Russia 090417

Basic Political Developments Lieberman tells Russian deputy FM Israel forming new policy on peace talks Lavrov Seeks to Revive North Korea Nuclear Talks, Chosun Says - Lavrov plans

a two-day visit to the North Korean capital on about April 24, the South Korean newspaper reported. He will meet with his North Korean counterpart, Pak Ui Chun, and may also hold talks with the country’s leader, Kim Jong Il, it said.

Russian FM to Visit N.Korea This Month Regional powers aim to rein in North Korea - Russia's foreign minister will visit

North Korea next week, a source said on Friday, as regional powers try to prevent the state from restarting its nuclear arms plant and defuse tensions that have rattled regional security.

Medvedev, Aliyev to discuss Azeri gas deliveries - Russian President Dmitry Medvedev and his Azerbaijani counterpart Ilham Aliyev will meet on Friday to discuss gas deliveries from Azerbaijan, the legal status of the Caspian Sea and the settlement of the conflict in Nagorno-Karabakh.

SCO exercises Norak-Antiterror-2009 began in Tajikistan - Joint command-staff antiterrorist exercises of the member countries of the Shanghai Cooperation Organization (SCO) Norak-Antiterror-2009 began in Tajikistan today on the range Fahrabad Hatlon garrison, Kazakhstan Today reported citing Tajik mass media.

Recent events in Moldova unconstitutional – Medvedev Finnish gov't approves Action Plan on Russia - The Finnish government approved

on Thursday its first ever Action Plan on Russia, which establishes the guidelines for management of Finland's relations with Russia, local media reported.

Arms Talks With U.S. Will Start Next Week - Russian and U.S. officials will begin negotiating a new deal next week to cut strategic nuclear weapons, the Foreign Ministry said Thursday.

EU may get rules for Russian visa relaxed - The plan to forego Russian visa regulations for European Union nationals has been approved by the Russian Foreign Minister Sergey Lavrov, reports Barents Observer.

International talks on Russia-Georgia conflict to resume in May - The fifth round of international talks aimed to solve outstanding issues left over by the Russia- Georgia war last August will be held here on May 18-19, mediators of the talks said in a statement on Thursday.

Georgians Arrest Alleged Russian Spy - Georgian police on April 16 apprehended a Russian citizen on suspicion of plotting a provocation that could lead to renewed Georgian-Russian hostilities.

RT: Will NATO in Georgia thwart efforts to reset US-Russian relations? NATO Ministerial NRC meeting expected on May 19 Russia-NATO Council resumes work Apr 29 – Rogozin Greenhouse Emissions Hit 13-Year Peak - Russia's greenhouse gas emissions rose

by a tiny 0.3 percent in 2007 to the highest level since the 1990s economic downturn caused by the breakup of the Soviet Union, according to data submitted to the United Nations.

Russia keeps to Kyoto levels - Russia's greenhouse gas emissions rose by 0.3% in 2007, but even with the increase the nation is still keeping to its Kyoto commitment, data submitted to the United Nations shows.

Putin wants twice as much nuclear power - By 2030 the share of nuclear power in the total energy production in Russia must be increased to 25 – 30 percent, says Prime Minister of Russia Vladimir Putin.

Cyprus and Russia endorse double taxation agreement Cyprus, Russia sign tax agreement - Cyprus and Russia signed a double taxation

agreement on Thursday that officials said will remove the east Mediterranean island from a Russian taxation "black list".

Increased Cooperation With Israel Does Not Allow Russia To Arm Iran With C-300

Barak to Russia: Don't sell advanced missiles to Iran - Defense Minister Ehud Barak asked Russian Deputy Foreign Minister Alexander Saltanov yesterday to prevent his country from selling advanced anti-aircraft missiles to Iran.

Turkmen Deal Puts Putin on Defense - Prime Minister Vladimir Putin struck a conciliatory note in a dispute with Turkmenistan on Thursday, telling Russian energy officials to reach out to Central Asian gas suppliers just as Turkmenistan signed a tentative gas deal with Germany's RWE.

Moscow and Ashgabat fail to agree over the Caspian Coastal Pipeline Medvedev makes changes in composition of Council for Religious Orgs Power abuse charge against Storchak dropped Armed clash with a group of militants occurred in Chechnya; there are no losses Clash in Chechnya after end of security regime - Russian security forces have

clashed in Chechnya with a dozen militants after Moscow formally ended a military crackdown in place for the last decade, reports said on Friday.

Russia says SARS did not kill Chinese woman Doctors to confirm exact cause of suspected avian flu death Tajik national stabbed to death in Moscow Al-Qaeda prepares terrorist attacks in Russia Russia’s Federal Security Service official warns about threat of Afghan terrorists Russia develops special tube to store nuclear wastes Patriarch Kirill has washed feet of twelve priests on the Holy Thursday About 90 percent of Russians to celebrate Easter this year – poll How Will Chechnya Live Without a Counterterrorist Regime? - After nearly a

decade as a “zone of counter terrorist operations,” Chechnya this week returned to a normal legal regime. The republic’s leadership has been lobbying for just such a move for a long time, and the decision was not unexpected. But the decision went against the better judgement of some in the Russian security services, and the prospect of a return of international flights to Grozny airport evokes memories of out of control smuggling and foreign terrorists who arrived in the 1990s.

National Economic Trends Russian monetary base up 1.7% in week to $112.7 bln Russian economy to start recovering only in 2011 - Arkady Dvorkovich, an

assistant to the Russian president said at a forum of the Russian Union of Industrialists and Entrepreneurs.

Russian min sees positive trends despite poor econ indicators - Nabiullina cited growth in food production and car output as evidence of improving conditions. She said she hoped that government support measures, including subsidies for car loans, would help increase auto production.

Optimistic CBR - The CBR is becoming increasingly optimistic on net private capital outflows in 2009.

CBR guides for current account surplus above $40 bln, expects to cut interest rates

Business, Energy or Environmental regulations or discussions Certain companies decline government support - Russian sixth-largest oil

producer Tatneft says it will waive inclusion in the government list of 295 strategic companies, because the chances of getting financial assistance are small, while greater government control of its operation is inevitable.

Banks and companies haggle over financial support - Banks want to toughen control over bad debtors, but companies are complaining the banks don't even renew loans to disciplined borrowers.

Russia’s Richest Lose $380 Billion as Crisis Bites, Forbes Says Prokhorov Tops Forbes Russia’s Diminished List of Billionaires Novolipetsk Steel Output, Sales Rise on China Demand (Update1) Russia's Kerimov raises Polyus stake to 37% -paper Kerimov buys Potanin's remaining 15% in Polyus Gold – Vedomosti The agency for restructuring of mortgage loans (ARIZhK) will revise the

eligibility criteria of "problematic" borrowers Alfa Expects Bad Loans To Eat Profit Russian government to subsidize Transmashholding: will LTPL benefit? Novorossiysk Commercial Sea Port Braced For Headwinds Atomenergoprom gains control of Energomash UK Firms Seek New Bioethanol Sources - Russian companies, frustrated by slow

legal reforms, have abandoned costly projects to produce bioethanol from grain and are instead trying to make the environmentally friendly fuel component from other sources.

Mercury unauthorised dumping sites in Altai settlement threaten Ob river Russian Real Estate Sector: Cash Matters

Activity in the Oil and Gas sector (including regulatory) Kudrin indicates possible 20% fall in gas production Lukoil May Reduce Uzbekistan Gas Output On Gazprom Request LUKoil wants Trebs and Titov deposits Russia's Sakhalin-1 2009 budget totals $2 bln Transneft and Rosneft ink agreement on oil supplies to China Crown Oil & Gas snares Russian assets Sibir joy at record Salym output 9 million tons of oil through Belokamenka

Oil production puts Russia on collision course - OPEC is squaring up for a spat with Moscow as it becomes increasingly frustrated with Russia's reluctance to curb oil output as agreed with the international cartel.

Gazprom Gazprom ties up $2bn bond - Russia's Gazprom expects to close the order book

on its 10-year $2 billion bond at 0900 GMT on Friday, with yield guidance unchanged from 9.25% 9.5%, market sources said.

Russia Gazprom sees Eurobond pricing at 9.25%-source Azerbaijan And Russia To Conclude Gas Sales Deal - Russia’s gas monopoly

Gazprom and the State Oil Company of the Azerbaijani Republic (SOCAR) will formalize a gas sale agreement this May, said the newly appointed Russian ambassador to Baku, Vladimir Dorokhin.

Mr. Petar Skundric: “South Stream will most certainly go through Serbia” Gazprom Unit Gets Sale License in Ukraine, Kommersant Reports Gazprom: Ukraine takes too less gas Gazprom may benefit from Russian government borrowing

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Full Text Articles

Basic Political Developments

Lieberman tells Russian deputy FM Israel forming new policy on peace talkshttp://www.ynetnews.com/articles/0,7340,L-3702507,00.html

Published: 04.17.09, 12:00 / Israel News

Foreign Minister Avigdor Lieberman met with Russian Deputy Foreign Minister Alexander Saltanov on Friday and stressed to him that the new government was in the process of forming a policy on negotiations with the Palestinians. Lieberman said the new policy will be presented to the international community once it is completed.

 

Lieberman expressed his reservations regarding the Russian initiative to bring the situation in the Middle East to a UN Security Council session before Israeli's policy is formed. "Such sessions only give a stage to criticize Israel and nothing more," he said. (Roni Sofer)

Lavrov Seeks to Revive North Korea Nuclear Talks, Chosun Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLHfXjMMCZVE

By Bomi Lim

April 17 (Bloomberg) -- Russian Foreign Minister Sergei Lavrov will travel to Pyongyang next week to try to persuade North Korea to return to international nuclear talks, Chosun Ilbo newspaper said, citing unidentified Russian officials.

Lavrov plans a two-day visit to the North Korean capital on about April 24, the South Korean newspaper reported. He will meet with his North Korean counterpart, Pak Ui Chun, and may also hold talks with the country’s leader, Kim Jong Il, it said.

Kim’s regime expelled United Nations nuclear inspectors this week after declaring April 14 it was quitting international talks aimed at scrapping the nation’s atomic weapons program. The six-party talks involve North Korea, the U.S, China, Russia, South Korea and Japan.

To contact the reporter on this story: Bomi Lim in Seoul at blim30@bloomberg.net

Last Updated: April 16, 2009 20:02 EDT

Russian FM to Visit N.Korea This Monthhttp://english.chosun.com/site/data/html_dir/2009/04/17/2009041700762.html

Russia is to send Foreign Minister Sergei Lavrov to North Korea to persuade the renegade country to return to talks on its nuclear program. Russian government officials on Thursday said Lavrov will fly to Pyongyang around April 24 for a two-day stay and will tell his North Korean counterpart Pak Ui-chun of the Russian government's position that it is essential for the North to return to the six-party talks.

Lavrov will probably meet North Korean leader Kim Jong-il, to whom he will deliver a letter from Russian President Dmitry Medvedev stressing the importance of finding a solution to the North Korean nuclear issue through dialogue.

Lavrov is expected to ask the North to exercise restraint, while warning that its expulsion of an IAEA inspection team and moves to reopen nuclear facilities are not helpful.

He will also likely explain to the North that it is essential for it to return to the six-party talks in the near future and it is not desirable for the UN Security Council to reinforce sanctions. His visit will be the first by a Russian foreign minister since July 2004.

Russia does not want to see new sanctions against North Korea. News agency Interfax quoted Russian Vice Foreign Minister Alexei Borodavkin, the chief delegate to the six-party talks, as saying on Wednesday what is more important than anything is to resume the six-party talks.

englishnews@chosun.com / Apr. 17, 2009 11:24 KST

Regional powers aim to rein in North Koreahttp://www.reuters.com/article/topNews/idUSTRE53F7UC20090417

Fri Apr 17, 2009 4:33am EDT

By Jon Herskovitz

SEOUL (Reuters) - Russia's foreign minister will visit North Korea next week, a source said on Friday, as regional powers try to prevent the state from restarting its nuclear arms plant and defuse tensions that have rattled regional security.

U.N. nuclear inspectors left North Korea on Thursday after an angry Pyongyang said it would boycott nuclear disarmament talks, expel inspectors and restart a plant that makes arms-grade plutonium in response to being chastised at the United Nations for launching a long-range rocket about two weeks ago.

Russian Foreign Minister Sergei Lavrov will visit North Korea next week, a Foreign Ministry source told Reuters.

Lavrov will try to sway the reclusive North to return to six-way nuclear talks and abide by a disarmament-for-aid deal, according to a separate report from the South Korean daily Chosun Ilbo.

China, the North's biggest benefactor, wants the United States to engage Pyongyang directly in a bid to ease escalating tensions, China's Foreign Minister Yang Jiechi told Japan's Nikkei newspaper.

"(China) hopes for an improvement and development of U.S.-North Korea relations," Yang, a former ambassador to Washington, said in an interview in Beijing.

China and Russia prevented North Korea from being hit with fresh sanctions for the launch, widely seen as a disguised long-range missile test that violated U.N. resolutions.

But they backed a U.N. Security Council statement on Monday condemning North Korea for the April 5 launch. Until that statement Beijing had avoided open criticism, instead suggesting it was a legitimate satellite launch as Pyongyang claimed.

Beijing's handling of impoverished North Korea has wobbled in past days, suggesting policymakers did not anticipate the full force of Pyongyang's anger.

POWER PLAY

China, whose energy and food aid to North Korea prop up its economy, has the strongest voice in persuading North Korea to return to the sputtering nuclear talks among the two Koreas, China, Japan, Russia and the United States, analysts said.

North Korea, which was hit with U.N. sanctions after missile tests in July 2006 and its only nuclear test a few months later, has used its military threat for years to gain global attention and squeeze concessions out of regional powers.

By making these moves early in the administration of U.S. President Barack Obama, it has more cards to play during his presidency and forces him to make crucial decisions about how it will manage its relations with Pyongyang, analysts said.

The Obama administration is unlikely to hold direct talks with North Korea over the nuclear threats because it could be seen as a sign of rewarding Pyongyang's bad behavior, diplomatic sources have said.

However, North Korea may discuss terms for releasing two U.S. journalists it detained last month near its border with China -- Euna Lee and Laura Ling of California-based media outlet Current TV -- as a way to engage in direct talks with Washington.

"(The matter) could spark a back-channel negotiation, which could ultimately open the door for bilateral talks later on," said Yun Duk-min of the Institute of Foreign Affairs and National Security in Seoul.

Market players in North Asia, which accounts for one-sixth of the global economy, have been unfazed by the North's latest actions, seen as typical saber rattling.

But North Korea could ratchet up tension if it followed through on its threat to restart its aging Yongbyon nuclear plant, which was being dismantled under the six-way nuclear deal in return for massive aid and better diplomatic standing.

It will take at least a year to resume all activities at the plant, which has produced enough fissile material for six to eight nuclear bombs, experts said.

However, it may only take as little as three months for the North to restore its plutonium separation facility. North Korea could extract enough fissile material for one bomb from fuel rods cooling at Yongbyon, they said.

(Additional reporting by Chris Buckley in BEIJING, Dmitry Solovyov in Moscow, Linda Sieg in Tokyo and Kim Junghyun and Jack Kim in Seoul; Editing by Jerry Norton)

Medvedev, Aliyev to discuss Azeri gas deliverieshttp://www.itar-tass.com/eng/level2.html?NewsID=13845222&PageNum=0

MOSCOW, April 17 (Itar-Tass) -- Russian President Dmitry Medvedev and his Azerbaijani counterpart Ilham Aliyev will meet on Friday to discuss gas deliveries from Azerbaijan, the legal status of the Caspian Sea and the settlement of the conflict in Nagorno-Karabakh.

