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Books on Russia
REPUBLICAN REFERENCE
Area (sq.km)
17,075,400
Population
143,782,338
Principal
ethnic groups
Russians 82%
Tatars 3.3%
Ukrainians 2.7%
Principal towns
Moscow (capital)
St Petersburg
Novosibirsk
Nizhni Novgorod
Yekaterinburg
Samara
Currency
Rouble
President
Vladimir Putin
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Update No: 310 (26/10/06)
The death of a heroine
Anyone who respects free speech and a free press must be downcast at the latest
event out of Russia, the assassination of a great investigative journalist and a
great woman, Anna Politkovskaya. She was gunned down in the stairs of her
apartment building on October 7th in what was clearly a contract killing, four
bullets from a silenced Makarov pistol, one to the heart and three to the head.
The pistol was left disdainfully on the floor to make the fact plain, with four
empty cartridges.
The threat is plain as day. Anybody attempting to introduce free speech and
democracy into Russia can count themselves as corpses ahead of time.
She had a great heart; but even more damaging to the powers that be - she had a
threefold great head. She knew too many of the evils of the current regime. She
was the thirteenth Russian investigative journalist to die since 1991. Another
great woman investigative journalist was Galina Starovoitova, a leading liberal
deputy and human rights campaigner, shot dead by gunmen, again in the stairs of
her apartment building in St Petersburg in November, 1998, for knowing too much.
One lesson of super-importance to learn for the promoters of liberal-democracy
in Russia is not to live in apartment blocks.
The Russian gangsters are the worst in the world. They do not abide by the
seemingly forgotten elementary principle of chivalry, that one does not attack,
yet alone, kill women.
Gorbachev condemned the killing as a "blow to all democratic, independent
press, a grave crime against the country and all of us."
The former Soviet leader, who part-owns the biweekly Novaya Gazeta where
Politkovskaya worked, said the newspaper would conduct its own investigation
into the murder.
She had lived with death threats for seven years, but continued to dig deeper
into the ongoing human rights abuses in Chechnya. She survived a poisoning
attempt in 2004 when she was en route to investigate the Beslan tragedy. At the
time of her death she was researching allegations of torture. She had refused
invitations to leave Russia, saying: 'The main thing is to get on with my job,
to describe the life I see, to receive visitors every day in our editorial
office who have nowhere else to bring their troubles, because the Kremlin finds
their stories off-message, so that the only place they can be aired is in our
newspaper, Novaya Gazeta.'
******
She was not a political person, and refused invitations to stand for the Duma.
Her own words in Another Sky provide the best insight into why she continued
writing, her remarkable stamina and her extreme courage: 'I have merely reported
what I have witnessed, no more than that. I have written and, less frequently, I
have spoken. I am even reluctant to comment, because it reminds me too much of
the imposed opinions of my Soviet childhood and youth. It seems to me our
readers are capable of interpreting what they read for themselves.'
Putin about Politkovskaya: "Her influence on politics
in Russia was minimal"
The Kremlin at first said nothing. Then two days later Putin described her death
as 'tragic,' hyperbolic hypocrisy from his point of view.
"Whoever did it and for whatever reason, the crime should be
punished," Vladimir Putin was quoted as saying on the murder of
Politkovskaya at a news conference in Dresden on October 10th. Earlier, the
Russian president had had a phone conversation with US President George Bush,
who perhaps prodded him into a display of grief.
As the Russian president is quoted as saying, it was the murder of "a
human, a woman, a mother and was directed against our country, against the
current authorities and Russia in general, and the Chechen republic, by which
the reporter was professionally pre-occupied." At the same time, Putin
noted that "Politkovskaya's influence on politics in Russia was
minimal," Ekho Moskvy reports. Indeed, alas. It does not seem to have
occurred to him that this is an indictment of his regime.
The farewell ceremony was held on October 10th at Troekurovo Cemetery in Moscow.
CNN (USA) was broadcasting the ceremony live; several thousand people
participated in the ceremony. The subject of Politkovskaya's murder was the main
subject of discussion on the Russian internet for the fifth day running. This
indicates the possibility that even if her life's "influence on Russian
politics was minimal," her death's influence may not be!
Putin promised a full investigation. The problem is that everything to do with
Chechnya is shrouded in mystery. It is pretty sure that nothing will come of it.
The heart of the matter
The very legitimacy of Putin's rule is tied up in the most intimate fashion
with Chechnya. A series of bombings in August-September 1999 of apartment
blocks, in which over 300 died, was imputed to the Chechen separatists and used
to justify the launch of the second Chechen war in a decade in December. Putin,
then premier, but with only a two per cent approval rating in the polls, was
promptly catapulted to supreme power, which he still exercises, becoming
president on Yeltsin's retirement in January 2000.
