MOSCOW, February 11 (RIA Novosti) 'Putin's Plan' spelled out at last / Nothing new in Russian-Japanese relations / Moscow is bluffing with threats to cut off gas supplies to Ukraine / Societe Generale likely to take control of Rosbank this week / LUKoil gets access to eight gas fields in Uzbekistan / Aircraft carrier project for India can be postponed until 2009
Izvestia
'Putin's Plan' spelled out at last
President Vladimir Putin made a speech last Friday to instruct Russia about its development in the next few decades. The Kremlin's opponents have already dubbed Putin's speech a presentation of his "political will." However, it in fact sounded more like a policy speech for the 2012 presidential campaign.
As a result, nearly 800 guests were leaving the Grand Kremlin Palace convinced they had just heard a national leader who will probably return as president in four years. Putin's strategy is designed until the year 2020 - the year when the fourth president's second term ends.
"The scenario which was so successful in the past eight years, will lead into a blind alley later," Kremlin officials who had helped write the speech said. "We have squeezed out all the benefits possible from the commodities-based model."
A social and economic development program until 2020 should partly explain the projected transition from one scenario to the other. Izvestia's sources said it was being finalized and would be submitted to the government in two or three weeks.
The program envisages a surge in the productivity of labor which is supposed to be achieved through intensive use of innovative technologies. As of now, it is as low as one-seventh of what they have in Germany, for example. It is simply a crime to make Russians work so hard - they have to work seven times more than Germans to do the same thing," Arkady Dvorkovich, head of the Kremlin's board of experts, explained.
After the program is implemented, at least 60% of Russia's should see themselves as middle class, rather than 20-25%, as today.
Our Kremlin sources admitted that the work toward the goals set was seriously hampered by ineffective government practices.
Kommersant
Nothing new in Russian-Japanese relations
Russia does not often have new leaders, and change invariably engenders hopes in Japan and Russia. But these are two different types of hopes, writes a Russian expert on Japan.
Georgy Kunadze, a former deputy foreign minister of Russia and ambassador to Japan, currently a leading researcher at the Moscow-based Institute of World Economy and International Relations at the Russian Academy of Sciences, told the popular business daily that the Japanese hope to settle the problem of "Northern Territories" on their conditions, while Russians hope they will at long last bury the idea.
The main reason why their hopes are regularly thwarted is that neither side has ever tried to revise its policy, Kunadze writes. Japan keeps up the high degree of rhetoric on the territorial problems, while Russia regularly rebukes its eastern neighbor.
According to the expert, Russia does not rise higher than the fifth rung of Japan's hierarchy of external priorities, and remembers Japan only when it has problems with the United States or Europe. Taken together, this is the braking mechanism operated also by the so-called siloviki, who are behaving as if they had long come to terms with each other.
Soon after President Vladimir Putin's first visit to Japan in 2000, a Japanese naval officer was arrested in Tokyo on charges of spying for Moscow.
A year later, when the Russian president and the Japanese premier coordinated the date for their next summit meeting, two Russian air force bombers allegedly overflew, or nearly entered, Japanese air space. Japan ordered its interceptors into the air and sent a note of protest to Moscow, which duly rejected it as ungrounded. The problems were hushed up, but the bad feeling persisted, Kunadze writes.
Russia will soon have a new president, who is to go to Japan for a G8 summit in summer. The Japanese' hopes have been revitalized, and Russia may again look at Japan because it is having problems with the United States and Europe.
As if on cue, Tokyo has arrested an alleged Moscow spy in Naikaku Joho Chosa-shitsu (the Cabinet Secretariat's Information Research Bureau), the only Japanese organization engaged fulltime in gathering and analyzing information on international and domestic affairs. And a Russian strategic bomber has allegedly flown into, or nearly entered, Japanese air space. Japanese interceptors were sent in hot pursuit and Tokyo issued a note of protest, which Moscow duly rejected.
A strange coincidence, if not a trend, don't you agree? And who needs this cheap comedy anyhow?
