MOSCOW, June 3 (RIA Novosti)
Russia, Germany exchange shots ahead of EU-Russia summit / Gazprom blocks plans to pump Caspian gas to EU bypassing Russia / Gazprom top managers sell their stakes / Gazprom improves chances of buying stake in TNK-BP / Russian firm buys into Czech aircraft producer / Foreigners cannot apply for work in Moscow this year
RBC Daily
Russia, Germany exchange shots ahead of EU-Russia summit
German Chancellor Angela Merkel, who will meet with Russian President Dmitry Medvedev on June 5, should like what Finance Minister Alexei Kudrin said about a possible reduction in the number of strategic sectors where foreign investment will be restricted.
Russia is trying to secure the support of natural gas consumers in its struggle against transit countries ahead of the EU-Russia summit in Khanty-Manskiysk. The summit, scheduled for late June, is expected to open talks on strategic partnership.
However, Moscow will also have to deal with the EU leaders, which want control over Russian pipelines.
Merkel said she was glad that Poland and Lithuania had lifted their vetoes on partnership talks with Russia. In a traditional televised address on Saturday, she said that the EU takes a coordinated stance on energy security issues.
Alexander Rahr of the German Foreign Policy Council said: "Germany is trying to sit on two chairs. Its positions in Europe will strengthen if it becomes a distributor of Russian gas. On the other hand, Germany wants to remain the driver of European integration, and therefore has to uphold the interests of East European transit countries."
The European interpretation of energy security stipulates broader access to oil and gas production in Russia as well as control over their transportation across the country.
Vladislav Belov, head of the Center for German Studies at the Institute of Europe, Russian Academy of Sciences, said: "Access of European companies to the Russian pipelines can be discussed only if the EU contributes to their modernization and repair, and to laying new pipelines." But it will never be allowed to control it.
The law limiting foreign investment in Russia's strategic sectors, which both Brussels and Berlin are criticizing, will be another stumbling block at the partnership negotiations.
"Business has joined European politicians in criticizing the law," Belov said. "Siemens and E.ON Ruhrgas want to increase their stakes in joint projects, while Russia has also put forward its requests."
Russia needs Germany too much to allow a confrontation with it. Kudrin said yesterday that the number of strategic sectors where foreign investment is limited could be scaled down from 42.
He did not give specific figures or deadlines, saying much depends on the outcome of the EU-Russia negotiations on a new partnership and cooperation agreement, which are not expected to end before the end of 2009.
"The WTO accession talks have shown that it may take as long to coordinate the positions of the 27 EU countries as to discuss the agreement," Belov said.
Vremya Novostei
Kommersant
Gazprom blocks plans to pump Caspian gas to EU bypassing Russia
Moves by the European Commission and the United States on the Caspian have forced Russian natural gas monopoly Gazprom to act. Yesterday its CEO Alexei Miller proposed to Azerbaijan's President Ilham Aliyev that Russia would buy gas from the republic at market prices under a long-term agreement.
A source familiar with the proposal said purchases could start next year. Gazprom is ready to buy any amount offered by Azerbaijan at world prices, which may rise beyond $300.
Previously, Azerbaijan imported Russian gas. In 2005, the monopoly sold it 4.5 billion cubic meters at $60 per 1,000 cubic meters, and in 2006, at $110. In 2007, gas supplies were cut by two thirds after prices rose to the average market figure of $230. Azerbaijan chose to increase its own production by exploiting the Shah Deniz gas field and agree a redistribution of gas quotas with Georgia and Turkey.
Azerbaijan has 1.5 trillion cubic meters in known reserves, including 1.3 million in recoverable resources on the Shah Deniz field, located in the Azeri sector of the Caspian shelf. Azerbaijan consumes 11-14 billion cubic meters of gas per year. Despite this, the field's export potential, even in the first phase, is estimated at 12 billion cubic meters.
During the second phase there are plans to increase exports by 5 to 7 billion cubic meters. In view of high transportation costs to Turkey and beyond through pipelines not yet built, whose estimated costs are rising all the time, Azerbaijan will find it difficult to compete with Gazprom.
According to information available to Vremya Novostei, Aliyev said he would consider the proposal. After all, it opens a window of opportunity for further bargaining with gas buyers - Turkey, Greece, Italy and Austria. The fixed and moderately priced contracts have been concluded only with Turkey's Botas, and for 6.6 billion cubic meters.
