MOSCOW, November 15 (RIA Novosti) Kremlin resolves Putin's third-term stalemate / General warns Russia may deploy missiles in Belarus / Gazprom to get stock listing in China / Germany's E.ON intends to acquire full control over OGK-4 / LUKoil launches gas production in Uzbekistan
Nezavisimaya Gazeta
Kremlin resolves Putin's third-term stalemate
The other day President Putin publicly revealed he had several employment options available to him. And once again stopped short of giving a direct answer to the main question of what exactly they were. Meanwhile, lawmakers and political experts are enthusiastically discussing a scenario which would not violate the Constitution and allow the current Kremlin boss to take part in a third presidential campaign.
The scenario is simple. Results of parliamentary elections are to be counted after the presidential campaign kicks off. Consequently, if Putin wins a seat in parliament and resigns as president, then no early election of the head of state can be called - because by law the elections have already been announced.
In this case, Putin would not be tied up by the special legal rule prohibiting a resigning president whose decision precipitated a snap campaign to run in an early election.
The constitutional ban on one person holding the presidential post for more than two terms would also be overcome, because Putin would contest the campaign as an ordinary parliament member.
According to a source close to the presidential administration, Putin has not yet made up his mind. "The president is hesitating, although his inner circle do not doubt there will be no other chance to keep him as leader of the nation."
According to the source, Putin need not even obtain a seat in parliament. He could simply issue a decree on his resignation in mid-December.
"Naturally, this could happen only after United Russia wins a sweeping victory at the December 2 polls and the people, en masse, ask the president to stay on," said the source.
According to the source, the necessary props are already being constructed to support a nationwide plea. The process will be completed after the For Putin! movement merges organizationally with the movement of United Russia supporters on November 21 at the Luzhniki stadium.
The source added that a PR campaign for Putin's forced consent to the people's main demand could resemble the October 1 election congress of the "party of power" when the head of state was vociferously acclaimed by women weavers, dairy maids and academics.
"It could all be stage-managed as an impromptu decision in the wake of consultations with the popular masses," the source said.
The source added the Kremlin was no longer considering Putin's other options.
Vedomosti
General warns Russia may deploy missiles in Belarus
A senior general warned on Wednesday that Russia could deploy short-range missiles in Belarus as part of efforts to counter the planned deployment of U.S. missile defense elements in Central Europe, Russian news reports said.
Colonel-General Vladimir Zaritsky, the chief of artillery and missile forces of the Russian army, said Russia could supply the state-of-the-art Iskander theater-level missiles to Belarus.
Zaritsky was replying to a statement by his Belarusian counterpart Colonel Mikhail Puzikov who said the Belarusian army's missile brigade could be rearmed with Iskander missiles by 2020, and that the first missiles would start arriving in 2015 and would cost as much as their Russian equivalents.
Zaritsky said the sale of Iskander missiles to Belarus would be a response to U.S. plans to deploy elements of its missile defense system in Europe.
A source in the Russian Defense Ministry said the Belarusian military had announced plans in 2003 to buy Iskander missiles, whose export versions have a 280-km range, but that neither side had gone into details until now.
The Russian army now has one Iskander missile battalion and plans to rearm five brigades by 2015. A source in the defense industry said serial production was problematic, and that rearmament deadlines had been repeatedly postponed.
Konstantin Makiyenko, deputy director of the Moscow-based Center for Analysis of Strategies and Technologies, said the media had never quoted an exact price for Iskander missiles.
A source in the missile industry said it would cost $200-300 million to equip one 12-missile brigade. Makiyenko said the Minsk Wheeled Tractor Plant was producing the expensive Iskander chassis, and that the Belarusian army would therefore spend less on the new missile system.
He said Belarus could pay for such missiles, due to be supplied in the next few years.
In 2006, Russia supplied an S-300 long-range surface-to-air missile (SAM) system to Minsk, which only had to pay $10 million for repairs. Belarusian military expert Alexander Alesin said the country would receive Iskander missiles under the same terms and that they would be returned to Russia if Minsk and Moscow terminated their military alliance.
Alesin said the Iskander missile brigade would target all military installations in eastern Poland and would serve as a deterrent.
Gazeta.ru
Gazprom to get stock listing in China
Gazprom has officially announced its plans to get listed on Chinese exchanges in order to boost its market capitalization. But the state will keep control over the gas monopoly.
Gazprom will trade its stock on the Shanghai stock exchange. It has not specified the kind of shares it plans to offer, but according to unofficial reports, there will be no newly issued shares. The state's interest in Gazprom will not be reduced, Industry and Energy Minister Viktor Khristenko said on Tuesday.
According to the minister, the Russian government will remain the owner of the control stake (50.002%).
Analysts believe Gazprom could use shares owned by its subsidiaries to trade on the Shanghai floor. Another option could be to buy out shares from investors, but that is unlikely according to analysts: owners of Gazprom shares are unlikely to part with them.
However, according to Dmitry Abzalov, an analyst with the Center for Current Politics, the monopoly has a fair chance of buying out some of its shares from major investors.
But overall this would not produce a large stake - "not more than 5%," according to the analyst.
"The more securities are placed on an exchange, the greater the profits," Abzalov said. "China is very attractive in this respect now, because the Chinese stock market is slightly undeveloped in financial terms."
