MOSCOW, December 7 (RIA Novosti) China wants to build a pipeline from Russia to India/Authorities continue to pressure foreign investors/Russian retailers drop Panasonic/DaimlerChrysler may join Magna-AvtoVAZ joint venture/China looks to enter Russian cement market
(RIA Novosti does not accept responsibility for articles in the press)
Nezavisimaya Gazeta
China wants to build a pipeline from Russia to India
Beijing and New Delhi have been negotiating the construction of an oil pipeline from Russia to India through China for four years already, Xia Yishan, head of the Chinese State Center for Strategic Energy Studies, told an oil forum involving Russia, China and Kazakhstan in Shanghai.
He added that two routes are currently being discussed - from Russia's Altai through China and Tien Shan to India, and another route bypassing Tien Shan.
India, which has already received its first oil deliveries as part of the Sakhalin-I PSA project, expects to increase oil exports from Russia to 50 million metric tons a year.
China expects to receive similar amounts. However, oil production growth rates have been falling every year, and according to the Natural Resources Ministry, as of 2021 oil output will cease to increase at all.
By all appearances, the division plans concerning Russian oil production confuse Moscow officials.
"The project of laying an oil pipeline through Tien Shan is likely to be effective," said Vladimir Sayenko from the Russian Industry and Energy Ministry. "Though I, for one, think it would be cheaper to ship oil to India by sea."
Valery Nesterov, an analyst with the Troika Dialog brokerage, said Russia has no particular reasons to lay an oil pipeline across China to India, as Russian pipelines are currently working at 6 million metric tons below their full export capacity, and by 2015 their surplus capacity will reach 34-60 million metric tons a year.
"The construction of the East Siberia-Pacific Ocean pipeline, with an oil terminal on the coast of the Sea of Okhotsk will enable Russia to run a more independent export policy, as it will be possible to sell oil to China, Japan, Korea and the United States," Nesterov said.
Alexander Razuvayev, chief analyst with the Megatrustoil financial corporation, said there are political reasons for the Indian-Chinese project. He believes it will be senseless to cede control of oil transportation to China.
Gazeta.ru
Authorities continue to pressure foreign investors
Next year, Sakhalin Energy, operator of the Sakhalin-II oil project, will face serious fines. Russian Natural Resources Minister Yuri Trutnev said the consortium, led by Shell (which is Sakhalin Energy's key shareholder), "violated numerous environmental regulations in a barbarous way."
Analysts, however, said that this is just an attempt to pressure the company into ceding a large stake in the project to Gazprom. Political experts believe that Sakhalin Energy has already accepted the fact that it will have to make concessions.
The exact amount of the fines may be determined by mid-2007, the minister said. "However, Moscow does not intend to review the production-sharing agreement under which foreign investors are developing Sakhalin-II," he said.
This is an odd statement, experts told the paper.
"If the PSA is not reviewed, than it is unclear how Gazprom will join the project. After all, foreign investors were almost ready to give it a 30% stake," said Natalia Yanakayeva, an analyst with CentreInvest Group.
"Apparently, 30% is not enough for Gazprom, and it wants to get more," she said.
Yet no one will give the state-controlled gas monopoly a controlling stake, and it will most probably have content itself with a stake equal to the one held by Shell, she said.
The operator understands that it will have to concede, political experts told the paper.
"Sakhalin Energy has no other choice," said Dmitry Oreshkin, a researcher at the Geographical Institute at the Russian Academy of Science. Environmental violations committed by the company are no greater than at any other large construction site in Russia, he said.
Pressure put on the project is an element of political PR, where environmental agencies are setting the tone, he said.
Kommersant
Russian retailers drop Panasonic
Six major Russian electronic retail chains announced Wednesday their decision not to buy Panasonic. Officially, they are boycotting not the cut-rate prices of Media Markt, but the producer's refusal to make direct deliveries to Russia.
Eldorado, Euroset, M.Video, Svyaznoy, Tekhnosila and Mir retailers will resume purchases of Panasonic equipment only when the company stops using intermediaries and delivers its products directly to Russia.
The retailers do not expect their refusal to buy Panasonic to affect their sales. Igor Yakovlev, president of Eldorado, said Panasonic occupied no more than 5% of the audio and video segment, and 1% of the household equipment market.
Panasonic goods, which are imported semi-legally, are being sold at cut-rate prices in the shops of German retailer Media Markt, which opened in Moscow last week.
Panasonic's management explained the retailers' outrage by the appearance of Media Markt on the Russian market.
"We have had normal relations with them until recently," said a Panasonic spokesman. "Now they have decided to strike out at us in their anti-dumping war."
