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Books on Russia
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Update No: 315 (29/03/07)
The situation in Russia is volatile. Putin, the central
player, is wary of all dangers. He trusts nobody, even, as Stalin said, himself.
He must stand down next year according to the constitution. But he is assuredly
aware that it only forbids more than two consecutive terms. He could stand again
in 2012 or 2016, when he would be only 61, only one year older than when Yeltsin
came to supreme power and seven years younger than when De Gaulle, one of his
heroes, returned from Colombey-les Deux Eglises to lead France once again.
Tale of three oligarchs
Putin is the creation of the oligarchs, who dominated power in the 1990s,
notably Berezovsky and Khodorkovsky. The first he has exiled; the second he has
imprisoned.
The oligarchs have got the message: 'Don't mess with the Kremlin.' They are
under Putin's thumb, Ambramovich meekly accepting his re-appointment to the
governorship of one of the most benighted places on Earth, Chukotka, in the Far
East. But then his deputy does the donkey work, while he relaxes on his yacht or
whatever, in warmer climes.
Tale of three nations
In the bad old Tsarist days there were two nations, the lords and the serfs,
although a very subordinate third stratum appeared in the nineteenth century,
the bourgeoisie. Now the latter has taken over, the lords having departed after
1917 having already lost their serfs in 1861 with Alexander 11's emancipation of
the same.
Instead of Russia merely dividing between haves and have nots, it now has
another third stratum, the have-yachts. There are some very wealthy people in
Russia, such as Ambramovich, who tend to live much of their time abroad; many
more now frequenting the more expensive world resorts who are at least
cash-rich, more often than not through dubious means; there are professional
people and small-to-medium businesspeople (often women) and then the rest, the
masses, the have-nots. Actually, they have at least one thing that they did not
have before - the vote.
This has changed things dramatically. The powers-that-be court them in
pre-election times, such as now (elections to the Duma loom in December and to
the presidency in March next year). The oil boom Russia has enjoyed since 2,000,
when Putin came to power, has brought an average 6.7% growth in GDP with it. It
came, moreover, after the collapse of the rouble in 1998, which saw it fall by a
vast 400%. Russia has so far avoided the usual route to 'the oil curse,' an
overvalued currency, which hollows out the economy and society. But the
advantages of an undervalued currency, which the Chinese are ruthlessly
exploiting right now, are exhausted. The rouble is now reflecting the
fundamentals more or less.
The Putin Kremlin is aware of their luck and now of the need to avoid the oil
curse. They have established a Stabilisation Fund for the rouble, now worth over
US$80bn. It is modelled on that of Norway, worth over US$150bn and destined to
grow, serving two key ends, keeping the currency down by buying foreign assets
and building up a vast nest egg for when (if), the oil runs out. The other
'beneficiary' of the North Sea oil boom, the UK, spurned such a state approach
as 'socialistic' under Thatcher and Major and preferred to expend the tax
proceeds of its oil wealth on destroying British export industries by a
ruinously high pound and creating a new underclass of three to five million
dependent on the dole. Actually, the Norwegian Stabilisation Fund was from the
start privatised, being outsourced to seven or more portfolios run by the
world's leading investment banks, Lehman Brothers and the like, to see which was
the more successful.
Putin has used tax proceeds rather to double wages and pensions, indeed to
triple the desperately low soviet-level salaries of doctors in the state health
system. With a new sense of security and new income, it is not surprising at all
that his popularity is sky-high, over 70% in polls quite consistently. He is
probably the most popular Russian ruler ever since Peter the Great, his hero,
the founder of his home city, St Petersburg.
The people now in charge of Russia are the siloviki, the old-time KGB loyalists,
such as Putin himself, mostly indeed from the former capital. If you defect from
their number and go and work 'for the enemy', as did Litvinenko for Berezovsky,
you do so at your peril. Litvinenko who knew the risks, discovered that
certainty before he died in November last year in London.
Whither next?
