MOSCOW, July 3 (RIA Novosti)
Putin strips foreign NGOs of tax privileges/ Britain trying to force Russia to interfere in TNK-BP row/ Major gas exporters want to change oil and gas pricing balance/ Russia could buy out Oman's stake in Caspian Pipeline Consortium/ Rosneft to up prices for China/ AvtoVAZ to buy engine production license from Renault
Gazeta.ru, Kommersant
Putin strips foreign NGOs of tax privileges
Prime Minister Vladimir Putin yesterday signed a resolution cutting the list of international NGOs whose grants are subject to tax privileges. All those receiving private sources of funding have been removed from a list of 101 organizations, which now only includes 12 intergovernmental associations.
Representatives of the private funds removed from the list fear that the decision will not only cut the number of social grants, but may also lead to new attacks on Western NGOs.
Pyotr Gorbunenko, Managing Director of WWF Russia, said: "Analyzing the resolution in detail will be impossible until it is officially published, but it appears that the new list includes only organizations that are government controlled or part of state structures."
Even if the Russian Finance Ministry determines the criteria and procedure for granting tax privileges to NGOs removed from the list, there is no time left to compile the new list before the enforcement of Putin's resolution, a source told the online newspaper Gazeta.ru. As a result, many international organizations will close their Russian offices.
"The profit tax in such cases in Russia is 24%. Parent organizations will have to stop financing their Russian offices because they are not permitted to contribute to foreign countries' budgets," Gorbunenko said. "Their grants come to Russia minus taxes, which are paid in the country of their parent companies' registration."
The official said the measure would not affect WWF Russia.
"We receive only 3.7% of our funds from Switzerland," he said. "But this will be a serious blow for civil society. The state has the right to make such decisions, but in this case we see a clear trend for depriving NGOs of foreign financial assistance."
Analysts say private Western funds can still be channeled into Russia in the form of donations.
Andrei Kortunov, president of the New Eurasia fund co-founded by the U.S.-based Eurasia Foundation, a privately managed non-profit organization supported by the United States Agency for International Development (USAID) and other public and private donors, told the business daily Kommersant that the funds his organization receives from the Eurasia Foundation "are not grants but donations, which comes under a different taxation scheme."
RBC Daily
Britain trying to force Russia to interfere in TNK-BP row
The attempts to resolve the shareholder conflict of Russian-British oil venture TNK-BP at the corporate and legal levels have obviously failed; the scandal is gaining momentum and shifting toward the political sphere.
British Prime Minister Gordon Brown plans to discuss the TNK-BP situation with the Russian president at the next G8 summit, although analysts doubt the dialogue will be sufficiently productive. Russia is still sticking to its neutrality and non-interference policy, while the AAR consortium is persistently trying to replace the company's CEO, Robert Dudley.
PM Brown's plans were revealed by the British media Wednesday and confirmed by his spokesperson.
The British government began making concerned statements after it became known that Dudley and other top managers of TNK-BP may be forced to leave Russia before the end of this month due to visa problems.
However, the crisis subsided later in the day as Russia's Federal Migration Service said it would issue work permits to 49 BP executives soon, and Dudley would obtain his on Thursday, which certainly satisfied the British shareholders.
President Dmitry Medvedev is unlikely to avoid a serious discussion with Gordon Brown though. The AAR consortium including Alfa Group, Access Industries and Renova, which are the Russian shareholders of the joint venture, announced yesterday it was calling an extraordinary meeting of the TNK-BP Management board of directors on July 7, Robert Dudley's replacement being the main item on the agenda. The other focus will be a request to the parent company's (TNK-BP Ltd.) board to ask BP to nominate an independent candidate for the post to be vacated by Dudley.
Analysts expect the tactical corporate games to go on until the governments interfere. Sergei Pravosudov, director general of the National Energy Institute think tank, suggests that London is trying to force Russia to take a side in the conflict.
Presidential aide Arkady Dvorkovich, in turn, said Russia planned to stick to its previous policy of non-interference.
