Nezavisimaya Gazeta
Europe reconciled to Gazprom expansion
Since the EU's dependence on Russia and its raw materials is increasing, the the European Commission's endorsement yesterday of the month-old deal by Gazprom to buy Sibneft is primarily a political step.
Gazprom has long been perceived by the world as something synonymous with Russia. The country's geopolitical interests and Gazprom's economic benefits coincide to an astonishing degree. It seems that President Vladimir Putin's political victories are directly linked to Gazprom's business conquests.
The only market not covered by Gazprom is Australia. Northern Europe, as well as parts of central and Western Europe, is supplied by the North European Gas Pipeline. Southern Europe will benefit from the Blue Stream gas pipeline, which opened recently and will supply Russian gas to Italy and Spain, as well as northern Africa. Success in Asia has been sealed in a memorandum recently signed in Islamabad allowing Gazprom to participate in the exploration and development of gas fields in Pakistan, to buy into oil and gas companies in the republic, and to build and run trans-national gas pipelines. Gazprom will also be supplying liquefied natural gas from the Shtokman deposit to the North American continent.
Even before it purchased Sibneft, Miller's company was repeatedly called an "unnatural monopoly" by European officials. The West is concerned that the growing company is becoming a dictator on the external markets but cannot put up any resistance because of its energy dependence.
Russian politicians need only to consolidate the gas monopoly's victories with protocol visits and graciously guarantee each country falling into the Gazprom orbit ideal conditions for a partnership. Whether or not the Russian authorities need "liberalization" in such ideal conditions is a rhetorical question.
Moskovsky Komsomolets
Alliance with China may cost Russia dearly
China, which has been a key political player in Southeast Asia for decades, is looking for a bigger role in the region. And Russia is concerned about the manner in which this search is being conducted.
Beijing has recently probed for the right to get a military base in Kyrgyzstan. "There was delicate probing," Vasily Mikheyev, an expert on China, said. "Having encountered a negative reaction, Beijing pretended that nothing had happened."
So far, all of Beijing's attempts to become established on the Russian energy market have failed. In 2002, it looked for a stake in Slavneft and later joined forces with Yukos to build an oil pipeline from Angarsk to Daqing. The arrest of Mikhail Khodorkovsky killed the project, and it has been rumored that Beijing was furious with the Kremlin. However, even government-owned newspaper Zhongguo Gongshang Shibao (China Business Times) wrote that the Angarsk-Daqing project did not serve Russian interests.
There are also problems with Russian-Chinese military-technical cooperation. On the one hand, selling arms to Beijing keeps the Russian defense enterprises afloat. (After joint exercises last summer, China decided to buy a large batch of the Il-76 military transport aircraft.)
On the other hand, the Chinese are not playing by the rules of the game. According to a high-ranking Russian official, China buys only 30% of Russia's military technologies and the other 70% come through controversial channels. For example, "the spacesuit of the Chinese taikunaut [astronaut] is identical to the Russian model, and the Chinese spaceship looks suspiciously similar to the Russian Soyuz," the official said. Meanwhile, "a village of 'space industry millionaires' has grown near the Stellar Town outside Moscow."
According to American experts, in 1999 the U.S. had the requisite resources for the production of 82 crucial military technologies, Russia had 44, and China 14, but the gap is becoming smaller every year. The unofficial opinion is that China will continue buying Russian arms for no more than 10-15 years.
Izvestia
Future of Russian-Ukrainian relations
Russian Prime Minister Mikhail Fradkov, due to leave for Kiev on November 23, will hold long and fruitless talks with Ukrainian leaders. Ukraine is to hold parliamentary elections in March 2006. Experts have said that until then, we should not expect any progress in relations.
Senior government officials do not expect the trip to yield any results. Experts believe that Kiev will once again try to explain why it will be unable to move to the all-cash settlement system as of January 1.
It is nearly time for Russia and Ukraine to sign gas delivery agreements and those stipulating gas transits to Europe. But there are still some unresolved problems. Will Ukraine pay $50 for every 1,000 cu m of gas? Or will Russia charge $150 per every 1,000 cu m in line with world prices? And will Moscow offer money or gas in exchange for gas transits?
The Ukrainian economy relies heavily on Russian gas, with local heating mains increasing gas usage because Moscow does not charge global prices. Kiev subsidizes gas used by the population, and the 2006 Ukrainian budget's gas subsidies are a far cry from international standards.
Ukrainian President Viktor Yushchenko faces tough competition on the part of former Prime Minister Yulia Tymoshenko, who will run for the Supreme Rada (parliament) in March. Consequently, it would be an unforgivable mistake if Yushchenko raised gas prices on the eve of the elections.
Ukraine will probably delay talks until the last moment and sign monthly or even weekly contracts in early 2006. All gas sale issues will be settled completely after parliamentary elections. "Annual gas delivery contracts are usually signed between December 20 and 29," a high-ranking government official said. "For instance, last year it happened on Christmas Eve."
