ConocoPhillips denied access to Shtokman/China's mounting influence on Caspian region/Gazprom may save up to $300 million by signing deal with BASF/Russian government to attract several leading international automakers/Most Russians want United Russia to lead the country
Kommersant
ConocoPhillips denied access to Shtokman
Russian President Vladimir Putin has decided that Norway's StatoilHydro will become Gazprom's second - and last - foreign partner in the project to develop the Shtokman gas condensate deposit.
U.S. ConocoPhillips has nothing to hope for now.
The choice of France's Total for the offshore project in the Barents Sea was unexpected, but the participation of Norwegian companies, which have merged since then, has always been considered highly probable.
StatoilHydro is working on adjacent fields, Snohvit and Ormen Lange, in comparable Arctic conditions. However, it failed to win a share in Shtokman, one of the world's ten largest gas condensate deposits.
Putin made his final decision after talks with U.S. Defense Secretary Robert Gates and Secretary of State Condoleezza Rice in Moscow on U.S. missile shield plans in the middle of October failed to bring the desired result. The talks were the last attempt to remove the main obstacle to the development of Russian-American relations.
Mikhail Korchemkin, the founder and managing director of Pennsylvania-based East European Gas Analysis, a consulting company that specializes in cost-benefit and financial analysis of natural gas projects in the former Soviet Union, said: "By choosing StatoilHydro, President Putin demonstrated a balanced approach, because the first [foreign] participant in the project represents the interests of importers, i.e. the European Union, and the second will speak up for exporters [Norway is not a member of the EU]."
According to Korchemkin, StatoilHydro saved $400 million when developing Ormen Lange in the Barents Sea, and "it would be advisable for Gazprom to try to cut spending on Shtokman with its help."
Yury Komarov, director general of Sevmorneftegaz, which has development licenses for the Prirazlomnoye oilfield and the Shtokman gas condensate field, said the project's Special Purpose Vehicle (SPV) would be most likely registered in the Netherlands or Switzerland.
"This will allow Gazprom to uphold its interests, which cannot be protected by Russian legislation," he said.
Gazprom will hold a 51% stake in the SPV, Total 25%, and StatoilHydro 24%. The SPV will take over ownership of the project's infrastructure 25 years after it comes on stream.
The project has been tentatively estimated at $15 billion, with 40% to be provided by members of the consortium and the rest to come from loans.
A source in Gazprom said that StatoilHydro, like Total, would pay an additional $800 million for the right to take part in the project, and will ultimately try to register Shtokman reserves on its balance sheet proportionately to its share in the project. An asset swap within the project is currently not being considered.
Moskovskiye Novosti
China's mounting influence on Caspian region
An explosive situation is gradually developing in the oil-rich Caspian region as the five littoral states, Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan, make desperate, albeit fruitless, efforts to agree on the sea's legal status. Experts say tension, triggered by China, might peak in the region at any moment.
Moscow is going out of its way to curtail Western attempts at gaining influence over the Caspian region, primarily through major energy projects. Analysts say that Russia's most cherished goal at present is torpedoing the construction of Nabucco, a proposed pipeline to transport natural gas from Turkey to Austria bypassing Russia. The latest Tehran agreements signed by the five Caspian Sea littoral states can effectively hinder that project.
Other experts dismiss the Tehran documents as mere declarations of intent. It is still highly unlikely that Azerbaijan's government will refuse to allow the United States to use its territory "to launch aggression against any of the member states." Baku, which had earlier been in conflict with Tehran over disputed oilfields, would prefer to keep the U.S. contingent for now, just in case of mounting tensions with Iran.
Kazakhstan and Turkmenistan, which could not refuse to join the trans-Caspian project, heavily lobbied by the West, are just as unlikely to assume firm positions on U.S. military presence in the region, due to the fact that Washington is very helpful in protecting their oil and gas reserves and willing to invest in the development of their offshore Caspian deposits.
China is the only nation which could opt for supporting Russia's and Iran's anti-U.S. stance. Analysts forecast that China's influence will steadily mount in the region. China, which is involved in the building of a natural gas pipeline from Turkmenistan, will naturally safeguard its oil and gas interests in the region, which means that Chinese ships will soon be seen navigating the Caspian unless a convention on the lake-sea's status is signed.
Analysts also believe that Iran, a country accounting for 2% of global oil reserves, still views Moscow as a potential rival, and can therefore try and use China to counterbalance Russia as much as the United States. Iran seems ready to stake on the new player in a game that involves from 4% to 10% of the world's hydrocarbons, according to various estimates of the Caspian resources.
Vedomosti
Gazprom may save up to $300 million by signing deal with BASF
Russian natural gas monopoly Gazprom has announced the sale of a stake in the Yuzhno-Russkoye gas field (Tyumen Region) to Germany's BASF. The Russian company may save up to $300 million in taxes from the transaction, worth about $1.3bn.
As early as last spring, Gazprom promised to sell a stake in Severneftegazprom, which holds a license for the Yuzhno-Russkoye field, with reserves of about 800 billion cubic meters of gas, to BASF. In turn, the German company was to give it a part of its stake in their joint trader Wingas (on October 25, Gazprom reported an increase in its stake in Wingas from 35% to 49.9%) and also 49% in each of its two oil concessions in Libya.
