MOSCOW, October 17 (RIA Novosti) Russia opts for caution and friendliness with Iran / Putin proposes Caspian "project of the century" / Gazprom to reject services of RosUkrEnergo intermediary company / LUKoil sends signals to American partners / Gazprom, Total to share expenses in developing Shtokman
Vedomosti
Russia opts for caution and friendliness with Iran
Even if the West had cherished any hope that [Vladimir] Putin would pressure [Mahmoud] Ahmadinejad to drop his nuclear program, that hope certainly died yesterday.
The four Caspian littoral states - Russia, Azerbaijan, Kazakhstan and Turkmenistan - supported Iran's right to pursue a nuclear program in a declaration adopted in the wake of the October 16 summit in Tehran. They also explicitly said they "would not allow other countries to use their territories for acts of aggression or other military operations against any party."
Russia is certainly interested in economic cooperation with Iran, especially in nuclear power generation and natural gas production and transportation. That is one of the reasons why Moscow objects to imposing sanctions on Iran. The political accord between the Caspian states might not be stable enough, and the possible economic alliance of the Caspian states (Putin put forth the idea while announcing next year's conference in Russia on the issue) might not be established after all, but that Moscow yesterday demonstrated its increased political clout in a difficult region is a solid fact.
With elections in Russia so close, Putin's policy toward Iran could be viewed as a kind of challenge to the West, primarily to show Washington how Russia can pursue its own independent policy on a complex international issue.
The West in fact has omitted one really important detail while firing criticism at Russia: Iran is much closer to us geographically, than the United States or Europe.
An Iran with nuclear weapons would pose a threat to Russia, especially if the U.S. launches a military operation against it. That is why Russia's strategy toward Iran differs from that adopted by the U.S. and Europe, the latter obviously failing to understand Russia's position. Russia and the West have a common general goal, preventing the Ayatollahs from making a nuclear bomb, but differ on strategy and tactics. Moscow, at least, has opted for caution and friendliness toward its Caspian neighbor.
Gazeta.ru
Putin proposes Caspian "project of the century"
Russian President Vladimir Putin proposed at the Caspian summit in Tehran that a canal be built between the Caspian Sea and the Black Sea.
Set to cost about $10-$15 billion, the shipping canal will speed up the development of the North-South transport corridor.
However, the project might be hindered by political differences among potential partners.
Alexei Pavlov, chief analyst with the investment group Vika, said the project, tentatively estimated at $10-$15 billion, would give Russia control over the export corridor from Asia to Europe and enhance its political weight. At the same time, it would boost the economic progress of Russia's southern regions.
The canal could be also used to transport Russian oil produced in the Caspian.
Alexander Razuvayev, head of market analysis at Sobinbank, said: "The canal could become one more leg of the Burgas-Alexandroupolis project."
Analysts agree that the project's future depends on the solution of political problems.
China and Kazakhstan would greatly benefit from it. "China would be able to slash the time for the delivery of its goods to Europe, which will allow it to increase trade," Pavlov said.
According to Pavlov, it now takes up to 60 days to deliver cargoes from Southeast Asia to Europe, while the transport corridor would cut the time to 10 days.
Kazakhstan could use the new canal to deliver its hydrocarbons to Europe without intermediaries (as of now, over 70% of Kazakh oil exports go across Russia).
"An agreement is possible with all Caspian states, with the exception of Azerbaijan," Razuvayev said. Azerbaijan is considering a trans-Caspian oil pipeline across Kazakhstan, bypassing Russia.
Many experts believe that the coordination of the project, let alone its implementation, would take years, if not decades. Russia could choose to pay for its construction, but it will not have enough goods to ship through it, and therefore will have to negotiate the matter with the other Caspian states anyway.
Kommersant
Gazprom to reject services of RosUkrEnergo intermediary company
Energy giant Gazprom could turn down the services of its subsidiary RosUkrEnergo when exporting natural gas to Ukraine. This move would be in the interests of democratic politician Yulia Tymoshenko, tipped to become prime minister, but could also enable Gazprom to cancel bilateral gas export contracts and to persuade Kiev to buy Russian gas, which is much more expensive than that from Central Asia.
Half of RosUkrEnergo (RUE), a Swiss-registered trader, is owned by Gazprom; the other half is managed by a subsidiary of an Austrian firm called Raiffeisen Zentralbank on behalf of Ukrainian businessmen Dmitry Firtash and Ivan Fursin, who own 45% and 5% stakes respectively.
Although First Deputy Prime Minister and Gazprom board chairman Dmitry Medvedev did not directly accuse RUE on Monday, he said certain sums sometimes "disappear in the hands of our partners."
Two sources close to RUE and Gazprom said the trader had defaulted on payment 50% of 2006 dividends worth $375 million to Gazprom. And the Ukrainian press said unspecified Cypriot companies had bought major stakes in 13 regional gas companies. According to several sources, companies owned by Firtash are using RUE assets to make such purchases.