It is what you do with your power that matters. Putin has the idea that he
got it wrong initially. He wanted to cosy up to the US after 9:11 and ceded it
rights all over the place, such as withdrawing his military base from Cuba.
The US has relentlessly pressed its advantage of sheer might. It is encroaching
again on Russia, like it did on the USSR. His speech in Munich was explicitly
directed against the US, in which he said that he was going to be candidly
discourteous. He unmasked the US government of George.W Bush as the major public
enemy of the world, which it is. Who else starts wars all over the place, which
they do not even win?
He is now convinced that Europe is a more worthwhile interlocutor.
Putin's aide calls for intensified Russia-EU dialogue
Russia and the European Union should start a more active dialogue on contentious
issues to avoid creating a dividing line on the continent, a Russian
presidential aide said on March 23rd.
"We have been conducting an insufficiently intensive dialogue on security
issues in Europe on the whole, and on U.S. plans to deploy its missile defence
system in Poland and the Czech Republic in particular," Vladimir Putin's
special envoy on relations with the EU, Sergei Yastrzhembsky, said at a French
university.
The United States said in January it would place elements of its missile defence
system in the Czech Republic and Poland to counter possible attacks from Iran or
North Korea. Moscow has strongly criticized the move, saying it threatened
Russia's security, and warned it could revise its military doctrine accordingly.
"This problem concerns not only these two countries, the U.S. and Russia,
but also NATO, as well as all of Europe," Yastrzhembsky said. He said there
are arguable issues in the Russia-EU dialogue, and suggested discussing them.
Thierry de Montbrial, director of the French Institute of International
Relations, said many differences in Russia-West relations are ideological.
He said a strong power established itself in Russia in 2000, which reminded
Western analysts of the Cold War era, and "spoiled the tone of
relations."
Yastrzhembsky said he wishes the EU would play a more significant role on the
international scene.
Russia's foreign minister said earlier Friday that U.S. plans to deploy air
defence missiles in Europe could negatively affect Russia's relations with NATO
if implemented unilaterally without Russia's involvement or any consideration of
collective interests.
"We are against 'strategic games' in Europe, which could all but create a
potential for confrontations and align European policies in accordance with the
friend-or-foe principle," Sergei Lavrov said in a newspaper article.
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ENERGY
Evraz Group wins Kuzbass power plant auction
A company reportedly acting on behalf of number one Russian steel producer Evraz
Group won an auction for 93.35 per cent of the shares in the West Siberian CHP
plant. One of the auction participants told Interfax that Investenergoproyekt,
which won the auction, was acting on behalf of Gazprombank. "We actually
used to own Investenergoproyekt, but we sold it to Evraz Group,"
Gazprombank's press office said, Interfax News Agency reported.
The winner bid 5.95 billion roubles for the shares, which were put up for sale
by Unified Energy System, Kuzbassenergo and Siberian Coal and Energy Company (SUEK).
The starting price was 5.7 billion roubles. Novosibirskenergo was the second
bidder, the source said. UES itself confirmed that Investenergoproyekt won the
auction.
The auction took place in Moscow on March 15th. Deutsche Bank, the sale
organizer, accepted applications to bid between February 9th and March 9th
inclusive. Kuzbassenergo, which owned half of the shares in the power plant,
will receive half the proceeds from the sale. The rest will be split between UES
and SUEK, which owned 22.97 per cent and 20.38 per cent, respectively.
Russian and foreign companies expressed an interest in the plant in the run-up
to the auction. They included EvrazHolding, which is the main consumer of the
plant's electricity, RusAl, Mechel, Britain's International Power and Italy's
Enel.
New energy horizons for Europe
The European Commission welcomed an intergovernmental agreement to construct a
Trans-Balkan pipeline that will be built on EU territory, bypassing the crowded
Bosporus Straits. "It is going to alleviate the pressure on a very
environmentally-sensitive area and it is going to increase the security of
supply by providing an alternative route for the transit of oil. So, however you
look at it, it's positive," Ferran Tarradellas Espuny, spokesman for Energy
Commissioner, Andris Piebalgs, said, New Europe reported.
