Russia 10702

Basic Political Developments Interfax: Second planeload of Russian relief aid sent to Ukraine - A second

Ilyushin IL-76 of the Russian Emergency Situations Ministry carrying relief aid for the flood-stricken western Ukrainian regions, has flown out from Ramenskoye airfield near Moscow.

RIA: Turkish nuclear plant deal with Russia submitted to parliament - A Russian-Turkish intergovernmental agreement on the construction of Turkey's first nuclear power plant has been submitted to the Turkish parliament, national media said on Friday.

Aysor: Osh, Jalal-Abad to be restored on account of Russian money Daily NK: Russia's Cheonan Report Nearing Completion - Andrey Nesterenko, a

spokesperson for the Ministry said, "The Russian experts who were given access (to information about the Cheonan) are finishing up their final report. The report shall be submitted to the national leadership, and then Russia will be able to take whatever measures it needs to take."

Kremlin: Dmitry Medvedev will make a working visit to Kazakhstan on July 5-6, 2010 - The President of Russia will participate in a meeting of the Interstate Council of the Eurasian Economic Community at the level of heads of state. A summit of the Customs Union between Russia, Belarus, and Kazakhstan will take place on the sidelines of this meeting.

Itar-Tass: In October, Russia officially join the Asia-Europe Forum VOR: Medvedev arrives in Birobidjan Kremlin: Integration with the Asia-Pacific region countries offers great economic

potential for developing Russia’s Far East Itar-Tass: Medvedev lists three guidelines for Far East development - Russian

President Dmitry Medvedev listed three guidelines for the development of the Far East, which include mounted economic ties with Asia, focus on high-tech cooperation, and a bigger Russian role in Asian organizations.

VOR: Law amendments to boost cooperation between Russia’s far East and Asia-Pacific

Moscow Times: Cypriot Tax Treaty in Works - Russia and Cyprus may ratify a double-taxation treaty when President Dmitry Medvedev visits the island in October, Cypriot Finance Minister Charilaos Stavrakis said.

FinancialMirror: Cyprus welcomes Gazprombank operations Trend.az: Russia official: Country will not place peace-keepers in Nagorno-

Karabakh - Russia will not place peace-keepers in the Nagorno-Karabakh, Russian Federation Council Speaker Sergei Mironov said in an interview with the Ekho Moskvy radio station. This is a problem of the two parties - Azerbaijan and Armenia, he added.

RIA: Russia's accession to WTO, OEDC to promote democracy - U.S. report RIA: U.S. praises Russian President Medvedev's anti-corruption measures Worldpoultry: Russia lifts Ukrainian poultry import ban Trend.az: Explosion in Dagestan did not affect train services between Azerbaijan

and Russia

Xinhua: Cargo train derails after bombing in Russia's Dagestan RIA: Bomb derails freight train in Russia's North Caucasus, 2 injured RUSSIAN SPY ARRESTS IN THE US

o Bloomberg: ‘Deep-Cover’ Suspect Wins Bail, Co-Defendants Denied Release

o Russia Today: Alleged Russian spy released on bailo VOR: One more spy scandal suspect released on bailo RIA: New York judge grants 1 Russian 'spy' bail o WSJ: Alleged Russian Agent Claimed Official Was His Firm's Adviser o WSJ: Moscow's Response: Vague, but More Frank Than Usual o VOR: Russian community in NY not affected by spy scandal

GhanaWeb: Russia to award over 30 scholarships to Ghanaian students RIA: Russian space freighter to dock with ISS as scheduled - Mission Control Xinhua: Passenger plane makes emergency landing in south Russian city - The

Boeing-737 plane, which took off from St. Petersburg, made the stopover at 08:10 Moscow time (0410 GMT) because of an overheated engine. No injuries were reported.

Interfax: Patriarch Kirill recommends priests to be more active in social networks - According to the Church Primate, today every deanery of a diocese should have its own website in order to spread information about themselves, hold dialogue with authorities, discuss socially important and at times disputable questions.

Interfax: Moscow City Court upholds court ruling against gay pride parade organizers

RIA: Moscow to spend $12.9 million on new computers for schools Bne: Last call for Luzhkov? - The situation now looks likely to accelerate the

push from the Kremlin to oust long time mayor of Moscow Yury Luzhkov, with government officials saying yesterday that the Federal Antimonopoly Service (FAS) is now investigating the cause of the delays, whilst Putin suggested that "they'll be a problem" if the situation is not remedied.

VOR: Press reviewo Most printed media are focused on the Customs Union of Russia, Belarus

and Kazakhstan. According to the Vremya Novostei newspaper, the Union will fail to effectively operate unless a single customs area is agreed on, so the issue has been put on the agenda of the EurAsEc Interstate Council meeting that’s due in Astana on the 5th of this month.

o The Nezavisimaya Gazeta daily reports that Russia’s Crimea-based Black Sea Fleet should start growing stronger as of this year

o The Izvestia daily reports that Russia may launch a new programme to support its automotive industry as of next year.

Interfax: Moscow press review for July 2, 2010o The natural resource extraction tax (NRET) should be increased for gas

and oil, but it has yet to be decided by how much, Economic Development Minister Elvira Nabiullina said.

o Igor Zyuzin, the principal owner of the coal and steel giant Mechel (RTS: MTLR), has left the position of the company's CEO and has become its board chairman instead of Valentin Proskurnya.

o State Duma deputies from the United Russia parliamentary group proposed amendments to Article 108 of the Criminal Procedure Code on Thursday to stipulate clearly who cannot be arrested before trial if charged with economic crimes.

o Confrontation between oil companies and the Federal Antimonopoly Service (FAS) may take an unexpected turn: the Energy Ministry, which earlier almost never intervened in this dispute, has suggested that the government be invested with the right to directly regulate prices for oil products in case they rise dramatically or their producer violates antimonopoly laws.

o Former Ukrainian Prime Minister Yulia Tymoshenko is continuing to publish documents related to RosUkrEnergo's lawsuit claiming that Naftogaz Ukrainy illegally pumped 11 billion cubic meters of gas out of national underground storage facilities.

National Economic Trends Interfax: Russia may place ruble-denominated Eurobonds in 2010 or 2011 –

Kudrin Reuters: Russian rouble falls to 5-week lows on weaker oil Bloomberg: Ruble Debt Tops Dollar Bonds by Most Since 2005 as Rates Fall Reuters: TABLE-Russia monetary base declines to 5.01 trln rbls RenCap: Ministry of Finance relies on financing other than the Reserve Fund

again

Business, Energy or Environmental regulations or discussions Bloomberg: Russian Stocks Snap 3-Day Losing Streak on Oil, Australian Tax Bloomberg: Norilsk Nickel, Novolipetsk, Polyus: Russian Equity Preview UralSib: Generation Companies - Liberalization continues - 80% of the market is

liberalized. The liberalization of the wholesale electricity market continues, and as of 1 July 2010 80% of electricity will be sold at non-regulated prices. The market should be fully liberalized by 1 January 2011 and only households will continue to purchase electricity at regulated prices (until 2014).

Bloomberg: Sberbank, VTB Cut Mortgage Down Payments to 10%, Vedomosti Says

UralSib: Sberbank and VTB reduce mortgage down payments to 10% DJ: Russia's Sberbank Not Bidding For Poland's Bank Zachodni WBK Reuters: Morgan Stanley sells Russian mortgage unit Reuters: Polyus Gold CEO says unit may sell $1 bln stake Reuters: NLMK sees Q3 prices down on weak recovery RenCap: Government plans to introduce cash-for-clunkers programme for trucks

and buses Itar-Tass: Russia’s KAMAZ puts out 3,500 trucks in June RIA: Russian senior official proposes luxury tax - paper

Activity in the Oil and Gas sector (including regulatory) Reuters: Russia June oil output hits record-high

Interfax: Russia boosts oil production 2.8% in H1; gas up 21.8% Reuters: Rosneft, CNPC to make refinery decision around Aug – official Reuters: Russia's Transneft net profit up 80 pct in Q1 y/y Reuters: REG-OAO Novatek NOVATEK acquires OAO Tambeyneftegas EurActiv: Lukoil CEO: Russian oil business prospers in EU - For Russian oil

companies, the business climate in Europe is good, but a lot of fallacious information about the country still needs to be countered, Vagit Alekperov, founder and President of Lukoil, Russia’s largest oil company, told EurActiv in an exclusive interview.

RenCap: New export duty regime for East Siberian crude now official RenCap: Ministry of Finance considers raising MET for crude oil and gas, and

export duty on products

Gazprom Interfax: Beltransgaz, Gazprom sign additional agreement on gas transit Reuters: RLPC-Gazprom Neft loan margin cut to LIB+210 bps SteelOrbis: Russia’s Gazprom to double pipe purchases to 1.9 million mt in 2010

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Full Text Articles

Basic Political Developments

July 02, 2010 12:38

Interfax: Second planeload of Russian relief aid sent to Ukrainehttp://www.interfax.com/newsinf.asp?id=175009

MOSCOW. July 2 (Interfax) - A second Ilyushin IL-76 of the Russian Emergency Situations Ministry carrying relief aid for the flood-stricken western Ukrainian regions, has flown out from Ramenskoye airfield near Moscow.

The plane departed at 9 a.m., Moscow time, on Friday, and it will deliver about 35 tonnes of relief aid to Ivano-Frankivsk, the Emergency Situations Ministry told Interfax.

The aid has been sent to Ukraine on the order of President Dmitry Medvedev.

About 35 tonnes of relief aid were delivered to Ivano-Frankivsk on Thursday.

sd dp

RIA: Turkish nuclear plant deal with Russia submitted to parliament http://en.rian.ru/world/20100702/159661361.html

12:02 02/07/2010

A Russian-Turkish intergovernmental agreement on the construction of Turkey's first nuclear power plant has been submitted to the Turkish parliament, national media said on Friday.

The agreement to build the plant near the Mediterranean port of Mersin was signed during Russian President Dmitry Medvedev's visit to Turkey in May. The plant is expected to be put into operation in 2016-2019.

The head of Russia's state-run nuclear corporation Rosatom, part of a Russian-Turkish consortium for the plant construction, earlier said Russia would maintain a controlling stake in the $18-20-billion project to be implemented by Atomstroyexport, Rosatom's export arm.

Sergei Kiriyenko said the project would also include the creation of a nuclear engineering company which, in the initial phase, will be owned completely by Russia.

The power plant will operate under IAEA guarantees, and the spent nuclear fuel supplied to the plant by Russia will be repatriated.

Moscow and Ankara have successfully cooperated in the energy sphere, including on the Blue Stream gas pipeline project, the South Stream gas pipeline and the Samsun-Ceyhan oil pipeline.

In early June, Russian Prime Minister Vladimir Putin visited Istanbul for talks with his Turkish counterpart Recep Tayyip Erdogan. During the visit, the two countries signed an agreement on the monitoring of nuclear safety and agreed to speed up bilateral energy deals.

Experts say, however, that the construction of the nuclear plant in Turkey will be problematic due to the lack of harmonized legislation between the two countries.

ANKARA, July 2 (RIA Novosti)

Aysor: Osh, Jalal-Abad to be restored on account of Russian moneyhttp://www.aysor.am/en/news/2010/07/02/osh-russian-credit/

Kyrgyz towns Osh and Jalal Abad, which were seriously damaged in clashes erupted between ethnic groups (causing hundreds of casualties) will be restored on account of Russian funds, Russian media reported citing Vice-Premier of the Interim Kyrgyz government Temir Sariyev.

“The interim government made a decision to direct $100 million from last year’s Russian loan to commission on restoration and development of Osh and Jalal Abad,” Temir Sariyev is quoted as saying.

He also said that the Russian loan is the only free found in Kyrgyz budget.

Russia provided Kyrgyzstan with a $300 million loan in February 2009 at times of presidency of Kurmanbek Bakiyev. There was also provided a $150 million grant while the dept was canceled.

TODAY, 12:36

Aysor.am

Daily NK: Russia's Cheonan Report Nearing Completion

http://www.dailynk.com/english/read.php?cataId=nk00400&num=6558

By Park Sung Kook[2010-07-02 16:23 ]   The report of Russian experts investigating the cause of the Cheonan sinking, is nearly finished, according to the Ministry of Foreign Affairs in Moscow.

Andrey Nesterenko, a spokesperson for the Ministry said, "The Russian experts who were given access (to information about the Cheonan) are finishing up their final report. The report shall be submitted to the national leadership, and then Russia will be able to take whatever measures it needs to take."

Russia has thus far kept neutral on the Cheonan incident, claiming that it can decide what to do only after their experts have reached a conclusion. Now the Russian experts are finishing up their report, Russia's position on UN Security Council sanctions is gaining import.

However, Russia's Interfax news agency has reported that the Russian investigation team has not found any evidence confirming North Korea’s guilt, implying that the final Russian report may run contrary to the findings of the joint investigation team.

The South Korean government reached its own conclusion based on the following evidence: the recovered torpedo propeller and drive shaft; a torpedo plan in a weapons export catalog produced in North Korea; the fact that chemical residue left on the torpedo propeller matches that detected on the hull of the vessel; 'Number one' written on the propeller; and the fact that a number of North Korean submarines disappeared from port on the day the ship sank.

However, while agreeing that the Cheonan was sunk by a torpedo, the Russian

investigation team may wish to question how South Korean intelligence obtained the catalog, and could conclude that there is a lack of direct evidence of North Korean guilt. Russia has traditionally been wary of western society, and may instinctively prefer to side with North Korea.

The Russian investigation team consisting of four experts on submarines and torpedoes arrived in Korea on May 31st, and returned to Russia after examining the sinking evidence.

