MOSCOW, October 1 (RIA Novosti)
Russian president proposes anticorruption measures/ Top court refuses to review privatization results/ Gazprom reveals Far Eastern pipeline project cost estimate/ Eni gives Gazprom third of Libyan field in exchange for opportunity to work in Russia/ Russia won't resume oil supplies to Lithuania/ Potential for protest grows in Russia/
Gazeta.ru, Vedomosti
Russian president proposes anticorruption measures
The Presidential Council has approved anticorruption bills and will submit them to the State Duma, the lower house of Russia's parliament, this week. They provide for confiscating the property of corrupt officials, but also include quite a few exceptions. Analysts say it is exceptions that engender corruption.
Some people thought Russia would suspend its fight against corruption after the war in the Caucasus, "but we will redouble our efforts," President Dmitry Medvedev said at the Council's meeting yesterday.
However, the Council has not approved all of the proposed measures against corruption, which Medvedev has described as "a grave disease eating at the economy and debilitating society."
Sergei Naryshkin, chief of the Kremlin executive office, said one of the proposed measures prohibits state officials from taking positions in a commercial organization with which they were connected in their official capacity for two years after their leaving state service.
However, that proposal has provoked quite a few questions and protests, and as a result state officials will be allowed to take jobs in business if their former bosses permit this.
A source with close ties with the leading members of the Council said Deputy Prime Minister Sergei Sobyanin, presidential aide Arkady Dvorkovich and the government representative in the country's top courts, Mikhail Barshchevsky, protested against the above measure.
They said a total ban would amount to prohibiting some officials from working in their profession.
Kirill Kabanov, chairman of the National Anticorruption Committee, said: "This could lead to the appearance of a new corruption scheme. Officials who supervised a certain sector will still have the ways and means to prevent their former subordinates from accepting a higher post."
Kabanov said this could force the said subordinates to bargain with their former boss, which implies bribes.
Oleg Sysuyev, former deputy prime minister and now deputy chairman of Alfa Bank, said: "Such a ban would effectively end the career of finance and economics ministers, who will be unable to find any jobs because they were responsible for all sectors of the national economy."
If an official accepts a post in business with the approval of his or her bosses, this would only strengthen ties between power and business, he said.
Mukhammed Tsikanov, former deputy economic development minister and now senior vice president of steel giant Mechel, said the bills proposed fighting the consequences of corruption, while the goal must be to preclude bribes by limiting officials' influence on economic decisions.
Kommersant
Vedomosti
Top court refuses to review privatization results
The Supreme Arbitration Court yesterday simultaneously dismissed the state's claims against three private companies. Judges rejected two actions filed by the Agency for the Management of Federal Property (Rosimushchestvo), which challenged the privatization of Domodedovo Airport and the Transammiak company in the 1990s, and did not allow the Finance Ministry to recover budget credit from a farm issued in 1998.
Experts hope this is an amnesty for business and an end to attempts to revise the results of privatization.
Experts see a positive trend in all three instances. "These cases deal with issues of fundamental importance for investors, such as the modernization of a large facility, and the statute of limitation. The stance of the Supreme Arbitration Court will be a guide for future judicial proceedings, especially those involving state bodies," said Yuly Tai, of the Bartolius lawyers firm.
Vladimir Kuznetsov, director of the TNK-BP Management legal department, says there is now a trend for the state not to look deeply into deals made many years ago. "The Court definitely shows that it is time to draw a line under the state-business relationship of the 1990s," he said.
Vladimir Vinogradov, professor at the Higher School of Economics, believes such decisions promote business confidence in authority. "In Russia, too many owners have property privatized with legal defects. The Court's decision makes them feel more protected," he said.
According to Vinogradov, the Court first showed its liberal views as early as April when it ruled to restrict the application of Article 169 of the Civil Code, dealing with confiscation. The article allowed tax authorities to seize property for the benefit of the state. "However, it is too soon to speak of a steady trend, because judicial practice is subject to change," he said.
The Supreme Arbitration Court is the court of last resort, and its rulings may not be challenged, said Artur Rokhlin, a partner of YUST law company, but the authorities might open litigation for Russia's largest airport afresh, re-defining their claim.
