadership of the Russian Institute of Strategic Research, leaders of the Strategic Research Center of Azerbaijan, Russian and Azerbaijani political scientists and experts.

Speaking at the opening ceremony of the event, head of the Center of Strategic Research Elkhan Nuriyev stressed the recent positive changes in the relations between Russia and Azerbaijan.

'The bilateral relations are built on pragmatism, realism and wide economic cooperation. The consideration of mutual interests is a feature of the modern stage of bilateral relations. The power centers of world policy, including Russia, understand and support the pragmatic, balanced and diversified policy of President Ilham Aliyev', he said.

He said the cooperation of the two countries based on long traditions and economic ties has acquired a more pragmatic nature.

Head of the Russian Institute of Strategic Research Leonid Reshetnikov stressed the importance of interaction of Baku and Moscow in the resolution of common problems and threats in Middle East.

'Probably, this is the only region which will become the center of world scale conflicts in unfavorable conditions', he said.

In turn, Russian ambassador in Azerbaijan Vladimir Dorokhin announced that the Azerbaijani-Russian relations are featured with equal rights and parity of interests. The diplomat announced that Russia’s policy in the region is 'quite clear and has no false bottoms'.

Dorokhin said in conditions of expansion of the political, economic and military cooperation between Baku and Moscow, the development of political science, regular conduction of such 'round tables' to analyze regional policy of the two countries would also be useful.

Interfax-Azerbaijan, 1 news.az

VOR: Atlantis to blast off to ISShttp://english.ruvr.ru/2010/05/14/7810935.html

May 14, 2010 09:54 Moscow Time

The U.S. Atlantis space shuttle is due to blast off from the Kennedy Space Center on Cape Canaveral on Friday. It will deliver Russia’s Rassvet research module to orbit. During their 12-day mission to the International Space Station the Atlantis crew will carry out three spacewalks before returning to Earth on May 26. Three more shuttle flights are being planned this year. After that NASA will close its shuttle program and will use Russia’s manned Soyuz space vehicles to take astronauts to the ISS and bring them back.

RIA: Russia to launch first carrier rocket from Kourou on December 17http://en.rian.ru/russia/20100514/159015469.html

12:1114/05/2010MOSCOW, May 14 (RIA Novosti) - The first launch of a Russian Soyuz-ST carrier rocket from the Kourou space center in French Guiana has been scheduled for December 17, Russia's top space official said on Friday.

Russia's Federal Space Agency Roscosmos and French satellite launch firm Arianespace signed a contract in 2008 to launch 10 Russian Soyuz-ST carrier rockets from Kourou. The first launch will take the Hylas-1 commercial satellite into orbit.

"The current official date is December 17," Roscosmos head Anatoly Perminov said on Russian television following his recent visit to the Kourou space center.

Parts of two Soyuz-ST rockets, modernized versions of the Soyuz-2 rocket developed specifically for launches from the Kourou space center, were delivered to French Guiana last year.

The Kourou launch site is intended mainly for the launch of geostationary satellites. Its proximity to the Equator will enable the Soyuz-ST to put into orbit heavier satellites than those launched from Baikonur in Kazakhstan and Plesetsk in northern Russia.

RASPADSKAYA MINE ACCIDENT

Bloomberg: Raspadskaya to Flood Parts of Mine to Cut Gases; Rescue HaltedFriday, May 14, 2010

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/05/14/bloomberg1376-L2EDYR0D9L34-5.DTL#ixzz0nt5asJIF

©2010 Bloomberg News

May 14 (Bloomberg) -- Parts of OAO Raspadskaya's largest mine, damaged by two explosions that killed at least 66 people, will be flooded to force out methane gas before

the search for 24 missing miners can resume, Russia's Emergency Situations Ministry said.

It will take at least seven days to "stabilize" the situation at the mine, which is also called Raspadskaya, the ministry said in a statement on its website today. The rescue stopped yesterday because of fires in the area being searched and after methane concentration rose, the ministry said.

The mining company will flood parts of the mine known as blind drifts, or dead-ends.

--Editors: Simon Casey, Claudia Carpenter

RIA: Methane delays search efforts at Siberian mine for at least 1 weekhttp://en.rian.ru/russia/20100514/159012352.html

08:3814/05/2010

Search efforts at the Raspadaskaya coal mine in West Siberia will be put on hold for at least a week due to high methane levels, chief Emergencies Ministry military expert Pavel Plat said.

Two methane blasts hit the mine over the weekend, killing at least 66 people and leaving over 129 injured. Rescue workers are still looking for 24 missing people.

Search efforts were suspended on Wednesday due to the risk of further explosions. Rescue workers still have to check at least 20 kilometers of underground caves and passages.

"The concentration of methane has surpassed all imaginable levels. We have calculations which say that it [the rescue effort] may resume after seven days at best," Plat said.

At least 12 fires blocked the passage leading to areas where the missing miners worked on the day of the tragedy.

Plat said all fire fighters left the mine at 20:05 Moscow Time [16:05 GMT] on Tuesday. They were unable to tackle the blaze, he said.

He added that rescuers would start flooding areas where the methane concentration is thought to be highest.

"Our task is to drive methane out," Plat said.

MEZHDURECHENSK, May 14 (RIA Novosti) 

Itar-Tass: Rescuers leave coalmine due to explosion threat

http://www.itar-tass.com/eng/level2.html?NewsID=15124293

14.05.2010, 08.22

MEZDURECHENSK, May 14 (Itar-Tass) -- Rescuers who worked underground in the Raspadskaya mine have come outside due to explosion threat. The methane concentration level is high at the sixth layer in a dead-end section, a source at the rescue operational headquarter told Itar-Tass.

There is nobody working underground now, the source said. Dead-end sections in the mine will be flooded to remove methane, and the work to flood them has already begun. The mine is closed for access.

Two methane explosions in the coalmine on the night to May 9 killed 66 people -- miners and rescuers who went down into the mine after the first explosion. The fate of 24 people is still unknown.

14.05.10 11:36

Interfax: Moscow police investigating why the cameras around homes of dead pensioners, did not work.

http://www.interfax-russia.ru/Moscow/news.asp?id=145184&sec=1668

May 14. Interfax MOSCOW - outdoor surveillance cameras installed near homes in the south-west Moscow in the Cheryomushki, where the murders of three elderly women who did not work, told a law enforcement source close to the investigation. "In both cases, and 11 and May 13 houses were equipped with CCTV, but they did not produce any record," - told the agency. He added that, currently, investigative task force establishes the reasons why the camera does not fulfill their functions. "If the cameras were functioning properly, the search for potential criminals would be moved faster," - said the source.

RIA: Russia eliminates terrorist cell in West Siberiahttp://en.rian.ru/russia/20100514/159013389.html

10:1714/05/2010

Russian security services have uncovered an underground terrorist cell of the Islamic organization Hizb ut Tahrir al-Islami, which is considered a terrorist group by Russian authorities.

"The head of the cell, a former convict, has been arrested. Since 2008, he has been propagating extremist ideas among the local population and recruiting new members, mainly among recently released convicts," a spokesman for the regional office of the Federal Security Service (FSB) said on Friday.

The official said FSB officers seized over 100 extremist pamphlets and books, banned in Russia, during the arrest.

"FSB operatives have also identified a group of supporters connected with activities of the [Hizb ut Tahrir] cell in Tyumen," he added.

Hizb ut Tahrir, which seeks to unite all Muslim countries into a unitary Islamic state, says on its website that it seeks to achieve its goals through peaceful means.

Russia, however, accuses the movement of having links to radical Islamist groups in Chechnya, and the group was placed on a list of banned organizations by the Russian Supreme Court in 2003.

The group, which calls itself a political party, is not classified as a terrorist organization by the United States.

Russia has eight regions with prevailing Muslim populations - Tatarstan and Bashkortostan in the Volga area, the North Caucasus republics of Dagestan, Chechnya, Ingushetia, Kabardino-Balkariya and Karachai-Circassia, and South Russian Adyghea.

TYUMEN (West Siberia), May 14 (RIA Novosti)

Jamestown: Government Authorities Fail to Provide Security in the North Caucasushttp://georgiandaily.com/index.php?option=com_content&task=view&id=18607&Itemid=132

May 14, 2010

Valery Dzutsev 

On May 9, several explosions and a suicide attack attempt took place in Dagestan, Kabardino-Balkaria and Chechnya (www.kavkaz-uzel.ru, May 9). The situation could be called almost normal for the region, which has been plagued by violence in previous years, but with one slight difference.

Following the bomb attack on high-ranking officials at the Nalchik hippodrome in Kabardino-Balkaria on May 1, the authorities vowed to elevate security measures on May 9, when Russia celebrates World War Two Victory Day with grandiose parades.

However, even heightened security failed to prevent new attacks from happening across the North Caucasus.

This means that the Russian security services and their regional allies are unable to provide safety for the public even for a single day when attacks are expected and additional security precautions have been taken. This also explains why top Russian government officials, like Prime Minister, Vladimir Putin, and President, Dmitry Medvedev, invariably arrive in the region unannounced. The security threat is grave and real, while the Russian security services and the government as a whole display an inability to improve the situation on the ground, despite applying crude force to the insurgency and the rebel suspects.

In Dagestan alone there were successive bomb attacks on May 7, 8 and 9. On May 7, one explosion took place at a local railway station in the previously relatively quiet southern Dagestani city of Derbent. The blast killed a civilian and a policeman and wounded several other policemen and civilians (www.kavkaz-uzel.ru, May 11). On May 8, a railway line was destroyed near Dagestan’s capital Makhachkala. On May 9 two explosions took place –one in Kaspiisk and the other in a suburb of Makhachkala– that claimed several lives. The security services say they also found an explosive device in Makhachkala that they managed to dismantle (www.kavkaz-uzel.ru, May 9-10). Over the same period, there were also several small arms attacks.

On May 9, two days after the explosion at the Derbent railway station, the security services in Dagestan killed two people they claimed were the perpetrators of the Derbent attacks (www.kavkaz-uzel.ru, May 10).

However, police claims are not always reliable, as they habitually connect any slain rebel suspect to recent crimes while rarely providing hard supporting evidence. This negligent approach on the part of the law enforcement authorities has become casual, even when they are investigating high profile cases like, for instance, the Moscow metro attack on March 29. That shocking attack in the heart of the Russian capital, which claimed the lives of 40 metro passengers, was attributed to two female suicide bombers who allegedly came from Dagestan. The security services also claimed they had identified several of their accomplices of Dagestani origin. Akhmed Rabadanov, one of the alleged accomplices, was killed by police on April 26. But one of his compatriots anonymously told the Kavkazsky Uzel (Caucasian Knot) website that Rabadanov could not have committed the crime as he had been present that day in his home village Novy Kostek. Two other people were kidnapped by the Russian security services from the same village and nobody knows their current whereabouts (www.kavkaz-uzel.ru, May 12).

The police combine extra-legal methods of interrogating rebel suspects with mounting pressure on rights activists in Dagestan, where some dedicated people remain despite being targeted by a campaign of threats and killings. On May 8, security forces blocked Albina Magomedova, a member of the Rights Defense organization, along with her 3-year-old child, in her apartment in Makhachkala. The police did not allow Magomedova to leave her apartment and threatened to shoot her dead as they have allegedly done in

similar situations, but eventually backed off from these threats (www.kavkaz-uzel.ru, May 10).

With the Russian security services in the North Caucasus enjoying virtually unchecked powers to kill, destroy homes and kidnap people, the security situation in the region remains dire and shows few signs of improvement.

“The situation with terrorism in the North Caucasus is becoming worse, despite the strengthening of the government’s economic, military and socio-political intervention in the region,” said Levon Batiev, Deputy Director of the southern branch of the Russian Academy of Sciences, at a press-conference. According to Batiev, while the insurgency has spread geographically, even into the predominantly Russian-speaking Stavropol region, and revived suicide bombings, the authorities’ actions still lack cohesion and coordination (Interfax, May 12).

So far, the creation of the new North Caucasus Federal District uniting almost all of the region’s republics has yielded few visible results in terms of improving the security situation. As the Russian government is under the increasing strain of economic problems and thus has to cut back on its spending in the North Caucasus, even including spending on such pivotal regions like Chechnya, in future the region may display an even higher propensity to violence.

Source: http://www.jamestown.org/programs/edm/  

VOR: Duma briefs Russians on deputies’ incomeshttp://english.ruvr.ru/2010/05/14/7812350.html

May 14, 2010 10:03 Moscow TimeThe website of the Russian Parliament’s lower house, the Duma, - www.duma.gov.ru carries information about the Duma deputies’ incomes for last year in keeping with a relevant presidential decree. The President, Prime Minister, top federal functionaries and Senators made public their incomes in the middle of last month.    