Kremlin: Dmitry Medvedev will make a working visit to Kazakhstan on July 5-6, 2010http://eng.kremlin.ru/news/540f

July 1, 2010, 20:40

The President of Russia will participate in a meeting of the Interstate Council of the Eurasian Economic Community at the level of heads of state.

A summit of the Customs Union between Russia, Belarus, and Kazakhstan will take place on the sidelines of this meeting.

July 1, 2010, 20:40

Itar-Tass: In October, Russia officially join the Forum of the Asia-Europe

http://www.itar-tass.com/level2.html?NewsID=15284909&PageNum=0

GOOGLE TRANSLATION

02.07.2010, 04.58 KHABAROVSK, July 2. Itar-Tass. In October 2010 Russia formally enter into Forum Asia - Europe ". This was announced today at a meeting with Dmitry Medvedev on the development of the Far East and Russia co-operation with the Asia-Pacific region, Foreign Minister Sergei Lavrov. "Just this year, our country was finally adopted in the ASEM forum in October, Russia officially enter into this Forum," - he said. The minister noted that Russia has long sought to join this organization. "13 years we have sought to join this rather promising structure, and finally we succeeded," - explained the foreign minister. In general, he stated that "in recent years significantly strengthened the position of Russia in multilateral, regional and trans-regional associations. "These are the APEC and the SCO, ASEAN Regional Forum on Security, Conference on Interaction and Confidence Building Measures in Asia, a dialogue on cooperation in Asia and the other" - explained Wednesday. Forum Asia - Europe - an international organization established in 1996 on the initiative

of France and Singapore, which unites the countries of East Asia and Europe. It includes more than 40 countries, which account for two thirds of world trade and more than half of total world gross product.

VOR: Medvedev arrives in Birobidjanhttp://english.ruvr.ru/2010/07/02/11264270.html

Jul 2, 2010 11:50 Moscow Time

Dmitry Medvedev has become the first Russian head of state to visit Birobidjan, the capital of Russia’s Jewish Autonomous Region.

He will meet with members of the business community and attend a series of meetings at the city’s cultural center, synagogue and furniture factory.

As part of his four-day trip to the Russian Far East, President Medvedev will also visit Blagoveshchensk and Vladivostok, which now hosts large-scale military exercise Vostok-2010.

Kremlin: Integration with the Asia-Pacific region countries offers great economic potential for developing Russia’s Far Easthttp://eng.kremlin.ru/news/541

July 2, 2010, 05:00 Khabarovsk

Dmitry Medvedev held a meeting in Khabarovsk on the Far East’s socioeconomic development and cooperation with the Asia-Pacific region countries.

Cooperation with the Far East region’s neighbours should focus on joint endeavours in the high-technology fields (particularly in energy, aircraft manufacturing, and the space sector), thereby strengthening Russia’s position in the Asia-Pacific region’s international organisations, the President said.  

Mr Medvedev noted that integration with the Asia-Pacific region countries offers great potential for developing the economy of the Far East and Russia in general. Such integration should be supplemented with relocation of goods, works and services from one part of the country to another while promoting closer cooperation within the Asia-Pacific region to the benefit of the eastern areas of Russia.  

Among the biggest problems of the Far Eastern Federal District, the President named the population outflow, which it has not yet been possible to stem. This is the most worrying trend and major threat in the region and it requires constant attention. To change the situation the region must improve its general competitiveness and quality of life. The success of these efforts will depend in large part on competent state social policy, and

economic progress, including broader cooperation with neighbouring countries, which lack raw materials and energy resources, and where consumer demand is on the rise.

July 2, 2010, 05:00Khabarovsk

Itar-Tass: Medvedev lists three guidelines for Far East development

http://www.itar-tass.com/eng/level2.html?NewsID=15284818

02.07.2010, 04.23

KHABAROVSK, July 2 (Itar-Tass) -- Russian President Dmitry Medvedev listed three guidelines for the development of the Far East, which include mounted economic ties with Asia, focus on high-tech cooperation, and a bigger Russian role in Asian organizations.

“Firstly, economic interaction of the region and the whole of Russia with Asia and the Pacific Rim shall reach a new level,” he told a conference in Khabarovsk on Friday.

“Until the end of the year the government has to submit for approval an action plan to enhance Russian positions in the region. It has to contain a forecast of long-term development of the Far East with account of the potential of our eastern regions and integration processes ongoing in Asia and the Pacific Rim,” Medvedev said adding specific attention shall be paid to free trade agreements.

“Secondly, Russian high-tech specialization is evident on the markets of Asia and the Pacific Rim,” the president said and specified the talk is about energy, aircraft construction, and space services.

“New multilateral technological cooperation projects are necessary and it is important to use the experience of neighbors in the creation of a favorable investment climate and special economic zones.”

Russia is a major supplier of hydrocarbons in the Asia. “We have to develop our energy infrastructure, attract investments into oil refining and chemistry, into production and transportation of raw materials,” the president said.

“Thirdly, we have to strengthen the Russian role in organizations of Asia and the Pacific Rim – APEC, SCO, ASEAN, and BRIC. Russia maintains solid positions there, however they expect more active efforts from us,” the president said.

“We shall offer our vision of how to build up a polycentric non-bloc security and cooperation architecture in the region,” Medvedev said.

“Integration with Asian and Pacific Rim countries is a major resource for developing the Far Eastern economy and the whole of Russia,” he stressed.

VOR: Law amendments to boost cooperation between Russia’s far East and Asia-Pacifichttp://english.ruvr.ru/2010/07/02/11239891.html

Jul 2, 2010 07:00 Moscow Time

Russian President Medvedev signed the amended law on concessional agreements.

Speaking at meeting on the development of Russia’s Far East in the Asia-Pacific the Russian President noted that the amendment targeted reaching an agreement in communal management and reaching a consensus between government and municipal organizations.

President Medvedev believes Russia has a huge potential to boost its cooperation with Asia-Pacific international bodies urging the Foreign Ministry and related government structures to get into gear.

Likewise, Russia’s Far East could become a source of energy supplies for many of Asia-Pacific investment and industrial projects.

Moscow Times: Cypriot Tax Treaty in Works http://www.themoscowtimes.com/business/article/cypriot-tax-treaty-in-works/409582.html

02 July 2010

Russia and Cyprus may ratify a double-taxation treaty when President Dmitry Medvedev visits the island in October, Cypriot Finance Minister Charilaos Stavrakis said.

The agreement, signed in April 2009, hasn’t been adopted fully, and some procedures still need to be completed, Stavrakis said Wednesday.

(Bloomberg)

FinancialMirror: Cyprus welcomes Gazprombank operations http://www.financialmirror.com/News/Cyprus_and_World_News/20725

July 02, 2010 - www.financialmirror.com

The presence of Russian Gazprombank in Cyprus constitutes a milestone in the island's position as a regional and international financial centre, President Demetris Christofias said on Thursday evening. Addressing a charity event on the occasion of the commencement of its operations in Cyprus, President Christofias said ''the choice of Gazprombank, the second largest bank of the Russian Federation, to expand its client business on securities markets, under the current difficult worldwide economic situation, bears testimony to the sound policies of our Government.'' ''The measures taken by the Government have enhanced Cyprus’s position as a regional and international financial centre, offering significant advantages to investors,'' he added, pointing out that ''the presence of Gazprombank in Cyprus constitutes a milestone in this effort''. The President also noted that ''Gazprombank’s presence in Cyprus is also a clear manifestation of the very close ties of our two countries, which have been built throughout past decades on the basis of principles, common outlook on international problems and on the continuous support that the Russian Federation has been providing to Cyprus, at various fora, for the just solution of our political problem.'' He recalled that the Cypriot government's commitment has been ''to offer political and financial stability and to maintain a favourable business environment.'' ''It has also been our Government’s commitment to maintain and improve even further our transparent legal system and the rule of law, offering a sound basis for business activities,'' he said. Concluding, President Christofias said that ''businesses activities are supported in our country through the very high level of professional services in the areas of accounting, auditing as well as legal services, a fact which is reflected on the rich human capital endowment of the island.''

Trend.az: Russia official: Country will not place peace-keepers in Nagorno-Karabakh http://en.trend.az/news/politics/foreign/1714197.html

02.07.2010 10:52

Russia will not place peace-keepers in the Nagorno-Karabakh, Russian Federation Council Speaker Sergei Mironov said in an interview with the Ekho Moskvy radio station. This is a problem of the two parties - Azerbaijan and Armenia, he added.

"There is an interesting format, where the Azerbaijani and Armenian leaders meet in the presence of Russian President Dmitry Medvedev. I hope that this format will continue," Mironov said. Russia plays a positive role in this negotiation, he believes.

According to Mironov, when the parties agree, Moscow is ready to be the guarantor of compliance with these agreements.

The conflict between the two South Caucasus countries began in 1988 when Armenia made territorial claims against Azerbaijan. Armenian armed forces have occupied 20

percent of Azerbaijan since 1992, including the Nagorno-Karabakh region and 7 surrounding districts.

Azerbaijan and Armenia signed a ceasefire agreement in 1994. The co-chairs of the OSCE Minsk Group - Russia, France, and the U.S. - are currently holding the peace negotiations.

Armenia has not yet implemented the U.N. Security Council's four resolutions on the liberation of the Nagorno-Karabakh region and the occupied

RIA: Russia's accession to WTO, OEDC to promote democracy - U.S. report http://en.rian.ru/world/20100702/159658904.html

05:14 02/07/2010

Russia's admission to the World Trade Organization and the Organization for Economic Development and Cooperation will help to improve democracy in the country, the U.S. Department of State said.

"The United States supports Russia's integration in multilateral organizations, such as the WTO and the Organization for Economic Cooperation and Development, which will promote rule of law, enhanced corporate good governance and transparency, and the push for greater adherence to international norms of democratic governance," the department said in its report 'Advancing Freedom and Democracy.'

Russia has been in negotiations for WTO membership for over 16 years and is the only major economy outside of the global trade body.

U.S. President Barack Obama reaffirmed last month the United States' support of Russia's bid to join the global trade body.

"I reaffirm our strong commitment to Russia's ascension to the World Trade Organization," Obama said during a joint news conference with Russian President Dmitry Medvedev in Washington.

President Medvedev has admitted Russia still has problems with intellectual property rights protection, a major impediment to WTO accession, but says tackling this issue is a priority for the Russian government.

WASHINGTON, July 2 (RIA Novosti)

RIA: U.S. praises Russian President Medvedev's anti-corruption measures http://en.rian.ru/world/20100702/159659046.html

05:33 02/07/2010© RIA Novosti. Mikhail Kutuzov

The United States support effective efforts of Russian President Dmitry Medvedev in the fight against corruption in Russia, the U.S. Department of State said.

Medvedev signed in April a bill on the creation of a national anti-corruption program for 2010-2011, aimed at eliminating corruption, including among top officials.

"President Medvedev has made anti-corruption efforts one of the priorities for his administration. President Medvedev has declared that Russia cannot compete with other countries on the world stage unless it stems and reverses the tide of corruption in Russian society, from the top governmental level to ordinary societal interactions," the department said in its report Advancing Freedom and Democracy.

The Berlin-based non-governmental anti-corruption organization Transparency International has persistently rated Russia one of the most corrupt nations in the world. In the 2009 Corruption Perception Index, Russia was ranked 146th of 180, below countries like Togo, Pakistan and Libya. The United States was ranked 19th.

A total of 4,500 corruption cases were brought to court in the first half of 2009 in Russia, with 532 public officials and 700 law enforcers convicted.

WASHINGTON, July 2 (RIA Novosti)

Worldpoultry: Russia lifts Ukrainian poultry import banhttp://www.worldpoultry.net/news/russia-lifts-ukrainian-poultry-import-ban-7636.html

//02 Jul 2010 Russia has lifted almost all the restrictions on poultry imports from Ukraine starting from 1 July, agricultural watchdog Rosselkhoznadzor told Interfax. However, only separate Ukrainian companies will be allowed to bring their products to Russia.

"Only enterprises certified by the Russian service, those which meet our requirements, will be able to export both raw materials and finished products to Russia," Rosselkhoznadzor Head Sergei Dankvert told Interfax, adding that the latest checks conducted in Ukraine show that not all the companies are ready to meet Russia's requirements. The principal reason for this is that Ukraine is harmonizing its rules with the European standards, which differ from the Russian ones, reports continue.

As a result of the inspection, only Elitex Ltd. (Donetsk region) has received permission to supply finished products to Russia starting from 1 July. Another 2 enterprises - CJSC Sniatynska Nova poultry farm (Ivano-Frankivsk region), and CJSC Myronivka poultry Farm (Cherkasy region) - were allowed to supply raw poultry products.

The restrictions on import of Ukrainian livestock products, including poultry, were introduced in late 2005 early 2006.

Source: Kyivpost

Trend.az: Explosion in Dagestan did not affect train services between Azerbaijan and Russiahttp://en.trend.az/capital/transport/1714254.html

02.07.2010 12:16

Azerbaijan, Baku, July 2 / Trend E.Ismayilov /

The explosion at the Manas-Achi railway line in Dagestan has not affected the movement of trains from Azerbaijan in the direction of Russia and back, CJSC Azerbaijan Railways Spokesman Nadir Azmammadov said.

He said the explosion occurred at 05.20 Moscow time, and the Baku-Tumen passenger train was sent from Baku at 06.20 Baku time. The Baku-Moscow will be sent at 19.50 according to the schedule.

"The incident did not affect the dispatch of trains. The opposite side has not yet informed us about possible delays and downtime that may occur on the territory of Dagestan,"Azmammadov said.