A day earlier, at the Presidential Mansion in Athens, Russia, Greece, and
Bulgaria in excellent ambience signed an agreement on the construction and
operation of the Bourgas-Alexandroupolis pipeline. Russian President, Vladimir
Putin, Greek Prime Minister, Costas Karamanlis, and Bulgarian Prime Minister,
Sergei Stanishev, attended the signing ceremony, marking a new era for the
transport of Russian and Caspian crude to Europe.
Signing the agreement on behalf of the three countries were Greek Development
Minister, Dimitris Sioufas, Russia's Industry and Energy Minister, Viktor
Khristenko, and Bulgarian Regional Development Minister, Asen Gagaouzov.
The Greek premier, in full command of the signing ceremonies, told a
well-attended press conference this "historic day" is the result of
intensive preparation leading to the implementation of this strategic project.
"This has been a pending issue for 14 years and it is now being managed in
the best possible way for the benefit of all," said Karamanlis, who helped
overcome last minute obstacles in negotiations.
He pledged that Greece will continue to work on the pipeline at the same intense
pace in order to make up for lost ground and complete the work as quickly as
possible.
Karamanlis said this project will place Greece and Bulgaria on the energy map.
"Apart from individual benefits for individual countries this is a wider
issue and a wider project that will be beneficial for the global energy market
since it facilitates access to oil and products that are important
products."
Putin defined the project's significance for energy security, noting that the
Trans-Balkan pipeline will provide an opportunity to think about expanding
supplies from the Caspian region through Russian territory.
"We are all equally interested in making this project happen. Bulgaria,
Greece and Russia are equally interested in the construction of this pipeline,
but, of course, as my colleague - the prime minister of Greece - said this is a
project that is interesting for all the energy markets globally because the
implementation of this project also provides a scope for further considerations
on how oil will be brought further from the Caspian Sea," Putin said in
response to questions. "It will be very interesting for US companies, Azeri
companies or Kazak companies. This will also increase energy supplies for the
global market."
In turn, Stanishev said the pipeline is of geo-strategic significance and will
play an important role in strengthening energy security. "This is a new
beginning of an era to come which should lead to great infrastructure works and
projects which should play a very important role not only in Greece but rather
in Europe."
It's notable that the Russian president stressed that the pipeline will be
filled with new volumes of oil, which will be transported through Russia among
others.
Assessing the Russian president's statements, the EU energy spokesman welcomed
the possibility of using Kazak and Azeri oil for the pipeline. "That's
perfect. That's reasonable because from a commercial point of view the more
people you have using the pipeline, the more money you are going to get. So it
will be risky to say they cannot use Kazak or Azeri oil, if they don't have
enough oil to fill it," Tarradellas Espuny told New Europe.
The agreement to build the Bourgas-Alexandroupolis pipeline could also have a
positive effect for another project, the Chevron-led Caspian Pipeline Consortium
(CPC) -- operating the pipeline running from the Chevron-led Tengiz field in
Kazakstan to the Black Sea.
The CPC partners - Kazakstan and Chevron - have been asking for Russia's
permission to double the size of CPC capacity. "Russia has blocked that
pipeline's capacity expansion until the Bosporus pipeline is agreed because
otherwise that oil from the Caspian would be competing with Russian oil trying
to get out of the Bosporus," Chris Weafer, chief strategist at Moscow's
Alfa Bank told New Europe. Speaking telephonically from Washington DC, he said,
"Russia has been telling Chevron: 'If you want permission for the doubling
of the pipeline you have to lean on the US State Department to put pressure on
Greece and Bulgaria to agree on the pipeline.'"
Washington, which backed a competing Trans-Balkan pipeline -- the Burgas-Vlore
oil pipeline project - has eased its reservations about Bourgas-Alexandroupolis,
realising that a bypass of the crowded Bosporus Straits, where tankers sometimes
have to wait inline for 10 days, was long overdue.