The attribution of the outrages to Chechen terrorists was always highly
questionable. For a start they never claimed responsibility, despite not being
bashful about having done even more gruesome things, such as a series of
killings in the 1990s in Southern Russia and later the Moscow theatre attack and
the Beslan affair. It would have been completely irrational for them to have
perpetrated the atrocities in 1999 since that pre-empted a Chechen referendum on
independence in 2001, which they would have clearly won. No evidence ever turned
up that Chechens were the culprits.
It is still an article of faith that they were responsible. It has to be, given
the claim that they propelled Putin to power. As Bush and Blair are discovering
to their eternal discredit, it is unwise, as well as immoral, to base the case
for war on a pack of lies. An enterprise badly begun, on wrong premises, can
only too easily turn deeply awry.
In Putin's case the point is not coming home because, unlike the Anglo-Saxons,
he does not face a free press by and large. He has seen to that over the last
six years. Novaya Gazeta is now virtually a lone voice, perhaps protected by the
full support given it by Mikhail Gorbachev, who increasingly looks like the only
decent ruler Russia had for a long while. While derided by the populus, there is
still a lingering respect for him in the Kremlin as the real architect of the
new Russia, of which they are the great beneficiaries.
A booming economy
For of course the popularity of Putin, an undoubted fact, is based on a
successful resurgence of the Russian economy in his time after the disasters
under Gorbachev and Yeltsin. Putin has had that great boon for any politician -
luck.
The six years of Putin's presidency have seen Russia's economy do very well.
Russia is booming on the back of high global oil and gas prices, indeed high
primary commodity prices. The Moscow bourse has risen 1,800% since 1999 and
boasts a market worth US$950bn.
Russia is now cushioned by a current account surplus of 10% of GDP and the
world's third biggest reserves of $260bn, rising at $12bn per month. It is
unrecognizable from the basket case of 1998, when the rouble crashed; it then
had only $14bn of reserves and defaulted on US$40bn of bonds. But it is all
premised on those oil prices etc.
Coming trouble ahead in the economy?
There are signs, indeed sins, of overreach. Who in the US in the 1920s saw
what was coming?
The real worry is that the US economy itself could suffer a major reversal,
affecting the whole world, as in 1929. There are built-in checks to prevent a
massive slump as in the early 1930s, with fateful consequences in Germany and so
the whole world.
But there are very disturbing indications that an upheaval of sorts is on the
way. The Bush Administration is one of the most profligate in living memory. As
Ambrose Evans-Pritchard of the Daily Telegraph, hardly an alarmist source, puts
it: "The US needs nearly one trillion dollars of foreign money each year
just to stand still (in financing its twin deficits in the federal budget and
current account). The risk has moved from the outskirts to the aorta of the
capitalist system."
From which it could then return to those very outskirts, including Russia!
All that would be needed to trigger off a calamity is for one of the booming
Asian giants to go bust. China is growing at 10% and India at 8%. But the former
has huge social and environmental problems, while the latter has a horrendous
fiscal deficit of 9.3%.
Japan has not emerged from the fiscal woods yet and would be immediately
vulnerable to a downturn on the mainland, as would Taiwan and South Korea. It is
their surpluses, along with those of the oil producers, including Russia, that
are feeding the US's hunger for credit. Any disruption of the process could see
a crash of the dollar, a stiff rise of interest-rates and a world financial and
commercial crash. Can the merry-go-round of credit really go on forever?
The future may come to curse the Bush Administration here. But the process began
earlier, although it has certainly been exacerbated by its upsurge in spending,
notably on its wars, and its fiscal laxity generally. If this analysis is sound,
the repercussions will come to be felt world-wide, and especially in the virtual
mono-commodity economy of Russia, so overwhelmingly dependent on exports of
energy.
The death of a banking supervisor and supervisionary
Russia is producing the best and the worst at the moment - great reformers
and visionaries and yet great scoundrels who try their best to kill them.
There was another assassination in Russia, a month before in September, every
bit as revealing as that of Politkovskaya. That was of Andrei Kozlov, the first
deputy chairman of the Central Bank, one of the architects of the country's
banking system. He had supervised the banks, revoked licenses, enforced the
money-laundering law, and was very uncompromising and tough in dealing with
bankers.