Vedomosti
Gazprom reveals Far Eastern pipeline project cost estimate
On Tuesday, Alexander Ananenkov, deputy CEO of energy giant Gazprom, said it would cost the company 230 billion rubles ($9.1 billion) to build a 1,800-km gas pipeline linking Sakhalin Island, Vladivostok and Khabarovsk in Russia's Far East.
Ananenkov said construction of the pipeline would begin next year and would end in July-September 2011. The project will receive 30 billion rubles ($1.2 billion), 100 billion rubles ($3.9 billion) and 100 billion rubles ($3.9 billion) worth of investment in 2009, 2010 and 2011, respectively.
He said the pipeline would at first pump gas from the Sakhalin-I and Sakhalin-II offshore oil and gas production sharing projects, but that it would only be filled to capacity after the Sakhalin-III project gets underway in 2015-2016.
The pipeline will eventually receive gas from the Chayandinsky gas condensate field in the Sakha-Yakutia Republic.
Ivan Ilyushin, chief analyst with VTB Asset Management, said the pipeline would cost less than other Gazprom projects, and that the company would spend $5.2 million per kilometer.
He said per-kilometer construction costs had totaled $5.8 million and $6.8 million in 2006 and 2007, respectively.
Valery Nesterov, an analyst with the investment company Troika Dialog, said foreign gas pipelines were much cheaper, and that per-kilometer construction costs for the Turkmenistan-China, Nabucco, Turkey-Italy and Nigeria-South Europe projects were $1 million, $3.8 million, $1.3 million and $2.4 million, respectively.
"The motives for this expensive project are unclear because of low gas demand in Russia's Ear East, because the Sakhalin-I project cannot fill the pipeline to capacity, and because Sakhalin-III deposits have not been studied yet," Nesterov said.
Gazprom is probably trying to obtain as many regional gas production licenses as possible, Nesterov told the paper.
Kommersant
Eni gives Gazprom third of Libyan field in exchange for opportunity to work in Russia
By the end of October, Italia's ENI will have processed all the necessary documents to hand over one third of its share (33%) in the Libyan oil field Elephant to Gazprom, Kommersant reported. In exchange for access to Libya, Gazprom promised to coordinate the transportation and sale of Arcticgas gas, which the Italians purchased at a tender for Yukos assets in 2007. As a result, Eni and Enel, its partner in Russian assets, will be finally able to start with the development of the fields.
Elephant's proven reserves amount to 68 million metric tons of oil, with a third of it estimated at $2 billion. The agreement for managing Arcticgas' assets (its proven reserves exceed 900 billion cubic meters of gas, 300 million tons of condensate, and 860 million tons of oil) includes a development plan, the terms of selling and transporting Arcticgas' gas, Gazprom joining the projects to develop and produce hydrocarbons in Libya, as well as a further policy on the South Stream pipeline.
Eni and Enel acquired Arcticgas in April 2007 at a tender for Yukos assets. They also bought Urengoioil, Neftegaztekhnologiya and 20% of Gazprom Neft, which totaled 145 billion rubles. The assets now belong to Severenergiya, where Eni and Enel have 60% and 40%, respectively, with Gazprom having a call option to buy out Severenergiya's controlling interest from the Italians.
Konstantin Cherepanov from KIT Finance is sure that, even if it gets Elephant, Gazprom will insist on realizing its call option to buy 51% of Severenergiya from the Italians.
Gazprom gave no commentary regarding the matter yesterday. According to Eni CEO Paolo Scaroni, Gazprom will buy out Gazprom Neft stocks "within the next few months."
Cherepanov points out that the package now costs 20% more than it did at the time when the call option agreement was concluded - $4.45 billion against $3.7 billion. This said, the deal is obviously beneficial to Gazprom.
Gazprom and Eni signed a cooperation agreement in November 2006. The contracts with Eni to supply Russian gas to Italy were extended to 2035. In 2007 Gazprom Export delivered 22 billion cubic meters of gas to the country. Also, the parties are realizing the South Stream pipeline project to supply Russian gas to Europe.
Maxim Shein from BrokerCreditService notes that initially Eni and Gazprom planned to develop partnership similarly to the monopoly's cooperation with Germany's E.On and BASF, which implies mainly exchanging assets. But in the case of Italy's concerns, the expert emphasizes, the Russian party's contribution boiled down to Eni and Enel's opportunity to participle in selling off Yukos assets and buy Arcticgas - that is, getting access to the Russian market. In exchange, the Italians let Gazprom work in Libya.
