MOSCOW, July 15 (RIA Novosti) Ukrainian billionaire to buy Russian coal assets / Russia amply represented at Farnborough air show / Transneft says oil cut to Czech Republic non-political / Gazprom to increase its presence in Africa / Gazprom, Iran sign oil and gas cooperation memo - paper
Vedomosti
Ukrainian billionaire to buy Russian coal assets
The Ukrainian Donbass Fuel and Energy Company (DTEK), controlled by Ukraine's richest man, Rinat Akhmetov, has reportedly agreed to buy the Chikh mine in the Rostov Region, southern Russia, a division of the Rusincor Group.
Rusincor director general Maxim Sinyavsky declined to comment on the deal.
Anna Adom, a spokesperson of DTEK, said the company was considering buying other coal assets in Ukraine and abroad, including in Russia.
The Chikh mine may be DTEK's first coal acquisition in Russia. According to Vladimir Zhukov, an analyst at Lehman Brothers, it is the first foray into the Russian coal market by Ukrainian companies.
The sides are not disclosing the value of the deal, but Dmitry Smolin, an analyst at the Uralsib financial corporation, said it may be worth $50-$60 million.
He said Ukrainians are interested in the Rostov Region not only because it is located close to Ukraine's generating assets, but also because it sells power generating coals relatively cheaply, at $40-$50 per metric ton.
A source in the Ukrainian company said the closing of the deal was hindered by the non-transparency of the seller.
The Chikh mine has approximately 50 million metric tons of power generating coal. Smolin says the prime cost of the coals will be relatively high, because they lie deeply in the Rostov Region.
A source close to DTEK said the company has the technology for deep coal production, which the current owner of the Chikh mine lacks.
According to the Industry Ministry of the Rostov Region, Rusincor planned to invest 147.7 million rubles ($6.36 million) in the mine last year and 60 million rubles ($2.58 million) in 2008, but has not invested anything. Moreover, its debts amount to as much as 200 million rubles ($8.61 million).
Rossiiskaya Gazeta
Russia amply represented at Farnborough air show
More than 60 of Russia's leading aviation companies have sent their products to the largest British air show at Farnborough, Hampshire, which has since 1948 been exhibiting the latest in aircraft and missile technology.
Regular attendance at the show is a sign of belonging to the world club of aviation powers and being technologically competent. It is also a venue for exchanging the latest technologies and drawing up and signing contracts worth billions of dollars.
Russia has been attending Farnborough since 1984. Initially, it demonstrated only civilian aircraft, but in 1988 warplanes were also shown. Currently, most of its exhibits are military.
However, this year Farnborough will see some of the latest civilian developments, too. Planned contracts also deal with civilian aircraft.
Much space will be given to the Sukhoi regional Superjet-100 project. The airliner is currently undergoing flight tests in Komsomolsk-on-Amur and its makers are looking for buyers on the world market.
The United Aircraft Building Corporation will again show its 21st century MS-21 medium-haul jetliner. It will be designed along the same lines as the Sukhoi, and many aviation giants in Western Europe and the United States are already jockeying for contracts.
Oboronprom United Industrial Corporation, which builds all Russian helicopters, said it is planning to sign a framework contract at Farnborough to set up a Russian-Italian joint venture in Russia. The venture will produce AgustaWestland-AW139 helicopters. Italy, in turn, has pledged to promote the Russian Ka-32 helicopter on the European markets.
Russia plans to conclude a contract with France's Turbomecha on the supply of Arius engines for the new Russian Ka-226 helicopter. They could power all future helicopters of this type, which have a good market outlook.
Russia's Su-35 fighter plane is a newcomer to Farnborough. It was shown here before, but as a model. No full-scale specimen is available now either, but it is being widely reported that a Su-35 is undergoing flight tests and will be purchased by the Russian Air Force. That adds to the market rating of the aircraft, which Sukhoi positions as an all-but G5 fighter.
The Russian pavilion at Farnborough is not one of the largest, but has much to show.
The Russian delegation is one of the largest. Aviation officials and aircraft builders like the show in Britain very much.
