What the Russian papers say


MOSCOW, April 21 (RIA Novosti) Moscow drafts softer charter for gas cartel/ Putin sends Aeroflot back to negotiate with Alitalia/ Russian shelf will need $2.64 trillion to develop/ Russia ends trade war with Georgia/ Putin to have one more instrument of power/ Putin denies romance rumors, Moscow newspaper suspended


Moscow drafts softer charter for gas cartel

Russia will present its draft charter of the Gas Exporting Countries Forum (GECF), which it wants to become a gas OPEC, at an April 28 meeting in Tehran.
Unlike Iran's draft modeled on the charter of the Organization of Petroleum Exporting Countries, the charter elaborated in Moscow presents GECF as the international floor for elaborating the gas price formula and discussing new gas routes.
Experts say it will be very difficult for potential gas cartel members to agree with each other.
Russia's Gazprom and Economic Development and Trade Ministry say GECF is quite unlike OPEC. "We don't need a cartel agreement," they said.
Moscow advanced its current initiative in response to the Iranian vision of the forum's future presented in December last year. According to sources in the Russian government and Gazprom, the Iranian draft is very similar to the OPEC charter. Several Russian ministries that have analyzed it have rejected the document as unacceptable.
The newspaper's sources in government agencies cannot say which of the two drafts will be approved at the GECF meeting in Moscow in June. The potential members of the gas OPEC have widely different interests and expectations.
Tripoli supports the idea of an organization of gas exporting countries similar to OPEC, Libyan leader Muammar Qaddafi said at a party organized in honor of Russian President Vladimir Putin last week. He said that the new organization should help countries hit by skyrocketing oil prices, above all in Africa.
Experts are wary of the idea of a gas OPEC. Vladimir Milov, president of the independent Moscow-based Institute of Energy Policy, said that in the next ten years gas suppliers would be linked with gas consumers with direct pipelines, very few of which cross.
"Qatar is the largest [gas] supplier to the United States and Britain, while Algeria mostly delivers its gas to Spain and Italy, and there is no way they can exchange their clients," Milov said.
Besides, there is growing competition in gas routes.
"As soon as Russia announced its South Stream project [designed to pump Central Asian natural gas to Europe], Iran said it could supply gas for the Nabucco pipeline [bypassing Russia] and started signing bilateral agreements on gas supplies to the European Union via the trans-Adriatic gas pipeline from Turkey to Greece and later possibly to Italy."
According to Milov, "one cannot expect rivals to coordinate their delivery routes."

Vedomosti, Nezavisimaya Gazeta

Putin sends Aeroflot back to negotiate with Alitalia

Silvio Berlusconi's reelection gives Russian national carrier Aeroflot a chance to eventually buy Alitalia, the nation's flagship carrier, but the Russian national carrier does not seem thrilled by the prospect.
President Vladimir Putin said at a joint new conference with Italy's prime minister-elect on Friday that Aeroflot was ready to resume talks on its possible participation in the privatization of Alitalia. He cited a recent conversation with Aeroflot's board chairman, Viktor Ivanov, who is also a presidential aide.
Berlusconi responded that the Italian government was in negotiations with Air France, but said he did not rule out establishing an international consortium which could include Aeroflot.
Aeroflot has made no comment except for director general Valery Okulov's comment on Thursday that the company was unlikely to participate in the auction.
"I believe that we have gained useful experience from taking part in the Alitalia privatization tender, but we have information that does not encourage us to try and bid for a second time," he said.
From an economic viewpoint, buying the government-owned stake in a troubled Alitalia is pointless at the moment, said a source in Aeroflot. The Italian carrier's financial condition deteriorated further in the past 12 months, with its capitalization decreasing 40%.
"But we'll resume the negotiations if they tell us to," the source sighed. According to him, it would be ideal to establish a consortium with another company, to minimize risks. Aeroflot would prefer Air France-KLM as a partner, especially because all the four companies are members of the SkyTeam airline alliance.
A year ago, Aeroflot made its first attempt to acquire the government interest in Alitalia. However, last June, the Russian carrier withdrew from the bidding because Italy's Finance Ministry set exorbitant conditions on the eventual buyer: the best price and a compulsory offer to the remaining shareholders at the same price, as well as huge fines for deviations from the company's business plan. Two more suitors exited the bidding following Aeroflot's pullout.
In the fall, Alitalia tried to call Aeroflot back, and in December its board approved a deal with Air France, which later fell through.
Yevgeny Shago, chief analyst at Ingosstrakh Investments, said it was hard to estimate the 49% stake in Alitalia, which could be worth "1 euro or 1 billion euros" now.