On the other hand, Baku is the main bastion of Western diplomacy in the Caspian region. Until now it was Azerbaijan that led the support for plans to create corridors for shipping energy resources to Europe bypassing Russia. There is a mix of interests here: first, transit (Azerbaijan and Turkey are linked by the Baku-Tbilisi-Ceyhan oil pipeline and Baku-Tbilisi-Erzerum gas pipeline, which are far from operating at full capacity), political relations (especially with Washington) and a sort of grievance against Gazprom. In addition, to agree to Russia's proposal would mean leaving its own pipeline to Turkey empty.
Gazeta
Gazprom top managers sell their stakes
It was reported yesterday that three top managers of Gazprom have sold their stakes, valued at more than $25.5 million. Analysts predict major personnel reshuffles in the Russian energy giant and the movement of its top managers to government agencies.
According to a company news release, Andrei Kruglov, deputy chairman of Gazprom's Management Committee and chief of finance and economics, and Kirill Seleznev, a member of the Management Committee and head of the gas & liquid hydrocarbons marketing and processing department, have sold their stakes in the company.
They had held 0.00008976% and 0.00202847% of shares respectively, valued at $7.67 million.
Alexander Ananenkov, Gazprom's deputy CEO in charge of production, also sold his 0.00497113% stake, valued at nearly $18 million.
Such sales of shares by several top managers usually mean that a company's future is not bright, analysts say.
However, Andrei Podoinitsyn, head of UFG Asset Management, said the move could also point to a possible personnel reshuffle.
"This has happened in Russia before. Shortly before German Gref was appointed head of Sberbank, the saving bank's top managers sold their minority stakes and later left the bank," Podoinitsyn said.
"Therefore, we can assume that several of Gazprom's top managers are considering accepting posts in government agencies, following in the footsteps of Konstantin Chuichenko," who has been recently appointed aide to the Russian president and head of his control department.
The Russian market has not reacted to the news, with the RTS indices falling by only 0.98%.
Vitaly Gromadin, an analyst at the Arbat Capital investment company, said: "Gazprom's top managers probably decided to book their profits after the company gained weight on the back of general positive mood created by the inauguration of the president. They most likely sold their stakes to gain maximum profit, not because they know something negative about the company's operation."
Svetlana Savchenko, director of investment planning at 2K Audit Business Consulting, shares this view. She said the sale of the stakes by Gazprom's top managers should be seen only as a private decision of individual shareholders.
Gazeta.ru
Gazprom improves chances of buying stake in TNK-BP
The resignation of Jean-Luc Vermeulen, an independent director on the board of Russian-British joint oil venture TNK-BP, owned by BP and a group of Russian tycoons, has ensured that a buyout of the Russian stake is only a mater of time, analysts say.
Without Vermeulen, who defended the Russian shareholders' interests, state-run Gazprom may soon make BP an offer it can't refuse. Russian shareholders will have to go.
Vermeulen explained his decision by failure to resolve the dispute between TNK-BP's shareholders. The long-standing row boils down to the Russian investors' desire to expand abroad even if foreign acquisitions competed with existing BP businesses, which clashes with BP's commitment to limit the ventures' operations to Russia and the CIS.
Market watchers say Vermeulen's resignation will improve Gazprom's chances of obtaining the Russian stake in TNK-BP.
Dmitry Abzalov, an analyst with the Center for Current Politics think tank, said it would be easier for the gas monopoly to reach an agreement with the British company and buy out 1% of the British stake in addition to the Russian one, taking control over TNK-BP.
BP may propose, in exchange, to set up a joint venture with Gazprom and offer certain preferences, from small fields to offshore operations.
"BP is currently more interested in growing capitalization than in higher profits. With oil production falling, Russian oilfields with huge reserves can help stabilize the company's global market position, even ones in the offshore zone which is more difficult to develop. Gazprom, in turn, will gain access to new production technologies," the analyst said.
Abzalov has not ruled out the possibility that the British company could be admitted to the Burgas-Alexandroupoli pipeline project as an additional source to fill the pipeline.
If the situation follows this scenario, the government will be unlikely to pressure the current Russian shareholders of TNK-BP too much, as no one wants another Yukos case. What they will need to do is choose the right moment to accept the offer and get the best price for their withdrawal.
Abzalov deems that their loyalty in selling out to the state giant will be certainly rewarded.
"I believe they will try to compensate Viktor Vekselberg's loss of his stake in TNK-BP with some energy assets; Mikhail Fridman, however, is unlikely to get anything at all because he is quitting the oil business," Abzalov went on.