Andrei Kozlov was not well liked in the banking community, although his high
level of professionalism was generally acknowledged. One Central Bank colleague
of his recalled that during the summer crisis of 2004, when several banks had
their licenses withdrawn, a caged goat was driven in an open Gazel van before
the windows of the Moscow City branch of the Central Bank (not even where
Kozlov's office was situated) - giving a clear hint [Kozlov's name calls to mind
a goat in Russian] to the functionary who spoiled the lives of many an
unscrupulous banker. But deep down everybody understood: the Central Bank,
through Andrei Kozlov, was only laying down the ground rules. Perhaps they were
rough-edged, but Russia's banking system needed to be civilized, purged of
crime, and made stable and transparent. In effect everything was being done for
the good of the ordinary client and customer.
Specialists say that nearly half the requests for opening criminal cases against
money laundering came from the Bank of Russia, with the rest furnished by the
Federal Financial Monitoring Service. And someone got his revenge. And revenge,
as a Mario Puzo character said, is a dish best served cold, although the killing
may have been an "emotional" backlash following a conversation or an
event involving Kozlov.
Throughout Russian history very few attempts have been made on the lives of
top-ranking financial executives. In the late 1990s Deputy Finance Minister
Andrei Vavilov's car was blasted, and shots were fired into a window of the
apartment of the then Central Bank chairman Sergei Dubinin. But that was a
different era with different motives, and the memory of those incidents has
faded. Not because such practices have gone out of use, but simply because
offenders have not taken issue with state representatives and regulators. Here
we have a cold-blooded, blunt and well-calculated shooting of one of the main
civil servants in the Russian banking and financial field.
The system is cleaning up its act, becoming civilized and turning its face to
the clients. It has ceased to be exclusively for money-laundering and has gotten
more competitive. It is now a place for rank-and-filers who solve their daily
problems by means of banking tools. The Russian banking system is also becoming
more transparent for both the domestic and foreign users of its services: in
recent years Russian banks have started introducing International Accounting
Standards (IAS). These indicators help to regulate bank activity more
competently, and enable market players to better see their headaches and ways of
dealing with them.
There is, of course, a certain amount of resistance. That is inevitable. No one,
however, could forecast that the resistance would toughen: a reply to the
rehabilitation of the system was a pistol shot ... But this will change nothing
about the banking system. The only pity is that such a dear price - a human life
- has to be paid for progress.
******
It is the fiftieth anniversary of one of the great events of the twentieth
century, Nikita Khrushchev's secret speech to the 20th Congress of the Soviet
Communist Party. It was not to remain secret for long. Here are two
recollections of the speech, one by Gorbachev, Khrushchev's spiritual heir, and
the other by Sergei Khrushchev, his son:-
Below, RFE/RL presents recollections of Nikita Khrushchev's 1956 speech to the
20th congress of the Communist Party of the Soviet Union by former Soviet
President Mikhail Gorbachev and Sergei Khrushchev, Nikita Khrushchev's son.
"A POWERFUL TEXT": Former Soviet President Mikhail Gorbachev, speaking
about the secret speech in 1994, on the occasion of the 100th anniversary of the
birth of Nikita Khrushchev:
"I was among those who were acquainted -- after all, not everyone was --
with the speech. At the time, I was the deputy chief of the agitation and
propaganda department of our region's Komsomol. I had the opportunity to be
invited to the party's district committee, where I became acquainted with this
text.
This acquaintance took place in a closed environment, and the speech was taken
away five days later. This is why, after I read it, I never saw it again until
perestroika. Later, many found out about the text, but slowly. In the West, on
the other hand, it was published and became popular.
It was a powerful text. It isn't marked by strong analysis, or a deep approach
to the roots of all these phenomena, like why the personality cult became
possible -- you won't find these things there. But there is something there that
moves and touches the soul. It talks about what was happening to us, what was
happening to people, to outstanding people -- how they left and were turned to
sand and everything vanished...and people's fates....
This is simple and terrifying. In that sense, the speech creates a strong
impression.
I remember how my grandfather was arrested. When the revolution happened, his
family got land, and it was apparent to them that it was theirs to manage. So he
became a communist. He created kolkhozes [collective farms]; he was the chairman
of a kolkhoz for many years. Then, suddenly, in 1938, he is an enemy of the
people! This is why, in this sense, I was prepared for the speech and
interpreted it differently than others. But even I was haunted by the question:
Was it really like that? Can it be?
My grandfather, who survived torture, returned to the village alive. The
grandfather Raisa Maksimovna [Gorbachev's wife.] was also a peasant and was shot
as a Trotskyite. It was a shame, because he did not know what a Trotskyite was.
This was in the Altai region.
I interpreted it to some extent as -- yes, this is what happened, this is what
happened in my family, and this is what happened in the entire country. It was a
tragedy, many people died, a nation was drained of blood and, to a certain
extent, decapitated. The intellectual part of the army, and of the politicians,
and the administrators was annihilated, decimated -- and the artistic
intelligentsia....