Just a few days before Russia, Greece and Bulgaria signed the agreement for the
construction of the Bourgas-Alexandroupolis pipeline, US Deputy Secretary of
State Matt Bryza, who visited Turkey and Greece, said Greece and Bulgaria are
US' allies in NATO and American companies are interested in the pipeline, so
Washington does not oppose the pipeline.
Asked if American companies would participate in constructing the Bulgarian
portion of the pipeline, the Bulgarian development minister told journalists in
Athens it would be decided by the time construction is set to begin. He noted,
however, that transit fees would be collected by Bulgaria.
Meanwhile, Bryza has urged diversity and multiple means of transport of
hydrocarbons. The US opposes Russia's proposal to participate in the
Turkish-Greek-Italian pipeline deal, which will transport natural gas from the
Caspian region and the Middle East to Europe. Putin's visit to Greece followed
his trip to Italy where Russian gas giant Gazprom and Italy's ENI finalised the
details of a major gas deal.
Politicians, company executives and analysts alike believe the
Bourgas-Alexandroupolis pipeline is ready to move forward. Transneft CEO, Semyon
Vainshtok, told journalists in Athens that Russia, Greece and Bulgaria will form
an international company and register its head office. According to the
intergovernmental agreement, the international company will be registered in a
European Union member state. A tender will then be held to conduct a survey and
a feasibility study, and construction will start after it has been completed.
This will all be done "within a very short time, in less than a year or
two," Vainshtok said. Asked if everything will go well, Vainshtok said he
is certain since Russian oil will be flowing through the pipeline.
Commenting on the agreement, Alfa Bank's Weafer said: "Everybody believes
it's a done deal. In terms of the political decision to do it, I don't see any
further obstacles. It looks like all parties have finally agreed ... Even the US
now wants it done."
LUKoil to hold talks on West Qurna-2 project in Iraq
A team of experts from LUKoil planned to make a working visit to Iraq at the end
of March or the beginning of April to hold talks on implementation of the West
Qurna-2 project, LUKoil President, Vagit Alekperov, said, New Europe reported.
"We plan that the working visit of LUKoil Overseas (the LUKoil operator in
extracting projects abroad) to Iraq will take place at the end of March - the
beginning of April," he said. The company is conducting a steady dialogue
with the provincial government in south Iraq, he said. "The company is
ready for the speedy implementation of the project," he said.
In Alekperov's opinion, LUKoil will be able to get down to work at the field in
26 months.
In March 1997 a consortium of LUKoil (68.5 per cent), Zarubezhneft (3.25 per
cent), Mashinoimport (3.25 per cent) and the Iraqi Oil and Gas Ministry (25 per
cent) signed an agreement on the development of the West Qurna-2 field on
production sharing terms. The PSA was to expire in 2020.
Proven recoverable reserves at the field amount to about 6 billion barrels of
oil. Some 4.8 billion barrels of oil and 56.4 billion cubic metres of natural
gas may be produced during the licensed development of the field. Developing the
field will cost an estimated US$ four billion.
The sanctions imposed on Iraq after the Gulf War prevented Russian companies
from implementing oil projects in Iraq. However, at the end of 2002, Iraq said
it was cancelling the West Qurna-2 contract because LUKoil was not implementing
the terms of the contract. LUKoil continues to treat the contract as being
valid.
Earlier it announced plans to hold talks with the new Iraqi authorities about
resuming the project and, if negotiations succeed, it plans to transfer 17.5 per
cent of its stake to ConocoPhillips.
Rostekhnadzor approves Sakhalin II platform
Russian Federal Ecological, Technological and Nuclear Oversight Service (Rostekhnadzor)
Director, Konstantin Pulikovsky, has approved an expert review on the safety of
a new oil platform for the Sakhalin II project, the service said in a statement.
