Russia 090605

Basic Political Developments Medvedev Questions Dollar as World Currency, Open to Yuan Swaps Medvedev displeased with Russia’s economic structure - “We realized this long

before the crisis,” he said in an interview with the Kommersant daily on Friday. “When we say that we had to do something – to spend less or something else, I think this is not the case

Time of optimistic assessments has not come yet – Medvedev: The time of optimistic assessments has not come yet, Russian President Dmitry Medvedev said in an interview with the Kommersant daily on Friday.

Russia has avoided 'dramatic' crisis: Medvedev Reuters WRAPUP 1-Russia sees some economic rebound, more rate cuts Kremlin aide sees first Russian recovery signs: "We think it will be lower than 6.5

percent but probably not much lower," Dvorkovich said when asked about the GDP contraction, adding that he believed top Russian banks would be able to survive the crisis.

Nabiullina Sees Russia In WTO This Year Elusive WTO accession goal gets new push Russia Accelerates Push to Join OECD and WTO Arroyo-Medvedev meet to discuss trade, investments; Moscow forum tackles

global crisis EBRD Commits Up To $100M In Russia-based Infrastructure Fund Russia courts Arab investment, lures trade - "The Russians are coming, and not to

plunder your wealth," Russia's Vice Premier and the cabinet's top anti-crisis manager, Igor Shuvalov, told a group of Arab ministers at a conference in the country's second city St Petersburg.

Medvedev brings Aliyev, Sargsyan together at informal dinner Russia's role in regulation of Nagorno-Karabakh conflict is so efficient as it is

demanded: ambassador Moscow believes Azerbaijan never to threaten stability in Russia: ambassador Russia may lose Belarus soon: President Lukashenko - Extremely dangerous

situation is taking shape in the relations of Belarus and Russia: Russia may lose Belarus soon, President Alexander Lukashenko said in an interview with chief editors of major Russian publications, BELTA reported in the press service of the Belarusian President.

EU to send mission to Moscow and Kiev over gas dispute - Barroso sent a letter to the Czech Prime Minister Jan Fischer, whose country holds the EU's rotating presidency, asking for time during a summit with EU leaders on June 18-19 to discuss the mission's findings.

Putin discusses Ukrainian gas payments - Russian Prime Minister Vladimir Putin chaired a meeting late on Thursday to discuss the situation with Ukrainian payments for current Russian gas supplies.

Moscow surprised by some countries’ criticism of Nord Stream – Lavrov Estonia: Paet Met with Russian Foreign Minister Lavrov Lithuania’s Minister of Foreign Affairs Met With Russian Foreign Minister

Wage arrears arrive to protesting Pikalevo after Putin interferes Security officer killed in clash with militants in S.Russia Five die in shootout in Russia's Ingushetia Bailiff killed in Ingushetia; a criminal case is about to be instituted Russian, Japanese border guards in drills near Sakhalin One sub out, another one in - The 154 meter long Oscar-II class submarine

“Voronezh” was put on the water having been in dock at Zvezdochka for the last two months, web site Severnyflot.ru reports.

New technology to border guards - FSBs Border Guard Service has started tests of a new system for automatic border control and taken unmanned aircrafts into use.

Russia Looking to Restore Military Transport Fleet

National Economic Trends Central Bank may cut refinancing rate to 10% in 2010 - Kudrin Russian monetary base down 9.4% in week to $125.3 bln Russia's capital inflow at $2 bln in May Worst Is Behind Russia, Ruble Rate ‘Not a Problem,’ IMF Says Russia had 0.6% inflation in May, 6.8% in year so far – Rosstat

Business, Energy or Environmental regulations or discussions Market Overview: Oil Strikes the key note – by Chris Weafer Borrowers Return to Bond Market - Rosselkhozbank is set to issue the first

eurobond by a Russian bank since last summer, but the agricultural bank isn't the only corporate taking a dip back into the once-frozen bond markets.

Microsoft In Antitrust Probe - The Federal Anti-Monopoly Service launched a probe into Microsoft over cutbacks in supplies of the Windows XP operating system in Russia, it said on Thursday.

Non-fulfillment of genco investment will not bring ownership review –Sechin Warmer May temperatures contribute to electricity demand decline Rushydro says to launch GDRs on London bourse July 6 Kinross Mulls Investment - Kinross Gold, Canada's third- largest gold producer,

is considering as many as 50 investments in all countries where the company has operations, including Russia, vice president James Crossland said Thursday at the forum.

RusAl May Miss Payment - United Company RusAl will miss a June 11 deadline to renegotiate $7.4 billion of debt to foreign banks, chairman Viktor Vekselberg said Thursday.

Usmanov not planning to leave Norilsk Nickel; may consider boostingstake Russia metals merger is idea for after crisis-Usmanov Billionaire Vekselberg Still Interested in Russian Metals Merger German Gref comments on Opel deal Sberbank to Sell Opel Stake? Wal-Mart May Come Soon - X5 expects Wal-Mart to come to Russia soon and

believes that the U.S. giant has ambitious plans for the national market, X5 chief executive Lev Khasis said Thursday.

Wal-Mart "confident" about entering Russia

Novocheboksarsk Khimprom Welcomes New Owners, Rosnano and Renova Russia's X5 Retail to issue bond on June 11 X5 Retail Group: Potential entry into Ukraine Russia's Wimm-Bill-Dann may continue buybacks-CEO Russia's largest brewery to cut investments by two thirds in 2009 Sistema may swap stake in Svyazinvest for MGTS The merger of Russia's second-largest phone operator Vimpelcom VIMP.RTMM

with Golden Telecom could be completed by the end of the year Suleiman Kerimov acquires additional 6.273% stake in PIK Crisis bites deep into Russian infrastructure programme - The government is now

targeting selective projects in St Petersburg, Moscow and the Winter Olympic venue of Sochi as priorities for completion until the investment climate for foreign and private capital improves.

Activity in the Oil and Gas sector (including regulatory) Russian oil output may fall if debt market stays shut IEA says oil price gains don't match fundamentals Russian oil chief puts fair price for oil at $75 per barrel Russia says $75 per barrel reasonable price for oil Kudrin: oil may stay near $50 a barrel for 3-5 yrs Rosneft Chief Sees Oil Price at $55 This Year, Interfax Says Rosneft CEO says positive Q1 dynamic will last E.ON Acquires 25% Stake in the Yuzhno Russkoye Gas Field in Siberia LUKoil's Kazakh Purchase LUKOIL: Eyeing bigger Kazakhstan presence, strategically positive TNK-BP to raise capex, seeks Kovykta progress TNK-BP: Capex and free float could grow BP voices support for Baltic pipeline BP Happy With Fridman Hayward Vs. Trade Barriers - "Erecting barriers to the inflow of foreign direct

investment is questionable," Hayward said at the forum. "Russia would benefit from higher investment."

ExxonMobil to start producing in Sakhalin-1 in 2011 Surgutneftegas takes MOL to court - Russian oil and gas company Surgutneftegas

has initiated judicial supervision against Hungarian peer MOL in the Metropolitan Court of Registration because of MOL's failure to include Surgutneftegas in its share registry, MOL said on Thursday.

Venezuela Says Russian Consortium to Develop Junin 6, Not Carabobo 1

Gazprom Gazprom may rope in Shell for Yamal LNG Gazprom to Buy Azeri Gas Germany anxious about Ukraine's ability to supply Europe with gas: Miller

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Full Text Articles

Basic Political Developments

Medvedev Questions Dollar as World Currency, Open to Yuan Swapshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=anvHhN4CqQOE

By Lyubov Pronina

June 5 (Bloomberg) -- Russian President Dmitry Medvedev questioned the U.S. dollar’s future as a global reserve currency and said using a mix of regional currencies would make the world economy more stable. Russia may consider ruble-yuan swaps.

The dollar “is not in a spectacular position, let’s be frank, and its prospects cause various questions as do the prospects for the global currency system,’’ Medvedev, who today hosts an international economic forum in St. Petersburg, said in an interview published by the Moscow-based Kommersant newspaper. Regarding the global financial system, “therefore our task is to make it more mobile and at the same time more balanced.’’

Medvedev is expected to reiterate his call for creating a new world currency at the forum today in his keynote address on the first lessons of the global crisis. Russia’s president has called for creating regional reserve currencies as part of the drive to address the global financial crisis. Russia’s proposals for the Group of 20 meeting in London in April included the creation of a supranational currency.

It is too early to be fully optimistic that the global financial crisis is easing, he said in the interview. The most dramatic scenarios for a collapse haven’t occurred, he said.

A new world currency may be on the agenda when Medvedev meets counterparts from Brazil, India and China on June 16 at a summit in the Ural Mountains city of Yekaterinburg, the Kremlin said this month.

“This idea has potential, even though some of my G-20 colleagues aren’t actively discussing it at the moment,’’ Medvedev told Kommersant. “However, for example, in the opinion of our Chinese colleagues it is quite a possible step. The most important thing is not to walk away from discussions on this topic.’’

Turning the ruble into a reserve currency is still a possibility, especially if some of Russia’s partners start making payments for their oil and gas in rubles, Medvedev said. Russia might consider setting up ruble-yuan swap positions similar to the recent accord suggested between China and Brazil, he said.

To contact the reporter on this story: Lyubov Pronina in St. Petersburg, Russia at lpronina@bloomberg.net

Last Updated: June 4, 2009 20:14 EDT

Medvedev displeased with Russia’s economic structurehttp://www.itar-tass.com/eng/level2.html?NewsID=14017242

MOSCOW, June 5 (Itar-Tass) - Russian President Dmitry Medvedev said “he was displeased with the structure of the country’s economy.”

“We realized this long before the crisis,” he said in an interview with the Kommersant daily on Friday. “When we say that we had to do something – to spend less or something else, I think this is not the case. Certainly, this is not the question when we speak about what programs to cut, the further more social ones. What we really did not do right – we did not diversify our economic structure.”

“We plunged into crisis with the same economy based on raw materials. As soon as oil and gas prices slumped, we began to face problems,” Medvedev said. “Of course, the decline in the GDP is considerable. In January-April it made almost 10 percent. The industrial production index reduced by 15 percent, while capital investments – by more than 15 percent.”

“This is the result of a distorted structure of our economy,” the president said.

Medvedev admitted that there are certain positive trends. “For instance, this is inflation. In January-April of last year the inflation growth made up 6.3 percent and over the same period of this year – 6.2 percent,” he said. “Another good thing is that over the past four months of this year real wages reduced only by 1 percent. This proves that the crisis by its depth and seriousness develops not under the most dramatic scenario.”

“One day we took the course for using state corporations as the locomotive of our economic development. In any case, I do no think that this is a right method to reform our economic structure. Finally, (I believe this is absolutely evident) state corporations should turn into joint stock companies,” the president said.

Among Russia’s development priorities the head of state named “energy on which prosperity of our economy rests, information technologies, the defence industry and agriculture.” “These very priorities are enough to take our economy from the middle of the last century to the 21st century.”

Time of optimistic assessments has not come yet – Medvedev

http://www.itar-tass.com/eng/level2.html?NewsID=14016286

MOSCOW, June 5 (Itar-Tass) - The time of optimistic assessments has not come yet, Russian President Dmitry Medvedev said in an interview with the Kommersant daily on Friday.

However, he admitted that some trends “in the global financial and economic system prove that positive signals even so exist.”

“In my opinion all these talks that the bottom of the crisis has been reached are analytical oddities,” the president said. What more important is “how we will go out of the crisis.”

There are several models that experts are discussing, he said. “The first one is that we will go out of the crisis the same way we had plunged into it – steeply, i.e. following a V-shaped recovery. The second variant – to go out by a L-shaped scenario, very slowly, may be, having some increasing trend,” Medvedev said.

And, finally, “the most pessimistic scenario is that a new recession can be expected and the whole world is expected to face a V-shaped or W-shaped recession, or three V-shaped turns and so on,” he said.

“In any case it seems to me that the scenario of the crisis that is now being unfolded is “far from being the worst of those that we had forecast in the end of last year or in the beginning of this year,” he said.

Medvedev stressed that in this respect the goal of the St. Petersburg international economic forum “is not only to speak about economic development trends and meet with leading business people, but also to formulate more or less realistic vision of the situation we are finding ourselves in, to listen to world experts on these issues, speak with managing directors of the world’s biggest companies in order to have a clearer look into the future.”

Russia has avoided 'dramatic' crisis: Medvedevhttp://news.yahoo.com/s/afp/20090605/bs_afp/financeeconomyrussiagrowthforum_20090605064417

SAINT PETERSBURG (AFP) – Russia has managed to avert a "dramatic scenario" in the economic crisis, President Dmitry Medvedev said in an interview with the Kommersant newspaper published on Friday.

"For all the depth and difficulty of the crisis, it is not proceeding according to the most dramatic scenario," Medvedev said in the interview, published on the day he gives a keynote speech to the Saint Petersburg Economic Forum.

"The task of the authorities -- of the government and of course the president -- it to make sure that at the very least this situation is preserved," he added.

Russia's economy, dependent on exports of hydrocarbons and raw materials, has been hit badly by the global economic slowdown and the government is forecasting a six-to-eight percent contraction in GDP this year compared with 2008.

However the prime task of Medvedev and Prime Minister Vladimir Putin has been to avoid any hint that the economy is approaching a meltdown similar to the 1998 crisis when Russian defaulted on sovereign debt.

"The scenario of crisis being realised at the moment is by far not the worst one that we forecast at the start of this year," Medvedev said.

