MOSCOW, November 27 (RIA Novosti) Putin can still seek re-election/ International observers to monitor elections under Russia's terms/ Gazprom could lose its status as global company - expert/ Rosneft to transport oil to China via Kazakhstan/ Russia sets up another super-corporation/ Oligarchs decide on Silovye Mashiny future
Gazeta.ru
Putin can still seek re-election
Vladimir Churov, who heads Russia's Central Election Commission, said Vladimir Putin would not be able to run in the next presidential elections if he steps down ahead of time. Upper house speaker Sergei Mironov did not agree with the statement.
Experts suggest that Mironov was correct from a legal perspective.
Churov argued that if a president steps down before the end of his term, he cannot run in the next elections.
"If a current president resigns ahead of time and an early election is called, he certainly cannot run," Mironov said. "But in this case, we have already called a regular election, which will take place on schedule, so there obviously is a collision here."
Political scientist Stanislav Belkovsky shared his view with Gazeta: "Churov has not studied the law so thoroughly. Anyone who is not president as of the day when the next election date is announced can run for the presidency, which means that Putin will have to step down within the next two days if he really wants to run. But I do not think he will, because Putin is not fond of tragic moves. It would be a tragedy for him to become an outcast in the international community if he did."
The expert emphasized that, after the date of the next election is announced, Putin will lose his chance of running in it for good.
Another expert, Dmitry Badovsky, also shared a scheme Putin could use to enable him to run for the presidency in March: "The March elections could be invalidated if, for example, none of the candidates gets 50% in the second round. In that case, a new election will be called, and Putin will be able to participate if he steps down early."
Nezavisimaya Gazeta
International observers to monitor elections under Russia's terms
The OSCE Office for Democratic Institutions and Human Rights has refused to monitor the December 2 parliamentary elections in Russia. The reasons for the decision, which will be noted in Russia and outside, will eventually become public, writes a Russian official in the popular daily Nezavisimaya Gazeta.
The Office is active throughout the OSCE area in the fields of election monitoring, democratic development, human rights, tolerance and non-discrimination, and the rule of law.
Igor Borisov, a member of Russia's Central Election Commission, said that Russia does not need international observers to proclaim the elections valid. If there is any doubt, the results can be appealed against in court, including the European Court of Human Rights. On an international level such a system for legitimacy is not required, since it is the task of the OSCE Office for Democratic Institutions and Human Rights to monitor elections.
However, the organization is not accountable to the OSCE collegiate agencies and has recently spread its operation to internal political processes in individual countries, which is not part of its mandate. The organization heads have been acting according to their own rules, probably believing that their task in Russia is like that of missionaries, Borisov writes. Russia will hold its parliamentary elections according to its own laws.
Even before December 2, the presidential election campaign will start, drawing attention away from the parliamentary elections. According to Borisov, Russia does not need the world to wonder who its new president is, which is bound to happen if the OSCE Office refuses to monitor the presidential elections.
On the other hand, Russia is not going to back down on the issue of international monitoring and assessment of democratic election procedures. It has won its current position with great difficulty, and despite attempts to impose the Western "golden standard" of democratic elections on it.
Borisov writes that Russia will respect its political commitments, but with due regard for its stance. It will invite representatives of the OSCE Office for Democratic Institutions and Human Rights after the registration of presidential candidates. The organization will have to accept these conditions; otherwise its operation on the money of signatories, including Russia, will become senseless.
Vedomosti
Gazprom could lose its status as global company - expert
The move by the Russian government to peg Russian gas prices to European ones appears incomprehensible, writes Mikhail Korchemkin, general director of East European Gas Analysis.
The higher the prices in Europe the more Russian consumers will pay for their gas. The government appears to be playing for the Gazprom side, and the EU, for Russian consumers.
The pegging of Russian market prices (Gazprom sells 316.3 billion cubic meters annually) to European market ones (161.5 billion cubic meters) is not quite fair and proper.
Gas markets in different countries differ very widely. Even in developed countries the price difference for piped gas can be higher than 50%.
According to BP, the average gas price in the EU in 2006 was $316 per 1,000 cubic meters, and $210 in Canada.
The new methods of adjusting gas prices in Russia also disappointedly match the popular idea of a gas cartel whose purpose is to maintain high natural gas prices in Western Europe.
OPEC countries, while exporting oil at high cartel prices, apply quite different prices in their territories. For example, petrol prices in Saudi Arabia, Qatar and Kuwait are 4-5 times lower, and in Venezuela 25 times lower than in Russia.
The Russian government's pricing policy is doing Gazprom a disservice. Conditions are being created to wipe out the last vestiges of competition among gas producers, while in the rest of the world competition is growing.
Gazprom's own estimates show that by 2030 Russia's share of world gas output will drop from the present 20% to 12%.
In the cosseted conditions of tax perks and absence of competitors in Russia, Gazprom is quite likely to lose its status as a global energy company to become an ailing "gas giant" like AvtoVAZ.
Business & Financial Markets
Rosneft to transport oil to China via Kazakhstan
Next year Russian state-controlled oil major Rosneft will start transporting oil to China via Kazakhstan.
Experts think that Rosneft lobbied for this outcome fearing that the first branch of the Eastern Siberia-Pacific Ocean (ESPO) pipeline will not be commissioned on time. In addition, this agreement will help resolve the pricing conflict between Rosneft and China National Petroleum Corporation (CNPC) because oil transit via the Kazakh pipeline will cost much less than oil transportation by railway.