“The agenda comprises the consideration of new promising cooperation guidelines in the energy sector related to the expansion of the sales markets for Azerbaijani natural gas,” a Kremlin official told Tass, adding bilateral trade turnover has grown 2.5-fold since 2005 and comprised 2.4 billion US dollars last year.

Azerbaijan is the only country that can supply natural gas to the US and EU-backed Nabucco project, that is to deliver it to Europe bypassing Russia.

However, in March Russia’s Gazprom and Azerbaijani oil company SOCAR signed a memorandum that includes a statement of deliveries, beginning in January 2010, of Azerbaijani natural gas to Russia on the boundary conditions, DAF Azerbaijan / Russia. In the near future the Baku - Novo Filya pipeline, part of the transmission system of Azerbaijan, which runs from Baku to the Russian border on the Caspian coast, will be inspected. The length of the pipeline is about 200 km.

The memorandum made experts claim Nabucco is doomed, as it will be left without Azerbaijani gas. However, SOCAR chief Rovnag Abdullayev played down the fears saying “We are interested in the Nabucco project and we are holding talks with the participants in this project.”

The Kremlin official also said one of the focal issues will be the settlement in Nagorno-Karabakh.

In November 2008 the trilateral Russian-Azerbaijani-Armenian summit in Moscow signed a declaration calling for a political settlement of the conflict. Russia, as a co-chair of the OSCE Minsk Group for Nagorno-Karabakh, promotes the search for a compromise.

“It is also expected that issues of the legal status of the Caspian Sea will be considered, as well as an agreed approach to the development of multilateral cooperation in the Caspian Sea,” the Kremlin official said.

SCO exercises Norak-Antiterror-2009 began in Tajikistanhttp://news-en.trend.az/cis/tajikistan/1457283.html

17.04.09 12:21

Joint command-staff antiterrorist exercises of the member countries of the Shanghai Cooperation Organization (SCO) Norak-Antiterror-2009 began in Tajikistan today on the range Fahrabad Hatlon garrison, Kazakhstan Today reported citing Tajik mass media.

According to the chairman of the press centre of the Ministry of Defense of Tajikistan, Faridun Mahmadaliev, joint exercises will be carried out in two stages. The operative groups and divisions of special purpose of the Armed Forces of Tajikistan, Kazakhstan, Kyrgyzstan, the Russian Federation and China will take part in the joint exercises.

According to F. Mahmadaliev, the goal of the joint exercises is coordination of cooperation of the participants in the organization of various antiterrorist operations, increase of vocational training and battle training, exchange of experience and practical skills, as well as further readiness in opposition to international terrorism, political extremism and separatism.

Recent events in Moldova unconstitutional – Medvedevhttp://www.interfax.com/3/488721/news.aspx

MOSCOW. April 17 (Interfax) - The form in which the recentopposition protests took place in Moldova are absolutely unacceptableand unconstitutional, Russian President Dmitry Medvedev said on Friday. "Unfortunately, what has happened in neighboring Moldova indicatesthat events can become absolutely unconstitutional," Medvedev toldTatyana Mitkova, head of news service at NTV television (the talkbetween Medvedev and Mitkova will air on NTV television at 7:00 p.m. onSunday). Medvedev said that "as a political leader, who cannot beindifferent about these processes, [he] absolutely cannot accept theforms in which it took place [in Moldova]." "Such civil activities should take place legally, not in the so-called colored revolution mode, which have not caused anything butpoverty and human rights problems on the post-Soviet space," Medvedevsaid.

Finnish gov't approves Action Plan on Russiahttp://news.xinhuanet.com/english/2009-04/17/content_11196455.htm

2009-04-17 05:01:15

HELSINKI, April 16 (Xinhua) -- The Finnish government approved on Thursday its first ever Action Plan on Russia, which establishes the guidelines for management of Finland's relations with Russia, local media reported.

    The action plan is forward-looking and comprehensive, reflecting Finland's present evaluation of Russia's current development. It also gives Finland's assessment of the general trend of relations between EU and Russia, and between Finland and Russia, as well as Finland's goals.

    To support the realization of the action plan, a Russia forum led by the prime minister will be set up. Representatives of the government, business and industry, research and education, as well as regions, and civil society organization will be invited to participate in the work of the forum, depending on the topic of discussion.

    The action plan also seeks to promote Finnish-Russian business interests, particularly in the fields of oil and gas. The Action Plan notes that energy accounts for two-thirds of Russia's export revenue. Finland will strengthen the role of Finnish companies in the Russian energy market. The know-how of Finnish companies in the oil and gas sector should be marketed. Some 35 percent energy consumed in Finland stems from Russia.

    The action plan was approved before Russian President Dmitry Medvedev starts his two-day state visit to Finland on Monday.    

Arms Talks With U.S. Will Start Next Weekhttp://www.moscowtimes.ru/article/600/42/376309.htm

17 April 2009 Reuters

Russian and U.S. officials will begin negotiating a new deal next week to cut strategic nuclear weapons, the Foreign Ministry said Thursday.

The deal aims to replace the 1991 Strategic Arms Reduction Treaty and has been billed as part of an effort by Moscow and Washington to reset relations that hit a post-Cold War low under former U.S. President George W. Bush.

"The first official contact on this theme will take place on April 24 in Rome," chief ministry spokesman Andrei Nesterenko told a news conference.

Foreign Minister Sergei Lavrov and his U.S. counterpart, Hillary Clinton, have provisionally arranged to meet in May to discuss the progress in the talks ahead of U.S. President Barack Obama's first visit to Russia in July, Nesterenko said.

At a meeting in London earlier this month, Obama and President Dmitry Medvedev announced plans to begin talks on replacing START 1, a treaty that led to huge bilateral cuts in nuclear weapons but expires in December.

The proposed arms deal would go beyond the 2002 Strategic Offensive Reductions Treaty (SORT), which committed both sides to cutting arsenals to between 1,700 and 2,200 warheads by 2012.

According to the Carnegie Endowment for International Peace, Russia currently has 3,113 strategic warheads, compared with 3,575 for the United States. Russia sees START 1 as the cornerstone of post-Cold War arms control and believes that letting it lapse with no replacement could upset the strategic balance.

16 April 2009

EU may get rules for Russian visa relaxedhttp://www.visabureau.com/worldwide/news/16-04-2009/eu-may-get-rules-for-russian-visa-relaxed.aspx

The plan to forego Russian visa regulations for European Union nationals has been approved by the Russian Foreign Minister Sergey Lavrov, reports Barents Observer.

Lavrov has said Russian visa regulations will be scrapped as part of a scheme to create visa-free travel between EU states and Russia, if EU leaders are willing to participate in the scheme. 

However, EU leaders have not committed to the Russian visa scheme and it is unclear as to when a decision will be made as to whether they would join the visa-free programme. 

Norway is already in discussions with Russia to establish visa-free travel between the two countries, particularly between the municipalities of Sør-Varanger and Pechenga.

International talks on Russia-Georgia conflict to resume in Mayhttp://news-en.trend.az/world/wnews/1457150.html

17.04.09 04:58

The fifth round of international talks aimed to solve outstanding issues left over by the Russia- Georgia war last August will be held here on May 18-19, mediators of the talks said in a statement on Thursday.

The series of talks, initiated last October, are co-chaired by the European Union, the Organization for Security and Cooperation in Europe (OSCE) and the United Nations.

Other parties to the talks include Russia, Georgia, the United States as well as Georgia's two breakaway regions, South Ossetia and Abkhazia, which were recognized as independent states by Russia shortly after the five-day war in August, Xinhua reported.

The last round of talks were held in February, during which participants agreed on a mechanism to prevent and solve security incidents in and around the sensitive South Ossetia and Abkhazia regions. But the parties failed to resolve long-term security and humanitarian issues.

Georgians Arrest Alleged Russian Spy

http://www.eurasianet.org/departments/news/articles/eav041609c.shtml

4/16/09

Georgian police on April 16 apprehended a Russian citizen on suspicion of plotting a provocation that could lead to renewed Georgian-Russian hostilities.

The Georgian interior ministry charged that pro-Putin Russian politicians had tasked the detainee, Alexander Kuznetsov, to provoke a shoot-out on the administrative border of

the breakaway region of South Ossetia. Kuznetsov is reportedly a member of Nashi (Our), a Russian youth movement supporting Prime Minister Vladimer Putin that had announced plans to travel from the South Ossetian capital, Tskhinvali, to Tbilisi to join in protests against Georgian President Mikheil Saakashvili.

In videotaped testimony released by the police, Kuznetsov admitted that he was tasked by members of the Russian Duma to instigate an exchange of gunfire between Georgian police and Russian guards accompanying Nashi members as they attempted to cross into Georgian-controlled territory from South Ossetia.

It was not immediately clear where Kuznetsov was arrested. Moscow has not yet publicly responded to the incident.

Georgia’s interior ministry said that Kuznetsov was handed over to Switzerland’s Tbilisi embassy, which has acted as Russia’s diplomatic go-between with Georgia after Tbilisi cut off ties with Moscow in 2008.

Will NATO in Georgia thwart efforts to reset US-Russian relations?http://www.russiatoday.ru/Politics/2009-04-17/Will_NATO_in_Georgia_thwart_efforts_to_reset_US-Russian_relations.html

17 April, 2009, 10:02

Russia has criticised NATO's plans to hold exercises in Georgia next month, saying they could destabilize the sensitive region.

Moscow has voiced its displeasure about the military exercises in Georgia, scheduled to begin on May 3rd and continue for one month, especially as they are happening at a time when the US administration of Barack Obama has called for a 'resetting' relations with Russia.

NATO insists the exercises pose no threat, and says Russia is welcome to take part, but Russian officials are interpreting the planned exercises as a sign that not everyone in the US is ready to push the reset button with Russia.

On one hand, Russian and American leaders had agreed to work together on making the world a safer place. On the other, American troops are on their way to the Russian border to take part in NATO military exercises in Georgia next month.

Dr. Ivan Eland, from the Independent Institute's Center on Peace & Liberty, blames some of Obama’s own team for their old guard views on foreign policy.

“This is an example of where even the most liberal aspects of the American political spectrum still buy into this internationalism and NATO alliances and really neo-containment of Russia. Even though they have a gentler face than the Bush administration, which was quite hawkish,” said Eland.

Russian Foreign Minister Lavrov echoed concerns over the NATO military presence in this sensitive region:

“Russia hopes the correct conclusion will come from the war on the Caucasus, which took place in August last year. I mean it should be clear that it is dangerous to arm Georgia. We know how the Saakashvili regime used the offensive weapons that were supplied in the last few years, despite Russia’s warning,” Lavrov said.

Global security would benefit if plans for drastic cuts in Russian and American nuclear arsenals are carried out.

Barack Obama and Dmitry Medvedev agreed to negotiate a new reduction treaty, but a fresh report published by the Federation of American scientists is causing a stir on both sides of the Atlantic.

While generally supporting the idea of nuclear disarmament, the report suggests the US chooses several sensitive targets to cripple the Russian economy. The authors go as far as to name specific Russian power plants and steel works slated for annihilation.

Putting the bluntness of the suggestion aside, other experts say that these plans are simply uncalled for:

“There is no such scenario in my view that the US or Russia faces that they cannot deal with conventional weaponry, except a potential attack by another country using nuclear weapons,” concludes Deryl Kimball, the executive director of Arms Control Association.

While the report was not commissioned by Obama’s administration, the timing could not be worse.

The desire to rekindle a warm relationship has been expressed by the White House, but to make that possible, they first have to figure out what they really want to do: find a new way with Russia, or continue down their old path?

Russia's envoy to NATO Dmitry Rogozin says NATO exercises in Georgia will do more harm than good:

“You should not aggravate the situation when there's no need to do so. You should not put out a fire with kerosene,“ warned Rogozin.

Rogozin also noted that “Russia is behaving quite rationally and I think that even in Georgia there are people who back our appeal to the alliance to call-off the games. No one needs these games in the South Caucasus at the moment.”

NATO Ministerial NRC meeting expected on May 19http://www.interfax.com/3/488688/news.aspx

BRUSSELS. April 17 (Interfax) - The NATO-Russia Council (NRC) isexpected to meet at the level of foreign ministers in Brussels on May19, a date which "has tentatively been agreed on with the Russian side,"a source with the NATO headquarters told Interfax.

Russia-NATO Council resumes work Apr 29 – Rogozin

http://www.itar-tass.com/eng/level2.html?NewsID=13844407&PageNum=0

BRUSSELS, April 16 (Itar-Tass) -- The Russia-NATO Council will resume work at the ambassador level on April 29, Russia’s permanent representative at the alliance, Dmitry Rogozin told Itar-Tass in an interview on Thursday. He confirmed an earlier statement by a senior NATO official the date had been agreed at Wednesday’s meeting of the RNC’s preparatory committee. The Russia-NATO foreign ministers will gather in the middle of May.

The theme of the first meeting will be informal.

“We shall focus on the most practical issues. Our task will be to take a close look at NATO’s latest actions, such as, the final documents of the alliance’ summit in Strasburg and Kiel, in particular, the paragraphs that have a bearing on Russia, including articles on the future of the CFE and missile defense issues, the alliance’s expansion and so on and so forth,” he said.

“We’ve got to realize where the alliance itself is moving, and to build our relations with it accordingly,” Rogozin said.

Measures to improve RNC mechanisms will be another aspect of joint work.

Rogozin said that earlier on Thursday a number of NATO’s member-countries came out with ideas of how to make RNC a more effective mechanism that would allow for maintaining an uninterrupted dialogue “in any kind of weather in our relations.”

The work of the Russia-NATO Council was frozen immediately after Georgia’s invasion of South Ossetia last August. After Rogozin’s request for an emergency RNC meeting the US delegation boycotted the necessary preparatory procedures. As a result, the emergency meeting failed to take place “for technical reasons”, as the alliance’s spokesman explained. Several days later the alliance convened an early meeting of the North Atlantic Council to condemn what it described as Russia’s disproportionate use of force against Georgia and made a decision to freeze RNC’s activities. Only when a new Administration took power in the United States the alliance recognized the need for resuming RNC work and cooperation with Russia.

At the jubilee summit in Strasburg and Kiel on April 3-4 the alliance confirmed the strategic nature of relations with Russia despite the existence of profound differences

over a number of issues, including the recognition of independence of South Ossetia and Abkhazia.

Greenhouse Emissions Hit 13-Year Peakhttp://www.themoscowtimes.com/article/1009/42/376321.htm

17 April 2009 Reuters

OSLO -- Russia's greenhouse gas emissions rose by a tiny 0.3 percent in 2007 to the highest level since the 1990s economic downturn caused by the breakup of the Soviet Union, according to data submitted to the United Nations.

Emissions edged up to 2.192 billion tons of carbon dioxide equivalent in 2007 from 2.185 billion in 2006, according to official figures filed to the UN Climate Change Secretariat in Bonn.

Russia is the world's third-largest emitter of greenhouse gases, mainly from burning fossil fuels, behind China and the United States.

The 2007 level was the highest since 1994 but still 33.94 percent below emissions in 1990, the benchmark in the UN's Kyoto Protocol. Russia's emissions tumbled in the 1990s with the collapse of Soviet-era smokestack industries.

The collapse led to a fall in emissions that bottomed out at 1.98 billion tons in 1998, compared to 1990 emissions of 3.32 billion tons. Economic revival has since lifted emissions.

Russia's target under the Kyoto Protocol, which sets curbs on emissions for all industrialized countries except the United States, is to keep emissions below 1990 levels during the 2008-12 period. It can sell any surplus by staying under 1990.

More than 190 nations have agreed to negotiate a new UN climate pact to succeed Kyoto by the end of 2009. Russia, Japan and Ukraine are among developed nations that have not yet laid out domestic goals beyond 2012.

Russia signed up last year for a "vision" by the Group of Eight industrialized nations to halve global emissions by 2050 to help avert rising seas, more floods, droughts and heat waves.