WRAPUP 1-Russia sees some economic rebound, more rate cutshttp://in.reuters.com/article/marketsNewsUS/idINL565018220090605

Fri Jun 5, 2009 2:04pm IST

* Recovery seen in some sectors, companies

* Economy will contract less than 6.5 pct IMF forecast

* Rates could be cut by another 100 basis points

* Oil output threatened by reduced foreign lending

(Combines comments from Russian officials)

By Toni Vorobyova and Dmitry Zhdannikov

ST PETERSBURG, Russia, June 5 (Reuters) - Russia's economy will contract by less than the 6.5 percent forecast by the International Monetary Fund as some sectors start to recover and capital outflows slow to around zero, officials said on Friday.

"We already have some signs of improvement but not across the board, just some companies and sectors," senior Kremlin economic aide Arkady Dvorkovich told Reuters financial television on the sidelines of the St Petersburg Economic Forum.

"We think it will be lower than 6.5 percent but probably not much lower," he said when asked about the GDP contraction.

Dvorkovich told Reuters that Russia could cut interest rates by another 100 basis points -- on top of the 150 basis points of cuts administered in the last six weeks -- should 2009 inflation stay below 10 percent.

Russia's central bank cut interest rates on Thursday for the third time in six weeks, bringing them down by 50 basis points to 11.50 percent to encourage banks to offer more affordable loans and help quell the country's first recession in a decade.

LOWER INFLATION

Alexei Ulyukayev, deputy chairman of the central bank, said inflation would be lower in June than last month and that capital outflows could reach around zero for the rest of 2009.

The central bank is considering revising down its 13 percent full-year inflation target in anticipation that consumer price growth -- a cumulative 6.8 percent so far in 2009 -- could fall to a monthly rate of zero or below.

Dvorkovich also said Russian capital outflows would be lower than the $70-80 billion initially expected, and that commercial banks' lending rates could come down by another two to three percentage points.

"Not every bank will survive this crisis but our major systemic banks will resolve their problems with government help. And with prudent policies," he said.

The recovery in oil prices CLc1 to almost $70 a barrel has underpinned the first signs of recovery in Russia's economy, and driven a recovery in its currency and stock markets.

Russia's key share .IRTS index rose 3.83 percent on Friday, led by commodity giants such as Norilsk Nickel and LUKOIL on the back of gains in oil and metals prices.

But the world's second-largest oil exporter may have to curtail production should Russian oil companies find it difficult to borrow money abroad, the country's senior energy official, Deputy Prime Minister Igor Sechin, said on Friday. Sechin, a powerful deputy of Prime Minister Vladimir Putin, said Russia was not happy with the current oil price and believes a fair level would be about $75 a barrel.

Sergei Bogdanchikov, chief executive of state-run oil leader Rosneft (ROSN.MM: Quote, Profile, Research), said the positive financial dynamic of the first quarter would last for the rest of 2009, a year in which he forecasts oil prices averaging a maximum $55 a barrel. (Writing by Robin Paxton; editing by Stephen Nisbet)

Kremlin aide sees first Russian recovery signshttp://www.guardian.co.uk/business/feedarticle/8542561

Reuters, Friday June 5 2009

ST PETERSBURG, Russia, June 5 (Reuters) - Russia is seeing some signs of recovery in certain companies and sectors and expects the economy to contract less than the 6.5 percent forecast by the International Monetary Fund, a Kremlin aide said on Friday.

"We already have some signs of improvement but not across the board, just some companies and sectors," Arkady Dvorkovich told Reuters financial television on the sidelines of the St Petersburg Economic Forum."We think it will be lower than 6.5 percent but probably not much lower," he said when asked about the GDP contraction, adding that he believed top Russian banks would be able to survive the crisis."Not every bank will survive this crisis but our major systemic banks will resolve their problems with government help. And with prudent policies.""We will save big institutions that are of systemic importance and we will not allow systemic crisis," he said adding that Russian capital outflows will be lower than the initially expected $70-80 billion. (Reporting by Toni Vorobyova, writing by Dmitry Zhdannikov, Editing by Guy Faulconbridge)

Nabiullina Sees Russia In WTO This Yearhttp://www.themoscowtimes.com/article/600/42/378040.htm

05 June 2009

By Nadia Popova / The Moscow Times

ST. PETERSBURG — Economic Development Minister Elvira Nabiullina said Thursday that Russia could enter the World Trade Organization by the end of the year, following a new show of support from the European Union.

"As of Wednesday, it's been 16 years that Russia has been trying to enter the WTO, and we don't want to celebrate another anniversary," Nabiullina told a panel on Russia-EU business ties on the opening day of the 13th St. Petersburg International Economic Forum.

EU Trade Commissioner Catherine Ashton told the panel that "we have agreed WTO accession should be completed before the end of this year," although she said it wouldn't be easy.

The optimism came a day after Prime Minister Vladimir Putin said his country would return to talks with Finland over a planned increase in export duties on timber, which has been one of the main barriers to Moscow's recent accession efforts.

Russia is the only major economy outside the 153-member WTO.

"We feel we are coming to agreement with the European Union," Nabiullina said on the sidelines of the forum. "We hope to finish all the talks by the year's end."

During a one-day visit to Helsinki on Wednesday, Putin extended an invitation to his Finnish counterpart, Matti Vanhanen, to take part in the St. Petersburg Timber Forum in the fall to discuss Russia's restrictions on logging exports.

Nabiullina told reporters that the export duties remained an issue to be discussed.

"We've left the export duties for the last bit," Nabiullina said, adding that she would meet Ashton on June 24 and 25. She did not say where the meeting would take place.

At a later panel on U.S.-Russian business ties, Washington's trade representative, Ron Kirk, also said negotiations on Russia's WTO admission had progressed recently and could be over by the end of the year.

Kirk declined to talk to reporters who chased him as he left the panel hall. A man who appeared to be a member of Kirk's team pulled a Bloomberg reporter at the back of his suit in an attempt to slow him down.

Nabiullina was to hold talks with Kirk later Thursday.

Prominent businessman, however, took a less conciliatory tone, suggesting that Russia didn't necessarily need membership and that the West doesn't have a spotless trade record, either.

Rusnano chairman Anatoly Chubais, who also took part in the Russia-EU panel said Russia could still find — and was actively pursuing — alternatives to the WTO.

"In recent months, there's been active work to form a new customs union with Russia, Belarus and Kazakhstan," Chubais told the panel. "And it's possible that the process may become an alternative [to WTO]. If the new customs union is formed, a new party to the talks will appear," meaning negotiations could be further delayed.

When asked whether joining the body would hurt Russian businesses, Chubais said 80 percent of Russian companies would welcome the accession.

Metals and oil billionaire Victor Vekselberg complained about protectionist measures Russian business continues to face abroad.

"Russian big business' appearance prompts surprise and an inadequate reaction in Europe," Vekselberg, who controls Swiss conglomerate Oerlikon and Russian power holding IES, told the panel. "The tariff to connect to the power grid for a Russian company exporting electricity to Finland is eight times higher than for a local power company."

Vekselberg also criticized European banks, suggesting that they denied loans to Russian companies on the pretense that they were not "of the same quality" as Western ones. "This is protectionism. The state's role has increased significantly in Western banks lately."

The moderator, Sergei Karaganov, dean of the world economics and politics department at the Higher School of Economics, disagreed, saying European markets have become

more liberalized. "Who would allow Sberbank to buy a third of Opel, say, eight months ago, before the crisis? It would have been a great scandal."

BP chairman Tony Hayward told the panel that Russia still had to liberalize its markets.

Hayward said the Russian government had to improve "the stability of the fiscal regime" and respect the property rights and the rule of law. His company is a 50/50 owner of Russia's third-largest oil firm, TNK-BP, where a management dispute overshadowed last year's St. Petersburg forum.

"We see a new type of protectionism in Russia, which is resource nationalism," Hayward said. "Protectionism means limited access of foreign investors in the so-called strategic industries," he added, apparently referring to the law on foreign investment, which requires a state commission's approval for foreign investment in 42 sectors deemed strategic.

Chubais, best known for leading the liberalization of former power monopoly Unified Energy System, said many Russian laws had to be changed entirely. "We need to change the tax, customs and budget codes," Chubais said. "The aims have changed since we adopted them in the 1990s. When we wrote the Tax Code, for instance, we had just one aim — to raise taxes and not let the budget fall to pieces. Now, we need to encourage investors with the tax incentives."

Staff Writer Anatoly Medetsky contributed to this report.

Elusive WTO accession goal gets new push http://www.russiatoday.ru/Business/2009-06-05/Elusive_WTO_accession_goal_gets_new_push_.html

05 June, 2009, 07:04

The European Commission says Russia will become a member of the World Trade Organization by the end of this year. But both the United States and Europe warn Moscow must first reverse its slide into protectionism.

The EU and US trade chiefs came to this forum with Russian relations at a low. Europe has hit out at new Russian taxes on food and car imports. An unmoved Vladimir Putin wants to raise tariffs on shipbuilding and metals.

This US-Russia round table is designed to smooth what has become a very vocal dispute. On WTO membership alone, US trade representatives say Russia has a "very long way to go."

Russia has also banned pork exports from the US, its main supplier. Ronald Kirk, U.S. Trade Representative dubbed that "unfair" and "not based on international standards". Talks have begun in St Petersburg which he expects to continue.

“Engaged in a very productive conversation in the last hour with Deputy Prime Minister Shuvalov and Minister Nabulina. We’re going to continue those discussions”

The biggest sticking point is Russia's membership of the WTO. The EU's trade commissioner, Catherine Ashton, told RT it will happen this year.

“I’ve seen real political will and political will is an important part of what will take this forward. I hope what we will do now is go through the details of the issues that remain. There are only a few issues, but those need to be sorted out in order that Russia can join very quickly. I certainly hope we are talking about months and not years.”

But experts at the forum fear this may be another false dawn.

Russia's been applying to the organization since 1993, both sides have claimed imminent success for several years. Worst of all, since the crisis kicked in 17 of the top 20 economies have brought in fresh trade barriers, flying in the face of the free trade principles the WTO is supposed to advance.

JUNE 5, 2009

Russia Accelerates Push to Join OECD and WTO http://online.wsj.com/article/SB124415259078886735.html

By MARC CHAMPION in Brussels and GREGORY L. WHITE in St. Petersburg, Russia

Russia on Thursday promised to accelerate its membership bids for two major Western economic institutions, at a time when the global downturn has starved its economy of capital.

Russian officials told the Organization for Economic Cooperation and Development in Paris that Moscow would submit a formal membership application later this month, according to a senior OECD official.

At the same time, Russian officials at an annual economic conference in St. Petersburg said they planned to speed up Russia's accession to the World Trade Organization, after several years of putting that issue on the back burner.

"We'd like to complete this process by the end of the year," said Deputy Foreign Minister Alexander Yakovenko, referring to joining the WTO. He said Russia's application has so far taken a record 16 years.

Mr. Yakovenko said joining the OECD and the WTO was part of Russia's effort to become more attractive to investors.

Though less significant than belonging to the WTO, OECD membership also requires commitments to about 250 legally binding decisions the intergovernmental think tank has issued since it was formed after World War II.

The OECD's 30 member states, including the U.S., agreed to invite Russia to join in May 2007, with Chile, Estonia, Israel and Slovakia. The other four countries submitted application packages by last year. Russia, however, seemed in no hurry; oil prices were soaring toward $150 a barrel, flooding it with cash.

On Thursday, Russian officials said at a meeting with the OECD they would submit their package at the organization's annual ministerial meeting in Paris on June 24 and 25, according to Nicola Bonucci, the OECD's legal-affairs director. "This would be a very important step towards accession," said Mr. Bonucci.

At the WTO, countries such as Georgia or Ukraine could use the threat of a veto over Moscow's membership bid to protest trade embargoes and other disputes. Joining the OECD is unlikely to be complicated by such resistance. But the OECD process is nevertheless likely to take time, as Moscow negotiates commitments that could require legislative and cultural change.

"We expect this to be a complex application. Russia is an important player, so when we talk about binding commitments under our code of liberalization, which sets principles for investment, we are talking about an important issue for Russia and for our members," Mr. Bonucci said.

Even now, many analysts and foreign investors are skeptical Moscow will implement the kinds of changes that would significantly improve the climate for foreign investment. From a low of under $40 a barrel earlier this year, oil is now trading above $60 again, reducing some pressures on the Russian economy.

The moves toward the OECD and WTO also come as Moscow is trying to patch up its relationship with the West after its military intervention in Georgia last summer and a crisis last winter in which Moscow shut off gas supplies to parts of the European Union .

Write to Marc Champion at marc.champion@wsj.com and Gregory L. White at greg.white@wsj.com

Arroyo-Medvedev meet to discuss trade, investments; Moscow forum tackles global crisishttp://www.bworldonline.com/BW060509/content.php?id=073

THE PHILIPPINES and Russia will discuss ways to improve trade and investments as well as defense and energy cooperation during a bilateral meeting between President Gloria Macapagal-Arroyo and Russia Federation President Dmitry Medvedev today, Palace statement said yesterday.

The meeting will be held at Lenexpo, venue of the 13th St. Petersburg International Economic Forum, a day after the plenary session of the economic summit opened yesterday.

The statement said the Arroyo-Medvedev meeting is expected to tackle the growing Filipino community in Russia.

Figures from the Russian Federal Migration Service showed that as of September 2008 there were 5,200 Filipinos in Russia from 2,600 in 2007.

Since diplomatic relations were established with the then Union of Soviet Socialist Republics in 1976, the Philippines has concluded 22 agreements with Russia on agriculture, energy, tourism, education, culture, sports, science and technology, parliamentary exchanges, and defense cooperation.

Many of the initiatives were firmed up during the visit to Manila of Russian Foreign Minister Sergey Lavrov in August 2007.