Bloomberg: Billionaire Kerimov Declares $247,000 Income, 1-Room Apartmenthttp://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/05/14/bloomberg1376-L2EDNX1A74E9-5.DTL

Friday, May 14, 2010

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/05/14/bloomberg1376-L2EDNX1A74E9-5.DTL#ixzz0ntBJuSux

©2010 Bloomberg News

May 11 (Bloomberg) -- Suleiman Kerimov, ranked Russia's fourth-richest man with a $14.5 billion fortune by Finans magazine, said he made 7.42 million rubles ($247,000) last year.

That's about one-eighth of the starting price of a Bugatti Veyron Grand Sport convertible, one of two cars declared by Kerimov as a member of Russia's upper house of parliament, according to the Federation Council's website.

The 44-year-old investor, a native of Dagestan in the North Caucasus, said his wife earned about $21,000 last year and owns three cars and one-third of a 54-square-meter (581-square-foot) apartment. Kerimov, part owner of OAO Polyus Gold, Russia's largest gold miner, declared two properties, a one-room apartment and a 508-square-meter building, both in Russia.

Kerimov's income pales in comparison to fellow billionaire senators Sergei Pugachev and Dmitry Ananiev, who reported earnings of $100 million and $12.3 million, respectively.

Senior officials are required to publicly disclose their incomes as part of a drive by President Dmitry Medvedev to crack down on corruption and make government more transparent. Medvedev declared 3.3 million rubles in income for last year, less than Prime Minister Vladimir Putin's 3.9 million rubles.

The record for disclosed incomes is held by Moscow Mayor Yuri Luzhkov's wife Yelena Baturina, who said this month that she earned $1 billion last year. Baturina, the only woman on the annual billionaire lists of Forbes magazine and its Russian rival Finans, said most of that income came from selling shares in companies including state-run OAO Gazprom and OAO Sberbank. Most of those proceeds were used to pay off bank debt, she said.

--Editor: Brad Cook, Torrey Clark

Moscow Times: Professional Director Incomes Capped http://www.themoscowtimes.com/vedomosti/article/professional-director-incomes-capped/405918.html

13 May 2010By Maxim Tovkailo and Yekaterina Derbilova / Vedomosti

The annual salary of professional directors in most state-owned companies should not exceed 1 million rubles, according to Ministry of Economic Development and the Federal Property Management Agency. This is much less than people in such positions are used to getting.

The Economic Development Ministry and the Federal Property Management Agency, or Rosimushchestvo, have sent a method for calculating the remuneration of professional directors of all the state-owned companies, officials from these agencies said. According to this method, their annual salaries should not exceed 1 million rubles ($330,000). This recommendation is in place to prevent abuse in small or medium-sized state companies, officials said.

VOR: Russia bids for 2018, 2022 World Footbal Cuphttp://english.ruvr.ru/2010/05/14/7814453.html

May 14, 2010 10:24 Moscow Time

Russia will present its bids for hosting the World Football Championships in 2018 and 2022 at the FIFA Zurich headquarters on Friday. It will be challenged by Australia, Britain and the United States. Spain and Portugal will make a joint bid for the 2018 Cup, and Belgium with the Netherlands will bid jointly to host the 2018 and 2022 events. Japan, Qatar and South Korea are bidding only for the 2022 Cup. The ultimate decision will be announced by the FIFA Executive Committee in December.

Russia Today/Vedomosti: Editorial: You are back in the armyhttp://rt.com/Top_News/Press/eng.html

Russia is turning away from a quality, professional army. This conclusion may be drawn based on a number of statements, made by the top generals.

Head of the of the Chief Organizationand Mobilization Directorate of the General Staff, Gen. Vasily Smirnov, suggested at the FederationCouncil hearings to raise the maximum age limit for conscription from 27 to 30years, also, to cut the number of universities that offer army deferrals, and draftstudents into the army after their second year of graduate studies.

He wouldlike to draft new conscripts almost throughout the entire year, by transferring the end of the spring draft, which starts on April 1, from July 15 to August 31(the fall draft begins on October 1 and ends December 31), and obliging the recruits to show up at the enlistment offices without the draft notice, fearing criminal prosecution.

Soon after, head of the General Staff Nikolay Makarov corrected his subordinate. The Ministry of Defense is considering increasing the age limit for conscription, but not as drastically as was stated (28? 29?). The ministry does not intend to amend any laws to reduce the number of student deferrals and the number of universities with a military department.

Makarov is either not deeply versed in the subject or is simply being cunning: reducing the number of civil universities and academies, whose graduates do not serve in the army, can be done without any legislative amendments.

However, the draft law of the Defense Ministry has been drafted and is now in the hands of the government.One general, who chose to speak incognito, told Nezavisimaya Gazeta (NG) that the proposals of the military generals have been approved in the Kremlin.

The arguments, set forth by the generals, are not new. The army is facing officer shortages, there are too many deferrals, the number of draft dodgers is increasing, and the fast approaching demographic crisis will completely deplete the army. To a certain degree, the Ministry of Defense is trying to compensate for the recent reduction of the service term to one year (starting 2008) by raising the maximum enlistment age.

The implementation of the generals’ plans will return the recruitment of the Russian army to the Soviet examples of the 1980s. Prior to Mihkail Gorbachev’s 1989 abolitionof recruitment of full-time students, a nearly indiscriminate draft of students,after they had completed their summer session, was the norm. However, even inthe times of the Soviet Union, young men past the age of 27 were not drafted.

This turnaround has obviously been provoked by the failure of the army’s transition to contract-basis recruitment. In February, Gen. Makarov clearly stated: “We are not moving recruitment to a contract-basis. Moreover, we are increasing the draft and reducing the contractual branch”.

The Federal Target Program titled “Transition to Staffing the Army Units withOfficers, Serving on a Contract-Basis” for the years 2004-2007 passed in 2003. It provisioned that the number of soldiers and sergeants, serving in permanent readiness units on a contract-basis, will increase from 22,100 in 2003 to 147,000 in2008, while their overall number would rise from 80,000 to 400,000.

In reality,in 2008, the number of contractors enlisted in permanent readiness units was100,000, and their overall number did not exceed half of the estimated sum --200,000 contractors. The program failed. And, money was not the only issue: the program’s funding increased from 79 billion to 100 billion, of which 84 millionwas used. As it turns out, the generals were unable to carry out (or sabotaged) the orders of the country’s top political leadership in peaceful times. Who could guarantee that the generals’ disobedience will not happen again in anemergency situation?

The Ministry of Defense could not organize and make professional service in thearmy look attractive, and views increasing the maximum age of enlistment as away to fill the gaps as a solution. Of course, the quality of these solders, whoare enlisted for one year, will be lower than the quality of the contractors.

The decision to move away from the transition to a professional army,promises to have many unfortunate consequences for the future of Russia. Conscription of 27-29 year-old

university graduates, who are in demand by professionals,could cause significant damage to the economy and put an end to modernization of the country. Many promising specialists will prefer leaving abroad to a one year break from their careers. It will be interesting to see the work of the draft board in the innovational city of Skolkovo, for example; although, if it will have its own special police units, why not create its own special army?

Read the article on the newspaper's website (in Russian)

Russia Today/Kommersant: President – periodhttp://rt.com/Top_News/Press/eng.html

Russian-language domain names become operational. The first ever Internet domain to use a national language script became the Cyrillic (.рф) domain. The workings of the first websites, outside of the Latin alphabet zone -- президент.рф (president.rf) and правительство.рф (government.rf) --were tested at a meeting of the Commission for Modernization and Technological Development of the Economy of the Russian Federation by President Dmitry Medvedev. Aleksandr Malakhov

It is expected that, in one and a half years, the number of websites registered in the domain zone could reach 500,000. Electronic mail should begin working in the Russian domain sometime this year.

Yesterday, the first ever national-language domain zone (.рф) appeared on the Internet; websites, operating in the new domain (президент.рф and правительство.рф) began working the same day. The Cyrillic domain was tested by Russia’s President Dmitry Medvedev at a meeting of the Commission for Modernization and Technological Development of Russia’s Economy. According to him, websites of certain state agencies will appear in the domain as soon as by the end of May. Media and Mass Communications Minister Igor Shchegolev said that by the end of the year, the number of websites operating in the Cyrillic zone will increase from 25,000 to 50,000.

RU-Center spokesman, Andrey Vorobyev, specified that the governmental websites will start operating in the domain before the end of May; meanwhile trademark owners will be registered in June. However, access to the (.рф) domain zone may be difficult if using older Internet browsers. E-mail in the new domain is being tested, but should start working sometime this year.

“This issue is currently being worked out. In particular, a replacement to the @ symbol, which only exists in the English layout, is being considered,” explains Andrey Vorobyev.

In November of 2008, the Board of Directors of the Internet Corporation for Assigned Names and Numbers (ICANN) received the necessary paperwork for the implementation of the Cyrillic domain (.рф) launch. The documents were prepared by the Coordination Center for TLD RU at the request of the Ministry of Media and Mass Communications.

Before the documents were submitted, the possible establishment of a (.ру) domain was being considered, but the ICANN gave notice that it will not be registered, because it graphically coincides with the domain of Paraguay.

Priority registration of website addresses in the Cyrillic domain for government agencies was held from November 25, 2009 until March 25, 2010. Priority registration for trademark holders will continue until September 16, and open registration process will begin in October, 2010.The next in line to receive a non-English language domain is China. This was announced yesterday by ICANN President, Rod Beckstrom. He specified that 21 countries have expressed the desire to obtain their national language domain.

According to Andrey Vorobyev, about 10,000 domain names have been reserved during the first stage of priority registration. “Of these, about 5% have been reserved by the government, and the rest were reserved by trademark owners, etc.,” said Mr. Vorobyev.

According to him, on May 12 alone, there were 1,500 applications made for priority registration in the (.рф) zone. “By the end of the second stage of priority registration (applications are accepted until September 16 and will be processed until the end of September -- Kommersant) there will be from 50,000 to 60,000 registered domains,” he estimates. He specified that as soon the open registration period begins, a new wave of registrations in the (.рф) domain zone is expected.

“We expect to register a total of about 500,000 domains in the Cyrillic zone in a year and a half,” explained Mr. Vorobyev.

Registering in the domain will cost around 500-600 rubles; renewing registration for another year will cost about the same, say RU-Center representatives. Thus, the profits of the Russian registration authorities could increase by at least 250 million rubles. Currently, there are about 2.6 million domains registered in the .ru zone, and the annual profit of the registration authorities amounts to about 1.4 billion rubles. If predictions concerning the number of new domains prove to be correct, then the Coordination Center of the (.рф) domain, which charges 70 rubles for every domain, will increase its profits in the next year and a half by 35 million rubles from the (.рф) domain alone. Currently, according to experts, the revenues of the Coordination Center of the (.рф) domain amount to about 180 million rubles per annum.

Read the article on the newspaper's website (in Russian)

Russia Today: Russians are spending twice as much on bribeshttp://rt.com/prime-time/2010-05-13/average-bribe-doubled-russia.html/print

13 May, 2010, 23:15

The cost of the average bribe in Russia has nearly doubled in the last 4 years, the Levada analytical center reports.

If in 2006 the average bribe amounted to 5,000 rubles ($165), now it reaches 9,000 robles ($298). The number of people who take bribes has also grown from 27% to 31%.

It turned out that most people give bribes to obtain a business license: 92% of people surveyed said that they paid for that. In 2005, only 19% of businessmen admitted to doing so.

Like 5 years ago, about 65% of those surveyed gave bribes when they had problems with traffic police. 45% of Russians had to pay in court or to obtain a driving license, 30% to avoid military service, to be properly treated in hospital or to enter university, and 14.5% to get employment.There is, however, a positive trend: the real estate sector has seen a massive decrease in corruption. Only about 1% of surveyed said that they gave bribes in connection with this kind of activity. However, people who want to get approval for renovations say it is still easier to pay a bribe to local authorities.

Given the fact that Russia has been doing its best to tackle corruption, the statistics are really worrying. Recently, Russian President Dmitry Medvedev has been very vocal about tackling corruption on the political level, among police and in general. He called this crime a plague on Russian society and said the issue cannot be tackled until Russians stop seeing corruption as another tax. However, the measures taken to combat corruption do not seem to be working.

Vyacheslav Shcherbakov from the University of the Interior Ministry believes that Russians should be patient.

“80 years of corrupted society do their job,” Shcherbakov told RT. “Now we are only in the beginning of the process. No less than 10 years are needed to get results.”

