MOSCOW, March 19 (RIA Novosti) Gas OPEC to appear in a month/"Weapon pirates" rob Russia of revenues/ Japan awards Russia high investment rating/ Russian company likely to walk out on Siemens/ Putin's former colleague to join No. 2 Russian bank's supervisory board
Kommersant
Gas OPEC to appear in a month
A union of the world's biggest gas exporters will be established in Qatar on April 9 by Russia, Iran, Qatar, Venezuela and Algeria, according to diplomatic sources. The emergence of such a powerful energy organization is certain to get a poor reception in the United States and the European Union.
Kommersant's sources in Arab diplomatic circles said that the Gas Exporting Countries Forum, which was set up in 2001 and whose members together control over 70% of the world's gas reserves, would meet in Doha, Qatar, on April 9, and it would be a good moment to announce the establishment of a gas cartel. A political agreement on the issue has nearly been reached, they said. Most of the talks have been conducted not by gas-producing companies, but by politicians at the highest level, "sometimes bypassing foreign ministries," an Arab diplomat said.
The biggest advocate of the initiative is, of course, Iran. Its spiritual leader, Ayatollah Khamenei, was the first to officially voice the idea of a gas cartel, which had been discussed in Russia for a long time. Russian President Vladimir Putin has repeatedly said he approves of it. Valery Yazev, the chairman of the Russian parliament's energy committee, has been actively lobbying for the project in the legislature.
Plans for a gas OPEC are causing concern in Europe. High-level managers at Russia's gas monopoly, Gazprom, have not concealed that their strategic goal is to "reach every gas station in Germany" and other European countries. Commercially, gas sales to the end consumer will bring Gazprom $400-$500 per 1,000 cubic meters instead of the $290 it gets now. The Russian gas giant will find itself in a more favorable position than its European counterparts, such as Germany's E.ON and Gaz de France, whose output is several times lower than their sales volumes.
Politically, Russia will be able to dictate any terms it wants in Europe. The EU will be totally dependent on Moscow's political will and have almost no leverages of its own left.
One of the most popular arguments about the impracticality of a gas cartel is that all gas supply contracts are long-term, so gas prices cannot be changed abruptly. Nevertheless, all of Gazprom's export contracts envision a price review once every three or six months. This means that the amount of gas supplied in the future and the regulation of gas prices could be discussed by exporting countries within the new alliance.
Nezavisimaya Gazeta
"Weapon pirates" rob Russia of revenues
The intellectual piracy of Russian military technologies in some eastern European countries is damaging the Russian economy, Sergei Ivanov, the first deputy prime minister and former defense minister, said at a recent meeting of the export-control commission.
It was the first time a high-ranking Russian official has made such an accusation, although the fact itself is nothing new, Alexander Sharavin, director of the Institute for Political and Military Analysis, wrote in the popular daily Nezavisimaya Gazeta.
Nikolai Dimidyuk, director-at-large of the state arms exporter, Rosoboronexport, said Russia annually loses some $2 billion from such piracy. The share of world-famous Kalashnikov guns produced by Russian companies is only 10%-15% on the global market, the rest being low quality fakes offered at dumping prices.
Sharavin writes that former allies and friends of the Soviet Union annually produce almost one million Kalashnikov rifles. They are produced in nearly 20 countries in Europe, Africa, Asia and the Americas.
Early this year, Poland signed a contract for the export of 30,000 Kalashnikov AK-47 and AKM assault rifles to Iraq without the required permit from Russia.
Other types of Russian weapons and military hardware are also commonly pirated. The pirate producers change some of a Russian weapon's parts, add a few new ones, and sell it as their own make.
According to Sharavin, Poland's ZU-23-2KG air-defense missile system is a carbon copy of the Russian-made ZU-23, and its PT-91 Tvardy tank is a modernized version of the Russian T-72 medium tank. Polish producers are also peddling the Russian Igla portable surface-to-air missile systems as the Polish OSA.
Romania has recently tried to sell an armored personnel carrier in the Middle East that turned out to be a slightly modified Russian BTR-80.
The expert writes that by selling Russian-made weapons at dumping prices, pirates are pushing Russia out of the arms market. In addition, many of these transactions violate international norms and rules, which may have dramatic consequences for the international community in view of terrorism.
Biznes
Japan awards Russia high investment rating
The Japanese rating agency JCR has for the first time awarded Russia a credit rating in long-term foreign currency liabilities, giving it an A-, higher than that awarded by the world's "big three" agencies (Fitch Ratings and Standard & Poor's rate it at BBB+ and Moody's at Baa2). Experts view the move as a political curtsey toward the Russian government.
The JCR rating was awarded soon after Russian Prime Minister Mikhail Fradkov's visit to Japan, which shows that his calls for more active investment in Russia did not go unnoticed. Now Japanese capital "will be coming to Russia more boldly," said Finance Minister Alexei Kudrin. He said he expected an influx "of investment dollars instead of petrodollars."
Japanese investment in Russia last year amounted to $695 million, accounting for 1.3% of all foreign investment in the country (compared to Germany's 9%, France's 5.5% and offshore Cyprus' 17.9%).