Mrs. Arroyo and her Russian counterpart, with Japanese Prime Minister Junichiro Koizumi, former German chancellor Erhard Schroeder and Nobel Prize laureate in economics Dr. Robert Mundell of Columbia University in the United States, led the forum’s opening day discussions of the global economic crisis, the lessons learned from it and the way forward for the world economy.

The President is the first Asian head of state to address the St. Petersburg forum.

The plenary meeting on "Global economic crisis; first lessons and leading the way forward," involved analyses and discussions on the effects of the economic turmoil by authorities on the global economy, including Nouriel Roubini, the economics professor of Stern School of Business, and chairman of RGE Monitor, New York who predicted the present economic slump.

Oil prices top the list of issues to be discussed today. The discussions will center on energy resources, demand and potential for development of new sources.

JUNE 5, 2009, 3:33 A.M. ET

EBRD Commits Up To $100M In Russia-based Infrastructure Fund http://online.wsj.com/article/BT-CO-20090605-702614.html

St. PETERSBURG, Russia (Dow Jones)--The European Bank for Reconstruction and Development is going to invest up to $100 million in the first infrastructure fund set up to target projects in Russia, Kazakhstan and Ukraine, the bank said Friday.

The EBRD's announcement at Russia's chief economic event of the year, the St. Petersburg Forum, follows a decision of Russia's fully state owned Vnesheconombank, or

VEB, to invest $200 million in the Macquarie Renaissance Infrastructure Fund. The International Finance Corporation also committed $100 million and Kazyna Capital Management, a subsidiary of Kazakhstan's sustainable development fund, $30 million, EBRD said.

The Macquarie Infrastructure Fund was set up in 2008 by Macquarie Group, an international investor and manager of infrastructure projects, and Russia's Renaissance Group. The fund is targeting total investor commitments of $1 billion to 1.5 billion

"The fund will (in the current crisis) have a crucial role to play in modernizing vital infrastructure in the three largest economies of the former Soviet Union," EBRD President Thomas Mirow said in a statement.

Russia courts Arab investment, lures tradehttp://www.reuters.com/article/OILPRD/idUSL467450920090604

Thu Jun 4, 2009 12:13pm EDT

* Russia, Arab states planning joint ventures

* Both sides want trade to increase substantially

By Amie Ferris-Rotman

ST PETERSBURG, Russia, June 4 (Reuters) - Russia, entrenched in economic woes, is positioning itself as a firm trading partner with Arab nations who are keen to rekindle their Soviet-era alliance, government officials said on Thursday.

Trade between the Arab world and Russia currently totals $8 billion a year -- a figure dwarfed by that of Russia's heavyweight partner, the European Union, amounting to hundreds of billions of dollars -- but Russia hopes a wave of new investments will cement trade for years to come.

"The Russians are coming, and not to plunder your wealth," Russia's Vice Premier and the cabinet's top anti-crisis manager, Igor Shuvalov, told a group of Arab ministers at a conference in the country's second city St Petersburg.

"Investment to the Arab world and from the Arab world to Russia is all important and we'll work on it."

Russia's gross domestic product (GDP) shrank by 10.5 percent year on year in April, making it the worst hit major emerging market in the global financial crisis, and its companies owe $400 billion abroad.

Shuvalov said Russian banks are currently "in talks with Muslim banks" over possible joint ventures and said combined Russian-Arab trading platforms should be set up.

The Arabs welcomed the offer, saying they want Russia to help develop their infrastructure and develop energy.

"Saudi Arabia is open (to Russia), like many others in the region," said Amr Dabbagh, the head of Saudi Arabian General Investment Authority.

Kuwait's Trade Minister Ahmad al-Haroun said the Gulf Arab state is banking on Russia -- through joint ventures or direct investment -- to construct railway networks, build car-making plants and develop a port in the north of the country to serve neighbouring Iraq.

"That ($8 billion) is not the number we want to obtain here. We have possibilities to enhance trade turnover between our two countries... The investment climate is good," he said.

Another top government official who spoke on condition of anonymity said he hoped trade between Russia and the Arab world would reach $10 billion either this year or in 2010.

Qatar's Finance Minister Youssef Kamal said the world's largest exporter of liquefied natural gas (LNG) wants to develop more mutually beneficial projects in the energy sphere with Russia over the next 10-15 years.

Late last year Russian state-controlled gas giant Gazprom, Iran and Qatar agreed to form a "gas troika" to strengthen cooperation in gas production. (Reporting by Amie Ferris-Rotman)

Medvedev brings Aliyev, Sargsyan together at informal dinnerhttp://www.itar-tass.com/eng/level2.html?NewsID=14015871&PageNum=0

ST. PETERSBURG, June 5 (Itar-Tass) -- Russian President Dmitry Medvedev brought his Azerbaijani and Armenian counterparts, Ilham Aliyev and Serzh Sargsyan, together at an informal dinner on Thursday following separate bilateral meetings with each of them on the sidelines of the International Economic Forum in St. Petersburg.

Medvedev’s spokeswoman Natalya Timakova said the three leaders will “discuss the situation in the Caucasus, including Nagorno-Karabakh settlement”.

The Kremlin does not expect a breakthrough at the talks. “We do not set the super task of reaching new agreements or holding detailed discussions of the issue. We work to support the format of direct communications between the presidents of Azerbaijan and Armenia, the dialogue which is taking place,” Kremlin foreign policy aide Sergei Prikhodko said.

The previous trilateral meeting took place in November 2008 and resulted in a declaration aimed at political settlement of Nagorno-Karabakh conflict on the basis of international law. It supported mediating efforts of the OSCE Minsk group and the

agreement between the presidents of Azerbaijan and Armenia to actively negotiate the issue.

Russia does not want to impose any recipes to both parties and believes Azerbaijanis and Armenians shall themselves bear the main responsibility for the final settlement. Russia is ready to support the solution that will satisfy the parties or act as settlement guarantor if no compromise is reached.

Timakova said the Kremlin believes “the very fact of the meeting of the presidents of Azerbaijan and Armenia is important.”

At the bilateral meeting with Medvedev Aliyev said “Azerbaijan is satisfied with relations with Russia along all guidelines.”

Sargsyan told Medvedev at their bilateral meeting “the Armenian government works persistently with Russian representatives and with members of the Minsk Group for resolving the problem of Nagorno-Karabakh.”

“We continue looking for the ways of ensuring safe and secure living for the people of Nagorno-Karabakh, which is their indigenous homeland, and giving them an opportunity to decide on their destiny independently,” he said.

Russia's role in regulation of Nagorno-Karabakh conflict is so efficient as it is demanded: ambassador http://news-en.trend.az/karabakh/1482496.html

05.06.09 12:43

Azerbaijan, Baku, June 5 /Trend News, V.Zhavoronkova/

Russia's role in the process of settling the Armenian-Azerbaijani conflict over Nagorno-Karabakh is so efficient, as it demanded, Russian Ambassador to Azerbaijan Vladimir Dorokhin said.

"Russia stands for peaceful settlement of the conflict. There was a period when Moscow wanted to send its peacemakers to Nagorno-Karabakh. The composition of international mediators on the conflict has been formed and Russia has to reckon with it," Dorokhin said at a meeting in the Azerbaijani President administration Strategic Studies Centre on June 5.

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.

Russia cannot take the settlement of the conflict in its hands and command," Dorokhin added.

According to him, Russia's position is neither pro-Armenian nor pro-Azerbaijani. "We want to reach fair settlement of the Nagorno-Karabakh conflict," the ambassador said.

Moscow believes Azerbaijan never to threaten stability in Russia: ambassador http://news-en.trend.az/politics/foreign/1482533.html

05.06.09 13:12

Azerbaijan, Baku, June 5 /Trend News, V.Zhavoronkova/

Moscow believes that Baku will never threaten stability in Russia, Russian Ambassador to Azerbaijan Vladimir Dorokhin told an audience at the Azerbaijan President administration Strategic Studies Centre.

"We have a high level of mutual understanding and respect," Dorokhin said.

"There is a confidence. The Azerbaijani leadership kept delicacy even in such a complicated situation as war. We perceive Azerbaijan as it is and want nothing more from this country," the ambassador said.

Azerbaijan is an independent and stable country. It knows what it wants from the international arena. "Azerbaijan is almost not a junior brother, it is a successful independent republic," the ambassador added.

Russia may lose Belarus soon: President Lukashenko http://news-en.trend.az/important/opinion/1482382.html

05.06.09 12:09

Extremely dangerous situation is taking shape in the relations of Belarus and Russia: Russia may lose Belarus soon, President Alexander Lukashenko said in an interview with chief editors of major Russian publications, BELTA reported in the press service of the Belarusian President.

A lot of good has been done in the bilateral relations recently, but this is nothing compared to what could and should have been done during this time, Lukashenko added. President of Belarus stressed that a meeting with editors of leading Russian publications were scheduled long ago to convey to the public opinion in Russia the truth about what is happening in the relationship between the two countries. But at the last moment, some leaders of publications have refused to go to Minsk. "I'm very sorry that several senior editors in such a democratic country such as Russia so encouraged by my invitation and prepared to spend the day and night here to meet with the President, suddenly have captured either bird flu or swine flu (whether they are treated in Rome or elsewhere?) But

they are democratic publications. It is normal in a democratic country. This is in response to a question that you ask me for sure that we have smothered the media that we have no one reads, but "Sovetskaya Belorussia", no other newspapers, because they are not, and do not watch any other channels, except for Belarus because others do not exist. The country located in the heart of Europe and exists thanks to its laws, it does not "sweep", and do not "seen" through and so on," the president said.

Belarus initially very seriously built its relations with the Russian Federation, the president said. Alexander Lukashenko has accused Russia of reluctant to adopt the Constitutional Act, and thereby promote further construction of the Union State. Returning to the history of the Union, Lukashenko said that the decision was taken jointly with Boris Yeltsin as an example of states in the post-Soviet space. It was planned to join Ukraine the Union later. "There were so many chances to join Ukraine to the Union. But Russia wanted the space to move. They had to leave a free trade zone, there should be no borders in the transfer of goods and labor force," the Belarusian leader said.

According to him, the relations with Europe became worsening from that time. At the same time, Belarus originally declared multi-vector principle its main foreign policy. The geographical position of Belarus is one of the key resources that must be used profitably avoiding damage to neighbors. "Being at a crossroad, you need to look at all sides, eitherwise you will be down. Why we have to live bad with our neighbors? Why should we quarrel with the Baltic countries, whereas we carry out all supplies by sea through the ports of the Baltic States?" hee said.

EU to send mission to Moscow and Kiev over gas disputehttp://www.google.com/hostednews/afp/article/ALeqM5gOWFAOKMemJhOBljBB0H4bFMczkw

13 hours ago

BRUSSELS (AFP) — The EU commission said Thursday it would send a fact-finding mission to Moscow and Kiev to shed light on their gas payment dispute after a previous row disrupted European supplies.

European Commission President Jose Manuel Barroso "has asked a team of senior officials at the commission to travel to Moscow and Kiev," his spokesman told reporters.

The aim of the mission is "to establish all the facts about the situation."

Talks will also be held in the EU with gas operators, he said.

Barroso sent a letter to the Czech Prime Minister Jan Fischer, whose country holds the EU's rotating presidency, asking for time during a summit with EU leaders on June 18-19 to discuss the mission's findings.

Russian Prime Minister Vladimir Putin warned Wednesday that gas supplies to Europe piped through Ukraine could come to a grinding halt soon due to crisis-ridden Kiev's payment arrears.

Moscow has called in recent days on the European Union to help Ukraine pay for its gas, or face a repeat of a crisis in January when Russia turned off the natural gas taps for two weeks, hitting supplies in Europe.

A representative of the Ukrainian presidency said Thursday that the government was in talks, notably with Russian banks, to secure credits to pay for Russian gas delivered in May, with payment due on Sunday.

Ukraine's public energy group Naftogaz "is in a difficult financial situation, which has forced it to negotiate with all possible partners, including Russian banks," said Bodgan Sokolovski, an energy specialist with the Ukrainian presidency.

He declined to identify the banks and the other potential partners.

"Naftogaz has put together only 20 percent of the amount needed to cover the gas delivered in May," he said. Russia supplied Ukraine with 2.3 billion cubic meters of gas last month for 620 million dollars (437 million euros), he added.

Sokolovksi said that in past months the needed funds had been found about 36 hours ahead of the deadline.

"Therefore it's possible that between now and Friday the rest of the money will arrive," he said, meaning that Ukraine would not have to apply for new credits.

In his letter to Fischer Barroso said Putin had told him Ukraine needed five billion dollars to buy additional gas from Gazprom, the Russian state-run gas giant, to fill its storage facilities before next winter, money that Kiev does not have.

He said in his letter that Putin "wants the EU to help Russia put together a loan package for Ukraine for this purpose."

"I think we would all be conscious that another gas crisis would have serious implications not just for our neighbours, but for the European Union and its member states," Barroso added.

The EU relies on Russia for almost a quarter of all the gas it consumes, notably for heating and the power industry, and more than 80 percent of the supplies transit Ukraine.

"I ... want to avoid rushing to judgement on what actions the EU should take. So I am asking a senior team of commission officials to go both to Moscow and Kiev to ascertain -- as far as possible -- the facts," Barroso said.

Putin discusses Ukrainian gas payments

http://www.itar-tass.com/eng/level2.html?NewsID=14015940&PageNum=0

ST. PETERSBURG, June 5 (Itar-Tass) -- Russian Prime Minister Vladimir Putin chaired a meeting late on Thursday to discuss the situation with Ukrainian payments for current Russian gas supplies.

His spokesman Dmitry Peskov said the payment deadline is coming close and “the situation remains unresolved”.

Deputy Prime Minister Igor Sechin, Finance Minister Alexei Kudrin, Energy Minister Sergei Shmatko and Gazprom CEO Alexei Miller participated in the meeting.

