What the Russian papers say


MOSCOW, July 28 (RIA Novosti)

Nezavisimaya Gazeta

Putin may soon run out of strategic partners - expert

After German Chancellor Gerhardt Schroeder's possible ousting this fall, the Russian-German-French troika that tried to integrate Russia with Europe may cease to exist. President Vladimir Putin will be left without any strategic partners in the EU, Alexander Rahr, director of Russian and CIS programs with the Berlin-based German Council on Foreign Relations, wrote in the Nezavisimaya Gazeta daily Thursday.

It is becoming clear why Putin has been pursuing a strategic alliance with China and doing his best to bolster the Shanghai Cooperation Organization (SCO), Rahr said.

The EU is destined to change. Given Europe's internal socio-political problems, aging population, and lack of economic growth, the EU cannot remain a club of rich West Europeans sponsoring the poor in Eastern Europe, but it also does not want to withdraw into itself either. Thus, the burden will have to be shouldered equally.

Where is Europe going? Will the old transatlantic union be reborn to the liking of western elites? Will the EU dissolve in transatlanticism and, led by Britain, again become a faithful pillar of U.S. global policies in a unipolar world, supported by Germany and France? Such a twist would give a second wind to the West's traditional institutions, NATO and the OSCE. Ukraine and Georgia would not have to integrate with the EU to accede to the EU; joining NATO would do. This would push Russia even more toward Asian alliances, the expert said.

Europe is irresponsibly rejecting integration, albeit informally, with a Eurasia rich in natural resources that the West so badly needs. According to Rahr, the EU seems unwilling to give up its principles. A strategic partnership with Russia would be, even more than before, viewed in light of liberal values. Present-day Russia is a fictitious partner to the West, Rahr concluded.


International brewer takes the lead in Russia

The world's largest beer brewing holding, Belgium's InBev, represented in Russia by Sun Interbrew, is currently negotiating the purchase of Turkey's Efes Breweries International. The merger will mainly benefit SUN Interbrew: Russian breweries contribute principal earnings for Efes, the business daily Kommersant reported.

The deal to purchase the controlling stake in the EBI may exceed $1 billion.

Experts consider the deal logical. EBI has leading positions in the markets of Kazakhstan, Serbia, Montenegro, Rumania and Moldova, but about 80% of its financial receipts comes from Russia, where the Turkish company has only 7% of the market.

Expert expect the deal to strengthen the positions of SUN Interbrew in Russia.

"The number of players in the world and in Russia diminishing is a matter of time," said Alexei Krivoshapko, an analyst with United Finance Group. "It is evident that Efes is the most attractive operation in Russia. It's a business with a good selection of brands and highly profitable."

The Russian beer market is stagnating and this is why InBev is buying up brands like Tinkoff and Efes, said Natalia Zagvozdina, an analyst with Renaissance Capital. She said it is better to sell less beer, but at higher prices.

This deal is also a chance for InBev to shorten its lag behind the Russian market leader, Baltic Beverages Holding.

"If InBev succeeds now in clinching one more deal to purchase beer assets this time in Russia, it is quite probable that leaders will be changed on the local market," said Marat Ibragimov, an analyst with the URALSIB financial group.

InBev is the world's largest brewer by output - 2,050 million dals a year and second in turnover, with 8.57 billion euros. It controls about 14% of the world market. Its share of the Russian market in value terms is 16.4%.


Gazprom to tap Italian retail market

As Italy becomes the second European nation to let Gazprom in on its deregulated retail energy market, Russian experts are divided on whether the Russian monopoly should go for it, Vedomosti business daily reported Thursday.

Gazexport, a Gazprom subsidiary and the world's number one natural gas supplier, yesterday reported signing an agreement with the Italian energy group ENI. The agreement calls for an extension of the existing contract from 2017 to 2027, under which ENI will give the Russian gas group an annual distribution quota of 2 billion cubic meters on the Italian market. This plan will work in the same manner as an operation in Germany, where Gazprom and local operator Wintershall (a BASF subsidiary) run retail distributor Wingas (Gazprom owns 35%), a Gazprom official said.

