MOSCOW, October 11 (RIA Novosti) CIS unable to carry out reforms/Russia: gas supply diversification postponed/New aluminum giant faces monopoly screening/Total loses fight for Vankor field to Rosneft
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Gazeta.ru
CIS unable to carry out reforms
Last week, Russia and Kazakhstan called off the CIS anniversary summit without consulting other members of the loose alliance of former Soviet republics. This decision was apparently motivated by the fact that Ukraine, Belarus and Georgia disagree with a Russian-Kazakh plan to overhaul the CIS.
Other CIS members were outraged at such overbearing behavior. A disgruntled Belarusian President Alexander Lukashenko said some CIS states considered themselves superior to the others. Ukraine, too, reacted indignantly to the Russian-Kazakh initiative.
Andrei Ryabov from the Carnegie Moscow Center said Moscow and Astana had problems coordinating the draft CIS reforms with Belarus, Georgia and Ukraine.
He said Russian-Belarusian relations had deteriorated, Ukraine was still choosing its foreign-policy priorities, and Georgia was on the verge of leaving the CIS.
"Russia and Kazakhstan, which have decided they cannot offer solutions to existing problems that are acceptable to all sides, suggest taking a break and drafting new proposals," said Ryabov.
Fyodor Lukyanov, chief editor of the Russia in Global Affairs magazine, said the CIS had virtually ceased to exist, and different countries maintained different relations with Russia.
Lukyanov said the summit had been called off due to the reluctance of CIS countries to comment on the Russian-Georgian conflict.
Russia's CIS partners will have to formulate their position on the current Russian-Georgian confrontation, said Lukyanov. "I believe they do not want to do this. Although they hardly support Moscow because they equate themselves with Georgia, these countries have no desire to criticize Russia," he told the paper.
Lukyanov said Russia and Georgia were on the verge of war, Moscow had imposed a boycott and an economic blockade on Moldova, relations with Ukraine were unclear, and Lukashenko was making anti-Russian statements.
Kommersant
Russia: gas supply diversification postponed
Moscow has announced significant changes to its energy strategy. On top of denying foreign partners a role in the development of the Shtokman deposit off Russia's arctic shelf, it has also decided to transport all future gas from Shtokman to Europe via Nord Stream (the North European Gas Pipeline).
This means not only that the Kremlin has taken a decision to close its resources to foreign companies, but also that gas supply diversification, so much touted by Gazprom, is being put off.
There will be no tapping of the U.S. market, and nor will a liquefied natural gas plant be built - at least in the first phase of Shtokman development. Construction of a similar plant on Sakhalin, scheduled to go on stream in 2008 and to start shipping gas to Asia, is threatened by the scandal surrounding Sakhalin 2.
Construction of yet another smaller LNG plant at Ust Luga is also unclear, said Tatyana Mitrova, head of the Russian Academy of Sciences' Center for International Energy Markets Studies.
Rice University in the United States has forecast that by 2020 Russia may corner up to 22% of the LNG market. Its predictions will now have to be adjusted.
As was the situation 30 to 40 years ago, Russia is placing all its bets on gas pipelines. But already about 25% of the gas is sold on international markets in liquid form, and this share keeps growing. The gas market grows by an overall 2-3% a year, against 7-8% for the LNG market. As forecast by the International Energy Agency (IEA), its share is to top 50% in the next 20 to 25 years.
Currently, the lion's share of LPG falls to Asia, but in the coming 20 years, the IEA forecasts, North America will catch up, and Europe will overtake. While the Russian leadership places priority on traditional pipeline transport and long-term contracts with the European Union, its traditional partner, this partner is putting its chips on another market with no Russian presence on it so far.
As the LNG share grows in gas trade, its market in Europe will be less and less a seller's market thanks to supply diversification and short-term contracts. And then Russia, now covering Europe with its gas pipelines, will become dependant on these pipes and on European gas buyers to an even greater extent than Europe is on Russia now.
Nezavisimaya Gazeta
New aluminum giant faces monopoly screening
The united company formed by the merger of RusAl, SUAL and Glencore, which was announced Tuesday, will be put to the test by a reworded law on the protection of competition, to come into force October 26.
However, since the Kremlin gave its approval for the deal, there is no doubt that the company's future is secure in Russia, especially since about 90% of the company's products go for export.
A possible future compromise between the Federal Anti-Monopoly Service and the united company may turn out to be a proposal made on Tuesday by Economic Development and Trade Minister German Gref, who suggested that customs duties on aluminum imports into Russia be scrapped to avoid the possible negative effects of an aluminum monopoly appearing on the domestic market.
On the other hand, there is no absolute certainty that authorities in the U.S., Canada and Europe will not attempt to block the emergence of a new leader in the aluminum industry. Vyacheslav Zhabin, an analyst with Broker Credit Service, said Western anti-monopoly bodies have enough leverage to stop the new united corporation in its tracks. After all, RusAl will outstrip the current leaders of the aluminum market - North American Alcoa and Canadian Alcan - in terms of production volume.
"They may simply shut out RusAl from their markets by imposing prohibitive import duties, quotas, or prices for its products with a premium to the price of their own producers," he said. "RusAl's production costs per ton are $1,788, compared to Alcoa's $1,900." Grounds for future claims are there, say experts.
However, Dmitry Parfyonov of the Prospekt brokerage is confident that neither domestic nor Western anti-monopoly agencies will stand in the way of the merger. "The new company will have about 15% of the world aluminum market," said the analyst. "This is not the kind of figure to prevent a merger."
"It is a different matter that power tariffs may raise difficulties: it is no secret that the production of primary aluminum is linked to electricity, whose price in Russia is not comparable with Western countries," he said.
"These considerations, however, are unlikely to affect the deal. At least while negotiating Russia's WTO entry we were able to stand firm on low electric power prices when the issue of tariffs was raised," the analyst said.
Vedomosti
Total loses fight for Vankor field to Rosneft
The Brussels court of arbitration said French oil giant Total has no right to develop the Vankor oil and gas deposit.
Total and Rosneft have been contesting the right to develop the deposit, which contains over 260 million metric tons of oil and about 90 billion cubic meters of gas, for the last several years.
In 2002, Total agreed to buy a 52% stake in Yeniseineft, which owns a license to operate the Vankor field, and a 60% stake in Taimyrneft, which is developing the adjacent North Vankor deposit.
In 2003, Rosneft purchased Anglo-Siberian Oil Co. (ASOC), which owns both Yeniseineft and Taimyrneft.
Total then sued Rosneft at the Brussels court of arbitration, demanding that it be allowed to buy 52% of Yeniseineft's shares. Total also demanded a 60% stake in Taimyrneft from Rosneft. The company said it will accept a payment of $430 million as compensation for Yeniseineft and $640 million for Taimyrneft.
Rosneft rejected Total's claims, stressing the French company failed to honor its commitments to ASOC, and that such agreements became null and void prior to the ASOC purchase. Rosneft officials said Tuesday the court had turned down the first Total lawsuit, but did not hand down a verdict on the purchase of a 60% stake in Taimyrneft.
A source close to Rosneft said Total might appeal the court's verdict, but that it stands little hope of success.
Albert Yeganyan, managing partner of the law firm Vegas Lex, said Total could appeal the arbitration court's verdict to the Belgian State Court, but that its chances are minimal.
He said European commercial arbitration courts take pride in how few of their verdicts are overturned by state courts. Moreover, practice shows that the verdicts of European arbitration courts are usually not overturned, Yeganyan told the paper.
Total refused to comment on the court's decision.