On Wednesday President Dmitry Medvedev made it clear European consumers should interfere in the situation if they want to prevent new gas supply disruptions because Ukraine is likely incapable of paying for gas.

“This is not just a problem of Russia and Ukraine, this is a problem of gas supplies to European countries,” Medvedev told Sechin.

Putin said in Helsinki on Wednesday “all our appeals to the European Union failed, the only answer is that there is no money for Ukraine. Therefore, we warn in advance the gas transit may be stopped in late June – early July.”

On Thursday Miller met E.ON Ruhrgas President and CEO Bernhard Reutersberg on the sidelines of the XIII St. Petersburg International Economic Forum and said German counterparts “expressed concern over Ukrainian ability to timely pay for Russian gas deliveries and to provide for uninterrupted transit of hydrocarbons to Europe. Due to the nearly monopoly position of the country in the transportation of the “blue fuel” from Russia, we understand why the problems of (Ukraine’s) Naftogaz have developed into a headache of a European scope.”

Miller said in order to guarantee reliable energy supplies to the Europeans it is necessary to urgently design an interaction plan for all market participants – supplier, transit country, and consumers.

“Such a plan shall list among the tasks subject for short-term implementation the search for financial sources to pay for Ukraine-consumed gas, as well as for gas to be pumped into its underground storages, as well as to modernize the Ukrainian gas transit system,” he said.

“Long-term tasks shall include active work of Russia and the EU to implement the Nord Stream and South Stream projects, which will for decades ensure uninterrupted natural

gas supplies and thus guarantee the absence of any types of conflicts between participants in the energy business,” Miller said.

Moscow surprised by some countries’ criticism of Nord Stream – Lavrov

http://russia-media.ru/energy/morenews.php?iditem=332

[04.06.06]

(Interfax) - Moscow is surprised to hear criticism of the Nord Stream project from a number of countries and objects to the use of double ecological standards, said Russian Foreign Minister Sergei Lavrov.

"We are sincerely perplexed by artificial objections against Nord Stream on the part of some European Union members, although the European Commission has put this project among priority ones," Lavrov said at the 15th ministerial session of the Council of the Baltic Sea States (CBSS) on Thursday.

"It is necessary to abandon the practice of double ecological standards and the use of ecology for political ends," he said.

The countries objecting to Nord Stream "prefer not to notice environmental aspects of other projects involving the installation of underwater infrastructure in the Baltic, which are necessary only for them," Lavrov said.

"Ecology these days is becoming increasingly more closely intertwined with energy, which is another major area of cooperation, the significance of which surpasses the region's framework," Lavrov said.

These two areas of cooperation are present in the Nord Stream project, Lavrov said. "It is precisely considering the Baltic's special vulnerability that, in choosing the route for the gas pipeline, the Nord Stream management company was guided not only by economic feasibility criteria but also by the strictest possible international environmental standards," Lavrov said. (Source: Interfax)

Estonia: Paet Met with Russian Foreign Minister Lavrovhttp://www.isria.com/pages/4_June_2009_97.htm

Foreign Minister Urmas Paet met with Russian Foreign Minister Sergei Lavrov on Thursday, June 4.

During their bilateral meeting held within the framework of the meeting of the Council of the Baltic Sea States (CBSS) foreign ministers in Elsinore, Denmark, the ministers discussed the state of Estonia-Russia relations and developments since their last meeting in December 2008. They also addressed bilateral economic relations, visa policy, and the status of many agreements that are currently being worked out.

Both foreign ministers felt positively about the political consultations that took place between the foreign ministries in January, where the main focus was on the practical issues of bilateral relations and intensifying communication between ministry departments. In June, consultations addressing European topics will take place in Tallinn between the Estonian and Russian foreign ministries.

The foreign ministers acknowledged that cultural relations between the two countries have been developing successfully. “The development of cultural relations is also reflected by the fact that during Cultural Minister of the Russian Federation Aleksander Avdejevi’s visit to Tallinn in January of this year, an Estonia-Russia cultural co-operation programme for the years 2009-2011 was signed,” remarked Paet.

Urmas Paet stated that Estonia feels it is positive that in February Russia eliminated the discrepancy that had arisen with Estonia and Russia’s international cargo agreement, and starting today, 4 June, the highway tax that was temporarily implemented for Estonian cargo trucks by Russia has been abolished.

Minister Paet expressed hope that the bilateral transportation commission would soon resume its work. “Many open questions could be discussed within the framework of the Estonia-Russia bilateral transportation commission, for example the renovation of the Narva bridge,” Paet remarked. “A direct flight between Tallinn and St. Petersburg and better transportation connections would be helpful for developing more contacts between people, as well as for tourism and business relations,” he added.

While talking about visa policy, Minister Paet confirmed that Estonia has done everything on its part to simplify the life of residents near borders since the expiration of the previous border-crossing system. “Estonia issues multiple-entry visas that are valid for many years. In addition to those living near the border, soon this liberal new system will be applied to all Russian citizens that apply for Estonia visas,” Paet emphasised at the meeting. “Another significant simplification is that Estonia is eliminating the requirement for a visa invitation when applying for an Estonian visa as of 30 July this year,” the foreign minister asserted. Paet expressed hope that Russia will soon find the opportunity to make reciprocal steps that would make movement easier for those living near the border and all Estonian citizens.

At the meeting, Paet confirmed Estonia’s readiness to bring the prepared diplomatic real estate agreement to a conclusion and to complete the social security agreement.

Russian Foreign Minister Lavrov expressed readiness to move forward pragmatically with Estonia-Russia relations. He also mentioned the issue of the slow tempo of naturalisation in Estonia.

Lithuania’s Minister of Foreign Affairs Met With Russian Foreign Ministerhttp://www.isria.com/pages/5_June_2009_21.htm

On 4 June in Elsinore (Denmark), Lithuania’s Minister of Foreign Affairs Vygaudas Ušackas met with Russian Minister of Foreign Affairs Sergey Lavrov and discussed the issues of bilateral and multilateral cooperation between Lithuania and Russia.

Lithuania’s Minister of Foreign Affairs stressed that Lithuania was interested in maintaining constructive relations with Russia that were beneficial to both countries and based on mutual respect and justice, in developing economic, business, academic, and youth ties.

Ministers V.Ušackas and S.Lavrov discussed preparation for the forthcoming meeting of the Lithuanian-Russian Intergovernmental Commission in Lithuania this autumn, agreed to accelerate the development of some intergovernmental agreements.

The Ministers stated that essentially the development of an agreement on travelling of border residents of the Republic of Lithuania and the Kaliningrad Region of Russian Federation had been finalised.

Ministers V.Ušackas and S.Lavrov agreed that the visa regime had to be further liberalized and that a joint address of Foreign Ministers of Lithuania, Poland and Russia to responsible institutions of the European Union regarding the possible visa-free regime for the residents of the Kaliningrad Region and respectively those of Lithuania and Poland had to be prepared together with Poland’s Minister of Foreign Affairs Radosław Sikorski.

The Ministers also discussed the implementation of practical border crossing measures in the watercourses of the Curonian Lagoon in accordance with the Agreement between the Government of the Republic of Lithuania and the Government of the Russian Federation on the Navigation in the Curonian Lagoon and the Watercourses of the Republic of Lithuania and the Kaliningrad Oblast of the Russian Federation that came into force in the middle of May.

Wage arrears arrive to protesting Pikalevo after Putin interfereshttp://www.itar-tass.com/eng/level2.html?NewsID=14015979&PageNum=0

PIKALEVO, June 5 (Itar-Tass) -- Russian Prime Minister Vladimir Putin had to personally interfere to make property owners pay debts to outraged sacked workers in the town of Pikalevo, 246 kilometers east of St. Petersburg, with a population of 22,200.

Head of Pikalevo administration Sergei Veber said wage arrears had been remitted right after Putin’s visit late on Thursday and the workers of the local cement facilities received their money.

The press service of the regional administration said 63 million rubles were remitted. “Two tranches of 18 and 45 million rubles of working capital were remitted to bank accounts of enterprises. Wage arrears comprise 41 million 242 thousand rubles,” it specified.

“The deadline is today”, Putin urged on Thursday during a fact-finding visit to Pikalevo, a scene of dramatic protests early this week.

Early this year all three crucial industrial facilities were closed down in the town. As a result local people have thrice taken to the streets to demand the restoration of heat and water supplies at least to hospitals and child-care centers. Early this week demonstrators blocked the Novaya Ladoga-Vologda federal highway for seven hours.

“You have made thousands of people hostage of your incompetence, ambitions and, probably, greed. That is absolutely impermissible,” Putin reprimanded enterprise owners and aluminum tycoon Oleg Deripaska, as well as local authorities. “Nobody will ever be able to persuade me that regional authorities have done everything in their powers to help the people,” the prime minister said.

Putin recalled that the problems of Pikalevo began to snowball back in 2006 when the prices of aluminum fell.

“The owners have got bogged in quarrels and disputes instead of conducting comprehensive production upgrades,” the prime minister said.

Putin has actually forced the owners of FosAgro and BaselCement to sign a contract and resume production.

“Did Oleg Vladimirovich sign it?” Putin asked Deripaska. “I do not see your signature here, go and sign it.” The owner of BasEl took a quick look at the document and signed it.

Security officer killed in clash with militants in S.Russiahttp://en.rian.ru/russia/20090605/155172694.html

MOSCOW, June 5 (RIA Novosti) - An officer from Russia's Federal Security Service (FSB) has been killed in a shootout with militants in Russia's North Caucasus Republic of Daghestan, a police source said on Friday.

The shootout occurred on Wednesday near the village of Muzhichi in the republic's Sunzha district. Four militants were also killed in the clash and their identity is currently being established.

"During a reconnaissance operation FSB officers and Interior Ministry service personnel came across a group of up to 12 militants, who put up armed resistance," the source said.

A special operation is ongoing in the area.

Daghestan and Ingushetia have seen a rise in violence recently linked both to militants based in neighboring Chechnya and local criminal groups.

Five die in shootout in Russia's Ingushetiahttp://www.reuters.com/article/asiaCrisis/idUSL5125482

Fri Jun 5, 2009 2:33am EDT

MOSCOW, June 5 (Reuters) - Four suspected rebels and a member of the Russian security forces were killed early on Friday in a shootout in Russia's turbulent southern region of Ingushetia, Interfax news agency reported.

Ingushetia has overtaken its neighbour Chechnya as the epicentre of violence along Russia's turbulent southern flank, challenging the Kremlin's fragile rule and, security forces say, providing a foothold for global networks of Islamist militants.

The battle took place near the village of Muzhichi, 14 kms (9 miles) from the border with Chechnya, after Russian forces engaged a group of 12 gunmen during a reconnaissance operation, Interfax quoted the source as saying.

The incident brings to 26 the number of suspected rebels killed in operations in the border region between Ingushetia and neighbouring Chechnya since May 16, Interfax reported, citing the Interior Ministry.

(Reporting by Conor Sweeney; Editing by Michael Roddy)

Bailiff killed in Ingushetia; a criminal case is about to be instituted

http://www.itar-tass.com/eng/level2.html?NewsID=14016631&PageNum=0

NAZRAN, June 5 (Itar-Tass) -- A car came under fire at about 08.50 Moscow time Friday on the Caucasus highway in the Barsutinsky municipal district of Nazran in Ingushetia.

Ingush bailiff Timur Ugurchiyev died of bullet wounds, a source in the republican law enforcement agencies told Itar-Tass on Friday.

The attackers escaped. The search operation for them is underway. A group of investigators is working at the scene. A criminal case is about to be instituted.

Russian, Japanese border guards in drills near Sakhalinhttp://www.interfax.com/3/497838/news.aspx

YUZHNO-SAKHALINSK. June 5 (Interfax-AVN) - Russian and Japaneseborder guards held a joint exercise in the Aniva Bay, southern Sakhalinon Friday. The exercise was commanded by head of Sakhalin maritime borderdepartment Maj. Gen. Andrei Burlaka, the department told Interfax. Border troops commanders from 11 CIS member states and

representatives of border departments from Germany, Finland, as well asthe Eurasian Economic Community (EurAsEC) were observers at theexercise. Two border guard patrol boats took part in the exercise on theJapanese side. Russia was represented by five Russian patrol boats andtwo cutters, as well as aircraft. The main goal of the exercise is to drill joint protection ofborders from trespassers: not only poachers and smugglers but alsopirates and terrorists. The exercise started t 11 a.m. local time (4a.m. Moscow time) and lasted for almost two hours.

One sub out, another one inhttp://www.barentsobserver.com/one-sub-out-another-one-in.4603549-58932.html

2009-06-04 Last week the Zvezdochka shipyard in Arkhangelsk Oblast put one nuclear powered submarine on the water after reparations and finished scrapping another one.

The 154 meter long Oscar-II class submarine “Voronezh” was put on the water having been in dock at Zvezdochka for the last two months, web site Severnyflot.ru reports.

The Northern Fleet has four Oscar-II submarines in service.

At the same time Zvezdochka has completed scrapping of a Typhoon class nuclear submarine. The project was funded by Russia, USA and Canada as part of the program “Global partnership”, Severnyflot.ru writes.

With a maximum displacement of 26,000 tons, Typhoons are the largest class of submarine ever built. They are 172 meters long and 23 meters wide. The Soviet Union built six of these submarines - three of these are still in service in the Northern Fleet, while the other three now are scrapped.

New technology to border guardshttp://www.barentsobserver.com/new-technology-to-border-guards.4602958-58932.html

2009-06-04 FSBs Border Guard Service has started tests of a new system for automatic border control and taken unmanned aircrafts into use.

