What the Russian papers say


MOSCOW, December 16 (RIA Novosti)
Russia messes around with oil stats on eve of OPEC summit / Russia postpones battle against corruption / LUKoil to shelve some foreign projects / Russians will not economize on New Year gifts


Russia messes around with oil stats on eve of OPEC summit

Oil output in Russia was down 0.7% in January through September, according to the estimates by the State Statistics Service, Rosstat. However, Prime Minister Vladimir Putin said last Friday that the fall in January-November was 0.5%.
This could only be possible if the latest statistics now only available to top officials show a booming growth in November, which could have partly compensated for the past nine-month' decline.
But is it much more probable that his statement has something to do with Russia's plans to participate in the next OPEC summit to be held in Algeria on December 17, and its hopes of being granted full membership there.
Putin's attempt to make things look better is easily explained from this perspective: the smaller the uncontrolled decline in production, the more benefits Russia could get for planned cuts.
If Russia's talks with OPEC produce a decision to coordinate actions, Russia will have to slash production by 3% in January.
OPEC president Chakib Khelil said all member countries as well as Russia supported the plan to cut oil production significantly and sharply, by 1.5-2 million barrels per day.
Vagit Alekperov, head of Russia's largest private oil producer LUKoil, said OPEC was looking to force Russia to cut production by 200,000-300,000 barrels per day from January 1, 2009. Without seasonal adjustment, that would mean a 2%-3% cutback.
Analysts doubt that Russia's private oil producers would agree to go along with the government's agreement with OPEC.
"There was a similar attempt to please OPEC in 2006. At first they promised they would cut production by 150 barrels per day, then apologized saying they could only manage 50, then 35, while oil companies ended up raising production by 150 barrels per day," said Mikhail Krutikhin from RusEnergy.
He added that high export duties could only gradually force production down in the long term, while to push prices up, the market would need a one-time sharp reduction of supply.


Russia postpones battle against corruption

Analysts say the numerous amendments proposed by parliament to the president's anti-corruption package have destroyed it.
In particular, MPs have canceled President Dmitry Medvedev's proposal to cut the number of people enjoying immunity, contrary to the December 5 reminder by the Council of Europe's Group of States Against Corruption.
Igor Nikolayev of FBK, the leading accounting and business advisory services company in Russia, said the latter move would hamper the fight against corruption among top officials, the type of corruption seen as the most harmful.
Likewise, the deputies removed the provision stipulating stricter control over the structure of ownership at companies involved in corruption-related crimes. An officer from the Interior Ministry's headquarters said the regulation was proposed because many deputies and officials receive shares or stakes as companies' payment for their "assistance."
The rule obliging municipal officials to place their securities in trust management will not be enforced until an asset management company is chosen. Federal officials have been waiting for it since 2005.
Officials no longer have to report all corruption-related crimes, but only those in which they personally are involved.
A source in the State Duma, the lower house of Russia's parliament, said the removal of the above provision and the one on immunity had created a contradiction between the anti-corruption law and the president's anti-corruption plan, because the plan stipulates these provisions and the law was formulated to implement the plan.
As of now, the package also disregards the provisions of international conventions Russia intended to apply by approving the above bills.
Vladimir Pligin, chairman of the Duma committee on state development, and his first deputy, Alexander Moskalets, proposed the bulk of amendments, including 30 amendments to the basic law on corruption.
Moskalets said he supported the president, but it turned out that society and authorities are not prepared to implement the president's ideas.
Pavel Kudyukin, assistant professor at the Moscow-based Higher School of Economics, said the amendments had emasculated the anti-corruption law.

RBC Daily

LUKoil to shelve some foreign projects

Due to the crisis, LUKoil is likely to cut its investment programs for the next two years and push back launching some of its major projects abroad. According to its head, Vagit Alekperov, it will also postpone commissioning the Filanovsky deposit in the northern part of the Caspian Sea for a year. But it expects to keep its investments in Western Siberia and Yamal afloat. Previously, LUKoil announced a retrenchment of its next-year investments down to $5 billion-$8 billion, depending on oil market prices.
The LUKoil board plans to approve a 2009 budget on December 22, based on a $50-per-barrel price. However, it also has scenarios for $65 and $80. The company's investment program this year is $15 billion with acquisitions, and $11 billion without.
It is wise to shelve international projects and focus on promising projects in Western Siberia, believes Natalya Milchakova, a senior analyst at the Otkrytie finance corporation. "Although many large fields in the area are already reaching their peak of output, including LUKoil's own fields, Western Siberia still accounts for 53% of all Russia's oil output," she said. Most likely, LUKoil will be investing in projects in the Nenets Autonomous Area, where the company's rates of production can be high enough in the next 10 years. Yamal's new fields are subject to resource extraction tax breaks and newly discovered deposits may be likely to have more breaks, Milchakova said.
Vitaly Kryukov, a Kapital Investment Group analyst, believes that should oil prices grow LUKoil would adjust its investment plans upward.


Russians will not economize on New Year gifts

Lavish New Year celebrations are planned in Russia despite the global financial crisis. Influential pollster All-Russia Public Opinion Institute (VTsIOM) said over 74% of respondents planned to spend over 10,000 rubles ($360) on New Year's Eve, while only 71% expected to do the same in late 2007.
Analysts said the poll's results were predictable, and that Russians remained committed to old-time traditions embodied in the popular saying "You will spend the new year the way you celebrate it."
"Most Russians believe in miracles and hope that the crisis will end after January 1," Olga Mezhenina, a psychologist with the Your Ego Center, told the paper.
She said many people wanted to have a good time on New Year's Eve just out of superstition, that most stress-ridden Russians feared wage cuts and losing their jobs, and that they wanted to relax and to stop talking about crisis for at least one night.
"They are ready to economize on anything except New Year celebrations," Mezhenina said.
As compared to 29% last year, 43% of the respondents said they would economize after New Year celebrations. They have canceled trips and do not plan to visit theaters, restaurants or other entertainment spots.
Not a single VTsIOM respondent plans to go abroad, while only 3% intend to stay at country houses or to visit their relatives.
Seventy-seven percent of those polled plan to celebrate New Year's Eve at home.
"There is every reason to call this a family holiday," Yevgeny Gontmakher, director of the Social Studies and Innovations Center, told the paper.
He said the crisis would play a positive role in bringing together Russian families.

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