14/05/2010 | Moscow News: Motoring maneuvres upset Russian army http://www.mn.ru/news/20100514/55442191.html

Evgeniya Chaykovskaya 

After trying to infiltrate a military convoy on the Minskoye Shosse, a Just Russia Duma representative Anton Belyakov found himself exchanging verbal volleys with the traffic police. 

The official version has the politician trying to overtake a 3 km column of slow-moving tanks and missile launchers trudging back to base after the annual Victory Day parade. 

Forced to swerve away from on-coming traffic, he got caught among the weaponry and was promptly stopped by the police escort. 

And that's where the fun starts: the cops say Belyakov - an active fan of drag racing - whipped out his parliamentary ID and threatened to have them sacked, according to Life News. 

Belyakov, meanwhile, insists he merely caught up with the police car to ask for advice about an alternative route and was baffled when this provoked an aggressive response. 

He told Komsomolskaya Pravda that he even required hospital treatment after being attacked. 

Military officials are investigating the incident.

13/05/2010 | Moscow News №17F 2010

Moscow News: Russians labeled “intolerant” by new surveyhttp://www.mn.ru/local/20100513/55441524.html

Evgeniya Chaykovskaya

Regardless of your creed or colour, it seems likely that you're going to end up annoying your neighbour at some point.

A recent study has found Russians are still hugely intolerant when it comes to dealing with the people next door.

And while it's hardly surprising that few people would be happy living next door to drug addicts, alcoholics or emotionally unstable people, there are some surprises elsewhere on the list compiled by market researchers Bashkirova and Partners.

Religion seems to be a particular taboo: 31 per cent of respondents said they didn't want Muslim neighbours, 25 per cent weren't keen on Jews and even Christians incurred the wrath of 11 per cent.

And despite Russia's proud claims to be a multinational federation of hundreds of ethnic groupings, there's not a lot of enthusiasm to have them living on your block.

Gypsies (62 per cent), immigrants and foreign workers (46 per cent) and people of a different nationality (25 per cent) all got the thumbs down from significant numbers of the 2,000 people who took part in the survey in seven different regions.

Experts think that it is the fear of the new that scares the people of living with representatives of different nationalities.

"It is a difficult process of mastering anything new, particularly people of other cultures; a cultural shock of the receiving side. It is not a total xenophobia or ethno-phobia, but a transitional period," Igor Kuznetsov, a senior researcher in the Centre for Interethnic Relations of RAN Sociology Institute, told The Moscow News.

And the head of the agency which carried out the research said Russians proved unwilling to deal with anything out of the ordinary.

"Our people turned out to be intolerant and not ready to carry hardships and domestic difficulties connected to any neighbourhood," commented Elena Bashkirova, the head of the agency.

It's not just nationality and faith which can upset the neighbours. Ex-convicts, HIV patients, political extremists on all sides and even families with lots of kids made it on to the hitlist. 

The most unwanted neighbours

Jamestown: Propaganda Overwhelms Russian Societyhttp://georgiandaily.com/index.php?option=com_content&task=view&id=18609&Itemid=132

May 14, 2010

Pavel Felgenhauer

In Soviet times grandiose displays of military might during parades on Red Square in the center of Moscow were mostly designed to impress western Cold War adversaries. The last Soviet military parade was in November 1990.

Russian society was engulfed in antimilitary sentiment caused by the unpopular Afghan war of the 1980’s that ended in humiliating defeat and Red Square parades were terminated until 1995.

The 50th anniversary of the victory over Nazi Germany on May 9, 1995 was used by the then President, Boris Yeltsin’s, administration as a pretext to restore military parades. In 1995 world leaders flocked to Moscow led by US President, Bill Clinton, – to offer political support to the internally beleaguered Yeltsin regime despite public criticism of brutal Russian actions in Chechnya. The parade on Red Square and an impressive display of hardware on Poklonnaya Gora Victory Park in 1995 was intended to show that the Russian military still had deadly capabilities, despite its debacles in Chechnya. The Victory Day military parades grew in magnitude. On May 9, 2010 over 10,500 servicemen marched in Moscow and more than 100,000 nationwide. The parades began throughout the country simultaneously regardless of time zones; though in the Far East it was already evening (Vedomosti, May 7).

The main PR thrust of the restored post-communist Red Square military parades became internal, to impress the Russian populace. Record audiences viewed the Red Square parade live on Russia’s government controlled TV channels (RIA Novosti, May 11). The interior ministry reported that some 17 million Russians participated on May 9, in public Victory Day holiday events and some 300,000 police and interior ministry soldiers were deployed to keep the peace (RIA Novosti, May 10).

There were 150 tracked vehicles, as well as 127 aircraft and helicopters on parade on Red Square on May 9 (EDM, May 11). Communist Party leader, Gennady Zuganov, announced at a rally on Lubyanka Square in central Moscow: “All the 127 planes and helicopters that flew today and all the heavy equipment on parade was made in the USSR during the great Soviet epoch” (Interfax, May 9). Zuganov is more or less accurate: the weaponry was Soviet in nature, a relic of a past epoch; some of it partially modernized using Western electronic components and know how. Yet, within the post-Soviet space that Moscow regards as its legitimate sphere of special interests, the Russian military machine (as displayed on parade) seems formidable.

For the first time since the demise of the Soviet Union small national contingents from all CIS states, excluding Uzbekistan, marched on Red Square, symbolizing to the public the restoration under the Russian mantle of the unity of the former Soviet empire. Token Western contingents with military bands from France, UK, US and Poland were also invited to march on Red Square in an apparent gesture of goodwill (Interfax, May 9). Moscow is offering an open hand to the West, with lucrative deals to buy technologies in exchange for oil and metals to modernize its industry and military. However, friendship must be solidly based on a clear recognition of Russia’s special territorial interests in

Eurasia. Some leading Western nations seem to already accept the concept, while others still waver.

Last week the local Western diplomatic community speculated about why Moscow refused to accept on May 9 both Prince Charles and the US Vice-President, Joe Biden, as replacements for President, Barack Obama, and the then Prime Minister, Gordon Brown, who were unable to attend. Western diplomats were puzzled as to why Moscow would deliberately snub the UK and US for no good reason. The author learned about this development on May 4, from a senior German diplomat which later was corroborated by top US, UK and French officials. Surprisingly, the Russian media, including the liberal (Gazprom-controlled) Ekho Moskvy, refused to run this story in an apparent fit of acute self-censorship. On May 6, at a British reception I told the story to Guardian correspondent, Luke Harding, including my own conclusion that a decision of such importance required Prime Minister, Vladimir Putin’s, approval, though officially the rebuff came through regular diplomatic channels (Moscow stated that only heads of state or government were accepted). The author allowed Harding to cite him, since Western diplomats confirmed the story but refused to be quoted (www.guardian.co.uk, May 7). After the story became public knowledge, Putin’s spokesman, Dmitry Peskov, announced: “The information is absurd, absolutely false and does not require any comment” (Interfax, May 10).

On May 8, both the French President, Nicolas Sarkozy, and the Italian Prime Minister, Silvio Berlusconi, canceled their trips to Moscow, citing the economic crisis in the EU. Sarkozy and Berlusconi did not offer any high-level substitutes, apparently knowing they would be rebuffed anyway. On May 9, 2005 more than 50 world leaders attended the 60th Victory Day celebrations. This time, Kremlin officials predicted some 40 would attend, but in the end only 21 were there, including to Russia’s annoyance only one prominent Western leader –German Chancellor, Angela Merkel (Kommersant, May 11). Merkel’s presence was somewhat questionable, since the celebrations did not feature any sense of reconciliation between former foes, but instead Soviet heroism and sacrifice in defeating Nazi Germany.

Leaders of separatist Abkhazia and South Ossetia, Sergei Bagapsh, and Eduard Kokoyti, were in Moscow as well as Georgian opposition leaders, Zurab Noghaideli, and Nino Burjanadze, whom Moscow seems to be grooming as the future leadership of Georgia when the present regime of President, Mikheil Saakashvili, is overthrown. At a groundbreaking ceremony of the construction of a Great Patriotic War memorial dedicated to Soviet-Georgian soldiers at Poklonnaya Gora on May 8, attended by Noghaideli and Burjanadze, Putin expressed his hope that “a new good page will open in Georgian-Russian relations.” In the same speech Putin did not mince his words, calling the present Georgian regime “cynical,” “barbarous,” “political vandals that betrayed their forefathers” and “use malice, hate and destruction.” However, according to Putin, “they will fail, they have no future” (www.premier.gov.ru, May 8).

After the establishment of an apparently pro-Russian government in Ukraine, and the stifling of internal dissent in Russia, Saakashvili appears to be Moscow’s last enemy in the CIS. Putin appears to believe the Georgian leader’s days are numbered.

Source: http://www.jamestown.org/programs/edm/

VOR: Press reviewhttp://english.ruvr.ru/2010/05/14/7819115.html

May 14, 2010 11:37 Moscow Time

The Moscow-based daily Izvestia reports that Russia has directed a Candidature File to the FIFA to brief the Association on what preparations Moscow would make if trusted with hosting a 2018 or 2022 world football championships. The organizing committee has needed 3000 pages in three volumes to describe in detail the construction of 16 state-of-the-art stadiums, updating airports in the cities that would play hosts to football matches and building rapid transit railways between these cities. The Candidature File also offers the Russian Government’s guarantees to ensure security, fund projects to the tune of several billion dollars and freedom of financial transactions. The Russian Government also pledges to largely ease the visa regime for the football fans, and exempt the FIFA from taxes on the income that it would generate while holding a championship. Also running for the right to host the 2018 world football championship are the UK, and Spain/Portugal and Belgium/the Netherlands, which have filed joint applications.  

 According to the Vremya Novostei daily, scholars from CIS countries will write a common textbook on the Great Patriotic War. It will be simpler to restore the common war past through a joint effort than to agree the interpretation of the history of the CIS nations in the past 20 years. Assessments are largely different today. Most CIS experts on the Second World War have already supported the idea, and believe that a common textbook will amount to a breakthrough in relations between these countries. 

Russians will be able to visit Turkey visa-free for up to 30 days as of this summer under an agreement reached during President Dmitry Medvedev’s recent visit to Ankara, the Rossiiskaya Gazeta reports. Similar measures will apply to Turkish tourists visiting Russia.  

Russia has launched its national Cyrillic Internet domain, registered as “.рф”. The first “.рф” web sties available to Cyrillic users are the official web sites of the president and government – президент.рф  and  правительство.рф, the Kommersant daily writes. About 500,000 “.рф” domain names are expected be registered within a year and a half.   

The Russian pavilion at the 63rd Cannes International Film Festival welcomed its first visitors on Thursday. For 10 days, it will be acquainting the Cannes public with the Russian movie industry - its glorious history and modern trends, the Gazeta newspaper

reports. Leading Russian moviemakers will present their new projects and tell about future plans.  

National Economic Trends

Dow Jones: Russia Funds See Outflows For First Time In 12 Weekshttp://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201005140318dowjonesdjonline000298&title=russia-funds-see-outflows-for-first-time-in-12-weeks

MOSCOW -(Dow Jones)- Russia-focused funds snapped a 12-week long streak of positive inflows as investors became more cautious on emerging markets in the face of turmoil over Greek fiscal woes, data from Emerging Portfolio Market Research showed Friday.

Russia saw outflows of $203 million in the week to May 12--its second largest outflow of the post-crisis period--as its peers in the so-called BRIC group of countries also reported redemptions. China funds saw losses of $530 million, Brazil funds reported $248 million in outflows and India-focused funds lost $189 million.

The outflow comes as no surprise to the market, as investors globally were reducing their risk exposure last week on the back of very high volatility and market turbulence," said Chris Weafer, chief strategist at Uralsib, adding that inflows will likely return as soon as global market volatility subsides.

Russia funds have led those of other BRIC countries in terms of inflow, drawing some $1.9 billion in new money in 2010.

-By Ira Iosebashvili, Dow Jones Newswires; +7 495 232 9195;

ira.iosebashvili@dowjones.com

Alfa: April budget deficit better than expected on strong tax collection

http://www.businessneweurope.eu/dispatch_text11660

Alfa BankMay 14, 2010

According to the Finance Ministrys preliminary estimates, the April budget deficit was RUB200 bln vs. our expectation of RUB270 bln thanks to an improvement in revenues. We view this better tax collection as very positive, and it supports our expectation that

economic growth will accelerate in the coming months.

