MOSCOW, November 19 (RIA Novosti)
Russia will not honor some G20 decisions / Russia's conflict-resolution initiatives give U.S. headache / Venezuela to buy Russian man-portable air-defense systems / Itera offers Gazprom public private partnership / Gazprom reshuffles noncore assets / LUKoil executives may waive annual bonuses to cut costs /
Vedomosti
Russia will not honor some G20 decisions
Russia has problems with fulfilling the decisions on dealing with the financial crisis made at the G20 summit in Washington, although Russian President Dmitry Medvedev said in Washington the summit was a success and Russia was satisfied with its decisions.
But on Monday Prime Minister Vladimir Putin questioned one of the main summit decisions - a gentleman's agreement on a 12-month moratorium on any new protectionist measures.
Prime Minister Vladimir Putin said at the meeting of the government's presidium on Monday that Russia would comply with the G20 decisions, but would carry out the planned measures to protect its national interests. Protectionist measures to stabilize the economy are a major part of Russia's stimulus package.
This has happened before. Medvedev signed the G8 declaration on sanctions against Zimbabwe last July in Japan, but several days later Russia vetoed an according resolution of the UN Security Council.
Russia will comply with the G20 decisions, Medvedev said when opening an anti-crisis meeting of the State Council in the Urals city of Izhevsk, and then went on to speak about national interests, support for the national auto industry, and exports.
Supporting exports, Medvedev said, would be difficult "at a time when the state takes protectionist measures despite all manner of appeals [to renounce them]."
It is not clear when the president changed his mind, in Washington or upon his return to Russia. Indeed, the problems of the Russian auto industry seem to be of greater concern in Izhevsk, a city that has an automotive plant with an annual capacity of 200,000 automobiles.
In general, this is not a specifically Russian phenomenon, because big-time politics entails a measure of cynicism and the ability to change one's view and recognize one's mistakes.
RBC Daily
Russia's conflict-resolution initiatives give U.S. headache
U.S.-Romanian consultations on the Transdnestr conflict were held in Bucharest the day after Prime Minister Vladimir Putin proposed in Chisinau to restore the plan proposed by Regional Development Minister Dmitry Kozak, but declined by Moldova in 2003 upon Western insistence. Washington seems determined to prevent a resolution of the conflict based on Moscow's proposals.
The meeting between U.S. Deputy Assistant Secretary of State David Merkel and Raduta Matake, Secretary of State of Romania's Foreign Ministry, ended with a confirmation of the current status-quo on the projected settlement talks format as five plus two - Moldova, Transdnestr, Russia, Ukraine and OSCE, and the United States and the EU as observers.
"Until recently, Moscow, Chisinau and Europe were happy with this status-quo that only imitated talks," said Moldovan political analyst Bogdan Tsyrdya. "The EU still hopes that time is on its side and that it will be able to integrate the Transdnestr elite some day. Russia wants to retain its military presence in the region. Moldova's ruling party needs to score political points in the run-up to the 2009 elections."
Russia's settlement plans envisaged legalizing Moldova as a federation and Transdnestr as one of its constituent regions with broad autonomy. Moscow was to keep its force in the region to monitor how the agreement is observed.
But neither the EU nor the United States were happy with the arrangement, because it would have undermined their influence in the conflict area and in the region as a whole.
In fact, Romania isn't a party to the conflict. Neither is it a guarantor or mediator or even an observer.
"Romanian President Traian Basescu has come to power by issuing slogans about the need to unite Moldova and Romania, a single nation once split," a source in the Romanian parliament told RBC Daily. "Therefore, he doesn't like Russia's plans any more than the Americans do."
In 2003, U.S. diplomats pressured Moldova so severely, up to threatening an economic and political blockade, that President Vladimir Voronin couldn't do much to resist that pressure and terminate the longstanding conflict.
The recent Bucharest meeting is part of that pressure. The West will do anything to prevent a bloodless resolution of the conflict under Moscow's guidance. Russia's military presence in the region is also a problem because the neighboring Romania is an EU member.
"They are trying to exert pressure also through OSCE and other European organizations," a source in the Moldovan government said. "However, President Voronin says he is more determined this time, possibly because his own future is at stake now too."
