Russia 111005

Basic Political Developments Russian, Laotian presidents to negotiate in Moscow - On October 13, talks are

scheduled between the heads of states. RF denies claims its veto is linked with arms sales to Damascus - Russia has flatly

denied allegations that its veto on the UN Security Council resolution on Syria that threatens with the imposition of sanctions is linked with the sale of arms to Damascus.

o Russia offers compromise on UN resolution against Syria - "Our draft remains on the table. We are ready to develop an authentically collective constructive position of the international community rather than legitimizing already adopted unilateral sanctions and attempts to forcefully overthrow regimes," Vitaly Churkin said.

o UN draft resolution on Syria is based on confrontation - Churkin U.S. economy to benefit from Russia's accession to WTO - diplomat: "The simple

fact is that Russia's accession matters to the U.S. economy. It will create new markets for American exporters in one of the world's fastest growing markets," Burns said at the 19th annual meeting of the U.S.-Russia Business Council in Chicago.

Russia to hand over n-sub to India mid-November o 50/50 - This is the scheme by which a new fighter aircraft will be

developed Yury Gavrilovo India, Russia agree to further expand defence cooperation - Listing some

of the projects where both sides had put in years of effort to bring success, Mr Antony said, "The project for joint development and production of the Fifth Generation Fighter Aircraft, BrahMos missile system, licensed production in India of T-90 tanks and SU-30 MKI aircraft are proud examples of our strong relationship. We are sure that the success of these projects would be models for the implementation of several other projects of mutual interest."

Tbilisi blames Moscow for disrupting Geneva talks on Caucasus security - Moscow is "trying to change" the format of the Geneva talks, Kapanadze said. "Contrary to the agreements to discuss security and stability issues in Geneva, Russia evaded debates on these issues at yesterday's meeting and demanded that the status of the occupied Georgian territories, Abkhazia and the Tskhinvali region, be discussed," he said.

RA President S. Sargsyan awarded D. Medvedev with Order of Gloryo Dmitry Medvedev is first holder of Armenia’s new state order

Official: “Russia will not participate in any war action” - Sergey Mikheyev, head of the Russian Political Conjuncture Center answered to the question by Armenian daily “Zhamanak” (“Times”) concerning Russian peacekeepers possible settlement in Artsakh. According to the Russian official, Russia does not want its peacekeepers to be sent to Artsakh.

Russia seeks extension of Azerbaijan radar lease - Russia is negotiating the extension of the lease of the Gabala missile early-warning radar in Azerbaijan, Commander of the Russian Space Forces Lt. Gen. Oleg Ostapenko said.

Azerbaijani, North Caucasus leaders discuss cooperation - The delegation was led by Russian Deputy Prime Minister Aleksandr Khloponin, who is also the president's envoy to the North Caucasus Federal District, and included the president of Ingushetia, Yunus-Bek Yevkurov, of Kabardino-Balkaria, Arsen Kanokov, North Ossetia-Alania, Taymuraz Mamsurov, and Dagestan, Magomedsalam Magomedov.

o AZERBAIJANI PRESIDENT ILHAM ALIYEV RECEIVES RUSSIAN DELEGATION LED BY DEPUTY PRIME MINISTER AND PRESIDENTIAL ENVOY TO NORTH CAUCASUS FEDERAL DISTRICT ALEXANDER KHLOPONIN

Russia to grant 1.6 mln rbl humanitarian aid to Kyrgyzstan Lithuania and Russia to build bridge across Nemunas River - The 8th session of

the bilateral Lithuanian-Russian Intergovernmental Commission for Trade, Economic, Scientific, Technical, Humanitarian and Cultural Cooperation took place on 3-4 October in Klaipeda. The plenary session was chaired by Lithuanian Minister of Foreign Affairs Audronius Azubalis, reported BC the MFA. At the session, the Commission signed an agreement on the construction of a new bridge across the River Nemunas (Neman).

Atomstroyexport opens office in Turkey - The office was opened at the Yeshilovajik Village of the Mersin Province. It is the 12th office of Atomstroyexport in ten states. The office was opened to help the general contractor of the Akkuyu nuclear power plant to optimize construction and expand participation in the project

Russia to create Air and Space Defence Force - According to the commander of the Space Force, Lieutenant-General Oleg Ostapenko, the first phase of the move will be devoted to the development of the first space echelon that warns of a missile attack. As a whole, the new forces will be an integrated system of space surveillance and missile, space and air defence aimed at averting external threats.

Radar outside Kaliningrad to enter trial run in 2011 - commander NATO cannot use obsolete Ukrainian radars against Russia - Space Troops (Part

2) U.S. shows interest in Russia's joint missile defense proposals - Gen. Ostapenko

(Part 2) Development of S-500 air defense systems behind schedule - paper: "The

production cycle of this system is about two years. Therefore, even if the prototypes are ready by 2015, the military will not receive production models earlier than in 2017," the source said.

Russian Space Forces to conduct 14 rocket launches by yearend - Russia's Space Forces will carry out 14 launches of various carrier rockets until the end of 2011, SF commander Lt. Gen. Oleg Ostapenko said.

No privatization of nuclear icebreakers before 2017 – Atomic Fleet

o Russia to sell off its nuclear ice-breaker fleet - The presidential order is expected to allow the fleet to be put up for auction, while still keeping 100 per cent of it as state property under the supervision of RosAtom.

"Eurasian Union - priority for Putin" – official: The creation of 'the Eurasian Union' will be one the priorities for Russia’s Prime Minister Vladimir Putin, who is to run for the presidency in March, Putin’s spokesman Dmitry Peskov said Wednesday. 

o No one knew in advance about decision announced at URP congresso Kudrin refusal to work in future govt no affront -- Peskovo Putin aide woos Russia's middle-class voters - Twice within a week Putin's

spokesman Dmitry Peskov has appeared on television stations favored by intellectuals and Russia's burgeoning middle class in an effort to persuade them that their views will be heard, should Putin win March polls.