Based on Reserve Fund statistics announced earlier, we expected the April budget deficit to be RUB270 bln. Spending was in line with our forecast, but revenues were a positive surprise. The Finance Ministry only broke the figure down into oil and non-oil revenues without further details; even so, the decline in the share of oil revenues to 41% in April from 45% in 1Q10 suggests the outperformance was driven by non-oil taxes, most likely VAT. This view is supported by recently disclosed detailed March budget execution figures, which indicate a strong pick-up in local VAT collection, the largest non-oil revenue item, by 25% y-o-y for 1Q10. In absolute terms, VAT outperformed our expectation by RUB85 bln, a trend we believe continued in April. Overall, we take this as a sign that economic growth is accelerating and consumption patterns are improving, which strengthens the case that lending picked up in April.

It is also important to note that the growth in the budget deficit ñ from RUB245 bln in 1Q10 to RUB445 bln ñ should result in a significant increase in retail deposits, putting additional pressure on interest rates and boosting demand for loans in June-July.

Natalia Orlova

Reuters: Russia may not borrow abroad at all in 2011-12-INTERVIEWhttp://www.forexyard.com/en/news/Russia-may-not-borrow-abroad-at-all-in-2011-12-2010-05-14T073006Z-INTERVIEW

RUSSIA-PANKIN/SOVEREIGN (INTERVIEW,EMBARGOED 0730)

By Toni Vorobyova and Kiryl Sukhotski

MOSCOW, May 14 (Reuters) - Russia will slash external debt plans and may not tap the market at all in 2011-12 after pushing through its first eurobond in a decade before Greek woes spiked risk aversion, Deputy Finance Minister Dmitry Pankin said.

Russia raised $5.5 billion in its first Eurobond in over a decade last month, with the oversubscribed issue showing how far it has come since the 1998 domestic debt default.

As well as plugging a post-recession budget deficit, the placement was intended to improve borrowing conditions for Russian corporates [ID:nLDE63L0HZ].

But investor risk appetite took a serious knock from the Greek debt crisis and yields across the board -- including for new issues -- surged.

"We just caught the last wagon of the train because one week after our bond issuance it could be much more difficult to get such results and as we see spreads are rising," Pankin told Reuters Insider television in an interview.

"We pushed the benchmark 20-30 basis points down. May be our expectation was that we could have better results, but the market was not as beautiful as it was at least one week before." Russia had originally planned to borrow up to $17.8 billion abroad this year, and similar amounts in coming years. But officials have since said all further borrowing this year will be done on the domestic market.

"I think our main strategy is to borrow in the internal market, mainly using rouble instruments," Pankin said, adding that this strategy would also apply in years ahead.

"Our plan is that we diminish our external borrowing from up to $20 (billion) to up to $7.5 billion ... for 2011 and 2012. But it's only an indication that we can borrow. Now it's difficult to say exactly whether we will borrow or not." Total borrowing needs for this year though are unlikely to be less than the expected 1.5 trillion rouble ($50 billion) despite higher oil prices.

"We are preparing a revised version of the budget projections but I think it would be rather difficult for this year to get a budget deficit substantially less than 6.8 percent," Pankin said, citing rouble appreciation and "much bigger demand from other ministries for additional spending".

Yields on the 5-year Eurobond, sold with a coupon of 3.625 percent, have risen above 4 percent <RU050495418=>. The 10-year with a 5 percent coupon now yields 5.3 percent <RU050495434=>. (Editing by Mike Peacock)

2010-05-14 08:29 Reuters: Russian rouble down on oil, severe drop unlikely http://www.iii.co.uk/news/?type=afxnews&articleid=7893425&action=article

MOSCOW, May 14 (Reuters) - The Russian rouble weakened slightly in early trade on Friday as lower oil prices and stocks discouraged investors from buying rouble assets but losses are likely to be limited by the upcoming domestic tax period. By 0635 GMT, the rouble was down 3 kopecks at 33.51 versus the euro-dollar basket, some 11 kopecks below a Thursday's 17-month high.The rouble was under pressure from global concerns over possible monetary tightening in the rapidly growing Chinese economy that may dampen demand for Brent crude, said Anton Zakharov, analyst at Promsvyazbank.Partly caused by technical factors linked to Brent futures expiration, the slide in oil prices on Friday may press the rouble down but a rapid decline in the currency is unlikely for now."The upper limit is 33.60 (roubles vs basket), the lower limit is the central bank's bid level of 33.40," said Pyotr Neymishev, a dealer at Otkritiye bank.The central bank keeps the rouble within a floating corridor against the basket, switching it by 5 kopecks after intervening in amounts of $700 million at each boundary. It has taken 32 such steps since mid-February, moving the corridor to 33.40-36.40, dealers said.The central bank's level of purchases has yet to be tested and it is likely to happen ahead

of impending monthly tax payments in Russia.In order to prepare for tax liabilities, Russian exporters convert part of their dollar and euro revenues into roubles which traditionally supports the Russian unit in the second half of every month.Against the broadly weaker euro, the rouble was at 37.72 , hovering near the 37.67 point scaled on Thursday, which was its highest level since mid-December 2008.Versus the dollar, the rouble lost 5 kopecks to 30.07 .(Reporting by Andrey Ostroukh; editing by Dmitry Sergeyev and Jason Webb) Keywords: RUSSIA ROUBLE/

(andrey.ostroukh@reuters.com, +7 495 775 12 42)

Alfa: Corporate loans up 1.7%, retail up 1.0% m-o-m in April http://www.businessneweurope.eu/dispatch_text11660

Alfa BankMay 14, 2010

According to preliminary estimates from the CBR, Russian banks total loan book excluding Sberbank increased 1.1% m-o-m in April, including 1.7% growth in the corporate segment and 1.0% in retail. This confirms our view that recent data signal a recovery in lending activity, which is likely to accelerate in June-July.

Our optimism toward Aprils preliminary lending figures is tempered by caution, however, as the data do not include Sberbank, whose participation in the lending growth is necessary to ensure a recovery. We note that in March, the CBRs preliminary estimate of corporate loan book growth was 1.5%; however, after incorporating Sberbanks 2.7% decline, the overall result turned out to be flat.

This time, however, thanks to signs of improvement in the macro picture, we do not expect Sberbank to post a decline. First, the acceleration in imports in April points to better consumption trends. Second, the inflow of liquidity owing to the expanding budget deficit is pushing down interest rates. Third, the CBRs placement of a mere RUB100 bln in bonds in April vs. RUB250 bln in March indicates greater demand for money in the system. Vedomosti cites sources at Sberbank as saying that its loan book was flat in April, which would put corporate loan book growth across the sector at 1.0%. If true, we would view this as positive news, and we expect the growth rate to accelerate in June-July.

RenCap: Inflation has been stable for the past two months http://www.businessneweurope.eu/dispatch_text11660

Renaissance CapitalMay 14, 2010

Yesterday (13 May), Rosstat reported that weekly inflation for the period 5-11 May was 0.1%, for the eighth consecutive week. CPI is now 3.6% YtD, vs 6.5% for the same period a year ago. Inflation on a YoY basis is currently 5.8%, the lowest level in Russian history. Prices for fruits and vegetables continue to exert the largest pressures on inflation: the cabbage price surged 11.8% during the reporting period.

The Central Bank of Russia (CBR) recently commented that it will pay more attention to industrial production performance and the dynamics of inflation expectations in its future interest-rate decisions. Nevertheless, we think that one interest-rate cut of 25 bpts is likely to be made by the middle of the year. Historical evidence suggests that the CBR has room to do this, as Russia has a very long record of negative real interest rates. The CBR has already succeeded in curbing the excessive positive real interest rate that arose last year. At the current level of seasonally adjusted annualised inflation, which was 5.2% as of the end of April, Russia has almost returned to a non-positive real interest rate, as the spread between the key repo rate and annualised CPI has narrowed to almost zero (about 5-10 bpts). However, a historical comparison suggests to us that there may be potential for a further interest rate cut.

Business, Energy or Environmental regulations or discussions

Bloomberg: Gazprom, Severstal, OAO Rosneft: Russia Stock-Market Previewhttp://www.businessweek.com/news/2010-05-14/gazprom-severstal-oao-rosneft-russia-stock-market-preview.html

May 14, 2010, 12:52 AM EDT

By Yuriy Humber

May 14 (Bloomberg) -- The following companies may have unusual price changes in Russia trading. Stock symbols are in parentheses and share prices are from the previous close.

Russia’s 30-stock Micex Index fell 1 percent to 1,378.7. The dollar-denominated RTS Index slid 0.6 percent to 1,476.03.

OAO Gazprom (GAZP RX): A tie-up between Russia and Ukraine’s state energy companies is an “absolutely pragmatic solution” given their Soviet history, said Gazprom Chief Executive Officer Alexei Miller. An overhaul of Ukraine’s pipelines should go “in lock step” with work on Russia’s system, Miller said after a meeting with Ukrainian Fuel and Energy Minister Yuriy Boyko in Moscow. Gazprom dropped 1.8 percent to 163.03 rubles in Moscow on the Micex Stock Exchange.

OAO Severstal (CHMF RX): Russia’s biggest steelmaker will probably buy more than the initial 16.5 percent stake it has acquired in iron-ore developer Core Mining Ltd.,

Socrates Vasiliades, the chief executive officer of the West African company, said in an interview. Severstal’s option to invest in Core Mining is valid through 2012. Severstal fell 1.6 percent to 371.40 rubles in Moscow on the Micex Stock Exchange.

OAO Rosneft (ROSN RX): Brazilian President Luiz Inacio Lula da Silva will discuss energy projects, as well as arms, aerospace and agriculture with his Russian counterpart, Dmitry Medvedev, in Moscow today, according to the Kremlin. They plan to sign a strategic partnership plan during the visit, the Kremlin said. Russia’s largest oil producer, the state-run Rosneft, fell 1 percent to 226.63 rubles in Moscow on the Micex Stock Exchange.

--Editor: Glenn J. Kalinoski

To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

RenCap: Putin and Shvets discuss the distribution business

http://www.businessneweurope.eu/dispatch_text11660

Renaissance CapitalMay 14, 2010

Event: Reporting yesterday (13 May) to Prime Minister Putin on how the electricity distribution sector fared over the past winter, MRSK Holding CEO Nikolai Shvets said the average fault recovery time was reduced to 4 hours, from 5.5 hours the previous winter. Shvets acknowledged, however, that the total number of incidents increased by 1,000. Responding to questions about the level of investment, Shvets said the capex budget for 2010 is RUB89bn, of which RUB85bn has already been approved by regional administrations. The total capex in 2009 was RUB79bn. According to the reported comments, the exchange concluded with Shvets thanking the prime minister and the government for supporting the implementation of rate-of-return tariff regulation for the grids.

Action: We reiterate our BUY rating on MRKH shares.

Rationale: In our view, this brief exchange provides useful insight into the positive transformation occurring in Russia's electricity distribution business. The number of breakdowns and average recovery times are key indicators of efficiency for consumers, regulators and investors. It is also encouraging to us that rate-of-return regulation seems to have become fully institutionalised both in the sector and in government circles. Of perhaps more concern is what we judge to be currently very low levels of capex. In recent public remarks, Shvets estimated the sector's 10-year capex requirement at RUB2,850mn ñ a figure we judge to be reasonable. Investing only 3% of that in 2010 suggests that the

sector is storing up for itself (and for consumers) a huge bill towards the end of the decade.

Vladimir Sklyar

VTB Capital: LSR wins RUB 3.6bn government contract to construct 110,000sqm in St Petersburg

http://www.businessneweurope.eu/dispatch_text11660

VTB Capital14 May 2010

News: LSR has won a RUB 3.6bn (USD 124mn) government contract to construct 100,000sqm of social (mass market) real estate in St Petersburg by the end of 1Q11.

Our View: The contract value translates into RUB 32,700/sqm, which is common for such contracts (the company is building on the states land plot and does not make utilities connections) although it is 44% below the average market price.

Assuming a 15% margin, this would result in RUB 540mn (USD 18.6mn) cash flows to be received through 1Q11. We view the news as positive for the companys capacities utilisation and liquidity position, given that payments on such contracts are usually received on the completed area on a monthly basis.

We note that this is the second state contract in 2010 (together they come to RUB 5.6bn). In 2009, the company had state contracts totalling RUB 21.7bn (to be received through mid-2011).

RenCap: Sberbank plans to set up management company by 1 July

http://www.businessneweurope.eu/dispatch_text11660

Renaissance CapitalMay 14, 2010

Event: Prime-TASS reported yesterday (13 May) that Sberbank plans to set up a management company by 1 July. Earlier this year, Sberbank purchased a management company that is currently undergoing re-registration. The new company is expected to manage open and closed mutual funds and the reserves of the banks nongovernmental pension fund.