Blast occurred on the territory of Dagestan lead to of delay (30 minutes) of the Baku-Kiev train in the Derbent station, RIA Novosti reported.  

As a result of the blast, 12 cars ran off the rails, seven of which overturned. The Karabudahkentsk police department representative said that the incident injured the driver and his assistant.

Xinhua: Cargo train derails after bombing in Russia's Dagestan http://news.xinhuanet.com/english2010/world/2010-07/02/c_13380764.htm

2010-07-02 12:25:24

MOSCOW, July 2 (Xinhua) -- Ten cars of cargo train derailed on Friday after bombing by unidentified men in the North Caucasian republic of Dagestan, the Itar-Tass news agency reported.

The incident occurred at 05:10 Moscow time (0110 GMT) on the 2,321-km-long Manas-Achi rail track, the Itar-Tass quoted the local railway department as saying.

The department said the incident which derailed the Derbent-bound train was a result of a sabotage.

An investigation is underway. The authorities are also taking measures to restore the interrupted railway traffic.

RIA: Bomb derails freight train in Russia's North Caucasus, 2 injured http://en.rian.ru/crime/20100702/159659968.html

09:27 02/07/2010

A freight train was derailed by a blast on a railroad in Russia's North Caucasus republic of Dagestan early on Friday, a local police spokesman said.

The bomb detonated at 05:20 Moscow time (01:30 GMT) in the republic's Karabudakhkentsky district, which borders the capital Makhachkala. The train driver and his assistant were injured.

"According to the latest information, 12 cars and the locomotive were derailed. Seven of the 12 cars were overturned," the spokesman said, adding that bomb specialists and sniffer dogs were inspecting the site of the incident.

Sporadic terrorist attacks and militant clashes are common in Russia's largely Muslim North Caucasus republics, especially Dagestan, Chechnya and Ingushetia.

A grenade on a railroad in Kabardino-Balkariya, another North Caucasus republic, was demined on Thursday, a local police source said.

Twenty-seven people were killed and 92 injured when a bomb equivalent to 7 kg (15 lbs) of TNT derailed the high-speed Nevsky Express from Moscow to St. Petersburg train in November 2009.

MAKHACHKALA, July 2 (RIA Novosti) 

RUSSIAN SPY ARRESTS IN THE US

Bloomberg: ‘Deep-Cover’ Suspect Wins Bail, Co-Defendants Denied Release http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ag3dWoXbRqGg

By Patricia Hurtado and David Voreacos

July 2 (Bloomberg) -- A New York woman accused of belonging to a “deep-cover” Russian spy ring was granted bail by a U.S. judge who denied release to a married couple in the case because of doubt about their true identities.

U.S. Magistrate Judge Ronald Ellis granted $250,000 bail to Vicky Pelaez, ruling the evidence against her wasn’t as strong as that against other defendants in the case. He said she could be freed after posting $10,000 cash. Ellis ordered Richard and Cynthia Murphy to remain in custody because they pose a risk of flight.

Pelaez wasn’t released after yesterday’s hearing in New York, and prosecutors said they may appeal. Earlier, defense lawyers and prosecutors agreed to postpone bail arguments on Pelaez’s husband, Juan Lazaro. They are among 11 people charged as unregistered agents of Russia’s intelligence service. Nine were accused of conspiring to launder money. The Murphys lived in Montclair, New Jersey, with their two children.

“The court just doesn’t know who these defendants are,” Ellis said. “The government’s evidence is strong. The defendants are trained agents of a foreign government. They have used false identities. When all is said and done, the question if they have community ties does not have an answer.”

Cambridge Couple

Also yesterday, a U.S. magistrate judge in Boston postponed until July 16 a bail hearing for another accused married couple, Donald Howard Heathfield and Tracey Lee Ann Foley of Cambridge, Massachusetts. A magistrate judge in Alexandria, Virginia, delayed for one day a bail hearing for three suspects, Michael Zottoli, Patricia Mills and Mikhail Semenko.

Pelaez, 55, wrote columns for El Diario La Prensa, the oldest Spanish-language newspaper in New York. The judge said she doesn’t appear to be a trained agent and that she hasn’t used false identities. John Rodriguez, her lawyer, said she is a naturalized U.S. citizen who was born in Peru and has a 17-year- old son.

“She’s very adamant about fighting for her reputation,” Rodriguez told the judge.

Ellis said that Pelaez may not be released until July 6 because of the July 4 holiday weekend. She must remain under house arrest with electronic monitoring, Ellis ruled.

Assistant U.S. Attorney Michael Farbiarz said the government’s case is “extraordinarily strong” and got “much better” since the suspects were arrested June 27 in Massachusetts,

New York, Virginia and New Jersey. One suspect, Christopher Mestos, was arrested in Cyprus and disappeared after posting bail, authorities said.

‘Devastating’ Evidence

“Prosecutors don’t get a case like this very often,” Farbiarz told the judge. “The evidence against Richard Murphy is devastating. Similarly, the evidence against Cynthia Murphy is devastating. The evidence with respect to Ms. Pelaez is extremely, extremely strong.”

The disappearance of Mestos, he said, provides a “powerful real-life demonstration if people in this conspiracy are allowed out, they will run.”

U.S. agents watched some suspects for more than a decade, and all were part of “long-term, deep-cover” Russian operation bent on infiltrating U.S. policy-making circles, prosecutors said. The suspects used fake identities, coded communications, secret payments and clandestine movements to try to pass data to the Russian spy agency, known as SVR, authorities said.

Prosecutors, who didn’t say whether the suspects succeeded in passing secret data back to Russia, haven’t charged them with espionage. Some of the accused lived in the U.S. with the goal of becoming “Americanized,” Farbiarz said in court.

‘Tradecraft Box’

Farbiarz said that after the Murphys were arrested, agents found a spy “tradecraft box filled with multiple phones and multiple currencies.” They also searched a safe deposit box associated with them and found eight unmarked envelopes that each contained $10,000 in “apparently new” $100 bills.

He told the judge that the suspects are practiced deceivers and secret global travelers backed by a “powerful, sophisticated network in the United Stated that they can call upon.” Richard Murphy, he said, traveled secretly this year to Rome, where he met an SVR official before going to Moscow.

Cynthia Murphy works in New York as certified financial planner and has a master’s degree in business administration from Columbia University, record shows. She was “meeting people at school and providing information to SVR about her clients,” Farbiarz said.

“There are other co-conspirators” not mentioned in the arrest complaint, he said.

Russian Officials

“There are a lot of Russian government officials in the United States who are actively participating and assisting in this conspiracy,” he said.

In court papers, prosecutors disclosed that a federal grand jury in New York has been convened in the case. The panel requested the immediate testimony of a “particular individual,” referred to as I-1, who has “has not come to the grand jury, as the law requires,” according to a government letter.

Lazaro also made a series of statements after his arrest, Farbiarz said. Lazaro admitted he wasn’t born in Uruguay and that he had given a false name, the prosecutor said. He also said Pelaez delivered letters to Russian agents and that their house in Yonkers, New York, had been paid for by SVR.

Lazaro said that even though he “loved his son, he would not violate his loyalty to the ‘Service’ even for his son,” prosecutors wrote. He also “refused to provide his true name,” according to the government’s letter.

Bail Denied

On June 28, Ellis denied bail to another defendant, Anna Chapman, 28. Chapman’s lawyer, Robert Baum, said she owned a Manhattan online real estate business worth $2 million.

At a 20-minute hearing in Boston yesterday, U.S. Magistrate Judge Jennifer C. Boal in Boston granted a request by defense attorneys for Heathfield and Foley for more time to prepare a bail application.

Speaking outside the courtroom, defense attorney Peter Krupp said the couple, whom he described as husband and wife, are worried about their two sons, who are 16 and 20.

“The government’s case is extremely thin,” Krupp told reporters. “It’s saying they infiltrated cocktail parties and the PTA.”

Defense attorneys said they will challenge the government’s claims about their clients’ identities. While Krupp said his client could be referred to as Donald Heathfield, a defense attorney for the woman that the government calls Tracey Lee Ann Foley asked that she be known as “Defendant No. 5.”

Defense attorneys asked that the couple be allowed to meet to talk about their children.

The cases are U.S. v. Metsos 10-MJ-1391; U.S. v. Chapman, 10-MJ-1389, U.S. District Court for the Southern District of New York (Manhattan).

To contact the reporters on this story: Patricia Hurtado in New York federal court at pathurtado@bloomberg.net; David Voreacos in New York federal court at dvoreacos@bloomberg.net.

Last Updated: July 2, 2010 00:01 EDT

Russia Today: Alleged Russian spy released on bailhttp://rt.com/Top_News/2010-07-02/alleged-russian-spy-bail.html/print

02 July, 2010, 09:54

One of the defendants in an alleged Russian spy-ring has been released on bail after a hearing in New York.

The journalist is one of nine suspects facing charges, and US prosecutors claim another suspect has admitted working for the Russian intelligence service.

Four of the defendants were present before the judge in the city of New York. In case of Richard and Cynthia Murphy, the court said that their identities were not well-enough established and the court was not certain of whom they, in fact, were. As their identities were considered fake, they were denied bail.

Vicky Pelaez was granted bail under very strict conditions. She was required to put forward a US$250,000 bond, with $10,000 in cash, and will be under home arrest and constant electronic surveillance.

After Vicky Pelaez’s release she called her former boss, who said that he believes that all the allegations put forward by the FBI and the Department of Justice against Vicky Pelaez are completely false.

“The judge took into consideration that Vicky Pelaez did not know any of these people,” commented Gerson Borrero, columnist at El Diario La Prensa. He said that Vicky Pelaez is an opinionated columnist and questioned “why is it that the FBI spent all this time and God-knows-how-many millions of dollars of taxpayer money to wind up with people that are really not being accused of being spies.”

Meanwhile, Richard and Cynthia Murphy, having been denied bail, are being held in separate facilities. Their lawyers have already asked the government to relocate them to one facility so that their children, who are in serious shock as a result of the situation, have a chance to visit them.

The prosecutor is saying that this case is “unique,” constantly embellishing his appeal with words like “extraordinary”, “devious”, “scandalous” and “very sophisticated.”

According to the criminal complaint filed by the Department of Justice, the FBI has been gathering evidence for a decade, trying to figure out who exactly the people involved in the “spy network” were, what they were doing and how they were doing it.

The criminal complaints filed against the defendants are huge and contain the evidence collected by the FBI up to this moment, including electronic surveillance and undercover agents who talked to some of the defendants, like Anna Chapman, who was denied bail.

Both Russia and the US expressed hope that the case will not undermine the current reset in bilateral relations. The Russian side has already confirmed that some of the defendants are Russian citizens, but insist that they did no activities against the US.

The prosecution insists that all the detainees have managed to create an influential network that infiltrated the American society and attempted to infiltrate policy making circles.

VOR: One more spy scandal suspect released on bailhttp://english.ruvr.ru/2010/07/02/11239525.html

Jul 2, 2010 05:53 Moscow TimeThe New York district Court heard the cases of four out of ten detained on charges of espionage for Russia. The court ruled to release Vicky Pelaez on bail. The judge explained the decision by Pelaez’s straightforward acknowledgment of her true citizenship and name. She will now remain at home under electronic surveillance.

It was ruled to keep the other three on trial, Cynthia and Richard Murphy and Juan Lazaro, in custody. Lazaro admitted having spent his childhood in the USSR and having bought a house in Yonkers, near New York, on the money not from his family budget.  

Prosecution demands all the four to be arrested as one of the suspects NAME has fled after being bailed out.

RIA: New York judge grants 1 Russian 'spy' bail http://en.rian.ru/world/20100702/159659781.html

09:10 02/07/2010

NEW YORK, July 2 (RIA Novosti) - A New York judge on Thursday granted the release on $250,000 bail of Vicky Palaez, one of the 11 suspects accused by the United States of spying for Russia.

Well-known journalist Palaez will be placed under house arrest no earlier than June 6, after the Independence Day long weekend.

Ten people were arrested in the United States on Sunday on suspicion of being part of a Russian espionage ring. An 11th suspect was detained on Tuesday in Cyprus, but reports on Wednesday said police on the island were looking for him after he apparently skipped bail.

Three spy suspects remain in jail in New York: Vicky Palaez's husband, Juan Lazaro, and Cynthia and Richard Murphy. The bail hearings of the other suspects have been delayed.

Judge Ronald Ellis explained his decision by saying that Palaez was the only suspect who did not conceal her name and nationality. He also said Palaez was a U.S. citizen and did not appear to be trained as a spy.

Palaez has in the past been a vocal critic of White House policies on immigration, human rights, Cuba and Israel. Before immigrating to the United States, she was a television reporter in her native Peru. In New York, she worked for the Spanish-language paper El Diario La Prensa.

The prosecutor at the hearing said the allegations are just the tip of the ice berg. He said FBI agents had found new evidence on searching the homes of the suspects. In the Murphys' house large sums of money in different currencies were found.

The prosecutor said that the children of the suspects knew nothing about the spy work being carried out by their parents.

Moscow said on Tuesday that members of the spy ring were Russians, but denied they had acted against the United States.

JULY 2, 2010, 1:29 A.M. ET

WSJ: Alleged Russian Agent Claimed Official Was His Firm's Adviser http://online.wsj.com/article/SB10001424052748703571704575341633816865778.html

By EVAN PEREZ

The alleged Russian secret agent who posed as a Canadian entrepreneur named Donald Heathfield claimed a former Clinton administration national security official was an adviser to his company.

A 2008 version of the website for Mr. Heathfield's company, Future Map, lists Leon Fuerth, former Vice President Al Gore's top national security aide, as an adviser.