But Eni's presence in Russia may be expanded. Yesterday, Paolo Scaroni reported that Eni would like to join the Russian monopoly's project to produce liquefied natural gas in the Yamal Peninsula "if Gazprom doesn't object."
RBC Daily
Russia won't resume oil supplies to Lithuania
Moscow has suggested that Lithuania finance the repairs on Russian pipeline Druzhba.
Russian Ambassador Vladimir Chkhikvadze, who delivered the proposal, said Russia found it economically inefficient to repair the pipeline and resume oil deliveries through it. Analysts believe that proposal banished all hopes that Russian oil deliveries to Lithuania would ever be resumed.
Russian oil deliveries were disrupted in 2006 after a breakdown of the pipeline. Russia then said that Druzhba was blocked for technical reasons. Russia's industrial safety regulator, Rostekhnadzor, later found more than 7,000 flaws in two sections of the pipe.
Transneft, Russia's pipeline monopoly and the operator of Druzhba, said it probably wouldn't repair the pipeline at all.
Industry and Energy Minister Viktor Khristenko confirmed in the summer of 2007 that Russia was not planning to repair the oil link to Lithuania.
Lithuania, in turn, took the cut-off as Russia's way of getting even for a refusal to sell a Lithuanian refinery, Mazeikiu Nafta. Although several Russian companies eyed the asset in 2006, it was eventually sold to Poland's PKN Orlen. The disruption of deliveries through Druzhba inflicted huge losses on Mazeikiu Nafta.
A source in Transneft also said the company was not planning to repair the pipeline.
"The damaged part is in Lithuania, so if they wanted, they could begin working on it without waiting for our permission," he said.
But Lithuania is also unlikely to take up the task, said Alexander Shtok, head of the Due Diligence department at 2K Audit-Business Consulting. It is a costly project, and Lithuania has no guarantee of future oil deliveries through it, not even after it pays for the repairs.
Therefore, on the one hand, Russia's proposal disproves the alleged political motives behind the cut-off deliveries, emphasizing purely business reasons, and on the other hand, puts paid to the idea of resuming deliveries, the analyst added.
Meanwhile, the Druzhba predicament keeps the Nord Stream plan pending, because the new pipeline needs to cross Lithuania's territorial waters. However, the construction of the second stage of the Baltic Pipeline System (BPS), a project to deliver gas from major Russian oil provinces to a terminal on the coast of the Gulf of Finland for export, is indirect evidence of Russia's intention to reduce deliveries through Druzhba, and not only to Lithuania, Shtok concluded.
Gazeta.ru
Potential for protest grows in Russia
The Levada Center pollster, which measured the level of discontent in Russia in the middle of September, says the majority of Russians are not prepared to take part in socio-political protests.
However, these results have quickly become outdated, because the people's belief in a better future and their material situation were not yet affected by the global financial crisis when the poll was conducted.
The crisis will hit the hardest those who have something to lose and who expected their gains to increase through education, diligence and effort. They can be described as Russia's middle class, although the Levada pollster prefers to call them the "middle group."
Information about sentiments in that group offers interesting insights, in particular with regard to the trend for social protest. The upper section of this group is more ready for action than the "lower group" (meaning the poor), and discontent among "managers" and "workers" is equally intense.
The reason is not that more prosperous Russians feel sympathy for their less lucky compatriots, or that the idea of social justice is winning more hearts and minds. Most probably, the middle group has embraced the idea of "class struggle" because of a growing gap between it and the upper (richest) group of Russians and diminishing freedoms.
The potential for protest registered in September will most likely grow. At least two factors will influence the situation in the future. One is inflation, which is accelerating on the back of the authorities' efforts to save the financial system. The other is the crumbling hope of the middle group for stability and prosperity, which seemed so close at hand.
In other words, the two groups who appear ready for social protest will be hit the hardest.
The unification of the potential for protest of the middle and the lower groups, although they have different goals, may have a highly destructive effect. In the early 20th century, the hostility of the Russian "educated class" against the top authorities, combined with the mass arming of the poor, eventually led to the destruction of the Russian Empire.
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