MOSCOW, May 15 (RIA Novosti) Belarus gets tool to pressure West/Putin sets out Baltic policy/Putin orders construction of BPS-2/Medvedev keeps most of Putin's men/Gazprom's reserves to increase by 13%/Global automotive giants to assemble more SUVs in Russia
Kommersant
Belarus gets tool to pressure West
Belarusian President Alexander Lukashenko, who has been resisting Western pressure for a long time, has now threatened the EU with energy sanctions if the latter follows the lead of the US and adopts a harsher policy toward Belarus.
Lukashenko's political results could have won top marks had they been evaluated on the grounds of purpose, resources and outcome, and not by his observance of democratic values. The Belarusian president has retained sufficient popularity over his 14 years in office, and there is still no equal match for him, politically speaking, who could challenge him in Belarus. Over this time, Lukashenko also ensured his country a stable supply of Russian subsidies. Apart from the short period of strain in 2007, when Moscow seemed to have stopped playing the gas-for-assurances-of-loyalty game, relations between the two countries remained stable. At present, Belarus buys Russian fuel at a relatively high price, which is largely compensated by Russian loans. Moscow hardly expects financial dependence to bring Belarusian assets to Russian businesses - it knows only too well that a sovereign state's debt is more of a problem to the creditor than to the debtor.
Lukashenko does not seem particularly afraid of possible Western economic sanctions. He has nothing to fear so far as the oil processed by Belarusian refineries reaches European customers unimpeded, and his country performs its transit function. The existing barriers are easy to overcome, all the more so since there are Venezuela, China, Iran and the Arab nations.
The Russia-Belarus Union State is quite viable because it still only exists on paper. However, Lukashenko has never dropped the idea of making a better alliance deal with Russia. He said in his last state of the nation address: "If I am saying that we are ready to build a union state with Russia, I mean it. It is not a game."
It means that the Belarusian president is still cherishing his dream of heading the Russia-Belarus Union State one day - an idea he had discussed with former president Boris Yeltsin. Lukashenko has hinted more than once that he would have known better how to use Russia's riches than the country's own government.
Analysts even believe that, if Lukashenko had had free access to Russia's media, he could have challenged Dmitry Medvedev's and Vladimir Putin's popularity. "His ratings here would have grown rapidly if he had had access to the Russian media. Moreover, if Medvedev had been running the country without Putin's patronage, Lukashenko would have outstripped him easily," said Leonid Zaiko, director of the Strategy analytical center in Minsk.
Gazeta.ru
Putin sets out Baltic policy
Prime Minister Vladimir Putin said Russia would not export its crude oil via Baltic ports. Analysts called this a tough response to Baltic opposition to Nord Stream, a projected offshore gas pipeline between Vyborg, Russia, and Greifswald, Germany.
According to Putin, all petroleum must be exported through Russian ports. "I hope very much that this will be accomplished in the near future," Putin said, while opening the first stage of the Sever (North) petroleum pipeline in Primorsk, a port on Russia's Baltic coast.
Putin said the Primorsk terminal would handle more petroleum if the Kirishi refinery in Russia's Leningrad Region and other refineries were overhauled on time.
"This means that Russian ports will handle export-oriented consignments previously earmarked for the Baltics," Putin said.
The transit capacity of Primorsk will be boosted from 75 million to 120 million metric tons.
Putin said the Ust-Luga port would become the final junction of the second stage of the Baltic Pipeline System, a Russian oil transport system operated by pipeline monopoly Transneft.
Analysts said the statements highlighted a tough Baltic policy. "This decision has more political than economic aspects," Sobinbank analyst Mikhail Zanozin told the paper. He said Putin was reacting adequately because the Baltic countries opposed constructive cooperation with Russia and were hindering the Nord Stream project.
Zanozin said there was not enough economic motivation for redirecting petroleum flows. "Although this good political move will drain Baltic budgets, Russian ports are still unable to handle more petroleum," Zanozin said.
But he said political aspects were more important. "Nord Stream is less profitable than gas transits via Ukraine. However, political risks and disrupted transits outweigh economic factors," Zanozin said.
According to Zanozin, Moscow does not want to depend on Ukraine and the Baltics.