Russia keeps to Kyoto levelshttp://www.upstreamonline.com/live/article175799.ece

News wires

Russia's greenhouse gas emissions rose by 0.3% in 2007, but even with the increase the nation is still keeping to its Kyoto commitment, data submitted to the United Nations shows.

Emissions edged up to 2.192 billion tonnes of carbon dioxide equivalent in 2007 from 2.185 billion in 2006, according to official figures filed to the UN Climate Change Secretariat in Bonn.

Russia is the world's number three emitter of greenhouse gases, mainly from burning fossil fuels, behind China and the US, a Reuters report said.

The 2007 level was the highest since 1994 but still 33.94% below emissions in 1990, the benchmark in the UN's Kyoto Protocol. Russia's emissions tumbled in the 1990s with the collapse of Soviet-era smokestack industries.

The 1991 collapse of the Soviet Union led to a fall in emissions that bottomed out at 1.98 billion tonnes in 1998, compared to 1990 emissions of 3.32 billion. Economic revival has since lifted emissions.

Russia's target under the Kyoto Protocol, which sets curbs on emissions for all industrialised countries except the US, is to keep emissions below 1990 levels during the 2008-2012 period. It can sell any surplus by staying under 1990.

More than 190 nations have agreed to negotiate by the end of 2009 a new UN climate pact to succeed Kyoto. Russia, Japan and Ukraine are among developed nations that have so far not laid out domestic goals beyond 2012.

Russia signed up last year for a "vision" by the Group of Eight industrialised nations to halve global emissions by 2050 to help avert the worst of warming such as rising seas, more floods, droughts and heatwaves.

Thursday, 16 April, 2009, 08:38 GMT  | last updated: Thursday, 16 April, 2009, 08:38 GMT

Putin wants twice as much nuclear powerhttp://www.barentsobserver.com/putin-wants-twice-as-much-nuclear-power.4581186-16178.html

2009-04-16 - By 2030 the share of nuclear power in the total energy production in Russia must be increased to 25 – 30 percent, says Prime Minister of Russia Vladimir Putin.

The current share of nuclear power in Russia’s electricity production is 16 percent.

- The situation in the economy will be changing and the demand for energy will be gradually growing. Experts say that in 2012 we will return to the pre-crisis energy

consumption level, Putin said at a conference at the Kalinin nuclear power plant in Tver region, reports Energoatom.

Currently, five new reactors are under construction in Russia, and many more are planned. Among them is the new nuclear power plant in Murmansk Oblast to replace the current reactors at the Kola nuclear power plant sometime into the future.

Putin instructed Rosatom state nuclear corporation to allocate additional 50bln RUR as property contribution for the implementation of priority target projects.

Cyprus and Russia endorse double taxation agreementhttp://www.focus-fen.net/index.php?id=n178041

16 April 2009 | 22:53 | FOCUS News Agency

Nicosia. Republic of Cyprus and Russia have endorsed a double taxation agreement, Cypriot Phileleftheros daily writes on its Internet site.The agreement was inked in Nicosia by Cypriot Minister of Finance Charilaos Stavrakis and head of tax unit with Russian Finance Ministry Ilya Trunin. The agreement automatically takes Cyprus out of the Russian government’s black list, said Stavrakis and noted Russia was now Cyprus’s most significant trade and economic partner.

Cyprus, Russia sign tax agreementhttp://www.forbes.com/feeds/ap/2009/04/16/ap6298799.html

Associated Press, 04.16.09, 09:38 AM EDT

Cyprus and Russia signed a double taxation agreement on Thursday that officials said will remove the east Mediterranean island from a Russian taxation "black list".

Cypriot Finance Minister Charilaos Stavrakis said the in-principle agreement was "very significant and beneficial" for both countries, as it will remove double taxation on assets and business activities for both individuals and companies.

Russia is one of Cyprus' biggest trading partners. Ministry officials estimate Russian deposits in Cypriot banks to exceed euro20 billion ($26.35 billion). Russia had blacklisted the country in early 2008 on claims that it was not cooperating enough in exchanging information on those vast bank assets, leading to tax evasion.

"(The deal) maintains Cyprus' very important advantages as a country through which investments can be made in Russia, and Cyprus is automatically removed from the black list," Stavrakis said.

Those advantages include "very low and competitive" taxes on Russian investments abroad and foreign investments in Russia, Stavrakis said.

Russian finance ministry official Ilya Trunin said Cyprus will be dropped from the black list once the agreement comes into effect.

"The promise of the Russian finance ministry, which is confirmed, is that Cyprus will be removed from the so-called black list," said Trunin.

Increased Cooperation With Israel Does Not Allow Russia To Arm Iran With C-300 http://www.turkishweekly.net/news/72761/-increased-cooperation-with-israel-does-not-allow-russia-to-arm-iran-with-c-300-.html

Friday, 17 April 2009

Azerbaijan, Baku, April 16 / Trend News D. Ibrahimova, E. Tariverdiyeva/Russia refuses from selling its rocket anti-aircraft complex. This decision was dictated by own Russian interests and accelerating of cooperation between Moscow and Israel. "Recently Russia improved relations with Israel. Presently, they negotiate on purchase of big batch of unmanned planes," leading Russian military expert Pavel Felgenhauer said.Russia has not launched realization of the contract on anti air craft rocket systems С-300 delivery to Iran. "Nothing occurs. There are no supplies," federal service on military-technical cooperation first deputy director Alexander Fomin told Interfax-ABN in Rio-de Janeiro. Fomin heads the Russian delegation at arms exhibition LAAD-2009 held in Brazil. 

Moscow's informed source told Interfax-ABH that realization of the contract on delivery of Russian anti-aircraft rocket systems C-300 to Iran can be postponed for uncertain period."This probability is not excluded. Decision on this issue must be taken on political level as the contract is out of commerce," he said.An interlocutor of the agency said that corresponding contract signed with Iran in 2005 has not been realized up to now. "Signing of the contract will depend on the international situation and leadership's decision," he said. The contract envisages delivery of С-300PMU1 system to Tehran from the Russian Federation's Ministry of Defence. The Russian side stressed that this is defensive arms designated to protect special important facilities from air attacks. Earlier Iran was supplied with Russian anti aircraft rocket systems of Тор-M1.The USA and Israel often stressed anxiety on possible deliveries of С-300 to Iran.Supervisors said that denial to Iran was dictated by Russia's willing to strengthen cooperation with Israel and following its foreign political interests. Establishment of relations with the USA is one of these interests.

The Russian Ministry of Defence has already decided which unmanned air crafts to buy from Israel. There will be three systems of near and medium distance of Israel Aerospace Industries (IAI) company, Kommersant newspaper said.According to this newspaper, sum of the first deal hits $50 million. One part (approximately 50 percent of total sum) has been transferred, a source in the Russian defence-industrial complex said.   For the first time, the intention to buy Israeli unmanned aircrafts was mentioned by the Chief of General Staff of Russian Armed Forces, Army General Nikolai Makarov in November 2008."Russia has very serious contracts, joint projects with Israel, including purchase of modern arms," Felgengauer, told Trend News in a telephone conversation from Moscow.These statements by the Russian side are dictated by the good relations with Israel, and with this, Fomin wanted to demonstrate the level of goodwill towards Tel Aviv, said Iranian expert on Russia and Caucasus Hasan Behishtipur. He stated that Russia wants to use the issue of armament of Iran as a object of bargaining with Israel, America and Iran.From the Russian point of view this is a bad time for the announcement of such sale because the government is currently studying the relationship with the new Obama Administration, says military expert Ian Anthony."Discussions are now held or expected to be held soon with the colleagues from the United States on several important issues, and this announcement would lead to negative effects," Anthony, a member of the Stockholm University for Peace, told Trend News via e-mail.He said that the governmental agreement between the USA and its European allies was signed, although has not come into force yet, and therefore, it will be difficult for the USA to close the missile defense program, which has been agreed. Nevertheless, further development of the missile defense system in Europe would be a very negative signal to Russia, said Anthony.This is an agreement between Russia and Israel rather than between Russia and Washington, said the expert.Russian expert also supports this opinion. "The fact that we now deny Iran is, of course, a signal to Washington, but much more this is connected with the fact that we have serious and good relations with Israel," said Felgengauer.The expert considers that it is difficult to work with Iran. "It infinitely trades, and the allied relations with them, which were considered at one time, were not over with the expected partnership, said Felgengauer - Therefore, Russia now does not want to sell its C-300 to Iran.Experts think that Russia will unlikely carry out the promised supply of air defense systems soon, since for one reason or another it is not in its interests.Each state builds relations with other countries within its own interests, and Russia's refusal to supply promised air defense is in the interests of Russia itself, Bahram Amirahmadyan, Iranian expert on Russia and Caucasus, told Trend News in a telephone conversation from Tehran.According to him, now the deployment of missile defense systems in Europe is being suspended, and the friendship with Washington is in the interests of Russia."Iran understands this, and this in no way affects the relations between Russia and Iran," said Amirahmadyan.

The United States is planning to deploy radar in the Czech Republic and ten missile interceptors in Poland under the guise of protection from missile threats from Iran until 2010. Russia fears that these systems will threaten its security. However, after Barack Obama came to power the U.S. is increasingly talking about the suspension or cancellation of the third position area in Europe.If Kremlin preferred to restore relations with the United States, Russia renounce the sale of C-300 to Iran, even if such a decision angered the Iranian government, Azerbaijan American expert Ted Carpenter said."If Moscow has decided that U.S.'s statements to improve relations with Russia are not serious, then Russia will begin to seek ways to improve ties with Iran," the Cato University Defence Policy Program Vice President Carpenter wrote to Trend News via e-mail.Iran is in a disadvantageous position in negotiations. "If Russia blocks the sale, then Iranian leaders could do little, especially given that Iran is very dependent on Moscow for security, as well as in opposition to sanctions, which European countries and the United States will continue to offer in response to the development of Iran's nuclear program," Carpenter said.This will not affect the relations between Moscow and Teheran, Iranian expert Bahram Amirahmedyan said. "Even if Russia does not transmit rocket complexes C-300 to Iran, no changes will take place in their relations, because Russia defines its foreign policy based on their interests," Amirahmedyan told Trend News over phone from Teheran.Iran and Russia are the strongest countries in the region and have joint positions on most international and regional issues.

Even if Iran does not acquire C-300, it is powerful to defend itself. "Iran is strong in the production of new military technology and in terms of the army," said Amirahmedyan.

Iran prefers to live in neighboring countries within the framework of mutual respect and no intention to attack any country, he said.T.Jafarov, E.Ostapenko and V.Zhavonkova contributed in the article.

Barak to Russia: Don't sell advanced missiles to Iranhttp://www.haaretz.com/hasen/spages/1078883.html

By Amos HarelDefense Minister Ehud Barak asked Russian Deputy Foreign Minister Alexander Saltanov yesterday to prevent his country from selling advanced anti-aircraft missiles to Iran.

Defense sources said Barak did not name the S-300 air-defense missile system, whose sale the two countries have been rumored to be negotiating, but referred to it indirectly by saying Israel expects Russia to refrain from introducing weapons that would change the balance of power in the region. The international press has reported that Russia and Iran agreed on the sale of the missile system two years ago but that Russia is delaying delivery of the weapons because of

pressure from Israel and apparently from the United States. A top Russian defense official says Russia has not delivered any S-300 systems to Iran, the Interfax news agency reported this week.

Russia has previously sold the Tor-M1 air-defense missile system and other weapons to Iran in deals criticized by the United States and Israel. The long-range S-300 is a much more advanced weapon that would make any potential Israeli strike at Iran's nuclear facilities more difficult.

Last year, a senior Defense Ministry envoy urged Russia not to sell Iran the missiles, saying they could help the Islamic Republic destroy Israel, according to a Russian news agency report.

The S-300 missile system is also seen as threat to the air forces of U.S. allies such as Saudi Arabia, Kuwait, Japan, and Taiwan, which are not equipped with aircraft that can counter the weapons.

Turkmen Deal Puts Putin on Defensehttp://www.moscowtimes.ru/article/600/42/376318.htm

17 April 2009By Anatoly Medetsky / The Moscow Times

Prime Minister Vladimir Putin struck a conciliatory note in a dispute with Turkmenistan on Thursday, telling Russian energy officials to reach out to Central Asian gas suppliers just as Turkmenistan signed a tentative gas deal with Germany's RWE.

"We need to maintain close contacts and coordinate all our actions with our strategic partners. ... I mean Uzbekistan, Kazakhstan and Turkmenistan," Putin told Deputy Prime Minister Igor Sechin and Gazprom chief Alexei Miller at a meeting. "Please, don't forget about this work."

In addition to Turkmenistan, the comments appeared directed at Azerbaijan, which agreed to consider selling gas to Russia starting next year. Azeri President Ilham Aliyev was scheduled to arrive in Moscow for a two-day visit Thursday.

Turkmen President Gurbanguly Berdymukhammedov signed a memorandum of understanding with RWE chief Juergen Grossman on Thursday that could allow the company to develop the offshore oil and gas Block 23 in the Caspian Sea. The deal also raised the prospect for the company to export the gas, which could help the European Union to diversify its gas imports.

"There are number of possibilities, and one of them is to go via the Caspian Sea, which is the option we are working on," Grossman, referring to potential export routes, told reporters in the Turkmen capital, Ashgabat.

The undersea pipeline has yet to be built, a project that would require five littoral states, including Russia, to complete long-running talks on the division of the sea. If built, the pipeline would allow Central Asian gas to bypass Russia on its way to the EU and raise hope for Nabucco, another planned pipeline.

EU-backed Nabucco, where RWE is a partner, seeks to draw gas from Azerbaijan and other countries in the region. The project hasn't advanced far because of uncertainty about securing enough gas. Socar, the Azeri state oil company, agreed last month to talk about selling its gas to Gazprom starting next year.

Turkmenistan has been maneuvering between Russia, China and the West to win better terms for its gas. In a further sign of such diplomacy, Berdymukhammedov met Richard Boucher, the U.S. State Department's assistant secretary for South and Central Asian affairs, on Wednesday and said his country was open to "constructive cooperation" in areas like energy. Boucher said the United States would send a delegation to an Ashgabat gas conference on April 23 and 24, Interfax reported.

Sechin and Miller are also going, Sechin said at the meeting with Putin.

In other foreign contacts, Berdymikhammedov met with the chief of the Korean National Oil Corporation on Thursday to invite the company to invest in the energy sector.

"We will be glad if our Korean partners join in the implementation of large-scale national programs," Berdymukhammedov said.

Ashgabat last week blamed Moscow for a rupture in its pipeline to Russia, the only export route for Turkmen gas. The pipeline burst after Gazprom reduced intake at a notice that Turkmen Foreign Ministry said was too short. Prompted by a drop in demand, Gazprom and other Russian producers are also reducing production.

Russia's policy of securing as much Turkmen gas as possible is faulted because it allows Ashgabat to exert diplomatic pressure and force questionable commitments on Moscow, said Konstantin Simonov, chief of the National Energy Security Foundation, a think tank. The price of $340 per 1,000 cubic meters of Turkmen gas that Moscow paid in the first quarter of this year was too high, he said.

"The softer we appear, the harder things will be for us later," Simonov said.

Moscow and Ashgabat fail to agree over the Caspian Coastal Pipelinehttp://www.glgroup.com/News/Moscow-and-Ashgabat-fail-to-agree-over-the-Caspian-Coastal-Pipeline-37513.html

April 15, 2009

Analysis by: GLG Expert Contributor

Analysis of: Russia, Turkmenistan put off gas agreement Published at: www.upi.com

Implications

The leaders of Russia and Turkmenistan have been unable to agree on terms for the (re)construction of a Soviet-era gas pipeline in western Turkmenistan. While subsequent negotiations are not excluded, Ashgabat has declared its intent to allow companies other than Gazprom, including Western companies, to bid for the work. In the context of recent developments, a pattern begins to form that may signify the breaking of what is left of Russia’s hold on Central Asian gas transport, to which its relationship with Turkmenistan has been central in the post-Soviet era.

