MOSCOW, May 20 (RIA Novosti)
Moscow's anti-Saakashvili rhetoric may help him win elections/ New anti-corruption effort will break Putin's system/ Plans to build Transcaspian pipeline are taking shape/ Gazprom to sell gas to Belgian companies/ Metalloinvest to list 25% stake, Norilsk Nickel merger on hold/ Gazprom CEO earned $7 billion last year
Kommersant
Moscow's anti-Saakashvili rhetoric may help him win elections
It was reported shortly before the May 21 parliamentary elections in Georgia that a "secret plan" exists to normalize Georgian-Abkhazian relations, writes a Russian analyst. But few people believe in miracles promised before elections, and the general impression is that the situation around the breakaway republics will get worse.
Alexei Malashenko, an expert at the Carnegie Moscow Center, writes in the popular business daily Kommersant that the National Movement - Democrats, the ruling party in Georgia, is unlikely to win as many seats as it has now, if it plays fair.
The Georgian authorities claim the people love the party, which needs an "external factor" to win additional votes. Malashenko writes that this factor is the Abkhazian and South Ossetian problems, whose settlement has not progressed since Mikheil Saakashvili came to power during the "rose" revolution.
According to his colleagues, the Georgian president has recently had a difficult conversation with Russian Prime Minister Vladimir Putin. Such conversations rarely bring good results, the Russian expert writes. Russian peacekeepers have been ordered to act according to the contingency plan, which in plain English means to prepare for a military operation.
The provocation may benefit Saakashvili, who intends to use the external threat to consolidate Georgian society around the party of power, Malashenko writes. The idea is very old: how can society be rocked at a time when external enemies are trying to destabilize it?
Moscow is repeating its old mistake, because its aggressive anti-Saakashvili rhetoric may help the Georgian leader win the parliamentary elections, the analyst concludes.
Gazeta.ru
New anti-corruption effort will break Putin's system
President Dmitry Medvedev has instructed the government to develop a systematic anti-corruption program, which, if implemented, will probably dismantle the system of government created by former president Vladimir Putin. If Medvedev has the nerve to defeat corruption, he'll bring about a major change in the country's policy rather than the continuity promised.
Medvedev spoke harshly and wisely at a recent anti-corruption meeting in the Kremlin: "We must do something. Enough dawdling! Corruption has grown into a systematic problem, so we must come up with a systematic solution."
His very statement contained direct recognition of the fact that corruption today has infiltrated the very state machine system and, in a broader sense, it is plaguing interaction between society and economic entities, on the one hand, and the state, on the other. It is no longer an exception to the rule or a deviation from the norm.
On the other hand, one can hardly expect immediate success in fighting the evil which is a "threat to national security" and "corrodes the business community," according to President Medvedev. For example, although the president has declared "a transparency for all procedures related to state contracts, tenders and administrative regulations," Gazprom was awarded nine operating licenses without any bidding in early May. The Russian gas giant, where Medvedev was once a board member for a long time, obtained nine licenses in addition to the earlier acquired huge Chayanda deposit, which it is unlikely to be able to tap in the next decade.
The talk of a "set of measures to fight corporate raiders" sounds just as naive, the government being the biggest marauder in the country. Government officials are for the most part busy converting their powers into cash and property.
Vladimir Putin, too, had an anti-corruption council early in his presidency, headed by Mikhail Kasyanov. Moreover, Putin and his prosecutor generals and other high-ranking officials used very similar language when talking about corruption. But nothing changed. This anti-corruption campaign might also boil down to vulgar PR for Medvedev, who is in fact a weaker president.
Meanwhile, the omnipotent prime minister can handle issues like lowering the tax burden on the oil sector, where his personal friends hold all the key posts now. They have taken them by raiding or through crooked schemes like the high-profile BaikalFinansGroup case. That hitherto unknown company became Russia's fourth largest oil producer overnight after buying a bankrupt Yukos' asset for half its price, and was later bought by state-owned Rosneft.
Kommersant
Plans to build Transcaspian pipeline are taking shape
After a long period of mutual separation, Turkmenistan and Azerbaijan are coming to terms. The two countries' leaders, who met for the first time in Baku on May 19, focused on a project to build a Transcaspian pipeline which will make it possible to transport fuel from Central Asia bypassing Russia.