United Russia election list checked - The Russian Central Elections Commission on Wednesday approved the election list of the ruling United Russia party, a decision preceding registration. The list is headed by President Dmitry Medvedev and includes 599 people in 80 regional groups.

‘OSCE biased in assessing elections’ - The OSCE Office for Democratic Institutions and Human Rights (ODIHR) has no universal method for evaluating elections, believes the president of the All-Russia Public Institute for Election Law,Igor Borisov.

Russian Union of Journalists to expose crimes against reporters Patriarch Kirill to chair Holy Synod session Wednesday Cache with 40 kilos of TNT found in Chechnya - “The police and servicemen of

the military commandant’s office have found a cache with 40 kilograms of TNT on Tuesday in the forest near Beshal-Irzu in the Nozhai-Yurt district,” the source said.

Investigator in Magnitsky case arrested for taking bribe - Maj. Nelly Dmitriyeva accepted part of the pay-off through a third party in August, a spokesman for the Investigative Committee of the Prosecutor-General's Office told reporters on Wednesday.

Moscow to spend $76m on stray dogs and cats 62 people detained, 13 criminal cases opened over forest fires in Bratsk PRESS DIGEST - Russia - Oct 5

o www.vedomosti.ru o Russian tycoon Vladimir Kogan, a close ally of Prime Minister Vladimir

Putin, is in talks to buy Vozrozhdenie Bank , a top-30 lender by assets, the paper writes, citing sources.

o Russia has exported 10 million tonnes of grain in the last three months, some 33 percent more than in 2008, when Russia recorded a record high harvest.

o www.kommersant.ru o Russia's state-controlled oil producer Rosneft may attract a manager from

British oil major BP to run the company's strategic policy, the daily says. o The outflow of capital this year reached $50 billion by October, far

outweighing an expected $36 billion, according to a central bank report.

o www.izvestia.ru o Russia will be able to deploy its new anti-missile S-500 systems ,

successor to the S-300 and S-400, only after 2017 at the earliest, the daily reports.

o www.rg.ru o Nearly a third -- 42 million hectares out of 115 million hectares -- of

Russia's ploughed fields have become abandoned or misused in the last ten years.

o www.mk.ru o Scientists in Ukraine's Crimea region warn of a possible ecological

disaster if even one of the hundreds of chemical containers, discovered on the Black Sea floor around the peninsular, start leaking.

Russian Press at a Glance, Wednesday, October 5, 2011 The peacekeeping Slavic shield - The warming of relations between Moscow and

Kiev is also being manifested in the military sphere Sergey Konovalov Hugo Chavez is being snatched out of Moscow’s hands - Belarus deepens its

expansion into Venezuela Pavel Tarasenko, Movsun Gadzhiev (Minsk) Twilight of a Seat-Warmer - Medvedev's worst week ever just keeps on going.

BY JULIA IOFFE

National Economic Trends Ruble Snaps Five-Day Losing Streak Against Dollar on Oil Rally CBR still not changing 2011 forecast for capital outflow from Russia - $36 bln Russia's net capital outflow stands at $18.7 bln in Q3; $49.3 bln in first 9 months -

CB (Part 2) Russia’s public debt up by over 70% in 30 months – Audit Chamber Audit Chamber concerned about rising state debt Kudrin departure may cause Russia's budget chronic deficit - VTB Russia to harvest at least 90 mln tons of grain – deputy prime minister

Business, Energy or Environmental regulations or discussions Russian Stocks Snap Three-Day Slide on Bernanke’s U.S. Outlook RUSSIA DAYBOOK: Manufacturing, Metalloinvest, Putin Meeting

o WHAT TO WATCH: *Russia’s services industry stagnated in September, HSBC Holdings Plc said in its monthly PMI survey today. *Putin is due to discuss grain production and other issues with senior officials after 3 p.m. *Ignatiev is due to address a plenary session of the State Duma after 11 a.m. *The Federal Statistics Service may publish weekly consumer price changes. *Metalloinvest, billionaire Alisher Usmanov’s holding company, is due to report first-half earnings after 10 a.m.

Russia wants private business to drive innovations - Russia cannot keep increasing government financing of innovations, Deputy Prime Minister Sergey Ivanov said during the Annual Russian Business Forum "Expert-400". "We are about to reach a milestone when private businesses should take up the government's role in driving innovations," he explained.

Sberbank, VTB Group, Rosneft: Russian Equity Market Preview

Metalloinvest posts 1H 2011 net income of $985 million on higher production Alrosa Buys Back Gas Companies From VTB Capital, Vedomosti Says Alrosa Policy Aims to Keep Diamond Market Stable Russian mining company boss attacks fellow businessmen as 'adolescent' -

Polymetal is to list on the London Stock Exchange Sawiris Pledges Vimpelcom Stake Against Loan, Vedomosti Reports Putin-VTB Capital love-in gets underway - The annual VTB Capital 'Russia

Calling' investor conference is underway in Moscow with "more than 2000 global business and political leaders" in attendance for the third year of the event.

Rosbank merges its way to the top RusHydro posts 1H 2011 net profit of 27.053 billion Roubles COMMENT: Russian struggles with electricity tariff reform - Sergei Bubnov of

Renaissance Asset Managers

Activity in the Oil and Gas sector (including regulatory) Rosneft may appoint a BP manager as its VP – paper: It has become known to the

newspaper that Larry Bates, who earlier worked at the Moscow office of the BP, where he was in charge of a failed deal with Rosneft, may be appointed as a new vice-president in charge of Rosneft strategic development.

o Rosneft Hires BP Man for Strategic Development, Kommersant Says Tatneft and Bashneft will be 100% compensated for 60-66 losses; POSITIVE TNK-BP R&D for 2011 at $320M TNK-BP Holding: Potential 50% stake in Itera acquisition Lukoil Neftochim Burgas amongst SEE companies suffering greatest losses Mikhailov, a member of LUKOIL's Board of Directors, continues to buy shares of

the company

Gazprom Russian Gazprom OAO is willing to discuss supplying natural gas directly to

Romania, without intermediaries, the economy ministry said in a statement. Economy Minister Ion Ariton is on a visit to Moscow.

