MOSCOW, September 8 (RIA Novosti) Allies support Russia, but look at the West / Moscow, Ankara strike new Caucasus alliance / Abkhazia wants to set up a tax heaven close to Russia / Russian company to get part of Total, StatoilHydro's stake in Kharyaga / TNK-BP makes generous proposal to minority holders / Gazprom's gas reserves soaring
RBC Daily
Allies support Russia, but look at the West
Russia wants to turn the Collective Security Treaty Organization into a full-scale NATO analogue and convince its allies to pledge to fight a common enemy to protect common interests. Unfortunately, these interests do not always coincide.
The Collective Security Treaty Organization (CSTO) is a regional security group comprising Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Uzbekistan and Tajikistan.
On Friday, the CSTO summit in Moscow approved a declaration that was too vague compared with the statements made by Russian President Dmitry Medvedev. He called on the allies "to pursue coordinated foreign policies" and "strengthen the military aspect" of the CSTO, without which the organization would be unable to develop.
Until August 2008, the Kremlin looked on unperturbed at the confusion in Eurasian organizations, such as the CSTO, the Eurasian Economic Community and the Shanghai Cooperation Organization. It now knows that Russia will not survive a lengthy confrontation with the West and so must encourage integration, and above all military integration, with its allies.
But are members of the CSTO, which the West has always considered a "paper tiger," ready to fight for each other?
Yuri Shevtsov, a Belarusian political analyst, said they are only ready for shallow integration.
"Few things are working as they should even in [Russia's] relations with Belarus, although they have common military contracts and a common group of armed forces," he said. "In particular, the establishment of a common air defense system, which is crucial for Russia's security, has been postponed until the elections in Belarus designed to normalize relations between Minsk and the West."
Dosym Satpayev, director of the Political Risk Assessment Group, a Kazakh consulting company, and member of the RIA Novosti Expert Council, said Russia should ease pressure on its Asian CSTO partners.
"Central Asian countries have learned a simple lesson: they can increase their importance in the geopolitical game only by balancing between Russia, China, the EU and the United States," Satpayev said. "Unconditional conversion to Russia's stance will not suit them."
Many of Moscow's allies fear that Russia may offer Abkhazia and South Ossetia the chance to join the CSTO, whose members would have to recognize their de facto independence in this event.
However, the West is facing problems too.
"By promoting at least political integration in the CSTO, Russia may complicate NATO's transit routes to Afghanistan and strengthen its military presence in some countries, above all Kyrgyzstan," Shevtsov said. "In the future, this could help it oust the U.S. from Central Asia."
Kommersant
Moscow, Ankara strike new Caucasus alliance
Russia and Turkey have begun developing an initiative they call the "Caucasus Stability & Cooperation Platform" advanced by Turkey to encourage political and economic links with five neighboring countries.
Turkish President Abdullah Gul tried to convince Armenian President Serzh Sargsyan of the need to form the new alliance over the past weekend. It was also the focus of the visit to Moscow by Azerbaijan's Foreign Minister Elmar Mamedyarov. The alliance would help Moscow and Ankara consolidate their positions in the Caucasus region, thus weakening Washington's influence there.
Turkish Prime Minister Recep Tayyip Erdogan presented the idea of forming the new alliance on August 12 in Moscow, and the initiative was supported in Russia. The alliance would also include Azerbaijan, Armenia and Georgia. The latter is the only one who has not yet given official consent to join, saying it would only be possible after Russia pulls out of its country.
Armenia expects to benefit from the plan - to normalize relations with Turkey and open the border, which means Armenian products will reach the Turkish market.
Azerbaijan has shown more interest in friendship and rapprochement with NATO and the West lately, but the latest Caucasus developments could have caused major changes in its policies.
Moscow, in turn, can give Azerbaijan at least two reasons why it should support Russia's policy in the Caucasus and abandon plans to befriend the West. Both have to do with different prospects of settlement of the Nagorno Karabakh conflict - the Georgian scenario, where it failed, despite the U.S. assistance, to resolve the South Ossetia and Abkhazia issues, and the Moldovan scenario, which is viewed as a successful one.
Transdnestr, Moldova's breakaway region, has recently lifted its moratorium on talks with Chisinau after its President Igor Smirnov's talks with Russia's President Dmitry Medvedev.