Russian shelf will need $2.64 trillion to develop

Rosneft, which following the latest changes to legislation is to develop the Russian shelf together with Gazprom, has estimated the required investments: they will run to 61.6 trillion rubles ($2.64 trillion) until 2050.
This is two and a half times Russia's 2007 GDP, or in yearly terms, almost double Gazprom's total investment program. Independent estimates show that even by 2020 the shelf's share in oil output will not exceed 7 to 10% of the total.
According to Rosneft President Sergei Bogdanchikov, $680.4 billion will have to be invested in geological prospecting, and $1.96 trillion in development.
But the $2.64 trillion is not the entire investment sum needed. It could increase by 16% if Russia bolsters its claim to disputed areas of the continental shelf.
The area in question is a "grey" zone in the Barents Sea covering 155,000 square kilometers and claimed both by Russia and Norway, a territory between the shelf's external border in the Arctic and the border of Russia's 200-mile economic zone where the Mendeleyev elevation and the Lomonosov Ridge are located, as well as areas in the Bering, Azov, Black and Caspian seas.
The total resources of the problem shelf zones are estimated by Rosneft to be 879 million metric tons of oil, and 6.14 trillion cubic meters of gas. Their development up to 2050 will require another $415.06 billion: $115.53 billion for exploration and $299.53 billion for development.
Rosneft does not explain who is going to finance the development. The Natural Resources Ministry has hinted that the budget will not be able to finance even the geological prospecting, which makes up the smaller part of the supposed investments. Gazprom's 2008-2010 investment program ($103.55 billion over three years) does not provide for investments on the scale indicated by Rosneft.
Mikhail Korchemkin, an analyst with East European Gas Analysis, said that if all shelf investments were to be made by the government and state-owned companies, Russia would have to give up not only the Sochi Winter Olympic Games, but also its housing and all other national programs.
"By indicating such a scale of spending, state-owned companies imply that shelf sections should be handed to them either at low cost or for free, and that they should also be granted maximum privileges," said Valery Nesterov from the Troika Dialog brokerage. In his view, by 2020 the shelf's share in Russian oil production will not surpass 7% to 10%, compared with today's 2.7%.
"It would be wiser," he said, "if the state channeled an insignificant part of the funds necessary to develop the shelf into raising the recovery rate from the already explored fields from 27% or 30% to 35%." In Nesterov's view, the effect would be comparable to the development of the shelf.


Nezavisimaya Gazeta

Russia ends trade war with Georgia

On Friday, President Vladimir Putin abolished economic sanctions against Georgia, imposed in October 2006. Analysts say the Kremlin was making a goodwill gesture to the West.
Tbilisi, which would be happy if the sanctions were lifted a week ago, believes Moscow will use a stick-and-carrot policy after President Putin ordered the government to establish special economic and administrative relations with the self-proclaimed republics of Abkhazia and South Ossetia.
Alexei Makarkin, deputy general director of the Moscow-based Center for Political Technologies, said the decision to lift sanctions was logical, because they were pointless, and because Russian authorities had failed to prevent Tbilisi from cooperating with the West and to dissuade it from joining NATO.
"Constant but futile pressure tactics lead nowhere," Makarkin told the paper.
He said the latest decisions were a goodwill gesture with regard to the West, rather than Georgia. "Russia must show that its decisions concerning South Ossetia and Abkhazia are not directed against Georgia," he told the paper.
Alexei Malashenko, a member of the Moscow Carnegie Center's academic council, said Moscow had started implementing its own Georgian strategy, and that the decision to abolish sanctions was probably motivated by a behind-the-scenes deal between Putin and his Georgian counterpart, Mikheil Saakashvili.
It is hardly surprising that the Georgian president did not react emotionally to Moscow's plans concerning the two breakaway republics.
"Russia is striving to improve bilateral relations but does not deviate from its principled stand as regards Georgia's accession to NATO and cooperation with Abkhazia and South Ossetia," Malashenko told the paper.
He said Moscow was now pursuing a "two-pronged policy" with regard to Georgia.