According to Prime-TASS, by the end of 2010 Sberbank plans to create three open mutual funds ñ including mutual funds of shares, bonds, and compound investments ñ as well as closed mutual funds.

Action: Positive for Sberbank, in our view.

Rationale: Sberbank accounts for about 50% of the sector's retail deposits and has the largest retail franchise among Russian banks; therefore, it would be logical for Sberbank to offer more products to its clients and manage their pension funds through its own specialised company, in our view.

Armen Gasparyan

VTB Capital: Russian air authorities to tighten rules for charter carriers

http://www.businessneweurope.eu/dispatch_text11660

VTB Capital14 May 2010

News: According to Kommersant, as of this year the Russian air authorities (Rosavia) will require charter carriers to agree their flights with the airlines that provide regular flights to the same destinations. The paper also quoted Aeroflot representatives as saying that the company would be unlikely to agree to charter carriers providing services to a number of destinations on routes where the national flag carrier had regular flights.

Our View: Given that Aeroflot carries out regular flights to a large number of popular tourist destinations, the company might benefit from lower competition from charter carriers during the approaching high season. However, we believe that the overall impact on Aeroflots business will be marginal.

Steel Guru: Russian aluminium exports in Q1 increases by 6pct

http://www.steelguru.com/news/index/MTQ1NjM2/Russian_aluminium_exports_in_Q1_increases_by_6pct.html

Friday, 14 May 2010

According to the statistics provided by the Federal Customs Service of the Russian Federation crude aluminium exports from Russia reached 827.5 kilo tonne to the total amount of USD 1.448 billion in Q1 2010.

Russian aluminium export supplies to countries outside the CIS in January to March 2010 reached 821.4 kilo tonne to the CIS: 6.1 kilo tonne to the amounts of USD 1.435 billion and USD 13 billion respectively.

Trends in aluminium exports and imports will be discussed at Aluminium, Alloys, Rolled Products and Profiles for Industry and Construction, 2nd International Conference on May 26 2010 in Moscow.

(Sourced from www.metalinfo.ru)

Bloomberg: Rusal Says Aluminum Demand Is Very Strong, Swings to Profithttp://www.businessweek.com/news/2010-05-14/rusal-says-aluminum-demand-is-very-strong-swings-to-profit.html

May 14, 2010, 12:20 AM EDT

May 14 (Bloomberg) -- United Co. Rusal, the world’s largest aluminum producer, may raise production targets because of the strength of demand in Asia, where it sold shares this year.

“We still see very strong demand for aluminum, especially in Asia,’ Oleg Mukhamedshin, Rusal’s head of capital markets, told reporters today in Hong Kong. “If the aluminum market improves further, we can consider raising production” beyond the planned 4.1 million metric tons target for the year, he said.

Rusal, controlled by billionaire Oleg Deripaska, is restarting plants after prices jumped 59 percent in the quarter and demand outside of China is forecast to grow 10 percent this year. The first Russian company to sell shares in Hong Kong is seeking to repay total debt of $12 billion and today said it swung to a first-quarter profit from a loss last year.

“Global aluminum producers are gradually increasing output as demand recovered from the crisis,” said Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd. “There are signs that global aluminum inventories are dropping, so it’s a positive sign on demand side.”

Rusal, based in Moscow, fell 0.4 percent to HK$8.22 at 11:33 a.m. Concern that its debt was too high contributed to the 24 percent decline from the initial public offering price of HK$10.80 in January, when the company raised $2.24 billion.

Recovering Profit

Net income was $247 million compared with a $638 million loss a year ago, Rusal said today in a statement. VTB Capital expected earnings of $367 million. Rusal wasn’t allowed to sell to retail investors in its IPO, and the stock trades in blocks of 24,000 shares.

“There are still a lot of concerns on the corporate side,” said Andrew Sullivan, a sales trader at MainFirst Securities Hong Kong Ltd. The minimum trading size also “puts it out of reach of many retail investors. I think it is likely to remain out of favor.”

Sales rose 31 percent to $2.3 billion. The market value of Rusal’s stake in OAO GMK Norilsk Nickel, Russia’s largest mining company, rose 32 percent through the first quarter, helping to boost income, Rusal said.

“Global demand has returned to growth this year,” Mukhamedshin said today. Rusal has the capacity to produce 4.6 million tons of aluminum annually, he said.

The Russian metal producer is planning to raise aluminum production by 3 percent for the year. Output of alumina, a semi- processed material used to make the metal, will increase by 11 percent, the company said April 12.

Debt Reduction

Aluminum cash operating cost increased 16 percent to $1,706 a ton in the quarter. Alumina costs rose 7 percent to $274 a ton, it said. Net debt dropped to $12 billion, the statement said.

“We are clearly ahead of our debt reduction targets,” Mukhamedshin said. “We will clearly meet the target of reducing the debt by a further $3.3 billion by the end of 2013.”

There are no plans to sell assets, he said.

Rusal joins rivals including Alcoa Inc. and Aluminum Corp. of China Ltd. in reporting improving profits as the recession eased and orders in the U.S., Europe and China gained. Aluminum Corp., also known as Chalco, returned to a profit in the first quarter as it ran plants at more than 90 percent capacity.

“Market conditions continue to improve, with the aluminum price benefiting from improving U.S. demand and rising premiums, a stable picture in Asia and a continued decrease” in stocks on the London Metal Exchange, Deripaska said in the statement.

Inventories of the metal on the LME dropped to a ten-month low yesterday.

Prices of the metal should stay above $2,000 a ton this year, Rusal said last month. Aluminum for immediate delivery averaged $2,167 a ton in the first three months, up from $1,366 a year ago. It traded at $2,146 yesterday, down 12 percent from a 19-month high of $2,439.85 reached on April 15 as concerns increased over Europe’s sovereign debt crisis.

“The market is a bit volatile,” Mukhamedshin said. “Aluminum will outperform other metals in the coming years.”

--Xiao Yu and John Duce, with reporting by Hanny Wan in Hong Kong. Editors: Tan Hwee Ann, Andrew Hobbs

To contact the editor responsible for this story Andrew Hobbs in Sydney at ahobbs@bloomberg.net

Reuters: UC RUSAL posts $247 mln Q1 net profithttp://in.reuters.com/article/basicMaterialsSector/idINHKV00239220100514

Fri May 14, 2010 6:07am IST

HONG KONG, May 14 (Reuters) - Russia's United Company RUSAL (0486.HK) (RUAL.PA), the world's top aluminium producer, said on Friday it returned to the black in the first quarter, boosted by higher aluminium prices and cost cutting.

RUSAL, whose January IPO made it the first non-Asian company with a primary listing in Hong Kong, posted a net profit of $247 million for the first three months of 2010, compared with a loss of $638 million a year ago, it said in a statement.

Higher aluminium prices on the back of a recovering global economy helped turn the industry around. Last month, RUSAL's Chinese competitor Aluminium Corp of China (601600.SS) (2600.HK), reversed losses to post a quarterly net profit. [ID:nTOE63I07T]

U.S. aluminium maker Alcoa Inc (AA.N) reported a loss in the first quarter last month, but would have recorded a profit that matched market forecasts after excluding charges. [ID:nN12201885]

Shares of RUSAL are still trading below their initial public offering price of HK$10.8 on concerns over its heavy debt position. The stock rose 0.36 percent to HK$8.25 on Thursday. (Reporting by Alison Leung; Editing by Jonathan Hopfner)

Bloomberg: Severstal Quarterly Loss Widens to $785 Million on Italian Unit http://www.bloomberg.com/apps/news?pid=newsarchive&sid=akySMF54A1JQ

By Ilya Khrennikov

May 14 (Bloomberg) -- OAO Severstal, Russia’s largest steelmaker, said net loss widened to $785 million in the first quarter after it reclassified the Lucchini Spa unit in Italy that it plans to sell.

Loss widened from $656 million in the same period last year and $162 million in the previous quarter, Severstal said in a regulatory filing today. Sales rose 34 percent from a year earlier to $3.14 billion, 7 percent less than the prior quarter.

“We are in a process of negotiations to divest Lucchini and expect to update the market as appropriate in the next six months,” Severstal said.

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

Last Updated: May 14, 2010 02:00 EDT

Moscow Times: Google Plans to Hire Sales, Operations Staff in Russia http://www.themoscowtimes.com/business/article/google-plans-to-hire-sales-operations-staff-in-russia/405952.html

14 May 2010Bloomberg

Google plans to recruit more direct sales and operations workers in Russia as the local market for Internet advertising rebounds, Nikesh Arora, head of global sales operations, said Thursday.

The owner of the world’s largest Internet search engine “will keep up with the pace of the market, and as the market evolves, we’ll continue hiring people,” Arora said in an interview.

Google has seen “lots of interest from global advertisers who want to participate in the Russian economy,” he said.

Russian advertising spending increased 5 percent to 46 billion rubles ($1.52 billion) in the first quarter, the Association of Communications Agencies said Wednesday. Internet media led the advance, with ad revenue surging 31 percent to 3.4 billion rubles, according to the association. Ad growth may exceed 10 percent this year as the economy rebounds from its steepest decline on record, said Sergei Piskarev, head of Gazprom’s media arm.

“We like the way our market share is progressing in Russia,” Arora said in the interview. “We offer a unique opportunity” in the country, he added.

Internet ad sales may expand by between 30 percent and 50 percent this year, said Eugene Lomize, head of technology and sales at Yandex.

Google, which competes against Yandex and Rambler in Russia, “hasn’t come anywhere near” exceeding Yandex in market share in the country, Lomize said. Yandex, which has 63 percent of Russia’s Internet search market, is adding sales offices in Russia to tap growing Internet use in the region, he added.

Yandex expects sales growth to outpace the Russian Internet ad market this year, Lomize said. Revenue climbed 14 percent to 8.7 billion rubles in 2009 on higher advertising sales, the company said Feb. 1.

May 14, 2010 09:56

Interfax: UTair flies 57.5% more passengers in Jan-Aprhttp://www.interfax.com/newsinf.asp?id=164423

KHANTY-MANSIYSK. May 14 (Interfax) - OJSC UTair Airlines (RTS: TMAT) increased passenger transport by 57.5% year-on-year to 1.288 million persons in January-April 2010, the company said.

The company's passenger throughput in this period went up by 70% to 2.147 billion passenger kilometers.

Total cargo transported by aircraft in the four months went up by 53.1% to 3,888.1 tonnes while transport of postage increased by 160% to 1,040 tonnes. Total cargo transport by helicopter increased by 11.4% to 7,030.8 tonnes.

UTair plans to fly over 4.8 million passengers in 2010, which is an increase of 34% from 2009. Through the implementation of the company's program, over 100 planes and 200 helicopters will be put into operation. The company will have helicopter operations in Russia and 11 other countries. According to UTair's business plan, the company's airliners will spend almost 300,000 hours in the air.

UTair is one of Russia's leading airlines and a major global operator of helicopters.

Ih

RBC: Sistema to offer new communications standards

http://www.rbcnews.com/free/20100514104744.shtml

      RBC, 14.05.2010, Moscow 10:47:44.Sistema Financial Corporation is currently working on developing new mobile communications standards, the company's major shareholder Vladimir Yevtushenkov announced at a meeting of the presidential commission on technological development and economic modernization, the RBC Daily newspaper reported today. Russian President Dmitry Medvedev consented with Yevtushenkov, stressing that Russia must develop and offer its own communications standards. Meanwhile, Sistema allocated $370m for R&D in the communications sectors in 2009-2010.

      In his presentation, Yevtushenkov indicated that Sistema is currently participating in the development of a number of promising telecommunication technologies, including "a new method of mobile connection." A source close to the company explained that the company did not intend to come up with an entirely new standard, but instead hoped to improve existing standards, including UMTS, GSM, and CDMA 2000. "The developments are aimed at improving the quality of the signal and data transfer speed," the source said.

RIA: Hyundai to launch press forging unit at Russian plant – paperhttp://en.rian.ru/business/20100514/159015686.html

12:2614/05/2010

Hyundai Motor Co. will become the first foreign automaker to launch a full-capacity press forging unit at its St. Petersburg car assembly plant, which starts production in September, a Russian business daily said on Friday.

Hyundai began building the $450-million plant in St. Petersburg's Kamenka industrial estate in June 2008. The new plant will have an initial annual production capacity of 100,000 vehicles, which the company plans to expand to 150,000 vehicles.

Vedomosti cited Hyundai spokeswomen Yulia Tikhonova as saying that the company had invested over $30 million in the forging unit and it would completely meet the plant's production demands.