A federal criminal complaint by the U.S. Attorney's office in Manhattan filed Monday charged 11 people, including Mr. Heathfield with being Russian secret agents, sent to the U.S. to infiltrate policy-making circles and help the Russian spy agency SVR cultivate intelligence targets.

In a 2005 message to his alleged spymaster handlers in Moscow, Mr. Heathfield reported that he had "established contact" with a "former high-ranking U.S. national security official," prosecutors said in their complaint. The official is unnamed in the complaint.

The complaint doesn't allege that the former national security adviser was aware of efforts by SVR to connect with him.

The criminal complaint against Mr. Heathfield notes that SVR handlers told him to keep his cover cautiously, suggesting the official was an unwitting target.

Officials familiar with the matter said that most of the people targeted were similarly unaware of they were being used as sources for Russian intelligence.

The Justice Department in Washington declined to comment. Mr. Fuerth, now a professor at George Washington University's Elliott School of International Affairs, didn't respond to calls seeking comment.

Mr. Heathfield and the woman the FBI alleges was posing as his wife, Tracey Lee Ann Foley, who worked as a real estate agent, lived in Cambridge, Mass. blocks from the Harvard University campus.

Mr. Heathfield listed himself as chief executive of the four-year old company Future Map on his Linked-in professional networking page. He described the company as developing software to help predict the future.

The current Future Map website has password-protected links which prevent viewing details about the company. Older versions of the company's website, including the one from August 2008, that lists Mr. Fuerth, are available via the Internet archive site known as the Wayback Machine.

Mr. Fuerth's university biography, which is replicated on the Future Map 2008 site, lists his time as Mr. Gore's national security adviser during both Clinton terms. He was the senior administration official responsible for the operation of bi-national commissions with Russia, Ukraine, Kazakhstan, Egypt and South Africa.

According to U.S. prosecutors in the complaint, Mr. Heathfield worked for more than a decade as an undercover Russian agent tasked with infiltrating U.S. policy-making circles, allegedly focusing on Harvard's Kennedy School of Government. Mr. Heathfield graduated in 2000 from the Kennedy school, where he would have had access to multiple major figures in U.S. policy. The school is a top choice for students who plan to pursue careers in Washington, including many who join the Central Intelligence Agency and other national security agencies. His graduating class included Mexican President Felipe Calderón.

The couple moved to the U.S. in 1999, according to the complaint, and part of their mission was to gather information on U.S. assessment of Russian foreign policy, U.S. policy on Central Asia and U.S. data on use of the Internet by terrorists.

Federal Bureau of Investigation agents in July 2006 secretly searched the Cambridge townhouse where Mr. Heathfield and Ms. Foley lived at the time and copied computer

disks, according to prosecutors. FBI investigators recovered electronic data that prosecutors said were drafts of messages the couple sent to Moscow. The couple allegedly used Steganography software, which embeds messages in images placed on publicly available websites. FBI investigators were able to decode the messages, prosecutors allege.

Mr. Heathfield reported to Moscow in December 2004, according to prosecutors, that he had attended a seminar and made contact with a U.S. government official who worked at nuclear weapon development at a government research facility. They discussed U.S. "bunker-buster" warheads, he told Moscow handlers, according to the complaint from U.S. prosecutors.

In a separate September 2005 message, he reported contact with a high-level former national security official draws interest from Moscow handlers, who encourage Mr. Heathfield to continue the relationship, according to prosecutors, citing Mr. Heathfield's messages.

Write to Evan Perez at evan.perez@wsj.com

JULY 2, 2010

WSJ: Moscow's Response: Vague, but More Frank Than Usual http://online.wsj.com/article/SB10001424052748704525704575341233373736148.html

By RICHARD BOUDREAUX

MOSCOW—When its Cold War spies got caught in the West, Moscow's usual response was silence. The Kremlin refused with rare exceptions to acknowledge its undercover agents, and the policy of denial lingered long into the post-Soviet era.

But after the U.S. arrested 10 members of what it called a deep-cover Russian espionage ring, Moscow was quick to admit that at least some were Russian citizens—a shift that offers an intriguing subplot to the spy story itself.

The Russian Foreign Ministry repeated the statement Thursday, saying it was ready to provide consular assistance to any Russians in custody.

Moscow hasn't specified how many of the 10 are Russians; two of those arrested, Anna Chapman and Mikhail Semenko, had not hidden that fact. The others, U.S. authorities allege, spent years operating under false names, blending into America and pretending not to be Russians.

Even so, Moscow's relative openness about the suspects was a departure from its past standard of stonewalling about spies.

The new approach has puzzled Russian and American analysts. Even a former spokesman for Russia's foreign intelligence service, Yuri Kobaladze, called the Foreign Ministry's statement "very unusual. ... There's never been anything like that before."

"In the Soviet era, the rule was to deny such people; they didn't exist," said Olga Oliker, a senior policy analyst at RAND Corp. "But now you have a changing political system, you have closer U.S.-Russia relations, and you have the Internet and all this information is available," she said. "Lying and saying they're not Russian nationals would make the Russian government look ridiculous."

Some of those arrested, including Ms. Chapman and Mr. Semenko, were active on social-networking sites.

Frederick Hitz, a former inspector general of the CIA, said Russia's relatively open approach to the case "is a hopeful sign that they don't want to go back to the Cold War."

In its initial statement Tuesday, a day after the arrests were announced, the Foreign Ministry said the case involved "Russian citizens who found themselves on U.S. territory at different times." It did not say how many of the 10 were Russians, and ministry spokesman Andrei Nesterenko declined Thursday to elaborate.

But the assumption in Moscow, reflected in Russian press coverage, is that all 10 are Russians.

Mr. Nesterenko repeated the government's assertion that the suspects had done nothing to harm U.S. interests. Other Russian officials have noted that the suspects are charged with conspiracy to fail to register as agents of a foreign government and to commit money laundering—not with espionage.

Igor Goloshchapov, a former KGB agent who heads a security veterans' association, said Russia was being more open about the suspects "because they are probably not spies."

"They do not fit into the category of spies whom the state protects," he said. "This is the case when it's possible to admit that they are our citizens."

Several American analysts said Moscow may also have been trying to limit the damage. Acknowledging suspects' origins, they said, could help Russia's foreign intelligence service, the SVR, keep in touch with them through consular officials.

"They have to be concerned that these people are going to talk," said Harvey Klehr, an Emory University professor and co-author of "Spies: The Rise and Fall of the KGB in America." "Maybe the Russians want access to them so they can tell them, 'Look, you can't talk about this. We're going to arrange some kind of deal to get you out and get you back home.' "

The Soviet Union and U.S. arranged spy swaps during the Cold War, notably the one that sent U-2 spy pilot Francis Gary Powers home to America in exchange for a KGB colonel who called himself Rudolf Abel. According to Mr. Klehr, the Soviets neither publicly acknowledged Mr. Abel's status nor met with him during his detention.

More recently, Russian officials refused to acknowledge any connection with a Russian citizen deported by Canada in 2006 on suspicion of spying under an assumed Canadian identity, Paul William Hampel.

For Moscow to abandon agents could also damage morale among any that remain, said Mark Galeotti, a Russian security specialist who runs New York University's Center for Global Affairs.

"It would have a corrosive effect on the rest of their intelligence operations if they washed their hands of those who get caught," he said. "Surely there are other 'illegals' out there. Moscow depends on their loyalty and patriotism. These people ultimately need to see they're going to be backed up."

It wasn't clear Thursday whether Russian consular officials had visited any of the suspects. The Justice Department said only that it had followed Vienna Convention guidelines by informing the Russian Embassy in Washington of the arrests and informing the suspects that they had a right to consular access. The embassy declined to comment. The U.S. Bureau of Prisons said it doesn't release information about visits to people in its custody.

—Evan Perez and Siobhan Gorman contributed to this article.

Write to Richard Boudreaux at richard.boudreaux@wsj.com

VOR: Russian community in NY not affected by spy scandalhttp://english.ruvr.ru/2010/07/02/11239664.html

Jul 2, 2010 00:22 Moscow Time

The Russian Community in New York is sure the recent spy scandal will not have a Cold-War-like effect on its image. Lots of Russians here are respectable citizens with good education and respected jobsб says community leader Marina Kovalyova.

Although US mass media keeps on spreading the general fear of more Russians possibly involved in the espionage conspiracy, most community members experience no suspicion on part of their US neighbours.

General News of Friday, 2 July 2010

Source: GNA

GhanaWeb: Russia to award over 30 scholarships to Ghanaian studentshttp://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=185369

Cape Coast (C/R), July 2, GNA - The Russian government will this year, offer more than 30 scholarships to Ghanaian students to study in Russia.

Mr Evgeny Tereshenchenko, Trade and Economic Attache at the Russian Embassy in Accra announced this at this year's Students for the Advancement of Global Entrepreneurs (SAGE) National Competition and Be a Social Success (BASS) Conference held at the University of Cape Coast in the Central Region.

The competition aims at equipping promising professionals, students and entrepreneurs with the skills required to communicate and network to enable them to become social magnet.

Saint Augustine's College in Cape Coast and Presbyterian Boys Senior High School, Legon, who emerged winner and first runner-up respectively in the competition, will represent Ghana at this year's SAGE World Cup scheduled for Cape Town, South Africa from July 23 to July 27. Mr Tereshenchenko, who was the guest speaker at the event, said this underscored the resolve of the Russian Government to continue to support Ghana's socio-economic development.

He therefore, urged the youth to place their development at the core of their goals to enable them to become responsible future leaders. Dr Joseph Annan, Deputy Minister in-charge of Tertiary Education underscored the importance of entrepreneurship saying "entrepreneurship has become central to economic growth in the light of the rapid advancement of information technology and growing importance of knowledge.

"The new economy now calls for innovative ideas and individual initiative, rather than organizational discipline, adjustability and greater speed in taking decisions, which I must say is what entrepreneurship is all about" Dr Annan said.

Dr Annan said the challenges of the 21st century demanded that Ghanaians developed and acquired entrepreneurial skills to assist the nation to overcome her monetary circumstances as well as help to promote independent, effective and efficient decision making amongst individuals. He said entrepreneurial development formed the core of government's agenda and assured that it (government) would continue to provide the necessary infrastructure to enable the citizenry to develop and sharpen their entrepreneurial skills.

He congratulated the winners for their hard work and called on them to seize the opportunity to improve themselves rather than engage in activities that might ruin their future.

He also commended SAGE-Ghana for organizing the competition. Mr F.K. Oklu, Central Regional Director of the Ghana Education Service (GES), who chaired the ceremony, said the GES was doing all it could to promote quality education in the country. He expressed satisfaction to the SAGE programme, saying its contents were useful and could

help develop the capabilities of the youth. Mr Seth Ignatius Donkor, Country Director of SAGE-Ghana appealed to the private sector to embrace the SAGE concept because it was equipping the youth to become captains of industry in future. He commended the Ministry of Education for its continued support for the programme. 2 July 10

RIA: Russian space freighter to dock with ISS as scheduled - Mission Control http://en.rian.ru/world/20100702/159658008.html

01:28 02/07/2010

A Russian cargo spacecraft, Progress M-06M, will dock with the International Space Station as scheduled on Friday night, a spokesman for the Russian Mission Control said.

"The docking of the spacecraft with the port of the Russian Zvezda module is scheduled for July 2 at 20:58 Moscow time [16:58 GMT]," the spokesman said.

The Progress M-06M was launched from the Baikonur space center in Kazakhstan on a Soyuz-U booster rocket on Wednesday night.

The space freighter will deliver fuel, oxygen, scientific equipment and video and photo equipment to the ISS, as well as food, water and personal items for the crew.

In early June, Russia's Mission Control readjusted the ISS orbit, raising it by 2.5 kilometers (1.6 miles) to ensure the best conditions for the docking of the Soyuz TMA-19 manned spacecraft and the Progress M-06M.

MOSCOW, July 2 (RIA Novosti)

Xinhua: Passenger plane makes emergency landing in south Russian cityhttp://news.xinhuanet.com/english2010/world/2010-07/02/c_13380792.htm

2010-07-02 13:23:42

MOSCOW, July 2 (Xinhua) -- A passenger plane made an emergency landing in the south Russian city of Rostov-on-Don Friday, the Itar-Tass reported.

The Boeing-737 plane, which took off from St. Petersburg, made the stopover at 08:10 Moscow time (0410 GMT) because of an overheated engine. No injuries were reported.

The plane circled one hour over the airport to use up the fuel and guarantee a safe landing, a spokesperson of the local emergency department said.

Meanwhile, "all ground services at the airport were brought to readiness," the spokesperson was quoted as saying.

02 July 2010, 11:00

Interfax: Patriarch Kirill recommends priests to be more active in social networkshttp://www.interfax-religion.com/?act=news&div=7437

Tver, July 1, Interfax - Patriarch Kirill of Moscow and All Russia believes clerics should be more active in missionary work in blogs and social networks.

Meeting with clergy of the Tver Diocese he regretted "the level of discussions in social blogs is sometimes depressing" while "people's, especially young people's, mood is formed there."

According to the Church Primate, today every deanery of a diocese should have its own website in order to spread information about themselves, hold dialogue with authorities, discuss socially important and at times disputable questions.

02 July 2010, 10:00

Interfax: Moscow City Court upholds court ruling against gay pride parade organizers http://www.interfax-religion.com/?act=news&div=7436

Moscow, July 2, Interfax - The Moscow City Court has rejected the lawsuit filed by representatives of the sexual minorities' community against Moscow Mayor Yury Luzhkov.

Representatives of sexual minorities are planning to appeal this judgment with the European Court of Human Rights. "We will study the court ruling and then make the decision to send a complaint to the ECHR," Moscow gay pride parade organizer Nikolay Alexeyev told Interfax.

