MOSCOW, July 7 (RIA Novosti)
Russia again willing to help save the world / Moscow gets new trump cards against U.S. missile shield in Europe / Gazprom in talks on Ukrainian project / Turkmenistan not ready to provide gas guarantees to Russia / Severstal to provide Esmark Steel top managers with "golden parachutes" / BP sues Russian partners in TNK-BP
RBC Daily
Russia again willing to help save the world
According to Russian President Dmitry Medvedev and Finance Minister Alexei Kudrin, Russia will offer its contribution to saving the global economy at the G8 summit, which begins in Toyako, Japan, today.
Russia is prepared to supply grain for the hungry, water for the thirsty and oil and gas to nations short of energy, and invest revenues in U.S. securities to save the dollar. But who will save Russia's economy? History shows that the West has never reciprocated Russia's concessions.
The G8 summit in Japan will address the financial and food crises, a number one issue that was added to the agenda less than a month ago.
Southeast Asian countries, along with India and Brazil, have announced a reduction or temporary termination of grain exports to protect domestic markets. But Russia is going its own way, as usual.
At the 12th International Economic Forum in St. Petersburg in early June, Medvedev criticized "economic egoism," and now Prime Minister Putin has cancelled the export duty on wheat and barley, which was introduced before the December 2007 parliamentary elections to contain the growth of bread prices, on July 1.
Kudrin, who appears to be the biggest altruist in the Russian government, has said Russia will propose investing in the falling U.S. securities. But this is logical, because investing oil revenues in the Russian economy will spur inflation.
Analysts cannot explain why the government does not lend oil revenues to state-controlled companies for investment abroad. By refusing to do so, it is forcing them, notably energy giant Gazprom, to borrow on foreign markets.
Sergei Lopatnikov, a research professor of civil and environmental engineering and senior scientist at the University of Delaware Center for Composite Materials, said: "The larger Russia's Stabilization Fund grows, the higher its corporate debt, as if the Fund serves as a pledge for the commercial loans of state-controlled companies."
The Russian elite loves to save the ungrateful West. Russian czars exported grain to Europe, causing hunger at home, but this and asset swaps did not save it from wars with European nations.
Poet Fyodor Tyutchev wrote before the Crimean War, fought between the Russian Empire and an alliance of France, Britain, the Kingdom of Sardinia and the Ottoman Empire in 1853-1856: "How could it happen that the empire, which reneged on its own interests for 40 years to safeguard the interests of others, is now facing their treacherous collusion?"
President Vladimir Putin said in the fall of 2007: "We have withdrawn our bases from Vietnam and Cuba and cleared up everything there. Meanwhile, new threats [the U.S. ballistic missile defense system] are being created on Russia's border."
It looks as if nothing has changed in Russia's relations with the West in the last 150 years.
Vedomosti
Moscow gets new trump cards against U.S. missile shield in Europe
Warsaw and Washington have failed to agree on deploying 10 interceptor missiles of an American missile defense system in Poland. This means Russia can continue its seemingly lost battle against anti-missiles in Eastern Europe.
Polish Prime Minister Donald Tusk has become Poland's first leader since the fall of communism in Europe to express concern over the likely effects of missile defenses for his country.
Warsaw's current polite refusal is perhaps another maneuver by the Polish leadership to gain maximum military and economic dividends from the United States. But the refusal comes shortly before a change of administration in Washington and after the American fiscal year has started. The building of a missile defense system can therefore stall until the beginning of 2009, and construction of facilities last 12 or 18 months longer than the 2011-2012 deadline.
The current situation around missile defenses, coupled with a deterioration of the situation in the Middle East (Israel has warned the U.S. that if it fails to put an end to the Iranian nuclear program in the next few months, Tel Aviv will do so itself) let Moscow not only continue its "anti-missile game" but also to turn the tables in its favor. Russia can also offer alternative deployment sites, closer to the sources of potential danger - in Turkey or south-eastern Europe.
In addition, Moscow could demand that Iran stop work on ballistic missiles with a range of 5,000 to 6,000 kilometers, which, experts predict, could appear in four years and reach targets not only in Europe and Israel, but also in Russia.