Vedomosti
Transneft says oil cut to Czech Republic non-political
As early as last weekend the Czech Republic said it was receiving less Russian oil than scheduled, and it could not understand why.
Supplies through the Druzhba pipeline were reduced by two Russian companies. They rerouted 200,000 tons to Russian refineries for processing, Transneft vice president Mikhail Barkov said on Monday.
He did not name the companies, but assured there was no politics involved: "The suppliers must have thought it to be more profitable."
"I wish to believe no politics is involved," Czech Prime Minister Mirek Topolanek said on Monday.
The cuts followed an agreement the United States and the Czech Republic signed to deploy an American missile defense radar in the country, provoking a negative response from Moscow.
The Czech oil refineries have a combined capacity of 740,000 metric tons per month. Russia supplies more than half of the crude needed. According to Argus Media, the Czech Republic imported 401,000 tons of oil from Russia in June, while the July figure will be 20% less, down to 322,000 tons.
The Czech Republic is foreseeing a further large reduction. Local media are expecting a 40% drop in imports - down to 300,000 tons instead of the stipulated 500,000 tons (figures cited by Euro24 magazine). The largest consumer - Ceska Rafinerska (a subsidiary of Czech Unipetrol, part of the Polish corporation PKN Orlen) - anticipates a 30% cut, said Blanka Ruzickova, a Unipetrol spokesperson.
According to her, the reason is "technical and organizational headaches in Russia." However, Ceska Rafinerska will suffer no setbacks, Interfax quoted a PKN Orlen spokesperson as saying, crude will arrive from an alternative source - the IKL pipeline in Germany.
According to Argus, Bashneft, the chief exporter, reduced its supplies by 30%, down to 142,000 tons, against the 256,000 tons in June, said Mikhail Perfilov, director for development at Argus Media. Transneft did not okay all Bashnet's deliveries, pleading low crude quality, Perfilov said.
The expert also forecasts a halving of supplies from smaller companies - from 82,900 tons to 36,000 tons. Tatneft supplies were "somewhat" trimmed as well, said its spokesperson Nuria Valeyeva (Argus cited 62,400 tons for June). She did not give a reason, but assured that the shortfall would be made up in the current quarter.
Nezavisimaya Gazeta
Gazprom to increase its presence in Africa
Europe may soon become fully dependent on natural gas supplies from Gazprom. The Russian energy giant plans to dramatically increase its presence in Africa, which Europe has regarded as an alternative gas supplier.
It was reported the other day that Libya had invited Gazprom to build a new pipeline to Europe. The gas monopoly is "scrutinizing the offer."
Last June it signed an agreement on cooperation with Algeria's Sonatrach and on possible involvement in the Trans-Saharan gas pipeline. Analysts say these projects will greatly enhance Gazprom's share in gas supplies to Europe.
The Old World is watching helplessly as the Russian company encourages its partners to act jointly, if not trying to monopolize gas supplies to Europe.
Gazprom spokesman Sergei Kupriyanov said on Friday evening: "Our Libyan colleagues have proposed that we build one more gas pipeline from Libya to Europe. We will consider this interesting possibility."
He said it was premature to discuss the capacity of the projected pipeline. Far more interesting is the Libyan offer to sell all its export oil, gas and LNG to Gazprom already this year.
Gazprom's success in Libya came after it had renewed ties with Sonatrach.
Two years ago, the two companies agreed to coordinate their operations in Europe, which increased Europeans' wariness of a potential gas cartel and provoked sharp protests in the European Union.
A year ago, Algeria said it had terminated the agreements sealed in the memorandum, because Gazprom had not made any practical offer regarding them. In mid-June 2008, it was announced that the Russian gas company would renew cooperation with Sonatrach.
Gazprom deputy CEO Alexander Medvedev said at the time: "We are discussing the possibility of swapping pipeline gas for LNG and swapping LNG supplies within different projects. This will be the best way of streamlining gas supplies to customers in Europe and outside it."