The next stage in building the new Caucasus alliance will be a personal meeting between the presidents of Russia and Azerbaijan. Dmitry Medvedev and Ilkham Aliyev talked on the phone last week and agreed that a meeting of ministers should prepare their talks.
A source close to the Kremlin said an Armenian-Azeri summit could be one of the issues discussed during the upcoming meeting, one mediated by the Russian president rather than the Minsk group of OSCE which had handled the Nagorno Karabakh peace process until recently.
Noviye Izvestia
Abkhazia wants to set up a tax heaven close to Russia
Last Saturday, Abkhazian President Sergei Bagapsh announced that his republic intended to become an offshore state. According to him, Abkhazia has all the makings of a free economic area. Analysts believe that with many Western offshore zones tightening up business rules, Abkhazia is capable of winning over a considerable number of offshore companies handling Russian capital.
Offshore zones are controlled by the International Monetary Fund and central banks of a number of countries. It is clear that the IMF and national banks will not recognize Abkhazia as an offshore until their governments recognize the republic as an independent state. As a result, only Russian and perhaps Nicaraguan companies will be able to maintain economic relations with offshore companies registered in Abkhazia.
But for now Abkhazia does not ask for more. Russian capital alone can improve the republic's financial fortunes. And, according to most of the analysts interviewed, a free economic zone in Abkhazia is not a fantasy or a matter for the distant future. "Abkhazia fully qualifies as an offshore," believes Vladimir Zharikhin, deputy director of the Institute of the CIS Countries. "China went through a similar process when it set up its free economic zone in Shenzhen: barbed wire on the perimeter, border checkpoints, and admittance by pass only."
Problems with the Sochi Winter Olympics could speed up the establishment of an offshore in Abkhazia. "The Krasnodar Territory has no gravel, while Abkhazia does. An offshore will give a boost to the building business," Zharikhin said.
In recent years, in efforts to control the financing of international terrorism, Western nations have put growing pressure on offshores and made many of them to tighten up controls. So the incorporation of an offshore in Abkhazia could prove manna from heaven for Russian business. "All over the world, offshores are losing their appeal," said Nikita Krichevsky, research head of the National Strategy Institute. "Most of deals and financial flows are already monitored and controlled. So I am 100 per cent certain that Abkhazia would win over Russian business from old offshores to its soil. There will be a special offshore for Russian business, because it will in effect be under Russian jurisdiction." Abkhazia could catch up with the Bahamas in financial freedom in six months, the analyst believes.
Gazeta
Russian company to get part of Total, StatoilHydro's stake in Kharyaga
Zarubezhneft, Russia's leading foreign trade company in the oil and gas sector, will take over a 10% stake of France's Total and the same stake of Norway's StatoilHydro in the Kharyaga PSA in the Nenets Autonomous Area, the Arkhangelsk Region in northeast European Russia.
The Kharyaga oilfield's reserves have been developed under a 29-year PSA that was signed in 1995 and came into effect in 1999. Total owns 50% of the project, Norsk Hydro 40%, and the Nenets Oil Company, controlled by the regional government, the remaining 10%.
The nominal value of the 20% stake is $3.7 million. The project initially cost $18.5 million, but the Energy Ministry has admitted the price of the Kharyaga reserves, assessed at some 97 million metric tons of oil (712.95 million barrels), has grown dramatically since 1999.
Industry analysts assess the project at $1.5 billion, or $2 per barrel of proven reserves, which means Zarubezhneft will have to pay some $300 million for the 20% stake. Analysts say it has the money and can also hope to get a major discount.
The possibility that foreign investors may have to cede 10% stakes is stipulated in the production sharing agreement. It was initially expected that the stake would be sold to LUKoil, Russia's largest private crude producer, and the Russian government even approved a relevant decision in 2001.
But LUKoil did not have a chance to use that right, because Total was then quarrelling with the Russian government over spending under the project. Those problems have traditionally resulted in accusations of violating contractual obligations and the threat of revoking the license.
It is not clear if LUKoil will cede its right to buy out the 20% stake to Zarubezhneft. Yesterday it declined to comment, but some time before that, the company's president, Vagit Alekperov, said LUKoil would not give up its call option right.