Vedomosti
Venezuela to buy Russian man-portable air-defense systems
Rosoboronexport, the main Russian state-owned arms exporter, has signed a major contract for the sale of Igla-S man-portable air-defense systems (MANPADS) to Venezuela.
The St. Petersburg-based Leningrad Optical-Mechanical Association (LOMO), manufacturing medical equipment, civilian and military optics, said it had signed a contract with the KBM Engineering Design Bureau in Kolomna, 100 km southeast from Moscow, for the delivery of components worth 72 million euros in 2009-2011. The components will be used to fulfill an arms-sale contract.
LOMO declined to name the contract price and the customer, and the KBM could not be reached for comment on Tuesday.
A manager of a LOMO partner company said this implied a contract for the delivery of several hundred Igla-S MANPADS worth several dozen million dollars to Venezuela.
Another defense plant manager said the 72 million euro contract also stipulated the delivery of components for Khrizantema (Chrysanthemum) self-propelled guns, also manufactured by the KBM for Syria and Libya, and that Igla-S MANPADS would be exported to Vietnam and some other countries.
The manager said KBM contracts for the 2009-2011 period cost $300 million because LOMO's homing-missile warheads accounted for just 30% of missile prices, and because other LOMO components would be supplied.
Rosoboronexport spokesman Vyacheslav Davidenko declined to comment on the issue. The Venezuelan Ambassador to Russia, Hugo Jose Garcia Hernandez, told the paper through his aide that he was not ready to discuss the MANPADS contract either.
Ruslan Pukhov, a member of the presidium of the Russian Defense Ministry's Public Council, said Washington regarded the sale of Igla MANPADS to Venezuela as the most sensitive aspect of KBM contracts, and that it would try hard to thwart the deal.
The United States has been accusing Venezuelan President Hugo Chavez of aiding the Revolutionary Armed Forces of Colombia (FARC) for a long time.
In March 2008, U.S. Drug Enforcement Administration (DEA) agents conducted a sting operation against an alleged illegal arms dealer Viktor Bout, nicknamed the "Merchant of Death," in Thailand.
Thai police acted on an arrest warrant issued by the U.S. government, which accuses Bout of supplying weapons to Colombia's FARC rebels. He is currently awaiting deportation proceedings.
Pukhov said the above-said DEA operation had involved agents provocateurs posing as FARC customers, and that a successful Venezuelan contract would highlight the new Russian authorities' independent foreign policy with regard to Washington.
Kommersant
Itera offers Gazprom public private partnership
The oil and gas company Itera has offered Gazprom the chance to jointly develop small gas fields, including those owned by the gas monopoly. To do so, Itera believes, public private consortiums should be set up. All in all, the company reckons, there are 700 such deposits in Russia, with aggregate recoverable reserves of 3 trillion cu m.
Market players, however, have noticed that the monopoly has not supported such a project until now.
Itera sent its proposals to the gas monopoly at the start of the year. Since then, according to Itera CEO Vladimir Makeyev, the two companies have set up an expert group of managers, who are now conducting talks on specific deposits and financial schemes of cooperation.
Itera believes public private projects can be effective in bringing piped gas to the regions and delivering power supplies to large industrial consumers. A similar gas production project is under way this year on the Bratsk deposit in the Irkutsk Region.
In December 2007, Itera, Vneshekonombank and the Bratsk administration set up a joint venture to develop it.
In Makeyev's view, the state could back such projects by granting them tax holidays and cutting obligatory payments in view of the difficulties and urgency of development of a particular field. Itera already has two joint ventures with Gazprom: Sibneftegaz and Purneftegaz.
The Natural Resources Ministry has supported the initiative. "We stand behind companies that develop small deposits by using existing tax and economic tools," said Nikolai Gudkov, the head of the Ministry's press-service. "We have suggested tax breaks, reduced transportation tariffs, and lowered administrative barriers. But so far no decisions have been made."
Gazprom confirmed it was discussing the project with Itera, but declined to comment further.
Sergei Stepanov, director of the independent gas trader Trans Nafta, said his company came up with such initiatives three to four years ago, but Gazprom did not support them. The current market situation, in Stepanov's view, will make the companies forget about the development of new deposits for "a year or two." "When there is a money squeeze, one wants a private public partnership," the top manager said.
