Vedomosti
United Aircraft Corporation to shield Russian market from Boeing and Airbus
Russia's state-owned United Aircraft Corporation [OAK], which brings together all the country's aircraft production companies, will not cede the local market to global aviation giants Airbus and Boeing without a fight.
OAK plans to build 1,100 to 1,800 new airplanes by 2015 if it receives $12 billion in federal budget guarantees.
The Russian aircraft industry has only turned out 10 aircraft per year since the break-up of the Soviet Union, whereas Airbus supplied 378 planes in 2005 and signed contracts for another 1,111 airliners.
Boeing produced 290 civilian airliners and signed contracts for another 1,029; however, this sum does not include regional airliners.
During the MAKS-2005 aerospace show in the town of Zhukovsky outside Moscow, high-level Boeing and Airbus executives promised that they would divide the Russian market between them in a decade.
The State Civil Aviation Research Institute said Russian air carriers will require 648 new aircraft in the next nine years; however, OAK believes this estimate is conservative.
OAK will need $7.5 billion in state credit guarantees to supply the domestic market and another $3.9 billion to enter the global market [including interest rates]. The budget should also set aside $700 million in subsidies for lease- payments.
In effect, Boeing and Airbus receive virtually the same amount from their governments. The EU estimates Boeing received $23 billion in subsidies and tax exemptions from the U.S. government in 1992-2004, while Washington claims that the French, German, Spanish and British governments have allocated at least $15 billion for Airbus.
Government officials will assess the OAK plan by April 1, 2007. The Industry and Energy Ministry is ready to support OAK, but the Economic Development and Trade Ministry opposes state guarantees for supplies to the domestic market, according to an official who asked to remain anonymous.
Airbus and Boeing spokespersons declined to comment on OAK's plans. A source close to Airbus said the Russian aircraft industry could boost sales because global aircraft producers now have to fulfil numerous orders by 2010-2011, and second-hand planes are too expensive owing to high import duties.
Air carriers reacted skeptically to OAK's forecasts. Andrei Martirosov, CEO of UTAir Aviation, said Russian enterprises must turn out at least 500 of each type of aircraft in order to master batch production. Otherwise these planes will remain custom-made products, he said.
Gazeta.ru
Russia will arm itself with new-generation tanks at India's expense
India has placed one of its biggest military orders ever with Russia. It will pay $950 million for 300 upgraded T-90 tanks equipped with new fire-control systems. The sellers have undercharged a bit, experts say, but the money will help them develop a new-generation combat vehicle. The T-90 tanks will be supplied within the next two years, increasing the number of them in the Indian army to 600.
According to Igor Matveyenkov of Finam, a brokerage firm, the contract is certainly a bargain. "Apart from a considerable sum for the delivery, Russia will enjoy additional receipts from the sale of components and the maintenance of the tanks," the analyst said. "It should also be remembered that large deliveries of military equipment are an indicator of a geopolitical partnership between the powers concerned. Also, cooperation with India is creating a new outlet for Russia, allowing it to drive a harder bargain with China." The expert believes India has bought the tanks at a discount but does not think it is exceptionally high.
Igor Nuzhdin, an analyst with the Solid brokerage firm, said the price is adequate: the United States' Abrams heavy tanks cost $4-5 million apiece.
However, another expert, who wished to remain anonymous, doubts that Russia generously supplied its best weapons almost gratis. He said that until recently, Russia was developing an entirely new combat vehicle called the T-95, but the effort was frozen due to a lack of financing. In his view, the money from the sale could well be used to subsidize the final phases of the project. If in several years' time production of the new hardware comes on stream, all outdated T-90s might be upgraded for sale to partner countries. As a result, through such contracts, Russia could fit out its own army with new vehicles.
Nezavisimaya Gazeta
TNK-BP to share stake in Kovykta with Gazprom
Russian energy giant Gazprom has stepped up its efforts to take over hydrocarbon assets. Reports emerged yesterday that Russian-British oil venture TNK-BP offered Gazprom a controlling stake in the project to develop the Kovykta gas condensate field. According to sources, negotiations may follow a scenario similar to Shell's participation in the Sakhalin II oil and gas project.
Alexander Shadrin, a spokesman for TNK-BP, said the company "is involved in a dialogue with Gazprom on a wide range of issues concerning both Kovykta and all of East Siberia." He refused to go into details, saying that the negotiations were still underway.
RUSIA Petroleum, the major shareholder of TNK-BP, which controls more than 62.4% in it, holds the license to develop Kovykta, whose reserves are estimated at 1.9 trillion cubic meters of gas. The Mineral Resources Ministry and Russia's Federal Service for Environmental Supervision recently accused RUSIA Petroleum of violating license agreements. As of 2007, the company must deliver 9 billion cubic meters a year to meet the Irkutsk Region's demand. RUSIA Petroleum said the region's consumption is currently less than that. A year ago TNK-BP drafted an amendment to the Kovykta license agreement, but the Federal Agency for the Use of Mineral Resources has not yet signed it. There are plans to conduct an inspection of the field in early 2007.