Rostekhnadzor also issued permission for the use of the LUN-A platform. The
platform is designed to operate 21 wells and to produce over 6,000 tonnes of
liquid hydrocarbons and 52 million cubic metres of natural gas per day, New
Europe reported.
The concrete base for the platform was produced by Finland's Quattrogemini Oy,
and the upper construction - by Samsung Heavy Industries Ltd (South Korea).
"The LUN-A platform is the largest facility of its kind on Russian
territory, located in an area of difficult geological and natural-climatic
conditions. According to the requirements of Russian legislative acts, when
designing and building the platform all the necessary technical solutions were
implemented to ensure the technological reliability, and industrial and
ecological safety of its systems," the press release said.
Drilling of the first wells from the platform is planned in the second quarter
2007. In June 2006 Rosprirodnadzor approved the project to build well Number
eight at the Lunskoye field, as part of the second phase of the Sakhalin II
project.
In August 2006 project documents for the construction and operation of LUN-A
wells at the Lunskoye fields received positive environmental expert review until
2016. In summer 2006 the project's operator Sakhalin energy installed the
Lunskaya-A platform at the Lunskoye field off the Sakhalin coast.
The platform will produce most of the natural gas to be supplied to a liquefied
natural gas plant build built on the shores of Aniva Bay.
LUKoil strikes oil at Condor block
LUKoil Overseas, the operator of LUKoil's foreign projects, has discovered
geological reserves of oil of over 100 million barrels at the Medina structure
of the Condor exploration block in Columbia, LUKoil said in a press release. At
the moment the field is being prepared for commercial development, New Europe
reported.
However, according to the statement, the project has already started to provide
financial yields - about 4,000 barrels of Colombian high quality Vasconia oil
produced during testing of the Condor-1 well, have been sold to North American
consumers. "This is the first oil strike in history by a Russian oil
company in the Western Hemisphere," the press release said. LUKoil Overseas
and Ecopetrol signed a contract for the Condor bock on April 7, 2002. The block
area amounts to 3,089 square km. The share of LUKoil Overseas in the project is
70 per cent, and Ecopetrol - 30 per cent. LUKoil Overseas Colombia Ltd. is the
operator of the project.
Transneft adopts plan for oil pipeline bypassing Belarus
The technical board of Russian state oil pipeline operator Transneft approved on
February 5th a plan for an oil export route bypassing Belarus, Transneft
President, Semyon Vainshtok, said, New Europe reproted.
A pipeline that would link Unecha, a town near the Belarusian border in Bryansk
region, to Primorsk, a Baltic coast town in Leningrad region, would have an
initial annual capacity of 50 million tonnes, Vainshtok told Russian television.
"From February 9-15 we will be presenting the project in the regions of
Bryansk, Leningrad, Pskov, and Novgorod. After these presentations, on the 12th,
896 explorers are to leave for the proposed route of [the pipeline]. We will
have deadlines as tight as possible as regards designing and construction under
this fairly difficult project," he said. "We have not yet determined
how much it will cost. But it can be said even now that it will be very
expensive. My colleagues and I have been discussing this - if we didn't run such
risks with neighbouring states, we wouldn't have to spent this amount of
money," Vainshtok said.
Russia, Greece, Bulgaria endorse pipeline agreement
Russia, Greece and Bulgaria endorsed the Bourgas-Alexandroupolis oil pipeline
agreement in the Bulgarian coastal city of Bourgas. Russian Deputy Industry and
Economy Minister, Andrey Dementiev, Greek Secretary General of the Development
Ministry, Nikos Stefanou, and Bulgarian Deputy Regional Development Minister,
Kalin Rogachev, signed the document, Focus news agency reported.
The pipeline project would strengthen Bulgaria's positions on the European
energy market, Rogachev said.
Stefanou said the project is an alternative way of the Bosporus Straight for
transportation of oil from Russia and the Black Sea to EU countries. The route
is safe and offers opportunities for high economic effectiveness.
The agreement between the three governments will be signed in Athens after which
an international project company will have to be set up.
