What the Russian papers say


MOSCOW, October 24 (RIA Novosti)
Row threatens Russian-Serbian oil and gas agreement / Tariffs authority cushions pipeline monopoly against debt spike / Vice-premier wants Inter RAO UES to expand / Antimonopoly regulator stops Google's Russian deal / Russians ask government for nationalization / Russians turn to the occult to seek shelter from crisis/


Row threatens Russian-Serbian oil and gas agreement

A row over Russian natural gas deliveries to Serbia may endanger the recently signed oil and gas agreement with Moscow, which provides for giving Gazprom control over Serbia's energy monopoly, NIS.
The dispute began after the signing of an annual protocol to the Russian-Serbian gas agreement in Moscow on October 14. Under it, Serbia is to receive 2.390 billion cubic meters of Russian natural gas worth 700 million euros in 2009.
It turned out that Sasa Ilic, head of Srbijagas (Serbiagas), responsible for gas transmission, distribution, storage and trade in Serbia, had signed the document without the approval of the company's board and not directly with Gazprom, but with its intermediary, Yugorosgas, which will receive 5%, or nearly 35 million euros, for its services.
It was also established that Ilic is vice president of Yugorosgas, a joint venture between Yugoslavia and Russia set up in 1996. In 2005, the Russian monopoly increased its stake in the joint venture to 75%.
The company started mediating in the two countries' gas relations in early 2006. Mladjan Dinkic, who was in Vojislav Kostunica's government at the time, yesterday announced that Moscow had allegedly insisted that Serbia must buy Russian natural gas through Yugorosgas or not at all.
Sources with close ties in the Serbian government said that transferring control over Yugorosgas to Gazprom and making the joint venture the intermediary in gas trade was Serbia's payment to Russia for its support in the struggle over Kosovo.
Fierce debates over the Moscow protocol have revived the delicate issue of oil and gas agreements signed this year. According to them, Russia will build a branch of the South Stream gas pipeline across Serbia, and Gazprom will buy a 51% stake in Serbia's biggest oil company, NIS, for the moderate sum of 400 million euros.
Belgrade noted that Russia's general plan for the development of its gas sector until 2030 puts off the commissioning of South Stream to 2015 from 2013.
Late last week, Gazprom CEO Alexei Miller met in Moscow with representatives of several Romanian companies to discuss attracting Romania to the South Stream project, where it might replace Bulgaria.
Serbia considers this evidence of new problems in Gazprom's gas pipeline project, designed to annually pump 30 billion cubic meters of Central Asian and Russian gas to the Balkans and on to other European countries across Bulgaria, Serbia, Hungary, Italy and Greece.
"There are too many questions in the agreement on which Serbia has pinned its hopes," a source with ties in the Serbian government told the popular business daily Kommersant. "When will Serbia receive Russian gas? For how much? Where will the pipeline be built? The problem with Yugorosgas should be solved soon, or else our doubts over the oil and gas deal with Russia will grow, and its opponents will get an additional trump card."


Tariffs authority cushions pipeline monopoly against debt spike

Starting from January 1, oil producers will pay Transneft the amount necessary to keep the Russian pipe monopoly's debt below 2xEBITDA.
A source close to the Federal Tariffs Service told Vedomosti about the new scheme for calculating oil transportation tariffs. Another source, close to the Economic Development Ministry, confirmed the information. The tariffs regulator and Transneft both declined to comment.
Transneft is implementing a series of strategically important projects for the industry, and officials must have decided to insure it against a sharp growth of debt, said Vladimir Vedeneyev, an analyst with the Bank of Moscow.
"There is nothing to worry about yet: in 2007, Transneft's debt to EBITDA ratio was 1.2. But the monopoly has ambitious borrowing plans. It plans to finance the construction of the second leg of the Baltic Pipeline System (BPS-2, part of the 2009 investment program) through a ruble bond issue," said Vitaly Karaganov, a department head at the Energy Ministry.
A Transneft spokesman said they were discussing several fund-raising options but did not specify the amounts they were talking about.
Additional transportation costs, especially added to decreasing global oil prices, will bring oil producers' revenues further down, said Valery Nesterov from Troika Dialog. In this situation, it would be more logical to postpone a few construction projects, such as the second legs of the BPS and the Eastern Siberia-Pacific Ocean pipeline, rather than augment oil companies' burden.
LUKoil, Rosneft, Gazprom Neft, TNK-BP, and Surgutneftegaz refused to comment.
Transneft is an oil pipeline company 78.1% owned by the state, operating a 30,000-mile pipeline network. Its IFRS revenue was 221.942 billion rubles, and its net profit was 64.674 billion rubles ($2.4 billion) in 2007.