Poles join queue threatening Gazprom over gas prices - Polish state-controlled oil and gas company PGNiG has resurrected threats to take Gazprom to international arbitration unless the Russian company agrees to cut the price of its gas, reports Prime.

Gazprom CEO, Ukrainian energy minister hold new round of gas talks - Gazprom CEO Alexei Miller and Ukrainian Energy and Mining Minister Yuri Boiko held a new round of gas negotiations on Tuesday, Gazprom said.

Gazprom to Spend $8 Billion on Central Asia Gas, Vedomosti Says Gazprom decreases gas purchases from Central Asia - and to spend another RUB

12bn on renewing Gazprom Avia's fleet Gazprom OAO : Alexey Miller and Lee Yun-ho: growing gas demand in Asian-

Pacific countries offers great prospects for regional gas business Big players ready to race for Russian natural gas - Turkish energy firms prepare to

race to replace state-run BOTAŞ in importing Russian gas via West Line. Aksa, a company close to Russian provider Gazprom, and Bosphorus Gaz, a Gazprom investment, are strong bidders, a source says

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Full Text Articles

Basic Political Developments

10/05 12:27   Russian, Laotian presidents to negotiate in Moscowhttp://www.interfax.com/news.asp

CORRECTED GOOGLE TRANSLATIONhttp://kremlin.ru/news/12930

President of Laos, Choummaly Sayasone to visit RussiaOctober 5, 2011, 12:00At the invitation of Dmitry Medvedev, from October 12-16, President of the Lao People's Democratic Republic Choummaly Sayasone will visit Russia on official visit.On October 13, talks are scheduled between the heads of states.October 5, 2011, 12:00

10:46 05/10/2011ALL NEWS

RF denies claims its veto is linked with arms sales to Damascus

http://www.itar-tass.com/en/c154/240014.html

UNITED NATIONS, October 5 (Itar-Tass) — Russia has flatly denied allegations that its veto on the UN Security Council resolution on Syria that threatens with the imposition of sanctions is linked with the sale of arms to Damascus.

“Russia has taken a principled position, and those of you who work in the UN, you know that in some cases Russia has supported Security Council resolutions despite sustaining major losses in this case in terms of economic relations and arms sales to various countries on which sanctions were imposed,” Russian Permanent Representative to the United Nations Vitaly Churkin told reporters on Wednesday after a meeting of the UN Security Council. The Russian ambassador said he was surprised that “such accusations were voiced by a country that is injecting into this region (the Middle East) hundreds of billions of dollars in weapons and military equipment.”

According to a UN release, Churkin said it was obvious that this evening’s result was not a question of the acceptability of wording; it was a conflict of political approaches. From the start, the Russian Federation had made efforts to develop an effective reaction from the Council to events in Syria, the first of which had been reflected in a consensual presidential statement. Together with China, the Russian Federation had prepared a draft

resolution, which had been changed to bear in mind the concerns of colleagues. At the heart of that text was the respect for sovereignty and non-intervention into State affairs, the unity of Syrians and an invitation to all to an even-handed dialogue geared towards achieving peace by reforming the socio-economic life of the country.

The Russian Federation could not agree with the accusatory tone against Damascus, he said, nor the ultimatum of sanctions against peaceful crisis settlement. The Russian Federation’s proposals on the non-acceptability of military intervention, among others, had not been taken into account. The collapse of President Bashar al-Assad’s Government could provoke a conflict, destabilize the region, and create a destructive impact on the Middle East. The situation could not be considered apart from the Libyan experience. He was alarmed that compliance with Security Council resolutions in Libya had been considered a model for future actions by the North Atlantic Treaty Organisation (NATO). It was important to see how that model had been implemented. The demand for a ceasefire had turned into a civil war, the humanitarian, social and military consequences of which had spilled beyond Libya. The arms embargo had turned into a naval blockade on west Libya. Such models should be excluded from global practice.

“We’re not advocates of the Assad regime,” he said, stressing that the violence was unacceptable, but that the reason for such dramatic events was not only rooted in the hard actions of Syrian authorities. The “radical” opposition had not hidden its extremist bent, hoping for foreign sponsors and acting outside the law. Armed groups supported by “diversionary” supplies were taking over the land, killing people who complied with law enforcement. Many Syrians did not share the demands for quick regime change. They favoured gradual change, which was starting to be implemented. The best way out of the situation was to refuse a confrontation and bring parties together to devise intra-Syrian political process.

He said the Russian Federation called on the Syrian regime to quickly implement change; free detainees who had committed no crime; start a dialogue with the opposition; and interact more with the League of Arab States. His Government would continue to work with the “patriotic” groups of Syrian opposition who had said they did not want interference in their country’s affairs. “There’s no alternative to dialogue,” he said. If the opposition believed the laws of the country were imperfect, they must take up the Government’s invitation to discuss them. If Council colleagues accepted the logic aimed at full reconciliation, the Russian Federation would continue to work on the Russian-Chinese draft which contained the vital concept of a settlement.

Speaking earlier on the motives of the UN Security Council vote on the West-supported draft resolution on Syria, which was turned down because of the veto of the permanent Security Council members - China and Russia - US Ambassador to the UN Susan Rice argued on Russia’s motives for the voting. She hinted at those countries that prefer to sell arms to the Syrian regime, rather than to support the Syrian people.