Gay activists demanded to compel the Moscow mayor to apologize to the plaintiffs for his offensive statements about gays and to pay one kopeck in damages.

The lawsuit was prompted by Luzhkov's statements made on television in early June 2009. The Moscow mayor said at the time that there were two reasons why gay pride parades will not be held in Moscow, one of which is "social morality." "Our morally healthy society does not accept all these faggots," the mayor said.

"The word 'faggot' has a clearly negative connotation and is offensive for homosexual people," Alexeyev said.

Last October the Tverskoy Court of Moscow rejected the lawsuit filed by gay community representatives against Luzhkov.

RIA: Moscow to spend $12.9 million on new computers for schools http://en.rian.ru/russia/20100702/159660318.html

10:08 02/07/2010

MOSCOW, July2 (RIA Novosti) - Moscow will spend some 400 million rubles ($12.9 million) on computers for schools as part of a government program to improve children's computer skills, a source in the city administration said on Friday.

The program is to be introduced in Moscow's elementary schools from September 1, 2011.

Funding for the new computers, which will be bought for a total of 180 schools, will be allocated from Moscow's reserves.

Moscow First Deputy Mayor Ludmila Shvetsova earlier expressed concern about the health affects of the new program, which she said would result in children spending less time reading and playing sports.

Bne: Last call for Luzhkov?

http://www.businessneweurope.eu/dispatch_text12055

bneJuly 2, 2010

Prime Minister Vladimir Putin on Thursday ordered 'action' over the massive traffic tailbacks surrounding Sheremetyovo Airport, reports Interfax, as pressure builds on Moscow city hall over the blocked international hub.

The situation now looks likely to accelerate the push from the Kremlin to oust long time mayor of Moscow Yury Luzhkov, with government officials saying yesterday that the Federal Antimonopoly Service (FAS) is now investigating the cause of the delays, whilst Putin suggested that "they'll be a problem" if the situation is not remedied.

Later on Thursday, national carrier Aeroflot added to the pressure, claiming that the jams are costing it over EUR 700,000 per day.

On Wednesday, Mikhail Vasilenko, director of the airport, wrote in a blog that the traffic problems surrounding the airport were caused by the decision of Moscow city government to start repairs to a bridge on Leningradskoye Shosse - the main route from the city center to the airport, as well as the start of the main highway between the capital and St Petersburg.

Vasilenko claimed that Sheremetyovo had received no warning of the work and therefore had no chance to make alternative arrangements for travel to and from the airport. He

suggested that the only reason that could be behind this is that city hall hopes to stifle competition with Vnukovo airport. The Moscow government owns Vnukovo and is set to unveil a new terminal there on July 3.

The director of the Federally-owned Sheremetyovo added that he had written to FAS about the issue.

Traffic jams have reached ridiculous proportions since the work closed all but one lane in each direction around the bridge on Saturday. Alternative routes through satellite towns are also gridlocked. Interfax writes that it is taking drivers as many as six hours to cover the 20km or so from the city centre.

Arrests of Moscow city government officials in recent months and criticism over a number of issues from federal officials have accelerated rumours that the Kremlin has decided it is time to move the long-serving Luzhkov on.

"If passengers can't fly from Sheremetyevo there'll be a problem," Putin told a government meeting on Thursday, "you can't get to Sheremetyevo, and people are complaining."

He then asked Deputy Prime Minister Sergei Ivanov to "please, sit down with the Moscow authorities and together take the action that is needed to improve the situation." Ivanov agreed, adding that "The Federal Antimonopoly Service is already looking into [the matter]."

Speaking to the state duma, Aeroflot Deputy CEO Andrei Kalmykov claimed that 1,300 passengers had missed flights on Monday, reports RIA Novosti. "We've refunded our passengers 75 percent of the ticket cost," he said, adding that "the first day of this disaster was deadly for us." Aeroflot received no warning about the roadworks he said.

Transport Minister for the Moscow Region, Pyotr Katsev, said that the bridge repairs followed an argument between the city and regional authorities over should foot the bill. He added that the work was vital because the bridge in on the route of the high speed Sapsan express train.

VOR: Press reviewhttp://english.ruvr.ru/2010/07/02/11257497.html

Jul 2, 2010 11:22 Moscow Time

Most printed media are focused on the Customs Union of Russia, Belarus and Kazakhstan. According to the Vremya Novostei newspaper, the Union will fail to effectively operate unless a single customs area is agreed on, so the issue has been

put on the agenda of the EurAsEc Interstate Council meeting that’s due in Astana on the 5th of this month. The Heads of State should decide whether the single customs area will comprise the geographic territories of Russia and Kazakhstan, or whether Belarus will make the required moves to ensure its fully-fledged involvement in the Customs Union. Vladimir Putin has pointed out that it is Russia’s historical choice to follow the path of integration with this country’s closest neighbours, with which the people of Russia has for centuries coexisted within a common state. 

The Nezavisimaya Gazeta daily reports that Russia’s Crimea-based Black Sea Fleet should start growing stronger as of this year. The ships that have grown old are due to be replaced with newly-built ones, and the Fleet’s personnel strength is to grow. The line-up and list of the Fleet’s combat units were approved back in 1997, when Russia and Ukraine signed their interstate treaty on the Fleet’s provisional deployment. By 2020 the Russian Black Sea Fleet will have incorporated new 15 frigates and several diesel-powered submarines.         

According to the Komsomolskaya Pravda, the Russian mathematician Grigory Perelman has completely and entirely rejected his one million-dollar award that he won by proving the Poincaré conjecture because of disagreement with the organized mathematical society. Perelman is disagreed with their decisions which he sees as unfair. He feels that the contribution to the Poincaré conjecture solution by the US mathematician Hamilton is by no means inferior to his own one.        

The Izvestia daily reports that Russia may launch a new programme to support its automotive industry as of next year. The current cash-for-clunkers programme for cars may be followed by a similar programme for trucks and commercial vehicles. This may prove good in many ways, both in terms of support for the vehicle manufacturers and in terms of boosting the output and acquisition of more ecologically friendly and safer transport vehicles. 

Many news media offer their forecasts for the outcome of the quarterfinals football games that kick off today. The Gazeta periodical points out in an article that the collapse of European teams at the world football championships-2010 has raised a sacramental question, namely whether Old World teams will make it to the semifinals at all? No more than three European teams out of the eight will play in the quarterfinals. Theoretically none of the three can make it to the semifinals. The Dutch will clearly perform a feat should they knock out Brazil from the tournament.          

July 02, 2010 10:23

Interfax: Moscow press review for July 2, 2010http://www.interfax.com/newsinf.asp?id=174952

MOSCOW. Juny 2 (Interfax) - The following is a digest of Moscow newspapers published on July 2. Interfax does not accept liability for information in these stories.

VEDOMOSTI

The natural resource extraction tax (NRET) should be increased for gas and oil, but it has yet to be decided by how much, Economic Development Minister Elvira Nabiullina said. In order to increase budget revenues, the Finance Ministry wants to double the NRET for gas to 294 rubles per 1,000 cubic meters starting 2011 and further adjust it annually according to inflation, and to increase the basic tax for oil by 11.6% to 468 rubles per tonne. The Finance Ministry expects this measure to add 679.6 billion rubles to the budget. The Economic Development Ministry has suggested increasing the NRET for gas by 61% and for oil by 11.2%, as is evident from the ministry's letter to the Finance Ministry. If these proposals are accepted, oil companies and Gazprom (RTS: GAZP) may lose 680 billion rubles ('Underpaid').

Igor Zyuzin, the principal owner of the coal and steel giant Mechel (RTS: MTLR), has left the position of the company's CEO and has become its board chairman instead of Valentin Proskurnya. Yevgeny Mikhel, who was earlier Zyuzin's first deputy, has been appointed the company's CEO. Zyuzin, who holds 66.76% in Mechel, had become its CEO in 2006. He made it clear back then that he would leave the position one day, Mechel's spokesperson Yekaterina Videman said. The holding's structure has been modified since then, and the company announced the completion of its restructuring on Thursday. From now on, each of Mechel's five activity segments will be run by its own management company ('Zyuzin's Retirement', see also Kommersant, page 9, 'Mechel Split Up Into Divisions').

State Duma deputies from the United Russia parliamentary group proposed amendments to Article 108 of the Criminal Procedure Code on Thursday to stipulate clearly who cannot be arrested before trial if charged with economic crimes. Amendments to the Criminal Procedure Code banning arrests of people suspected of committing business-related crimes were enacted in April, but they did not stipulate clearly to whom these amendments may be applied. The bill proposed by United Russia bans arresting co-owners of companies whose operations are under investigation, individual business people, members of boards of directors or other collective executive bodies of companies, and also "individuals performing organizational and managerial or administrative functions permanently or temporarily" ('No Jailing for Managers').

KOMMERSANT

Confrontation between oil companies and the Federal Antimonopoly Service (FAS) may take an unexpected turn: the Energy Ministry, which earlier almost never intervened in this dispute, has suggested that the government be invested with the right to directly regulate prices for oil products in case they rise dramatically or their producer violates antimonopoly laws. Relevant proposals are contained in a bill On Oil, which the Energy Ministry has sent to relevant governmental agencies for

clearance and intends to submit to the government in September 2010 (page 2, 'Government to Ensure Sponsored Gasoline').

Former Ukrainian Prime Minister Yulia Tymoshenko is continuing to publish documents related to RosUkrEnergo's lawsuit claiming that Naftogaz Ukrainy illegally pumped 11 billion cubic meters of gas out of national underground storage facilities. In line with the Arbitration Institute of the Stockholm Chamber of Commerce's recent ruling, Naftogaz admitted the wrongdoing but asked for being allowed to refund the debt to RosUkrEnergo not in cash but by returning the said amount of gas to the energy trader. Tymoshenko is sure that Naftogaz acknowledged its wrongdoing under pressure from the new Ukrainian authorities led by President Viktor Yanukovych. Lawyers believe that, in any case, the nation will have to repay the debt to RosUkrEnergo (page 7, 'Ukraine Acknowledges Theft').

National Economic TrendsJuly 02, 2010 12:20

Interfax: Russia may place ruble-denominated Eurobonds in 2010 or 2011 – Kudrinhttp://www.interfax.com/newsinf.asp?id=174999

YALTA. July 2 (Interfax) - Russia may offer ruble-denominated bonds on global markets this year or next, Deputy Prime Minister and Finance Minister Alexei Kudrin said at an international investment forum in Yalta.

"We will perhaps place ruble-denominated Eurobonds this year or next," he said.

Russian plans to "promote the ruble on world markets," he said. "We are currently borrowing in dollars, but we can borrow on world markets on a ruble-denominated basis too," he said.

jh

2010-07-02 09:12 Reuters: Russian rouble falls to 5-week lows on weaker oil http://www.iii.co.uk/news/?type=afxnews&articleid=7973770&subject=economic&action=article

MOSCOW, July 2 (Reuters) - The Russian rouble fell to a five-week low on Friday, hit by broadly weaker oil prices and dealers said more losses were possible as players squared positions ahead of the weekend.

By 0740 GMT, the rouble was down 13 kopecks to 34.68 versus the euro-dollar basket after falling as low as 34.76, its lowest since late May, according to Reuters data.Renewed worries about global economic recovery and oil -- Russia's chief export -- trading near 3-week lows added to a withdrawal of foreign funds from the Russian currency market, dealers said.Against the euro, the rouble fell 34 kopecks to 39.0 heading away from 2010 high of 37.30 scaled in mid-May. Versus the dollar, it gained 4 kopecks to 31.15 .Mikhail Spolokhov, chief dealer at MDM bank, said the rouble had room for more losses given the downtrend in oil prices and expectations of poor data from the U.S. labour market on Friday.A Reuters poll of analysts and economists called for U.S. non-farm payrolls to fall by 110,000 in June after a surge of 431,000 the previous month, mainly driven by census workers who are now seen being laid off.The rouble may come under additional pressure later in the day as some market players are expected to square part of their positions ahead of the weekend."The rouble is likely to stay around current levels (versus the basket) but non-residents may start squaring their positions which may drive the basket even higher," said Evgeniy Kurasov, dealer at Lanta bank.(Reporting by Andrey Ostroukh; editing by Patrick Graham) Keywords: RUSSIA ROUBLE/

(andrey.ostroukh@reuters.com, +7 495 775 12 42)

Bloomberg: Ruble Debt Tops Dollar Bonds by Most Since 2005 as Rates Fall http://noir.bloomberg.com/apps/news?pid=20601087&sid=aspnrFg3JwLs&pos=7

By Denis Maternovsky

July 2 (Bloomberg) -- Ruble bonds are outperforming Russia’s international debt by the widest margin since at least 2005, paying investors almost 5 percentage points more profit in a signal of increased confidence in the currency’s stability.

Government ruble notes returned 7.5 percent in the first half compared with a 2.6 percent advance for foreign-currency securities, the biggest gap in the period since JPMorgan Chase & Co. started indexes for the bonds five years ago. Ruble bonds climbed 1.5 percent in April through June, posting a fifth quarterly advance, while international debt fell for the first time since 2008.

Domestic bonds are benefiting from the ruble’s 3.9 percent climb against a basket of dollars and euros this year and 14 interest rate cuts that helped drive yields lower. Falling volatility in the ruble, which plunged more than 70 percent against the dollar after the government’s 1998 default, may encourage companies to borrow more locally, said VTB Group Chief Executive Officer Andrei Kostin.