But around the world, I noticed a shocking confusion. It was hard not to
believe, but some still didn't. Can it really be that it happened this way? But
the most important question that arose was: Why did all this collapse and why in
this way?
I think this is exactly what Khrushchev must be credited with. They say he
trembled while he read the speech, but he read it nonetheless. I think this is
where we begin our difficult, dramatic separation from Stalinism and everything
it bore.
"TO TELL THE TRUTH": In February 1996, RFE/RL correspondent Vladimir
Tolz spoke with Sergei Khrushchev, Nikita Khrushchev's son, about his
recollections of the 1956 secret speech.
Sergei Khrushchev: I found out about the speech not from my father, but later,
when people came and said, "You know, there was this report...." Then
I rushed to him with questions.
RFE/RL: And what did he tell you?
Khrushchev: He actually didn't tell me anything. He said, "Well, you know,
we decided that we had to..." -- I forget his exact words now -- "tell
the truth." He probably said it a bit differently, but in any case he gave
me the text and said, "Here, read it. I'm tired of talking...."
RFE/RL: Do you remember your impression? Was it somehow discussed in your
family?
Khrushchev: It wasn't even discussed in our family. We all kept to ourselves
because we all had -- I assume -- thoughts of our own about the matter. For me,
it was the end of the world. Later, when I asked my father about this and he
told me about his friends who died, I became an anti-Stalinist, and it seemed to
me at that moment that it would be impossible to resurrect the name of Stalin
and speak of it positively. But as you see, we were all wrong about that.
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CREDIT RATINGS
S&P upgrades Tomsk region to ruA+
Standard & Poor's Ratings Services has raised its Russia national scale
rating on the Tomsk Region, in western Siberia, to ruA+ from ruA, the ratings
agency said in a press release, New Europe reported.
"The upgrade reflects the region's growing revenues, debt structure
improvements and commitment to maintain low debt and sound financial
performance," said Standard & Poor's credit analyst Boris Kopeykin. The
rating on Tomsk, one of the most developed industrial regions in the Russian
Federation (foreign currency BBB+/Stable/A-2; local currency A-/Stable/A-2;
Russia national scale rating ruAAA/-/-), remains constrained by the region's
strong exposure to a single taxpayer, oil company Tomskneft - a subsidiary of
OAO NK YUKOS (D/-/-); dependence on federal-government decisions; and low
investment.
Tomskneft provides about 25 per cent of Tomsk's revenues, which highly exposes
the region to oil price swings and developments in the YUKOS case. The company
cut capital expenditures in 2004-2005, which contributed to the low 0.1 per cent
growth in the region's gross regional product (GRP) in 2005.
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ENERGY
Gazprom to explore Stockmann field alone
Russia will exclude foreign companies in the development of the giant
Stockmann gas field in the Barents Sea as a future energy source for Europe, the
head of the semi-state gas company Gazprom, Alexei Miller, said in Moscow on
October 9th, New Europe reported.
Potential overseas partners had failed to offer a sufficient share of their
assets in exchange for a stake in the project to tap the natural gas deposits
off north-west Russia, Miller told the Russia Today television channel.
Foreign companies would only be allowed to take part in tenders for construction
of related infrastructure, he said.
The five companies that vied for a stake in Stockmann in recent years were
Norway's Hydro and Statoil, ConocoPhillips and Chevron of the United States, and
France's Total.
It was initially planned to liquefy the gas and ship it to the lucrative US
market. But at talks with the leaders of Germany and France in September,
Russian President Vladimir Putin unexpectedly announced that the gas would be
exported to Europe via the North European Gas Pipeline that is now under
construction.
Observers linked the decision to growing political tensions between Moscow and
Washington.
Laying beyond the Arctic Circle, the Stockmann field holds an estimated 3.7
billion cubic metres of natural gas. Combined with exports from other Russian
gas fields, the deposits would cover Europe's gas needs for the next 50 to 70
years, according to the Russian leader.
Gazprom signs memorandum on cooperation with Repsol
Gazprom CEO, Alexei Miller, and Repsol President, Antonio Brafau, have signed a
memorandum on mutual cooperation in oil and gas projects, Gazprom's press
service said, New Europe reported.
The memorandum stipulates that the two companies will study the possibility of
joint cooperation in Europe, Latin America and Africa in addition to liquefied
natural gas (LNG) projects with the use of Russia's resource base, including the
Baltic LNG project. "The sides will set up a coordinating council for the
successful realisation of the memorandum," the press service said.