This is highly unpleasant news for Europe, which has been trying to gain energy independence and diversify gas supply routes. Until recently, Sonatrach and Gazprom were rivals on the European gas market, where the Russian company accounts for 25% and its Algerian colleague for approximately 10%. Depletion of European gas reserves gradually increased the share of the two companies.
But rivals may now become partners, and could subsequently negotiate cartel collusion and use gas leverage to attain political goals.
Last June Gazprom confirmed its interest in the Trans-Saharan gas pipeline project, with an annual capacity of 30 billion cubic meters, which will be built across Algeria and Niger to connect Europe with Nigeria's rich gas deposits. It is to come on stream in 2015.
Analysts say the EU will not be glad if Gazprom joins the project, which has been considered an alternative to Russian gas routes.
Gazprom's attempts to coordinate efforts with Algeria and control gas supplies from Libya and Nigeria will further strengthen its positions in southern Europe.
Alexander Shtok, head of the Due Diligence department at 2K Audit Business Consulting, said: "So far, Libyan gas is not as important to Europe as gas from Algeria. However, Libya's gas production has recently been growing at a fast pace due to an influx of investment capital, especially after the UN sanctions were lifted in 2003. In the future, Libyan gas may account for a considerable part of the European market."
The analyst said Gazprom's foray into southern Europe would strengthen rivalry among gas suppliers. On the other hand, the influence of Gazprom and its African partners/rivals on Europe may increase substantially if its gas talks with Algeria succeed, or if it joins the Trans-Saharan gas pipeline project.
Europe has nothing with which to counter Gazprom's expansion, because the EU still does not have a common energy policy, Shtok said.
"The EU's attempt to diversify its gas supply routes has so far failed," he said. "The Nabucco gas pipeline project, which should have reduced the EU's dependence on Gazprom, is losing to the Russian South Stream project. The European countries that initiated Nabucco are signing agreements on joining South Stream one after another, which is undermining the European pipeline's competitiveness."
Besides, Nabucco, with its moderate annual capacity of 30 billion cu m, will not ease Europe's dependence on Russian gas supplies, especially as its energy consumption is expected to grow considerably.
If the EU continues to try to solve its gas problems single-handed, the influence of energy exporters on its energy market will grow.
Kommersant
Gazprom, Iran sign oil and gas cooperation memo
Gazprom and the National Iranian Oil Company (NIOC) have signed a memorandum of cooperation in oil and gas production and transportation.
The memorandum was signed on Sunday during negotiations in Tehran between Gazprom CEO Alexei Miller, Iranian Oil Minister Gholamhossein Nozari, and NIOC Managing Director Seifullah Jashnsaz.
According to Kommersant, Tehran has offered Russia a full package of projects to develop oil and natural gas fields, build processing facilities and transport oil from the Caspian Sea to the Gulf of Oman.
The document, which stipulates the creation of a joint venture for oil and gas projects, is set to give Gazprom a foothold in Iran, which has the world's second largest gas reserves, totaling 28.13 trillion cu m, after all the major global energy companies have given up cooperation with the Islamic Republic, the paper said.
However, the paper said analysts are cautious about the prospects of cooperating with Iran, as the issue involves complex and delicate factors.
The country is under three sets of United Nations Security Council sanctions for its refusal to halt uranium enrichment, and the United States and Israel have refused to rule out military strikes if Tehran continues with its nuclear program, widely suspected to be a cover for a weapons production.
"A very negative political atmosphere has been formed around Tehran, due to which France's Total, the last foreign company, quit the country. But if Russia drops its attempt to consolidate its positions in the country, it will cede this market to Japan, India and China," Valery Nesterov, an analyst from Russia's Troika Dialog brokerage, said.
At the same time, Mikhail Korchemkin, director of East European Gas Analysis, said the memorandum was a purely political document.
"Iran has no partners left after Total's withdrawal. Meanwhile, Gazprom needs additional gas volumes to honor all its obligations," Korchemkin said.
The agreement between Gazprom and NIOC will exist only on paper until the political situation changes radically, he said.
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