The main item on the agenda was known beforehand. Shortly before the arrival of Turkmen President Gurbanguly Berdymukhammedov in Baku, Azerbaijan's Industry and Energy Minister Natik Aliyev said that the presidents planned to focus on energy cooperation. "The matter in hand is the unifying of infrastructure for offshore deposits in Azerbaijan and Turkmenistan. What we mean is linking oil and gas pipelines and agreeing on mutual assistance in fuel transportation," Aliyev said.
The United States and the EU have long been nurturing a plan to build a pipeline bypassing Russia. Last year, the U.S. State Department allocated a grant for preparing a feasibility study on the project. In April, Benita Ferrero-Waldner, EU commissioner for External Relations, visited Ashgabat and reached an agreement with Turkmenistan on the reservation of 10 billion cu m of gas for the EU in 2009. At the same time, the Turkmen president assured Brussels that the EU would have an opportunity to develop new gas fields in Turkmenistan. Benita Ferrero-Waldner talked about a gas pipeline along the Caspian seabed as the most preferable route for fuel deliveries. If this 200 km-long gas pipeline is built (the cost of the project may exceed $1billion), gas will be transported via the Baku-Tbilisi-Erzurum gas pipeline which has an annual capacity of 8 billion cu m. In that case, Turkmenistan will become a fuel supply source for the Nabucco gas pipeline from Turkey to the EU. This is the plan cherished by Brussels.
Experts believe that Baku and Ashgabat are likely to come to terms. Mikhail Korchemkin, director of the East European Gas Analysis agency, thinks that "the project will be most profitable from a business point of view; it will be even more profitable for Turkmenistan than the Caspian pipeline offered by Russia." In his opinion, "transportation costs in the Transcaspian project will be much lower, and it is quite possible that Turkmenistan will not have to pay construction costs." As a result, Turkmenistan will have enough headroom when choosing gas transportation routes, while Gazprom's positions may seriously weaken.
"Even the implementation of Gazprom's present contracts with Turkmenistan is at risk because contracts with that country do not usually live longer than 6-9 months," Korchemkin said.
RBC Daily
Gazprom to sell gas to Belgian companies
Gazprom Marketing & Trading Ltd. (GM&T), a subsidiary of Gazprom, has received a license to supply gas to industrial clients in Belgium. Analysts say this promises the Russian gas monopoly strategic, rather than economic, benefits.
Gazprom has become the 25th company to be granted the permit in Belgium. Previously it had worked there only as a shareholder of Wingas, a joint venture with Germany's Wintershall in which the Russian company holds 50% minus one share.
GM&T spokesman Philip Dewhurst has confirmed the receipt of the license, saying talks with potential clients had not yet begun, but the company expects to rival other gas suppliers in Belgium.
GM&T used a similar scheme to become established in Britain and France. According to Dewhurst, Gazprom has several thousand commercial and industrial clients in Britain. The concern plans to hold 10%-15% on the French gas market in five years and 15%-20% on the British market by 2015.
Gazprom will have to fight for Belgian clients with the local leader Distrigas, a division of the French energy giant Suez, as well as with Gaz de France.
Konstantin Cherepanov, an analyst at the KIT Finance investment bank, said Gazprom's strategic goal is to supply gas to end consumers in Europe, thereby, increasing its presence there. Even though Belgium is not a major gas consumer, it will benefit the Russian company, which will get an additional margin by selling gas directly to consumers, eventually becoming a fixture on European markets.
"Gazprom's main competitive advantage is that it is also a gas producer," Cherepanov said. "So, its small share on the Belgian market will grow with time."
Vitaly Kryukov of the Kapital investment group said, Belgium is a high capacity market, with growing demand for additional gas, so that Gazprom's supplies will allow the Belgian economy to more efficiently satisfy its gas needs.
Vedomosti
Metalloinvest to list 25% stake, Norilsk Nickel merger on hold
Russia's Metalloinvest iron and steel group plans to list 25% of its shares this fall, and it will now put on hold a merger with mining conglomerate Norilsk Nickel prior to completing the share sale, a source close to Metalloinvest told the paper. Metalloinvest is a Russian holding company that controls a range of assets.
The group is majority owned by Alisher Usmanov, the Russian billionaire who acquired a minority stake in London's Arsenal Football Club last year.
Usmanov and his partners said they did not like the company's preliminary capitalization pending a merger with Norilsk Nickel. An investment banker, cooperating with Norilsk Nickel, said Metalloinvest was worth $20 billion. And a source familiar with Metalloinvest top managers estimated its value at $28 billion.