Forging is one of the most costly aspects of the car manufacturing process and is only profitable when combined with large scale production. Other foreign car makers have been reluctant so far to launch forging units at their assembly plants in Russia.

Hyundai is hoping to reach the initial production capacity within a few months of launching the plant and ensure a quick return on investment in the forging unit, which will allow the company to better control the production cost and maintain its high quality standards.

Hyundai sold a total of 74,607 vehicles in Russia in 2009, becoming the No. 3 foreign brand after Ford Motor Co. and General Motors Co.'s Chevrolet.

In the first two months of this year, Hyundai sold 11,821 units in Russia, accounting for 10.4% of the imported car market.

MOSCOW, May 14 (RIA Novosti)

Moscow Times: IKEA Masters Rules of Russian Business http://www.themoscowtimes.com/business/article/ikea-masters-rules-of-russian-business/405948.html

14 May 2010By Rinat Sagdiyev and Anastasia Popova / Vedomosti

Swedish retailer IKEA, the biggest owner of commercial real estate in Russia, has been beset by accusations of corruption.

Whether the accusations prove true is uncertain, but what is clear is that the Swedish company has adapted to the rules of Russian business better than Russians themselves.

The IKEA scandal broke out in February. The Swedish newspaper Expressen, citing an internal correspondence among employees of IKEA's Russian subsidiary, IKEA Mos,

which owns and manages the Mega shopping centers, reported that IKEA Mos' management effectively approved a bribe to connect its Mega Parnas shopping center to Lenenergo's power grid.

IKEA Mos didn't give any bribes itself, Expressen wrote, but "it's completely clear that the construction firm Renaissance Construction [a general contractor for Mega Parnas and seven other Mega centers], which was responsible for connecting the center, will try to get permission from the authorities using illegal means, with the help of bribes," IKEA midlevel manager Joachem Virtanen told his managers, IKEA Mos CEO Stefan Gross and chairman Per Kauffman, in August 2009.

The warning didn't get Gross and Kauffman's attention. "We are approving the installation of electrical equipment in correspondence with our plans," Kauffman told Virtanen, Expressen reported. "I'm taking all responsibility for this decision."

IKEA wouldn't comment on the memo, but Kauffman and Gross were quickly fired and an internal investigation was opened. Of those involved in the story — Gross, Kauffman, Virtanen, Renaissance Construction and IKEA itself — only Renaissance has commented to Vedomosti. Sergei Yaroshevsky, a company spokesman, said it didn't deal with connecting buildings to the electrical grid.

An investigation carried out by Vedomosti was unable to get an answer to whether IKEA gave bribes. But it did show that the Swedish company often ends up in corruption-prone situations.

Cash Triumphs Over Evil

Lennart Dahlgren, the first director of IKEA Mos, told Vedomosti how everything started. To build a big shopping center like IKEA or Mega, it is necessary to get more than 300 separate permits, he said.

"If we had waited to receive them all, we would have lost years," he said. Therefore, he said, the company came to agreements with local authorities that it would begin construction and receive the permits "in the process." True, the risk was high — bureaucrats took advantage of the situation.

In 2003, IKEA built its first distribution center — a warehouse in the Moscow region town of Solnechnogorsk in which it invested $40 million. Dahlgren said he reached a verbal agreement on its construction with Solnechnogorsk district head Vladimir Popov. "The police unexpectedly showed up at the building site. They halted work, shut everything down, and we couldn't even go onto the territory," he said.

Dahlgren tried to get in touch with Popov, but he had disappeared. Eventually, he reappeared and promised to launch construction if IKEA paid 10 million rubles.

"I said, 'Fine, we'll pay. We have to build, but on my terms — that the money goes to houses for the elderly,'" Dahlgren said. "I had thought we had reached a deal, but a few days later, Popov arrived and said the deal was off — 10 million was too little, 30 million rubles was needed. Every day we lost thousands of dollars because of the lost work. It was cheaper to pay the 30 million."

IKEA transferred the money into a charity fund, "announced this to the entire city, to local journalists … and the police left and opened construction," he said.

A similar story happened a year later with Mega Khimki. The mall's opening, scheduled for December 2004, fell through. The regional construction regulator wouldn't allow the opening because the shopping center operated on reserve generators and a traffic interchange hadn't been built. IKEA had to build not only two bridges for $4 million (one of which was never launched) but to pledge $1 million for the development of children's sports.

By June 2006, when Dahlgren was transferred to another position, four Mega malls had been opened in Russia and another six were under construction — not a bad result for three years of working in a new market.

Bombarded With Megas

But the coin has another side: Of the 14 Mega malls, only two opened on time and without any problems.

And the problems were similar everywhere. For example, in September 2006, construction on the Mega Rostov-on-Don shopping center, which was being carried out without permits, was halted for two months. A court fined IKEA Mos 12 days before the opening of its Mega Adygeya shopping center in 2008 for building without an approved plan, and the opening was delayed by a month.

Mega Ufa, construction on which was started in September 2007, has still not been opened. In May 2008, Bashkortostan's construction watchdog found that part of the work had been completed without the necessary permits.

In Novosibirsk, the construction watchdog found many defects before the opening of the Mega mall there. The agency's lead inspector, Vitaly Ivlyev, said the complex lacked a heating system, that IKEA had tried to connect the mall to reserve diesel generators and that it didn't build a traffic interchange, although this wasn't included in the technical specifications. On the official opening day, only a third of the Mega Novosibirsk complex was completed; the rest took another year to finish.

The situation became even farcical. In 2009, Tatarstan's construction watchdog suddenly found that IKEA had been working without a use permit — after four years.

In Samara, bureaucrats still won't let IKEA open a mall that was finished in November 2007. Deputy Economic Development Minister Stanislav Voskresensky dealt with IKEA's complaints and found that the mall had no permits whatsoever.

At the time, the Samara region administration worked out a plan with IKEA to "bring the Mega Samara family shopping center into accordance with current regulations and to facilitate its exploitation." In January 2010, IKEA received a confirmed city plan for its land, and in March it got a positive state appraisal of its planning documentation and a permit for construction.

IKEA didn't respond to any warnings, a representative of the Samara government said, and at the end of 2008, the construction watchdog refused to give a use permit, citing all the violations.

There were no problems, however, with the launch of Mega Belaya Dacha. Its co-owner is former Agriculture Minister and State Duma Deputy Viktor Semyonov.

Deals Are Made to Be Broken

Working without documents, IKEA learned how to get by without communicating, but it is also necessary to get connected to the electrical grid. The Swedes leased diesel generators from the company Autonomous Energy Supply Systems, or SAE, during construction and often afterward.

"Not a single IKEA complex in Russia would have been built without using our generators," SAE owner Konstantin Ponomarev said.

Generators are typically more expensive than hooking up to the grid, but it depends on the bureaucrats.

For Mega Parnas and Mega Dybenko in St. Petersburg, generator rentals lasted for years and ended up in court. IKEA couldn't conclude an agreement with Lenenergo in time, and both malls, which opened in 2006, operated on SAE generators.

In 2008, the partners began to fight.

Starting in July 2008, IKEA stopped paying, started accumulating debts and refused to return the generators, Ponomarev said indignantly. In August, SAE filed its first suit against IKEA Mos for 130 million rubles.

Ponomarev said he had already filed 10 suits, but wouldn't say the total amount of debt being sought. So far, according to information in the courts' databases, Ponomarev has won all the cases.

IKEA didn't stay in debt: In March 2009, Ingvar Kamprad accused Russian energy firms of cheating the company out of 135 million euros. IKEA also starting filing lawsuits,

disputing the generator rental agreements on various grounds: sometimes because they were coerced into the deals, sometimes because electrical stations are immoveable property, meaning that the agreement should have been registered with the state. So far, according to information in the courts' databases, IKEA has lost all such cases.

Nevertheless, Ponomarev has received neither money nor his 112 generators. SAE filed a suit against IKEA requesting the return of its property and won, but IKEA is not hurrying to return the equipment. IKEA's lawyers have repeatedly requested clarification on the court's ruling: They ask, for example, what it means exactly to return property "in good working order," Ponomarev said.

IKEA is trying to get a court order for SAE to remove garbage from the territory of the Mega malls, but the "garbage" is containers with the very same generators that SAE wants to take away, all the while they refuse to give them to us, Ponomarev said.

IKEA refused to comment to Vedomosti on ongoing court cases.

Did Someone Call the Police?

In order to feel more confident on the Russian market, IKEA turned to British detective agencies.

One of them was Diligence, the newspaper Expressen said. This agency is well-known in Russia because of a certain project: In 2006, the IPOC fund (whose beneficiary is likely former Communications Minister Leonid Reiman) accused Diligence of obtaining the fund's confidential documents from KPMG at the request of Alfa Group. At the time, Alfa and IPOC were battling for a blocking stake in MegaFon.

It's possible that Diligence even worked against Alfa. On the agency's web site it says that at the request of a leading Western oil firm aiming to purchase a Russian competitor, Diligence investigated who the real owner of the Russian firm was and studied key employees to determine whether it was connected with criminals. After the investigation, the client successfully invested $7 billion.

Such a description could only mean one deal: In February 2003, British BP and Russian TNK, partly owned by Alfa, jointly created TNK-BP.

IKEA's inquiry was more modest, said a private detective familiar with the investigation. According to an agreement with IKEA, the detectives were to study all court materials and memos concerning the case with Ponomarev and to draw conclusions as to how well founded the judges decisions were.

According to Expressen, Diligence came to the conclusion that Ponomarev's complaints were legal, so the detectives developed a "criminal strategy" for IKEA against the owner of SAE, suggesting that the case be reclassified as criminal. The newspaper's site shows a photograph of a presentation of this strategy.

A representative of Diligence's London office said Expressen's information was "insinuation." "The tasks set out for Diligence pertained exclusively to the legal process and contained no assignment to collect compromising information about anybody," IKEA's legal department said.

The private detective, who asked to remain anonymous, told Vedomosti about another British agency working for IKEA — Alaco.

Ponomarev knew about Alaco, saying that when the problems between SAE and IKEA began, Alaco's cofounder Ambrose Carey pestered Ponomarev's partner, Harry Heikkila, to sell his 50 percent stake in SAE to IKEA. But Heikkila preferred to sell his stake to Ponomarev. (Heikkila and Carey wouldn't comment about their relationship with IKEA.)

Same as Anything Else

"Formally, IKEA hasn't always operated in a legal framework, and that's why it has had problems," Voskresensky said. "In some regions, the authorities support IKEA because of the new jobs and taxes, and in other places they don't — and that's where IKEA's problems started."

A source in IKEA gave a more blunt explanation. IKEA just didn't notice that Russian legislation has been tightened since 2005, when the City Planning Code was adopted. The company's employees tried to tell the management of violations in construction, but they were immediately fired, the source said. In 2008, when the company suddenly realized that the shopping centers were built in violation of current law, there was a scandal.

From that moment, IKEA has tried to find its way out of the situation, which it is in because of its own fault, the source said.

"The company is holding an inquiry in connection with accusations by fired employees against the former management of Mega shopping centers," an IKEA Mos spokesperson said. If any of the accusations are confirmed, the company will take measures to satisfy the corresponding complaints and ensure that similar situations don't happen again.

The IKEA example is significant from the point of view of changes that are needed to the city planning legislation, said Sergei Belyakov, a department head at the Economic Development Ministry.

"Because of the confused procedures of gathering documents, which has taken up to three years, investors are faced with a choice — either spend a lot of time on assessments and agreements and give up investment in Russia, or begin construction and worry about the documents later. The second route became widespread, and IKEA is no exception," he said.

"Before, many began to build before getting permits, intentionally made violations and paid the fines so as not to delay construction," said Andrei Zakrevsky, senior vice

president at Knight Frank. "If everyone followed the construction legislation, then there would not yet be any IKEAs or other big projects in Russia."

"The requirements are so contradictory that if you follow all the rules, then no project will be possible to build. It simply doesn't harmonize," said Maxim Gasiyev, chief executive of Colliers International Russia. He added that the system of state regulation of the construction sector incites bribe taking.

No one asked by Vedomosti would go on the record to put a price tag on the amount of bribetaking in the sector. But the figures that were named were about the same: If a company builds without a permit, the kickback to officials for getting the right documents could reach 30 percent of the construction costs, and 20 percent to 30 percent for connection to the electrical grid. "No one gives cash bribes. Everything is documented as social support, or part of the work is given to contractors indicated by local officials," said an executive at Management Development Group.

