MOSCOW, February 27 (RIA Novosti) U.S. missiles can reach Moscow in 11 minutes - expert / Gazprom cannot grant wishes of all participants in South Stream / Gazprom fights Ukrainian PM for access to local market / New energy monopoly to emerge on market in summer / GM, GAZ to team up to make economy cars / India to choose between Russian and American aircraft carriers
Nezavisimaya Gazeta
U.S. missiles can reach Moscow in 11 minutes - expert
Vladimir Vasilyev, assistant professor of the radio-electronic warfare chair at the Russian Strategic Missile Force's Peter the Great Military Academy, said the United States, which already had missile interceptors in North Dakota and Alaska, would soon deploy similar systems in the Czech Republic and north-eastern Poland.
He said the three-stage GBI-3 ground-based interceptors would be able to destroy Russian inter-continental ballistic missiles during their boost phase, and that one GBI-3 missile launched from Poland could reach Moscow, Nizhny Tagil in the Urals area and Novosibirsk in Western Siberia in just 11, 15 and 21 minutes, respectively.
Vasilyev said the U.S. missile-defense system in Eastern Europe featured the rather vulnerable In-Flight Interceptor Communications System (IFICS), and that two separate IFICS centers were needed to ensure reliable remote control and communications in adverse weather conditions affecting the propagation of centimeter and millimeter band radio waves.
Washington plans to deploy seven IFICS tandems depending on the number of missile defense areas in the United States and elsewhere, Vasilyev said.
He said the United States was reluctant to disclose the location of its IFICS centers, the most vulnerable missile defense elements. Unless they are deployed in Eastern Europe, it would be appropriate to say that the silo-based GBI-3 missiles serve entirely different purposes, Vasilyev told the paper.
He said they could be used to destroy military satellites launched from the Plesetsk space center in the Arkhangelsk Region, northern Russia, and that they had sufficient range to hit strategic installations west of Novosibirsk.
Gazeta
Gazprom cannot grant wishes of all participants in South Stream
Russia has nearly reached agreement with the interested countries on the construction of the South Stream gas pipeline. However, experts think that the rivalry between the project participants may hinder the implementation of the project.
The South-European gas pipeline (or South Stream), 900 km long, will run across the Black Sea. It will branch off in Bulgaria, with its northern section to run from Bulgaria via Romania, Hungary and the Czech Republic to Austria (with the possibility of supplies to Germany), and its southern section to be directed towards southern Italy. The feasibility study for the project is to be completed this year and the gas pipeline is to be commissioned in three years.
Analysts say that the South Stream pipeline will be built anyway since there is a high demand for Russian gas in the countries of southern Europe. At present, the stability of gas supplies from Russia to Europe largely depends on Ukraine, which is taking advantage of its position as a transit country and tries to put pressure on Russia every now and then.
Russia is trying not to succumb to Ukraine's pressure but the threat of the termination of gas supplies to Europe remains. The Russian South Stream and Nord Stream gas pipeline projects will tangibly reduce Ukraine's influence on gas transit to Europe.
However, the future of the South Stream project is still uncertain. While Nord Stream was opposed from the outside (for instance, Estonia tried to hinder it with environmental experts' findings), South Stream may suffer from the participants' internal conflicts.
"Many countries want to participate in the project and they are competing now, trying to make a better offer. It would be useful for Russia to sign agreements with Austria and France, as Austria will give Russia access to the markets of Central Europe, while France itself is a major market. Besides, the conclusion of an agreement with Gaz de France will strengthen Russia's positions in France because GDF is a strong lobbyist," said Dmitry Abzalov, an expert at the Center for Political Studies.
However, according to Abzalov, each partner will not only try to make a better offer, it will also try to demand better terms for itself. Gazprom may prove incapable of granting everyone's wish.
Nevertheless, the forecast for the South Stream project are optimistic. "Serbia, Hungary and Bulgaria are Russia's reliable partners. Therefore, the South Stream project will be easier to implement than Nord Stream," Abzalov said.