Putin to have one more instrument of power

The Russian government is drafting a plan for economic macro-regions, which will be effective only if the federal center allows them to keep their earnings for subsidized regions, which is unlikely.
Therefore, the new division of the regions will be a political instrument strengthening the power of Vladimir Putin in his role as head of the next government.
According to the online newspaper Gazeta.ru, the idea of economic regions is being broadly discussed in the government and could be the first decision of Dmitry Medvedev as Russia's new president.
There should be 10 macro-regions within the borders of Russia's economic regions, to be ruled by the governors of large and economically advanced regions within the new entities. These governors will be granted the status of deputy ministers for regional development.
At the same time, Russia will continue to be divided into seven federal districts with the president's envoys in charge.
Economists say the effect of macro-regions will be most likely political, giving the new government led by Vladimir Putin a new instrument for influencing the regions.
Oksana Goncharenko, an expert at the Center for Current Politics in Russia, said: "Nobody has substantiated the economic effect of the project."
Alexander Deryugin, in charge of inter-budgetary relations at the Center for Fiscal Policies, said: "If a poor region were united with a rich one, the poor region's revenues would not grow, while the rich regions would have more outlays."
"Vast federal funds will be invested to level off the regions' development standards. This process has no relation to economic efficiency and is highly unprofitable economically-wise," Deryugin said.
Experts are balk at the idea of "super-governors," arguing that the fight for new powers within the regional authorities will not benefit economic development.
According to Deryugin, "competition is good in business and market economics, but not in state guidance." Moreover, it can undermine the regions' governance, contrary to the proclaimed political goals.
"We should either reform the institution of the president's envoys into economic regions, or cancel them altogether," he said. "The parallel existence of the two systems would be ineffective. They would keep pulling the blanket onto themselves, so that much time and administrative resources will be spent not on solving problems, but on determining who is the boss."


Putin denies romance rumors, Moscow newspaper suspended

A Moscow newspaper that reported Vladimir Putin had divorced his wife and planned to marry an Olympic gymnast this summer was closed by its publishers on Friday, just hours after the Russian president angrily denied the report.
Moskovsky Korrespondent said last week that Putin had secretly divorced his 50-year-old wife, Lyudmila, and would wed Alina Kabayeva, a 24-year-old Olympic rhythmic gymnast gold medalist, on June 15 at Constantine Palace in St. Petersburg.
The 55-year-old Kremlin leader reacted furiously when asked about the report at a news briefing in Sardinia with Italian Prime Minister-elect, Silvio Berlusconi.
"I have always reacted negatively to those who with their snotty noses and erotic fantasies prowl into others' lives," Putin said.
Until the news briefing in Italy, most of the Russian media had not touched the story in Moskovsky Korrespondent, a racy tabloid owned by pro-government deputy and businessman Alexander Lebedev.
On Friday, publisher National Media Company said it had suspended publication until it had found "a new concept" for the title. The newspaper's website was closed at 9.00 p.m. that same day.
Artyom Artyomov, head of the National Media Company managing Lebedev's assets, said the move had nothing to do with the reported romance.
"There is no question of any political motivation behind the decision to suspend the newspaper's publication," he said.
Artyomov said employees would be told about the suspension on Monday.
He said the loss-making newspaper had received tremendous investment, but that only 45% of its print run was being sold.
The Kremlin administration said it had nothing to do with suspending the newspaper's publication. According to deputy presidential spokesman Dmitry Peskov, media owners were supposed to shut down publications or to continue funding them.
He said the alleged wedding report was typical tabloid rubbish, and that any self-respecting paper could have phoned the presidential press service for an official comment pending publication.
Igor Yakovenko, Secretary-General of the Russian Union of Journalists, said the owner became scared and decided to suspend the paper, which was first published in September 2007.
Yakovenko said Lebedev had, most likely, assessed publication risks, all the more so as the paper was not his core asset.
"It is very easy to target a successful businessman in Russia. The authorities have reminded Lebedev that banking is his priority," Yakovenko told the paper.

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