IKEA's experience may show that officials' bribe requests are nevertheless lower. In Yekaterinburg, the local administration in 2004 required that IKEA give 10 percent of the estimated cost of construction ($150 million) to "voluntary funds" for the development of the city's infrastructure. The event was related on the web site of the former governor of the Sverdlovsk region, Eduard Rossel, whom IKEA manager Dan Shellgren complained about. Rossel then personally took control of the project, and the company didn't have to pay a dime.

More than half of Russians think bribing officials is the best way to "solve problems," according to a new national survey by the Levada Center.

Fifty-five percent of respondents said they believed that "bribes are given by everyone who comes across officials" in Russia, while 10 percent acknowledged that they had even paid to arrange funerals for relatives.

Just 10 percent believed that only "cheats and criminals" bribed officials, and 30 percent said those offering "cash in envelopes" were in fact "ordinary people who have no other way to solve their problems." (Reuters).

Reuters: REFILE-Global ad industry eyes boost from mobile deviceshttp://www.reuters.com/article/idUSLDE64C17I20100514?type=marketsNews

2:27am EDT

(Repeating to correct date, May 14, not May 13)

By Maria Kiselyova

MOSCOW, May 14 (Reuters) - The global advertising industry is eager to capitalise on booming use of mobile phones for Internet access as more enhanced devices are coming to the market to get more consumers reachable online.

The trend is promising bumper returns in future years especially in markets like Russia where Internet usage is growing rapidly and is forecast to do so for years to come as people's incomes find support from oil-based economic growth.

"I think mobile is a fantastic opportunity," Nikesh Arora, Google <GOOG.O> President of Global Sales, said on the sidelines of an International Advertising Association conference.

"The advent of the iPhone, the Android devices and the Blackberry have finally given people reason in the western world (to) start using the mobile data. And as you see that go up, you begin to see the relevance of advertising in those applications," he told Reuters Insider Television.

Data is seen as the main driver of mobile companies' future revenue streams as new-generation technologies develop to allow the transfer of large amounts of information at a high speed.

Top global advertising and marketing chiefs, gathered in Moscow for the two-day IAA Congress to consider growth strategies for the $450 billion industry, have called for a new approach to consumers, based on a deeper understanding of their needs and the context they are living in. The mobile phone has become an essential tool for the vast majority of people in the developed world and is moving fast on this path in developing countries like Russia and China, and as the handsets are increasingly used to access the Internet, the advertising has to catch up, industry players said.

Google, the online search global leader, announced a $750 million deal in November to buy AdMob, which controls about one-third of the market for putting ads on mobile applications and Web pages.

And last month Apple <AAPL.O> announced a new advertising platform for the iPhone and iPad, dubbed iAd, showing the potential large players believe the market has. Google said Apple's move was evidence of a highly competitive market.

RUSSIA GROWTH

"Mobile offers unique opportunities in targeting, understanding a customer behaviour, not only what the customer does but where the customer is ... at this particular moment, and this allows to give the customer a very relevant message," Mikhail Gerchuk, Chief Commercial Officer of Russia's top mobile phone operator MTS <MBT.N>, told the conference.

Gerchuk said the Russian mobile advertising market could grow to $100 million by 2013 from $15 million now, and forecast that this type of advertising will surpass some other ways of advertising in a few years time.

Advertisers are in general bullish on Russia where consumer markets are expected to boom again as strong oil prices are helping the country out of recession.

"We are seeing growth in early stage markets where more people are going on the internet, and markets with large populations are wonderful places," Google's Arora said.

The number of Internet users is expected to rise to 5 billion worldwide over the next 10 years from about 1.8 billion now, Arora said.

"I think in the next 5 to 8 years 30-50 percent of the media is going to be consumed on the web, and if you look at the advertising proportion of the Internet versus the overall ad market, we are still under 10 percent."

From the mobile perspective, it means booming growth of content including advertising distributed via portable devices.

"I believe that for communications the content experience on the mobile is very important. Mobile is a very important platform for content distribution," Emilio Azcarraga, CEO of Mexico's top broadcaster Televisa <TLVACPO.MX>, told Reuters.

Televisa has been expanding into mobile services and after buying a 30 percent stake in Nextel Mexico, a unit of NII Holdings Inc <NIHD.O>, it aims to bundle together fixed-line telephone, wireless, Internet and video, becoming the first provider of so-called quadruple services in Mexico. (Editing by David Cowell)

Activity in the Oil and Gas sector (including regulatory)

Aton: BashTEK Companies Boards Recommend Insignificant Dividends for 2009 http://www.businessneweurope.eu/dispatch_text11660

Aton14 May 2010

PrimeTASS reported yesterday (13 May) that the boards of directors of five BashTEK companies (Ufa Refinery, Novoil, Ufaneftekhim, Ufaorgsintez, and Bashkirnefteproduct) have recommended paying dividends for 2009 that are only a fraction of those paid for 2008. The record date for all the companies has been set as 14 May.

The companies have not explained their reasoning for such significant reductions. In our view, they are retaining funds in order to invest heavily into their business development during 2010.

According to Kommersant (14 May), the Bashneft board, which owns controlling stakes in all of the aforementioned companies, should make a decision on its own 2009 dividends next week. We believe the company may pay $0.39 per common and preferred share. This would imply dividend yields of 1.1% and 1.5%, respectively.

Bottom line W e expect the news to put short term selling pressure on the BashTEK stocks. In our view, investors' anticipation of high dividends was a major driver of the stocks' strong performance in recent months and so many investors may now be disappointed with these proposed dividend yields, at less than 0.5%.

At the same time, we regard the news as neutral for the companies in the long term given that Sistema (Bashneft's major shareholder) had on several occasions forewarned that it planned to change the BashTEK companies dividend policy, with the intention of investing more into the companies' development.

Standart: LUKoil Upgrades its Neftochim Refineryhttp://paper.standartnews.com/en/article.php?d=2010-05-14&article=33067

FRIDAY, 14 May 2010

Yesterday, Bulgaria's PM Boyko Borissov and LUKoil President Vagit Alekperov visited the Neftochim refinery near the coastal city of Bourgas and attended the opening of new installations and capacities on the site. The ceremony was also attended by Economy Minister Traycho Traykov, Russian Ambassador in Sofia Yuri Isakov, LUKoil Bulgaria CEO Valentin Zlatev, Bourgas District Governor Konstantin Grebenarov and Bourgas Mayor Dimitar Nikolov. "The new facilities of LUKoil-Neftochim Burgas cost 660 million levs," PM Borissov said after the ceremony. "The Bulgarian government will support all foreign investors who develop projects here and make reinvestments in environmentally-friendly solutions," Borissov added. On his part, Mr. Alekperov made it a point that so far LUKoil has poured over one billion US dollars in the modernization of the refinery near the coastal city of Bourgas.

Elena Dimitrova

13.05.2010

Oil and Gas Eurasia: LUKOIL Begins Construction on $1 BN South-West Gissar Projecthttp://www.oilandgaseurasia.com/news/p/0/news/7304

LUKOIL Uzbekistan Operating Company has started work to erect infrastructure on the South-West Gissar field, LUKOIL Overseas Holding Ltd. President Andrey Kuzyaev said during the Oil Gaz Uzbekistan 2010 conference currently under way n Tashkent.Kuzyaev said LUKOIL has signed a contract with Toyo Engineering which will design

the site and supply technical equipment.LUKOIL plans to build a gas drying and gas condensate separation facility as part of the $1 billion project. The main unit in the enterprise will be a 4.2 billion cubic meters of gas preliminary gas preparation unit, PRAYM-Tass reports.Kuzyaev said ethane found in gas condensate in South-West Gissar fields will be sent to the Shurtanskiy gas chemical complex. Copyright 2010, UzDaily.uz. All rights reserved.

14.05.2010

Oil and Gas Eurasia: TNK-BP: 24 Million Rubles For Geological Work In Saratov Regionhttp://www.oilandgaseurasia.com/news/p/0/news/7311

TNK-BP allocated Orenburgneft over 24 million rubles to geological surveys in the first quarter of 2010, the company reported in a news release. Developing the Kulikovskoye and Kamelikskoye licensed blocks in the Perelyubskiy district of Saratov Region is a point stipulated in an agreement between TNK-BP and the regional administration. Orenburgneft received the rights to developing subsoil resources Kulikovskoye in 2007 and to Kamelikskoye in 2009. Exploratory drilling is currently in progress in the Kulikovskoye field.TNK-BP plans to spend about 400 million rubles on geological surveys in Saratov Region in 2010.Copyright 2010, TNK-BP. All rights reserved.

14.05.2010

Oil and Gas Eurasia: Environmentalists Disapprove Of Shtokman Profilehttp://www.oilandgaseurasia.com/news/p/0/news/7312

Environmental organizations maintain that the environmental assessment report presented by the Shtokman Development AG to the public this week contains a number of weak points.The Shtokman Development AG in two public hearings this week presented materials on its plans for the development of the offshore part of the Shtokman project as well as the project’s environmental profile.The hearings, which was open for the public, was held in the towns of Kola, just south of Murmansk, on the 12 May, and in Teriberka on 13 May. Both representative of regional and local authorities, control agencies, research representatives, NGOs and local attended the meeting, MBnews.ru reports.Environmentalists even before the meeting announced their criticism with the environmental profile in the project.Leader of the Murmansk-based Nature and Youth organization, Vitaly Servetnik argues that the environmental consequence report “raises many questions, has a number of unclear points, as well as shortages”. –Without doubt, in this form the project can not be approved, he underlines to Bellona Web.He was supported by several expert present at the hearings, Bellona.ru informs.

The organizations also argue that SDAG has failed to present a plan on climate gas emissions in the project. Coordinator at Bellona Murmansk, Nina Lesikhina, stresses that the company should come up with a way on isolating climate gas emissions from the project.Meanwhile, the SDAG representatives at the hearings admitted that a positive image of the company and the project is of paramount importance. –It is very important for us that the company has a positive international image, and not worse than major international companies like Statoil and Total, Deputy Director at SDAG Gennady Zaitsev repeatedly said in the meeting.Copyright 2010, Barents Observer. All rights reserved.

Business Insider: Russia Backtracks On Black Sea Oil Exports, Because The Real Market Is In AsiaJohn Helmer | May. 13, 2010, 9:47 AM

Read more: http://www.businessinsider.com/russia-is-backtracking-on-black-sea-oil-exports-because-the-money-market-is-in-asia-2010-5#ixzz0ntKsht74

Russia’s energy chief, Deputy Prime Minister Igor Sechin, has disclosed that the Black Sea oil export plan he launched in Milan last October, with much applause from Turkish and Italian interests, is going nowhere fast – err, I mean, slow.

He was speaking on the sidelines of President Dmitry Medvedev’s visit to Turkey on Wednesday. Without allowing direct questions from, or quotation by Russian reporters, Sechin reportedly said that a start on the new crude oil delivery route, including the cross-Turkey pipeline from Samsun, on the Black Sea, to Ceyhan, on the Aegean, will be delayed until 2015. In the oil business, five years into the future is a number equivalent to eternity — and for practical purposes, oblivion.

When he unveiled the project on October 19, Sechin was reported in Kommersant as saying: “Turkey has agreed to the implementation of the South Stream [gas pipeline] in exchange for participation of Russia in construction of the pipeline Samsun-Ceyhan;” that Russia had agreed to the “ participation of Turkey in South Stream instead of Bulgaria…bypassing Bulgaria”; and that Russia and Turkey have agreed to consider construction of an oil refinery at Ceyhan, and are “close to an understanding of [their] participation in joint marketing of the oil in the pipeline”.

An October 19, 2009, statement by Eni, the Italian partner in the project, announced that “representatives of Eni, Calik Holding, JSC Transneft and Rosneft, the energy companies involved, signed a Memorandum of Understanding which envisages the commitment to discuss the definition of the economic and contractual conditions for Russian companies to participate in the Samsun-Ceyhan Project in order to ensure the volume of crude that would guarantee the economic sustainability of the project. Eni has been heavily involved in the oil pipeline project since 2005 and will play a leading role in its realization. In 2006, Eni bought 50% of Trans Anadolu Pipeline Company (TAPCO), the company designed for the realization and management of the Samsun Ceyhan pipeline.”

As Eni pointed out, the Samsun-Ceyhan project was not new when Sechin signed on to it. It had been unveiled by Çalik Energy, which made it the subject of a press conference on June 22, 2006, at the Istanbul Hilton Hotel. The company presentation said the “Samsun-Ceyhan Petroleum Pipeline Project was introduced…as having great importance in changing Turkey’s geo-strategic position to a strategic advantage and strengthening its position in the international energy sector. At the meeting organized jointly by the business partners realizing the project, Çalık Energy and the Italy based giant petroleum company, Eni , the importance of the project and the benefits it would provide from the viewpoint of the international energy sector were presented.” The estimated capital cost at the time of building the 550-km pipeline was $1.5 billion.