“We strongly reject these allegations,” said Vitaly Churkin.

Russia offers compromise on UN resolution against Syriahttp://en.rian.ru/russia/20111005/167392685.html

04:04 05/10/2011

UNITED NATIONS, October 5 (RIA Novosti)

Moscow calls on the UN Security Council to continue the search for a balanced approach toward the political crisis in Syria based on a draft resolution prepared by Russia and China, Russia's envoy to the UN said.

"Our draft remains on the table. We are ready to develop an authentically collective constructive position of the international community rather than legitimizing already adopted unilateral sanctions and attempts to forcefully overthrow regimes," Vitaly Churkin said.

Russia and China used their veto right and blocked on Tuesday a draft UN resolution that threatened sanctions against Syria if President Bashar Assad's government continued violence against the opposition in the country

The draft, prepared by the European members of the UN Security Council and supported by the United States, stipulated that the Assad's regime should face the possibility of tough sanctions if it fails to stop its crackdown on opposition within 30 days since the adoption of the resolution.

The resolution was rejected late on Tuesday by a vote of 9-2 with four abstentions.

Russia, which stands firmly against any mention of sanctions citing the example of Libya where the NATO countries largely overstepped the UN mandate in a military operation against Muammar Gaddafi's regime, said the text of the document was "unacceptable" despite several changes to the draft.

U.S. Ambassador to the United Nations Susan Rice told the 15-nation body after Russia and China vetoed the resolution that Washington was outraged by the failure to condemn violence in Syria.

"The crisis in Syria will stay before the Security Council and we will not rest until this council rises to meet its responsibilities," she said.

The Syrian government has used force to crush opposition protests, which followed a wave of uprisings in other Arab countries. The UN says some 2,700 people have died since the start of the protests in March.

The United States, Canada and the EU have already imposed unilateral sanctions on Syria and have called for Assad to step down.

09:12 05/10/2011ALL NEWS

UN draft resolution on Syria is based on confrontation - Churkin

http://www.itar-tass.com/en/c154/239946.html

UNITED NATIONS, October 5 (Itar-Tass) — Russia has voted against the Western draft resolution of the UN Security Council on Syria, because it “was built on the confrontation philosophy,” Russian Permanent Representative to the United Nations Vitaly Churkin said at the UN Security Council on Tuesday commenting on the voting results.

The resolution was not adopted, as two permanent members of the UN Security Council - Russia and China - took advantage of their veto right.

The Russian ambassador stressed that Moscow cannot “agree with the unilateral accusatory bias against Damascus.” “We consider unacceptable the ultimatum threat of the use of sanctions against the Syrian authorities,” he said. “Such an approach runs counter to the peaceful crisis settlement principle that is based on the common Syrian national dialogue.”

According to the UN, China and Russia on Tuesday vetoed a draft resolution in the Security Council that had strongly condemned Syrian authorities for their violent crackdown against pro-democracy protesters this year and called for an immediate end to human rights abuses. Nine of the Council’s 15 members voted in favour of the draft text, there were two vetoes, and four countries abstained. A veto by any one of the Council’s five permanent members – China, France, Russia, the United Kingdom and the United States – means a resolution cannot be adopted.

The draft resolution had voiced deep concern over the recent violence in Syria and strongly condemned “the continued grave and systematic human rights violations and the use of force against civilians by the Syrian authorities.”

U.S. economy to benefit from Russia's accession to WTO - diplomathttp://en.rian.ru/world/20111005/167391386.html

02:18 05/10/2011

WASHINGTON, October 5 (RIA Novosti)

The United States will benefit from Russia's accession to the World Trade Organization (WTO) as it would open new markets for American exporters, U.S. Deputy Secretary of State William Burns said.

"The simple fact is that Russia's accession matters to the U.S. economy. It will create new markets for American exporters in one of the world's fastest growing markets," Burns said at the 19th annual meeting of the U.S.-Russia Business Council in Chicago.

"If we want to meet President Obama's goal and double U.S. exports by 2015 -- if we want to put more Americans back to work -- then WTO membership for Russia must be a part of our strategy. By one independent estimate, Russia's WTO accession would allow U.S. exports to Russia to more than double (from $9 billion in 2008 to $19 billion annually)," he said.

Russia, the only large economy outside the global trade club, has been negotiating its entry into the 153-member WTO for 17 years.

Russia hopes to end the talks on its accession to WTO before the end of this year, if the matter is not politicized.

Two-thirds of votes of WTO members are sufficient for the admission of a new member. The next WTO ministerial conference will be held in December 2011.

Russia to hand over n-sub to India mid-November

http://www.domain-b.com/defence/sea/indian_navy/20111005_russia.html

05 October 2011

Moscow: Russia will be leasing a nuclear submarine to India in mid-November, a Russian defence industry source said Tuesday. The K-152 Nerpa (Indian Navy designation: INS Chakra) Schucka-B class nuclear attack submarine is an advanced model with reduced acoustic signatures which make it a potent presence in the sea.

The delivery will make India only the sixth military power in the world to operate nuclear-powered submarines after France, China, Russia, Britain and the United States.

The Nerpa/Chakra was to have been leased in 2008 but the transfer was put on hold after a fatal mishap three years ago, when a freon gas fire suppressant system was accidentally set off.

The $650 million lease contract was signed in 2004. The submarine was lying in dry-dock, partially constructed, until Indian financing revived its construction. The Chakra will be a brand new boat of its class.

The Nerpa has been built by the far eastern Amur Shipyard,

The source said all the defects "will have been eliminated before November, after which the Nerpa will be transferred to Delhi".

Reportedly, the Nerpa had 208 people aboard at the time of the accident, including civilian shipyard personnel. It is designed to carry a crew of 73.

With 17 killed and 21 injured, it was Russia's worst naval accident since the sinking of the Kursk nuclear submarine in 2000.