Vice-premier wants Inter RAO UES to expand

While he is not yet head of the Inter RAO UES board of directors, Deputy Prime Minister Igor Sechin has nevertheless announced that the company will seek out markets in Latin America, Asia and South Africa. Inter RAO's plans also include Western Europe, where its partners will be not only France's EdF, but also Italy's Enel. In the next two years, Inter RAO plans to spend $5.5 billion on foreign expansion.
Inter RAO UES is a Russian electricity export and import monopoly. It owns 8000 MW of capacities in Russia and abroad. Rosatom (Federal Nuclear Power Agency) holds 57% of shares, 38.5% is owned by minority holders and 4% are treasury shares. On Thursday, they traded at $570 million. By 2015, Inter RAO wants to increase its capacities to 30000 MW and its value to $14 billion.
On Thursday, the company had an extraordinary shareholder meeting. At it, the vice-premier only became one of the board members, not its head. The first board meeting, which is to be held shortly, will elect a new chairman.
"There is no doubt that Mr. Sechin will become the chairman," said a source familiar with the situation. "He has already started an active review of the company's assets and approves plans for its expansion abroad."
Thursday's statement by the company's director for strategy and investments, George Rizhinashvili, confirms the seriousness of Sechin's intentions. Previously, Inter RAO has always kept under wraps the sums it planned for new acquisitions. However, on Thursday, Rizhinashvili disclosed that in the next two years the company would spend $5.5 billion outside the country alone. Most of that sum (65%) is meant for M&A deals and only 35% for new construction. "Well-known Russian banks" will help Inter RAO with financing. One of them is Vnesheconombank, which has spent 20 billion rubles on buying a blocking stake in Inter RAO. Most of the money will go into new acquisitions.
In the view of Matvei Taits, an analyst with Uralsib investment company, the financial crisis, given money, may enable Inter RAO to enter West European markets. "The time for such acquisitions is now," the analyst said. "Abroad, energy asset prices have dropped, too, although not so significantly as in Russia."
Sergei Pikin, director of the Power Development Fund, said that Inter RAO was now feeling more confident about buying assets in the West, but believes that the company will have a greater presence in Eastern Europe. On Thursday, George Rizhinashvili said Inter RAO was planning to cooperate with the Czech power utility CEZ in Romania.


Antimonopoly regulator stops Google's Russian deal

The Russian regulator has not allowed Google, the world's largest search vehicle, to buy Begun, Russia's second largest seller of contextual advertising.
According to official data, Prime Minister Vladimir Putin said he was unhappy with the proposed deal.
The Federal Antimonopoly Service (FAS) yesterday rejected the request of Kokuna Holdings Limited, Google's Cyprus-based subsidiary, to buy a 100% stake in Begun from Rambler Media.
Rambler Media is a Russian-language Internet media and services group, which operates or has interests in the Russian Internet homepage and search engine Rambler.ru, online newspaper Lenta.ru, product comparison website Price.ru, Internet catalogue and navigation system Top 100, instant messaging service Rambler-ICQ, digital advertising agency Index20, and contextual advertising company Begun.
FAS head Igor Artemyev said Google had not provided reliable and sufficient information about persons who could influence the company's economic operations and the full list of owners, which prevented FAS from calculating the possible consequences of the deal, in particular whether it would help or hurt competition.
Google will have to file a new request, he said.
"We are very disappointed to hear that FAS has come to this decision, since we strongly believe that this acquisition will enable us to significantly improve opportunities for Russian users, advertisers and publishers as well as the entire industry," Google Russia PR director Alla Zabrovskaya told Reuters.
"At this time, we are awaiting the FAS's decision. Once the review process is complete, we will decide on our next steps," Zabrovskaya said.
Google agreed on the purchase of Begun last July. Under the terms of the deal, Rambler was to buy a 49.9% stake in Begun from the Finam investment company, and then sell it together with its 51.1% stake to Google. The deal could be completed only with a FAS approval, said Vyacheslav Kochetkov, a Finam spokesman.
With Begun, Google would become the biggest rival of Yandex on the Russian market of contextual advertising, which was worth $210 million in 2007.
Last year, Begun held 20.2% of that market, Yandex about 64%, and Google nearly 5%, according to ad agency iContext. With Begun, the American search engine would have had approximately 25% of the market.
"We are surprised by FAS's decision; we did not expect such interference," said Mikhail Ushakov, a representative of Yandex, Russia's largest Internet search engine and a leading Russian Internet and technology company.
A source with close ties among Rambler shareholders told the popular daily Vedomosti that Prime Minister Vladimir Putin expressed dissatisfaction with the proposed deal. The Internet may soon have the same audience and influence as television.
Putin's press secretary, Dmitry Peskov, said the prime minister did not take part in taking the decision on the deal with Google, which is a prerequisite of FAS.