Moskovsky Komsomolets
Moscow is bluffing with threats to cut off gas supplies to Ukraine
In a repeat of a two-year old scenario, Russian gas monopoly Gazprom is again threatening to cut off gas supplies to Ukraine at the risk of undermining gas deliveries to Western Europe. However, this new inter-Slavonic "gas war" is not what it seems to be.
Actually, this is not a conflict of two countries but a battle of several political clans. In general, Russia's position as a "hostage of Ukrainian political games" suits the Russian political elite. Therefore, all Russia's threats to cut off oil supplies for a long time are nothing but a bluff.
Yulia Tymoshenko, who has again become Ukraine's prime minister, is trying to get "a key to the Ukrainian economy" - the gas distribution and transit system. In order to achieve this, the present mediator between Ukraine and Gazprom, which was favored by Viktor Yanukovych's government, must be ousted from the game.
Why cannot Gazprom fulfill the functions of Rosukrenergo, a mediator with an unclear structure of ownership? The advocates of the present state of affairs in Russian-Ukrainian gas relations can produce thousands of financial and technical reasons making this absolutely impossible. However, experts say that all the technical problems can be easily resolved. It is another case that the presence of mediators more than meets corporate interests of the Russian elite. The thing is however that the presence of mediators opens wide opportunities for truly great undertakings.
However, the Ukrainian elite is not averse to them either, therefore Tymoshenko's statements on the "harm of mediation" should be regarded as nothing but a "smoke screen." Her real aim is to replace one mediator with another.
There is also the West, which is dead tired of the situation when its gas supplies depend on periodic squabbles between Russian and Ukrainian partners in the gas business. However, experts in European capitals know for sure that Moscow cannot cut off gas supplies via Ukraine for long.
It is technically impossible to temporarily reduce gas production on gas fields. If the operating gas pipelines are cut off, oil should either be liquefied or pumped into underground storage facilities. However, Russia does not yet have big LNG plants, or a powerful gas tanker fleet. According to expert estimates, its vacant underground gas storage facilities will be filled in four or so days, after which Moscow will be faced with a dilemma - either to resume gas supplies to the "sly Ukrainians" or burn its gas.
Vedomosti
Societe Generale likely to take control of Rosbank this week
A Cypriot court has lifted a ban on the sale of Rosbank shares and the French bank Societe Generale could gain control over the Russian bank this week.
In 2006, SocGen bought from Vladimir Potanin and Mikhail Prokhorov 20% minus 1 share of Rosbank with an option on another 30% plus 2 shares for $1.7 billion. The French exercised the option and planned to close the deal in mid-February, but a division of the Potanin-Prokhorov business upset their applecart.
Rosbank shares were sold by the Cypriot KM Technologies (69.9%). It is a subsidiary of the KM Invest foundation, which owns the partners' assets (including stakes in Norilsk Nickel, Polyus Gold, Open Investments and others worth $14 billion).
Potanin and Prokhorov cannot yet decide how to divide their business. In December, KM Invest's board, thanks to Potanin's deciding vote as board chairman, approved the sale of some of the assets, but Prokhorov disagreed. Following claims filed by his Onexim Group the arbitration courts in Moscow, the British Virgin Islands and Cyprus in December banned the sale of nearly all of KM Invest's assets, including Rosbank shares, as a provisional remedy.
But at the end of last week the district court in Limasol, Cyprus, lifted the ban on the sale of Rosbank, said two sources close to Interros. The application to the court was filed by KM Invest, one of the sources said. This was confirmed by a source close to KM Invest. Later, Onexim joined in the appeal, he added. An Onexim spokesman said only that the group was acting by agreement with SocGen.
KM Invest spokesman Konstantin Vorontsov reaffirmed that the ban on the sale of Rosbank shares had been lifted, adding that other KM Technologies assets were banned from being sold.
The court ruling will enable SocGen to close the deal this week and bring its stake in Rosbank to a control level, all four sources said. A source in Rosbank said this will take place in the near future. Stephanie Carson-Parker, a spokesperson for Societe Generale, confirmed the bank's plans to clinch the deal in mid-February.