Waiving part of its distribution capacity, ENI will buy less natural gas from Gazexport while allowing Gazprom to pump its gas through the Trans-Austrian Gas Pipeline from the Slovak border to the Italian border.

The Gazprom source told Vedomosti ENI was under pressure from the Italian government to decrease its market share from 68% to 61% by 2009. "ENI has to give in to other suppliers, for example Gazprom," he said. Gazprom expects a profit of $20-$22 per 1,000 cubic meters (after taxes) in Italy, the source said.

Sergei Glazer, an analyst with Vostok nafta brokerage, said the ENI agreement could give Gazprom an additional $40-$50 million per year. Dmitry Lukashov of Aton brokerage, however, doubts whether Gazprom should play the role of a retail distributor in Europe. "Competition will unfold as the market is deregulated, and whether today's profit margin will remain the same is uncertain," Lukashov said. "Gazprom should concentrate on production and transportation."


Russian assets attract investors

Russian assets look better than those of developing countries, some analysts say.

"Investors consider Russian assets more attractive than those of other emerging-market countries," Gazeta.ru quoted Bank of Moscow analysts as saying after analyzing data published by the U.S. organization Emerging Portfolio Fund in Cambridge, Massachusetts.

A 17.3% Novatek stake was recently floated on the London Stock Exchange, thereby highlighting Russia's undisputed success. Each share of this independent Russian gas producer cost a maximum of $16.75 for a global depositary note (GDR).

Experts say unprecedented oil prices of $57-58 per barrel on global commodity markets are another positive factor for Russia.

"The Russian oil sector would grow once again, if a barrel of Brent crude oil were to hit an all-time high in excess of $60 soon," the Bank of Moscow report said.

Head of the bank's analytical department Kirill Tremasov elaborated:

"The May 2005 decision of the Morgan Stanley international investment bank to revise Russia's role in its MRCI emerging-market index from 3.7% to 4.3% played an important role," Tremasov said. "All global investment funds heed this index, while formulating their strategy. Russia's changed role prompted them to reshuffle their portfolios and to channel additional money into Russian assets."

Experts do not perceive any factors that could impair such investments in the mid-term perspective. Tremasov said first-quarter direct-investment volumes soared by 30% on the first quarter of 2004.

"This increment was small, totaling $2.5 billion in absolute terms. Nonetheless, investments tend to grow and this is a positive trend for Russia," he said.


Russia, China to start building floating nuclear plant

Russia and China have signed an $86.5-million contract for the construction of the world's first floating nuclear power plant, Vladimir Uryvsky, deputy department head at the Federal Nuclear Energy Agency, told the newspaper Trud.

China will build the body and Russia will be responsible for the power block. The plant will look like a ten-story 140m-long and 30m-wide floating building with the displacement of 21,000 tons.

It is to be sited in Severodvinsk, in the Arkhangelsk region in Russia's European north, to supply electricity and heat to the Sevmash defense enterprise there. Its will have a 70-megawatt capacity and a maximum thermal capacity of 150 gigacalories per hour, enough for a city of 200,000. The construction is to begin next year and end in 2011.

Uryvsky said the 6-billion ruble ($208.84 million) project would be recouped in 12 years with electricity returns of 46 billion rubles and thermal energy returns of 61 billion. Accrued profits are expected to top 65 billion rubles during the plant's exploitation.

The plant will use the closed technological cycle and multiple hermetic protection. The energy block will have five independent safety barriers, more than those on a nuclear submarine or icebreaker. Even the first stationary nuclear power plants did not have such protection. The block could not even be depressurized if a plane crashed down on it, giving the design full safety guarantee, Uryvsky said.

He said the design also includes anti-terrorist measures. Divers and submersible craft will be stopped a long distance from the power block.

Such plans will be in demand in Siberia and the Far East, which are short of energy. The leaders of the nuclear energy sector and the administrations of the Chukotka autonomous area and the Kamchatka region have signed declarations of intentions on the construction of similar power plants. Canada, Indonesia, India and several other countries have expressed interest in the project.

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