MOSCOW, June 18 (RIA Novosti) Gazprom fights for development licenses in Eastern Siberia and Sakhalin/ Gazprom may lose interest in Europe and turn to Asia - expert/ Slovenia works to downplay Russia's influence in Eastern Europe/ Rosoboronexport to run MAKS aerospace show/ Russia will never have equality for all in law
Vedomosti, Kommersant
Gazprom fights for development licenses in Eastern Siberia and Sakhalin
Gazprom, which has ambitious plans to increase production, is fighting for development licenses for major Russian fields.
The Industry and Energy Ministry has promised to issue development licenses for the Chayandinskoye gas field in Eastern Siberia and the Sakhalin-III oil and gas project to Gazprom without holding a tender. Negotiations for a license for the Kovykta gas condensate field are underway with Russian-British venture TNK-BP.
Gazprom claims that granting development licenses without a tender is in state interests. Under its agreement with South Korea, the gas monopoly should start supplying 10 billion cubic meters of gas annually in 2012 or 2013. Gas can be delivered to South Korea only through the Khabarovsk-Vladivostok pipeline, which Gazprom's subsidiaries should complete by 2011.
However, Gazprom's deputy CEO Alexander Ananenkov said the company does not have enough gas for South Korea or even Vladivostok. If Gazprom is denied development licenses for the East Siberian and Sakhalin projects, it will have to buy liquefied natural gas (LNG) on the cash market.
Prime Minister Mikhail Fradkov seems ready to support the concern.
He said Friday at a government commission on fuel and energy: "Today everyone is ready to assign the role [of project operator in Eastern Siberia and the Far East] to Gazprom. It would be better to do this openly, rather than elbow one's way through the field."
But Natural Resources Minister Yury Trutnev said granting of development licenses without a tender amounted to a major change in legislation.
The Industry and Energy Ministry holds a different view. A ministry official told the popular daily Vedomosti that the law on mineral resources, although it does not stipulate a direct provision for development licenses, has a clause saying that licenses for projects of federal importance should be issued in a procedure stipulated by "federal laws."
According to the law on gas supply, development licenses for such fields can be granted without a tender "to an organization that owns the United Gas Supply Network," which means Gazprom. The official said the gas monopoly would have to pay for the licenses, but the sum had not been calculated yet.
Nezavisimaya Gazeta
Gazprom may lose interest in Europe and turn to Asia - expert
Europe wants to put an emphatic end to Gazprom's monopoly: to keep the European market competitive, production and sales must be divided, it says. In the expert's view, the recurring theme of European dependence on Russian energy supplies is becoming increasingly politically motivated.
Neelie Kroes, the European Commissioner for Competition, said last Friday that division must also apply to Gazprom. Should the EU adopt plans to reform its energy industry, the Russian holding will have to sell its assets in Estonia (37% of the Eesti Gaas gas distribution network), Latvia (34% of Latvijas Gaze) and Lithuania (just over 37% of Lietuvos Dujos). In the long-term perspective, its share of the Nord Stream could also be affected.
"There is a whiff of paranoia about the dependence on Russia for energy supplies," Valery Nesterov, an analyst with Troika Dialog, said. "Of course, the necessary laws could be passed, but one should remember they cut both ways: Gazprom may simply lose interest in Europe and turn to Asia, whose market is just as attractive."
And this comes at a time when there is currently no alternative to Russian gas for Europe, with demand only set to grow. As a result, European consumers will be paying double for Russian gas only to feel satisfied they have "kept competition alive."
Alexander Rozuvayev, head of market analysis at Sobinbank, said that in the worst-case scenario Gazprom would only have to part with its Baltic assets, but this would do practically nothing to worsen its performance.
"Besides, Europe is far from one and united, we see that the Italians, in Enel's case, are interested in the Russian energy industry and joint plans with Gazprom. So taking advantage of these differences, the company might actually hold a winning hand in the future," the analyst said. "Everything hinges on the Energy Charter, proposed by the European Union which Russia will never sign."
Business & Financial Markets
Slovenia works to downplay Russia's influence in Eastern Europe
LUKoil is a "less suitable" bidder for a large stake in Slovenian company Petrol dd than Italian Eni SpA, the Slovenian management said in what seems an attempt to put down Russia's influence in the region.
Other bidders in acquiring Slovenia's largest oil refining company, which owns a chain of gas stations in the country, apart from LUKoil and Eni, include Polish PKN Orlen SA and Hungarian MOL Nyrt. But chairman of the Petrol board Marko Kryzanowski said the Italian oil and gas group was the one to make the best offer.