Vedomosti
Russian courts uphold investors' tax rights
Although regional tax exemptions were abolished January 1, 2004, Philip Morris, PepsiCo, Mars and other investors can still take advantage of them because tax inspectors have failed to win a single investment incentive lawsuit this year. Arbitration courts believe that regional corporate privileges are valid pending the expiration of existing contracts.
Russia's regions lavished tax exemptions on investors throughout the 1990s. Ford, Philip Morris, Danone, Mars, IKEA, Nokian Tyres, PepsiCo, Kraft Foods, Merloni TermoSanitari Rus, Henkel Era, Caterpillar and many other companies based their business plans on investment contracts with regional authorities.
After the introduction of the new Tax Code abolishing exemptions, foreign companies decided to pay their taxes in full and to sue tax agencies later on.
"The courts consistently uphold investors' rights," Alexei Maslov, a leading lawyer with Nalogovaya Pomoshch (Tax Help), said. Mars, Philip Morris, Vena Brewery and the Nevskiye Porogi tea packaging factory have all defeated tax inspectors in court. Three enterprises of Avtotor holding company, which assembles BMWs, KIAs and Hummers in Kaliningrad, also convinced courts in three instances that the abolition of tax exemptions ahead of schedule was unlawful. Each enterprise filed separate lawsuits.
"The Constitutional, Supreme and High Arbitration courts believe that the additional tax burden does not apply to previous 'lasting legal relations,'" said Maria Andreyeva, spokesperson for Pepelyayev, Goltsblat & Partners. The courts rule that the use of investment contract privileges is an example of such legal relations.
Gazeta.ru
Rosneft to tap Asia and Pacific petrochemical retail market
State-owned company Rosneft has plans to set up a joint venture with Japan's Marubeni to sell refined oil products through retail outlets in Japan and China.
Rosneft President Sergei Bogdanchikov, speaking at a business forum in Japan, said that by 2015 his company planned to be exporting to the Asia-Pacific region more than 50 million metric tons of hydrocarbons from the Russian Far East and East Siberia. "It is time we sold not only oil but also petrochemicals and gas chemicals," he said. "Our goal is to tap the retail markets of the Asia-Pacific region."
Experts consider the project to be quite sound. "Rosneft owns the Komsomolsk oil refinery and can supply high quality petroleum products to the Japanese market," Arif Zeinalov, an analyst at Interfintrade, said. "The management has invested $1 billion in the enterprise, increasing the conversion level from 60% to more than 90%."
"Earlier the refined products were meant for the domestic market, but an increase in capacities (to rise to 7 million tons by the end of 2006) and the improved quality of products point to a re-orientation toward external markets," MDM-Bank analyst Andrei Gromadin said.
Other Russian oil companies, analysts believe, will be unable to compete with Rosneft in the Asia-Pacific region. "In addition to the Komsomolsk refinery, there is only the Khabarovsk plant, but its capacities are unlikely to reach one million tons a year," Gromadin said.
Experts see Rosneft's entry into the Asia-Pacific oil products market as a positive development. "The region has two major oil importers - Japan and China. Demand is also growing in India," Gromadin said. "The market has great potential."
However, the venture may encounter some problems. "Rosneft lacks expertise and does not specialize in retail sales," Zeinalov said. "Besides, the company has no inside man for the job. So the decision to invite a local dealer was reasonable. LUKoil did the same when setting up its external retail chain."
Biznes
Russian and Ukrainian pipe producers may quarrel over NEGP
The North European Gas Pipeline (NEGP), which is to be built by 2010, has caused a stir among Russian pipe producers who fear future problems.
Natalya Kocheshkova, a FINAM analyst, said a number of Russian companies were planning to take part in the tender. Among them are Vyksa Works (incorporated into the OMK United Metallurgical Company), the Izhora pipe plant (owned by Severstal Group), the Volzhsk pipe plant (incorporated into the biggest branch holding, the TMK Pipe Metallurgical Company), and the enterprises of EvrazHolding.
"The German-made pipes will probably be used" for the biggest section of the NEGP laid on the floor of the Baltic Sea, which is known for harsh weather, Dmitry Baranov, chief analyst at PRADO Banker & Consultant, said. "Moreover, there is a similar experience of cooperation, namely the gas-for-pipe deal of the 1970s."
Baranov said that Russian-made pipes might be used for the land segment of the NEGP if they meet the stringent German standards.
Russian pipe producers were not pleased to learn that Gazprom and the Khartsyzsk pipe works (KTZ, Ukraine) have an agreement on the delivery of 400,000 metric tons of pipes under the NEGP project in 2006.
On November 21, the Russian Foundation for the Development of the Pipe Industry called on the Russian government to stop unfair competition on the pipe market, immediately introduce anti-dumping duties regarding small- and medium-sized Ukrainian pipes, and set a quota for the import of pipes.
The KTZ press service said the company would participate in the tender on common terms and that it did not intend to sign any self-imposed limitations on the delivery of pipes to Russia in order to satisfy the Foundation.