Kommersant
Gazprom fights Ukrainian PM for access to local market
Russian gas monopoly Gazprom is again threatening to limit supplies to Ukraine, this time from March 3. The new gas tensions between Moscow and Kiev have to do with the latter's debt and its reluctance to abide by the agreements reached by the two presidents on the new scheme of supplies. Prime Minister Yulia Tymoshenko still refuses to give Gazprom access to Ukraine's domestic gas market, which would mean $150-$200 million net profit a year.
The Ukrainian government announced it had cleared the $1.5 billion 2007 debt for Russian gas on Tuesday night, but Gazprom only confirmed the receipt of $280 million.
On the other hand, a source in the oil and gas department of Ukraine's Industry and Energy Ministry told Kommersant that the debt was not the key problem and that Gazprom made its ultimatum after Tymoshenko's Cabinet had once again rejected its downstream sales JV plan.
Ukraine's First Deputy Prime Minister Alexander Turchinov said last Friday that the country's government had approved a set of measures to shut all intermediaries out of its gas market. According to the plan, Ukraine's Naftogaz will be the only company allowed to sell up to 30 billion cubic meters of natural gas to local industrial consumers, that is, at the most expensive prices. Neither the UkrGazEnergo joint venture, nor the projected Gazprom-Naftogaz JV which was to be established on February 14, will have the relevant permits anymore.
"We do not think there is a need to set up a joint venture to help Naftogaz operate on the domestic market. Naftogaz is perfectly capable of working on its own," Turchinov said.
In fact, Gazprom and Tymoshenko are fighting over $150-$200 million, the official annual net profit of UkrGazEnergo.
Vladimir Fesenko, head of the Penta applied research center, said Tymoshenko would have to sign the new JV deal eventually.
"The Russian monopoly is perfectly satisfied by the agreements reached between the two presidents, Vladimir Putin and Viktor Yushchenko, while Ms Tymoshenko is fighting at two fronts, simultaneously against Gazprom and Yushchenko," said Danil Shevelev, director of the Ukrainian gas trading company United Gas Group. She has no chance of winning, he added.
Business & Financial Markets/Gazeta.ru
New energy monopoly to emerge on market in summer
Russian energy giant Gazprom and Siberian Coal Energy Company (SUEK), Russia's largest coal producer, have ultimately agreed to pool their power generating and coal holdings. SUEK will issue new shares which will be all bought up by Gazprom's subsidiaries, with the result that the gas giant will become the owner of 50% plus one share of SUEK stock. The assets, estimated by experts at $20 billion, will then be offered to the public.
In February of last year, Gazprom and SUEK agreed to set up a joint venture with an authorized capital made up of power and coal assets. But they failed to agree on the principles of the running of the future company. Also, the Federal Anti-Monopoly Service firmly opposed the venture. Its head Igor Artemyev threatened to block the deal.
Yesterday the sides announced that the disputed points had been settled. SUEK will issue new stock that will be all taken up by Gazprom's subsidiaries, which will become owners of 50% plus one share of SUEK.
As a result, a new energy monopoly is likely to emerge on the market this summer following the disappearance of national power grid Unified Energy Systems (UES).
Semyon Birg, portfolio manager at Alfa Capital brokerage, has calculated that "the installed thermal power capacities of such a company will be 25 GW, or more than of the two other major power market players: HydroOGK (24 GW) and Rosenergoatom (23 GW)."
The new coal and energy company will take the lead in thermal power generation. Bank of Moscow analyst Dmitry Skvortsov said: "The joint venture will not only control over half of Russia's generating plants, but nearly all fuel (gas and coal) supplies to them."
The establishment of a new monopoly actually under the state's thumb runs counter to the logic of Russian power reform. As planned by reform navigator Anatoly Chubais, head of UES, all thermal power capacities must go from the state into private hands. That was why he was so bitterly opposed to the venture, calling it a big mistake by the government.