Vedomosti
Putin orders construction of BPS-2
Prime Minister Vladimir Putin has ordered the construction of the second stage of the Baltic Pipeline System (BPS-2), even though analysts say there is not enough oil for it.
BPS-2 is perceived as an alternative to the Druzhba pipeline, which was built in Soviet times to pump Russian oil to Europe through Belarus and terminals in the Baltic countries.
Russia will honor its commitments to energy consumers in full, but must also adequately react to its partners' demands to raise transit tariffs or their siphoning off of commodities, Putin said yesterday. A way to protect Russian producers is to develop the export infrastructure, he said, in particular building the BPS-2.
The 1,300-km (808-mile) pipeline with a capacity of 50 million metric tons (367.5 million bbl) of oil has been tentatively estimated at $2 billion.
The idea was first proposed in early 2007, when Belarus introduced a transit duty of $45 per metric ton of Russian oil. Moscow accused Minsk of siphoning off oil from the Druzhba pipeline and suspended crude deliveries to Europe via Belarus for a few days.
The Russian government then decided to reduce the country's dependence on the Belarusian transit route by building a second stage of the Baltic Pipeline System.
This spring pipeline monopoly Transneft submitted to the government four route scenarios, but officials were not sure there would be enough oil for the pipe. In April, the Industry and Energy Ministry recommended that the government abandon the project.
However, Putin is convinced there will be enough oil if oil companies increase production after severance tax is cut. The schedule for increasing oil production submitted to Transneft provides for raising production by 67.5 million metric tons (496.12 million bbl) by 2015.
Konstantin Cherepanov from the KIT Finance investment bank said the plan would be fulfilled only if oil companies commission all of their proclaimed projects on time.
Denis Borisov, an analyst at the Solid investment financial company, said BPS-2 would be short of oil if the East Siberia-Pacific Ocean oil pipeline, with a capacity of 80 million metric tons (588 million bbl), comes on stream and oil companies increase oil refining as planned.
Transneft President Nikolai Tokarev told the popular daily Vedomosti that BPS-2 could receive oil from the Vankor deposit in East Siberia and also if 30 million metric tons (220.5 million bbl) of oil was redirected to it from the Odessa-Brody pipeline.
Transneft was not available yesterday for comment, while LUKoil and TNK-BP refused to comment.
Kommersant
Medvedev keeps most of Putin's men
President Dmitry Medvedev's first personnel decisions demonstrate a respect for Vladimir Putin's policies. Analysts say the president's activity in this sphere is "lower than expected."
Five presidential envoys in federal districts, appointed by Putin, have kept their posts, while Vladimir Ustinov, a former prosecutor general and justice minister, has been appointed the presidential envoy in the Southern Federal District.
Medvedev is carrying on the personnel policy of Putin, who preferred to have former security staff as his envoys in federal districts. The president has only transferred Grigory Rapota from the Southern to the Volga Federal District, and appointed Ustinov in his place.
Since the bulk of presidential envoys have kept their posts, this may mean that Medvedev views Putin's policy of relations with the regions as acceptable, and reforms in this sphere are unlikely.
The new president and prime minister will focus on the North Caucasus and Sochi, a city on the Black Sea where the 2014 Winter Games are to be held. The appointment of Ustinov to the Southern Federal District looks logical in this connection. As Russia's Prosecutor General in 2000-2006, he acted in the interests of the Kremlin during the sinking of the Kursk submarine and the notorious affair of the Yukos oil company.
The Kremlin's relations with the parliament and the Constitutional Court will be supervised by those who developed them - Mikhail Krotov, Alexander Kotenkov and Alexander Kosopkin.
"Medvedev's personnel expansion is smaller than expected," said Mikhail Vinogradov, head of the Center for Current Politics in Russia.
Only one key post, of chief of the Kremlin personnel department, remains vacant. Presidential aide Viktor Ivanov, who held that post, has not been reassigned to it.
Dmitry Badovsky, deputy director of the Research Institute of Social Systems, said this could be explained by the Kremlin's desire to review the personnel policy and appoint new people.
"In principle, quite a few new people have been appointed deputies; they will use their positions to gain experience and skills and learn the ropes," Badovsky said.