Construction works will start in the beginning of 2008 and have to finish within
shortest terms, Stefanou said.
One of the participants in the project - Russian oil company Rosneft - said the
agreement might be signed in February, but a source in a related Russian
department said he doubted that this would be possible, Interfax reported.
The 285-kilometre-long pipeline could initially carry 35 million tonnes of oil
annually, but its handling capacity could be later increased to 50 million
tonnes. The project is valued at some US$900 million.
Russian President Vladimir Putin said at a press conference two weeks ago the
Russian side has made the necessary proposals for the project, all that remains
is for them to be agreed by Greece and Bulgaria.
TNK-BP, Gazprom discuss Kovykta agreement
Gazprom and TNK-BP are in consultations about a stake in the Kovykta gas
extraction project, chief of Gazprom's Financial-Economic Department, Andrei
Kruglov, said during a telephone conference with investors on February 15th, New
Europe reported.
"Talks and consultations are under way. It's too early to comment on
anything while the talks are still in progress," he said. TNK-BP hopes to
clinch a deal with Gazprom towards the middle of the year that would enable
Gazprom to participate in the development of the Kovykta gas condensate field
with TNK-BP retaining a "considerable" stake in the project.
Ukraine to receive access to gas production in Russia
Ukraine hopes to receive access to production of natural gas in Russia in
exchange for access by Russian gas monopoly Gazprom to supplies of natural gas
directly to Ukrainian consumers, Ukrainian Fuel and Energy Minister, Yury Boiko,
said, New Europe reported.
"I know about agreements between our prime minister and the Russian
government regarding Ukraine's participation in gas production in Russia in
exchange for the fact that a joint venture is currently operating on the
Ukrainian market. That is sufficient," the minister said on local TV on
February 14th. Boiko said Germany's Wintershall AG is structuring its relations
with Gazprom along the same lines. "Wintershall went down the same road,
when it exchanged its share on the market for gas assets in Russia," the
minister said.
Lithuania looks past Russia for energy supply sources
Lithuania's president said on February 13th he was working on a plan to
circumvent Russia's energy hold on Eastern Europe by opening its ports for oil
transports from elsewhere, including the dictatorship of Belarus, which has been
under siege from the United States and the European Union.
Lithuania, Belarus and Ukraine were "looking at alternative routes"
using sea transport of energy supplies through its Baltic port of Klaipeda,
Lithuanian President, Valdas Adamkus, told reporters in Washington, Deutsche
Presse-Agentur (dpa) reported.
The oil would come from Norway, Venezuela and elsewhere and be shipped inland
via rail to "cover the immediate needs for everyone," Adamkus said.
The premier revealed that he had discussed the plan with US Vice President, Dick
Cheney. The US was critical of anti-democracy trends in Belarus, but Adamkus
defended supplying Belarus on humanitarian grounds.
"Belarus is affected as much as Ukraine in the manipulations by Mr Putin,"
Adamkus said. "This is not aimed at supporting a regime but rather
responding to the needs of the Belarus people."
Earlier, Adamkus called on the EU to present a common front to Russia on matters
of energy and democracy. Adamkus met with US President, George Bush, on February
12th The Lithuanian president has been outspoken against Russia's
"monopolistic hands" over its oil and gas supply, with its attempts to
control its former Soviet satellite countries - many of which have joined the EU
and NATO - by cutting off energy supplies.
Adamkus outlined to reporters Lithuania's plans for energy independence,
starting with a new nuclear reactor due to be opened in 2012 with participation
by Latvia, Estonia, Poland and possibly Sweden.
He said that his country's sale of a stake in the Baltic's only refinery,
Mazeikiu Nafta, to Polish refiner PKN Orlen last year had created "some
unhappiness" in Russia. Moscow in turn has dragged its feet on repairing an
oil-feeder line that Lithuanian engineers could have fixed in "two to three
weeks," Adamkus charged.