Opponents of the new monopoly are unlikely to resist its appearance: the venture already has the blessing of the authorities. First Deputy Prime Minister Dmitry Medvedev, a presidential candidate, stressed on Tuesday that the venture benefitted both the state and Gazprom and SUEK shareholders.
Enjoying such support, Gazprom and SUEK are already planning an IPO of the new company. Skvortsov said that with coal prices growing the company's capitalization would reach $20 billion. Birg's estimate is more modest - $15 billion to $17 billion.
Vedomosti
GM, GAZ to team up to make economy cars
General Motors is completing negotiations with Russia's GAZ Group to set up a joint venture to manufacture economy cars. The major auto-making group, owned by billionaire Oleg Deripaska's Russian Machines holding, will make a final decision in the next few weeks. Experts suggest that if the partners end up launching the project, Chevrolet and Renault will account for equal shares of the Russian car market.
Two sources told Vedomosti that the JV's production facility would be located in the Nizhni Novgorod region in the Volga area. The partners have not decided how they would split the stakes yet. One of the sources said the project would require substantial investment from the GAZ Group, around $1 billion, as it would involve building additional production facilities with a capacity of 50,000 cars a year, which could be later expanded to 300,000 cars a year.
The partners have set themselves a goal of designing a car with a price below $10,000, the sources said. One of them said, however, that they could still fail to reach an agreement, because the project might turn out economically inefficient.
The partners will have to work hard to lower costs, Yevgeny Bogdanov, an auto analyst at AT Kearney, a global strategic management consulting firm, said.
If GM and GAZ Group reach a deal, their model will be a real rival to Renault in Russia, said Alexander Agibalov, managing director at the AG Capital brokerage. Last year, Russians bought 67,844 Logans (260,000 rubles and up). In addition, Renault is currently in negotiations with Russia's largest automaker AvtoVAZ to acquire a blocking stake in that company and launch the production of Renault models, economy cars included, at AvtoVAZ facilities.
The 300,000 cars GAZ plans to produce a year is an ambitious project, said Agibalov. If the partners implement it, Chevrolet and Renault will have equal shares of the Russian car market.
Kommersant
India to choose between Russian and American aircraft carriers
India will reportedly be offered the aircraft carrier USS Kitty Hawk, due to be decommissioned next year, for free if it buys 65 Boeing F-18 Super Hornet fighters for it.
The fighters will take part in the $10 billion tender announced a year ago by the Indian Defense Ministry for the acquisition of 126 aircraft for its Air Force.
Experts say that India, for which Russia is modernizing its air-capable cruiser Admiral Gorshkov, commissioned in 1987, is unlikely to accept the American offer.
Late last week, an Indian delegation led by Defense Secretary Vijay Singh visited Russia. A source at the Sevmash shipyard, which is modernizing the cruiser, said the delegates had been convinced that India should pay $1 billion more (the initial price of the contract was $700 million), although it planned to pay only $500-$600 million.
A source cited by the business daily Kommersant at the Indian Embassy in Moscow confirmed that New Delhi would pay more than $600 million. The carrier is due to start two-year trials in 2010 and be turned over to the Indian navy in 2012.
Vinay Shukla, chief of The Press Trust of India's Moscow bureau, said the United States had not proved to be a reliable long-term partner. It had banned military deliveries to India several times, including in November 1997 after a nuclear bomb was tested in India. That embargo was lifted only in 2006.
Shukla said USS Kitty Hawk did not fit India's military doctrine, according to which the navy should have three aircraft carriers - the modernized Admiral Gorshkov and two Indian-built carriers designed for carrier-led groups with such planes as the MiG-29K. The official said that USS Kitty Hawk would not fit the configuration.
Konstantin Makiyenko, an expert at the Russian Center for Analysis of Strategies and Technologies, said the Kitty Hawk was an old vessel and therefore its maintenance and use would be very expensive.
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