Commersant
Gazpromneft Sold Before Yuganskneftegaz Auction
Yesterday, it was reported that Gazprom had decided to sell its oil subsidiary, Gazpromneft, to individuals not affiliated with the gas monopoly a day before the Yuganskneftegaz auction. This means the merger between Gazprom and Rosneft and further addition of Yuganskneftegaz was canceled at the last moment.
According to Commersant, Gazprom officials apparently feared international sanctions. The Yuganskneftegaz auction was held without regard for a Houston court's 10-day injunction on all activities with Yuganskneftegaz assets. At this point, the scenarios for the creation of a large state-controlled oil company might be totally unexpected.
According to a source close to Gazprom, the gas giant sold Gazpromneft December 16, although the board of directors only approved the deal yesterday. Therefore, despite the fact that the deal was made official after the auction, Gazpromneft was not formally affiliated with Gazprom or its new owners at the time of the auction.
Gazpromneft was created to absorb Rosneft through an exchange of 100% of Rosneft for 10.74% of Gazprom shares, rather than to participate in the December 19 auction. The sale of Gazpromneft ends the proposed merger. Apparently, after Baikal Finance Group won the Yuganskneftegaz auction, officials implemented emergency plans to form the largest oil company in Russia.
Yesterday, Gazprom announced the creation of a new department for the coordination of Gazprom projects in eastern Siberia and the Far East, which include not only gas projects, but also oil projects previously associated with Gazpromneft.
The sale of Gazpromneft opens the way for a plethora of unexpected possibilities, including a new plan for the liberalization of the Gazprom stock market and even the creation of Gazpromneft 2, which will not be connected to Gazprom.
Noviye Izvestia
Russia Downgraded To 'Not Free'
The respected international human rights organization, Freedom House, headquartered in Washington published its annual survey of political rights and civil liberties in 192 states, "Freedom in the World 2004."
For the first time since the dissolution of the Soviet Union, it names Russia as a not free state. Russia was the only country whose last year's rating plummeted so quickly that it was moved to another category, reported Noviye Izvestia.
According to the report, the Kremlin's growing control over the national television and other media, the limits put on the powers of local governments, as well as parliamentary and presidential elections can hardly be described as free or fair.
The human rights organization was outraged that the Kremlin used the Beslan tragedy as a pretext for canceling the elections of governors and independent Duma deputies, as well as the Russian authorities' "blatant interference" in the Ukrainian election.
Freedom House analysts survey political rights and civil liberties on a 7-point scale where 1 stands for complete freedom and 7 for its absence. This year, Russia was given a 6 for political rights and a 5 for civil liberties.
Gleb Pavlovsky, president of the Effective Policy Foundation, thinks Freedom House is an "political self-service" organization, which mostly prepares ideological theses linked to the current political situation. "Look at the Map of Freedom on the wall," said Mr. Pavlovsky. "On it, the group of absolutely free countries includes Mongolia, Jordan, Mali and Botswana. The supposition that the standards of freedom is lower in Russia than in Mali or that Mali enjoys the same amount of freedom as Britain seem arbitrary to me."
Vedomosti
Irkut Signs $200 Million Contract With Airbus
The European aircraft-manufacturing consortium, Airbus, has expanded the number of its Russian suppliers. Yesterday, Airbus signed a 10-year $200 million contract with Irkut. (Irkut includes two aircraft manufacturing plants. Its major products are Su-30MK fighters and Be-200 amphibious aircraft.)
Four significant work packages are included in this contract: the nose landing gear bay, keel beam, flap track and a floor grid section. Irkut plans to start shipping the components in 2006.
Irkut, Vedomosti reported, hopes the contract will help make the manufacture of components a pillar of its business. According to an Irkut official, with the contract, the company can expect future orders for more complex parts and even entire sections of aircraft. The official said that Bombardier and Eurocopter (EADS) had shown an interest in ordering components from Russian manufacturers. Irkut's acting president, Valery Bezverkhny, said that in several years the production of components would be up to 45%-50% of all Irkut orders.
Russian analysts said the expansion of component manufacturing would allow Irkut to diversify its business.
Some experts said that because these contracts do not include the manufacture of complex aircraft systems, the current orders would not lead to qualitative changes in the industry. These contracts can help solve current problems related to the effective use of existing capacities. However, they will only ensure the development of the Russian aircraft industry if a transfer of respective technologies to Russian companies accompanies the cooperation.