Experts are in no hurry to share Kudrin's optimism. Vladimir Pantyushin, chief economist of Renaissance Capital, said that the country's rating has only a conventional value for real-sector companies. "They are more interested in their potential profit," he said. Alexei Novikov, head of S&P's office for Russia and the CIS, said that a credit rating assessed the risk of unpaid liabilities, while the inflow of direct investment was related to the assessment of factors that determine how comfortable it is to do business in a country.
The more assessments, the more comfortable it is for investors, but the number of assessments does not influence the growth of sales volumes, he said. All the more so as Russia's financial stability has been repeatedly assessed as high by many international institutions, including the International Monetary Fund, the World Bank, and the Organization for Economic Cooperation and Development.
Vladimir Tikhomirov, chief economist of the Uralsib brokerage, said that the JCR rating was really a political gesture on the part of Japan, testifying to its policy of rapprochement with Russia. "When the problem of the disputed islands was extremely acute, the Japanese government did not encourage investment in Russia," he said. So the rating is meant rather for Japanese investors, who traditionally put more stock in the opinions of their national institutions than investors in other countries, he said.
Vremya Novostei
Kommersant
Russian company likely to walk out on Siemens
Silovye Mashiny (Power Machines), a Russian company that has been negotiating with Siemens since last year for the purchase of a manufacturing license from the German firm for a 278 MW power turbine, cannot obtain a license for its follow-up servicing. Industry experts say the strategic partnership with the German company may be abandoned in favor of one with the Americans.
A source familiar with the talk's progress said that Siemens (which owns a 25%-plus-one-share stake in Silovye) took a rigid stand from the beginning, since the service margin is much higher than the turbine-sale margin (30% versus 10%). According to the source, elsewhere in the world Siemens gets 0.18 cents per each kW/hour of power generated by its turbines. "Siemens is unlikely to give up this income to Silovye. Otherwise, why would it have paid for a ticket to the Russian market by purchasing Silovye stock?" the source said.
For the Russian company this is a matter of principle. According to a source close to Silovye Mashiny, unless it is guaranteed a license for follow-up maintenance, it may not buy the manufacturing license. Already, Silovye is considering the option of holding talks with other turbine makers, particularly the United States' General Electric.
Siemens may suffer, too, from its spat with Silovye. The point, according to Anatoly Chubais, the head of Unified Energy Systems, which runs the national power grid, who also owns a blocking stake in Silovye and manages 30% of its shares, is that an additional issue of $450-500 million-worth of shares is planned by the Russian power machinery manufacturer in the next five years. Market sources did not rule out that the issue could be bought out by the German concern by using its licenses as payment. Apparently, the current disagreements are making such a plan impossible, and the most that Siemens can hope for is to keep its stake in Silovye Mashiny by paying cash for a part of the issue. When UES bought its stake in Silovye, it was known that Chubais favored cooperation with GE over Siemens.
Vedomosti
Putin's former colleague to join No. 2 Russian bank's supervisory board
A German intelligence officer turned investment banker will help Russia's second biggest state-owned bank, VTB, to organize its initial public offering. Mattias Warnig, managing director of the Nord Stream pipeline and a former officer in the East German intelligence service, has been appointed to the VTB supervisory board.
VTB plans to raise 90-120 billion rubles ($3.5-$4.6 billion) by placing 22%-23% of its stock on Russian and foreign exchanges in May. To do so, it requires independent directors. The bank spent several months looking for suitable candidates and last Friday announced that its supervisory board had proposed to its shareholders that they offer seats to Warnig and Yves-Thibault de Silguy, chairman of the board of the construction giant Vinci and former French foreign minister (1981-1984).
Warnig admitted that he had established good personal relations with Russian President Vladimir Putin in the early 1990s when he opened the Dresdner Bank's office in St. Petersburg. Under his guidance, the bank's investment arm, Dresdner Kleinwort, has become one of the leaders in Russia. It appraised Yuganskneftegaz, the former production asset of the beleaguered Yukos company, for the Justice Ministry and advised the gas monopoly Gazprom when it planned to merge with the state-owned oil major Rosneft. A year ago Warnig was appointed managing director of Nord Stream, one of Gazprom's key projects, which is involved in the construction of the $6 billion North European Gas Pipeline from Russia to Germany. He also kept his seat on the board of directors at Dresdner Bank Russia and the St. Petersburg-based bank Rossiya, controlled by another old friend of Putin, Yuri Kovalchuk.
VTB has found the prominent figures it needs, said Vladislav Reznik, chairman of the Russian parliament's banking committee. Bob Foresman, deputy chairman of the board of Renaissance Capital, a brokerage, said he could not imagine a better candidate. Warnig has the necessary knowledge of both the situation in Russia and international financial markets, he said.
Foreign directors might be useful for VTB not just for the stock placement. The bank needs a European lobbyist both to attract foreign capital and to develop subsidiaries in the region, and Warnig could open doors to gas projects, said Alexander Khandruyev, first vice president of the Russian banking association Rossiya.
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