"Our company owns the wells used by the consortium. They were turned over to it by the government, and we have an agreement with it for getting the 20% stake as compensation for the losses LUKoil sustained," Alekperov said. "The option is still effective, and LUKoil will appeal to court to be able to exercise its right in case of problems."
Kommersant
TNK-BP makes generous proposal to minority holders
TNK-BP Holding, which owns TNK-BP's Russian assets, has made an extremely generous buyout proposal to its minority shareholders. It is buying out common stock at 11% above market quotations and privileged stock at up to 40%.
Those who vote against merging several of the subsidiaries into the holding at a shareholder meeting on September 8 will be able to sell their stakes. This is how the Russian-British venture is trying to streamline its shareholding in the run-up to the IPO agreed on between its Russian and British shareholders.
The shareholder meeting will focus on consolidating the holding's fully-owned subsidiaries, Sidanco-Neftepererabotka, Sidanco Investments, Sidanco Securities and Sborsare Management. They cumulatively own 5.366% of the holding's common shares, or 5.217% of its share capital. The securities will be cancelled if the merger is approved.
Those minority shareholders (3.3% of common shares and 5.1% of share capital) who vote against consolidation or abstain from voting will be able to sell their papers at 48.94 rubles per share, common or privileged. The price was set after an independent evaluation by KPMG auditors as of March 31.
The buyout will take place in December. If all the minority holders choose to sell their stakes at the price offered, TNK-BP Holding will have to pay more than 40 billion rubles ($1.6 billion).
Anton Konchin from Unicredit Aton said they should sell their stakes now and go back to this story by the next share placement by a company with higher liquidity.
On Thursday, TNK-BP shareholders announced the terms and conditions of their settlement and said they were willing to place up to 20% outside Russia.
"It was a pleasant surprise that TNK-BP offered to buy out minority holders," said Vladimir Vedeneyev, an analyst with the Bank of Moscow. He added that the company could further simplify its shareholding structure later by adding 50% of Slavneft and its Ukrainian assets (now held by TNK-BP Holding) to the company whose shares it is going to place.
Vedomosti
Gazprom's gas reserves soaring
Russian energy giant Gazprom increased its natural gas reserves by 4% on Monday, with the company receiving a license to develop the rich Chayandinskoye gas deposit (in Yakutia) with its proven reserves of 1.24 trillion cubic meters.
The gas field's reserves are twice as large as those of the Sakhalin-II oil and gas project, to acquire control of which Gazprom paid $7.45 billion.
The company will pay the advance of $1.5 billion rubles (63.8 million) to develop the deposit, said Anatoly Ledovskikh, head of the Federal Agency for Subsoil Use. The final amount of finance for the license will be determined after the government approves calculations procedures. The term is yet to be specified, with Gazprom planning to launch operations at the field after 2016.
The Chayandinskoye gas field, along with other nine deposits, was granted to Gazprom by the Russian government in spring 2008. Apart from the license for the Chayandinskoye field, warrants for developing another three gas fields were registered and validated for the company, including the Kirinskoye deposit, which is part of the Sakhalin-III oil and gas project. The remaining seven licenses will be registered in the nearest time, and the company is currently coordinating the projects, Ledovskikh elaborated.
The 10 fields' total reserves are estimated at over 4 trillion cubic meters, with Gazprom's budget for 2008 listing $16 billion rubles ($680.9 million) for the licenses.
The federal budget is expected to receive about 33 billion rubles ($1.3 billion) from the fields, the evaluations by Russia's Research Geological Oil Institute performed by order from the Federal Agency for Subsoil Use revealed.
According to the estimations, the expected price of $0.33 for a cubic meter of gas is half that paid by Gazprombank in 2006 for 51% in Sibneftegaz, with its reserves of 400 billion cubic meters. The sum paid by Gazprombank totaled $131.5 million, or about $0.64 for a cubic meter, which experts considered profitable for the buyer.
Gazprom is Russia's largest company and the largest extractor of natural gas in the world, with its total proven gas reserves of 29.8 trillion cubic meters. The Russian government controls 50.002% of shares in the company. In 2007, Gazprom's revenues amounted to 2.39 trillion rubles ($101.7 billion), with net profit of 658 billion rubles ($28 billion).
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