LUKoil is still optimistic because the Petrol dd chairman had not made "a deal completion statement," and so refused to make any comment on the news yet. "We do not have any specific information," the LUKoil spokesman said.
LUKoil started eyeing the Slovenian oil major back in 2005, but did not specify the stake it wanted then. In addition, the companies agreed on setting up a joint venture to market oil products in central and southeastern Europe. The deal was postponed several times, last slated for the early 2007.
"True, the negotiation process became protracted as it did not prove an easy one," the LUKoil spokesman says. "We sent our proposals to evaluate the JV assets to the Slovenian partners a while back." It looks like the sale of the stake in Petrol dd was hindering the JV deal, too.
However, Russian experts say LUKoil still has a chance to buy into the Slovenian company.
"LUKoil maintains a broad presence in the region (Bulgaria and Romania), it is a reliable oil supplier and a major player on the local oil and gas market," according to Mikhail Zak, director of research at the Veles Capital investment company.
"A reliable and stable supplies record is more important than financial clout when a company is bidding for a stake in a relatively small asset like Petrol dd (its total estimated market value is $330 million)," he added.
Kommersant
Rosoboronexport to run MAKS aerospace show
State arms exporter/importer Rosoboronexport, which also produces automobiles, titanium, and special steels, has been charged with holding the International Aerospace Show (Russian abbreviation MAKS) in Zhukovsky near Moscow.
Part of the area and premises of the Gromov Flight Research Institute, where the show is held every two years, have been turned over to the arms exporter, which will profit from the shows and also control a major airport.
The legal aspects of the transaction have yet to be agreed on, but sources said a new legal entity, probably called the Transport Exhibition Complex, would be established and take over the real estate and part of the territory of the Gromov Institute.
According to the Federal Service for Military-Technical Cooperation, MAKS shows at the Gromov Institute will alternate with fairs of army equipment, as well as security, transport, and aircraft engine exhibitions. Rosoboronexport can handle all of them, because it exports and imports weapons and military equipment, and also builds automobiles and other things.
MAKS participants have complained about increasing prices. "The participation fee cost us 1.5 million rubles ($57,626) this year," said a spokesman of the Sukhoi corporation. "One flight demonstration costs $10,000. MAKS has become the world's most expensive air show."
Boris Rybak, head of the Infomost consulting company, said the Le Bourget show earns its organizers about $100 million, whereas profit from the MAKS 2005 fair was only $25-$30 million.
The new operator of MAKS will take over more than 400 hectares (1.5 square miles) of the Institute's territory with Europe's only 5-km (3-mile) runway.
Konstantin Makiyenko, an expert with the Center for the Analysis of Strategies and Technologies, said: "Rosoboronexport most likely wants the runway more than anything else, because it is crucial for the development of the air transportation business."
Experts have evaluated investment required to turn the airport into a commercial hub at $700 million to $2 billion.
Izvestia
Russia will never have equality for all in law
Russian society on the whole shares President Vladimir Putin's opinion expressed at the G8 summit: Russia will not "be thinking up a special brand of democracy for itself." At the same time, rank and filers believe that some of the classic traditions and institutions of democracy are unlikely to take root in the country in the foreseeable future.
Over 70% of those polled by VTsIOM (All-Russian Public Opinion Research Center) in 46 of Russia's regions have no doubt that free elections, a multi-party system, and an independent media are quite at home in the country. But almost half of the 1,600 interviewees are convinced that one key principle of the democratic system of government, such as equality for all in law, will never be observed in their country.
One in three respondents said that such typical features of many classic democracies as "law-abiding authorities and society" and "the citizens' ability and desire to fight for their rights" "are unlikely to become rooted in Russia."
Pollsters also asked what democracy in Russia mostly lacked for its development. Russians put "freedom from material need" first in their list of musts for real people power. Civic social development, however (parties, trade unions and public organizations), was moved to the bottom of the list.
"Equality in law for all was publicly hailed in the Soviet era, but everybody remembers that it existed only on paper," Igor Eidman, VTsIOM director for communications, said. "Mikhail Gorbachev's restructuring drive likewise started with a campaign against the perks of party functionaries, but developed into an easy street for oligarchs, who have usurped many of citizens' rights and freedoms. With such a background, what do you expect from people? Besides, most of society believes, and not without reason, that money decides everything in today's world."
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