Gazprom to discuss 2007 gas supplies with Georgia
Georgia and Russia's Gazprom will discuss gas supplies to Georgia for 2007 in
December - before contracts for the current year expire, Georgian International
Gas Corporation (GIGC) said recently, Interfax News Agency reported.
The corporation said the volumes and prices of the supplies would be discussed.
Georgia is due to receive around two billion cubic metres of Russian gas at
US$110 per 1,000 cubic metres in 2006.
Gazprom approach puts pressure on TNK-BP
Gazprom, Russia's gas monopoly, recently confirmed its interest in buying a
stake in TNK-BP in an apparent bear hug on the private Russian shareholders in
the 50:50 Anglo-Russian oil joint venture. The move would mark further
consolidation of oil assets in state hands ahead of the 2008 presidential
elections, the Financial Times reported on Sept 29th.
The move comes amid mounting pressure on BP's Russian venture over its licence
to develop the giant Kovykta gas field in Eastern Siberia. Alexander Ryazanov,
the chief executive of Gazprom Neft, the oil arm of Gazprom said: "If the
shareholders think about this, we would be the first to be interested."
TNK-BP has a market capitalisation of US$40bn, but Mr Ryazanov said finding the
money would not be a problem for Gazprom given its cash flow and borrowing
power. Gazprom already owns the Sibneft oil company, which it bought from Roman
Abramovich for US$13bn last year.
However, Gazprom could face a challenge from Rosneft, the state oil company,
which is also believed to be eyeing TNK-BP.
A person close to BP said it was clear to the company that within two years it
would have a new state partner - the only question being whether it would be
Gazprom or Rosneft.
The Russian shareholders are Mikhail Fridman's Alfa Group and Access-Renova, a
partnership between Viktor Vekselberg and Len Blavatnik. The Russian tycoons and
BP have an agreement that the venture's shape cannot be changed before 2007.
TNK-BP has come under pressure from the Russian authorities over the past few
weeks in what appears to be an attempt by the Kremlin-backed companies to
persuade BP to change this agreement. Russian prosecutors and the country's
minister for natural resources have threatened to withdraw TNK-BP's licences to
develop a giant Kovykta gas field in Eastern Siberia, one of the company's most
prized assets.
They cite TNK-BP's alleged failure to fulfil the terms of the licence, under
which Kovkykta is supposed to produce some 9bn cubic metres of gas for the needs
of Ikrutsk region this year. However, TNK-BP estimates the demand for gas in the
region could reach 2.5bn cubic metres of gas by 2008-2009.
Russian gas subsidy move boosts JKX
JKX Oil & Gas almost tripled its underlying profit as it benefited from the
recent move by Russia to end gas subsidies to its former Soviet satellite and
increased production, New Europe reported.
But the company, which has all its reserves in Ukraine, warned it was struggling
to expand its licence portfolio in the former Soviet republic because the state
was reluctant to relinquish control over further strategic assets.
The company managed to secure one exploration licence in January - the first in
12 months - in a country that has been dominated by Russian and Ukrainian
producers and where rival Regal has suffered a challenge to the ownership of its
assets.
His comments came as JKX reported a jump in pre-tax profit from US$14.5m to
US$56.4m (£29.6m) in the six months to June 30th. The numbers were skewed by
the writing back of a US$15.2m impairment charge in the period, leaving
underlying profit almost trebled.
Revenues jumped to US$60.6m (US$23.8m) as production rose to 10,664 (7,521)
barrels of oil equivalent per day. Three wells were brought on stream in the
first half, while a further two started producing since the half-year end,
lifting current production to 12,000 boepd against 11,067 at the end of
December.
The move by Russia at the end of last year to scrap cheap gas to the Ukraine
meant JKX could sell its gas at higher prices, with the average price up 54 per
cent to US$2.69 per thousand cubic feet.
JKX was also helped by an increased oil to gas mix (45:55 against 27:73), which
allowed it to tap into the strong oil price. The average realised oil price rose
24 per cent to US$52.05 per barrel.
Timetable for Bushehr reactor launch agreed with Iran
Russia and Iran signed an agreement cementing the timeframe for the overdue
launch of the Bushehr nuclear power plant next year and paving the way for
further joint nuclear projects, government officials were cited by press reports
as saying in Moscow on September 26th. The document "envisions the supply
of fuel in March, the physical launch in September 2007, and the energy launch
in November 2007," the Itar-Tass news agency reported, citing consultations
between heads of the respective nuclear authorities.
