MOSCOW, June 6 (RIA Novosti) NATO expansion into Ukraine will push Russia toward anti-Western alliances / Europe does not depend on Russia for energy - expert / Russia set to classify strategic deposits / State may take over Norilsk Nickel - analyst / Yukos tries to avoid bankruptcy / Nokia may lose up to 10% of Russian market
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Rossiiskaya Gazeta
NATO expansion into Ukraine will push Russia toward anti-Western alliances
Washington and Kiev are seriously discussing accelerated NATO membership for Ukraine before 2008. There are also plans for even faster expansion without any national referendums that will either torpedo the idea of membership - unless they are rigged - or lead to an even deeper schism in Ukrainian society, writes Sergei Karaganov, a prominent political scientist and chairman of the editorial board of Russia in Global Politics magazine.
In Ukraine, those who are not confident in their own strength and in the viability of the Ukraine state, and those who fear a more competitive Russia and would like to put a military and political fence up around their country, welcome expansion and link Ukraine to the United States, he argues.
The West's logic is not entirely clear either. But some of it can be guessed, Karaganov writes. The West wants to bind hesitating and unstable Ukraine more firmly to the Western system. Some people in the U.S. definitely want to gain the votes of East European diasporas ahead of mid-term elections this year and the presidential elections in 2008. They want to create another pro-American political foothold in Europe in addition to Poland - especially given that the Polish foothold is not functioning as it should. Warsaw has found itself all but politically isolated in the expanded Europe. Meanwhile, Polish traditionalists dream of restoring their former dominance over Ukraine that was lost a few centuries ago, Kraganov says.
Yet there is obviously a simple misunderstanding of what NATO's expansion into Ukraine will lead to, he argues. Russia and Ukraine do not have a demarcated border. In fact, it exists only on the map and also serves to feed corrupted customs officers at checkpoints. If a real border is to be built, there will be huge problems, Karaganov says. Millions of people who now work on the other side of the border may lose their jobs, and millions of families will be divided. Dozens, if not hundreds, of conflicts will break out, and there will be a "divided-nation syndrome" on both sides that so far we have managed to avoid. The situation could develop under a milder version of the Yugoslavia scenario, although not necessarily so.
Russia is no Serbia, Karaganov says. It will survive, although it will be temporarily weakened and pushed toward anti-Western alliances. Many in Moscow will no longer want to play the role of a "status quo power". He writes he hopes Russia will not get sucked into a confrontation, but warns that it will have to respond toughly and sometimes, possibly, inappropriately.
Novye Izvestia
Europe does not depend on Russia for energy - expert
Leading Russian economist Viktor Ivanter, director of the Russian Academy of Sciences' Institute of Economic Forecasting, said Europe does not depend on Russia for energy. European countries always considered Russia a reliable supplier, even when the Soviet Union and the West were enemies. Neither the U.S.S.R. nor present-day Russia used their natural resources to exert political pressure and Russia's Western neighbors have no reason to renounce mutually advantageous relations, he said.
Russia tends to profit from diversified energy supplies that have become a reality in Moscow's relations with the East and the South, Ivanter told the paper. Russia will use the Pacific pipeline to pump oil to China and other Asia-Pacific nations, while the Blue Stream pipeline is supplying Russian gas to the South. Alternative supplies are a problem because they require time and huge infrastructure investment, while Europe is continually receiving Russian energy.
There is continual speculation over what will happen if the oil price falls, Ivanter said. This is understandable - generals are always preparing for war that has already finished. There is no reason for such a slump to occur in the foreseeable future. However, the depletion of known deposits is a more serious problem. Cheap oil will run out, and it will have to be extracted from "expensive" East Siberian and shelf deposits.
Some experts forecast that oil production costs will reach $40-60 per barrel by 2030. Russia-EU dialogue is essential in this situation because of European companies' invaluable experience in developing expensive oil fields. The problem is not with money - Russia has enough of it, and not with technology, which can be bought, but in the invaluable experience that European specialists have. Ivanter said this was another convincing argument in favor of transferring Russia-EU energy relations from a "conflict zone" into an "allied zone."
Vedomosti
Russia set to classify strategic deposits
The Natural Resources Ministry has proposed a considerable reduction in classification limits for strategic deposits. The major beneficiary will be natural-gas monopolist Gazprom, as margins for gas fields will be lowered more than substantially. Foreign investors will be allowed to develop any large deposit as junior partners of the Russian company.
The government also suggested classifying deposits holding over 1 trillion cu m of gas, more than 150 million tons of oil, over 700 tons of gold or more than 10 million tons of copper as strategic deposits, with limited foreign access. According to Valery Nesterov of Troika Dialog brokerage, three or four oil and gas fields could be categorized as strategic.
A draft law on mineral resources got stuck in the Kremlin administration over allegedly improper protection of the country's national interests. Deputy Natural Resources Minister Yury Tyomkin said Monday the margin for gas deposits had been lowered to 75 billion cu m and the lower limit for oil had yet to be fixed at less than 150 million tons. "The criteria [for oil] now depend on active oil calculation, not on geological reserves," he said.