Chief of FSBs Border Guard Service Army General Vladimir Pronichev believes that technical re-equipment is one of the most important steps in creating a modern system for protection of the border. Testing of a new system called “Polosa-71” has started on Russia’s southern borders, Rossiyskaya Gazeta reports.

The system includes signal devices, equipment for video and radar surveillance, infrared, heat and seismic sensors.

The Russian border guards are also receiving new vessels and patrol boats. In course of the last five years 14 new vessels and 47 motor boats have been taken into service. The first vessel in the “Sprut” series was to be delivered to FSB’s coast guard only a week ago, BarentsObserver reported.

According to Pronichev, the border guards’ tasks have changed considerably over the last years. While the main task earlier consisted of protecting the borders from violators, the forces now cooperate with other FSB units in counteracting international terrorism and cross-border crime like drug trafficking, illegal immigration and smuggling.

FSB’s Border Guard Service consists of only professionals. The last conscript was dismissed in 2008.

Russia Looking to Restore Military Transport Fleethttp://www.defenseindustrydaily.com/Russia-Looking-to-Restore-Military-Transport-Fleet-05480/

04-Jun-2009 17:59 EDT

RIA Novosti recently quoted Lt. Gen. Viktor Kachalkin, commander of Russia’s 61st Air Army,as saying that Russia intends to step up buys of modern military transports beginning in 2012. Meanwhile, the current strategic fleet of AN-22 “Cock” turboprops, IL-76 “Candids”, and the huge AN-124 Ruslans will be modernized for another 20 years of service. Many of the planes in Russia’s current fleet entered service in the 1960s and 1970s.

The IL-76MD-90 project has already begun to install new avionics and engines in some planes, and expects to deliver 12 modernized aircraft by 2010. A similar program is contemplated for the AN-124s, whose modernized AN-124-100 version is operated by commercial charters on behalf of global outsize heavy lift customers – including NATO. The AN-22s could end up being supplanted by the AN-70, however, an A400M-sized turboprop which recently experienced a $300 million program defibrillation.

In the light transport category, Russia plans to field the IL-112V, which will also have a commercial IL-112T version. The 20-tonne medium lift category is expected to feature the jet powered Indo-Russian MRTA.

National Economic Trends

Central Bank may cut refinancing rate to 10% in 2010 - Kudrinhttp://en.rian.ru/business/20090605/155174229.html

11:3605/06/2009

ST. PETERSBURG, June 5 (RIA Novosti) - Russia's Central Bank could cut its key lending rate to 10% in 2010, the finance minister said on Friday.

"If inflation reaches 10% (the basic forecast for 2010), the refinancing rate may be cut to 10% in the middle or by the end of the next year," Alexei Kudrin told journalists at the St. Petersburg International Economic Forum.

He added that the refinancing rate needs to be lowered carefully because the GDP and inflation forecasts for 2010 are uncertain.

The Central Bank announced on Thursday it would further cut the refinancing rate by 0.5 percentage points to 11.5% per annum from June 5, following a slowdown in consumer price growth.

Russian monetary base down 9.4% in week to $125.3 blnhttp://en.rian.ru/business/20090605/155172979.html

MOSCOW, June 5 (RIA Novosti) - Russia's Central Bank said Friday the country's narrowly defined money supply (M1) was 3 trillion 857.4 million rubles ($125.3 billion at the current exchange rate) as of June 1, down 9.4% in the week since May 25.

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

Russia's capital inflow at $2 bln in May http://en.rian.ru/business/20090605/155174729.html

ST. PETERSBURG, June 5 (RIA Novosti) - Foreign capital inflow into Russia reached over $2 billion in May, Central Bank First Deputy Chairman Alexei Ulyukayev said on Friday.

"Capital inflow into Russia in May exceeded $2 billion according to the Central Bank's estimate," Ulyukayev said on the sidelines of the International Economic Forum in St. Petersburg.

The official predicted that capital outflow from Russia, which has totaled around $30 billion since the start of the year, is not likely to see a further increase.

"The outflow volume could remain unchanged - at around $30 billion since the beginning of the year," Ulyukayev said.

He also said Russia's monetary base in May decreased 5%, year-on-year, while in April it declined 8% compared with April 2008.

Worst Is Behind Russia, Ruble Rate ‘Not a Problem,’ IMF Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=acGGfyAVXKPs

By Paul Abelsky and Ellen Pinchuk

June 5 (Bloomberg) -- Russia has passed the worst of the financial crisis, while the ruble exchange rate doesn’t pose a problem for the economy, the International Monetary Fund’s First Deputy Managing Director John Lipsky said in an interview with Bloomberg Television in St. Petersburg today.

To contact the reporter on this story: Paul Abelsky in St. Petersburg at pabelsky@bloomberg.net

Last Updated: June 5, 2009 01:20 EDT

Russia had 0.6% inflation in May, 6.8% in year so far – Rosstathttp://www.interfax.com/3/497826/news.aspx

MOSCOW. June 5 (Interfax) - Russia had 0.6% inflation in May 2009compared with 0.7% in April, the Federal State Statistics Service(Rosstat) reported on Friday. Inflation in January-May was 6.8%. May inflation was slightly lower than the consensus forecast of0.7% compiled by Interfax in a survey of analysts. Inflation in the first five months of 2009 was 0.9 percentagepoints lower than the 7.7% rate in the same period last year. Inflation in May 2009 compared with May 2008 declined to 12.3%compared with 13.2% in the previous month.

Business, Energy or Environmental regulations or discussions

Market Overview: Oil Strikes the key notehttp://www.businessneweurope.eu/dispatch_text8802

UralSib, RussiaJune 5, 2009

President's keynote speech today. The S&P 500 Index closed up 0.9% last night, led by the banks and energy stocks: the former on optimism that earnings growth has resumed and the latter because of the higher oil price. A similar pattern can be expected in Russia

today. Brent crude for July settlement gained $2.81/bbl yesterday to close at $68.69/bbl, and so long as that trend continues then so too will the momentum in the equity market. The main news focus today will be President Dmitri Medvedev's keynote address at the St Petersburg forum, to be followed by a presentation on energy by Deputy Prime Minister Igor Sechin. For international markets, the main item to watch will be the May nonfarm payroll and unemployment report. Consensus is for a gain of 530,000 in the number of unemployed, down slightly from the end of April number of 539,000, and an unemployment rate of 9.2%. Any significant variation will have a big impact on investor sentiment. Russian funds got their first significant inflow of new money in the week to Wednesday, in a sign that investors may be losing patience in their wait for a correction in emerging markets. The total received by Russia funds was $182 mln, and although the biggest weekly take since mid- May last year, the amount still lags investments in other major emerging markets. Brazil funds took in $832 mln, as investors prefer that market as a commodity proxy. GEM and BRIC funds again took in over $1 bln in aggregate, as investor appetite for risk shows no sign of easing just yet.

Late rally lifts MICEX. The local bourses endured another volatile session yesterday, opening weaker after the US market drop before rallying later in the day, as crude oil rose and US markets opened better. MICEX benefited more by virtue of its later closing and ended the session up 1%. The RTS ended down 1.7%. Sberbank was the best performing stock of the majors with a gain of 4.9% on MICEX, albeit it closed down 3.7% on the RTS. VTB closed down 2.5% on MICEX. Rosneft led the oils lower with a loss of 0.5% on MICEX, while LUKOIL traded more actively over the last hour to end up 3.1% on MICEX (down 0.9% on the RTS). Rostelecom lost 5.2% and remains very volatile, as investors wait for news of a possible restructuring with Svyazinvest. Aeroflot was the best of the second-tier names, rising 7.9% on MICEX. In the London GDR market, the steel names all closed lower as, globally, the sector retreats with pricing worries.

Novolipetsk was the main loser, ending down 6.8%. TMK bounced again, rising 4.1% as a possible beneficiary of cheaper steel. Polyus Gold lost 5.9% despite the rising price of gold. Cherkizovo was the day's biggest mover, losing 15.4%, as trade volume remains tight. Global Trans ended down 10.6% as a proxy for investor fears over the economy. In New York trade, Mechel bounced into the close and managed to close with a gain of 0.2%. VimpelCom was the best of the Russian names with a closing gain of 4.7%.

Chris Weafer

Borrowers Return to Bond Markethttp://www.themoscowtimes.com/article/600/42/378055.htm

05 June 2009By Courtney Weaver / The Moscow Times

Rosselkhozbank is set to issue the first eurobond by a Russian bank since last summer, but the agricultural bank isn't the only corporate taking a dip back into the once-frozen

bond markets.

Bonds are back --- and not least of all in Russia, where the past few weeks have witnessed a flurry of issuing announcements and rumors, the most ambitious being the 100 billion ruble ($3.2 billion) issue that Atomenergoprom said it was considering last week.

Gazprom Neft, MTS and Russian Railways pioneered Russia's return to local and foreign debt markets this spring, and now a bigger wave of issuers is coming in, said Mikhail Galkin, a fixed-income analyst at MDM Bank.

At least six borrowers, including City Hall, have announced issues in the past week, and there is talk that three more are on the way.

Gazprom and Russian Railways are expected to issue 15 billion rubles of bonds each and will join the ranks of VTB Leasing, Vneshekonombank and Pervobank, as well as retailers such as Sedmoi Kontinent and Pharmacy Chain 36.6, all of which announced an issue in the past week.

Thanks to a strong ruble and high oil prices, market participants have been more than happy to return to the local debt market, but the window for prospective borrowers can only last as long as positive investor sentiment, said Marina Vlasenko, a senior credit analyst at Commerzbank. "As soon as fears about the currency escalate, the window [for issues] could close," she said.

At the same time, corporate borrowers must temper the urge to rush in. Coupons will continue to fall as the Central Bank slashes its refinancing and repo rates and investor demand grows.

Both MTS's 15 billion ruble issue last month and Gazprom's 400 million Swiss franc ($373 million) issue in April were oversubscribed.

"The ruble is gaining, and rates are falling," Galkin said. "It's the perfect opportunity to jump on the train if you believe in the oil price -- and many do."

For now, the market is only ready to digest bonds from top-tier borrowers, and it may be a while still before second-tier companies get the chance to swoop in, Vlasenko said.

Dominating the field are semi-sovereign players such as Russian Railways and Gazprom, which have already issued multiple bonds this year, and Rosselkhozbank, one of the few that can afford to brave the eurobond market.

Rosselkhozbank plans to place over $1 billion worth of bonds, Bloomberg reported Thursday, with an expected coupon of 9.25 percent -- the same rate as Gazprom's eurobond issue in April.

The Rosselkhozbank bonds will likely perform even better than Gazprom's because of the rally on the equities markets over the past few weeks, said a credit analyst, who declined to be identified because she was not authorized to speak to the media.

While bonds on the domestic market have also been in high demand, much of the interest stems from state-owned banks that are deliberately trying to pique interest, Vlasenko of Commerzbank said.

"Part of the demand on the local market is created by state banks that are requesting larger amounts of the issues than they're actually going to buy," she said.

While this strategy may work for now, it probably cannot sustain the bond market rally in the long run. "During the second half of the year, larger banks might be dealing with their own credit portfolio problems," she said.

Microsoft In Antitrust Probehttp://www.themoscowtimes.com/article/600/42/378049.htm

05 June 2009 ReutersAMSTERDAM -- The Federal Anti-Monopoly Service launched a probe into Microsoft over cutbacks in supplies of the Windows XP operating system in Russia, it said on Thursday.

The agency said it thought that Microsoft had violated anti-monopoly legislation by cutting delivery of Windows XP to Russia both separately and pre-installed on personal computers, as well as in its pricing policy on the product.

"Analysis of the market for various operating systems shows that the transfer to the new Windows Vista operating system is occurring while demand for the previous operating system, Windows XP, continues," the service said.

"Demand for separately packaged and pre-installed versions of Windows XP is also confirmed by retailers and the number of orders from the government." It said it would consider the case on July 24, 2009.

Microsoft's Moscow office said it had not received an official query from the anti-monopoly service."We [have] always answered anti-monopoly service questions in full and intend to continue this practice in future," Microsoft spokeswoman Marina Levina said by telephone.

The anti-monopoly service is regularly in contact with Russian companies but full-scale investigations are not common.

Non-fulfillment of genco investment will not bring ownership review –Sechinhttp://www.interfax.com/3/497815/news.aspx

ST. PETERSBURG. June 5 (Interfax) - Although the Russian governmentis not planning to alter the ownership of gencos when their new ownersfail to carry out the investment program, the government still expectsstrict compliance with the terms of their acquisition, Deputy PrimeMinister Igor Sechin said on the sidelines of the economic forum in St.Petersburg. "We will demand fulfillment of the investment programs in strictaccordance with the commitments that they (the owners) assumed when theyacquired the companies," Sechin said, adding that work on the issue isongoing. The Energy Ministry is monitoring the situation, he said.

Warmer May temperatures contribute to electricity demand declinehttp://www.businessneweurope.eu/dispatch_text8802

Rencap, RussiaFriday, June 5, 2009

In a press statement released yesterday (5 May), Russia's electricity market System Operator reported that electricity consumption declined 8.3% YoY in May, marking the sharpest contraction recorded since the onset of the global economic crisis. The most significant decrease, of 14%, was recorded in the Mid Volga region, while the lowest fall occurred in the South. In several regions where demand is dominated by households, including Ingushetiya, Dagestan, Krasnodar region, and Chechnya, small increases were recorded.

We think much of the acceleration of the decline reflects unusually high ambient temperatures in certain regions of high electricity demand. In the Centre region, for example, which includes the city of Moscow, May temperatures this year were 2.5 degrees Celsius higher than for the corresponding period in 2008. Nevertheless, the same vagaries of climate cannot be blamed for the 9.5% demand contraction in the energy-intensive Urals region. Judged on this statistic, industrial demand remains at depressed levels.