Russian experts are convinced that Iran will not be able to deal an effective strike against Israel in the next four to five years. Russia together with the U.S. must convince Tel Aviv of that. And also that a repeat of a 1982 episode when Israeli aircraft attacked Iraqi nuclear facilities could have devastating perhaps disastrous consequences for the world in the present situation.
Kommersant
Gazprom in talks on Ukrainian project
The oil and gas company Naftogaz of Ukraine said it was negotiating joint projects on the Black Sea shelf with energy giant Gazprom, which would keep all crude oil and would cede all natural gas to Ukraine.
Gazprom is in no hurry to accept the "interesting offer" due to unconfirmed shelf deposits and high production costs.
Naftogaz of Ukraine wants to develop the Kerch oil and gas segment containing an estimated 30 billion cubic meters of gas and 4 million metric tons of oil on the Black Sea shelf together with Gazprom.
Although no drilling operations have commenced, Vanco International, a subsidiary of the U.S.-based Vanco Energy Company, owns the license to develop the deposit and must invest at least $100 million into prospecting operations under a production-sharing agreement.
Long-term production investment was estimated at $3 billion in case of successful exploratory drilling. This spring, however, the Ukrainian Natural Resources Ministry exposed violations in the PSA tender and said Vanco had violated the agreement. Although the ministry revoked Vanco's license this April, the company continues its work because President Viktor Yushchenko has not agreed to the revoking.
A source close to Gazprom said Ukrainian authorities and Gazprom had long negotiated the company's involvement in a prospecting and production joint venture on the Black Sea shelf. Gazprom spokesman Sergei Kupriyanov said the company was interested in the Ukrainian shelf, but that no specific talks had been held yet.
Ukraine is probably eager to involve Gazprom in such a project to stave off a rise in gas prices from the Russian monopoly, which may reach $400 per 1000 cu. m. next year. Gas produced on the shelf would also be cheaper.
Vitaly Kryukov of Capital Investment Group said, by offering shelf deposits to Gazprom, Ukraine hoped that the company would not raise gas prices in 2009. However, Gazprom may turn down the offer in case of exorbitant production costs.
Dmitry Lyutyagin, an oil and gas analyst from Moscow-based investment company Veles Capital, said Ukraine was offering a Belarusian-style concept to Gazprom. The Russian company told Minsk that it would raise gas prices stage by stage, after receiving a 50% stake in Belarusian transport monopoly Beltransgaz.
But the Ukrainian offer is less profitable because the shelf may contain less oil and gas than predicted.
Vremya Novostei, Vedomosti
Turkmenistan not ready to provide gas guarantees to Russia
Russian President Dmitry Medvedev's recent visit to Turkmenistan showed that that the Central Asian country is not ready to pledge to supply gas to and coordinate gas prices with Russia.
The two presidents exchanged warm words while members of the Russian delegation made contradictory statements before and after their meeting.
Although Russian energy giant Gazprom is ready to convert to European gas prices, the sides have failed to agree on gas cooperation, which accounts for 90% of bilateral trade, and on the gas pricing formula for 2009 and a subsequent period, expected to streamline Turkmenistan's obligations.
The absence of long-term written guarantees is also hampering the development of gas transportation systems connecting Central Asia to Russia, notably the modernization of the Central Asia-Center pipeline and the construction of a new littoral Caspian pipeline.
Gazprom CEO Alexei Miller may travel to Turkmenistan soon, possibly this week, to continue the difficult commercial talks. However, it appears that new agreements will be signed only in the fall, when approaching winter colds make the sides, especially customers, more pliant.
Presidential aide Sergei Prikhodko said after the talks that the Russian delegation had not planned to sign concrete agreements. "We did not go there to sign agreements," he said. "Gazprom is preparing amendments to contracts and the Turkmen president recently met with Miller. These contacts can continue, if necessary."