According to Viktor Khristenko, Russia's Minister of Industry and Energy, it is planned to annually transport up to 5 million metric tons of Russian oil by this route. Today, Rosneft is the only Russian company exporting oil to China which is capable of filling the Kazakh Atasu-Alashankou pipeline with a capacity of 10 million metric tons. Annually, Rosneft supplies about 11 million metric tons of oil to China by rail.
The first branch of the ESPO pipeline is to be commissioned by the end of next year when Rosneft plans to start oil production in the Vankorskoye field (Eastern Siberia). "It is clear that the state is acting in Rosneft's interests," commented Natalia Milchakova, head of the fundamental analysis department at the Otkrytie financial corporation. "There is some uncertainty about the timeframe for building the ESPO pipeline. Rosneft, which will launch oil production in Vankor in 2008, may be left without a sales market as it is more expedient to sell Vankor oil to China but too expensive to transport it by rail."
In 2004, Rosneft and CNPC signed a future contract for supplies of 48.4 million metric tons of oil to China until 2010. Rosneft has already supplied 20.7 million metric tons up to now. Today it is threatening to cancel the contract unilaterally because world oil prices have surged by more than 75% since then. The sides will find it easier to come to terms on oil supplies via the Kazakh pipeline as they will be several times cheaper than transportation by railway," said Alexander Shtok, director of the due diligence department at the 2K Audit - Business Consulting company. "Thanks to a tangible reduction in transportation costs of a part of Rosneft's oil supplies, China may agree to an increase in oil purchasing prices pressed for by the Russian side," the expert added.
Gazeta.ru
Russia sets up another super-corporation
Rostekhnologii, a new holding company set up to promote the development, production and export of high-tech industrial products, may become the main client of Russian industries.
President Vladimir Putin has appointed Sergei Chemezov, previously the head of the state-controlled arms exporter Rosoboronexport and former security officer with whom Putin worked in East Germany in the 1980s, to the post of director general of Rostekhnologii.
In the past few months, Chemezov has been acting as the official in charge of key sectors. He has said that state corporations should control nearly all sectors of the Russian economy, from defense to the manufacturing and marketing of pharmaceuticals. As a result, Putin decided to curtail the new corporation's powers.
The revised bill on its establishment does not include a clause on domestic defense contracts, which Chemezov as former head of Rosoboronexport wanted to control.
However, Rostekhnologii will be one of the most powerful and strategically independent corporations in Russia. It will take over all the assets of Rosoboronexport, including Oboronprom (air defense and helicopter manufacturing), the world's largest titanium producer VSMPO-Avisma, RusSpetsStal, which offers special steels to the defense industry, and a stake in Russia's largest car producer AvtoVAZ. It could possibly incorporate several other strategic companies.
Chemezov will head the new corporation for four years, which will serve as a guarantee against possible political risks after the 2008 presidential elections.
The corporation will have more freedom also because it will not be directly accountable to the government. It will be a non-profit organization, which is very convenient for Chemezov, said Dmitry Abzalov, an expert with the Center for Current Politics think tank. "Officially, it is not a business structure, but a kind of fund," he said.
Rostekhnologii will own stakes in individual companies it will incorporate, which will allow it have a more flexible asset management. It will be able to sell stakes in its subsidiaries and promote their IPOs, Abzalov said.
Chemezov has said that VSMPO-Avisma, AvtoVAZ and Oboronprom will go public in 2009.
Kommersant
Oligarchs decide on Silovye Mashiny future
Billionaire Oleg Deripaska has dropped out of the race for Silovye Mashiny, Russia's leading supplier of power generation equipment (also known as Power Machines). His representative did not submit a proposal yesterday for the third round of the bid for a 25% stake in the company owned by RAO UES.
Therefore, Alexei Mordashov, head of Severstal, a major Russian steel producer, remained the only bidder for the shares. He is currently consolidating the controlling stake in Silovye Mashiny after having bought a blocking stake for 26.5% more than its market value.
RAO UES head Anatoly Chubais said in early October that the electricity monopoly would announce a closed bid for the blocking stake in Silovye Mashiny and would try to get the best possible price. It was not the case, however. Some sources said that Mordashov had paid 5.42 rubles per share, or a total of $486 million (a mere $2 million more than the starting price of $484 million).
Mikhail Pak, analyst with the Investment Group Capital, said RAO UES was in any case selling the shares of Russia's leading producer of equipment for hydro, thermal, gas-fueled and nuclear power plants at a premium of market quotes.
On Monday night, a 25% stake in Silovye Mashiny cost $384 million, that is, the premium was 26.5%. "Given that RAO UES had bought the stake for $101.7 million, the electricity monopoly has now made a good deal," Pak said adding that the bidding still was not transparent enough and the outcome could have been known in advance.
Another expert, Kirill Chuiko from Uralsib also believes that Mordashov's win could have been predicted as early as September, when the latter bought 30.4% in Silovye Mashiny from the Interros Holding. Deripaska, too, had taken part in the bidding. After September's acquisition, Mordashov replaced the head of Silovye Mashiny and established a strategic alliance with the only remaining majority shareholder, Germany's Siemens (25%).
Experts are not even trying to guess how Chubais, Deripaska and Mordashov could finally have reached an agreement and halted the closed bidding process. Whatever the case, Chuiko said, having one major controlling owner will only benefit Silovye Mashiny. As of now, the company's financial status leaves much to be desired, as it posted its highest IFRS loss in 2006.
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