Vremya Novostei
Major gas exporters want to change oil and gas pricing balance
Qatar and Algeria, the second and third largest natural gas exporters after Russia, insist that the balance of oil and gas prices should be reviewed.
Chakib Khelil, Algeria's minister of energy and mines and the current president of OPEC, said gas prices would soon equal oil prices. He also said Algeria would stop signing long-term contracts, which constrain growth in gas prices without good reason and prevent suppliers from renegotiating them with consumers.
This decision could be the first step toward setting up a gas cartel.
Russian energy giant Gazprom, the country's monopoly exporter of natural gas, so far supports the idea of long-term contracts.
Its spokesman Sergei Kupriyanov told the popular daily Vremya Novostei: "The goal is to maintain stability. We don't want to make sharp moves for quick gain."
The gas giant's representative said long-term contracts help balance the interests of suppliers and consumers.
The European Union has also proposed cutting the link between gas and oil prices. Some EU experts and politicians explain the idea by the need to stop the growth in gas prices, which many be attributed to speculation.
However, Qatar and Algeria apparently made their proposal for the opposite reason.
At present, natural gas costs approximately 40% less than oil.
Leonid Grigoryev, president of the Russian Institute of Economics and Finance, said: "There is a theoretical disparity in the fact that oil, which produces less heat and does more damage to the environment, costs more than natural gas. However, oil is mainly used to produce motor fuels, not heat or electricity."
Vladimir Milov, president of the Institute of Energy Policy, said: "It would be difficult to replace oil in the motor fuel sector, whereas gas can easily be replaced by coal in the electricity sector."
Excessively high gas prices have already spurred European demand for coal, he said, adding that the trend is set to continue.
"Gas suppliers should know that in their desire for super-profits they may lose part of their market to the producers of other fuels," Milov said.
Grigoryev said Qatar and Algeria's statements do not mean a gas cartel will be created tomorrow. But the beginning of the discussion means that LNG producers would like to see the pricing formula changed.
Kommersant
Russia could buy out Oman's stake in Caspian Pipeline Consortium
Russia could increase its presence in the Caspian Pipeline Consortium (CPC) by buying out the 7% stake owned by Oman. This will give Russia, which has long been pressing for control of the only private pipeline on its territory, two more seats on the board of directors and increase the number of its representatives to seven, out of the total 22. But it will need to invest a minimum of $700 million for the pleasure. In addition, Kazakhstan and Hungary's MOL are also eyeing the stake.
A source close to Transneft, the company that manages Russia's share of the CPC (24%), said the decision to purchase Oman's 7% was taken on June 30 at a meeting between Deputy Prime Minister Igor Sechin and company representatives. The offer was made early in the year. The source said that Russia had failed to make a bid before the deadline - the end of June - and now has to buy the stake on the open market in competition with Hungary's MOL, which is ready to pay $701 million.
Transneft assures that the offer was taken up on time - before July 1 - and confirms it is negotiating the price of $701 million. MOL declined to make any comment yesterday. A source close to the CPC said that whenever any of the shareholders sells a stake, Russia and Kazakhstan have pre-emption rights. (Kazakhstan owns 19% of the CPC.) If both sides accept the offer, the stake will be divided between Russia (3.9%) and Kazakhstan (3.1%). Oman's price is made up of CPC debts, $360 million plus interest, the source said. He said Kazakhstan had not accepted nor turned down the offer, and that it had some objections to its formal side.
"Additional shares, if bought by Russia, will enable it to get at worst one and at best two seats on the board of directors," said a source close to the CPC. Also, Russia' stake in the project would exceed a blocking one. Most of the disputes in the CPC are decided by 75% of the votes. A 28% to 31% vote will be a guarantee against any "anti-Russian" majority in the CPC. However, the Rosneft and Shell joint venture (Rosneft-Shell Caspian Ventures Limited owns 7.5% of the CPC) has almost always sided with Russia.