50/50http://rt.com/politics/press/rossijskaya-gazeta/aircraft-india-moscow-project/en/

Published: 5 October, 2011, 03:36Edited: 5 October, 2011, 03:38

This is the scheme by which a new fighter aircraft will be developed Yury Gavrilov

Yesterday, Russia’s defense minister, Anatoly Serdyukov, and his Indian counterpart, Arackaparambil Kurian Antony, held a meeting of the intergovernmental commission on military-technical cooperation in Moscow.

The ministers discussed the pending lease of the K-152 Nerpa nuclear multi-purpose attack submarine, specified the terms of completion of works on the Vikramaditya aircraft carrier – its transfer to the Indian Navy is expected to take place before the end of this year – and readdressed licensed production and overseas maintenance of Su-30MKI aircraft and T-90S tanks.

However, the main topic of discussion was a multi-functional fighter aircraft, which Russia and India have agreed to create jointly on a 50/50 basis. Delhi has high hopes of this project. On the eve of his business trip to Moscow, India’s Chief Air Marshal Norman Anil Kumar Browne recalled the purchase of at least 214 of this type of aircraft – 166 single-seaters and 48 twin-seaters. India hopes to have the new aircraft in service in four to five years. Meanwhile, the FGFA project (Fifth Generation Fighter Aircraft) is called “the countries’ largest joint defense program.” In the next 20 years, the Indian

government plans to invest about $35 billion in the project. This money should be enough to cover 250-300 jet fighters. 

The Indian minister was able to ascertain, in fact, that the resources won’t go to waste during yesterday’s visit to Zhukovsky Airfield near Moscow, where he was shown a prototype of the new T-50 fighter aircraft.

Various forms of cooperation are appropriate for strategic partners like Russia and India.

At the beginning of this year, India accounted for about a third of Russia’s export portfolio, and the value of our contracts with Delhi was close to $12 billion. In the next two years, Russia will supply 16 MiG-29 deck-based fighters and, under a second contract, 29 more units. In September, the first batch of Mi-17V5 multi-purpose helicopters was transferred overseas. Experts say that the contract for the supply of 80 of these helicopters to India could be supplemented with an additional order for 59 helicopters.      

The transfer of three Project 11356 frigates to India – the Teg, Tarkash, and Trikand – has unfortunately been delayed. But our shipbuilders promise to closely observe the new supply schedule of these ships to the Indian Navy.

Home: India, Russia agree to further expand defence cooperationhttp://netindian.in/news/2011/10/05/00016313/india-russia-agree-further-expand-defence-cooperation

NetIndian News Network New Delhi, October 5, 2011

India and Russia have agreed to step up their defence ties and take all necessary measures to further expand their cooperation on a mutually beneficial basis.

In a protocol signed after the 11th meeting of the India-Russia Inter-Governmental Commission on Military Technical Cooperation (IRIGC-MTC), co-chaired by Defence Minister A K Antony and his Russian counterpart Anatoly Serdyukov in Moscow yesterday, the two sides noted with satisfaction that that during the period under review various diligent steps had been taken "to deepen interaction in the development of defence technologies, modernization of military equipment and joint manufacture of military-purpose products".

"Such cooperation involves the strengthening of interactions between the Armed Forces, defence industry enterprises and research agencies of the two countries," the protocol noted.

Visibly happy at the outcome, Mr Antony told a group of Indian journalists shortly after the talks: "Distinct improvements have taken place in the pace of progress of many

critical projects in the last one year. We value our friendship a great deal. Together we would like to consolidate our relationship and take it forward."

At the talks, the Indian delegation included Defence Secretary Shashikant Sharma, Secretary, Defence Production Shekhar Aggarwal, Indian Ambassador Ajai Malhotra, Lt Gen M S Buttar, Air Marshal R K Sharma, Vice Admiral N N Kumar, Chief Controller of Research & Development of the Defence and Research Development Organisation Avinash Chander, Hindustan Aeronautics Limited Chairman and Managing Director Ashok Nayak and Director General, Acquisition Vivek Rae.

Mr Antony told the meeting that the India-Russia defence relationship had grown both in content and scope over the years. He said India highly valued the time tested, strong and multi- faceted relationship with Russia.

"There is a strong impulse, both at the level of the Government and among the people of India to further strengthen our special strategic partnership which is based on mutual trust and complimentarity of interests," he said.

"The world in general and our region in particular, are witnessing significant developments which have an impact on regional and global security. In the evolving scenario, the special strategic partnership between our two countries assumes even greater significance. Both our countries must continue to strengthen our joint efforts to address these challenges," he said.

Listing some of the projects where both sides had put in years of effort to bring success, Mr Antony said, "The project for joint development and production of the Fifth Generation Fighter Aircraft, BrahMos missile system, licensed production in India of T-90 tanks and SU-30 MKI aircraft are proud examples of our strong relationship. We are sure that the success of these projects would be models for the implementation of several other projects of mutual interest."

Referring to the planned delivery of aircraft carrier INS Vikramaditya, Mr Antony said, "We are keenly awaiting the induction of the aircraft carrier into the Indian Navy. This project has attracted considerable public attention in India. We hope that the induction will take place, on schedule, by end 2012. We also hope that all activities on the MiG-29K are completed to achieve synchronization with the aircraft carrier."

Nevertheless, Mr Antony drew the attention of the Russian side to the vexing issue of delayed export clearances for vital repair equipment for already contracted weapons systems. This has been affecting supplies of defence equipment and spares.

The Russian side assured the Indian side that the matter was receiving attention at the highest levels in the Russian Government and efforts would made to institutionalize measures to avoid such delays in future.

Mr Antony expressed India’s concern at the tardy progress made in the design and

development of the Multi-Role Transport Aircraft (MTA). The two sides agreed to accelerate the progress of this project and they would be meeting later this month.