Ukrainian analysts said the Gazprom-RUE conflict was not the main factor, and that Russia wanted to raise gas prices from the current $130 per 1,000 cubic meters.
RUE is the main element of a system for exporting Central Asian gas to Ukraine, Russia spends up to $100 on every 1,000 cubic meters of such gas. However, Gazprom would have no formal pretext for charging higher prices, unless Turkmenistan, a republic in Central Asia and the main regional gas supplier, does nor raise them next year.
If RUE is abolished, the entire gas supply system would change, enabling Gazprom to negotiate new prices without linking them to Central Asian exports.
Oilgas Invest CEO Yury Korovin said 1,000 cubic meters of gas would then cost $230-$250.
Gazeta, Gazeta.ru
LUKoil sends signals to American partners
No mention has been made of LUKoil among companies willing to develop Russia's strategic deposits. It itself has announced its interest in Arctic shelf development.
It is probable that LUKoil is counting on the fact that state companies Gazprom and Rosneft will find it more profitable to work with a Russian partner than with an international player. Besides, experts are sure that LUKoil is trying to intimate to American partners that if they want a share of Russia's shelf resources they should support the Russian company in Iraq.
According to LUKoil president Vagit Alekperov, the proportion of high-priced oil (from the sea, highly-viscous, or obtained from gas and coal) will grow all the time in the next few decades. Any marked increase in output can come only from the continental shelf.
Only state-owned companies - Gazprom and Rosneft - were officially mentioned, by Putin and others, among the potential developers of the shelf. LUKoil added that so far it was only willing to work.
Analysts said LUKoil might well form an alliance with some of them.
"LUKoil is unlikely to develop the shelf on its own even if it is allowed to, as the project requires heavy spending," said Yekaterina Kravchenko, an analyst with Broker Credit Service.
"LUKoil is going to set up a joint venture with Gazprom Neft," said Timur Khairullin, Entente Capital analyst.
This, however, appears to be only one of LUKoil's objectives. "Alekperov's words are more a signal to its investor, a LUKoil minority shareholder, the American company Conoco Phillips," said Alexei Makarkin, deputy director general of the Center for Political Technologies.
According to him, LUKoil is indicating that Conoco made the correct choice when it spurned the day-to-day running of the company to satisfy itself with a 20% stake.
"LUKoil is letting it be known that Russian companies have a better chance of developing the shelf than American ones, but Conoco, if only indirectly, can take part in the undertaking," Makarkin said. "In that way, LUKoil is hinting that the American company might do well to help its Russian partners in Iraq."
Alekperov's company hopes to resume its activities in Iraq.
"LUKoil's American partner can play a decisive role in bringing the Russian company back to Iraq," the analyst said.
Business & Financial Markets
Gazprom, Total to share expenses in developing Shtokman
Russian energy monopoly Gazprom is again amending its investment program, cutting investment in developing the giant Shtokman gas condensate deposit in the Arctic by 60%. Experts claim the Russian state-controlled company wants to share expenses with French oil major Total, its partner.
For the third time in a year, Gazprom has cut investments in gas transportation projects. Initially, they were planned at 183.9 billion rubles ($7.38 billion) but then were cut to 156.2 billion rubles ($6.26 billion). Experts call this a technical factor as the funds were rechanneled into gas pipeline repair.
In addition, funding for construction was increased in some projects. Construction expenses for main pipelines of the Bovanenkovo-Ukhta system will increase from 0.4 billion rubles ($16.5 million) to 1.3 billion rubles ($52.15 million), Gryazovets-Vyborg (the land part of the Nord Stream gas pipeline) from 26.8 billion rubles ($1.075 billion) to 27.3 billion rubles ($1.095 billion), and the Northern Tyumen Region (NTR)-Torzhok pipeline from 17.4 billion rubles ($698.09 million) to 18.5 billion rubles ($742.2 million).
Expenses on field infrastructure development at the Bovanenkovskoye and Kharasaveiskoye deposits were reduced from 26.2 billion rubles ($1.05 billion) to 25.4 billion rubles ($1.01 billion). At the same time, it was decided to increase funding for other extraction projects by 14 billion rubles ($561.68 million).
The funding of the Shtokman project was again reduced, to 6.4 billion rubles ($257 million), from the initially planned 17.1 billion rubles ($686 million). Analysts attribute this to participation of the French company Total in the project.
"By attracting a partner, Gazprom receives an opportunity to shift part of its burden onto the partner's shoulders," said Timur Khairullin, an analyst with the Antanta Capital investment firm.
"Next year, the option for Gazprom Neft's securities will expire and the company will need another $3 billion to buy out 20% of its shares," he explained.
Analysts see the news as moderately negative and unlikely to affect Gazprom's share price.
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