"If there is a chance to increase the stake in the project, this should be done," said Valery Nesterov, an analyst with Troika Dialog brokerage. He added that Russia could play a more active role in managing the project. But RusEnergy analyst Mikhail Krutikhin thinks it is throwing good money after bad. He said Russia had already demonstrated its ability to block private shareholders' decisions and get its own way.
Nezavisimaya Gazeta
Rosneft to up prices for China
Rosneft head Sergei Bogdanchikov said Russia's largest state-controlled oil company could revise the price of oil exported to China, which currently buys Russian oil slightly below market prices.
Analysts believe Rosneft is warning China that Russia could raise oil prices after 2010.
"The contract is being observed and all obligations will be fulfilled until 2010," Bogdanchikov said at the Madrid World Petroleum Congress. But once it expires, oil price will have to be revised. "We'll make a decision after we receive estimates of the ESPO tariffs."
China's National Petroleum Corporation, CNPC, paid Rosneft $6 billion in 2004 for the delivery of 355.7 million bbl of crude until 2010. The Russian oil major then needed the money to pay for the auctioned assets of the bankrupt Yukos company, the most valuable of them Yuganskneftegaz.
Russia's oil price was then around $40 per bbl, and the price for the huge long-term contract seemed justified. In 2007, after oil surged by 75%, Russia made an attempt to revise the contract price, and CNPC agreed to a marginal rise of $0.675 per bbl.
China turned down all later price rise proposals.
Tensions have started to increase again now that Russian oil is 3.5 times more expensive than the agreed price, but Rosneft experts and independent analysts agree that the contract will still have to be fulfilled as it is.
"Russia will be obliged to abide by the contract until its expiry," said Alexander Shtok, director of the Due Diligence department at the 2K Audit Business Consulting, an independent consultancy. There is also a pending plan to build a branch of the Eastern Siberia-Pacific Ocean pipeline to China. Rising oil prices for China now could totally jeopardize the project.
Mikhail Zanozin, a Sobinbank analyst, said Rosneft was gradually preparing its Chinese partners for a spike in oil prices. "The Russian company's position on the issue looks stronger. If Beijing does not cooperate, it could always reverse the export oil flow to Europe instead. It is what Gazprom is doing, insisting that China should pay more than Europe for its natural gas because of higher transportation costs."
Vedomosti
AvtoVAZ to buy engine production license from Renault
AvtoVAZ, the largest Russian carmaker in Tolyatti in the Volga Region, will buy a license for annually producing 450,000 1.4-liter and 1.6-liter gasoline engines from French automotive giant Renault. The engines will be fitted to Renault and Lada vehicles.
"The contract is virtually ready for signing," AvtoVAZ CEO Boris Alyoshin told the paper. On September 5, an extraordinary general meeting of corporate shareholders will approve the document.
A source close to AvtoVAZ said the production site had not been chosen yet, but that new facilities were not necessary, and that the company could overhaul operational ones.
AvtoVAZ declined to name the price to be paid for the license; and a Renault spokesman declined to comment on the contract with AvtoVAZ.
In 2006, GAZ Group, Russia's largest automotive manufacture of light trucks, buses, cars, diesel engines, power-train components and road construction equipment, bought a truck-engine production license from Renault Trucks for $10.4 million.
Mikhail Pak, an analyst at Metropol Investment Financial Company Ltd., said the company would have to spend up to $300 million on a new plant, and that a reequipping program would cost slightly less.
Over the last few years, AvtoVAZ has been dreaming about new engines for its cars. In 2005, the company and General Motors, the world's largest automaker based in the United States, negotiated a $400-500 million contract with an annual production capacity of 300,000-350,000 engines.
In 2006, Rosoboronexport, Russia's main state-controlled arms exporter, appointed its managers at AvtoVAZ and said there were plans to build a new engine plant. AvtoVAZ subsequently negotiated the purchase of the engine plant Tritec Motors in Brazil and contemplated a joint engine-production venture with Italy's Fiat last year.
Pak said cooperation with Renault was logical because Renault Logan vehicles would also be assembled in Tolyatti, and that the engines would also be installed on new Lada cars.
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