Rushydro says to launch GDRs on London bourse July 6http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSB105546820090604

Thu Jun 4, 2009 1:20pm EDT

ROME, June 4 (Reuters) - Russian hydro-electric company Rushydro (HYDR.MM: Quote, Profile, Research, Stock Buzz) expects to launch global depositary receipts on the

London Stock Exchange starting July 6, Chief Executive Vasily Zubakin said on Thursday.

"I hope that our arrival in London will... allow us to increase the liquidity of our shares and bring further gains for our shareholders," Zubakin told reporters in Rome.

A spokesman said that the July 6 launch was subject to regulatory approval.

Rushydro is the world's second-largest producer of renewable energy after Hydro Quebec. The Russian government holds a 62 percent stake in the company. (Editing by Hans Peters)

Kinross Mulls Investment

http://www.themoscowtimes.com/article/1009/42/378048.htmKinross Gold, Canada's third- largest gold producer, is considering as many as 50 investments in all countries where the company has operations, including Russia, vice president James Crossland said Thursday at the forum.

Kinross wants to acquire "development-stage" or "active" projects and is likely to take on local partners for any investments in Russia. (Bloomberg)

RusAl May Miss Payment

http://www.themoscowtimes.com/article/1009/42/378048.htm

United Company RusAl will miss a June 11 deadline to renegotiate $7.4 billion of debt to foreign banks, chairman Viktor Vekselberg said Thursday.

The company "won't need long" after the deadline to reach an agreement with lenders, he said. (Bloomberg)

Usmanov not planning to leave Norilsk Nickel; may consider boostingstakehttp://www.interfax.com/3/497750/news.aspx

ST. PETERSBURG. June 5 (Interfax) - Alisher Usmanov, the co-ownerof Metalloinvest, does not plan to divest his Norilsk Nickel holdings,which amounts to 4% according to the most recent information. Instead, Usmanov may consider increasing his stake. "If circumstances allow [the stake may be increased]," he toldInterfax on the sidelines of the economic forum in St. Petersburg.

Russia metals merger is idea for after crisis-Usmanovhttp://www.reuters.com/article/rbssMiningMetalsSpecialty/idUSL09115620090605

Fri Jun 5, 2009 1:28am EDT

ST PETERSBURG, Russia, June 5 (Reuters) - Russia should return to the idea of a mega merger of its metals companies, including Norilsk Nickel (GMKN.MM: Quote, Profile, Research, Stock Buzz) after the end of the economic crisis, metals billionaire Alisher Usmanov said on Friday.

Usmanov, who controls Metalloinvest, Russia's largest iron ore miner, said he would pay for the Udokan licence but wanted some of the terms of the project to be changed. (Reporting by Dmitry Sergeyev, writing by Guy Faulconbridge, editing by Dmitry Zhdannikov)

Billionaire Vekselberg Still Interested in Russian Metals Mergerhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aO_Atwc8.0tg

By Lyubov Pronina

June 5 (Bloomberg) -- Viktor Vekselberg, the billionaire chairman of United Co. Rusal, said he’s still interested in a merger of large Russian metals companies that was first proposed last year.

Vekselberg, speaking to reporters at the St. Petersburg International Economic Forum, declined to elaborate.

To contact the reporter on this story: Lyubov Pronina in Moscow at lpronina@bloomberg.net

Last Updated: June 5, 2009 02:13 EDT

German Gref comments on Opel dealhttp://www.businessneweurope.eu/dispatch_text8802

Troika, RussiaFriday, June 5, 2009

Sberbank CEO German Gref made a number of comments on the Opel deal yesterday to journalists at the St Petersburg Economic Forum. Key takeaways included the following.

Sberbank's participation will consist of two parts. The first is investment in capital, which will not be a material amount. Second, Sberbank and Magna will provide EUR500m ($700m) in funding proportional to their equity stakes (Sberbank 35% and Magna 20%). Under this split, Sberbank would provide about EUR320m ($450m) in funding for its 35% stake, though we do not have further details.

The key goal of the deal from Sberbank's perspective is the restructuring of Russian automotive assets. We presume that this refers to General Motors' assembly plant in St Petersburg and its 41.6% stake in a JV with AvtoVAZ.

Sberbank does not plan to be a strategic investor in Opel, but will look to sell its stake in the automaker as soon as it has been restructured, possibly to a Russian strategic investor. Magna will be primarily responsible for the restructuring process.

We expect more news flow on this deal in the coming weeks, and for now we have very little detail on the full terms and extent of the liabilities that Sberbank may be taking on. While we appreciate that Sberbank may have cut a good deal that will potentially benefit itself and the Russian car industry, and that it is acting primarily as a financial partner before eventually selling its stake, we are still concerned that this is a complex non core investment that is well removed from the bank's usual business sphere, and one that is clearly being directed from a political rather than purely business angle. For minority shareholders, the concern is in the deal's impact on Sberbank's bottom line and management resources.

Gref also commented on the BTA deal, stating that a decision would be made this autumn.

Andrew Keeley

Sberbank to Sell Opel Stake?http://www.themoscowtimes.com/article/1009/42/378048.htm

Sberbank may sell its stake in the automaker Opel to a strategic investor, chief executive German Gref said at the forum Thursday. The purchase of the stake will cost the bank about 500 million euros ($705 million), he said.

Gref also said Sberbank will make a decision this autumn on whether to buy a stake in Kazakhstan's BTA Bank.

Sberbank hasn't yet assessed the value of BTA and is working with Kazakhstan's National Well-Being Fund Samruk-Kazyna to "understand the situation with the bank's debts," Gref said at the forum. (Bloomberg)

Wal-Mart May Come Soon

http://www.themoscowtimes.com/article/1009/42/378048.htm

X5 expects Wal-Mart to come to Russia soon and believes that the U.S. giant has ambitious plans for the national market, X5 chief executive Lev Khasis said Thursday.

"Wal-Mart is obviously interested in the Russian market and will enter it soon. They have ambitious plans regarding Russia," he said.

Wal-Mart, which has an office in Moscow, last year joined a Russian retail lobby group, chaired by Khasis, after hiring an executive to head its efforts to explore opportunities in Russia and neighboring markets. (Bloomberg)

Jun 4, 2009, 6:01 p.m. EST

Wal-Mart "confident" about entering Russia http://www.marketwatch.com/story/story/print?guid=0BB00950-4A21-4629-AAC0-C61D86215E87

ROGERS, Ark.(MarketWatch) -- Wal-Mart Stores Inc. said Thursday it's "confident and hopeful" about entering the Russian market. The company set up an office in that country a year ago to study the market and explore opportunities. Wan Ling Martello, finance chief of the retail giant's international division, told reporters covering the company's annual shareholder meeting that Wal-Mart also is actively looking to buy businesses to expand its global reach. Wal-Mart's international unit covers 15 markets, from Brazil and Mexico to China and Japan in addition to Puerto Rico, and generates about $100 billion, or about a quarter of the company's sales. It been the fastest growing division of the company, generating compounded annual sales growth rate of 17% the past five years. (Updates with the international sales growth rate.)

Novocheboksarsk Khimprom Welcomes New Owners, Rosnano and Renovahttp://www.businessneweurope.eu/dispatch_text8802

CiGJune 5, 2009

According to yesterday's (June 4) reports, state corporation Rosnano and Viktor Vekselberg's Renova holding had signed an investment agreement to set up a JV to manufacture 1 mn solar panel modules (120 MW) a year. According to our estimates, this represents 20-25% of existing global demand for alternative energy (excluding space projects).

On May 20 the partners signed a memorandum of intent to establish the RUB 20.1 bn ($628 mn) joint venture around Novocheboksarsk Khimprom using Switzerland's Oerlikon Solar technology.

Russia's X5 Retail to issue bond on June 11http://in.reuters.com/article/newIssuesNews/idINL534405820090605

Fri Jun 5, 2009 12:18pm IST

MOSCOW, June 5 (Reuters) - Russia's largest retailer by sales, X5 (PJPq.L: Quote, Profile, Research), said on Friday it planned to begin placement of an 8 billion rouble ($259.1 million) bond on June 11 to improve its debt structure and maturity profile.

The seven-year bond with a two-year put option will be placed via open subscription, X5 said in a statement.

The issue organiser told Reuters last month X5 planned to sell the bond with a 18.5-19.5 percent coupon. [ID:nLQ122945]

Raiffeisenbank and VTB Capital are lead managers of the issue, while Alfa-Bank is co-lead manager. (Reporting by Maria Kiselyova; Editing by David Cowell)

X5 Retail Group: Potential entry into Ukrainehttp://www.businessneweurope.eu/dispatch_text8802

UralSib, RussiaJune 5, 2009

X5 may acquire one of Ukraine's largest food retailers. RBC Daily reports that X5 Retail Group is currently trying to acquire one of Ukraine's largest food retail players, most likely Velika Kishenya which operates 30 supermarkets and 8 hypermarkets in 16 Ukrainian cities and has total selling space of 100,000 sqm (while X5's total selling space is 907,000 sqm) The potential price of the deal has not been released. X5 already has a few stores operating in Ukraine which together generate 1% of the group's total revenue. X5 is also currently in acquisition talks with a number of Russian retailers including the Holiday chain.

Payment via share swaps. X5 plans to finance these acquisitions with share swaps and may issue new shares, according to RBC daily. Earlier this year, X5 provided 2009 capex guidance of about $466 mln (RUB14 bln) but this may not be enough for large M&A deals and so it may issue bonds (according to media reports X5 could issues bonds totaling about $258 mln) or raise new loans.

Russia's Wimm-Bill-Dann may continue buybacks-CEOhttp://www.reuters.com/article/rbssFoodProcessing/idUSL525957320090605

Fri Jun 5, 2009 2:01am EDT

ST PETERSBURG, Russia, June 5 (Reuters) - New York-listed Russian juice and dairy maker Wimm-Bill-Dann (WBD.N: Quote, Profile, Research, Stock Buzz) will continue to buy back its shares on the stock market to support the share price, its chief executive said on Friday.

David Iakobashvili said the company, Russia's largest in the sector, had bought back 3.2-3.6 percent of its shares.

"We have already acheieved our aims and from here it will depend on market prices," Iakobashvili said.

He said the company, acquisitive in recent years, continued to look for acquisition targets but many were too highly leveraged and their acquisition could threaten compliance with debt covenants, he said. (Reporting by Polina Devitt; writing by Melissa Akin; editing by Robin Paxton)

Russia's largest brewery to cut investments by two thirds in 2009http://en.rian.ru/business/20090605/155174656.html

ST. PETERSBURG, June 5 (RIA Novosti) - Russia's largest brewery Baltika will reduce investments by three two thirds to 100 million euros in 2009, the company's president said on Friday.

Anton Artemyev told RIA Novosti on the sidelines of the St. Petersburg International Economic Forum that Baltika's annual investments were 300 million euros in 2008 and around the same level in previous years.

He said Baltika has decided not to invest in new production facilities as "the market is not growing and our company has enough production facilities."

He added the Russian beer market could shrink by 2-3% in 2009

Baltika owns 11 breweries across Russia, and accounts for 37% of the domestic beer market. Carlsberg holds a controlling stake in the company.

Sistema may swap stake in Svyazinvest for MGTShttp://www.businessneweurope.eu/dispatch_text8802

bneJune 5, 2009

Russian conglomerate AFK Sistema says that talks with the government to swap its blocking stake in fixed line telephone monopoly Svyazinvest for a bigger stake in Moscow City Telephone Company (MGTS) are going well, reports Prime Tass.

Sistema wants swap its a 25%+1 stake in Svyazinvest held by Sistema unit Comstar UTS for Svyazinvest's 28% stake in fixed-line operator Moscow City Telephone Company (MGTS), one of the most profitable regional telephone companies in the country. In addition, Sistema wants state controlled Sberbank to write off a RUB26bn 5-year loan that Comstar UTS took from the bank in 2007, which was secured by Sistema's shares in Svyazinvest.

Chairman of Sistema's board of directors Vladimir Yevtushenkov told newswires that Sistema is disputing the valuation of Svyazinvest by Ernst & Young's recent, which said last month that the company's stake is worth RUB23bn. The company intends to commission a new valuation. The markets have risen significantly since the valuation was completed.

Comstar UTS bought the blocking stake from the government in 2006 for $1.3bn and was counting on the further privatization of the government's 75% minus one share stake in the holding.

However, recent government comments suggest the state has changed its mind and will hang on to the phone company.

http://in.reuters.com/article/oilRpt/idINL57112320090605www.kommersant.ruThe merger of Russia's second-largest phone operator Vimpelcom VIMP.RTMM with Golden Telecom could be completed by the end of the year, Vimpelcom's top manager Alexander Torbakhov says in an interview.

Suleiman Kerimov acquires additional 6.273% stake in PIK http://www.businessneweurope.eu/dispatch_text8802

VTB CapitalJune 5, 2009

Vedomosti reports that Suleiman Kerimov has increased his stake in PIK 6.273% to 51.273%.As a result of this acquisition, Suleiman Kerimov has become a major shareholder. We view this news as neutral-to-positive for the company as all strategic decisions and issues regarding refinancing will be in Kerimov's hands.We note that with Kerimov as a PIK shareholder, the company signed a standstill agreement with creditors (Sberbank being the largest one) until July and mentioned further potential refinancing agreements to come this year.

Crisis bites deep into Russian infrastructure programme http://www.businessneweurope.eu/story1634/Crisis_bites_deep_into_Russian_infrastructure_programme

Jason Corcoran in Moscow June 5, 2009

Russia's Stalinist-like trillion-dollar infrastructure programme to revamp its crumbing roads, bridges, ports and airports over 10 years has been shaken by the global financial crisis. Many infrastructure projects have been postponed or cancelled due to the lack of

available finance from domestic and international capital markets. And the Kremlin's much touted public-private partnership (PPP) programme to stimulate investment has yet to take off, while bankers hired to capitalise on an anticipated deal-making boom have been twiddling their thumbs for the past six months.