With regard to the Fifth Generation Fighter Aircraft (FGFA), being jointly designed and developed by India and Russia, both sides noted that the first stage of the preliminary design contract had been successfully completed and the second stage of the PD Contract is to be finalised before September, 2012. The training programme for the Indian engineers covering nearly 20 courses was completed in July, 2011. Both sides agreed to continue discussions for finalization of the R&D contract as per the agreed timelines of the general contract signed in December 2008.

Mr Serdyukov described India-Russia defence ties as a "stable and promising relationship".

During the discussion, the Russian side spoke about their views on offsets. The Indian side informed them that the Indian offset guidelines were presently under revision. The two sides also discussed the regional security situation.

Mr Serdyukov hosted a banquet in honour of the visiting Indian delegation.

Mr Antony is scheduled to return home tonight.

Tbilisi blames Moscow for disrupting Geneva talks on Caucasus securityToday at 10:43 | Interfax-Ukraine Tbilisi - Georgian Deputy Foreign Minister Sergei Kapanadze has accused Moscow of disrupting the recent Geneva consultations on stability in the Caucasus.

"The Geneva talks on stability in the Caucasus have been disrupted because of Moscow's tough position," Kapanadze told Georgian journalists on Wednesday.

Moscow is "trying to change" the format of the Geneva talks, Kapanadze said. "Contrary to the agreements to discuss security and stability issues in Geneva, Russia evaded debates on these issues at yesterday's meeting and demanded that the status of the occupied Georgian territories, Abkhazia and the Tskhinvali region, be discussed," he said.

The diplomat blamed Russia and "the puppet authorities" for the disrupted talks. "Russia's position was tougher than ever in the three years of the Geneva talks. The representatives of Moscow and the puppet regimes blocked debates on any issues, even relatively insignificant ones. They insisted that the conversation on any subjects could be continued only after the parties reach a consensus on Abkhazia's and the Tskhinvali region's status," he said.

Under an earlier agreement, the Geneva talks concerned security and stability and the

return of displaced persons, Kapanadze said. "We have not discussed and have not touched upon the status issue, but it was absolutely obvious at this meeting that Moscow was trying to evade this agreement and bring the status issue to the foreground," he said.

"Georgia needs some time to analyze Russia's new tactics," he said.

Read more: http://www.kyivpost.com/news/russia/detail/114146/#ixzz1ZtMdzVpd

RA President S. Sargsyan awarded D. Medvedev with Order of Gloryhttp://www.aysor.am/en/news/2011/10/05/sargsyan-medvedev/

RA President Serzh Sargsyan signed a decree on awarding RF President Dmitry Medvedev with the Order of Glory.

The decree says: “According to the 16th point of the 55th article of the Armenian Constitution and grounding on the Law of the Armenian Republic about “State rewards of the Armenian Republic” I decide:

to award President of Russian Federation Dmitry Anatoli Medvedev with the Order of Glory for strengthening traditional relations between Armenian and Russian people, for deepening and enlarging the allied military relations between Armenian Republic and Russia, as well as for the big personal contribution he has in the peace and protection of the international security.”

TODAY, 11:08

Aysor.am

10:09 05/10/2011ALL NEWS

Dmitry Medvedev is first holder of Armenia’s new state order

YEREVAN, October 5 (Itar-Tass) — Russia’s President Dmitry Medvedev has become the first holder of Armenia’s new state Order of Glory, Armenia’s presidential press service reported on Wednesday.

Armenia’s President Serzh Sargsyan said in his decree of October 4 that Dmitry Medvedev is decorated with the order “for his big personal input in strengthening of traditionally friendly relations between the peoples of Armenia and Russia, deepening and expanding of strategic partnership relations between the Republic of Armenia and the Russian Federation, as well as for keeping peace and international security.”

Official: “Russia will not participate in any war action” http://times.am/2011/10/05/official-russia-will-not-participate-in-any-war-action/

By Times.am at 5 October, 2011, 1:40 pm

Sergey Mikheyev, head of the Russian Political Conjuncture Center answered to the question by Armenian daily “Zhamanak” (“Times”) concerning Russian peacekeepers possible settlement in Artsakh. According to the Russian official, Russia does not want its peacekeepers to be sent to Artsakh.

“Why does Russia need it? We need money to fulfill our own plans, why will we spend money on peacekeepers? We are fed up with our problems in Caucasus. Russia will not participate in any war action. Russian society will not bear it. Do you think our victims in Caucasus are not enough?”

/Times.am/

Russia seeks extension of Azerbaijan radar leasehttp://en.rian.ru/russia/20111005/167390222.html

00:52 05/10/2011

MOSCOW, October 5 (RIA Novosti)

Russia is negotiating the extension of the lease of the Gabala missile early-warning radar in Azerbaijan, Commander of the Russian Space Forces Lt. Gen. Oleg Ostapenko said.

The radar, located near the town of Minchegaur, 120 kilometers (75 miles) from the capital Baku, was leased to Russia for 10 years in 2002. The lease expires on December 24, 2012.

"Talks are under way about a possibility of lease extension. Azerbaijan has put forward certain proposals, which are now being studied," Ostapenko told reporters on Tuesday.

Russia pays the annual Gabala rent of $7 million to Azerbaijan under the current agreement.

According to various sources, Baku is asking for a higher rent, a compensation for environmental impact on the area, and wider employment opportunities for Azeri citizens servicing the Russian personnel at the radar facility, as part of the new agreement.

The Gabala radar, also known as the Daryal Information and Analytical Center, is an important element of the Russian missile defense network.

The radar has been operational since early 1985. Russia says that with its range of 6,000 kilometers (3,700 miles), it is the most powerful in the region and can detect any missile launches in Asia, the Middle East and most parts of Africa.