The upgraded list now includes seven minerals that will be exhausted in 35 years at current production volumes. Apart from oil, gas, copper and gold, the final list of strategic deposits includes nickel, platinoids and bimetals.
If the criteria become law, some 20 oil and gas fields from the undistributed mineral resources fund will be classified as strategic, Tyomkin said. Together with undeveloped sectors in East Siberia and Sakhalin and Arctic offshore areas, this could bring the number up to a hundred, he said.
The changed criteria point to the government's striving for control of mineral resources, said Steven Dashevsky from Aton Capital brokerage. He labeled the approach as "a sound promotion of economic interests." The need for investment will push Russian companies into consortiums with non-residents, he said, citing Sakhalin projects and the Shtokman and Yuzhno-Russkoye deposits.
Nezavisimaya Gazeta
State may take over Norilsk Nickel - analyst
Authorities are considering declaring nickel deposits strategic. Following this decision the industry itself - above all mining and metals company Norilsk Nickel - may come under state control.
"The scheme is simple," says Dmitry Parfyonov, an analyst with Prospekt brokerage. "First, nickel deposits are declared strategic, and then Norilsk Nickel itself may be brought under state control. The same scheme can be applied to VSMPO-Avisma Corporation, the world's largest producer of titanium products."
Partly foreign-owned joint ventures will be allowed to take part in tenders to develop strategic deposits only if their Russian stakes are not less than 51%, analysts forecast. This is the scheme used by Norilsk and Anglo-Australian RIO Tinto to set up JV RioNorGeologorazvedka, announced in January. The foreign stake in the venture is only 49%.
"Everybody knew that the state will declare nickel fields strategic, as it did with copper and gold deposits," says Vyacheslav Zhabin, a BrokerCreditService analyst. "The fact that the matter is still under consideration does not mean anything. Just look at current metal prices on world markets and their upward growth trends. The decision will not be slow in coming."
Zhabin says the state's moves are justified: the world is hungry for resources, and control over one's own reserves should not be ceded. "The strategic status of the deposits will make things difficult for foreign companies, but they will cope with this somehow," the analyst says.
Gazeta.ru
Yukos tries to avoid bankruptcy
Yukos shareholders are willing to use some of their shares to pay off the beleaguered oil company's debts in order to save it from bankruptcy. The state is unlikely to agree to the deal, but may be satisfied with a controlling stake in the company.
Yukos has offered to give up its 12.5% stake in Yuganskneftegaz, which belongs to the company's largest Russian commercial creditor, state-owned oil producer Rosneft. The idea is to hand over the stake in late September in order to pay off Yuganskneftegaz's claims against Yukos to the tune of $2.45 billion. The stake to be surrendered is calculated from the company's estimated value of $20.6 billion.
Yukos's bills total $29.5 billion, $11.6 billion of which are back tax claims with penalties, which the company is still contesting. Yuganskneftegaz claims $2.45 billion, which Yukos is also contesting.
Yukos has calculated that after March 15, 2008 it will be able to pay off any claims from its current cash. Its annual earnings are estimated at $3-3.5 billion. The management says that having implemented its plan of financial recovery, the company will pay off all the debts and preserve $15 billion worth of assets.
Experts say that creditors are unlikely to accept the proposal, but that the very idea of a stake transfer is promising. "To pay off debts with shares is the only sensible way out, given the current circumstances," said Stanislav Kleshchev, an analyst with Financial Bridge. "However, creditors, primarily Rosneft, are unlikely to accept the terms proposed by Yukos."
Market players say the state will not want to make the company bankrupt in order to absorb it piece by piece, when it can take over the whole company and then merge it with, for example, Rosneft. The state-owned company is preparing for its initial public offering, so an additional asset, albeit with a poor record, will come in quite handy.
Kommersant
Nokia may lose up to 10% of Russian market
The last "gray" channels for supplying Nokia cell phones to Russia were closed a few days ago. Experts predict that a decline in buying will cause a shrinking of Nokia's market share in Russia.
Two St. Petersburg companies, Teleko and VVP, have virtually stopped buying Nokia cell phones, after the local police impounded 40,000 Nokia phones worth about $15 million. "It has become difficult to import "gray" phones through customs terminals in Moscow, after the confiscation of a large cell-phone batch received wide press coverage in August 2005. Several companies in St. Petersburg, which became major "gray" market operators, used to supply up to one third of Nokia phones until now," a source told the paper.
Experts said the actions of Russian law-enforcement agencies might cause Nokia to lose part of its share of the Russian market and to charge higher prices. "Nokia's Russian market share may shrink by 10% from the current 21% by late 2006," said Eldar Murtazin, head of Mobile Research Group (MRG).
Murtazin said his company estimated cell-phone sales in Russia in 2006 at only 25 million units, rather than 32 million, because of the latest confiscations. Murtazin said retail prices for Nokia cell phones would increase by 10-15% by late summer because of the reduced market and the closing of major phone import channels.