Experts agreed that the retailers' adversary is Media Markt.
Eduard Murtazin, chief analyst with Mobile Research Group, said Media Markt's two shops could ruin the Moscow electronics market.
"In fact, the company is working at a loss, but it can do so because it can draw on the powerful financial resources of its parent company, Metro Group," he said.
"Russian retailers' profitability in 2006 was 23-25%, whereas the average figure in Europe is 4-7%," said Viktor Larionov, managing partner of the MOST Marketing consulting agency.
"Media Markt's profitability is 5-20%, depending on the market situation. Even if it works with a 8-9% profitability in Russia, this will push down the profitability of all Russian retailers."
Media Markt and Saturn are the European market leaders in consumer electronics retailing. They are part of Metro Group and have more than 400 shops. Their 2005 revenues amounted to 13.3 billion euros.
Vedomosti
DaimlerChrysler may join Magna-AvtoVAZ joint venture
DaimlerChrysler models may soon be assembled in Togliatti, next door to the newest Lada cars that AvtoVAZ hopes to launch in cooperation with Canada-based Magna.
Magna, entrusted by Daimler to assemble Mercedes vehicles for many years now, is prepared to join AvtoVAZ in building a new plant capable of producing up to 480,000 cars a year and costing $1.7-2 billion.
This imposing project will not hinder AvtoVAZ negotiations for another joint venture - with Renault. For the post-Soviet era giant, whose ability to compete with low-priced foreign models has long been in doubt, the projects are a chance to survive, analysts believe.
Before the end of the year, AvtoVAZ and Magna will sign an agreement on the construction of a second assembly plant in Togliatti, Boris Alyoshin, the head of the Federal Agency for Industry (Rosprom), announced Wednesday.
Alexander Novolotsky, general director of the Magna representative office in Russia, confirmed that the agreement will be signed soon.
Construction is to begin in 2008 and will be completed in 2010, a source in AvtoVAZ's management added.
Several sources in AvtoVAZ said a third partner might join the project, invited by Magna - DaimlerChrysler.
One of Magna's subsidiaries - Magna Steyr - has long been cooperating with the auto concern, assembling its Mercedes, Jeep, and Chrysler models. DaimlerChrysler would not comment.
Foreign partners are a lifebuoy for AvtoVAZ: the plant needs new models as much as the air one breathes, said Deutsche UFG analyst Yelena Sakhnova.
In the meantime, the Togliatti giant is rapidly losing its market. As forecast by Rosprom, in 2006 its share of the market will drop from 38.94% to 33.5%, and, according to Deutsche UFG, down to 31% in 2006 and to 28% in 2010.
Tens of thousands of unsold cars are currently waiting at AvtoVAZ dealerships because they are unable to compete with inexpensive Renault, Chevrolet and Hyundai models.
The ability to implement joint projects with foreigners will show the real worth of AvtoVAZ and its new management from Rosoboronexport, which has made no mark of any sort in almost a year, said Aton analyst Tatyana Kapustina.
Biznes
China looks to enter Russian cement market
Chinese cement producers are willing to struggle for a place on the Russian market. Yet experts and market players say that their cheap cement will not enjoy the same demand as domestically produced cement.
Several Russian developers and cement producers have announced that the Chinese are looking for ways to enter the Russian market.
"According to our information, annual imports of Chinese cement amount to about 47,000 tons," said Sergei Meshcheryakov, PR director with Eurocement Group, adding that the bulk of it stayed in Siberia and the Far East.
Chinese producers are now unable to compete in Moscow because of huge transportation costs, he said.
"Given the current cement prices, large supplies from China to central Russia will be unprofitable," he said.
The Chinese are now looking into the possibility of starting production in Russia in order to have better access to the central part of the country.
China's Complant has announced its plans to launch the construction of a cement plant in the Saratov Region next spring. Chen Longbo, the company's vice president, said the $35-million plant's projected capacity will be 5 million tons of cement annually.
Experts give different assessments of China's chances.
"I do not think they will be able to stage a big expansion," said Valery Vaisberg, leading analyst with the Region group. Chinese producers can compete in terms of prices, but not in quality, he said.
"Imports of cheap Chinese cement do not solve the problem," said Tatyana Palchikova, deputy CEO of the company Trest-1991. "It is better to develop domestic production and look for competition inside the country than abroad."
Yevgeny Botka, CEO of the Construction News Agency, said that deliveries of Chinese alumina cement could cause distribution problems for Russian producers of similar kinds of cement (the Pikalevsky plant in the Leningrad Region and the Pashiisky plant in the Perm Territory).