AnalysisBACKGROUND

The Caspian Coastal Pipeline (CCP, also called by its Russian name the Prikaspii and sometimes, by erroneous translation, the pre-Caspian) is part of the western branch of the Central Asia-Center (CAC) pipeline, a spidery network inherited from the Soviet era of which the earliest branches date back to the late 1960s. The CAC’s eastern branch consists of four lines that run to various gas fields in southeast Turkmenistan. They pass northward through western Uzbekistan and then western Kazakhstan before crossing into European Russia. (Another spur originating in Uzbekistan proper shoots more directly northward through west-central Kazakhstan, crossing into European Russia’s southeastern extremity.) The CCP, which runs along the Caspian Sea coast in Turkmenistan and southwest Kazakhstan, is connected to gas fields in eastern Turkmenistan through a pipeline running from east to west across the southern expanse of the country. After reaching the eastern coast of the Caspian Sea, it turns north-northwest and traces the coastline passing west of the Garabogazkoel Gulf, an inlet of the Caspian Sea in northwest Turkmenistan, then northward into Kazakhstan before turning northeast to rejoin the CAC’s Russia-bound main trunk.Constructed over a third of a century ago, the CCP is in such disrepair that it has reportedly carried only 2 billion cubic meters per year (bcm/y) since being re-opened in the middle of the current decade. Nearly all gas exported from Turkmenistan and Uzbekistan to Russia has taken the CAC’s eastern-branch route. In 2003, Turkmenistan’s then-president Saparmurat Niyazov proposed to Russia’s then-president Vladimir Putin that the CCP be refurbished and its volume expanded. Agreement was not reached until mid-May 2007, when Niyazov’s successor Gurbanguly Berdimuhamedow agreed with Putin and Kazakhstani president Nursultan Nazarbaev, and a declaration was signed to this effect. Kazakhstan’s participation was necessary because of the CCP’s transit through that country after leaving Turkmenistani territory before entering Russia. At the time, Putin foresaw the final agreement being signed in July 2007, with work beginning in the first half of 2008 and increasing the route’s capacity by at least 12 bcm/y by 2012.IMPLICATIONS

It was only seven months later, in mid-December 2007, that a draft agreement for the CCP was signed among state officials of Russia, Turkmenistan, and Kazakhstan. According to it, the three main national trusts (respectively Gazprom, Turkmengaz, and KazMunaiGaz) would construct a pipeline to carry 30 bcm/y along the land route, of which the first stage of the project would foresee at least 10 bcm/y that Russia would commit to purchase. This would include an upgrade of the existing CCP where feasible and appropriate but joining the main CAC trunk at the Kazakhstan-Russia border rather than further south, as does the present line, and moreover construction of an offshore pipeline to carry an additional 10 bcm/y (which latter the Russian media have taken to calling the trans-Caspian gas pipeline in their English publications, as if to confuse it in readers minds with the undersea Turkmenistan-Azerbaijan pipeline project long under discussion but not yet agreed).With the December 2007 agreement, the construction that Putin foresaw beginning in the first half of 2008 had already been pushed back to the second half of 2009. It was with a view toward agreeing terms for that construction to start, that planned meetings took place between the Russian and Turkmenistani sides at the end of March. It was expected, in line with previous agreements to agree, and especially given an early July 2008 Memorandum of Understanding over bilateral energy relations more generally, that Gazprom would be tasked to coordinate and execute the lion’s share of the work concerned. But that was all before world energy prices crashed, followed by world stock exchanges in the ongoing global financial crisis that has severely restricted the availability of investment capital even for such asset-laden firms as Gazprom, the stock price of which had dropped in Moscow from 14 in early July 2008 to just below 3 last week. Gas sales to Europe are off by between one-quarter and one-third. Russia’s energy ministry, which was reportedly projecting sales of gas to Europe at US$280 per thousand cubic meters (tcm) has revised that figure down by almost 10%, and this following an average price of over US$ 400/tcm in 2008. An effect of this would be that Russia is less dependent upon Turkmenistan’s gas than in the past and may have offered a lower price for it than Turkmenistan expected.A contract from the Niyazov era gives Gazprom the right to buy up specified quantities out until 2028, although prices must always be negotiated. The last agreement, signed in September 2006, covered only the years 2007-2009, during which Russia’s entitlement had been set at 50 bcm at $100/tcm. Byr last year, the prices demanded by Ashgabat and paid by Moscow had exceeded $300/tcm, and the figure must now be renegotiated to take effect from   he from 2010. It is this price that Moscow apparently sought to lower in the t most recent unsuccessful talks held in Moscow at the end of March. Those talks were expected by observers in Moscow to end with agreement on the so-called East-West gas pipeline that runs across southern Turkmenistan from the eastern gas fields to the beginning of the CCP. Berdimuhamedow would have had good reason to doubt Gazprom’s ability to finish the original grand project as first conceived: the cost of the East-West pipeline alone was originally estimated to run to US$ 1.5 billion, and when Putin finally signed the authorizing Russian draft legislation over to the Duma late last year, the terms included only the construction of a 20 bcm/y refurbished overland CCP and omitted mention of the offshore parallel segment.CONCLUSIONS

The original tripartite agreement among Turkmenistan, Kazakhstan, and Russia provided that each party would be responsible for conducting the work for the CCP on its own national territory. It was in this context, and taking into account Turkmenistans longstanding ties with Gazprom, that it was anticipated that Gazprom would get the nod from Ashgabat to execute the work planned. However, now that terms have not been agreed as anticipated (and it is possible that Gazprom was the party that declined), Turkmenistan now indicates that it will seek other bids for the pipeline work. Of course it is possible that this is merely a negotiating tactic designed to extract better conditions from the Russian side. But reports from Moscow suggest that Berdimuhamedow had begun to doubt Gazprom’s ability to complete the work in its new financial situation, and had therefore hesitated to allow Gazprom monopsonistic control of volumes of gas to be transported through the CCP; and the move presents Western companies the opportunity to bid for the work.Already in November 2007 Berdimuhamedow visited Brussels on a three-day state visit during which he engaged the highest-level EU officials in intensive discussions over a wide range of issues. A year later, the German energy giant RWE embarked on a joint venture with Austria’s OMV to pursuse projects for bringing Caspian Sea region energy resources to Europe and began working with Turkmenistan in other energy-related industries such as the electricity sector. Ashgabat signed an agreement to begin supplying 10 bcm/y to Europe through interconnecting its sources to Azerbaijani offshor rigs. Together with the ground-breaking for construction of an agreed pipeline to from Turkmenistan to China and Berdimuhamedow’s continuing evocation of interest in a Turkmenistan-Afghanistan-Pakistan pipeline, pattern is forming for Russia’s grip on Central Asian gas to be at least significantly weakened. Such a development would naturally increase the quantities available for export to Europe through an eventual Trans-Caspian Gas Pipeline as part of the Nabucco project, or else through the White Stream project from Azerbaijan to Ukraine under the Black Sea, whence further westward also on to Europe.

Medvedev makes changes in composition of Council for Religious Orgshttp://www.itar-tass.com/eng/level2.html?NewsID=13845225&PageNum=0

MOSCOW, April 16 (Itar-Tass) - Russia's President Dmitry Medvedev has made changes in the composition of Council for Interaction with Religious Organizations, the Kremlin press service said Thursday.

More specifically, he introduced priest Igor Kovalevsky, the Secretary General of the Conference of Roman Catholic Bishops of Russia in the list of Council members.

By the same resolution, Medvedev withdrew Archbishop Tadeusz Kondrusiewicz from the Council.

Mosignor Kondrusiewicz, formerly the Roman Catholic Archbishop and Metropolitan of Moscow, currently holds the position of Archbishop of the Roman Catholic diocese of Minsk and Mogilyov.

Power abuse charge against Storchak dropped

http://www.itar-tass.com/eng/level2.html?NewsID=13844291&PageNum=0

MOSCOW, April 16 (Itar-Tass) -- Power abuse is missing from the new, final list of charges brought against Deputy Finance Minister Sergei Storchak, his lawyer, Andrei Romashev, told Itar-Tass on Thursday.

According to the lawyer, his client is facing charges under Article 30 and Article 159 of the Criminal Code (attempted fraud). Part 2 of Article 285 (power abuse) has been dropped.

Romashev added that he and his client had been forced to stop reading the case files in early December 2008, when more investigative procedures were ordered.

“The case files began to be read again a week ago. The charges have now taken a new shape,” the lawyer said.

The case consists of 80 volumes, so it will take the defendants and their lawyers a while to read them.

Sergei Storchak was detained on November 15, 2007.

On November 23 he was accused of an attempt at gross fraudulent embezzlement, committed by an organized group. The sum in question is 43.4 million dollars. The other figures in the same case are the general director of the Sodexim company, Viktor Zakharov, president and board of directors chairman of the Inter-Regional Investment Bank, Vadim Volkov, and a member of the bank’s board of directors, Igor Kruglyakov.

The investigators argue the accused formed an organized group with the aim of defrauding the federal budget on the excuse of compensating for costs allegedly sustained by the Sodexim company.

In 1994-1998 Storchak first led a section at the Finance Ministry’s foreign credits and foreign debt department and then was promoted to the department’s deputy chief. In 1998 he took the position of a deputy chairman at Russia’s foreign economic bank Vneshekonombank. Returned to the Finance Ministry in 2004 to take over the department of international financial relations, the state debt and state financial assets. Appointed as deputy finance minister in November 2005.

Armed clash with a group of militants occurred in Chechnya; there are no losses

http://www.itar-tass.com/eng/level2.html?NewsID=13845480&PageNum=0

GROZNY, April 17 (Itar-Tass) -- An armed clash with a group of militants occurred in a remote highland region; there are no losses.

As a source in the law enforcement bodies of the republic told ITAR-TASS on Friday, “on Thursdays’ morning, an armed clash with a group of militants occurred in a highland forest four kilometers to the north-west of the settlement Dai of the Shatoi region.” According to the source, artillery fire was opened on the place of their location, however, they managed to escape thanks to the fact that the region was difficult of access.

While examining the site of the incident, a base of militants was found. According to the source it was destroyed by explosion.

Clash in Chechnya after end of security regimehttp://news.yahoo.com/s/afp/20090417/wl_afp/russiachechnyacaucasusunrest_20090417061212

MOSCOW (AFP) – Russian security forces have clashed in Chechnya with a dozen militants after Moscow formally ended a military crackdown in place for the last decade, reports said on Friday.

The Russian security forces clashed with the group outside the settlement of Dai in Chechnya and used artillery fire, the Interfax and RIA Novosti news agencies quoted security sources as saying.

There were no casualties amongst the security forces, it said. The clash took place at 10:50 am (0650 GMT) on Thursday but these were the first reports to have emerged.

Russia at midnight Wednesday-Thursday ended its decade-long "counter-terrorist operation" in Chechnya, claiming stability had returned to a territory torn apart by two wars since the collapse of communism.

This was the first reported clash since the security regime was abolished.

Moscow fought two full-scale wars with separatist forces in Chechnya after the collapse of the Soviet Union, but the situation has largely stabilised in recent years under strongman pro-Moscow local leader Ramzan Kadyrov.

Russia says SARS did not kill Chinese womanhttp://uk.reuters.com/article/worldNews/idUKTRE53G16D20090417

Fri Apr 17, 2009 7:21am BST

MOSCOW (Reuters) - A Chinese women who suddenly died on a Russian train this week in the country's Far East was not struck down by the SARS virus, Interfax news agency quoted a top Russian health official as saying on Friday.

Russian health authorities have quarantined 53 people from the same train while they investigate the cause of the illness after the woman died on the way to Moscow from the city of Blagoveshchensk on the border with China.

On Thursday Radio Television Hong Kong sent alarm bells through the health community when it reported the woman may have died from Severe Acute Respiratory Syndrome or SARS, a contagious disease that spread worldwide and killed at least 774 people in 2002 and 2003.

Preliminary test results using material from the woman's lungs, intestines and brain showed no trace of SARS or other dangerous viruses, said Gennady Onishchenko, Russia's chief public health official.

"Investigations are continuing," he said, adding that more data would be available later on Friday.

(Reporting by James Kilner)

Doctors to confirm exact cause of suspected avian flu death

http://www.itar-tass.com/eng/level2.html?NewsID=13845223&PageNum=0

MOSCOW, April 17 (Itar-Tass) -- Doctors are planning to confirm on Friday that the death of a Chinese woman in a Russian train on Wednesday was pneumonia rather than initially suspected avian flu.

Cui Cinian died in Blagoveshchensk-Moscow train in a car with Chinese labor migrants and her body was taken off the train at the Zuyevka railway station in central Russia’s Kirov region.

“The autopsy provided a preliminary conclusion that she died of double pneumonia,” Russia’s sanitary watchdog Rospotrebnadzor said.

“The girl was sick for some five days, the illness was grave, but she received no treatment,” it said.

“The exact cause of the death cannot be determined earlier than Friday when the first test results arrive,” it said.

Russia's chief sanitary officer Gennady Onishchenko said the condition of the passengers from the Blagoveshchensk-Moscow train did not cause concern.

“The condition of all those currently staying at an in-patient hospital of the town of Kirov does not cause concern,” Onishchenko said on Thursday.

Russian Railways officials said the passengers who arrived in Moscow by the Blagoveshchensk-Moscow train have no health complaints.

“The passengers have been under medical supervision during the entire travel time: doctors took their temperatures and carried out examinations,” a company official said, adding “medics have not found any symptoms of diseases.”

Russian sanitary authorities however ordered to uncouple the first three cars before allowing the train to travel further to Moscow. All the cars that arrived in Moscow were decontaminated.

In the meantime, Russian regions bordering on China tightened health controls of arrivals from the neighboring country.

Tajik national stabbed to death in Moscowhttp://en.rian.ru/russia/20090417/121171531.html

MOSCOW, April 17 (RIA Novosti) - Moscow police are searching for four men who attacked two Tajik nationals in east Moscow, killing one of them and injuring the other, a police source said on Friday.

"Four masked men... attacked the Tajik nationals with knives before fleeing," the source said. "One of the victims died at the scene and the other was hospitalized."

There is currently no information on the condition of the second man.

Attacks on foreigners and ethnic minorities are a regular occurrence in Moscow and St. Petersburg, as well as other Russian cities. According to the Russian non-governmental organization SOVA, at least 68 people died and 262 were injured in racially motivated attacks in the country in the first eight months of 2008.

Russia's Interior Ministry has warned of a rise in crimes against foreigners and migrant workers amid the current economic crisis.

Al-Qaeda prepares terrorist attacks in Russia http://english.pravda.ru/russia/kremlin/17-04-2009/107416-Al_Qaeda_Russia-0

17.04.2009

Russian special services disclosed monstrous designs of international terrorist network al-Qaeda. The organization intended to conduct a series of terrorist attacks in Russia during the celebration of the Orthodox Easter. Terrorists planned to explode a building of the Federal Security Bureau in Moscow, a building of an aircraft-making association and a tan-yard in Kazan. They also planned to assassinate a high-ranking FSB official, Boris G.

Russian special services left no chances to the terrorists. Eight al-Qaeda members have made their way to Kazan using fake passports. Three of the terrorists are Russians.

“They originally were given Indian passports, but they later decided to issue Azeri passports for them, because it is always easy for guest-workers to remain inconspicuous,” an official said.