Attractive as the Chinese bourse is, some serious risks lurk for Gazprom as it enters Chinese trading floors.
China is a traditional partner of Rosneft, Gazprom's active competitor. In the event of the gas monopoly entering the Chinese market, a sharpening of relations between the two Russian state-owned companies is inevitable.
"Gazprom's entry into the Chinese market is highly prohibitive for Rosneft," Abzalov said. "Above all, because it automatically means the admission of Gazpromneft to China."
The bitter rivalry between Rosneft and Gazpromneft for oil fields in Eastern Siberia is adding massively to the price of the deposits.
"Sometimes the price of a natural resource land plot exceeds the initial quote by ten times," Abzalov said. "So far most of the deposits have gone to Rosneft, but lately Gazprom's subsidiary has stepped forward and began to actively buy up plots."
"Eastern Siberia must supply oil to China," the expert said. "If Gazprom manages to corner the Chinese market on top of everything else, things could look more sour for Rosneft in Eastern Siberia."
Business & Financial Markets
Germany's E.ON intends to acquire full control over OGK-4
On November 15, German energy company E.ON will make an offer to minority shareholders of Russian wholesale generating company OGK-4. At present, E.ON holds a 69% stake in the Russian company of which it wants to become sole owner. Analysts say E.ON could pay between $400 million and $1.3 billion for the remaining stake, but this is unrealistic now.
E.ON will offer OGK-4 minority shareholders to sell their shares at 3.35 rubles per share. In September 2007, E.ON won an auction for the buyout of the newly issued shares and the state-owned stake in OGK-4. It paid $5.8 billion for the stake. The Germans assessed the Russian generating company very highly - $750 per kilowatt of design capacity.
The German company wants to consolidate 100% of OGK-4 shares, and the Russian Federal Anti-Monopoly Service has already approved the transaction. Today, Russian electricity monopoly RAO UES holds a 22.49% stake in OGK-4, the rest being in the hands of minority shareholders.
Andrei Butenko, an analyst with the Aton investment group, estimated that the German company would now have to pay about $2.64billion (1.8 billion euros) for an almost 30% stake in OGK-4. However, experts say that this cannot be done because RAO UES cannot sell its stake until the official completion of its reform, i.e., until July 1, 2008. This means that E.ON can now count only on 8.2% of the company owned by its minority shareholders.
However, there is no certainty that E.ON will be able to complete this task in full, experts say. "Considering the very high price of the offer (4% higher than current market quotations), E.ON may increase its stake by another 5-6% and spend up to $400 million on it, says Semyon Birg, an analyst with the Finam investment company.
In the near future, analysts do not expect any surge in OGK-4 share prices, "although within the 80 days when the offer is valid, their price is likely to rise to 3.35 rubles per share (the price on MICEX yesterday was 3.22 rubles). This price will be a powerful ceiling on the OGK-4 share price," Butenko said.
Next to come is an offer from Italian energy company Enel to OGK-5 minority shareholders through which the Italians want to acquire a 74% stake in the Russian generating company.
Vedomosti
LUKoil launches gas production in Uzbekistan
On Tuesday, LUKoil Overseas Holding Ltd. operating foreign upstream projects of Russia's largest private oil company LUKoil and Uzbekistan's state-owned Uzbekneftegaz said they had started pumping gas on November 8 from the Khauzak sector in the Central Asian country's Bukhara Region via the Dengizkul-Mubarek pipeline.
Both companies are using three drilling units in order to expand onsite gas production and to conduct subsequent prospecting operations.
Russia and Uzbekistan have been implementing the Kandym-Khauzak-Shady-Kungrad gas project under a production sharing agreement since November 2004. LUKoil Overseas and Uzbekneftegaz own 90% and 10% stakes, respectively.
LUKoil-Uzbekistanoperating, a subsidiary owned by LUKoil Overseas, manages the project.
Under the 35-year PSA, investors will receive 50% of high-profit products; however, the government share could reach 80% after the project reaches a previously-agreed profitability threshold.
Proven local gas reserves are estimated at 283 billion cubic meters, and there are plans to produce 207 billion cubic meters of gas by 2042. The entire project requires $2 billion worth of investment.
LUKoil Overseas spokesman Grigory Volchek said initial gas output would total 3 billion cubic meters per year, and that production would peak at 11-12 billion cubic meters in 2012-2013.
He said all gas would be exported via the Central Asian - Central Russian pipeline network but declined to name prospective customers and gas prices.
LUKoil CEO Vagit Alekperov recently said all gas from the project would be sold to energy giant Gazprom on the border between Uzbekistan and Kazakhstan, another Central Asian republic.
Troika Dialog analyst Valery Nesterov said this was a highly important project for LUKoil and a major source of hydrocarbons together with the Yuzhno-Khylchuyuskoye deposit in the Timano-Pechora oil-and-gas province, in northern Russia.
Nesterov said Gazprom would also have to pay $100 for every 1,000 cubic meters of Uzbek gas, and that LUKoil, which was receiving $40 per 1,000 cubic meters for its gas from the Nakhodka deposit in the Yamalo-Nenets Autonomous Area (Northwest Siberia), would certainly profit from the deal.
A Gazprom spokesperson declined to comment.
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