At talks in the Kremlin, the Security Council Secretary, Igor Ivanov, said
Russia would make good on its promises about the completion of Iran's first
1,000-megawatt reactor, which has been hampered by repeated delays on the
Russian side. "A concrete plan for the construction of the nuclear reactor
in Bushehr has been laid out and we will strictly abide by our agreements,"
Ivanov told Gholam-Reza Aqazadeh, Iran's vice-president and head of its Atomic
Energy Organisation. Moscow was satisfied with the development of ties with
Tehran and was interested in furthering the "spirit of friendship,"
Ivanov told Aqazadeh. Frustrated at the hold-ups, Iran has recently stepped up
pressure on Russia to provide exact dates for the start of the power plant in
southern Gulf port.
Initially, Russia pledged to begin the first phase of the project in early 2000,
but delayed the launch several times. The United States opposes Russia's close
nuclear cooperation with Iran and accuses Tehran of using the technology to
develop weapons of mass destruction. Meanwhile, the deputy head of the Iranian
Atomic Energy Organisation spoke of expanding joint work in the field.
"With the finalisation of the timetable for starting the Bushehr power
plant reactor, we want Russia to cooperate with Iran in further nuclear projects
in the future," Mohammad Saeidi told state-television from Moscow.
"The Russian government itself is committed to implementing the (Bushehr)
agreement and the Russian decision to continue nuclear cooperation with Iran is
serious," Saeidi said. Russia has previously offered to build several more
reactors for civilian power generation in Iran. Under the plans for Bushehr,
Russia will supply the fuel rods on the condition that the spent rods are later
returned for disposal. Sergei Kiriyenko, head of Russia's nuclear power agency
Rosatom, has repeatedly stressed that delivery of the fuel would not take place
earlier than six months before the unit is powered up.
Russia has long-term plans to privatise Rosneft fully
Russia has long-term plans to privatise oil company Rosneft, an advisor to
President Vladimir Putin said on September 17th in the Black Sea resort of Sochi.
"In three to 10 years, (Rosneft) will be completely private," Igor
Shuvalov said. Following the successful initial public offering of 14.8 per cent
of Rosneft's shares which generated US$10.6 billion in income, more of the
company was expected to be sold off on the stock exchange. No one shareholder is
allowed to possess more than 10 per cent of the company's shares, New Europe
reported.
Russia, Hungary considering expansion of gas pipelines
Russia and Hungary are discussing the expansion of gas pipelines and storage
facilities in Hungary, Russian President, Vladimir Putin, said after talks with
Hungarian prime minister, Ferenc Gyurcscany, in Sochi on September 18th,
Interfax News Agency reported.
Putin said the fuel and energy sector is a priority for Russian Hungarian
relations. He also said that Russia and Hungary are discussing projects in
electricity. "We have noted the growing activity by Hungary's MOL in the
Russian energy sector," Putin said. Moscow and Budapest "are also
talking about mutual interest in developing transport infrastructures" in
Hungary, he said. "This could include large logistic centres with the
participation of other countries such as Ukraine and the European Union,"
Putin said. Russian-Hungarian trade reached a record six billion Euro last year
and Hungarian exports to Russia have grown 74 per cent since the beginning of
the year, he said. "This shows the openness of the Russian market for
Hungarian goods," Putin said. We are far from being satisfied with this
level, he said. "Therefore, our discussions centred on large joint
cooperation projects that will significantly increase the base of economic
mutual action once they are implemented and will help our trade turnover,"
he said. Putin pointed out that Hungary was interested in priority national
projects being implemented in Russia. Hungary has also expressed a desire to
join in on implementing national projects concerning agriculture and new
housing, Putin said.
Gazprom to establish relations with Petronas
Russian gas giant Gazprom plans to develop cooperation with Malaysian state oil
company Petroliam Nasional Berhad (Petronas), the Gazprom press service said
after a meeting between Gazprom Deputy CEO, Alexander Medvedev, and Petronas
Vice President for Gas Business, Wan Zulkiflee Wan Ariffin. To begin with the
sides are discussing the possibility of signing a memorandum of understanding,
with the subsequent setting up of working groups for various areas of
cooperation. It is planned to develop multilateral cooperation in the oil and
gas sector based on the joint implementation of projects in Russia, Malaysia and
in other countries, New Europe reported.
The participants in the meeting also discussed cooperation in the exploration
and development of oil and gas fields in Central Asia, potential for partnership
in the production and supply of liquefied natural gas; and cooperation in
projects to build underground gas storage facilities, Gazprom said.
At the moment the only example of cooperation between Gazprom and Petronas is
participation in a consortium for the development of the second and third phases
of the South Pars field in Iran. Petronas is taking part in oil and gas projects
in Uzbekistan and Turkmenistan. A year ago Petronas bought four per cent of
British gas and electricity supplier Centrica - a company that the market has
for a long time considered to be of interest to Gazprom.