RBC Daily

Russians ask government for nationalization

VTsIOM national pollster has held another survey, asking Russians what they think about the financial crisis.
The survey that canvassed 1,600 people in 42 regions will probably leave liberal-minded politicians disappointed: more than half of those polled said they would be happy if banks and major industrial companies were nationalized. On the other hand, Russians are still critical of the government's bailout package.
Despite the frantic efforts of the federal TV channels to prove the opposite, most Russians still see the financial crisis as a local reality rather than an overseas plague: 44% expect it to adversely affect the economic situation in the country, while 41% fear that the crisis will ruin their own financial situation.
Russians seem to generally follow the logic of the government's anti-crisis efforts, however tangled it is, but see them as ineffective at the best. The gist of their responses is as follows: instead of bailing the country out, the officials are busy rescuing their own business without thinking of the people.
For example, 56% said it would be more important to keep prices in check than to save banks from bankruptcy, while only 23% hold the opposite opinion; 79% believe government regulation of prices could help in the tight situation; 58% think nationalization of major enterprises would be advisable; and 50% want banks nationalized as well.
These statistics suggest two important conclusions. First, Russians have more confidence in their government than in major businesses. Second, liberal ideas putting personal freedoms and private initiatives above collective interests are still uncommon in Russia and only have a few adherents. On the other hands, neither of these conclusions is sensational.
What really is surprising is the fact that the majority of lower middleclass Americans have also heartily welcomed the de-facto nationalization of mortgage giants Fannie Mae and Freddie Mac, and not only because their personal pensions are directly linked to the situation. Westerners are also annoyed with the "golden parachutes" of incompetent top managers and with the growing social stratification, which are both the delayed results of the neo-liberal revolution of the 1980s.
"Liberalism is dead," said Tatyana Bulakh, president of Public Dialogue NGO. "Although the United States used to preach liberalism to the world, it began talking about tough protectionism last December."
This is only logical, isn't it? Neo-liberalism includes limited role of the state during the times when financial bubbles grow. But when they burst, the government is the only force that can help everyone everywhere.

Novye Izvestia

Russians turn to the occult to seek shelter from crisis

The current economic crisis has led to an increased interest in the occult and paranormal among residents of Russia, recent surveys revealed. According to the polls, every third client of the country's astrologers and psychics has sought advice on business and financial issues.
"There is a snowballing public interest in the occult in the country at the moment," Leonty Byzov, head of the analytic department for the Russian Public Opinion Research Center VTsIOM, said.
According to him, the tendency is also fueled by the position of officials, who "make little explanations" for the current state of affairs thus making people think the actual state of things is being withheld from them.
"People still remember the default which occurred in 1998, when President Boris Yeltsin kept on saying everything would be all right, while the financial crisis hit the country the next day. People are frightened, and the less they trust the officials the more they believe in the supernatural stuff," Byzov stressed.
"The crisis has evoked fear, and people are addressing the magicians in an attempt to cope with this fear, trying to protect and encourage themselves," psychiatrist Mikhail Golubev echoed.
The better-off segment of the population is the group which is turning to paranormal services the most, astrologers say. "More people turn to astrologers, psychics and magicians to protect themselves from trouble by having their future predicted," astrologer Pavel Sviridov notes.
According to Denis Matveyenkov, head of the department for social and political research at the Bashkirova & Partners monitoring company, people with higher education, the young and the middle-aged are those who show most interest in the paranormal services, while pensioners and badly-educated people are not so keen on the supernatural.
Interestingly, Russians turn to magicians and physics more often than they seek encouragement in official religions. According to Leonty Byzov, this stems from the insincere attitude to the religion of most Russians, who consider themselves Orthodox Christians while still believing in fortune-telling, superstitions, and reincarnation, which has nothing to do with the traditional religion. Even Orthodox followers believe in miracles, such as healing powers of holy relics and holy water, which are not of primary importance in Christianity. "Such a vast interest in the occult is unparalleled in Europe," Byzov noted.

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