Senior financiers held a meeting with Deputy Prime Minister Sergei Ivanov at the start of the financial crisis in November last year and were told that the infrastructure programme for 2009 was being cut by 30%. The 2009 budget for infrastructure is believed to have been slashed again by a similar amount following the ruble's devaluation and dwindling federal revenues from lower commodity prices.

The government is now targeting selective projects in St Petersburg, Moscow and the Winter Olympic venue of Sochi as priorities for completion until the investment climate for foreign and private capital improves. Joerg Bongartz, chairman of the board of Deutsche Bank Russia, said the government was stepping in to meet the shortfall in showcase projects. "In Russia, there has been a reality check on infrastructure spending since the start of the crisis," Bongartz tells bne in an interview. "A significant amount of foreign capital was expected to be made available for a number of large infrastructure projects structured as public-private partnerships, but it appears now that if the government wants these projects to materialise, a larger share of the funding and the coverage of particularly the foreign exchange rate risk will need to come from the budget and government funds."

Bongartz said Deutsche Bank is still hoping to get involved in infrastructure via its corporate finance specialist team, its infrastructure and property management unit Rreef and DB Partners, and its joint venture with the Austrian construction firm Strabag.

Planes, trains and automobiles

The St Petersburg municipal government has said it will delay $13bn of infrastructure projects, which had attracted bids from international companies including Alstom, Siemens and Oleg Deripaska's Basic Element, due to the credit crisis deterring most private investors. Projects facing prolonged delays include the $10bn highway, known as the Western High-Speed Diameter (WHSD), the Orlov tunnel under the Neva River and a planned $1bn upgrade of Pulkovo airport. The Orlov tunnel and a fast-speed train link to the airport are likely to be postponed indefinitely.

The WHSD roadway encircling St Petersburg was meant to be the pioneering large PPP project in Russia, but the winning consortium formed by oligarch Oleg Deripaska and Strabag hasn't yet signed the concession contract governing the project. St Petersburg Governor Valentina Matviyenko said in April that some of the major projects of the city's road infrastructure would be built at the expense of the federal budget after private investors pulled out. The federal government is to allocate $617m for the construction of the WHSD roadway provided the city authorities keep their word to invest $198m.

A decision on the winning consortium for Pulkovo airport has been pushed back to June

25. The municipal government on May 21 whittled down the list of bidders to upgrade Pulkovo airport to three - Deripaska's Basic Element, Flughafen Wien in partnership with Leader, an investment house founded by Gazprom structures, and German Fraport in tandem with state bank VTB. Those that didn't make it on to the shortlist include Macquarie Renaissance, a joint venture formed by the investment banks Macquarie and Renaissance Capital to invest in Russian and CIS infrastructure; Germany's Hochtief in partnership with oil and mining tycoon Viktor Vekselberg; India's GMR; and Turkish TAV Airports.

A spokesman for Renaissance Capital in Moscow declined to comment on "specific transactions," but said the alliance sees the number and quality of potential deals increasing as industrial groups look to exit non-core investments, including infrastructure assets. Macquarie Renaissance's first fund raised half of its $1.5bn target last year. Most of the funds raised came from Russian and CIS multinational development agencies such as Vnesheconombank (VEB), the Kazakhstan State Development Bank and the Eurasian Development Bank.

VEB, which is the government agency responsible for infrastructure spending, has declined repeated requests for an interview. However, VEB's chairman, Vladimir Dmitiev, recently claimed on the VEB website that international agencies such as the International Finance Corporation and European Bank for Reconstruction and Development (EBRD) had expressed an interest in participating in the Macquarie Renaissance fund. Dmitriev said the fund's resources will soon be used for implementing infrastructure projects in CIS countries and more credit will be made available by VEB, the Kazakhstan State Development Bank and the Eurasian Development Bank. "And we are absolutely sure that as soon as the [the Macquarie Renaissance Fund] starts operating, we'll get a number of private and institutional investors to participate in it, including ones from the Middle East," Dmitriev said in a statement on the VEB website.

Renaissance said fund raising continues to progress, and is making solid progress, but declined to give any specifics. The Russian investment bank, which has its own financing difficulties, insists that private investment still has a role to play in priority projects alongside government funding. "The process of private investment alongside the government will be evolutionary," explains the Renaissance spokesman. "Macquarie Renaissance Investment Fund, for example, is the first dedicated infrastructure fund to be focused on Russia and the CIS. As in other markets, investor interest will follow as the opportunities to invest ramp up."

One location where investors can be certain that most planned projects will be undertaken is Sochi, the Black Sea resort which will host the Winter Olympics in 2014. "Sochi is one of the priority areas for the government because of the reputational issue attached to hosting the Olympics," says Deutsche's Bongartz. "This has to be successful and there has to be a clear timeline for projects as the date is fixed. There still remains a great deal of interest from abroad from companies keen to get involved in services and construction."

Activity in the Oil and Gas sector (including regulatory)

Russian oil output may fall if debt market stays shuthttp://in.reuters.com/article/oilRpt/idINL049570720090605

Fri Jun 5, 2009 12:15pm IST

ST PETERSBURG, Russia, June 5 (Reuters) - Russian oil output could fall if Russian energy companies find it hard to borrow abroad, Deputy Prime Minister Igor Sechin said on Friday.

Russia is not happy with the current oil price and believes a fair price would be about $75 per barrel, Sechin, one of Russia's most powerful officials, told reporters. (Reporting by Denis Dyomkin, writing by Guy Faulconbridge, editing by Simon Shuster)

IEA says oil price gains don't match fundamentalshttp://in.reuters.com/article/oilRpt/idINL539053620090605

Fri Jun 5, 2009 12:04pm IST

ST PETERSBURG, Russia, June 5 (Reuters) - International Energy Agency (IEA) Executive Director Nobuo Tanaka said on Friday oil price gains do not match market fundamentals. "We haven't seen much of a recovery in demand, so expectation of economic recovery is very high but fundamentals haven't improved so much," Tanaka told Reuters in an interview.

"If the economy is not recovering but the price is going up, it makes for a very bad, negative implication." (Reporting by Amie Ferris-Rotman, writing by Robin Paxton)

Russian oil chief puts fair price for oil at $75 per barrel http://www.mosnews.com/money/2009/06/05/sechinoil/

Today, 12:00 PM

World oil prices, currently around $65 a barrel, are inconvenient for Russia, Deputy Prime Minister Igor Sechin says.

Russia needs oil prices to be at least $75 a barrel, Sechin was quoted by RIA Novosti as as telling the press Friday.

Sechin said making forecasts about oil prices was an ungreatful task at the moment, since the market is totally unpredictable.

But he noted that Russia did not plan to cut down on oil production in the next few years.

According to Yulia Tseplayeva, the chief economist for Merrill Lynch in Moscow, for each $1 increase in the price of oil, Russia’s government budget earns about $1.7 billion a year.

Yet in recent Russian history, the two periods of most intensive economic change — both of which were a condition for the boom of the past decade — were preceded by deep and prolonged slumps in oil prices.

Russia says $75 per barrel reasonable price for oilhttp://en.rian.ru/russia/20090605/155174540.html

ST. PETERSBURG, June 5 (RIA Novosti) - A reasonable price for oil is at least $75 per barrel, Russia's first deputy prime minister said on Friday adding that production could drop in Russia if the credit crisis persists.

Speaking on the sidelines of the International Economic Forum in St. Petersburg, Igor Sechin said: "We need at least $75 per barrel."

Sechin said "output will not drop in the next few years" thanks to major investment in the industry in previous years, but "an increasingly shrinking access to finances could lead to a decline."

Oil prices plummeted from a record $140 a barrel last July to around $35. Prices have strengthened in the past three months, along with stock markets, rising to above $68 a barrel on Thursday, fueling expectations that crude will continue its rally.

But Sechin said it is not clear so far whether the price hike is a result of fundamental changes in the world economy or market speculation.

Oil has been a major source of revenue for Russia, the largest non-OPEC producer, fueling its almost decade-long economic boom before the global credit crunch hit the country.

Kudrin: oil may stay near $50 a barrel for 3-5 yrshttp://www.interfax.com/3/497850/news.aspx

ST. PETERSBURG. June 5 (Interfax) - The price of oil may hover near$50 a barrel for the next three-five years, Deputy Prime Minister andFinance Minister Alexei Kudrin said. "We are proceeding based on a forecast of $50 a barrel in thecoming years," Kudrin said on the sidelines of the St. PetersburgInternational Economic Forum. That price could hold for "aboutthree-five years," he said. The Economic Development Ministry has raised the oil price forecastto $45 per barrel on average for 2009 from $41. The Finance Ministry isproposing that the 2010-2012 budget assume oil at $50 in 2010, $52 in

2011, and $53 in 2012. The Economic Development Ministry previouslyproposed calculating the forecast based on oil at $50 in 2010, $60 in2011 and $70 in 2012. The government has not made a final decision onwhich of the figures to use in calculating the 2010-2012 budget.

Rosneft Chief Sees Oil Price at $55 This Year, Interfax Sayshttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aJFnI_3e_dvA

By Mark Sweetman

June 5 (Bloomberg) -- OAO Rosneft Chief Executive Officer Sergei Bogdanchikov said he expected the maximum average oil price this year to be $55 a barrel, Interfax reported.

Price fluctuations will continue throughout the year, the news service cited Bogdanchikov as telling reporters in St. Petersburg today.

Last Updated: June 5, 2009 01:55 EDT

Rosneft CEO says positive Q1 dynamic will lasthttp://www.reuters.com/article/rbssEnergyNews/idUSL021598120090605

Fri Jun 5, 2009 2:04am EDT

ST PETERSBURG, Russia, June 5 (Reuters) - The head of Russia's largest oil firm, state-controlled Rosneft (ROSN.MM: Quote, Profile, Research, Stock Buzz), said on Friday he expects the positive financial dynamic seen in the first quarter to last throughout the rest of 2009.

Sergei Bogdanchikov told reporters on the sidelines of the St Petersburg Economic Forum he saw oil prices averaging a maximum $55 per barrel this year. (Reporting by Vladimir Soldatkin, writing by Dmitry Zhdannikov, Editing by Robin Paxton)

E.ON Acquires 25% Stake in the Yuzhno Russkoye Gas Field in Siberiahttp://www.oilvoice.com/n/EON_Acquires_25_Stake_in_the_Yuzhno_Russkoye_Gas_Field_in_Siberia/64dd7902.aspx

Friday, June 05, 2009

E.ON’s participation in the Yuzhno Russkoye gas field in Siberia has been finalised. Alexej Miller, CEO of OAO Gazprom, and Bernhard Reutersberg, CEO of E.ON Ruhrgas AG, signed a detailed agreement to that effect at a meeting in St Petersburg. E.ON’s acquisition of just under 25 % in Yuzhno Russkoye is to be completed this year.

In return, Gazprom will take over from E.ON Ruhrgas its 49 % interest in the Russian company ZAO Gerosgaz, which holds almost 3 % of the Gazprom shares. Via Gerosgaz E.ON Ruhrgas is economic owner of that share package, which will be transferred to Gazprom ownership. The company continues to hold 3.5 % of the Gazprom shares.

"We are pleased that the negotiations on our participation have been successfully completed. We are thus deepening our long-standing partnership with Gazprom based on mutual trust and are making an important contribution to security of supply for Germany and Europe," said Wulf Bernotat, CEO of E.ON AG.

Alexej Miller, CEO of OAO Gazprom, also regards this participation as a successful example of German-Russian energy partnership. “By implementing this asset exchange transaction, Gazprom and E.ON have once again demonstrated a successful development of long-term Russian-German cooperation in the energy sphere. Now our companies are partners in the area of gas production as well. Unique experience of developing the Yuzhno Russkoye field will not only allow Gazprom and E.ON to strengthen their business ties, but will also serve as further confirmation of our mutual trust and friendship.”

"For over 35 years we have been cooperating closely with Russia, as again illustrated by our participation in Yuzhno Russkoye. At the same time we are coming considerably closer to our upstream goal: In the long run, E.ON intends to obtain at least 10 billion m³ of gas from its own production," stressed Bernhard Reutersberg.

With gas reserves exceeding 600 billion m³, Yuzhno Russkoye is one of the world’s largest gas fields. The owner of the production licence and field operator is Russia’s OAO Severneftegazprom (SNGP), in which Gazprom will in future have a stake of just over 50%, while E.ON Ruhrgas and Wintershall will each hold nearly 25%.

LUKoil's Kazakh Purchase

http://www.themoscowtimes.com/article/1009/42/378048.htm

LUKoil may pay BP more than $1.5 billion for assets in Kazakhstan, CEO Vagit Alekperov said Thursday. LUKoil plans to buy out BP from their Lukarco joint venture, he saidLukarco holds 5 percent in the TengizChevroil oil production venture and 12.5 percent of the Caspian Pipeline Consortium in Kazakhstan. (Bloomberg)

LUKOIL: Eyeing bigger Kazakhstan presence, strategically positivehttp://www.businessneweurope.eu/dispatch_text8802

UralSib, RussiaJune 5, 2009

Yesterday, the CEO of LUKOIL (LKOH - Buy), Vagit Alekperov, said the company plans to maintain its investment program for 2009 at $7 bln. This will include the $1.5 bln buyout of BP's 46% stake in the LUKARCO joint venture (BP acquired US oil company ARCO in 1999, with which LUKOIL had set up a JV in 1997).