“The problem previously was that the ruble wasn’t very stable,” Kostin, who heads the nation’s second-largest lender, with 3.6 trillion ruble ($115 billion) in assets, said in an interview at the G20 meeting in Toronto last week. “Nowadays the ruble is quite strong, and more important than strong, is stable.”

The yield on Russia’s 8.5 percent ruble bond due in November 2021 dropped 163 basis points, or 1.63 percentage points, this year to 7.28 percent. The yield on the country’s dollar bond maturing in 2030 fell 20 basis points in the same period to 5.37 percent.

Currency Basket

The ruble strengthened this year against the basket of dollars and euros used by the central bank. It appreciated 13.6 percent versus the euro, while weakening 4 percent against the dollar.

Russia’s central bank lowered its main interest rate by a quarter point to 7.75 percent in May, its 14th reduction in as many months, to bolster the economic recovery after gross domestic product shrank last year by the most since the Soviet Union’s 1991 collapse. Russia is the last of the so-called BRIC countries, which also include Brazil, India and China, to end a policy of lowering rates in response to the global credit crisis.

Bank Rossii reduced its rate after a decline in inflation to 6 percent from 15 percent two years ago. The central bank pledged June 30 to keep interest rates at the lowest level on record.

Diminishing Depreciation

The average volatility of the ruble versus the dollar in the past 10 days has declined to 9 percent, from a 10-month high of 23 percent on May 27 and 16 percent at the end of 2009, data compiled by Bloomberg show. The reduced swings helped cut the cost of contracts used to hedge against exchange-rate losses to the lowest in at least five years. Ruble non-deliverable forwards, or NDFs, show the currency will weaken 4.18 percent in a year, according to data compiled by Bloomberg.

The same contracts a year ago predicted a 14 percent slump and in November 2008 projected a record 37 percent slide, the data show. The currency tumbled 30 percent in the six months to January 2009 as the global credit crisis caused a 70 percent plunge in oil, Russia’s biggest export earner.

Finance Minister Alexei Kudrin said June 29 the ruble rate is “balanced.”

The ruble climbed 0.2 percent yesterday to 31.1950 per dollar. NDFs, which provide a guide to expectations of currency movements as they allow foreign investors and companies to fix the exchange rate at a specific level in the future, show the ruble at 31.5630 per dollar in three months.

Dollar Bonds

The yield on Russia’s dollar bonds due in 2020 sold in April rose 2 basis points yesterday to 5.473 percent, the highest since June 25.

Credit-default swaps linked to Russian debt fell 2 basis points to 196 on June 30, declining from a seven-month high of 217 on May 7. The contracts, which investors use to hedge against losses on debt or speculate on creditworthiness, pay the buyer face value if a borrower reneges on its obligations.

Russia credit-default swaps cost 2 basis points more than the same contracts for Turkey, which is rated four levels lower at Ba2 by Moody’s Investors Service. That difference has narrowed from 40 basis points on April 20.

The extra yield investors demand to hold Russian debt rather than U.S. Treasuries rose 2 basis points to 285 yesterday, according to JPMorgan EMBI+ Indexes. That compares with 188 for debt of similarly rated Mexico and 251 for Brazil, which is rated two steps lower at Baa3 by Moody’s.

Yields on Russia bonds are 54 basis points below the average for emerging-market, the smallest gap since September 2009 after narrowing 1 basis point yesterday, according to JPMorgan Indexes.

Fluctuations

Bank Rossii pledged on Jan. 22, 2009 to defend the ruble against excessive fluctuations hurting country’s exporters, introducing a target trading band of 26 to 41 against a basket of dollars and euros. The ruble touched the weakest end of the range at 41 in February 2009 and has gained 19 percent since then as Russia’s economy rebounded. Rising bank deposits and credit are fueling an economic expansion that Goldman Sachs Group Inc. says may reach 7 percent this year.

The credit crisis pushed hedge funds out of Russia’s debt markets, leaving domestic banks and pension funds that prefer to “buy and hold” as the main investors, said Sergey Dergachev, who helps oversee about $6 billion of emerging-market debt at Union Investment in Frankfurt.

“What we are seeing now is more long-term debt investors, not fast money guys,” said Dergachev. “This is a very positive development from a technical standpoint. Most investors want ruble debt because they see low volatility. There is huge demand for ruble debt now.”

Debt Sales

Russian companies have sold 305 billion rubles ($9.8 billion) of domestic bonds so far this year, a 17 percent increase from the same period last year and the busiest start since

2007. Corporate issuance of foreign-currency bonds has totaled $8.3 billion so far in 2010, according to data compiled by Bloomberg.

The yield on ruble bonds sold by OAO Gazprom, Russia’s biggest company, is 167 basis points above the same-maturity Gazprom debt in dollars, down from a yield difference of 600 a year ago, data compiled by Bloomberg show. The spread narrowed to as little as 115 on June 11.

“We expect people to more comfortably hold ruble debt as it is becoming a more stable and liquid asset class,” said Mikhail Galkin, director of fixed-income research at VTB Capital. VTB of Moscow is the biggest underwrite of ruble debt and third-largest organizer of Russian Eurobonds this year, data compiled by Bloomberg show.

“Ruble bonds have become a defensive play in times of volatility because they are more stable,” said Elena Kolchina, head of fixed income products at Renaissance Asset Managers in Moscow, which has $1.5 billion in assets under management.

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

Last Updated: July 1, 2010 20:25 EDT

2010-07-02 07:42 Reuters: TABLE-Russia monetary base declines to 5.01 trln rbls http://www.iii.co.uk/news/?type=afxnews&articleid=7973620&subject=economic&action=article

MOSCOW, July 2 (Reuters) - Russia's monetary base declined to 5.01 trillion roubles ($161.2 billion) on June 28 from a historic peak of 5.03 trillion roubles a week earlier, the central bank said on Friday.

It provided the following details. Date Monetary base(bln roubles)

2010

June 28 5,005.6June 21 5,032.4June 15 4,985.0June 7 4,883.2May 31 4,861.2May 24 4,890.0May 17 4,842.6May 11 4,801.9May 4 4,760.9April 26 4,746.2April 19 4,728.4

April 12 4,642.9April 5 4,566.7March 29 4,581.8March 22 4,617.4March 15 4,578.4March 9 4,553.8March 1 4,479.5Feb 24 4,563.2Feb 15 4,483.4Feb 8 4,420.0Feb 1 4,403.1Jan 25 4,479.2Jan 18 4,482.5Jan 11 4,716.0Jan 1 4,716.0

2009

Dec 28 4,487.6Dec 21 4,353.0Dec 14 4,246.4Dec 7 4,154.7Nov 30 4,103.5Nov 23 4,157.7Nov 16 4,133.8Nov 9 4,081.3Nov 2 4,049.7Oct 26 4,101.6Oct 19 4,095.9Oct 12 4,047.0Oct 5 3,988.3Sept 28 4,026.8Sept 21 4,055.4Sept 14 4,039.3Sept 7 3,990.9Aug 31 3,976.4Aug 24 4,078.6Aug 17 4,076.5Aug 10 4,023.5Aug 3 3,985.7July 27 4,059.6July 20 4,083.6July 13 4,055.8July 6 3,986.6June 29 3,988.4June 22 4,007.3June 15 3,975.8June 8 3,883.5June 1 3,857.4May 25 3,893.9May 18 3,871.7May 12 3,848.2May 4 3,820.2April 27 3,820.9April 20 3,825.7

April 13 3,772.0April 6 3,710.1March 30 3,729.8March 23 3,759.6March 16 3,751.5March 10 3,741.4March 2 3,715.9Feb 24 3,781.8Feb 16 3,741.2Feb 9 3,707.5Feb 2 3,755.4Jan 26 3,896.1Jan 19 4,066.2Jan 12 4,218.7Jan 1 4,391.7

2008

Dec 29 4,283.1

2007

Dec 24 4,016.6

2006

Dec 25 3,002.0

NOTE - Monetary base comprises cash in circulation and commercial banks' deposits at the central bank.

To see more detailed historical data on Russia's monetary base you can go to www.cbr.ru/eng/main.asp ($1=31.07 Rouble) Keywords: RUSSIA BASE

(Moscow Newsroom, +7495 775 1242, moscow.newsroom@reuters.com)

RenCap: Ministry of Finance relies on financing other than the Reserve Fund again http://www.businessneweurope.eu/dispatch_text12055

Renaissance CapitalJuly 2, 2010

Yesterday (1 July) the Ministry of Finance released monthly statistics on the usage of the Reserve Fund and National Welfare Fund. As of 1 June, the Reserve Fund was at RUB1.23trn ($39.3bn) and the National Welfare Fund was at RUB2.67trn ($85.5bn). According to the news, the Ministry of Finance did not use the Reserve Fund to cover a

budget gap in June, and the change in the nominal volume of the funds is related to the effects of forex revaluation.

The Ministry of Finance's recently announced commitment to save as much of the Reserve Funds as it can is reflected in the ministry's financing policy in June. Last month the Ministry of Finance started to tap the domestic bond market and borrowed around RUB55bn there. Moreover, commercial banks repaid RUB40bn in deposits earlier placed with them by the ministry. In our view, these funds could support financing the traditionally higher government spending in June, as the acceleration of budget expenditures usually begins in early summer. We think the repayments may not have been enough to cover the budget gap and, as the Reserve Fund was not used, we think the federal budget received 75% of the CBR's annual income (as approved earlier) in June.

In our view, current YtD budget performance (deficit at 2.9% of GDP only) demonstrates that official estimates of the deficit figures in 2010 seem to be reliable and we forecast the 2010 deficit to be 4.8-5.4% of GDP. Thus, we think the Reserve Fund will likely be used again by the end of summer but, overall, by year-end it is unlikely to be fully exhausted.

Business, Energy or Environmental regulations or discussions

Bloomberg: Russian Stocks Snap 3-Day Losing Streak on Oil, Australian Tax http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a3ya4AtHhvrQ

By Jason Corcoran

July 2 (Bloomberg) -- Russian stocks advanced for the first time in four days after oil rebounded and mining stocks gained on Australia’s compromise tax agreement with resource companies.

The country’s two largest oil producers OAO Rosneft and OAO Lukoil both increased more than 1 percent. OAO GMK Norilsk Nickel, the nation’s biggest miner, gained 1.7 percent, helping to push the Micex Index of 30 stocks higher by 1 percent at 1,267.35 as of 11:22 a.m. in Moscow, paring the weekly loss to 6 percent.

Crude, Russia’s chief export, rose as much as 43 cents to $73.68 a barrel in New York after slipping 6.8 percent in the previous four days. A compromise agreement between the Australian government and mining companies on changes to a proposed resources tax relieved concern that the levy would crimp earnings at mining companies and smother economic growth, boosting demand for riskier investments.

“The market was oversold yesterday and we are seeing fund managers stepping in looking for some bargains,” Elena Suslova, portfolio manager at Wermuth Asset Management, which manages about $400 million in Russia and eastern Europe, said by

phone. The Australian tax is “positive for metals and mining which have been amongst the worst affected in the sell-off,” she said.

Russian stocks retreated yesterday to their lowest level in five weeks as oil plunged after reports showed manufacturing in China and the U.S. slowed in June, indicating the world’s two largest energy consumers may need less crude. The Micex has slid 17 percent from its April 15 peak.

To contact the reporter on this story: Jason Corcoran at Jcorcoran13@bloomberg.net

Last Updated: July 2, 2010 04:15 EDT

Bloomberg: Norilsk Nickel, Novolipetsk, Polyus: Russian Equity Preview http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a5TAsL5A2jec

By Denis Maternovsky

July 2 (Bloomberg) -- The following companies may have unusual price changes in Russian trading. Stock symbols are in parentheses and share prices are from the previous close.

Russia’s ruble-based Micex Index fell for a third day, declining 4.2 percent to 1,254.65 in Moscow. The dollar- denominated RTS Index retreated 3.8 percent to 1,288.72.

OAO GMK Norilsk Nickel (GMKN RX): Russia’s largest mining company said it repaid on June 29 a $1.5 billion loan taken in 2007 for the purchase of LionOre Mining International Ltd. without taking any new external borrowings for the repayment. Company shares tumbled 3.7 percent to 4,361.64 rubles.

OAO Novolipetsk Steel (NLMK RX) is scheduled to report its first-quarter results in Moscow. Russia’s largest steelmaker by market value fell 2.2 percent to 80.16 rubles.

OAO Polyus Gold (PLZL RX): Gold futures tumbled the most since February with the contract for August delivery falling to $1,208.70 an ounce in New York. Russia’s biggest producer of the metal fell 7.5 percent to 1,509.55 rubles.

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

Last Updated: July 1, 2010 22:00 EDT

UralSib: Generation Companies - Liberalization continues http://www.businessneweurope.eu/dispatch_text12055

UralSibJuly 2, 2010

80% of the market is liberalized. The liberalization of the wholesale electricity market continues, and as of 1 July 2010 80% of electricity will be sold at non-regulated prices. The market should be fully liberalized by 1 January 2011 and only households will continue to purchase electricity at regulated prices (until 2014).

Tariff regulation for households remains unclear. Although liberalization is almost complete, the problem with tariff regula- tion for households remains unsolved. We estimate that Russian households account for 10%-15% of total electricity consump- tion. One of the most progressive proposals for regulation is charging regulated prices for an allocated level of electricity con- sumption, based on the average consumption per household as estimated by the government, and charging market prices for all consumption above this level. Regulated volumes will be proportionally distributed among all generation companies.

Efficient generation companies benefit from liberalization. Liberalization is positive for the most efficient generation compa- nies that have relatively low regulated tariffs given the low cost of electricity generation. As the market is liberalized these compa- nies will benefit the most, selling electricity at the liberalized electricity prices that are significantly above their low generation costs. All generation companies will benefit to some degree, but we see RusHydro, OGK-4, OGK-1, TGK-1 and Mosenergo as the key beneficiaries of market liberalization.