The special services have obtained the verbal descriptions of all the three suspects. The first one of them, Mohammad Yunus bin Mussa is a 35-year-old red-haired well-built male. The second one is Janes Han bin Ali Khan, a 32-year-old, dark-haired male. The third suspect is identified as Sodjat Ali Shakh bin Makbul Ali Shakh, 35, dark hair. The three men are fluent in Russian, Pushtu, Dari, as well as the Arab and the Turkish, Life.ru reports.

“The terrorists planned to use car bombs in their subversive activities. The Russian services have obtained the numbers of those wheeled bombs,” an official said.

In addition to Easter terrorist attacks, the gunmen planned to hold arson attacks of the buildings of the Internal Affairs Ministry, the FSB and the offices of United Russia Party.

Russia’s Federal Security Service official warns about threat of Afghan terrorists

http://www.axisglobe.com/article.asp?article=1803

16.04.2009At a security conference of members of the Shanghai Cooperation Organisation in Moscow, a high-ranking official of the Russian Federal Security Service (FSB) stated that terrorist groups brewing in the region of the Afghan-Pakistani border were one of the biggest threats to the national security of Russia and its allies in the region, according to TV channel Russia Today.“Despite the effort of the international coalition in Afghanistan, terrorist groups have managed to rebuild their potential under the flag of Al-Qaeda, which has strengthened its role as an international coordinator of terrorism,” Colonel General Alexei Sedov, who heads the FSB’s task force tackling terrorism threats, told Russia Today.According to the FSB official, the NATO-led operation failed to take into account cultural and regional specifics of the region, which lead to spiraling insurgency.General Sedov mentioned several terrorist organisations as posing the worst threat towards Russia, including the Taliban, Al-Qaeda, Islamic Jihad, Jamaat-ul-Mujahideen and the Islamic movement of Uzbekistan. The unfolding global economic crisis may contribute to surge of terrorism across the world, the counter-terrorism expert warned.

Sedov said terrorists and extremists are gaining proficiency with cyberwarfare and may be planning cyberattacks on official organizations and private companies, which deal with vulnerable objects of infrastructure.“There is information that terrorists use the Internet to simulate attacks on specific locations and to subtly coordinate actions of different cells,” he said. “Terrorist materials are published in more than 40 languages. Analysts believe that for, say, Al-Qaeda, survival of its ideology is far more important that the survival of individual members of the organization, and the Internet as it is now is a perfect means of propaganda.” Sedov added that the increasing expertise that terrorist organisation have in IT poses a ‘principally new threat’, according to Russia Today.

Russia develops special tube to store nuclear wasteshttp://english.pravda.ru/science/tech/17-04-2009/107419-ampoule_nuclear_wastes-0

17.04.2009

Tochmash, Russia’s defense enterprise from the city of Vladimir, conducted successful tests of a special ampoule that was designed to store spent nuclear fuel of Russian nuclear power plants. The ampoule guarantees that the storage of toxic fuel will be ecologically secure. Engineers of the enterprise were working on Ampoule PT for eight years. “It is made of stainless steel, is not heavy at all and is equipped with a unique spring lock that does not let the lid open even under the impact of heavy pressure,” a spokesperson for the enterprise said.

The ampoule looks like a cylinder with a lid. The cylinder will not let fuel particles penetrate into the environment for over 50 years.

The ampoule was originally made to be four meters high, but was later cut to 3.5 meters. The ampoule is meant to store spent nuclear fuel of three Russian nuclear power plants in Kursk, St. Petersburg and Smolensk regions, ITAR-TASS reports.

As Pravda.Ru previously reported Russian Russian scientists suggested burying spent nuclear fuel in Earth's core.

Russian Minister for Nuclear Power Alexander Rumyantsev acknowledged during his recent visit to Helsinki that Finland left Russia behind in the field of technologies to handle the spent nuclear fuel and radioactive wastes.

Scientists of the nuclear power and Greenpeace activists have been arguing for years regarding the spent fuel issue, whether it is supposed to be imported or not, processed or buried. It is a good thing to study foreign colleagues experience. However, there is a very interesting project in Russia about a way to get rid of the radioactive garbage.

This project seems to be a piece of a science fiction story at first sight, since it suggests taking nuclear wastes hundreds of kilometers deep in the Earth. According to the project,

there is no need to drill an extremely deep well for it: a hundred tons of radioactive wastes can be placed in a tungsten ball several meters in diameter.

This construction will get heated up to the temperature of 1,200 degrees Celcius itself. The temperature to melt rocks is a lot lower, so the ball will simply drown in the ground like a stone in the water.

This project is called a "Hot Drop," it was born in the Institute of Theoretical Physics more than 30 years ago. The project was developed by Aleksey Byalko and Igor Khalatnikov. Ecologists were first to express their reaction about a new idea.

They claimed that there was no guarantee to prevent from an explosion of the ball with nuclear wastes inside. Even without an explosion, ecologists said, the radiation would be too high. They concluded that no country in the world would agree to let such a thing happen on their territory.

17 April 2009

Patriarch Kirill has washed feet of twelve priests on the Holy Thursdayhttp://www.interfax-religion.com/

This tradition originated from the Last Supper when Jesus Christ washed feet of His disciples as a sign of deep humility. To commemorate the Gospel event, many bishops wash feet to twelve priests or parishioners, though this practice is not obligatory and universal and every bishop can decide whether to do it or not. For example, when Patriarch Alexy was a primate, he did not perform the Washing of Feet on the Holy Thursday, while his predecessor Patriarch Pimen observed the tradition as well as Metropolitan Nikodim of Leningrad and Novgorod, who was Patriarch Kirill’s spiritual guide

16 April 2009, 16:37

About 90 percent of Russians to celebrate Easter this year – pollhttp://www.interfax-religion.com/?act=news&div=5937

Moscow, April 16, Interfax – Overwhelming majority of Russians (88 percent) is going to celebrate chief Christian feast, the Holy and Great Resurrection of Christ, sociologists from All-Russia Public Opinion Research Center told Interfax.

According to the all-Russia poll, among those who are not going to celebrate Easter most frequent are citizens of Moscow and St. Petersburg (20 percent).

Five percent state they observe all commandments, 3 percent participate in sacraments, live honestly and pray, 2 percent commemorate their departed relatives, and 1 percent of respondents don’t work on festival days and Sundays.

Almost half of Russians who consider themselves believers do not observe any religious instructions and rites (47 percent).

Experts found out, Orthodox are frequent churchgoers (17 percent), Muslims are inclined to do the fasting (20 percent) and adherents of other religions more often than other respondents say they celebrate religious feasts (28 percent).

April 17, 2009A New Start or an Old Song? By Dmitry BabichRussia Profile

How Will Chechnya Live Without a Counterterrorist Regime?

http://www.russiaprofile.org/page.php?pageid=Politics&articleid=a1239947346

After nearly a decade as a “zone of counter terrorist operations,” Chechnya this week returned to a normal legal regime. The republic’s leadership has been lobbying for just such a move for a long time, and the decision was not unexpected. But the decision went against the better judgement of some in the Russian security services, and the prospect of a return of international flights to Grozny airport evokes memories of out of control smuggling and foreign terrorists who arrived in the 1990s.

The decision to lift the status of a zone of counter-terrorist operation from Chechnya as of midnight April 16 was long expected and was obviously taken by Moscow under pressure from the Chechen authorities. Actually, Ramzan Kadyrov, Chechnya’s president, made a formal request for the lifting of the status on March 25, 2009, and predicted that the lifting would be formally adopted on March 31, at a meeting of the National Antiterrorist Committee (NAC) in Moscow. This did not happen, however, despite President Dmitry Medvedev’s open support for the idea on the eve of the NAC’s session. Some representatives of Russia’s security forces were reported to have concerns about the consequences of such a move. Now, after a two week delay, the decision to end an almost 10 year long “state of siege” in Chechnya has come to pass.

The status of a counter-terrorist operation, according to the Russian law “On Fighting Terrorism,” gives the state authorities, both local and federal, additional powers on any territory that is declared the zone of a counter-terrorist operation. Chechnya was declared such a zone on September 23, 1999, when the fighters of the Arab Islamist warlord Khattab and Chechen separatist “Prime Minister” Shamil Basayev attacked the neighboring Moslem region of Dagestan, which was officially another subject of the Russian Federation. At the time, the Russian troops not only pushed the intruders out of Dagestan, but also continued their pursuit of retreating warlords into Chechnya itself, taking the territory of the rebel republic, a de facto independent state between 1996 and 1999, under their control. Chechnya’s chief mufti Akhmat Kadyrov, a former separatist

fighter, supported the federal troops and became the president of the new Chechnya inside the Russian Federation in 2003. After Akhmat Kadyrov’s assassination in 2005, he was succeeded by his son Ramzan Kadyrov, following a brief interregnum during which real power was already concentrated in Ramzan’s hands.

“This decision was long overdue,” commented Akhmar Zavgayev, the State Duma deputy representing the Chechen republic in the lower chamber of Russia’s parliament. “Actually, it will only change the modalities of importing foreign goods to Chechen territory, saving us from the necessity to go to the airports in the neighboring autonomous republic of Dagestan to pick up our imports.”

Ivan Sukhov, an expert on North Caucuses working for the Vremya Novostei daily, who made dozens of trips to Chechnya between the years 2000 and 2009, agrees that the Kadyrov family had taken control over Chechen territory from Russian troops long before the regime of the counter-terrorist operation was lifted.

“When Akhmat Kadyrov became the president in 2003 he established a block post near the base of the Russian troops in Khankala [an area surrounding Grozny’s airport],” Sukhov remembers. “Kadyrov was informed about these troops’ movements, so he was the real master of the land, not them. Kadyrov senior also had enormous influence on the Russian authorities, securing the release from prison of former fighters and lobbying for more federal funds for Chechnya. He was genuinely respected in Chechnya, because he achieved concrete results instead of continuing empty talks about independence as the preceding Chechen leaders did.”

Having succeeded his father, Ramzan Kadyrov continued the same policy of gradually taking more and more “home rule” from the hands of Moscow, guaranteeing security against possible terrorist raids from Chechen territory in return. Thus, the regime of counter-terrorist operation, which formally gives the federal troops and police the right to check people’s identities, to requisition any vehicles they need or to tow away and destroy suspicious ones, became truly redundant. Kadyrov’s police force, made up exclusively of Chechens, took upon itself the full responsibility for law and order in the republic. And this police force de facto has all the powers provided by the status of the counter-terrorist operation. However, these powers are given to it not by Russian laws, but by the unwritten laws of Chechen customs and traditions. Consisting mostly of former separatist fighters who switched to the Kadyrovs’ side lured by security guarantees and high salaries, provided personally by Akhmat and later Ramzan, these police became the dominant force in the republic, gradually sidelining the Russian forces and the separatist underground.

“In this situation, the lifting of the regime of the counter-terrorist operation is indeed mostly a formal or economic matter,” said Dmitry Oreshkin, the head of the Merkator research center, which specializes on Russia’s regional politics. “In fact, Ramzan Kadyrov is largely independent of Putin and Medvedev themselves. Formally, Medvdev, as the president of Russia, can dismiss Kadyrov, as he can dismiss any head of a subject

of the Russian Federation. But such a move would involve huge security risks and political problems. Kadyrov knows it and in fact behaves like an independent ruler.”

According to Kadyrov, under the new status Grozny’s international airport will receive flights from the United Arab Emirates, Saudi Arabia and Turkey. This revived the sad memories of the early 1990s, when under Chechnya’s first separatist president, Djokhar Dudayev, Chechnya became an illegal free trade zone inside Russian Federation, importing all sorts of goods and then selling them to the rest of Russia without paying import tariffs. The Islamist clerics and future terrorist mercenaries also came to Chechnya by the same flights from Saudi Arabia and UAE.

The Russian Aviation Authority said it was ready to give the Chechen airport international status as soon as the counter-terrorist operation regime was lifted. In an interview to RIA Novosti a source in the State Customs Committee, which would then have to establish a post in Grozny airport, declined to say it could guarantee full order on its future checkpoint in Grozny’s airport. The Chechen leadership, although, remains unperturbed by these concerns.

“I don’t think one can compare Dudayev’s terrorist regime and the constitutional order under Ramzan Kadyrov,” said Akhmar Zavgayev. 

National Economic Trends

Russian monetary base up 1.7% in week to $112.7 blnhttp://en.rian.ru/business/20090417/121173087.html

MOSCOW, April 17 (RIA Novosti) - Russia's Central Bank said on Friday the country's narrowly defined money supply (M1) was 3 trillion 772 billion rubles ($112.7 billion at the current exchange rate) as of April 13, up by 61.9 billion rubles ($1.9 billion) in the week since April 6.

According to the Bank, M1 money supply consists of the currency issued by the bank, including cash in vaults of credit institutions, and required reserves balances on ruble deposits with the Central Bank.

Russian economy to start recovering only in 2011http://english.pravda.ru/russia/economics/17-04-2009/107418-Russian_economy-0

17.04.2009

The Russian economy will begin to recover in 2011, Arkady Dvorkovich, an assistant to the Russian president said at a forum of the Russian Union of Industrialists and Entrepreneurs. The year 2011 will become the year of the economic rise in the country. However, it may take Russia a longer time if the government does not conduct adequate reforms of the bank system.

“If Russian banks do not give loans to businesses on reasonable conditions, the crisis in the country will last longer,” the official said.

He pointed out several problems, which Russia has in the crediting field. One of them is connected with the weak and underdeveloped mechanism of crediting.

There are no tools to supervise the targeted use of the funds. “The problems need to be solved in a complex. Everything should be solved in several months,” the official said.

The financial burden on the Russian business is not supposed to increase from 2011 for it will reduce the competitive ability of the Russian economy, Dvorkovich said.

“I think that a reduction of the value added tax will take place in 2011, but it is my personal opinion only,” the official said. The Finance Ministry will have the decisive word on the matter.

As Pravda.Ru previously reported Russia's economy will contract by more than 2 percent this year under the weight of the financial crisis and lower commodity prices.

"The GDP forecast has been downgraded to minus 2.2 percent," Andrei Klepach was quoted saying by the agency.

Klepach's estimate was the first official announcement of a sharp fall in the Russian economic growth, with the government previously predicting only a 0.2 percent contraction for 2009.

The minister said the forecast had been revised due to increasing investment outflows, which he estimated at 14 percent this year.

Russia 's stock markets reacted with steep drops in late trading. Both the RTS, Russia's benchmark index, and the larger MICEX exchange shed 9.4 percent by the close of the day. The national currency fell 2 percent against a dollar-euro basket.

But even after the latest forecast revisions, the government is still more optimistic than most analysts about the year ahead.

Russian min sees positive trends despite poor econ indicatorshttp://www.prime-tass.com/news/show.asp?topicid=68&id=455757

MOSCOW, Apr 16 (Prime-Tass) -- Economic Development Minister Elvira Nabiullina said Thursday that she saw some positive trends in the Russian economy despite falling industrial output and gross domestic product (GDP), ITAR-TASS reported.

“We’ve had falling indicators of industrial output and GDP, but economic trends in March went in various directions,” she said during a meeting with Prime Minister Vladimir Putin.

Nabiullina cited growth in food production and car output as evidence of improving conditions. She said she hoped that government support measures, including subsidies for car loans, would help increase auto production.

Industrial output in Russia fell 14.3% on the year in January-March. In March, it decreased 13.7% on the year, but increased 11.1% on the month. Russia’s GDP fell over 7% in January-March.

Optimistic CBRhttp://businessneweurope.eu/users/subs.php

VTB CapitalApril 16, 2009

The CBR is becoming increasingly optimistic on net private capital outflows in 2009. This is consistent with the Prime Minister's recent announcement on corporate debt restructuring. The monetary authorities have stepped up their FX interventions, providing liquidity to banks. But inflationary pressures remain low as unsecured loans shrink. The CBR sees the CPI below 13% YoY in 2H09 and might cut rates in April.