Airbus is willing to continue expanding its presence in Russia. Next year, the company plans to sign a series of 10-year contracts with other Russian aircraft manufacturers worth $150 million. Airbus COO Gustav Humbert said the company hoped to increase its cooperation with Russian aircraft manufacturers to $800 million in ten years.
Finansoviye Izvestia
Germany To Help Gazprom
Under the guise of developing economic ties with Russia, the German government is putting pressure on E.ON AG, which owns a 6.5% stake in Gazprom worth about $4 billion, to increase its stake.
Gazprom will be able to use the money from selling shares to purchase Yuganskneftegaz, Finansovye Izvestia writes.
Gazprom and E.ON's Russian office declined to comment, as did the German concern's head office.
"Yesterday, Russian Finance Minister Alexei Kudrin said that Russia was paying off its debt to Germany within the Paris Club ahead of the schedule," says Alexander Baranov, an asset manager with Prospekt Investment. "So Germany, which has a commodity firm affiliated with the Bundestag even more than Gazprom with the Kremlin, receives free funds."
They can be used to increase the stake of E.ON Ruhrgas in Gazprom. It should not be forgotten that the gas concern also has about 5% of treasury stock (shares on the balance of Gazprom's subsidiaries).
They can be purchased by E.ON. As a result, Gazprom will raise money to purchase Yuganskneftegaz without using bank services or attracting syndicated loans, Mr. Baranov believes.
Vedomosti
Confectionery Giant Orkla Arrives In Russia
Today, multi-profiled concern Orkla, a major Norwegian investor, will announce the purchase of confectionery holding SladCo, reports Vedomosti.
One of the five biggest Russian chocolate makers, SladCo incorporates the factories SladCo and Volzhanka. Ninety-six percent of the SladCo factory and 50.55% of Volzhanka belong to the Dutch company United Confectioneries, which in turn is owned by a fund managed by Baring Vostok Capital Partners. Volzhanka stocks are 45.45% owned by Hermitage Assets Management and UFTG.
Philip Wegh, Orkla Foods Russia & Ukraine director, announced that Orkla had bought United Confectioneries from Baring Vostok Capital Partners.
At the same time, Orkla is buying the remaining stocks of Volzhanka from the minority shareholders, Mr. Wegh claims.
The SladCo and Baring Vostok press services confirmed the deal.
The sum of the deal has not been officially revealed but analysts estimate it at $75-120 million.
Now that Orkla has arrived, business will have fresh opportunities for expansion, says Garry Wilson, director-general of the managing company SladCo.
The arrival of Orkla is bad news for players on the Russian confectionery market, believes Alfa-Bank analyst Alexander Svinov. "It spells more competition and less profit on a market that grows a mere 2% to 3% a year anyway," he says.
But Jennifer Galenkamp, a spokesperson for Nestle's Russian office, is of the view that a company that lacks chocolate market know-how and experience will find it hard to win a niche on the highly competitive Russian market.
And Andrei Sterlin, general director of the Biznes Analitika research company, cites an overabundance of chocolate making capacities (more than 150 enterprises) and expects a consolidation of the branch. In large cities, according to Biznes Analitika, chocolate consumption is already comparable with that in Europe - five to six kilograms per capita a year - while in smaller and average ones, it is only two to three kilograms.
Vremya Novostei
Russians Polled On Pension Reform
The Public Opinion foundation has conducted a survey on an order from the Russian Pension Fund. According to its results, 81% of Russians know that a pension reform is currently being implemented and 51% say it is essential, Vremya Novostei writes.
The pension reform is mostly opposed by retired persons, the newspaper notes, but the overwhelming majority of students and housewives support it. At the same time, Pension Fund officials believe that young people's support is particularly important because the introduction of the pension-savings system affects all those who were born in 1967 and later.
Educated respondents from families with monthly incomes in excess of 5,000 roubles (1$=27.88 rubles) who live in large cities supported the idea of calculating pensions in accordance with their wages. Moreover, they backed pension-savings plans. Most of those supporting the pension reform live in Moscow, Khabarovsk, Tomsk and Magadan.
On the contrary, people who live in Central Russia, retirees and those earning not more than 2,000 roubles a month advocate state pension regulation.
However, only 7% of those polled are ready to transfer their money from pension accounts to private funds and trust companies. Even fewer eligible Russians have contacted such companies to date. The survey also shows that the Russian Pension Fund is still trusted by the population. The number of Russians who believe in this fund and the state trust company has increased from 62% to 76% in 2004. Ten percent more Russians have received information on the pension reform, Pension Fund officials say.
This sample survey involving 34,510 respondents was conducted in 69 regions, Vremya Novostei writes.