Matvey Taits

Bloomberg: Sberbank, VTB Cut Mortgage Down Payments to 10%, Vedomosti Says http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=adLwIgTwdmW8

By Ilya Khrennikov

July 2 (Bloomberg) -- OAO Sberbank and VTB Group, Russia’s biggest lenders, agreed yesterday to cut the minimum down payment required to receive a mortgage to 10 percent of the purchase price of a home, Vedomosti reported.

To contact the reporter on this story: Ilya Khrennikov at ikhrennikov@bloomberg.net

Last Updated: July 2, 2010 01:38 EDT

UralSib: Sberbank and VTB reduce mortgage down payments to 10% http://www.businessneweurope.eu/dispatch_text12055

UralSibJuly 2, 2010

Mortgage terms eased substantially. Sberbank and VTB have re- duced their requirements for mortgage down payments from the cur- rent 20-30% to 10%, Vedomosti reported today. The base interest rate on mortgages is 10.5% per annum at Sberbank. This level for both in- terest rate and down payment will definitely drive the recovering hous- ing market. This became possible on the back of government support for the mortgage market. The reduced down payments and mortgage rates (at 10-11%) are largely in line with government policy. Earlier AIZhK (the state mortgage agency) announced that it would lower in- terest rates on mortgage refinancing from 11% to 8% (in rubles) from 1 July 2010. This would be financed by RUB250 bln ($8.3 bln) in state funds, on loan from VEB).

Lower requirements to drive mortgage market. Sberbank expects to double monthly mortgage lending volumes to $1 bln. Mortgage financ- ing is a key driver for the development of the housing market. Currently Sberbank and VTB account for around 65% of mortgage lending in Russia. We expect the mortgage lending market to see 30% increase, triggered by lower down payments. The largest property market in Rus- sia - Moscow - has been recovering YtD in terms of the number of transactions. May saw a record number of transactions on the Moscow residential market, up 75% YoY and 5% MoM to 8,336 deals. Mort- gage-financed deals constituted 20% of total sales. Before the crisis, some 20-30% of sales were made with mortgages. Year-on-year the mortgage market has demonstrated a strong recovery of pre-crisis lev- els. The new mortgage terms will make mortgages more affordable and should drive demand for newly built housing, which will be of particular benefit to the mass-housing market.

4Positive news for PIK and LSR. The news is positive for mass-housing developers - LSR Group (LSRG - Buy) and PIK Group (PIK LI - Buy). We see lower down payments as an important driver for the housing market. It supports our strong fundamental view on the economy-class housing segment, which we see as the best bet on the property market recovery. Lower rates and down- payments should support demand. More and more leading banks are easing their mortgage terms. This process is triggered by the fact that Russian banks are increasingly looking to lend their liquidity.

Tigran Hovhannisyan

JULY 2, 2010, 4:15 A.M. ET

DJ: Russia's Sberbank Not Bidding For Poland's Bank Zachodni WBK http://online.wsj.com/article/BT-CO-20100702-702172.html

MOSCOW (Dow Jones)--OAO Sberbank (SBER.RS), Russia's biggest bank, said it won't be among the bidders for Allied Irish Bank PLC's (AIB) 70.5% stake in Poland's Bank Zachodni WBK SA (BZW.WA).

"Sberbank has taken the decision not to participate in the tender for acquiring Bank Zachodni WBK," a spokeswoman said by email late Thursday.

State-controlled PKO Bank Polski (PKO.WA) and Bank Pekao SA (PEO.WA), a unit of Unicredit SpA (UCG.MI), may be bidding for the competing Polish bank, according to people familiar with the negotiations, as well as HSBC PLC (HBC), Italy's Intesa Sanpaolo SpA (ISP.MI), France's BNP Paribas SA (BNP.FR) and U.S.-based private equity company Apax Partners.

-By William Mauldin, Dow Jones Newswires; +7 495 232-9192, william.mauldin@dowjones.com

Reuters: Morgan Stanley sells Russian mortgage unithttp://www.reuters.com/article/idUSLDE66105020100702

2:35am EDT

MOSCOW, July 2 (Reuters) - Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) sold its Russian mortgage unit, one of the country's leading mortgage operators, to Russian Orient Express bank, the Russian lender said late on Thursday.

Morgan Stanley has been looking for a buyer for its City Mortgage Bank since the global financial crisis hit the country's construction sector hard and effectively froze the securitisation market and killed demand for new loans.

Orient Express bank, which ranks among Russia's top 10 privately owned lenders and is partly owned by banking magnate Igor Kim -- also a major shareholder in MDM-bank -- bought a 100 percent stake in Morgan Stanley's unit, Russian lender said on its Web site giving no further details.

City Mortgage bank with current equity capital of 2 billion roubles ($63.94 million) and offices in 23 regions was bought by the U.S. heavyweight in 2006 in order to enter the Russian market that at that time enjoyed a double-digit growth.

However, the global financial meltdown has effectively closed the country's mortgage market, pulling the plug on wholesale funding and refinancing for mortgage banks, while rouble devaluation made the mortgage burden unbearable for many Russians. (Reporting by Dmitry Sergeyev; Editing by Lidia Kelly and Hans Peters) ($1=31.28 Rouble)

Reuters: Polyus Gold CEO says unit may sell $1 bln stakehttp://af.reuters.com/article/metalsNews/idAFLDE66109E20100702

Fri Jul 2, 2010 7:32am GMT

MOSCOW July 2 (Reuters) - A unit of miner Polyus Gold (PLZL.MM) (PLZLq.L), Jennington, will "sooner or later" sell its stake of around 10 percent in a new company created after a reverse takeover, Polyus' CEO Yevgeny Ivanov said on Friday.

"The stake must be sold sooner or later," Ivanov told Reuters in an interview.

He said this stake may be used to increase the company's free float to 25 percent from 17 under a planned premium listing on the London Stock Exchange and to finance the company's projects. (Reporting by Polina Devitte, writing by Aleksandras Budrys)

Reuters: NLMK sees Q3 prices down on weak recovery-UPDATE 1http://www.forexyard.com/en/news/NLMK-sees-Q3-prices-down-on-weak-recovery-2010-07-02T065650Z-UPDATE-1

NOVOLIPETSK/ (UPDATE 1)

* Q1 net profit $132 million, vs forecast $163 million

* Sees Q2 sales volumes up 10 percent, EBITDA margin 25-30 percent

* Says Q3 prices decreasing on weak macro recovery

(Adds detail)

MOSCOW, July 2 (Reuters) - Novolipetsk Steel, Russia's fourth largest steelmaker, said third-quarter prices would likely fall due to the weak recovery in developed markets, when posting a first-quarter profit that missed forecasts.

NLMK, controlled by Russia's richest man, Vladimir Lisin, posted a first-quarter net profit of $132 million on Friday, below the $163 million forecast in a Reuters poll.

"In Q3 2010, prices for a wide range of our products are expected to decline due to the lack of clear signs of recovery in developed economies," the company said.

Novolipetsk, which made a first-quarter net loss of $194 million in 2009, has returned to profit thanks to its position as a low-cost producer.

Rival Magnitogorsk Iron & Steel Works last month posted a $94 million first-quarter profit, while Russia's largest producer Severstal posted a steep loss because of problems at overseas operations.

Novolipetsk said first-quarter sales were $1.70 billion, versus its guidance for $1.65 billion.

First-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) reached $386 million, compared with a forecast for $381 million in the Reuters poll.

NLMK's second-quarter EBITDA margin was expected to be 20-25 percent, while sales volumes were expected to grow 10 percent quarter-on-quarter to 3.0 million tonnes.

Average second-quarter selling prices likely rose 20-30 percent from the first quarter, the company said. (Reporting by Alfred Kueppers; Editing by John Bowker and Dan Lalor)

RenCap: Government plans to introduce cash-for-clunkers programme for trucks and buses http://www.businessneweurope.eu/dispatch_text12055

Renaissance CapitalJuly 2, 2010

Event: According to a report in Vedomosti today (2 July), the government has decided to create a cash-for-clunkers programme for trucks and buses, similar to the programme implemented in Mar 2010 for car sales. The details of the new programme could be defined by 28 July, and it could be implemented in 2011.

Action: Positive for KAMAZ and GAZ Group, in our view. Rationale: The cash-for-clunkers programme boosted sales for AvtoVAZ, and although we see this new programme as a one-off, it is a positive development for truck and bus makers.

Ivan Kim

Itar-Tass: Russia’s KAMAZ puts out 3,500 trucks in June

http://www.itar-tass.com/eng/level2.html?NewsID=15284450&PageNum=0

02.07.2010, 00.08

KAZAN, July 1 (Itar-Tass) -- Russia’s biggest truck manufacturer KAMAZ made 3,500 trucks in June 2010, or twice as much as in June 2009, a company spokesman said on Thursday.

“In June the company reached the highest figure in this year, in June last year it was 1,700 trucks,” Oleg Afanasyev told Itar-Tass.

According to Afanasyev, the company has manufactured more than 15,000 trucks since the beginning of the year, or half as much as in the first five months of 2009.

Moreover, KAMAZ has manufactured spare parts to the total sum exceeding 4.5 billion roubles, or a 1 billion rouble increase on the last year’s figure.

Under its business plan, the company will put out at least 28,200 trucks in 2010.

KAMAZ ranks 11th among the world’s biggest truck producers and 8th among diesel engine producers. The KAMAZ group incorporates 96 enterprises.

RIA: Russian senior official proposes luxury tax - paper http://en.rian.ru/russia/20100702/159660647.html

10:43 02/07/2010

Russian Deputy Minister of Economic Development Andrei Klepach has proposed the introduction of a tax on luxury goods, Russian daily Vedomosti reported on Friday.

Russia's list of excisable goods currently includes alcohol, cigarettes, jewelry, cars and motorcycles, gasoline, diesel fuel and motor oil, but Klepatch said it was not yet clear what would come under the category "luxury goods."

The first edition of the Excise Law was adopted in 1991 and included jewelry, caviar and salmon, gourmet seafood, high-quality porcelain and crystal, rugs, furs, leather clothing, tires and chocolate. From the original list, only jewelry remains.

Head of the Russian Tax Department Ilya Tryunin said the idea was worth discussing, but a strict definition of luxury goods should be introduced first.

Alexandra Suslina of the Economic Expert Group, an independent think tank, said the list must be updated.

"If we are to restore the list that existed before 2001, it should be adapted to the modern world. Tires and chocolate should not be included," she said.

Sales of luxury goods decreased during the economic downturn and have not yet fully restored.

The competitive advantage of Russia's jewelry market is weakened by high taxes and a law stating that the tax service must be informed about purchases of more than 600,000 rubles ($19,300).

MOSCOW, July 2 (RIA Novosti)

Activity in the Oil and Gas sector (including regulatory)

Reuters: Russia June oil output hits record-highhttp://af.reuters.com/article/energyOilNews/idAFLDE66102T20100702

Fri Jul 2, 2010 6:36am GMT

MOSCOW July 2 (Reuters) - Russian oil output reached a record-high level in June and stayed above 10 million barrels per day for the tenth consecutive month, allowing Moscow to retain the world's top position ahead of Saudi Arabia.

An industry source told Reuters on Friday that June oil output rose to 10.13 million barrels per day (bpd), up from 10.08 million bpd in May and the previous record-high of 10.12 million bpd in March.

Russia's natural gas production continued its decline amid falling demand in Europe and at home due to high summer temperatures.

Russia's overall gas output fell to 1.49 billion cubic metres per day in June from 1.65 bcm per day in May.

(Reporting by Gleb Gorodyankin; writing by Vladimir Soldatkin)

July 02, 2010 10:56

Interfax: Russia boosts oil production 2.8% in H1; gas up 21.8%http://www.interfax.com/newsinf.asp?id=174964

MOSCOW. July 2 (Interfax) - Russia produced 249.425 million tonnes of oil and gas condensate in January-June 2010, up 2.8% compared with the same period in 2009, the Fuel and Energy Central Dispatch Service said.

Russian gas production rose 21.8% to 334 billion cubic meters.

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Reuters: Rosneft, CNPC to make refinery decision around Aug – officialhttp://af.reuters.com/article/energyOilNews/idAFTOE66102R20100702

Fri Jul 2, 2010 4:30am GMT

BEIJING July 2 (Reuters) - Russia's Rosneft (ROSN.MM) and its Chinese partner, China National Petroleum Corp (CNPC), will make a final investment decision in August on the planned multi-billion-dollar refinery in northern China, a Rosneft official said, more than four years after an initial deal.

Both companies have yet to agree on the supply of crude oil, after CNPC diverted the 300,000 barrels-per-day Russian crude earlier earmarked for the refinery to other Chinese plants, said the Rosneft official directly involved in the investment plan.

"Now the crude supply is the most complicated issue for the project to move ahead," said the official, who declined to be named. The refinery was first agreed between the firms in 2006.

Under a $15-billion oil-for-loan deal agreed in April 2009, the Russian oil major agreed to transport 15 million tonnes, or 300,000 bpd of crude from 2011 to China via the East Siberian Pacific Ocean pipeline (ESPO) slated for operation in late 2010.

The pipeline has an extension to northeast China, where CNPC, parent of China's second-largest state refiner PetroChina (0857.HK), operates about ten refineries.

Rosneft was hoping the crude would go to feed the planned Tianjin refinery but CNPC allocated the oil to its subsidiary plants in northeast China including a newly upgraded plant in Liaoyang to process exclusively Russian crude.