Business & Financial Markets
LUKoil gets access to eight gas fields in Uzbekistan
LUKoil Overseas, the overseas oil and gas production arm of Russia's largest private oil company LUKoil, has announced the acquisition of a controlling stake in Soyuzneftegaz Vostok Ltd., a Soyuzneftegaz subsidiary and a member of the oil and gas PSA in Uzbekistan's South-West Gissar basin and Ustyurt Region. A 36-year production sharing agreement was signed on January 23, 2007.
Experts attribute LUKoil's interest in foreign projects to a slowdown in Russia's mineral extraction. They also said the deal must have been approved by Gazprom.
Soyuzneftegaz Vostok holds licenses to eight fields with geological resources estimated at around 100 billion cubic meters of natural gas according to Russian classification. There are plans to produce around 3 billion cubic meter of gas a year at these fields within four years. All the gas extracted is to be exported via Gazprom's main pipelines.
Total investment in the project is estimated at $700 million. Production at two of the South-West Gissar fields began in the summer of 2007. Around 700,000 metric tons of crude oil is to be annually extracted in the license area once the project reaches its target capacity.
LUKoil is participating in two more projects in Uzbekistan, Aral and Kandym-Khauzak-Shady-Kungrad. Experts attribute LUKoil's interest in foreign projects to a slowdown in Russia's mineral extraction and a delayed launch of the new oilfields in Russia's northeast republic of Komi. LUKoil increased production by a mere 2.5% in 2007, to about 14 billion cubic meters - that, after a 140% growth in 2006.
"The fall in natural gas production is a nationwide tendency," said Natalia Milchakova, head of the fundamental analysis department at the Otkrytie brokerage. She said she expected LUKoil's total gas output to exceed 23 billion cubic meters in 2011, its overseas projects included.
State monopoly Gazprom, which is dominating gas supplies to Russia's domestic market, plans to export the bulk of its gas in the future, according to Konstantin Cherepanov, an oil analyst at the CIT Finance investment bank. "Therefore, LUKoil and Novatek could increase their domestic sales. With the programmed growth in the global gas prices and extremely low transportation costs, this should be very promising," he added.
Kommersant
Aircraft carrier project for India can be postponed until 2009
India may allocate about $600 million of the additional $1 billion needed to modernize the Admiral Gorshkov aircraft carrier. The issue will be discussed during Prime Minister Viktor Zubkov's visit to India, which starts tomorrow. The project will be put on ice until 2009, with the supply deadline put off from 2012 to 2013.
The hull of the Vikramaditya (formerly Admiral Gorshkov) was turned over to India free of charge in 2004, on the condition that it will be modernized at the Sevmash shipyard in the northern Arkhangelsk Region. The contract is worth $1.5 billion, of which some $700 million is to be spent on modernization and the rest on the acquisition of 16 MiG-29K/KUB ship-borne fighters.
Denis Manturov, deputy minister of industry and energy, told the business daily that India was prepared to provide $500-$600 million additionally for the modernization of the Vikramaditya. A source in the Indian Defense Ministry told The Times of India the scale of work had been underestimated at the time of signing the contract.
Manturov said India cannot provide the additional funds sooner than in 2009.
This "will delay the ship's commissioning for a year, from 2012 to 2013," said a source at Sevmash.
The Russian Industry and Energy Ministry says $1 billion is needed to complete the project. "Rosoboronexport plans to negotiate the provision of the remaining funds with India, because the scope of work needed to be done on the carrier has been expanded," said a source in the United Shipbuilding Corporation (USC).
A source in a branch department said the Russian government had received proposals on the financial rehabilitation of Sevmash before its corporatisation and incorporation in the USC, which does not imply financial assistance to the completion of the Gorshkov project.
Vinay Shukla, chief of the Press Trust of India's Moscow bureau, said India was unlikely to pay more than $500-$600 million, which, in his opinion, should be enough. He said Sevmash was probably trying to shift its debts under other contracts to India, and that the Russian government should make up the difference.
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