Valery Nesterov from Troika Dialog said Gazprom was unlikely to concern itself with small deposits anytime soon.
Nezavisimaya Gazeta
Gazprom reshuffles noncore assets
Gazprom press secretary Sergei Kupriyanov said the energy giant's management has decided to divest noncore assets.
However, the concern will not sell the St. Petersburg soccer club Zenit and will continue to finance the German Schalke 04 club.
Analysts say it is almost impossible to correctly assess Gazprom's noncore assets because of the nontransparent ownership structure of the gas monopoly. Therefore, the divestiture of noncore assets may amount to a reshuffle.
"Gazprom has sold a substantial part of its noncore assets," Kupriyanov said. "It is divesting insurance, banking and media companies. But the Zenit club is a socially significant noncore asset, and so we will not sell it."
Since Gazprom bought Zenit in July 2006 for $36.25 million, investment in it has grown to $150 million, including the purchase of players and development of its infrastructure. Last August, Zenit bought Portuguese player Danny Miguel for 30 million euros from Dynamo Moscow. In February 2007, it bought midfield anchor Anatoly Timoshchuk from Ukrainian Shakhtyor Donetsk for $20 million.
Gazprom is also financing German soccer club Schalke 04. It signed an agreement in 2006 to pay 100-125 million euros to the club within five years.
Gazprom spokesman Denis Ignatyev, responsible for the company's foreign projects, told the newspaper yesterday that Zenit and Schalke are two different things. He said Gazprom owns Zenit but is the general sponsor of Schalke, adding that the monopoly would continue to sponsor the German club.
Analysts cannot carefully assess Gazprom's noncore assets.
Mikhail Zanozin, an analyst at the Uralsib financial corporation, said: "The ownership structure is nontransparent and the number of assets in power generation, petrochemicals, construction and other sectors is so large that it is impossible to give even a rough assessment. The company could divest such assets more effectively."
Last year Gazprom raised as much as 38 billion rubles ($1.4 billion) from the sale of noncore assets. It has recently announced the sale of 18 assets between November 10 and December 12, including hotels and agribusinesses, worth a total of 22 billion rubles ($802 million).
Vedomosti
LUKoil executives may waive annual bonuses to cut costs
If LUKoil's top managers and directors who hold over 30% of the company's shares give up their annual bonuses, the oil major, with a market capitalization of $24.2 billion, can cut costs by $10 million.
The company said on Tuesday, quoting its president, Vagit Alekperov, that the management would not claim their bonuses "if need be." Annual bonuses are paid in the middle of the year after an annual shareholder meeting, the source said, adding that LUKoil's top managers and board directors could also give up their bonuses.
The company source did not specifically describe a situation in which the executives would use this cost-cutting scheme, but said it would depend on the price of oil.
LUKoil has discussed three respective scenarios for next year, based on average oil prices of $85, $65 and $45 per barrel. This year's average is $104.5, up from $72.5 in 2007.
Russia's second largest bank VTB was, until recently, the only Russian company whose management had agreed to waive their bonuses. Neither Rosneft, nor Gazprom executives discussed such plans, according to their spokespeople.
LUKoil's board includes 11 directors, six of them former or current managers, others representatives of affiliated companies, four independent directors and a representative of the U.S. ConocoPhillips, the holder of a 20% stake in LUKoil. Last year's bonus payments to the board totaled 47.92 million rubles, down 4% from the 2006 level.
LUKoil's management includes 15 people. Their total bonus was some 614 million rubles last year, up 19% from 2006, and their salaries totaled 377 million rubles.
Admittedly, LUKoil's top managers earn much more as the company's shareholders. As of the end of June, they controlled 30% of the company's stock. Vagit Alekperov was to receive 7.2 billion rubles as dividends in 2007, vice president Leonid Fedun about 3 billion, others over 1 billion rubles.
LUKoil's US GAAP profit may surge 40% this year, and so will their dividends, said Pavel Sorokin, an analyst at the UniCredit Aton, part of the international Unicredit Group.
LUKoil directors were unavailable for comment Tuesday, while a ConocoPhillips spokesman declined to comment.
RIA Novosti is not responsible for the content of outside sources.