"The 15 million tonnes is all we have from the ESPO pipeline. If we are asked to provide more, we will have to bid in the spot market," said the official.

Top executives from Rosneft will meet their CNPC counterparts in Beijing around August to hammer out a final decision for the 200,000-bpd refinery estimated to cost $4-$5 billion, said the Rosneft official.

"For now, everything is a maybe."

The firms have almost completed feasibility studies for the Tianjin refinery, based on assumptions that crude supply for the plant will be a mix of Middle Eastern and Russian oil, said the official. (Reporting by Chen Aizhu; Editing by Valerie Lee)

Reuters: Russia's Transneft net profit up 80 pct in Q1 y/yhttp://af.reuters.com/article/energyOilNews/idAFLDE66108F20100702

Fri Jul 2, 2010 6:44am GMT

MOSCOW July 2 (Reuters) - Russia's oil pipeline monopoly Transneft (TRNF_p.MM) said on Friday that its first-quarter net profit rose by more than 80 percent to 33.7 billion roubles ($1.09 billion) from 18.6 billion a year earlier.

The company's revenue rose to 102.8 billion roubles in the first three months of the year from 85.2 billion in the first quarter of 2009.

(Reporting by Katya Golubkova; Writing by Lidia Kelly)

Reuters: REG-OAO Novatek NOVATEK acquires OAO Tambeyneftegashttp://www.reuters.com/article/idUS51648+02-Jul-2010+BW20100702

http://www.businesswire.com/news/home/20100701006756/en

MOSCOW--(Business Wire)--

NOVATEK ACQUIRES OAO TAMBEYNEFTEGAS

Moscow, 2 July 2010. OAO NOVATEK ("NOVATEK" and/or the "Company") todayannounced that it has acquired a 100% equity stake in OAO Tambeyneftegas, theholder of the exploration and production license to the Malo-Yamalskoye naturalgas and gas condensate field. The Company acquired the stake from the followingCypriot companies; SIRITIA VENTURES Ltd., ALDI TRADING Ltd., INNECTO VENTURESLtd. and ORSEL CONSULTANTS Ltd. for total consideration of ten million USdollars.

The Malo-Yamalskoye reserves, according to the Russian C1+C2 reserveclassification, amount to 161 billion cubic meters of natural gas and 14.4million tons of gas condensate1, or approximately 1.2 billion barrels of oilequivalent. The field is located in the southern portion of the Yamal peninsula,near Kamenny Cape and in the general vicinity of Gazprom`s Bovanenkovo-Ukhtatrunk pipeline construction project.

The acquisition is consistent with the Company`s strategy to participate in thedevelopment of the Yamal peninsula, as well as increasing its resource base andproduction capacity of natural gas and liquid hydrocarbons.

EurActiv: Lukoil CEO: Russian oil business prospers in EUhttp://www.euractiv.com/en/energy/lukoil-ceo-russian-oil-business-prospers-eu-interview-495854

Published: 02 July 2010

For Russian oil companies, the business climate in Europe is good, but a lot of fallacious information about the country still needs to be countered, Vagit Alekperov, founder and President of Lukoil, Russia’s largest oil company, told EurActiv in an exclusive interview.

Vagit Alekprov created Lukoil in 1991. With operations in 40 countries, the company is now the second largest worldwide in terms of proven oil and gas reserves after ExxonMobil. Alekprov is rated by Forbes magazine as the sixth richest person in Russia with more than $10 billion of net worth.

He was speaking to Georgi Gotev, Senior Editor of EurActiv.

As a prominent representative of big Russian business, how do you assess the state of relations between your country and the EU? Is the climate good?

Lukoil, the company I represent, operates in 16 countries of the European Union. Our relations with European institutions are good, and I can illustrate them with the fact that we have received today (1 July) the permission to buy two oil-processing plants, in Sicily and in the Netherlands. This gives us confidence that our investments in the EU, which we intend to continue, will receive support on the EU side.

In particular, on the territory of Bulgaria, Lukoil has plans for an investment to the value of half a billion dollars, in rehabilitating the oil refinery in Burgas, so that this plant would become one of the most modern in the EU. We also plan investments in Bulgaria in wind farms, and as in other countries, our activities only receive positive reactions.

Recently Lukoil bought 157 filling stations in Belgium. What is your strategy for the Western part of Europe?

Indeed, we own a chain of filling stations in Belgium and Luxembourg, and we plan to enter the Dutch market.

Can we say then that Russian business finds no obstacles to penetrate the West?

In any case, I can say that our company finds no such obstacles. In the business segment where we are active we don’t experience difficulties. Lukoil is a private company quoted on the London stock exchange, and our Western partners see us as any other company working under the principle of transparency in business affairs. 

You just participated in a debate at the European Business Summit and from here your next meetings are in the European Parliament. Do you need to lobby the MEPs? And on what?

No, it’s not even lobbying. It’s about presenting the position of Lukoil on the territory of the EU, it’s about presenting the development strategy of our company. I frequently meet the European Commissioners, and this is very important, because there is a lot of fallacious information circulating around, including about my country. I consider it part of my everyday work to explain the real strategies and positions.

Maybe it’s easier for your EU partners to work with Russia in the field of oil, and more difficult to work with Gazprom. Would you agree?

The situation with the gas business is different. We have a law in Russia that limits to just one the number of gas exporters. Gazprom is the only gas supplier from Russia. But we don’t need to discuss the laws of the Russian Federation, those laws ensure stable flows of Russian gas to the EU market. Indirectly, we also participate, as we produce 15 billion cubic meters of gas per year, we sell it to Russia and Gazprom exports our gas as well.

What’s your opinion on the competition between the Gazpom-favoured South Stream pipeline and Nabucco, a EU project aimed at decrease the dependence on Russian gas?

I think that any plans have to be economically sound and resource-secured. This is the bottom line: the economic viability and the availability of gas to be supplied by the pipelines. But I don’t see those two pipelines as competitors. Maybe they will complement each other. I don’t exclude that in the not so distant future a pipeline from Iraq across Turkey would complement this system. There are also projects for pipelines to China.

But doesn’t politics interfere in business? South Stream has been designed to bypass Ukraine, and Nabucco is planned to import from sources other than Russia. Aren’t those political pipelines?

No, South Stream and Nord Stream are not designed to bypass anyone. They are designed to help Russia bring gas to the EU without transiting countries. This in fact can bring down the price of gas supplies. As to Nabucco – I would advise that political aspects should not take centre-stage, and that economic considerations should prevail.

Are representatives of the big business in Russia a projection of the country’s power? Are you and Mr. Alexander Medvedev from Gazprom, who attended the same round table, some sort of ambassadors of the Kremlin?

No. We are not authorised to speak on behalf of the authorities. Myself, as a representative of a private company in which the state doesn’t own a single per cent, speak on behalf of the Council of directors in which I participate. But the fact that we work closely with the government is also perfectly obvious. The bowels of the earth belong to the State. The State is represented by the government. Cooperation with the government is the basis for stable work of any fossil energy company.

RenCap: New export duty regime for East Siberian crude now official http://www.businessneweurope.eu/dispatch_text12055

Renaissance CapitalJuly 2, 2010

Event: The Russian government has officially implemented a new export duty regime for East Siberian crude, effective 1 July 2010. The zero duty rate has been abolished, in line with previous comments by government officials (click here to read our story, "Sechin presents the new export duty regime for East Siberian crude," in the CIS Morning Monitor dated 17 June 2010) and our expectations (click here to read our report, Outlook for 2010: Fewer perks, more policies, dated 11 Dec 2009). The new regime sets the marginal export duty rate at 45% above the cut-off price of $50/bbl, leading to approximately 72% savings at an oil price of $71/bbl.

Action: We believe the news should be priced-in by now, given earlier reports on this matter. Rosneft was the main beneficiary of the tax holiday - which alone accounted for 25% of the company's 2010E net income - followed by Surgutneftegas (18%) and TNK-BP (8%), on our estimates.

Rationale: Russia's Deputy Finance Minister Sergey Shatalov said earlier that Rosneft's Vankor field will be the first to return to the regular export duty regime in 2011, followed by TNK-BP's Verkhnechonsk field in 2012 and Surgutneftegas's Talakan field in 2013. Shatalov's statement has not been officially confirmed, however. In the meantime, we continue to model that all East Siberian oil fields will lose all of their export duty benefits next year.

Alexander Burgansky

RenCap: Ministry of Finance considers raising MET for crude oil and gas, and export duty on products http://www.businessneweurope.eu/dispatch_text12055

Renaissance CapitalJuly 2, 2010

Event: Today (2 July), Vedomosti reported further details of the Ministry of Finance's proposed changes to the taxation of oil, gas and oil products. According to the newspaper, the ministry has proposed raising the mineral extraction tax (MET) on gas 100% in 2011, to RUB294/mcm, and linking MET to the inflation rate in the future, which would increase MET 130% in total during the next three years. The Ministry of Economic Development supports this idea. The Ministry of Finance is also proposing to increase the base rate of MET on crude 11.6%, to RUB468/mcm. A third proposal was made to set the export duties on both light and dirty oil products at 60% of the crude export duty. Neither the Ministry of Economic Development nor the Energy Ministry

supports this last proposal, according to Vedomosti.

Action: We regard the news as neutral for Gazprom, and slightly negative for the oil companies.

Rationale: The idea of increasing MET on gas is not new, and has been proposed several times since 2007. We currently assume in our models that MET will rise 96% in 2011 to RUB288/mcm, increasing 153% in total by 2013. The second proposal is somewhat new, but we believe its adoption is less likely in the absence of broader changes to the tax policy in the Russian oil sector. The third proposal has also been made before, and we expect a final decision this year. Fixing the export duties on oil products at 60% of the crude export duty would result in a slight increase over the current average rate of 52%, but is better than the most radical proposal of 80%, which was made by the Federal Antimonopoly Service. We believe there is a very high risk of an eventual increase in the export duty on oil products, which underlies our cautious stance on companies with high refining cover, such as Alliance Oil Company and Gazprom neft.

Ildar Davletshin

Gazprom

http://www.interfax.com/news.asp

12:27Beltransgaz, Gazprom sign additional agreement on gas transit

Reuters: RLPC-Gazprom Neft loan margin cut to LIB+210 bpshttp://af.reuters.com/article/energyOilNews/idAFLDE6600XS20100701

Thu Jul 1, 2010 10:51am GMT

LONDON July 1 (Reuters) - Russia's Gazprom Neft (SIBN.MM) lowered the margin on its $1 billion loan to 210 basis points (bps) over LIBOR from 240 bps, taking advantage of lenders' big appetite for the deal, bankers close to the deal said.

Senior syndication closed well oversubscribed and the borrower is considering taking the deal to a wider general syndication in order to increase the loan amount, the bankers said.

The five-year pre-export financing, where the deal is secured on exports, has proved popular with banks hungry for lending opportunities that have been rare in a lacklustre loan market this year.

"It is not surprising that Gazprom Neft was oversubscribed at senior," one of the bankers said. "This is the nature of the market -- borrowers rule today."

Gazprom Neft, the oil arm of gas export monopoly Gazprom (GAZP.MM), is regarded in the loan market as one of the best borrowers among Russian state-owned companies. Russia's fifth largest oil producer, it is rated BBB- by Standard & Poor's and Baa3 by Moody's.

Together with the attractive yield that Russian loans carry and the security that pre-export loan structures offer lenders, demand for the loan has been high, the bankers said.

The company appointed Bank of Tokyo-Mitsubishi-UFJ, Natixis and Societe Generale as initial mandated lead arrangers and bookrunners in February. [ID:nLDE60S1BA]

The loan, which was fully underwritten by the initial mandated lead arrangers, will be used for general corporate purposes and refinancing of existing indebtedness. (Reporting by Christopher Mangham)

SteelOrbis: Russia’s Gazprom to double pipe purchases to 1.9 million mt in 2010http://www.steelorbis.com/steel-news/latest-news/russias-gazprom-to-double-pipe-purchases-to-19-million-mt-in-2010-540920.htm

Thursday, 01 July 2010 05:02:58

The Russian state-run gas monopoly Gazprom  intends to double its purchases of pipes in 2010 to about 1.9 million mt from 950,000 mt in 2009 (850,000 mt in 2008), Russia's Metal Supply and Sales magazine has reported, citing the chairman of the coordination board of Russia's Pipe Producer Association, Ivan Shabalov.

Accordingly, the significant growth in Gazprom's pipe purchases is due to the start of construction of its major gas pipeline projects, such as Bovanenkovo-Ukhta, Pochinki- Gryazovets, Ukhta-Torzhok, and Sakhalin-Khabarovsk-Vladivostok. In addition, in 2008-2009, because of the crisis Gazprom's pipe purchases were about 700,000 mt below expected levels, with a shortfall of 250,000 mt in 2008 and of 450,000 mt in 2009.

In the current year up to July 1, the amount of pipes shipped to Gazprom amounted to about 750,000 mt, of which only 80,000 mt were imported. In 2002 the share of pipe imports in Gazprom's overall pipe purchases amounted to 65 percent, while currently the share has decreased to three percent. However, the share of imported strip which is bought by Russian pipemakers is still high and amounts to 48 percent.

In H2 2010, Gazprom is to acquire about one million mt of pipes from Russian manufacturers, of which 45-50 percent will be bought from OMK, about 25 percent each

will be purchased from TMK and Izhora Pipe Mill, while from ChTPZ Group, which in July will commission its new pipe mill, Gazprom is to buy 50,000 mt of pipes.

In addition, Mr. Shabalov said that at the last meeting of Gazprom's board of directors the equity participation of Russian pipe producers in international gas transmission projects of the group was decided in proportion to Gazprom's share in these projects.