Adamkus, who worked for 27 years in the United States as a government
environmental protection agent during the Cold War, also warned that plans by
Russia and Germany to build a gas pipeline serving German consumers could cause
an "ecological disaster."
The line is to pass underneath the Baltic Sea, where about 40,000 tonnes of
chemical munitions were dumped after World War II, including mustard gas,
according to the Helsinki Commission. "If they are putting a line under the
Baltic Sea and touch the gas and release it, that's a disaster," he said.
"It's the responsibility of Germany and Russia if they want to proceed and
neglect the dangers." Poland, Lithuania and other transit countries for
Russian oil and gas also oppose the Baltic pipeline because it would cut them
out of the circuit. Adamkus said Lithuania's "entire foreign policy"
was geared to keeping a good working relationship "with our big neighbour,
Russia."
"Russia, they are realists ... we recognise they are a power, and
accordingly we are trying to be good neighbours and not create problems."
But Adamkus, who supported Ukraine's Orange revolution that turned out a
Russia-friendly government, said his country was also working with Ukraine,
Georgia, Armenia and Azerbaijan to keep open the way to the future, which is
"openness to ideas."
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FOREIGN INVESTMENT
China may invest over US$130m in Sakhalin projects
Chinese investors are planning to invest over US$130 million in the Sakhalin
economy, Igor Shlyakhter, president of the Association of Russian and Foreign
Investors, said during a visit to Sakhalin by a delegation from China
Development Bank During its visit, which ended on February 8th, the delegation
discussed possible investment projects with the Sakhalin administration and
representatives from the local business community. "A selection of projects
for investment is currently underway. But currently at the forefront are
forestry processing, agriculture, coal production, and housing construction, New
Europe reported.
One of the conditions of the Chinese investors is that quotas be provided for
Chinese workers employed in these projects," Shlyakhter said. As regards
forestry processing and coal production, the Chinese investors plan to invest
money in these sectors in exchange for receiving supplies of these products to
China. He said that the Junhai corporation has been set up in Beijing to handle
the practical side of cooperation with Sakhalin region. "This holding
company has been set up to unite all the business circles in China interested in
cooperating with Sakhalin region and to decide with them on projects in which
the China Development Bank will invest," Shlyakhter said. It is planned to
start implementing the first projects this year. Shlyakhter added that China
Development Bank is participating in financing geological exploration work for
the Sakhalin-3 project, through Sinopec. Zhao Jianping, the head of the Chinese
delegation, said that Sakhalin region is the first Russian region with which the
China Development Bank plans to implement joint projects in five or six sectors:
in residential construction, transport and energy, agriculture, forestry,
fishing and in telecommunications. "Based on the example of Sakhalin region
we want to set up and develop a mutually beneficial cooperation mechanism, which
we will then apply to other Russian regions. We plan to work based on the
profitability of projects and also on their level of demand at a local level,
and the level to which the projects complement both China and Sakhalin region.
Another important condition is that the implementation of these projects
increase the quality of life on Sakhalin," Jianping said.
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FOREIGN LOANS
EBRD plans financing for CHTPZ Group
The European Bank for Reconstruction and Development (EBRD) is planning to
arrange up to 140 million Euro of financing for the ChTPZ Group, a major Russian
steel pipe producer, the EBRD said, New Europe reported.
The EBRD would provide 9-year senior debt financing of up to 140 million Euro,
part of which will be syndicated to commercial banks. The proposed project
consists of debt financing to ChTPZ Group's Pervouralsk New Pipe Plant (PNTZ) in
the Sverdlovsk region to build a steel mini-mill with design capacity of 950,000
tonnes per year to produce billets for seamless pipes. This investment will
allow ChTPZ Group to achieve vertical integration in seamless pipe segment,
making it almost self-sufficient in billets for seamless pipe production. The
project will replace ChTPZ Group's outdated open-hearth furnaces currently in
operation at ChTPZ Group's Chelyabinsk Tube Rolling Plant in Chelyabinsk.
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