Metalloinvest has been preparing to hold an IPO for the last few years. In early 2008, the company and Norilsk Nickel began talks on a possible merger that would have created a new metals and mining group. In late April, business oligarch Mikhail Prokhorov sold a 25% stake in Norilsk Nickel to Oleg Deripaska's aluminum giant United Company Russky Alyuminy (UC RusAl), which also wants to merge with Norilsk Nickel.
A source close to Metalloinvest said corporate shareholders hoped the company would be worth at least $30 billion pending the IPO. A banker said its higher capitalization was even more desirable. Alexander Yakubov, metals analyst at Trust investment bank, said the company was worth $28 billion minus debts.
Kirill Chuiko, an analyst with the Uralsib Financial Corporation, said Metalloinvest was worth $25-30 billion.
Alexander Pukhayev, a metals analyst with VTB, said iron-ore prices had soared by 80% last year to reach $150 per ton. He said the capitalization of Brazil's Vale, the world's largest iron ore miner, had increased by 33% since early 2008 to reach $200 billion.
Metalloinvest can also count on greater capitalization and more profitable merger deals after the IPO, Yakubov told the paper.
The company recently selected Merrill Lynch, Credit Suisse and Deutsche Bank to hold the IPO, several investment bankers familiar with Metalloinvest top managers and shareholders said. However, the company has not yet signed any deals with the banks, and has not decided where the share sale might take place, although one source said a New York listing was under discussion.
The company is to sell a 10% stake to investors; and the remaining 15% will be distributed among corporate shareholders depending on the size of their shares, a source told the paper.
Vedomosti
Gazprom CEO earned $7 billion last year
Alexei Miller earns more as board chairman of the gas monopoly's subsidiaries than as Gazprom CEO.
In 2006, when Gazprom approved its option program, it reported that Miller earned $1.4 million annually. In 2007, the monopoly paid its top managers nearly 663 million rubles (almost $28 million), or some 39 million rubles ($1.6 million) to each of the 17 board members, compared with 35 million rubles the year before.
Miller's income as board chairman of Gazprom Neft, Gazprombank and Sogaz, the oil-producing, banking and insurance subsidiaries of Gazprom, from June 2006 to June 2007 exceeded 124.5 million rubles ($5.25 million), and he also earned quite a bit as board chairman of Gazprom Media and Gazfond.
Gazprombank, the most generous of Gazprom's subsidiaries, paid an average of 85 million rubles (approximately $3.5 million) to each of its directors in 2007.
Gazprom Neft paid Miller as much as 38.5 million rubles ($1.6 million), Sogaz 1 million rubles ($42,150), and Gazprom, a bonus of 16.2 million rubles ($682,950) for serving as deputy chairman of the board of directors. This adds up to more than $7 million according to the weighted exchange rate of the Russian Central Bank.
Tomorrow Gazprom's board of directors will discuss draft decisions of the annual shareholder meeting scheduled for June 27, including payments to its directors for services rendered from June 2007 to June 2008.
Miller as the deputy chairman may receive as much as 17.5 million rubles ($737,770), two sources close to the board of directors told the popular daily Vedomosti. Other directors will be paid 15 million rubles ($632,380). If the shareholders approve the decision, Miller's bonus will be 8% larger than last year (dividend payments are to be increased by 5%).
It will be Miller's largest paycheck as deputy of the Gazprom board of directors, but it has grown faster in the past, from 1 million rubles to 6 million in 2005, and to 15 million rubles in 2006.
Gazprom Neft uses an established principle to calculate bonuses for its directors. It depends on the company's net profit according to Russian Accounting Standards, said a source close to the company. In 2006, profit rose by 48%, and last year, 26.5%. Miller as the company's board chairman is to receive approximately 30 million rubles ($1.26 million), the source said.
On the whole, Miller's income in Gazprom and its subsidiaries is comparable to his colleagues' pay in foreign companies. Jeroen van der Veer, the chief executive of Royal Dutch Shell, earned about $9 million last year in salary, bonuses, options and the like.
Liia Kupchina, managing partner at the TopContact Executive Search company, said the total earnings of the head of such a giant company as Gazprom, the world's third largest in terms of value ($365.8 billion), should be as much as $10 million without subsidiaries and options.
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