The business daily Kommersant has cited sources as saying Ivanov has been offered the post of head of the state drug enforcement agency left vacant after Viktor Cherkesov was appointed to a new post.
Business & Financial Markets
Gazprom's reserves to increase by 13%
Prior to the new president's inauguration, Russian gas giant Gazprom received a farewell gift from the government in which Dmitry Medvedev was first deputy prime minister. Nine gas fields of federal importance on the shelves of the Sea of Okhotsk and the Kara Sea and in the Yamalo-Nenets Autonomous Area were transferred to the natural gas monopoly without a tender. As a result, Gazprom's gas reserves will increase by 13%. These gas fields with aggregate reserves exceeding 2.7 trillion cu m will support Gazprom's production after 2020, when its main gas-producing assets are partially exhausted.
Viktor Zubkov, the most likely candidate for the post of Gazprom's chairman of the board, signed the corresponding government resolution on May 6. Under the law on gas supplies, Gazprom may be given access to deposits from the undistributed mineral resource fund without a tender. Licenses for the Antipayutinskoye, West-Tambeiskoye, Kruzenshternskoye, Malyginskoye, North- Tambeiskoye, Tasiiskoye, Semakovskoye, TotaYakhinskoye and Kirinskoye fields will be transferred to Gazprom within a month, the Ministry of Natural Resources and Ecology said. The ministry could not tell whether Gazprom would pay any compensation for the assets received.
These assets will help Gazprom to maintain its production level after 2020: by that time, its present resource base will shrink.
"The assets transferred to Gazprom suit its long-term plans to develop the resources of the Yamal Peninsula and the adjacent shelves," said Mikhail Zanozin, an analyst at Sobinbank. As the monopoly's three major fields (the Yamburgskoye, Medvezhye and Urengoiskoye fields) are getting exhausted, the united gas transportation system will receive gas from the new fields," he said.
Dmitry Alexandrov, an analyst from the Financial Bridge investment company, is of the same opinion. According to his estimates, the minimum cost of the nine fields at an auction could be nearly $1.45bn. Zanozin assesses these assets at $1.2-$1.5bn, or $0.45-$0.55 per barrel of oil equivalent.
$martMoney
Global automotive giants to assemble more SUVs in Russia
Although sport utility vehicle (SUV) production has declined worldwide, things are different in Russia, which leads in SUV sales due to its notoriously rough roads.
Foreign companies are launching various car-assembly projects on the Russian market where few empty niches remain.
It is no longer possible to build new car-assembly plants in St. Petersburg.
In late April, Japanese automotive giant Mitsubishi Motors Corporation and France's PSA Peugeot-Citroen said they would jointly build a plant in the Kaluga Region, north-west of Moscow. This logical decision will make things easier for them and will recoup investment more quickly.
PSA Peugeot-Citroen and Mitsubishi have already built automotive plants in Japan and the Netherlands, respectively.
The Kaluga plant will assemble Peugeot 4007 and Mitsubishi Outlander XL SUVs with a standard platform.
The Taganrog Automotive Plant (TagAZ), the Izhevsk Automotive Plant (IzhAvto) and Severstal-Auto, the car-making division of Russian steel and mining giant Severstal, owned by business oligarch Alexei Mordashov, are manufacturing similar cars and are also promising to assemble General Motors and Suzuki vehicles.
Leading automakers realized long ago that fuel-guzzling SUVs were their worst nightmare. Skyrocketing fuel prices and tougher environmental standards pave the way for compact cars. GM recently said it would assemble 88,000 less SUVs in the United States, the biggest SUV buyer, in July-December 2008.
Russia now has the third largest SUV market in Europe and leads in SUV sales.
Although the PSA request submitted to the Economic Development and Trade Ministry does not specify the Kaluga plant's parameters, market players said the $300 million plant would assemble at least 100,000 cars a year.
Last week, TagAZ said it would start manufacturing 2.6-liter diesel engines using Korean components to a Korean license this June, and that annual output would reach 60,000 engines. Some of them will be installed on Tager and Road Partner vehicles, and the rest sold elsewhere.
It appears that TagAZ is confident in the SUV market's future. Both projects should succeed, unless the quality of Russian roads improves.
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