Gazprom board approves oil strategy
The board of directors of Russian gas giant Gazprom approved the company's oil
business strategy at a meeting on September 27th. This strategy involves
reaching annual production of 80 million tonnes of oil by 2020, with annual
growth in production of four per cent, Gazprom said recently, New Europe
reported.
Gazprom owns over 75 per cent of shares in Gazprom Neft, formerly Sibneft. The
plan to reach annual production of 80 million tonnes of oil in 2020 involves the
gradual launch of production at all Gazprom Neft's explored fields (including 50
per cent stake in Slavneft), the development of Gazprom reserves and the
expansion of the resource base.
"In the area of oil refining and sales, Gazprom Neft activity will be aimed
at expanding oil refining capacity, exporting part of the oil produced,
achieving synergy with Gazprom's refining assets, and developing its retail
network," the press service said. The Gazprom Neft investment program will
be totally financed from the cash flow generated by its own activity, without
using Gazprom funds.
First Sakhalin-1 oil to be sent to Japan
The first consignment of export oil from the Sakhalin-1 project will be sent to
a refinery in Japan, Exon Neftegas President, Steven Terni, said on September
27th, New Europe reported.
Oil is currently being loaded onto the first tanker at De Kastri. A special
fleet of Afremax-type double-hulled tankers with a capacity of 100,000 tonnes
each will transport oil from De Kastri year-round. Planned daily exports of
Sokol blend oil amount to up to 250,000 barrels. "This means that on
average one full tanker will leave the terminal every three-four days,"
Terni said. He said the light Sokol low-sulphur oil would be an easily refined
crude for oil refineries in the North Asia region. Production at the Sakhalin-1
project is expected to increase to 30,000 tonnes of oil per day by the end of
2006, all of which will be exported. Sakhalin-1 participants include Exxon
Neftegaz Limited (30 per cent), India's ONGC (20 per cent), Rosneft (20 per
cent), and Japan's SODECO (30 per cent).
Russia to export 54.21m tonnes of oil outside CIS
Russia plans to export 54.205m tonnes of oil outside the CIS in the fourth
quarter this year, compared with 55.9m tonnes in the third quarter, with exports
to the CIS of 9.9m tonnes, a source in the Russian Industry and Energy Ministry
said, Interfax News Agency reported.
According to the export schedule, supplies through Novorossiisk will amount to
11.4m tonnes, Tuapse - 1.23m tonnes, Germany - 5.976m tonnes, Poland - 4.935m
tonnes, Gdansk - 1.864m tonnes, the Czech Republic - 1.35m tonnes, Slovakia -
3.7m tonnes and Primorsk - 17m tonnes. No supplies are planned via Butinge in
Lithuania. Oil supplies on this route were halted by an accident on the Druzhba
pipeline in July. Supplies to Belarus in the fourth quarter are planned at four
million tonnes.
Tekhsnabexport to export spent nuclear fuel
Russia's OAO Tekhsnabexport has signed a contract on exporting 2.3 tonnes of
spent nuclear fuel from a research reactor in Serbia, the company said, Interfax
News Agency reported.
Tekhsnabexport won a tender announced by Serbia and has signed a contract for
the first preparatory stage. The first stage is expected to last about 18
months, Tekhsnabexport said. Within this period the spent fuel will be audited
and prepared for delivery to the Mayak Production Association. The current
project is a part of a Russian-US programme on the return of spent nuclear from
research reactors to Russia. About a quarter of the total costs will be covered
by the United States, the company said.
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FOREIGN TRADE
Zimbabwe, Moscow sign deals worth US$300 million
Zimbabwe and Russia have signed agreements to encourage investment worth US$300
million in tourism, aviation and power generation, it was reported on October
10th. The agreements came at the end of a week-long visit by a 48-member Russian
business delegation comprising both business representatives and journalists who
were in Zimbabwe to explore areas of possible Russian investment, New Europe
reported.
The state-run companies that signed agreements with Russian investment company
Rusavia Trade included the Zimbabwe Power Company, Hwange Colliery Company, the
Zimbabwe Tourism Authority and the Civil Aviation Authority of Zimbabwe, the
report said.
Rusavia Trade specialises in construction and air transport but will subcontract
some of its work to other Russian companies, the report said.
An official from Rusavia Trade was quoted as saying his company already had
experts working on plans to expand an airport in southern Zimbabwe to
international standards.
Similar expansion is planned for the airport in the key resort of Victoria Falls
in northwestern Zimbabwe, said the official, Yury Panchenko.