Both Gazprom and BASF have refused to disclose the price set for the stake in the Yuzhno-Russkoye field (one preference share and 25% of common stock minus one common share). Maxim Shein, an analyst with Brokercreditservice, thinks it may be no less than $1.3 billion. A Gazprom manager explained that the offered BASF assets were not enough for the transaction, so the German company had to pay extra. It declined to reveal the size of its additional payment.
Gazprom will save substantially in taxes from the deal with BASF. A source close to Gazprom described the transaction scheme. Severneftegazprom's shares were not sold by Gazprom (the former owner of 100% in Severneftegazprom) but by Gazprom's two western subsidiaries - Germany's Gazprom Germania GmbH and the recently established Gazprom Netherlands B.V.
They obtained Severneftegazprom's shares after the placement of an additional share issue in their favor, and they bought them at their nominal price, according to the same source. Recently, the Federal Financial Markets Service reported the registration of such an additional share issue with total nominal value of 107,692 rubles ($4,350.84).
When the subsidiaries bought those shares they sold them to BASF and received a sizeable net income. In Russia, Gazprom would have had to pay 24% in profit tax on the deal, that is, over $300 million (if 25% of the Yuzhno-Russkoye field costs $1.3 billion). As for Gazprom's foreign subsidiaries, they will not have to pay tax, the source claims.
In both Germany and the Netherlands, a company may receive income tax exemption if income is received from the implementation of strategic investment projects, said Gennady Kamyshnikov, head of the tax and legal department and partner of Deloitte CIS. In Germany the exemption applies to 95% of the income and in the Netherlands to 100% (under certain conditions), he said.
Vremya Novostei
Russian government to attract several leading international automakers
An Economic Development and Trade Ministry official said the government planned to extend the deadline for accepting applications from foreign automakers and car component manufacturers wishing to assemble motor vehicles in Russia, and that his ministry was discussing this possibility.
In mid-September, the Economic Development and Trade Ministry, Finance Ministry, and Industry and Energy Ministry said they would stop signing industrial assembly agreements because of Moscow's plans to join the World Trade Organization.
The government is ready to make an exception for U.S. automotive giant General Motors, and two alliances between steel giant Severstal and Japan's Isuzu automaker and Italy's FIAT and Ssang Yong of South Korea.
Ford Motor, Severstal-Avto and GM-AvtoVAZ currently operating in Russia, as well as the eight incomplete Volkswagen, GM, Nissan, Toyota, Suzuki, Peugeot-Citroen plants and an alliance between the Izhevsk automotive plant in the Ural Region and South Korea's KIA, have been paying reduced taxes in the last seven years.
A spokesperson for the Economic Development and Trade Ministry said seven other foreign companies had not yet decided whether to launch operations in Russia, but that only four or five of them, including South Korea's Hyundai, Mitsubishi of Japan and China's Great Wall, could enter the market.
The government requires all foreign automakers to relocate production and to assemble at least 50,000 vehicles per year. But the world's problem-ridden automotive giants remain undecided.
Mitsubishi is facing financial hardships, and Hyundai still does not know whether to build a new plant or to expand its alliance with the Taganrog automotive plant in southern Russia.
The Economic Development and Trade Ministry official said the quality of Chinese cars and materials left a lot to be desired, and that Great Wall was the only eligible company.
Moscow and Beijing continue to bargain over additional privileges requested by China. But quality is not the main problem because the cheaper Chinese cars could oust their Lada rivals from the domestic market.
Vedomosti
Most Russians want United Russia to lead the country
The Levada polling center has put the following question to Russians: "What would you think if United Russia officially became a leading and guiding force in the state, which, like the Soviet Communist Party in its day, could direct the activities of all bodies of authority and appoint its people to responsible posts?"
A relative majority of those polled (49%) supported the idea: 20% positively and 29% rather positively. As many as 16% of the respondents gave a negative answer, with 21% answering rather negatively.
The poll of 1,600 Russians took place in 45 regions on October 19-23; the margin of error was no more than 3%.
"The ‘for' vote came from those who will go to the polls and, moreover, cast their ballots for United Russia," said Levada Center Director Lev Gudkov. "That is not accidental, it is an organized consensus, a product of propaganda, discreditation of other parties and their ousting from the political field."
According to Medialogia, in the first week of October the national media mentioned United Russia three times as often as it did the KPRF or Just Russia, and twice as often in mid-October.
The "yes" answer was given by people living in the zone of chronic crisis, Gudkov said: the party which Vladimir Putin came to head can be expected to provide help, it can bring back the destroyed system of social welfare, voters hope. People still do not understand how democracy works. They are indifferent to program planks and align with those whom they regard as a real force, Gudkov said.
That is not affection or love for United Russia or its leaders. Rather it is voting in reverse because the opposition looks so helpless, said Leonty Byzov from the VTsIOM public opinion research center, whose polls also register a trend towards a single-party system: about the same 50% comes out for one big and strong party. For the older generation it is nostalgia for the U.S.S.R., and for the youth, a form of delegated indifference, he said.
The most ardent advocates of giving United Russia a similar status to that of the Soviet Communist Party are young people (aged 18-24) and the most senior citizens (older than 55), according to Levada findings.
A single-party system contradicts Article 13 of the Constitution, which guarantees political and ideological diversity, said Mikhail Krasnov, head of the constitutional and municipal law department at the Higher School of Economics. In his opinion, a one-party system is unlikely in modern Russia.
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