Earlier, Gazprom has bought minority stakes and controlling stakes in other independent gas projects in Russia, such as Nortgaz, Novatek and the South-Tambeiskoye deposit. Dmitry Mangilev, an analyst with Prospekt, a brokerage firm, said the gas monopoly is speeding up its acquisition policy in a move to improve its gas balance. "As soon as the company acquires a share of the assets of independent producers, it will have to encourage them to increase production to meet the growing domestic demand," the expert said. "Meanwhile, Gazprom will retain control of gas exports and will still be capable of honoring all previous contracts."
Commenting on potential developments, Alexander Razuvayev, chief analyst with the Megatrustoil brokerage, said the monopoly "will obtain a 100% stake in the Kovykta deposit." He said: "This may be followed by another large deal, which may give Gazprom the entire Russian stake in TNK-BP itself."
Kommersant
Russian monopoly threatens to cut gas supply to Belarus on January 1
Gazprom yesterday officially acknowledged for the first time that last winter's suspension of gas supplies to Ukraine may be repeated for Belarus. The state-controlled gas monopoly warned that the gas supply contract expired on December 31 and said Minsk's position was irresponsible. The gas giant began getting ready to suspend supplies in advance, pumping the necessary amount of gas to underground gas storage facilities in Germany and the Baltic states.
Until now, Moscow and Minsk have shown their willingness to reach an agreement on gas supplies, both in official statements and unofficial comments. At the CIS summit in Minsk on November 29, Russian President Vladimir Putin even voiced a scheme to introduce market gas prices for Belarus, with part of the payment being made in stock of Beltransgaz. It was expected that although Belarus would sign a contract with a market price of $200 per 1,000 cubic meters of gas, it would in fact pay $80 per 1,000 cu m, making up the difference with a stake in its gas transportation monopoly. A 50% stake in the latter is estimated to be worth $2.5 billion, which would be just enough to make up for the difference of $120 per 1,000 cu m for one year.
Final talks were scheduled for last Friday. They were then postponed to Monday, and Belarussian Energy Minister Alexander Ozerets said that "setting up a joint venture will take the entire first quarter of 2007." However, a source close to the talks said that Belarussian Deputy Prime Minister Vladimir Semashko had not come to the meeting with Gazprom's CEO Alexei Miller. "Belarus said again that it intended to buy Russian gas at the price set for the Smolensk Region, not higher," Gazprom confirmed.
Smolensk will pay 1,427 rubles ($54.2) per 1,000 cu m next year. This year, Belarus has been buying gas at $46.68.
The possibility of suspending supplies to Belarus on January 1 seems like deja vu: last winter Gazprom cut off gas delivery to Ukraine. Now, however, the gas giant is better prepared. It has already turned off the tap for Belarus once, in 2004. At that time, Minsk (just like Kiev last January) siphoned off gas meant for the Kaliningrad Region, Lithuania and Poland. So this year, the Russian monopoly has already pumped additional amounts to storage facilities in Germany (to supply Poland) and the Baltic states.
Novye Izvestia
Northern Europe severs energy contacts with Russia
Concerned about their growing dependence on Russian energy, northern European countries are making political decisions that are economically disadvantageous in a move to protect their markets.
Last month, the Swedish government announced that it would not approve the construction of the Swedish leg of the underwater gas pipeline from Russia to Germany, although Scandinavian industrial lobbyists have been pressing for it. In early December, Estonia became less dependent on Russian energy after an electricity cable was laid between Helsinki and Tallinn. The project cost almost 200 million euros.
Experts believe electricity from Finland will be almost twice as expensive as from Russia and that there were political reasons for laying the cable.
Northern Europe halted its growing reliance on Russia last week when Finnish Trade and Industry Minister Mauri Pekkarinen rejected the application of Russia's United Power Company to lay a 1,000 MW electricity cable along the bed of the Gulf of Finland from Keglovo to Kotka.
Commenting on his refusal, Pekkarinen said he represented the will of the majority of parliamentary parties, which are alarmed over their country's dependence on Russia. If the cable had been laid, Finland's own energy production would have fallen below the current 34% of domestic consumption, which would be dangerous for the country, the minister said.
The Russian underwater electricity line had a lot of influential opponents in Finland, primarily local energy companies, which feared that a twofold increase in the volume of Russian electricity supplies would cause prices to fall on the northern European electricity exchange. This year alone Russian electricity supplies have increased by almost 70% and are expected to keep growing, partly to meet European industries' growing demand for electricity, which cannot be satisfied by domestic reserves. Sweden, for one, is implementing a program to close nuclear power plants, while electricity generated at hydroelectric plants has been increasingly expensive in the past few years because of droughts and falling water levels in reservoirs.