"We are going to subcontract some of the business deals that we would have
clinched here to the specialised companies in Russia," he added.
The Russian business delegation has also pledged to construct a railway line
linking Harare to Chitungwiza a sprawling working class dormitory town south of
the capital. The delegates also showed a keen interest in investing in power
generation, tourism, coal mining and banking, the report said.
Russia has been a long-time ally of Zimbabwe. It supported the country's war of
independence from white minority rule, and provided education to many ruling
party cadres in the post-independence era.
President Robert Mugabe, whose government has been condemned by Western nations
over its human rights record, has called on Zimbabweans to look elsewhere,
including Asia for new business partnerships and potential investors.
Trade turnover with China to reach US$60bn soon
The target of increasing annual trade turnover between Russia and China to
US$60bn will be achieved in the near future, Russian Presidential Chief of
Staff, Sergei Sobyanin, said at a meeting with Chinese State Council Secretary
General, Hua Jianmin, in Beijing on September 26th, according to the Vesti-24 TV
channel.
Bilateral relations between Russia and China will be developing in all sectors,
Sobyanin said. The two countries will increase cooperation in the energy sector,
nuclear power engineering, space exploration, aviation and other high technology
areas, he said. Relations between Russia and China are strong thanks to
successful contacts at the top level and the appropriate implementation of
documents signed by the two countries, he said.
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MINERALS & METALS
Polymetal, Anglogold form JV
Polymetal and Anglogold Ashanti will invest US$15 million in a joint venture in
Russia in 2007, Vitaly Nesis, Polymetal's CEO, said. The resources will be used
for geological exploration, he said, Interfax News Agency reported.
"We will look at sites that will be put up for auction next year, but we
don't have any concrete plans yet," he said. The joint venture is not
planning to work outside of Russia yet, he said.
Polymetal, Russia's biggest silver and second biggest gold producer, is forming
a joint venture with AngloGold Ashanti, the world's third biggest gold producer,
for operations in Russia and is transferring a number of Russia-based assets to
the joint venture, the companies said in statements. The companies have launched
a 50/50 Strategic Alliance with AngloGold Ashanti to cooperate in exploration,
acquisition and development of gold mining assets within the Russian Federation,
Polymetal said in a news release.
On September 21st 2006, the companies' CEOs signed an agreement establishing the
formal terms governing their cooperation in the Strategic Alliance, the release
said. Polymetal and AngloGold Ashanti will participate in the Strategic Alliance
though a Joint Venture company (JV), each party will hold 50 per cent in the JV,
the release said. The agreement provides for joint identification, acquisition
and development of attractive gold mining projects in Russia, the release said.
In terms of the Strategic Alliance, it has been agreed that the JV's interests
in Russia will be divided into three broad regions, the release said. Polymetal
and Anglo Gold Ashanti agree that the companies will jointly pursue the
prospective exploration and development of gold opportunities in the Russian
Federation within the entire Siberia Gederal District and the Far East Federal
District of Russia and including, the regions of Yamal Nenets, Khanty Mansi,
Tyumen and Kurgan but excluding, certain areas (Magadan, Sverdlovsk, Kamchatka,
Irkutsk Regions, Khabarovsk, Chukotka and Koryakiya Territories), as Exclusive
Areas where the companies will only pursue gold mining opportunities through the
Strategic Alliance, the release said.
In other areas either AngloGold Ashanti or Polymetal may pursue a gold mining
opportunity solely and independently, but not together with a third party as
part of a consortium, unless the Strategic Alliance elects not to pursue such
opportunity, the release said. It is proposed that the Strategic Alliance will
be equally held by AngloGold Ashanti and Polymetal and will initially hold two
assets to be provided by AngloGold Ashanti and two Greenfield exploration
projects to be provided by Polymetal, the release said.
RusAl boosts 2004-2013 investment up to US$16bn
RusAl, one of the world's top three aluminium producers, has increased its
investment programme for the period 2004-2013 to in excess of US$16bn. RusAl
originally anticipated that the programme would cost US$8-10bn, Pavel Ulyanov,
the company's deputy director general for corporate development strategy, said,
New Europe reported.
The programme calls for investing US$4.6bn in bauxite and alumina assets,
US$6.2bn in smelting, US$5.2bn in energy and more than US$500m in the
environment, Ulyanov said. This will be financed "by various means,
including re-investment profit and a possible Euroband issue," Ulyanov
said.
Ulyanov did not say when the possible Eurobond issue might be placed. He did say
that the company would contemplate an IPO if bonds could not generate the
desired level of investment. The investment programme targets alumina production
to rise to eight million tonnes and aluminium production to grow to five million
tonnes.
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