Alekperov confirmed that negotiations are ongoing and that a deal may be agreed upon in the near future. Considering that the buyout will increase LUKOIL's direct ownership to 12.5% and 7.7% respectively in two core Kazakhstan projects - the Caspian Pipeline Consortium (CPC) and Tengizchevroil, we regard this news as strategically positive for the company although price dependent.

Kazakhstan - a core upstream zone. LUKOIL has the strongest presence in Kazakhstan among the Russian oil peers. LUKOIL is currently involved in seven upstream projects in Kazakhstan: Karachaganak, Kumkol, Tengiz, Arman, Karakaduk, Zapadniye Buzachi and Aktyube. The combined reserve base of these projects is 474 mln bbl of 1P reserves, or 96% of LUKOIL's international reserves (although only 3% of total 1P reserves). The buyout of BP's stake in LUKARCO will increase the LUKOIL's stake in the Tengiz field from 2.7% to 7.7%. The buyout would also give LUKOIL direct ownership of a 12.5% stake in the CPC pipeline.

Valuable part of southern value chain. We welcome LUKOIL's exposure to the prolific reserve base and transportation network in Kazakhstan, as it strengthens the upstream and mid-stream part of LUKOIL's southern value chain. The upstream part includes LUKOIL's Caspian Sea offshore projects that will provide for medium- and long-term production growth. In addition, such exposure strengthens Russia's position in the region, and will enable it to indirectly control the reserves and logistics of oil that potentially could be a source to fill a reversed Odessa-Brody pipeline - a Ukrainian pipeline project that aims to squeeze out Russia's crude export to Europe.

TNK-BP to raise capex, seeks Kovykta progresshttp://in.reuters.com/article/oilRpt/idINL4101399620090604

Thu Jun 4, 2009 5:48pm IST

ST PETERSBURG, Russia, June 4 (Reuters) - Russian oil firm TNK-BP, half owned by BP (BP.L: Quote, Profile, Research), will raise capital expenditure this year to speed up projects and is seeking progress with the state on its Kovykta gas field, an executive said on Thursday.

Viktor Vekselberg, who alongside three other Soviet-born businessmen controls 50 percent of TNK-BP, told reporters capital spending would rise by $400 million from the previously planned $3.3 billion, but still down from $4.4 billion in 2008.

Vekselberg told reporters on the sidelines of Russia's Economic Forum in Saint Petersburg the money would be spent on projects whose development had slowed in previous months, such as the Uvat, Verkhnechonsk and Kamennoye fields.

He also said the government was studying including TNK-BP's giant Kovykta gas field in the investment programme of state gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research), which could help unlock the deal on the sale of the field.

TNK-BP agreed to sell Kovykta to Gazprom for around $1 billion in 2007 after months of warnings from state officials that it might lose the licence for the field as its development was proceeding too slowly. The deal has been repeatedly delayed due to a price disagreement. (Reporting by Polina Devitt, writing by Dmitry Zhdannikov, editing by Will Waterman)

TNK-BP: Capex and free float could growhttp://www.businessneweurope.eu/dispatch_text8802

UralSib, RussiaJune 5, 2009

Upstream capex could increase 12%. Interfax reported yesterday, citing unofficial statements made by Victor Vekselberg, TNK-BP's Managing Director, during the Economic Forum in St. Petersburg that at next week's board meeting for TNK-BP Ltd, the parent company of TNK-BP Holding (TNBP - Hold), the company's 2009 investment program could be increased by $400 mln.

According to the article, most of the new capex will go to its upstream green field projects - Verkhnechonsk and Uvat. In December 2008 TNK-BP's Board of Directors approved investment of $3.3 bln for 2009 versus $4.4 bln in 2008.

Also, Bloomberg reported yesterday that the company's shareholders are considering raising the free float and placing some of their shares on the market. However no details were provided about the amount of shares involved and this may not happen until 2011 when market conditions should be much more favorable.

Biggest greenfields. Verkhnechonsk and Uvat are the company's biggest projects and are expected to provide up to 18 mln tons of crude (22.8% of total production) by 2018:

__ Verkhnechonskoye field (estimated reserve potential of 200 mln tons), which is located in Eastern Siberia, was brought on stream in October 2008 and produced about 2 mln tons of oil in 2008. The company expects production to peak at 7-8 mtpa by 2011 (10-12% of production); __ The Uvat project (estimated reserve potential of 1 bln tons), located in the Tyumen region of Western Siberia, comprises 15 license blocks with 21 discovered oil fields. This field should provide 2 mln tons this year and reach a plateau of 9-10 mln tons by 2018-19 (11-13% of total production).

Higher investment will support production. Upstream is TNK-BP's top priority and so we believe there is a good chance that a capex increase will be approved. In our DCF-model we assume 2009 investment of $3.1 bln (89% for upstream and 11% for downstream). In our view, directing additional capex into such promising projects would strongly support production and in 1H09 we expect TNK-BP to be one of the fastest growing oil companies in Russia in terms of production growth. We regard this news as neutral for TNK-BP Holding's shares since it is not clear how the project's parameters will change - if production profiles remain unchanged then capex growth would be negative for the company's valuation, but if they improve it could be positive.

Victor Mishnyakov,

BP voices support for Baltic pipelinehttp://www.upstreamonline.com/incoming/article180211.ece

News service

UK oil major BP yesterday called on Russia to remove investment barriers to increase energy production and voiced support for a new gas pipeline under the Baltic.

"There is wide agreement today that protectionism in all forms, be it in trade or in inward investment, is short sighted and is not a remedy in times of economic distress," BP's Chief Executive Toni Hayward was reported as saying on The Guardian at Russia's Economic Forum.

"These barriers will slow down overall investment in the sector. Russia's oil production has recently started to decline and the demand for Russia's gas potentially also outstrips available supply," said Hayward.

"The threat is that, in an attempt to shelter domestic producers and employment from international competition, first the government starts to erect trade barriers, subsides to tariffs.

"Next, other countries retaliate and before we know it we are spiraling out of control - this very process brought the global economy to its knees in the 1930s," said Hayward.

Russia says its joint project with German and Dutch companies to build a pipeline under the Baltic Sea would help boost security as it would cut Moscow's reliance on transit states like Ukraine.

Previous disputes between Russia and Ukraine have led to cuts across Europe and prompted many European politicians to call for the reliance on Russian gas to be reduced.

But the Baltic Sea project was delayed due to ecological concerns in Baltic states.

"One concrete example of this (Russia-EU energy partnership) is the Nord Stream pipeline," said Hayward in his first public support of the project.

BP is not part of Nord Stream, which involves Russia's Gazprom, Germany's E.ON, BASF and Dutch Gasunie.

"This critical linkage between Russian gas producers and European energy consumers will enhance energy security and ensure freer flows of gas to European markets. It is a real physical manifestation of greater economic integration between Russia and Europe," said Hayward.

BP has a bumpy history of relations with Russian authorities and its partners in the TNK-BP joint venture.

Friday, 05 June, 2009, 02:41 GMT  | last updated: Friday, 05 June, 2009, 02:46 GMT

BP Happy With Fridman

http://www.themoscowtimes.com/article/1009/42/378048.htm

BP chief executive Tony Hayward said Thursday that his company's conflict with the Russian shareholders of their TNK-BP oil venture is over.

"That's just business," Hayward said on the sidelines of the forum. Hayward said he's "happy" with the joint decision by the venture's shareholders to appoint Mikhail Fridman acting CEO until one of two nominated candidates takes over. (Bloomberg)

Hayward Vs. Trade Barriers

http://www.themoscowtimes.com/article/1009/42/378048.htm

BP chief executive Tony Hayward urged Russia on Thursday to drop barriers to foreign investment and mitigate risks as "capital is in short supply."

"Erecting barriers to the inflow of foreign direct investment is questionable," Hayward said at the forum. "Russia would benefit from higher investment." (Bloomberg)

ExxonMobil to start producing in Sakhalin-1 in 2011http://www.themoscowtimes.com/article/1009/42/378048.htm

ExxonMobil vice president Zeljko Runje said Thursday that the Odoptu field in the Sakhalin-1 project should start producing in the first quarter of 2011. (Bloomberg)ExxonMobil's Sakhalin-1 venture off Russia's Pacific coast has invested $7 billion to date, Exxon Development President Neil Duffin said at the forum on Thursday. (Bloomberg)

Surgutneftegas takes MOL to courthttp://bbjonline.hu/index.php?col=1004&id=48948

Friday 9:23, June 5th, 2009

Russian oil and gas company Surgutneftegas has initiated judicial supervision against Hungarian peer MOL in the Metropolitan Court of Registration because of MOL's failure to include Surgutneftegas in its share registry, MOL said on Thursday.

Surgutneftegas acquired a 21.2% stake in MOL from OMV at the end of March, but it was not included in the share registry before the company's AGM in April.The Hungarian Energy Office (MEH) told MTI earlier that Surgutneftegas had informed it of the company's acquisition of the MOL stake, but MEH had submitted questions to the Russian company before acknowledging the transaction. For this reason, the company was unlikely to be included in the share registry before the AGM.

MOL's management called the acquisition of the stake by Surgutneftegas unfriendly. (MTI-ECONEWS)

Venezuela Says Russian Consortium to Develop Junin 6, Not Carabobo 1 by  Nancy AginRigzone 6/4/2009URL: http://www.rigzone.com/news/article.asp?a_id=76878According to Reuters, Venezuela clarified Thursday that Venezuela's Official Gazette erroneously stated that a Venezuelan-Russian consortium will be developing an oil project in the Carabobo area.In fact, the joint venture is not going to develop the Carabobo 1 central and northern blocks; rather, the companies will be developing the Junin 6 block, which has the potential to produce 200,000 barrels per day."This week or next a gazette should be printed with the correct block (Junin 6). Those blocks (Carabobo) are being publicly tendered," a PDVSA spokesman told Reuters.The consortium to develop the Junin 6 block consists of state-run PDVSA, Rosneft, Gazprom, Lukoil, TNK-BP and Surgutneftegaz.

Gazprom

Gazprom may rope in Shell for Yamal LNGhttp://www.upstreamonline.com/incoming/article180209.ece

Wire services

Russia’s gas giant Gazprom is considering inviting Royal Dutch Shell to participate in liquefied natural gas projects on the Arctic Yamal Peninsula, Gazprom's Chief Executive Alexei Miller was cited as saying yesterday in the Wall Street Journal.

"I'm certain that the experience from joint work at Sakhalin 2 can lay the foundation of future cooperation in LNG, including on Yamal," Miller said following a meeting with Shell's CEO Jeroen van der Veer during the St Petersburg Economic Forum.

In 2007, Shell ceded its controlling stake in the Sakhalin 2 project off Russia's Pacific coast to state-controlled Gazprom. The project started production of LNG in March.

Gazprom is considering production of LNG in the arctic Yamal region, but hopes to attract partners to share the financial and technical challenges.

International oil majors such as ConocoPhillips, Exxon Mobil and Total have also expressed interest in the project.

Friday, 05 June, 2009, 02:01 GMT  | last updated: Friday, 05 June, 2009, 02:28 GMT

Gazprom to Buy Azeri Gas

http://www.themoscowtimes.com/article/1009/42/378048.htmGazprom chief executive Alexei Miller said Thursday that the gas producer has "all conditions to start purchases of Azeri gas soon."

Russia and Azerbaijan have "always" been linked by a gas pipeline network, Miller said at a meeting with Rovnag Abdullayev, head of the State Oil Company of Azerbaijan. (Bloomberg)

Germany anxious about Ukraine's ability to supply Europe with gas: Miller http://capital-en.trend.az/oil/oilgas/1482221.html

05.06.09 14:00

Gazprom OJSC board chairman Aleksey Miller met with board chairman of German energy concern E.ON Ruhrgas AG Bernhard Reutersberg within Saint Petersburg international economic forum. German side expressed anxiety concerning capability of Ukraine to provide uninterrupted gas supplies to Europe, press-service of the Russian gas holding said, RIA Novosti reported.

"Colleagues from E.ON Ruhrgas expressed anxiety concerning capability of Ukraine to pay for Russian gas in time, as well as provide uninterrupted transit of hydrocarbon to Europe. We understand why problems of Naftogaz turned out to be problems of European scale given monopoly position of this country in transportation of blue fuel from Russia, Miller said.   

Both sides agreed during discussion of the situation that guarantee of reliable energy provision of Europeans requires immediate designing of plan on interaction of all participants of market - supplier, transitory country, consumers 

"Search for financing sources for payment of gas used by Ukraine and gas necessary to pump in underground depositories, as well as for modernization of Ukrainian gas transportation system refer to tasks within such a plan requiring realization shortly. Long-term plans include stirring up of work of Russia and EU on realization of North Stream and South Stream projects that will be able to provide uninterrupted natural gas supplies within ten years. There will be guarantee for no conflicts between participants of energy business," Miller said.  

Russian authorities repeatedly warned that problems with payment for gas by Ukraine can promote halt of gas transit to Europe by late June. Ukraine paid current consumption in time in 2009. There is doubt in capability to find funds for gas pumping in underground depositories. Keeping of gas reserves in underground depositories is necessary for transit to Europe.  

The Ukrainian government and Naftogaz applied to the Russian side with request to grant loan in the amount of $4.2 billion to buy roughly 19.5 billion cubic meters of gas for further pumping in underground gas depositories. Moscow is not ready for giving this loan alone and calls Europe for creation for the international pool of creditors.

Head of European commission decided to direct commission on establishment of facts concerning gas supplies to Moscow and Kiev, official representative of the European commission Johannes Leitenberger said on June 5. Barrozo will prepare report on situation concerning gas supplies by Brussels's summit on June 17-18 upon analyses that experts will submit as a result of trips to Russia and Ukraine, he said.