First Deputy Chairman of the CBR Alexey Ulyukayev announced today that net private capital outflows in 2009 might be less than the official forecast of USD 70bn. The key reasons for this are corporate external debt restructuring and Eurobond buy-backs.

The CBR's optimistic view on net private capital outflows this year is consistent with our assumption that corporate sector debt redemptions might be lower than the scheduled USD 116bn. Prime Minister Vladimir Putin recently mentioned that corporates repaid or restructured USD 174bn, which implies that the private sector could have rolled over some USD 98bn of external liabilities.

According to Ulyukayev, in February-April the CBR bought about USD 8bn of FX and printed some RUB 300bn, supporting banking system liquidity. However, we emphasise that the CBR decreased the total of outstanding unsecured loans to banks by RUB 400bn during the same period, limiting inflationary pressures.

Ulyukayev also mentioned that inflation was likely to subside to below 13% YoY in 2H09 and, hence, allow the CBR to cut rates. We think the regulator might lower the refinancing and repo rates by the end of April unless the global macro background deteriorates sharply. However, even a series of rate cuts might not be enough to spur credit growth. Ulyukayev's words also chime with our view that the CBR follows the market and would be very careful in lowering rates as this might bring down deposit rates and create

additional funding problems for banks.

CBR guides for current account surplus above $40 bln, expects to cut interest rateshttp://businessneweurope.eu/users/subs.php

AlfaApril 16, 2009

On April 15 Alexei Ulyukaev indicated that Russia's current account surplus could exceed $40 bln this year and that the CBR may consider cutting interest rates. 

The dramatic drop in imports and recent recovery in oil prices have made the CBR more optimistic about Russia's chances of running a current account surplus this year. A surplus would boost the CBR's reserves, as well as helping it reduce liquidity support to the banking system and cut interest rates.

However, a surplus would not solve the problem of short maturity, which is the main obstacle to lending growth. Corporate borrowers are not helped by cheaper 3-6 month money from the CBR, since they cannot finance their projects with such short loan maturities. Therefore, as long as the Russian economy suffers from a lack of long-term private savings, we do not expect the CBR to be able to use interest rates to regulate banking sector growth.

Business, Energy or Environmental regulations or discussions

Certain companies decline government support

http://en.rian.ru/analysis/20090416/121166826.html

Vedomosti, Kommersant

Russian sixth-largest oil producer Tatneft says it will waive inclusion in the government list of 295 strategic companies, because the chances of getting financial assistance are small, while greater government control of its operation is inevitable.However, the Economics Ministry does not think the company's wish will be enough to take it off the list. The government does plan to exercise tighter control of oil majors.The companies on the list are required to submit monthly reports including 70 points. Otherwise, they would have only had to present quarterly financial reports.Tatneft's key investment project is a major oil refinery and petrochemicals plant under construction in Nizhnekamsk, worth $3 billion-$5 billion, said deputy CEO Nail Ibragimov. However, he said, the government is not planning to provide money for business development under the strategic companies bailout program. It will only have "more serious control" of them.The company needs long-term cheap loans to finance investment. Without the money, there is no point in submitting reports, said Konstantin Cherepanov from KIT Finance.

Tatneft must have estimated additional costs of making the reports and realized there in no point remaining on the list, echoed Denis Borisov from the Solid brokerage.Tatneft is not the only company saying it doesn't need government support. Gazprom CEO Alexei Miller also said the monopoly would rather do without it for the time being when offered support by Prime Minister Vladimir Putin a few days ago. The Gazprom source did not say whether the state giant planned to withdraw from the list.In any case, it will not be easy. "The situation in the country largely depends on the situation in strategic companies. Therefore, government monitoring will be continued, regardless of the companies' wishes," an Economics Ministry official said.

Banks and companies haggle over financial supporthttp://www.russiatoday.ru/Business/2009-04-16/Banks_and_companies_haggle_over_financial_support.html

16 April, 2009, 21:01

Banks want to toughen control over bad debtors, but companies are complaining the banks don't even renew loans to disciplined borrowers.

They say one good turn deserves another, but that's not the experience of some Russian corporate borrowers.

Vladimir Korzun the head of Moscow food producer, Karat, says it repaid its bank, but some lenders refused to help out again.

"We paid back Uralsib $5 million but didn't get a kopek from it again, MIB Bank also hasn't given us another loan."

And its a similar story at Russian cable maker, Sevcabel. Its struggling to pay its debts on time, and company head, Gennady Makarov, says the banks should be prepared to help firms through the hard times.

"Our bankruptcies are not profitable for banks. It takes time and money – even our equipment on collateral is not that easy to go and sell. We hope that even the most uncompromising banks will understand that their behaviour is absurd, and switch to normal partner relationships."

One of Russia's main state lenders, VTB, told president Medvedev that it has increased financing of the real sector by 8% since the beginning of the year, and on behalf of the banking sector, CEO Andrey Kostin called for stricter financial discipline by borrowers.

"It's important that debtors don't think that the crisis writes off everything. There is need to take improve legislation in this sphere."

President Medvedev agrees. The state plans to inject several billion dollars more into banking sector. Medvedev once again emphasised that the banks should pass the money

on to industry. But that’s unlikely to satisfy industrialists, who say the current interest rates on loans, of around 25%, are unaffordable anyway. 

Russia’s Richest Lose $380 Billion as Crisis Bites, Forbes Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSVQWx21YY_w

By Torrey Clark and Anastasia Ustinova

April 17 (Bloomberg) -- Russia’s 100 richest people lost 73 percent of their wealth last year as the economic crisis slashed the value of commodity and banking assets, Forbes Russia said.

“Not a single business leader in the Golden Hundred increased his fortune in the past year,” Forbes said in its annual list published today. Only 32 billionaires remain, compared with 110 in the previous year.

The value of assets held by the so-called Golden Hundred tumbled to $142 billion this year, from $522 billion last year, according to the magazine. Those who “suffered least” sold interests before the financial crisis, which has wiped 38 percent from the Micex index and 30 percent from the ruble against the dollar since Aug. 1.

Mikhail Prokhorov, 43, with a fortune of $9.5 billion, topped the list, Forbes said. In April last year, Prokhorov sold 25 percent of OAO GMK Norilsk Nickel, Russia’s biggest mining company, to Oleg Deripaska, 41, for about $7 billion in cash and 14 percent of aluminum producer United Co. Rusal.

Deripaska, the first of the billionaires to cede secured assets to banks, dropped to 10th from first place after losing an estimated $25 billion in the past year. Forbes put his fortune at $3.5 billion now.

One of eight people to join the list was Yury Bortsov, 38, who with his father sold control of the OAO Lebedyansky juice maker to PepsiCo Inc. and Pepsi Bottling Group Inc. in a $1.4 billion sale last year. Forbes rated Bortsov 71st, with $500 million.

An additional 15 businessmen returned to the list from previous years, the magazine said.

To contact the reporter on this story: Torrey Clark in Moscow at tclark8@bloomberg.net; Anastasia Ustinova in Moscow at austinova@bloomberg.net.

Last Updated: April 17, 2009 03:28 EDT

Prokhorov Tops Forbes Russia’s Diminished List of Billionaireshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=amh3KEEf0Hn8

By Torrey Clark

April 17 (Bloomberg) -- Mikhail Prokhorov topped Forbes Russia’s list of the country’s richest, which shrank to 32 billionaires from 110 the previous year, publisher Axel Springer AG said on its Web site.

Prokhorov’s fortune was estimated at $9.5 billion, according to the statement.

Last Updated: April 17, 2009 01:42 EDT

Novolipetsk Steel Output, Sales Rise on China Demand (Update1)http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9YW0ZVEAlGs

By Yuriy Humber

April 17 (Bloomberg) -- OAO Novolipetsk Steel, Russia’s biggest steelmaker by market value, increased first-quarter production and sales on reviving Chinese demand.

Output jumped 21 percent from the prior three months to 2.1 million metric tons, the Lipetsk, Russia-based company said today in a statement. Volume sales rose 3 percent on the quarter to 1.9 million tons, still down 25 percent from a year earlier.

Signs of a demand revival, supported by government spending pledges in Russia and other countries, may be undermined for most of this year by a weakening steel market. Russian prices for the metal are likely to drop by half in 2009 as sales of cars and new homes stall, UralSib Financial Corp. said in a report last month.

“In the second and third quarters, the situation will remain challenging,” Novolipetsk said. Falling steel prices in the first three months in its main markets, “coupled with low sales volumes, put downward pressure on financial results.”

Novolipetsk gained 59 kopeks, or 1.1 percent, to 56.90 rubles at 11:47 a.m. in Moscow trading, extending its four-day climb to 23 percent. The stock has almost doubled this year.

The steelmaker, controlled by billionaire Vladimir Lisin, was sending between 15 percent and 20 percent of its monthly exports to China, investor-relations chief Anton Bazulev said last month. Sales to China are likely to drop within two months after global iron-ore and coal contracts are settled, making Russian steelmakers less competitive, he said.

Novolipetsk said today it’s cutting costs and negotiating lower prices for coking coal and iron ore to compete on exports.

OAO Raspadskaya, Russia’s second-largest producer of coal used for steelmaking, said this week the average weighted price for washed coal plunged 61 percent to $47 a ton in the first quarter from the preceding three months.

To contact the reporter on this story: Yuriy Humber at yhumber@bloomberg.net

Last Updated: April 17, 2009 03:50 EDT

Russia's Kerimov raises Polyus stake to 37% -paperhttp://www.forbes.com/feeds/afx/2009/04/17/afx6302609.html

04.17.09, 02:41 AM EDT

MOSCOW, April 17 (Reuters) - Billionaire Suleiman Kerimov has raised his stake in Russian miner Polyus Gold to 37 percent in a deal that ends a protracted asset split between two of Russia's richest men, a newspaper reported on Friday.

Vedomosti business daily, citing two unnamed sources, said Kerimov had spent a total of $1.3 billion building up his stake. He bought 15 percent of Polyus, Russia's top gold miner, on April 15 after acquiring 22 percent last month, the paper said.

Kerimov bought the stakes from fellow billionaire Vladimir Potanin, Vedomosti reported.

Polyus was the last company under the joint control of Potanin and Mikhail Prokhorov, the former business partners who announced more than two years ago they were splitting their varied assets in mining and finance.

Prokhorov, who is chairman of Polyus, remains a shareholder.

Polyus was not immediately available for comment.

Gold, often sought as a safe-haven alternative to equities and currencies during economic strife, has performed better than other metals during the global financial crisis.

Polyus produced about a fifth of Russia's gold last year.

(Reporting by Robin Paxton, editing by Will Waterman)

Kerimov buys Potanin's remaining 15% in Polyus Gold – Vedomostihttp://www.interfax.com/3/488675/news.aspx

MOSCOW. April 17 (Interfax) - Structures controlled by SuleimanKerimov have purchased Vladimir Potanin's remaining 15% stake in goldproducer Polyus Gold (RTS: PLZL), the business daily Vedomosti reportedon Friday, citing unnamed sources. Kerimov had purchased 22% of shares in Polyus from Potanin inMarch. The Federal Antimonopoly Service has yet to clear the purchase, butit has been closed by the foreign-registered companies concerned. Infact, Kerimov's shares in Polyus are spread among a number of hiscompanies, while clearance is only needed to raise a company's stake in

the gold producer above 25%. The application from Kerimov's Nafta Moskvawill be examined by the government commission on foreign investment inearly May. The 37% stake in Polyus was worth $3.2 billion as of April 16, butPotanin only realized about $1.3 billion from sale of the shares. Thediscount to the market when the first part of the deal was closed inMarch was 40% and the price of Polyus shares on the London StockExchange has risen 21.05% since. The sale price might have been higher,but was discounted because Polyus had less cash than was assumed. Potanin's Interros group and Mikhail Prokhorov's Onexim groupdeclined to comment on the report. Onexim, which controls Polyus by virtue of a majority on the boardof directors, claims to own about 30% of shares. Vedomosti reports itsstake is actually 35%.

The agency for restructuring of mortgage loans (ARIZhK) will revise the eligibility criteria of "problematic" borrowershttp://businessneweurope.eu/users/subs.php

CitiApril 16, 2009

The Agency has denied 52% of refinancing applications from borrowers who applied for state support to help meet their mortgage payments, Vedomosti reports, quoting ARIZhK's CEO Andrey Yazykov. In order to change the situation, the Agency's Board will soften the requirements of the refinancing programme. In particular, the programme will become available to borrowers with mortgages on rooms and the requirement of obligatory registration of the purchased apartment/room will be cancelled. In addition, ARIZhK will determine refinancing procedures for borrowers on maternity leave and change the requirement to sell other properties prior to applying for refinancing.

Alfa Expects Bad Loans To Eat Profithttp://www.themoscowtimes.com/article/1009/42/376317.htm

17 April 2009 Reuters

Alfa Bank expects no profit this year as provisions for bad loans soar, CEO Rushan Khvesyuk said Thursday.

Russia's banks were hit badly by the stock market collapse in the second half of 2008 and are weighed down with deteriorating assets as the economy feels its first contraction in a decade.

"We will channel a maximum of our profits to create provisions. ... We are urging everyone to work based on the most pessimistic, most conservative scenario. ... The most

conservative scenario is a zero net profit for this year," Khvesyuk told reporters.

The bank reported a 10 percent fall in 2008 net profit to $230 million as provisions consumed up to $900 million.

"It's no use hiding your head in the sand -- everybody will suffer losses, and so will we," Khvesyuk said.

The bank's overdue loan ratio has ballooned to 9.83 percent at April 1, 2009, from 1.14 percent in October 2008.

"The share of loans with signs of impairment is two times bigger then that of overdue ones," deputy CEO Vladimir Tatarchuk said.

Government officials have said Russian banks could see their profits fully erased this year should bad loans triple to 10 percent of the total portfolio, triggering provisions of about $45 billion.

Alfa Bank president Pyotr Aven has said the level of bad loans in the banking sector is likely to hit 15 percent to 20 percent by the end of this year.

Russian government to subsidize Transmashholding: will LTPL benefit?http://businessneweurope.eu/users/subs.php

FoyilApril 16, 2009

Transmashholding, a large Russian railway equipment producer and disputed owner of 76% of the Ukrainian locomotive builder Luganskteplovoz (LTPL) should receive government subsidies this year, according to the State Budget that is now entering its second reading in the Russian Parliament, PM Putin announced on Wednesday. The interest rate at which State assistance is to be made available should be 10%-14% p.a.

We see this development as negative for Luganskteplovoz, since in the absence of a clear situation regarding the ownership of LTPL, we doubt that Transmashholding will be eligible to allocate any funds to Luganskteplovoz until the situation is resolved. Also, we believe that it would be more logical for the Russian company to direct any proposed government aid towards its other subsidiaries that compete directly with Luganskteplovoz and have no ownership issues outstanding. This should hold back the technical modernization of Luganskteplovoz at least until 2010, negatively impacting its ability to compete both domestically and internationally. Nevertheless, this news should not hamper the cooperation of Transmashholding and Luganskteplovoz in the production of locomotives for Russian Railways.

We believe that LTPL should receive new orders from Russia in May, while we see the

earlier announced plans to produce 120 locomotives in 2009 for the Russian railway monopoly as less realistic, and we expect that the order will be reduced to just 70-80 units this year.

Novorossiysk Commercial Sea Port Braced For Headwindshttp://businessneweurope.eu/users/subs.php

VTB CapitalApril 16, 2009

In 1Q09, Novorossiysk Commercial Sea Port maintained strong operating performance, with cargo turnover increasing 14% YoY to 21mn tonnes. The rise was primarily driven by the growth in oil (10%), oil products (25%), grains (247%) and iron ore (up 16 times).

The results feature the trends observed in previous months.

- The increase in oil products and grain was largely driven by the expansion of handling capacity: for oil products it increased by about 1mn tonnes in October 2008, while a new 4mn-tonne grain terminal reached its projected capacity in 2H08.

