MOSCOW, October 27 (RIA Novosti) Europe cannot do without Russian energy - expert/Natural Resources Ministry to give access to deep oil without competition/Russia reverts to Soviet trading methods /British companies to sell elite Russian housing/Alternative right party to be set up in Russia
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Moskovskiye Novosti
Europe cannot do without Russian energy - expert
At the Russia-EU summit recently, President Vladimir Putin showed his determination not to agree to the Energy Charter. Analysts with leading Russian brokerages gave the paper their views on the issue.
Alexander Blokhin, Antanta Capital: "The Energy Charter has been drafted with consideration for the interests of European consumers, not of Russia as a gas supplier and a transit country. At the same time, under EU regulations, each country must have at least three sources of hydrocarbons. This means that Europe does not have an alternative to Russian oil and gas. So it cannot do without us.
"The Energy Charter was signed when Russia was weak. Now this country has become financially stronger, and has very strong positions in the oil and gas sector. As resources on the planet are being depleted and becoming more expensive, the dialogue with Russia should be about equal cooperation only."
Maxim Shein, Broker Credit Service: "All around the world, superficial bargaining is going on between countries on the terms of energy cooperation. Each country is trying to secure the most profitable terms possible. Russia, due to its energy might and control over huge energy flows, can ensure terms that will be beneficial for it.
"Europe needs stable energy supplies at the lowest prices possible, and without Russia entering its markets. In response, we can thumb our noses at them: sorry, guys, things have changed. Contempt toward Russia is no longer relevant. But it takes developed countries a long time to adjust to changes in the world because of their mentality: they know everything 20 years ahead. But the world changes much faster. So the dialogue with Russia should be different; it will no longer put up with the tone that has been tolerated in the past.
"The energy dialogue between Europe and Russia will go on anyway. Russia is in no hurry. We are in one boat with Europe. Europe cannot exist without Russian resources, while Russia will have no one to sell to without Europe."
Dmitry Mangilev, Prospekt: "This is a deadlocked situation for both Russia and Europe. None of the parties are ready for compromise. It is clear that Europe is afraid of market monopolization, while Russia does not want to share access to its energy, and intends to reach European consumers, which are almost mutually exclusive things. But at the moment both parties are losing."
Kommersant
Natural Resources Ministry to give access to deep oil without competition
The Russian Natural Resources Ministry has agreed to grant oil producers licenses for the exploration of oil deposits below the previously licensed depth limits without competition. The ministry believes that in Western Siberia alone this may involve up to 10 billion metric tons of reserves.
Sergei Fyodorov, head of the ministry' department, said that according to expert estimates, deep oil reserves in Western Siberia alone "can be compared to those already developed in the region," and may reach up to 10 billion metric tons.
However, the depth of a deposit beyond which companies cannot go is fixed in the majority of licensing agreements. "However, unless they drill they cannot know if there are mineral resources, and they cannot drill because they have no licenses," the official said.
Fyodorov said Surgutneftegaz and Russian state-owned oil company Rosneft have already encountered "the problem of subjacent beds." The new regulations will soon come into effect, he said.
An official from a large oil company also admitted that the problem exists. "We can see that there are some reserves under our field, and we are being told that we cannot drill there and that these limits should be put off for tender," he said. "Why should I disclose information about these reserves at all? To attract another company?" he asked indignantly.
"Oil production is being conducted at a depth of 2,500-3,000 meters now, and we are talking about 4,000 meters," said analyst Valery Nesterov from the Troika Dialog brokerage.
"According to some estimates, there may be large reserves there, though this oil will be inaccessible and expensive," he said. "However, all shallow reserves have already been used up, and a company such as Surgutneftegaz has its major prospective reserves at that depth."
The expert added that there is a trend that companies have been lately exploring lower horizons as oil prices have soared. To illustrate this, Nesterov cited an 8,500-meter oil well that was drilled by U.S. Chevron in the Gulf of Mexico, and that may total 3-15 billion barrels.
Gazeta
Russia reverts to Soviet trading methods
Russia has reverted to Soviet-era practices, when Moscow sold weapons to friendly customers on credit. News broke this week that it may issue $1 billion in credit to Indonesia to purchase Russian arms.
Indonesia wants to buy six Kilo-class submarines, six Su-30MK2 fighter planes, and Mi-17 and Mi-35 helicopters.
Rosoboronexport has not yet commented on the deal. But experts take a positive view of the stance, and do not expect a repeat of Soviet mistakes. "We cannot simply distribute weapons and money," said Dmitry Vasilyev, an expert at the Center for the Analysis of Strategies and Technologies. "Only the United States can afford to do this."