Formally, the Russian side has the authority to replace Vermeulen. Abzalov believes the decision will clarify the real situation in and around the company.
"It will either be someone from Vekselberg's Renova holding, or a third-party top manager. The former appointment will mean that Vekselberg is still willing to fight for TNK-BP, and the latter, that the Russian British venture is being prepared for sellout," the analyst concluded.
Kommersant
Russian firm buys into Czech aircraft producer
Russia's Ural Mining and Metallurgical Company (UGMK) has bought a 51% stake in Aircraft Industries, a Czech company manufacturing L-410/420 aircraft, from aerospace, automotive and defense industry giant PAMCO INT.
Analysts predicted high demand for the company's aircraft, provided that the state subsidized regional air traffic.
An UGMK report said the purchase was linked with plans to expand regional air traffic and to produce short-haul planes and gliders.
This March, UGMK established a regional airline in the Ural Region where its main ore-producing assets are located. The company, which initially planned to buy Let-410 planes from Aircraft Industries, started negotiating the plant's purchase in May.
Although the contract price was not disclosed, a top manager at a Russian aviation industry company that was also offered a controlling stake in Aircraft Industries said Czech partners had requested $15 million.
On June 12, the new owners will hold a general shareholders meeting, appointing their representatives to the corporate board and approving a five-year strategic development plan.
UGMK sources said the meeting would also decide whether to manufacture new aircraft models. Anyway, L-410 and L-420 aircraft will continue to be mass-produced because UGMK prefers smaller planes. Moreover, the Soviet Union had operated several hundred Let-410s; and many Russian pilots can still fly them.
Oleg Panteleyev, head of research at Aviaport, a Moscow-based aviation analytics firm, said UGMK had good chances of marketing its L-410 planes. He said federal and regional authorities were now planning to subsidize regional air traffic.
It will be possible to buy L-410 aircraft for future regional projects, Panteleyev told the paper.
Panteleyev said the L-410 would face no competition from the larger Antonov An-38 cargo plane, and that no similar Western aircraft were available.
Alexander Rubtsov, general director of Ilyushin Finance leasing company, said this aircraft model would be in high demand in modern Russia, as Russian air carriers now have to replace An-28 planes, the older versions of the An-38, and that the L-410 had been designed especially for the Soviet market.
Vedomosti
Foreigners cannot apply for work in Moscow this year
The Moscow migration service has stopped receiving work applications from foreigners, not only from guest workers but also managers of international corporations handling billions of dollars. The quota is filled, say officials.
That the federal migration service for Moscow was no longer accepting permit documents for foreigners and individual job clearances was reported simultaneously by several informed sources. Yevgeny Reizman, Baker & McKenzie partner, said an announcement on this had been posted in his office, with officials offering no explanations.
In 2008, Russia's requirements for foreign labor exceeded 1.8 million people, with 300,000 in Moscow alone, according to a reply sent by the Health and Social Development Ministry, which oversees the labor market, and which Vedomosti asked for clarification.
Of the total, 672,304 was set aside as a quota for visa entrants (among them 105,644 in Moscow), and 1,155,000 for workers from no-visa countries.
Now no company can hire a single new employee or extend their earlier issued permits, said Reizman. Whether they are janitors or company presidents, the procedure is the same for both, he said.
If employees are nearing the end of their work permits, contracts with them will have to be broken off, warned Alexander Yermolenko from FBK Pravo. Otherwise the company may be fined 250,000 to 800,000 rubles according to the Code of Administrative Violations, or its operations halted for a period of up to 90 days.
In September 2007, the service also stopped handling applications for the same reason, said Natalia Petrovicheva, HR manager of Royal Dutch Shell's Russian office, but then the quota was increased. The break lasted a month and a half, and some of the foreign companies operating in Russia put their managers on the staff of their foreign divisions, which sent them back to Russia as if on business missions. The same can be done now, Yermolenko said, only the business visa is valid for no more than 90 days.
Officials promise the pause will not be for long. The quota can in principle be increased, which has already been done partly on Moscow's request. Now the possibility is being considered of increasing an all-Russia quota by 1.2 million people.
Companies are hopeful that problems will not arise. Royal Dutch Shell filed its applications before the deadline and is now waiting for them to come through. Most likely, the restrictions will only apply to the unskilled work force, believes MTS spokeswoman Irina Osadchaya.
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