- The volume growth is partially explained by disruptions in cargo handling in early 2008 due to bad weather conditions. We note that oil volumes were flat YoY in March.

- Low-margin cargo volumes (iron ore) increased significantly while high-margin cargoes (containers) saw a strong decline.

The rising share of low-margin cargoes in the total mix might put some pressure on the margins. However, NCSP is likely to maintain relatively stable profitability because:

- over 70% of the company's revenues are dollar-denominated but some 90% of costs are rouble-denominated, so the rouble devaluation is favourable for the company;

- grain is a relatively high-margin cargo and we expect the significant increase in grain volumes to support profitability;

- NSCP's new capacity is more efficient;

- there is a residual positive effect from tariff increases in April 2008.

We are reiterating our view that NCSP's diversified and resilient business model will allow the company to maintain stable volumes despite the current crisis, including by switching between cargoes to increase capacity utilisation. This makes this stock, which has dropped more than 70% since its May 2008 peak attractive.

Atomenergoprom gains control of Energomash UKhttp://businessneweurope.eu/users/subs.php

RencapApril 16, 2009

State company Atomenergomash (a part of Atomenergoprom) and majority holders of Energomash UK (A. Stepanov and A. Pleschev ) have signed an agreement according to which Atomenergomash will buy 50% plus two shares in Energomash UK. The price will be finalised in one month, after Atomenergomash completes due diligence with regard to the deal. According to a company press release, the funds from the deal will be spent on the repayment of Energomash's main debt to commercial banks. The rest of its debt will be restructured. The head of Rosatom, Sergey Kirienko, supported the deal as Atomenergoprom will gain control over Atommash, which produces reactors with a capacity of eight to 10 reactors per year. Stepanov will provide operating management. Atomenergomash plans to extend its cooperation with Energomash in the nuclear segment, and participate in the strategic management of Energomash. Energomash UK includes Atommash, Belenergomash, Tchekhovenergomash, Barnaul boiler , Uralelectrotyazhmash and Uralhydromash.

Energomash UK is one of Russia's largest power engineering groups, and one of the most efficient in terms of revenue per employee. Energomash's financial position became vulnerable due to the high level of debt raised for the development of GT-TEC Energo, which is focused on power unit construction and generation. We estimate Energomash's total debt at over $1.3bn as of last summer, mainly borrowed from Sberbank and other state banks. We believe the high debt level and significantly increased cost of borrowing resulted in the final acquisition agreement of Energomash by the state corporation. A small stake of about 10% was sold through a private placement in Aug 2008. Shares of Energomash UK are not traded.

Firms Seek New Bioethanol Sourceshttp://www.themoscowtimes.com/article/1009/42/376320.htm

17 April 2009 Reuters

Russian companies, frustrated by slow legal reforms, have abandoned costly projects to produce bioethanol from grain and are instead trying to make the environmentally friendly fuel component from other sources.

One Siberian plant has started production, and two projects are under development, a far cry from the dozen projects mooted when oil prices were rising last year, industry officials and lawmakers said.

"We are tired of fighting," Alex Ablayev, president of the Russian Biofuels Association, said on the sidelines of a bioethanol conference Wednesday.

"We have found a compromise, and now we are talking more about producing fuel from timber waste and straw," he said. "But I still believe that until we have created a market for grain-based bioethanol progress will be slow."

Alexei Petrykin, a sector expert with the Federation Council, told the conference that it was difficult to overcome a widespread conviction in Russia that output of bioethanol from grain would lead to a food crisis.

This belief, he argued, is not true. "There is an excess of feed grain in Russia, and stable demand will lead to an increase in grain production."

The current tax system was an obstacle to the development of new projects, Petrykin said. Russia applies an excise tax of 27.7 rubles ($0.83) per kilogram of gasoline containing 1.5 percent of ethanol, which rises to 191 rubles ($5.72) if the ethanol content rises to 10 percent.

This makes production of bioethanol unprofitable. To change this, a group of lawmakers prepared a new law in May 2008, but parliament has yet to start dealing with it, Petrykin said.

Some projects, however, are progressing. The market leader is the Titan group, which launched the Biocomplex project in the Omsk region.

By producing gasoline with a bioethanol-based component, Ethil Tertiary Butyl Ether, and exporting the gasoline itself, the company avoids payment of the excise tax, project founder Mikhail Sutyaginsky said.

Biocomplex, which plans to produce 150,000 tons of bioethanol per year in its first stage, is a replica of a similar project run by the Sutyaginsky family across the border in Kazakhstan.

The Kazakh complex produces bioethanol as a byproduct of other commodities. It makes gluten used to improve the quality of flour, bran and yeast to make animal feed, which in turn is used by poultry and pig-breeding farms in the complex.

Another Russian project envisions production of 250,000 tons a year of bioethanol in Tambov region, said Dmitry Arsenyev, CEO of NPK Ekologia, the engineering firm drafting the project.

"It will use local grain and molasses remaining at local sugar beet refineries as raw materials," Arsenyev said.

NPK Ekologia has also been charged with drafting a project in Nevinnomyssk, a town in the Stavropol region. The plant would be located next to a local utility and would have design capacity of 200,000 tons, Arsenyev said.

Mercury unauthorised dumping sites in Altai settlement threaten Ob river

http://www.itar-tass.com/eng/level2.html?NewsID=13845708

GORNO-ALTAISK, April 17 (Itar-Tass) -- Residents of the Altai settlement of Aktash requested to the authorities of Russia’s Altai Republic to remove unauthorized dumping sites of 90 tonnes of mercury waste. Some 158 people, who live near the Aktash ore mining plant, signed a letter addressed to Altai First Deputy Prime Minister Sergei Tevonyan. The local residents shoulder responsibility on him for piling up five toxic dumping sites.

The territorial department of the Russian consumer rights watchdog has already confirmed that dangerous dumping sites had piled up in 2003-2005 and now threaten ecological security of the Ob River basin. According to sanitary doctors, the chemical plant should have disposed of this mercury waste at their mercury processing plant, but failed to do it. As a result rains and floods are washing the dumping sites away, so toxic agents are leaking in the river, which is flowing through the whole settlement, where 3,500 people live. Ob’s tributaries – Chuya and Katun are flowing nearby.

Russian Real Estate Sector: Cash Matters http://businessneweurope.eu/users/subs.php

CitiApril 16, 2009

Investment Edge - The Russian real estate sector appeared to be highly vulnerable to the global financial turmoil. With access to credits hindered developers found themselves in a rather difficult position with servicing existing debt and funding the ongoing projects. On the other hand, weaker demand has challenged developers' plans to deliver projects. We believe the future is with the companies that have enough financial resources to bring projects to completion.

Office Market - As corporates put on hold expansion plans, demand for office spaces significantly contracted. With vacancy rates surging to 20%, office owners are being prompted to reconsider pricing policy. Lease rates are likely to see a major correction from mid 2008 heights and we believe will not return to a growth path until Russia sees a rebound in economic activity.

Residential Market - Price deflating expectations have finally dominated the real estate market across the country. The outcome is stalling residential property sales, which have further aggravated the financial situation of the residential developers. Our regression analysis suggests that Moscow property prices may fall 40%-60% in US$ terms from current levels.

Picks - The challenging market environment leaves little room for positive news flow for the real estate sector in the foreseeable future. As such, we have lowered our forecasts,

ratings and target prices (see table below), in line with the new macro forecasts and new outlook for the Russian real estate market. Still, we think that investors should highlight the stories with sound balance sheets and strong project pipelines as prime rebound candidates. We like AFI Development for its strong liquidity position and focus on key projects. We think OPIN's plans to do another equity placement could further undermine investors' confidence in the stock, while Sistema Hals' high leverage could weigh hard on earnings.

Activity in the Oil and Gas sector (including regulatory)

Kudrin indicates possible 20% fall in gas productionhttp://businessneweurope.eu/users/subs.php

AlfaApril 16, 2009

Finance Minister Alexei Kudrin has stated that Russian gas production could fall as much as 20% this year, according to RBK Daily. This compares with the 10% reduction signaled by the company itself last week. According to the company data available in its newest prospectus, deliveries within Russia fell by 10% in 4Q09, while exports fell 13%. CDU TEK data, which we have reported on previously, show that those declines have extended into 2Q09.

We currently model in an 11% production fall for 2009 for Gazprom, and view a 20% fall as an unlikely worst-case scenario. Still, each additional official comment underlining the depth in the fall in demand for Russian gas both domestically and on export markets will have an incremental impact on earnings perceptions of the company. We reiterate our Underweight rating on both Gazprom and Novatek on uncertain volumes sales and questionable sustainability of planned ruble tariff increases in 2010 and beyond.

LUKOIL MAY REDUCE UZBEKISTAN GAS OUTPUT ON GAZPROM REQUESThttp://www.tradingmarkets.com/.site/news/Stock%20News/2276249/

Thu. April 16, 2009; Posted: 11:44 PMTASHKENT, Apr 17, 2009 (AsiaPulse via COMTEX) -- LUKOY | Quote | Chart | News | PowerRating -- Lukoil could meet a request by Russian petroleum giant Gazprom and reduce its gas production in Uzbekistan owing to dwindling demand.

"We see a reduction of around 400 million-500 million cubic meters," Lukoil's president, Vagit Alekperov, said in an interview with Bloomberg television.

Lukoil was earlier planning to produce 2.7 billion cubic meters (bcm) of gas this year in Uzbekistan.

Uzbekistan, Lukoil and Gazprom signed an agreement to supply 1.8 bcm of gas this year, but Alekperov said that Gazprom was acting fairly when it asked independent gas producers to reduce their output in proportion to its own decrease.

It was earlier reported that Lukoil planned to produce over 12 bcm of gas a year in Uzbekistan.

This rate could be achieved by 2011, the company said.

In the autumn of 2007, Lukoil started producing gas in Uzbekistan under the framework of the Kandym-Khauzak-Shady PSA. All gas exported from Uzbekistan goes through Gazprom's trunk pipeline system.

(UzReport)

LUKoil wants Trebs and Titov depositshttp://www.barentsobserver.com/lukoil-wants-trebs-and-titov-deposits.4581190-16178.html

2009-04-16 Russia’s oil major LUKoil says it is ready to bid for the two fields in Nenets Autonomous Okrug, said to be the largest untapped fields in the European part of Russia.

Both the Trebs and Titov deposits on the Nenets tundra are located near LUKoil's Varandei export terminal on the Barents Sea.

LUKoil’s CEO Vagit Alekperov said in an interview with Bloomberg that the Russian state should offer more licenses domestically.

The government should offer large fields that can be rapidly developed in tenders to attract investors Russian and otherwise, Alekperov said according to The Moscow Times.

LUKoil is not the only company to bid for the lucrative licences. Three years ago state owned Rosneft they wanted to expand in the region by bidding for licenses to develop the potentially huge Trebs and Titov deposits.

According to The Sunday Times LUKoil controls an estimated 750 million tonnes of recoverable reserves across the Nenets region, while Rosneft had only 84 million tonnes.

Russia's Sakhalin-1 2009 budget totals $2 blnhttp://www.reuters.com/article/rbssEnergyNews/idUSLG30866720090416

Thu Apr 16, 2009 12:36pm EDT

* Sakhalin-1 2009 investment approved at $2 bln

* Not all of 2008 additional spending approved

By Vladimir Soldatkin

MOSCOW, April 16 (Reuters) - A group led by U.S. energy giant ExxonMobil (XOM.N: Quote, Profile, Research, Stock Buzz) will invest about $2 billion into Russia's Sakhalin-1 oil and gas project this year, the Sakhalin regional government said on Thursday.

Russia approved the Sakhalin-1 budget last week after a prolonged delay which analysts linked to disagreements between Exxon and Russian state gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) over the sale of Sakhalin gas.

Gazprom has long said it needs the gas produced at Sakahlin-1 to cover domestic needs, while Exxon plans to export the fuel to China.

The Sakhalin regional government announced the approved budget figure in a statement on Thursday.

"The governor... has pointed out several important details: additional spending for 2008 was approved at $480 million and 2009 spending at about $2 billion," it said.

A source close to the commission made up of government and company officials that had reviewed the budget told Reuters the exact figure for 2009 was $1.978 billion.

Extra spending for 2008 was approved at $404 million, lower than the $627 million Exxon had asked for, the source said.

Exxon operates the $12 billion project along with Russian state oil firm Rosneft

(ROSN.MM: Quote, Profile, Research, Stock Buzz), Japan's Itochu (8001.T: Quote, Profile, Research, Stock Buzz), Marubeni (8002.T: Quote, Profile, Research, Stock Buzz), Japan National Oil and India's ONGC.

Exxon had threatened to suspend the future phases of Sakhalin-1 during the bitter budget standoff. But analysts say the financial crisis and a fall in global gas demand might have made the issue less acute.

Sakhalin-1 works under a production sharing agreement (PSA), which gives investors tax stability but makes it subject to special regulations. Any increase in spending delays and reduces the government's income from the project.

The project has been producing oil for several years and reached peak production of 11.2 million tonnes in 2007.

It has been producing gas since 2005 and shipping small volumes to continental Russia. It signed a separate deal to supply China with 8 billion cubic metres of gas a year and hoped to start supplies next decade.

Gazprom, the world's largest gas producer, itself has a rival plan to supply China from East Siberia via two links. It wants to buy gas from Sakhalin-1 at market prices but talks have been stalled for over a year due to a price disagreement.

Gazprom co-leads Sakhalin-2, a neighbouring project from Sakhalin-1, and liquefies all of the gas produced there. (Writing by Olzhas Auyezov, Editing by Peter Blackburn)

Transneft and Rosneft ink agreement on oil supplies to Chinahttp://steelguru.com/news/index/2009/04/17/OTA1MjQ%3D/Transneft_and_Rosneft_ink_agreement_on_oil_supplies_to_China.html

Friday, 17 Apr 2009

Itar-Tass citing Mr Igor Demin head of the press service of the pipeline company as saying that Rosneft and Transneft have signed an oil purchase and sale contract. As he said, according to the reached agreements, as of 2011, Rosneft will supply nine million tons of oil and Transneft six million tonnes of oil to China through a branch of the oil pipeline Eastern Siberia Pacific Ocean.

Within the framework of Russian-Chinese agreements, Rosneft and Transneft will get from China 20 year credits in the volume of 15 and 10 billion dollars, accordingly, a branch of the ESPO oil pipeline will be built, and beginning from 2011, Russia will annually supply China with 15 million tonnes of oil during 20 years. Transneft expects to get the first tranche of the credit after the ratification of the Russian-Chinese intergovernmental agreements on cooperation in the sphere of fuel and energy complex which, as is expected, will take place in the near future. Rosneft hopes to get the first tranche within the second-third quarters of 2009.

Rosneft will sale crude oil to Transneft to repay the transport monopoly’s Chinese credit liabilities, which, in its turn, will sale it in the Chinese market to settle up the credit.

Crown Oil & Gas snares Russian assets http://www.upstreamonline.com/incoming/article176111.ece

By Upstream staff 

US-based Crown Oil & Gas has completed the acquisition of Langford Worldwide and its Russian subsidiaries from Boshoff Holdings in a deal worth $11.9 million.

With the acquisition of Langford and its wholly-owned Russian subsidiaries, Crown holds exploration and development licenses for the Tereshkinsky, Kikinsko-Gusikhinsky and Krasnoarmeisky-2 properties located in the Saratov region of Russia.

The Saratov region is situated in the European part of Russia on the border with Kazakhstan, the largest oil producing country in Central Asia. The three properties have a combined area of about 500,000 acres. Continuing seismic work and analysis is scheduled for 2009 and will be followed by exploration drilling.