But the Russian oil companies refused to fill the pipeline with their oil. Until last October’s statement by Sechin, that is. Then a spokesman for Rosneft, the state oil company chaired by Sechin, said it was joining the Samsun-Ceyhan pipeline plan, along with the Russian pipeline company Transneft.

The project momentum gathered force in January of this year, when Prime Minister Vladimir Putin met his Turkish counterpart, Recep Tayyip Erdogan, in Moscow, and announced they had “agreed to step up work on the Samsun-Ceyhan pipeline.” Calik Energy and the Italian company Eni were also involved; according to Putin, “we will start to study this with the Italian partners.” An expert group, under Sechin’s supervision, is reported to be analyzing both pipeline projects, and considering whether there is oil supply, money, and strategic justification for building both of them in parallel.

A month later, when the Greek Prime Minister, George Papandreou came calling, Putin said of the Burgas-Alexandroupolis pipeline – already a decade in the planning – was affordable. “There’s enough money for this type of projects. There would be absolutely no problems with funding them,” Putin said. But he didn’t say that he and Sechin had decided to provide Russian funds for two pipelines on either side of the Turkish straits. That has been left for the backroom committee of ministry, Transneft and Rosneft experts to figure out. Nikolai Tokarev, Transneft’s boss, has signaled that, so far as he knows, the backroom exercise isn’t over. “We … see real prospect of association [of the two projects], ” Tokarev said in a published statement on January 19.

What Sechin disclosed this week signals that a decision has been taken not to do anything for the foreseeable future. According to Sechin, the Samsun-Ceyhan pipeline will not be ready until mid-2015. The estimated cost of the pipeline will be $3 billion, Sechin also says, doubling Çalik’s estimate.

According to Sechin, Russia is guaranteeing minimum throughput of between 60 to 70 million tonnes per annum (1.2-1.4 million barrels daily). This is 20% below earlier projections of pipeline throughput of 1.5 mbd. The crude will be shipped by tanker from Novorossiysk port, and the route will substitute for the present tanker route through the Bosphorus Strait. The Samsun project is substantially cheaper by the kilometre than the alternative route from Burgas, Bulgaria, to Alexandroupolis, Greece, but the latter route is half the distance and about half the total cost.

Why the change of Sechin’s mind, casting both of the new Black Sea pipelines into doubt? Alexei Bezborodov, a leading Moscow maritime analyst, believes that Rosneft is calculating that it can fetch more profit for its crude if it ships it eastwards, to Russia’s new oil terminal on the Sea of Japan at Kozmino. From there the crude is sold to China and other Asian markets. According to Bezborodov, “there will not be enough oil for Samsun-Ceyhan. That’s because quotations for the Far East oil are better, so most companies want to work with the Far-East project.”

Gazprom

RIA: Gazprom to open regional office in Brazil before year's end - Kremlin http://en.rian.ru/russia/20100513/159005772.html

18:3913/05/2010

Russian energy giant Gazprom plans to open a regional office in Brazil's Rio de Janeiro by the end of 2010, a Kremlin source said on Thursday.

The announcement was made as Brazilian President Luis Inacio Lula da Silva arrived in Moscow on Thursday for an official visit with Russian President Dmitry Medvedev slated for Friday.

The Brazilian leader is set to discuss bilateral cooperation, including as part of international organizations, as well as urgent issues on the international agenda.

"Gazprom plans to open a regional office in Rio de Janeiro in 2010," the Kremlin source said, adding that there were several joint energy projects in the works, including the construction of hydro- and thermal-electric plants in Brazil.

In 2008, Medvedev said Brazil was chosen for the creation of Gazprom's regional office as it is more centrally located in Latin America. Gazprom has a gas and oil consortium with Venezuela, the Spanish-Argentinian company Repsol and Gazprom are discussing possible cooperation on the Yamal LNG project, as well as with Bolivia in creating a joint project on oil research and extraction.

MOSCOW, May 13 (RIA Novosti) 

Moscow Times: Gazprom Gets Closer to Landing China as Customer http://www.themoscowtimes.com/business/article/gazprom-gets-closer-to-landing-china-as-customer/405957.html

14 May 2010

By Anatoly Medetsky

Gazprom said Thursday that it had moved closer to selling gas to China, one of the world's biggest energy markets, after offering an “updated” price during the latest talks with the China National Petroleum Company.

The Chinese company, known as CNPC, also amended its position at the negotiating round in Kazan, Gazprom said without specifying when the meeting took place.

Such talks appear to indicate that the countries haven't lost hope of agreeing on gas trade terms after many years of futile talks. Prime Minister Vladimir Putin and his Chinese counterpart Wen Jiabao attempted to renew the search for common ground in October.

Company delegations, led by Gazprom deputy chief Alexander Medvedev and CNPC vice president Wang Dongjin, “exchanged their updated price proposals that brought the sides closer” in their outlook for potential supplies, Gazprom said in a statement.

The executives have already met once since October when their companies signed a framework agreement on gas sales to China. At the December talks, which lasted six days, they agreed on basic commercial and technical terms for the deal, CNPC said on its web site at the time.

As bargaining continues, CNPC mentioned that China was pursuing plans to produce more shale gas inside the country, Gazprom said.

CNPC, along with Shell, began developing a shale-gas field in the Sichuan Province in November, saying it was China's first cooperation project to tap the unconventional reserves.

It's unlikely that Gazprom's announcement of reaching some progress means that the sides broke through an impasse, said Alexander Nazarov, an analyst at Metropol.

The price China is offering can't be much higher than what it pays to buy gas from Turkmenistan through a pipeline launched last year, he said. At that price, Gazprom will not recoup the costs of laying a pipeline to China, he said, suggesting that the route would be more expensive than the Turkmen line.

Nazarov was doubtful that the talks had actually advanced much.

“You can change the date on a proposal and say it's updated,” he said, referring to the language of Gazprom's statement. “Sales to China are not realistic in the next 10 years.”

Putin said in October that China agreed to link the price of any future gas deliveries from Russia to the price of oil products in Asia.

Prior to the attempts to produce shale gas, China had been rapidly developing its conventional natural gas reserves. Its gas production has been recently increasing by 10 billion cubic meters annually, CNPC said on its web site, adding that the rate — impressive by industry standards — was insufficient to meet the growing consumption.

China is also importing liquefied natural gas, or LNG, from Australia, Malaysia and Indonesia where its energy companies partnered with local or international players such as BP and Petronas.

RIA: Ukrainian Naftogaz to consolidate with Russian Gazprom only on basis of parity http://en.rian.ru/exsoviet/20100514/159015384.html

12:0414/05/2010

MOSCOW, May 14 (RIA Novosti) - Kiev will only agree to integrate the main Ukrainian and Russian gas companies on a parity basis, media sources have said.

Last month Russian Prime Minister Vladimir Putin proposed a merger between Russian gas monopoly Gazprom and Ukrainian Naftogaz at a meeting with Ukrainian Prime Minister Mykola Azarov in the southern Russian town of Sochi.

"If I had been in Sochi, I would have extended my hand to Putin and said 'I agree to a fifty-fifty deal," Ukrainian President Viktor Yanukovych told Ekho Moskvy radio station on Thursday.

The Ukrainian Foreign Minister told the Financial Times on Thursday that full integration would be difficult.

"We've said we will look into it, but obviously there would be major difficulties in full integration of the two companies. We are not about to abandon control of Naftogaz," Konstantyn Gryshchenko said.

"We would only enter into agreements that would serve our interests, and that would have built-in guarantees of control over assets that are on our territory and are an important element of our overall economic development."

Yanukovych said he was not concerned about the South Stream pipeline project, designed to pump Russian gas to Europe bypassing Ukraine.

"If it is a means of putting pressure on Ukraine, then we understand it. If it is a competitive struggle, then we are ready for it," he told Ekho Moskvy.

Russian Energy Minister Sergey Shmatko said the possible merger had no bearing on the South Stream project.

The South Stream pipeline will pump 63 billion cubic meters of Russian natural gas annually to Bulgaria, Italy and Austria and is part of Russia's efforts to cut dependence on transit nations, particularly Ukraine and Turkey.

Yanukovich also said his country was ready to cooperate with Russia and the European Union on modernizing Ukraine's gas transit system, which is estimated to cost up to $700 million.

However, Russian daily Kommersant quoted Gazprom CEO Alexei Miller as saying that the proposal is not related to the creation of a gas transport consortium between Russia, Ukraine and the EU. He said that it has a global significance as it is an important part of Europe's energy security.

Miller also noted that the improving relations between Russia and Ukraine would not have any impact on the implementation of the South Stream project.

However, East European Gas Analysis director, Mikhail Korchemkin thinks Ukraine will only agree to the Naftogaz-Gazprom merger if Russia gives up its plans for the South Stream. Otherwise, he says, the merger will simply be a transfer of part of the Ukrainian market to Russia without any benefits for Kiev.

Kommersant said the next round of gas talks between Moscow and Kiev may take place on May 17-18 during an official visit by Russian President Dmitry Medvedev to Ukraine.

Moscow Times: Gazprom Backs Ukraine Bid http://www.themoscowtimes.com/business/article/gazprom-backs-ukraine-bid/405979.html

14 May 2010

A tie-up of Russia and Ukraine’s state energy companies is an “absolutely pragmatic solution,” given their Soviet history, Gazprom chief executive Alexei Miller said Thursday.

“This idea is based on common history of the gas industry development in our countries,” Miller said after meeting with Ukrainian Fuel and Energy Minister Yury Boiko in Moscow. An overhaul of Ukraine’s pipelines should go “in lock step” with work because they were built as a single entity, he said.

(Bloomberg)

Ukrainian Journal: Naftogaz/Gaprom merger talks progressinghttp://www.ukrainianjournal.com/index.php?w=article&id=10395

Journal Staff Report

MOSCOW, May 13 - Gazprom and Naftogaz Ukrayiny on Thursday discussed in "greater detail" a recent proposal by Russia's Prime Minister Vladimir Putin to merge the two companies, Gazprom said in a statement.

Alexei Miller, the CEO of Gazprom, met Ukrainian Energy and Fuel Minister Yuriy Boyko at the company’s headquarters in Moscow to discuss the merger.

"I am confident the merger of the two companies would become an important part of strengthening European energy security, along with diversification of routes for supplies of Russian gas to Europe," Miller said in a statement.

Naviny.by: Gazprom is not seeking majority stake in gas pipeline operator, official sayshttp://naviny.by/rubrics/english/2010/05/12/ic_articles_259_167774

Russia's Gazprom so far has not asked the Belarusian government to sell it more shares in the Beltranshaz gas transport company, Natallya Zharnasek, director of the State Property Fund, told reporters in Minsk on May 12.

The Russian gas giant and the Belarusian government each hold a 50-percent stake in Beltranshaz. "We will work as a 50-50 partnership for the time being," the official said. as quoted by BelaPAN.

While visiting Minsk in late March, Gazprom Deputy Chairman Andrei Kruglov said that the company would like to acquire control of Beltranshaz. However, he noted, this is a matter of relations between not only these two economic entities but also between the two states. Since the governments are the main stockholders of both Gazprom and Beltranshaz, “we’ll adjust our investment plans on the basis of interstate agreements,” he said.

In late February, Gazprom paid the last $625-million installment for the 50-percent stake in the Belarusian gas pipeline company. It paid a total of $2.5 billion to the Belarusian government over four years.

BarentsObserver: Meeting on Shtokman field development projecthttp://www.barentsobserver.com/meeting-on-shtokman-field-development-project.4783755-16178.html

2010-05-13 The Gazprom headquarters last week hosted a meeting on the Shtokman gas field development where technical solutions for phases 2 and 3 of the project were discussed.

At the meeting, which was led by Deputy Chairman of Gazprom’s Management Committee Alexander Ananenkov, the participants reviewed materials prepared by Gazprom subsidiary Gazprom Dobycha Shelf on the front-end engineering design development for the Shtokman project, Gazprom web site reads.

In particular, optional technical solutions for Phases 2 and 3 of the Shtokman field development were discussed. Special attention was paid to ensuring technological, environmental and fire safety at the future hydrocarbons production and transmission facilities of the Shtokman GCF.

Gazprom’s specialized subdivisions and subsidiaries were tasked to perform the expert review of the materials provided by Gazprom dobycha shelf in order to define the optimal technical and technological solutions within the Shtokman field development process, Gazprom says.

The project launch has been postponed from 2014 to 2016 and the final investment decision will be made only in 2011, and not in 2010 as earlier planned.