Russia cannot. But Moscow has already sold arms on trust. "Last year, for example, it concluded a contract with Jordan to supply two Il-76 transport planes on credit, worth $100 million," said Capital analyst Mikhail Pak. "But $1 billion is an unprecedented sum."
Foreign credit for such nations as Indonesia is the only solution. It will extend the repayment period, which is important with purchases on such a scale. "Also, Jakarta can include purchasing outlays in its budget, spreading the credit equally over a number of years."
Russia, too, will to gain from selling arms on credit. "In addition to interest that the country will receive on top of the price, bank money will go straight to Russian companies. They will not have to concern themselves over whether they will be paid or not, but will be able immediately to channel the funds into production development," Pak said.
Russia can also start long-term cooperation with borrower-countries in other fields. "For example, credit can be considered wherever our big business has its own interests. This may be access to natural resource deposits - such as oil, gas, gold, or diamonds - or participation in other projects," said Vasilyev. Africa is a promising market for such trade, he believes.
"Also the small Latin American and South East Asian countries," Pak adds. The latter region may prove the most attractive, the expert believes. "If Indonesia starts arming itself, then its neighbors will have to catch up and may begin buying arms from us," he said.
Gazeta.ru
British companies to sell elite Russian housing
A new player has appeared on the Russian elite housing market. Savills, a leading British realtor, is merging with Intermark's Russian office. A player of this scale could make life difficult for Russian firms.
The new company will be called Intermark Savills and will continue specializing in the best housing. Notably, the Moscow City project has an important place in its plans.
Experts say that now is a good time for the British company to come to Russia, as there is an obvious shortage of supply of elite housing. After the law on participatory construction came into force on April 1, 2004, registering land rights became tougher, and many sites that were expected to appear on the market in 2004-2005 have still not been put up for sale, analysts of the Knight Frank realtor said.
In the first six months of this year, only 23% of apartments for sale were in elite apartment blocks under construction.
It is no secret how prices for elite housing will evolve: given the shortage of supply (first of all because of the reduced amount of construction) and strong demand, the price growth potential is inexhaustible, which is typical for any economy, Knight Frank said.
The market is cautious about receiving a new player. "The elite housing market in Moscow and the Moscow Region gets tougher every year," said Valery Mishchenko, development director with Rodex Group, an investment and construction holding. "Today there is unsold housing worth $3 billion in the Moscow Region alone. The length of time for which elite housing must be advertised increases every year, and competition between realtor companies that sell them is growing tougher."
However, he said that he hoped Savills "has not come in order to use dumping prices."
Vedomosti
Alternative right party to be set up in Russia
A new party, Free Russia, will try to appeal to the right-wing electorate in the 2007 parliamentary elections. The Kremlin admits that right-wingers do not have any leaders, and says it does not intend to hinder the newcomer.
The Kremlin believes that in the next election, not only centrist and left politicians will be in demand. The Union of Right Forces (SPS) has ceded its positions, but the electorate remains the same, said a source in the Kremlin administration. So it remains to be seen who will be able to fill this niche.
Another source close to the Kremlin said that lawyer Mikhail Barshchevsky, a government representative with the Constitutional Court, will try to turn Free Russia into a powerful right party.
Free Russia emerged in 2004 from the Russian Party of Small and Medium Businesses. It has 55,063 registered members and is little known to the population. It has never run in a national parliamentary election, but gained 11% of the votes in the regional election in the Novgorod Region on October 8. Unlike other right-wing parties, it does not intend to oppose the government.
Alexei Makarkin of the Center for Political Technologies said Free Russia was a pro-Kremlin project. He recalled elections to the Moscow City legislature in December 2005, when the party tried to stand in the way of another liberal party, Yabloko.
A Kremlin official hinted that the administration will not hinder Barshchevsky, but was not certain of the project's success. To gather the right-wing electorate's support, the party will need famous faces, professional and creative organizers, and an attractive ideology.
About 15% of the Russian population share liberal views, while only 8% strongly advocate liberal policies, said Leonid Sedov of the Levada Center, a prominent pollster. However, ratings of the Union of Right Forces and Yabloko do not exceed 2-3%, he said.
The Union said it does not view Free Russia as a rival. This is only a disguise, said Boris Nadezhdin, member of the party's political council. If the Kremlin decides to turn it into a liberal Rodina, then it will have a sponsor and a chance.
If it manages to attract prominent individuals and get rid of its democrats' spoiler image, it may even become a threat to the ruling party United Russia, but not a major one, said Vladimir Medinsky, member of United Russia's general council. Still, he does not consider Free Russia to pose a great threat.
"The right-wing liberal electorate is disappointed with the liberal idea, and either votes for United Russia or ignores elections," he said.