Friday, 17 April, 2009, 04:24 GMT  | last updated: Friday, 17 April, 2009, 04:24 GMT

Sibir joy at record Salym output http://www.upstreamonline.com/live/article175821.ece

By Upstream staff 

Sibir Energy said today that daily crude oil production at the Salym fields hit a new record by exceeding 160,000 barrels per day.

The Salym fields are in Western Siberia and are operated by Salym Petroleum Development, a 50-50 joint venture between Sibir and Anglo-Dutch supermajor Shell.

Sibir's acting chief executive Stuard Detmer said in a release: “It has taken less than two years to double production at Salym."

Thursday, 16 April, 2009, 09:50 GMT  | last updated: Thursday, 16 April, 2009, 09:59 GMT

9 million tons of oil through Belokamenkahttp://www.barentsobserver.com/9-million-tons-of-oil-through-belokamenka.4581292-116321.html

2009-04-17 reloaded at the floating oil terminal Belokamenka in the Kola bay.

8 million tons will come from Varandey oil terminal and 1 million from the oil company Rosneft, Head of Administration of Murmansk Sea Port Sergey Didenko said at a press conference recently, Portnews.ru reports.

Varandey oil terminal is located in the Barents Sea, 23 kilometers from land, and is owned by Lukoil. Oil from the Timano-Pechora oil and province is transported from the terminal on 20 000 ton tankers to Belokamenka. The 300 000 tons tanker Belokamenka is owned by Rosneft. An agreement between the two companies will shortly be signed, Didenko said.

According to Portnews.ru, in 2008 1.4 million tons of oil was shipped from Varandey and 7.3 million tons was reloaded at Belokamenka.

16/04/2009 | Moscow News №14 2009Oil production puts Russia on collision coursehttp://www.mnweekly.ru/business/20090416/55374322.html

By Ed Bentley

OPEC is squaring up for a spat with Moscow as it becomes increasingly frustrated with Russia's reluctance to curb oil output as agreed with the international cartel.

Oil prices continued to hover around the $50-a-barrel mark despite a statement from the International Energy Authority (IEA) that demand would fall more than expected. However, OPEC is becoming for prices above $60 and is frustrated with Russia for not reducing its exports in line with the cartel's record cuts this year.

Russia's oil exports increased 6.3 per cent in February and 2.2 per cent in March, including by 10-fold to the United States. At the same time U.S. imports from OPEC fell by 14 per cent, or 818,000 barrels per day.

"OPEC is frustrated with the fact that Russian oil production is not falling as promised (it rose in March)," said Chris Weafer, chief strategist at Uralsib in a note to investors. "It is believed that Russia assured OPEC, at a December meeting, that oil production would slide steadily all year."

OPEC's cuts have raised the oil price from $35 in February to around $50 a barrel, but Saudi Arabian Oil Minister Ali Al-Naimi said at OPEC's last meeting on March 16 that suppliers need a price of $60 to $75 to support production of higher cost resources. The following day, Algerian Oil Minister Chakib Khelil said he was disappointed Russia hadn't cut production to support prices, Bloomberg reported.

Russia is expected to reduce production this year but only by about 1.5 per cent, which is considerably less than OPEC's cuts. Although Russia does not have any formal obligations to OPEC, it would naturally benefit from higher prices.

"I think some kind of price regulation was discussed jointly but in terms of quota setting and production Russia has its own independent policy," said Lev Snykov, an oil and gas expert at VTB Capital.

Despite being the world's largest oil producer, the 5.02 million barrels OPEC shipped in January dwarfs Russia's exports of 157,000 barrels per day to the United States, limiting the amount they can influence prices.

"I don't think that Russia will have an effect on the price and in addition I don't think the Kremlin has abandoned its plan of aligning itself with OPEC's efforts to sustain price levels," said Artem Konchin, oil and gas analyst at UniCredit Aton.

Some Western analysts have claimed that Russia is trying to increase its exports to the United States and is trying to take advantage of OPEC's commitment to reducing production by 4.2 million barrels per day.

"Russia has been trying to get a foothold in our market for a long time," said Bill O'Grady, chief markets strategist at Confluence Investment Management in St. Louis, Bloomberg reported. "With both gas and oil Russia hopes to gain geopolitical leverage."

The IEA announced last week that world oil demand would fall 2.4 million barrels a day this year, while OPEC predicted it would slide 1.37 million barrels per day. Both groups have revised these figures upwards from previous forecasts, which is likely to put downward pressure on the oil price in the short term

Russian analysts have warned that it doesn't matter who Russia sells oil to, but did say that it could cause problems with OPEC, which wants to support the oil price.

"Russia will resume building up exports and this could raise issues with OPEC," said Valery Nesterov, oil analyst at Troika Dialog.

The Russian government's budget takes a large chunk of its revenue from the energy sector and has forecast an average price of $42 a barrel for 2009. However, Snykov stated that VTB expects it to be $55 for the year, while Mary Ann Bartels, chief market at analyst at Bank of America's Merrill Lynch Unit predicted a price of over $70 a barrel this year, Bloomberg reported.

If Russia does not cut production then OPEC might increase production to lower the price in order to put pressure on the Russian budget, which already has a big deficit at $42 per barrel.

"If Saudi Arabia decides to make life difficult for Russia over the next few months to bring pressure to try and force production cuts, then the second quarter might be even more difficult than expected," said Weafer. "Saudi Arabia is in a better position to withstand a period of much lower oil prices to try and force Russian compliance."

While the federal budget would suffer, Russian oil companies would be well placed to withstand this kind of attack from OPEC. Production costs in Russia are approximately $15 per barrel and any decrease in price would hurt all suppliers.

"There is the theory that OPEC can flood the world with oil to make it really tough for Russia to get by but price wars would also hurt OPEC," said Konchin. "Russia and OPEC are mature enough to find a common aim in this situation."

Gazprom

Gazprom ties up $2bn bond

http://www.upstreamonline.com/live/article176105.ece

By Upstream staff 

Russia's Gazprom expects to close the order book on its 10-year $2 billion bond at 0900 GMT on Friday, with yield guidance unchanged from 9.25% 9.5%, market sources said.

The bond, which will carry a three-year put option, is being arranged by Credit Suisse.

Friday, 17 April, 2009, 08:25 GMT  | last updated: Friday, 17 April, 2009, 08:26 GMT

Russia Gazprom sees Eurobond pricing at 9.25%-sourcehttp://www.reuters.com/article/rbssOilGasExplorationProduction/idUSLH41906720090417

Fri Apr 17, 2009 4:29am EDT

MOSCOW, April 17 (Reuters) - Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz), Russia's gas export monopoly, expects the pricing of its 10-year, $2 billion Eurobond bond at 9.25 percent, the lower end of the range, a banking source told Reuters on Friday.

Gazprom expects to close the order book on the Eurobond at 0900 GMT on Friday, market sources said.

The price range was set as 9.25-9.50 percent.

The bond, which will carry a three-year put option, is being arranged by Credit Suisse. (Reporting by Dmitry Sergeyev, editing by Robin Paxton)

Azerbaijan And Russia To Conclude Gas Sales Deal

http://www.eurasianet.org/departments/news/articles/eav041609.shtml

4/16/09

Russia’s gas monopoly Gazprom and the State Oil Company of the Azerbaijani Republic (SOCAR) will formalize a gas sale agreement this May, said the newly appointed Russian ambassador to Baku, Vladimir Dorokhin.

Gazprom and SOCAR signed a memorandum of understanding on March 27 to pave the way for the upcoming agreement. Under the memorandum’s terms, Baku and Moscow will refurbish the pipeline link between the two countries to help connect Azerbaijan’s gas export infrastructure to Russia’s pipeline network. Since the memorandum’s signing, the two sides have been working to reconcile the particulars of the upcoming deal, the ambassador said.

Azerbaijani President Ilham Aliyev’s April 16-17 state visit to Moscow could advance that work still further.

"We hope that this process will be depoliticized," Dorokhin was quoted by the Trend news agency as saying.

Political potholes, nonetheless, remain. The deal, which relies on SOCAR-produced gas, has already raised alarm among supporters of the Western-backed Nabucco gas pipeline and similar projects, which focus on different gas sources. Moscow has promised to purchase Azerbaijani gas at a price competitive to those of the proposed Turkey and Black Sea routes.

Mr. Petar Skundric: “South Stream will most certainly go through Serbia”http://emportal.rs/en/news/serbia/85560.print.html

16. April 2009. | 07:32

Source: EMportal

Minister of Energy and Mining, Mr. Petar Skundric, announced that during the last talks with representatives of Gaspromexport he had been given strong confirmations that the South Stream gas pipeline would most certainly go through Serbia.

Minister of Energy and Mining, Mr. Petar Skundric, announced that during the last talks with representatives of Gaspromexport he had been given strong confirmations that the South Stream gas pipeline would most certainly go through Serbia.

At the Third Annual Conference “The Future of the Energy Sector in the Balkans”, organized by Ekonomist Media Group, Mr. Skundric said that the South Stream route running through Serbia from Dimitrovgrad to Subotica had turned out to be the most optimal and most economical solution.

The Minister also said that 53 companies had applied for the pre-qualification tender for selection of a strategic partner for construction of two blocks of the thermal power plants Kolubara B and Nikola Tesla 3. “Twenty-six companies have applied for Kolubara B and 27 firms for the third block of TENT,” Mr. Skundric says.

“Fourteen respectable energy companies have expressed interest in construction of one or both facilities, while other letters of intention have been sent by construction companies, equipment producers and electricity traders,” he said, adding that by the end of April the Power Industry of Serbia would present a list of candidates that had fulfilled the pre-qualification tender terms.

He said that the Government had also given its consent for announcing a public invitation for construction of a gas-fired thermal power-heating plant of 450 megawatts in Novi Sad.

“I expect that by the end of the year we will be able to give the same consent to beginning of construction of one gas-fired thermal power-heating plant in New Belgrade as well,” Skundric said.

South Stream construction contracts to be signed

Serbian Minister of Energy and Mining Petar Skundric said also that separate contracts concerning the construction of the South Stream gas pipeline are expected to be signed between Gazprom and various national gas companies at the energy summit, to be held from April 24 to 25 in Sofia.

Speaking to the press after the conference on the energy future of the Balkans, being held at the Hyatt hotel, Skundric said that the contracts will be signed in the presence of the heads of states of the countries which are taking part in the project.

He said that the national gas companies of these countries will sign separate agreements with Gazprom at the summit in Sofia, adding that it is expected that delegations of over 100 countries, including Serbia, will be present.

Russian Prime Minister Vladimir Putin will also be present on the occasion, said the Minister.

Skundric explained that after the signing of separate contracts every country will conduct a feasibility study in order for a final agreement to be signed.

He said that Serbia has to complete the feasibility study by September this year and general preparations for the project must be completed by the end of June next year.

He said according to all estimates the gas pipeline link through Serbia is considered to be the most realistic and most economical option.

Skundric said that work has begun on demining the area through which the gas pipeline link will be built in Serbia, adding that Russian experts engaged by Russian Minister for Emergency Situations Sergei Shoigu are currently working on clearing the area of bombs left over from the 1999 NATO bombing.

Gazprom Unit Gets Sale License in Ukraine, Kommersant Reports

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a4yjx._tj6Nw

By Kateryna Choursina

April 17 (Bloomberg) -- OAO Gazprom’s sales unit received a one-year license to sell natural gas to Ukrainian industry, Kommersant-Ukraine reported, citing Andriy Halushchak, the head of Gazprom Sbyt Ukraina’s legal department.

The license allows for the sale of 7.5 billion cubic meters of gas in a year, according to the Kiev-based newspaper. Gazprom Sbyt will sell about 4 billion cubic meters of the fuel in 2009, Kommersant cited Halushchak as saying.

Gazprom Sbyt signed a 10-year contract with NAK Naftogaz Ukrainy in February under which it will sell no more than 25 percent of the gas consumed by Ukraine’s industry, Kommersant reported.

To contact the reporter on this story: Kateryna Choursina in Kiev kchoursina@bloomberg.net

Last Updated: April 17, 2009 01:38 EDT

[16.04.2009 12:49]  

Gazprom: Ukraine takes too less gashttp://www.unian.net/eng/news/news-311512.html

Gazprom deputy CEO Valeriy Golubev believes that the negative foreign trade balance of the Ukrainian economics is a certain threat for Russia, as Ukraine may fail to pay for the consumed natural gas in full and on time.

According to an UNIAN correspondent, he said this in Kyiv at a press conference on Wednesday.

According to V.Golubev, due to the economic recession, Ukraine buys by 40% less gas than in the previous years. According to him, the Ukraine’s demand in 2009 made up 33 billion cubic meters of gas.

“Considering the reduction of such a significant volume of gas – less by 22 billion cubic meters than usual, we have to correct the gas balance, exploration plans, as well as transportation plans”, the Gazprom deputy CEO said.

Gazprom may benefit from Russian government borrowinghttp://www.glgroup.com/News/Gazprom-may-benefit-from-Russian-government-borrowing-37549.html

April 16, 2009

Analysis by: Michael Lynch Analysis of: Russia May Turn to Foreign Banks for Loans to Cover Deficit Published at: www.nytimes.com

Implications

Andrew E. Kramer in Moscow reported in the New York Times on April 15 that Russia may borrow money from foreign banks in 2010. Their finance minister Aleksei L. Kudrin in a cabinet meeting signaled that the Kremlin was planning for a long recession. The government will hold a road show this year to familiarize investment banks with Russia’s situation. The return to foreign borrowing could help the Russian economy by setting a benchmark rate for corporate lending. Russia would test the water with relatively small amounts. Mr. Kudrin said Russia might seek $5 billion in 2010. Russia currently holds $385 in gold bullion and foreign reserves. The government’s credit rating is strong while the ratings of Russian companies is near-junk. According to Rory MacFarquhar, “Russia is not in a desperate state.” If crude oil prices rose slightly, Russia could get through 2010 without borrowing. Russia is linked to the global economy. Moderate improvement would be good for Russia.

Analysis

 The worldwide financial crisis has introduced severe planning problems for all energy-related projects. No one can determine how much lead time is needed to finance oil and gas field developments because it is presently impossible to forecast exactly when more oil and gas will be required. Major international companies can predict with some accuracy funds needed to buy crude oil, maintain essential levels of equity production and keep refineries running. But Russia, and other large exporters, aside from domestic requirements, can only sell oil and gas for general export. Russia, like many others state-run economies, also must budget for extraneous but essential social programs. Export demand is firmly in the hands of buyers, many of which are in Asia. When the Russia-China oil pipeline goes into operation in a few weeks, Russia will find out quickly how much China will import immediately. But requirements in 2010 and beyond will depend on a number of imponderables. It is known that Exxon Mobil (XOM) plans capital spending of $25-30 billion/year for at least the next five years to support production runs of 3 million bbl/day. For Russia to hold 9.5-10 million bbl/day for five years will require $120 billion using the XOM model. Half of that will likely be provided by co-venturers Royal Dutch Shell, Total, ConocoPhillips, StatoilHydro and BP. So Gazprom and other state-controlled companies will need to find $60 billion/year. Russia has a long list of projects to become part of its overall energy portfolio. In addition to the Nord Stream (under the Baltic Sea) and South Stream (under the Black Sea) pipelines, another long

line to China is planned and then development of Shtokman natural gas/gas condensate field in the Barents Sea plus other super giant natural gas fields in Eastern Siberia. Russia is blessed with a vast potential of projects and co-venturers with solid balance sheets. Five years looks to be the appropriate time frame for oil and gas prices to return to 2007-08 levels. Thus oil and gas projects will have to be financed with substantial borrowing. Taking the view that prudent borrowing to create wealth will not undermine the national financial system, Russia’s plans to enter the credit markets in 2010 is a reasonable calculation of future probability. By 2015, oil and gas prices will be higher for the simple reason that there will be less of it available.