Azerbaijani, North Caucasus leaders discuss cooperationhttp://news.az/articles/politics/45926

Wed 05 October 2011 04:39 GMT | 6:39 Local Time

Ilham Aliyev has welcomed to Baku a delegation of leaders from Russia's North Caucasus republics.

The delegation was led by Russian Deputy Prime Minister Aleksandr Khloponin, who is also the president's envoy to the North Caucasus Federal District, and included the president of Ingushetia, Yunus-Bek Yevkurov, of Kabardino-Balkaria, Arsen Kanokov, North Ossetia-Alania, Taymuraz Mamsurov, and Dagestan, Magomedsalam Magomedov.

Welcoming bilateral relations with Russia's federal districts, the Azerbaijani leader said the visit opened up good opportunities to discuss the development of cooperation.

He said Azerbaijan and Russia enjoyed growing trade, with the two countries strengthening their political relations and regional cooperation.

President Aliyev said Azerbaijan was strengthening its business, brotherly and neighbourly relations with Russia's North Caucasus republics.

The Russian president's envoy to the North Caucasus Federal District, Aleksandr Khloponin, said both Azerbaijan and Russia attached particular emphasis to developing

bilateral relations and cooperation at the federal district level as well as the government level.

He described the cooperation between Azerbaijan and the North Caucasus Federal District as “vivid evidence of this”.

The envoy said they had already held a series of important meetings and presented several complex projects in Baku.

The meeting heard that "at the request of veterans and the people of Ingushetia, Malgobek City Council decided to name one of the city's avenues after Azerbaijan's national leader, Heydar Aliyev".

Following the meeting, President Ilham Aliyev hosted a dinner in honour of the Russian delegation.

Prime Minister Rasizade

Earlier in the day on Tuesday, Azerbaijani Prime Minister Artur Rasizade met Aleksander Khloponin and the accompanying delegation.

The prime minister said that the visit would provide a good stimulus to deepening bilateral relations and said that Azerbaijan was interested in expanding cooperation with the North Caucasus, a region with which it had deep historical ties.

Outlining the prospects for cooperation between Azerbaijan and Russia in the North Caucasus, Aleksander Khloponin highlighted the potential of tourism and other business areas.

He said that an agreement on the protection of investments would be signed in the near future.

AzerTAj, 1news.az

AZERBAIJANI PRESIDENT ILHAM ALIYEV RECEIVES RUSSIAN DELEGATION LED BY DEPUTY PRIME MINISTER AND PRESIDENTIAL ENVOY TO NORTH CAUCASUS FEDERAL DISTRICT ALEXANDER KHLOPONINhttp://www.azerbaijan.az/portal/newsen.html?action=GetFullNews&ldid=2005-07-26&ltid=21:41:54&ndid=2011-10-05&nid=5

President of Azerbaijan Ilham Aliyev has received a Russian delegation led by Deputy Prime Minister and Presidential Envoy to the North Caucasus Federal District Alexander Khloponin.

President Aliyev praised the visit of the Russian delegation, which includes Ingush leader Yunus-Bek Yevkurov, President of Kabardino-Balkaria Arsen Kanokov, President of North Ossetia-Alania Teimuraz Mamsurov and Dagestan leader Magomedsalam Magomedov.

The Azerbaijani leader said the visit opened up good opportunities to discuss ways of developing cooperation.

President Aliyev hailed Azerbaijan`s bilateral relations with Russia`s federal districts.

He said Azerbaijan and Russia enjoy growing trade, with the two countries strengthening their political relations and regional cooperation.

President Aliyev noted Azerbaijan has strengthening business, brotherly and good neighborhood relations with the North Caucasian republics of Russia.

Russian Deputy Prime Minister and Presidential Envoy to the North Caucasus Federal District Alexander Khloponin said both Azerbaijan and Russia attach particular emphasis to developing the bilateral relations and cooperation not only on the level of governments, but also on the level of federal districts.

Mr. Khloponin said the cooperation between Azerbaijan and the North Caucasus Federal District was a “vivid evidence of this”.

He noted they already held a series of important meetings and presented several complex projects in Baku, adding Russia was interested in developing the bilateral cooperation with Azerbaijan.

It was said at the meeting that by request of veterans and people of Ingushetia the Malgabek City Council decided to name one of the city`s cemeteries after Azerbaijan`s national leader Heydar Aliyev.

Following the meeting President Ilham Aliyev hosted a dinner in honor of the Russian delegation.

BAKU. 05.10.2011. AzerTAg.

Russia to grant 1.6 mln rbl humanitarian aid to Kyrgyzstan http://english.ruvr.ru/2011/10/05/58185287.html

Oct 5, 2011 09:58 Moscow Time

Russia is to provide humanitarian aid to Kyrgyz disabled children worth 1.6 million rubles, an official with the Kyrgyz Ministry of social protection of population said Wednesday.

The money will be spent on buying upgraded wheelchairs for 50 disabled children. All the wheelchairs meet the international standards and were made in compliance with individual recommendations. (TASS)

Lithuania and Russia to build bridge across Nemunas Riverhttp://www.baltic-course.com/eng/transport/?doc=46730

Danuta Pavilenene, BC, Vilnius, 05.10.2011

The 8th session of the bilateral Lithuanian-Russian Intergovernmental Commission for Trade, Economic, Scientific, Technical, Humanitarian and Cultural Cooperation took place on 3-4 October in Klaipeda. The plenary session was chaired by Lithuanian Minister of Foreign Affairs Audronius Azubalis, reported BC the MFA. At the session, the Commission signed an agreement on the construction of a new bridge across the River Nemunas (Neman).