A high-ranking source in the Russian delegation said the agreement would be signed in the fall. At present, Russia is vying for the Turkmen resources with China, which has signed an agreement under which Turkmenistan will supply 30 billion cu m (1.06 trillion cu f) of gas annually for 30 years beginning in 2009.
Kommersant
Business & Financial Markets
Severstal to provide Esmark Steel top managers with "golden parachutes"
The amount Severstal plans to pay for America's Esmark Steel may be increased. The company has a program of "golden parachutes" for its top managers. If they decide to leave the firm or are fired, Severstal will have to cough up $9.3 million for them. But viewed against the deal's total sum of $1.285 billion (plus debts), this is not a large amount, and managers who do not work effectively enough can be dismissed without paying them.
Analysts note that "golden parachutes" for managers are a global practice.
"Although a 'golden parachute' can be used to oppose a hostile takeover, its basic function is to protect the management from new shareholders," said Zhanna Mankulova, head of corporate practice at AB Vegas-Lex.
Olga Lazareva, deputy director of the Yakovlev and Partners law firm, says that such a practice is taking root in large Russian companies and banks and should not come as a great surprise for Severstal.
But Russian "golden parachutes" are way below those in the West. In 2007, Bob Nardelli, head of Home Depot, received $210 million in compensation, while this year Angelo Mozilo, head of Countrywide Financial, got almost $40 million in severance pay. The scandalous OGK-2 program of "golden parachutes" in Russia provided for the payment of 554 million rubles ($23.6 million) to 16 managers.
Ivan Andriyevsky, manager and partner of NKG 2K Audit-Business Consulting, is certain that Severstal accepted the terms when it signed the deal. In his view, Severstal will not "walk into the same trap" again. In 2006, Mittal Steel won the battle for Arcelor against Alexei Mordashov by allowing the top managers to keep their positions and functions, something Severstal failed to do.
Uralsib analyst Dmitry Smolin said that $9.3 million is a "miserably low price for the successful completion of the deal." However, experts from Yakovlev and Partners note that even these payments can theoretically be avoided if Esmark managers are dismissed "under a clause" - for grossly neglecting their duties or violating other clauses of their work contracts.
Kapital analyst Pavel Shelekhov believes a change of management could be justified by the company being in the red: "The management must be changed because despite good capacities the assets are loss-making. To optimize the company's work, fundamental decisions are needed to deal above all with changes in top-level management."
Gazeta.ru
BP sues Russian partners in TNK-BP
British oil major BP said on June 30 it was suing its partners in the Russian venture TNK-BP for 8.4 billion rubles ($357.3 million), money it believes should not have been paid out as back-tax claims in Russia prior to the venture's creation in 2003.
BP filed the lawsuit with the High Court in London pending the July 7 meeting of the TNK-BP board of directors.
The sum is probably part of the $1.5 billion back-tax claims paid by TNK-BP in November 2006. At that time, the company said the payments would not affect its financial performance. It appears that the current BP lawsuit is just another move in a corporate conflict because the company previously had no misgivings about back-tax claims.
Oligarch Viktor Vekselberg, CEO of Russian conglomerate Renova Group, who owns a 50% stake in TNK-BP, initiated the board's meeting, which will discuss the resignation of corporate CEO Robert Dudley.
Previously, analysts said BP would try and consolidate its positions prior to the board's meeting and could even thwart it by not showing up. The lawsuit is playing into the hands of British shareholders.
The latest conflict between TNK-BP shareholders is motivated by disagreements on long-term corporate development. The British side wants to expand operations in Russia, while local shareholders are focusing on foreign investment.
Analysts said BP wanted to include Russian deposits in its balance sheets and to increase corporate capitalization. However, Russian oligarchs who are afraid of losing their assets want to take them outside Russia in order to minimize risks.
According to analysts, the July 7 meeting of the TNK-BP board will change nothing. The conflict will go on until one of the shareholders cedes his stake to a state-owned company.
Market analysts said the AAR consortium, comprising Mikhail Fridman's Alfa Group, Leonard Blavatnik's Access, and Viktor Vekselberg's Renova, would sell its stake to energy giant Gazprom, and that the stand-off would end after the deal was closed.
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