"Despite the remaining issues of our common perception of history on the bilateral agenda that will take some time, today, as we are marking the 20th anniversary of the re-establishment of diplomatic relations, we can say that our relations are dynamic and pragmatic. A busy agenda of the Intergovernmental Commission testifies to this fact," Azubalis said after the meeting. At the session, the Commission signed an agreement on the construction of a new bridge across the River Nemunas (Neman) between Panemune and the region of Sovetsk. It is believed that this bridge will ensure easier communication between Lithuania and the Kaliningrad region, and will help to boost trade. That this will reduce border congestion and will improve the wellbeing of local people in Panemune, because the traffic will be moved away from the city centre and into the suburbs, is not less important.

 

Lithuania welcomes the increase in trade with Russia and would like Russia to join the World Trade Organisation and to sign a new Partnership and Cooperation Agreement with the EU as soon as possible. During the session, Russian representatives were acquainted with Lithuania's concerns about obstacles for the Lithuanian language teachers to work at schools in the Kaliningrad region. The officials were invited to find a long-term visa solution, which would allow the Lithuanian language teachers to work unhindered. "Bearing in mind the statistics of the Russian language teaching in Lithuania, we have every right to expect that in the Kaliningrad region and elsewhere no artificial hindrances will be put in the way of the Lithuanian language teaching. We have also called for the Lithuanian language to be made an optional subject in Russia," said the minister. It was repeatedly stressed that Lithuania had still not received all the answers to its serious and legitimate concerns about the construction of the nuclear power plant in the Kaliningrad region. Azubalis assured the Russian delegation that Lithuania's firm determination to demonopolize the energy sector was unchanging.

 

The minister also encouraged Russia to open a dialogue on difficult issues. "I have encouraged Russia to open dialogue on the joint evaluation of the past, the restoration of justice, the compensation for the occupation, problems of the investigation of crimes (e.g., in January 13th case) and the perpetuation of the memory of the victims," Azubalis said.

Atomstroyexport opens office in Turkeyhttp://vestnikkavkaza.net/news/economy/18587.html

Atomstroyexport, a Russian nuclear engineering company, has opened an office in Turkey, RIA Novosti reports.

The office was opened at the Yeshilovajik Village of the Mersin Province. It is the 12th office of Atomstroyexport in ten states. The office was opened to help the general contractor of the Akkuyu nuclear power plant to optimize construction and expand participation in the project.

Plans for the next year are to build all the necessary infrastructure and start building auxiliary facilities, a town for builders and maintainers of the power plant.

Atomstroyexport is a leading company of the Rosatom State Corporation for construction of nuclear facilities abroad.

Russia to create Air and Space Defence Forcehttp://english.ruvr.ru/2011/10/04/58160682.html

Oct 4, 2011 19:28 Moscow Time

Russia will create Air and Space Defence Forces by the 1st of December. Russian President Dmitry Medvedev insisted on the necessity to form them during his State of the Nation address in November last year. The new forces will be based on Russia’s Space Force.

According to the commander of the Space Force, Lieutenant-General Oleg Ostapenko, the first phase of the move will be devoted to the development of the first space echelon that warns of a missile attack. As a whole, the new forces will be an integrated system of space surveillance and missile, space and air defence aimed at averting external threats.

Although experts support the idea, they call in question the possibility of uniting a large variety of weapon-systems under a single command. All agree that on the 1st of December, one can talk about Air and Space Defence Forces in general terms because this will be a huge military structure, says a military expert Alexander Khramchikhin:

“A real defence of the territory will hardly be created within 20 years even if everything goes smoothly. Moreover, the new forces will be created on the basis of the Space Force, which is only ten years old and has never had means to hit targets although such means will sharply strengthen the Air and Space Forces. It will be a serious problem to manage these systems properly,” Alexander Khramchikhin said.

Some experts disagree with him. The main thing is to implement the idea, says head of the Military Forecasting Centre, Anatoly Tsyganok:

“First and foremost, specialists have to be trained. There should be a military Academy that will train officers. Weapons have to be developed, and contract-soldiers have to be trained. Until recently, the creation of the Air and Space Defence Forces has been under question. A decision has been taken, and I believe that Russia will create Air and Space Defence Forces in 2-3 years,” Anatoly Tsyganok said.

The formation of the new forces is taking place on against a complicated foreign policy background. Talks with the U.S. on the creation of a joint global missile defence system are stuck. Russian experts believe that Russia must develop its own missile defence system in any case before a compromise is reached with the Americans. The main

obstacle is that Washington is rejecting to conclude a legally binding agreement on not directing the missile system that is being developed in the West against Russia. According to Russian ambassador to NATO Dmitry Rogozin, disregard of Russia’s worries might lead to the point of no return. The creation of the Air and Space Defence Forces is a compulsory measure, but it will give the country a real feeling of self-defence says Dmitry Rogozin. The ideal situation would be Russia’s partners realizing the necessity of creating a joint global missile defence system. At present, this is a dream of distant future.

Radar outside Kaliningrad to enter trial run in 2011 - commander http://www.militarynews.ru/EMAIN.ASP

NATO cannot use obsolete Ukrainian radars against Russia - Space Troops (Part 2)

http://www.militarynews.ru/EMAIN.ASP

U.S. shows interest in Russia's joint missile defense proposals - Gen. Ostapenko (Part 2)

http://www.militarynews.ru/EMAIN.ASP

Development of S-500 air defense systems behind schedule - paperhttp://en.rian.ru/mlitary_news/20111005/167395154.html

07:11 05/10/2011

MOSCOW, October 5 (RIA Novosti)

The development of Russia's formidable S-500 air defense system is lagging behind schedule by at least two years, the Izvestia daily said on Wednesday citing a defense industry source.

According to the source, the first prototypes will be ready and tested by 2015, while the deliveries to the Russian army could start in 2017 at the earliest.

"The production cycle of this system is about two years. Therefore, even if the prototypes are ready by 2015, the military will not receive production models earlier than in 2017," the source said.

A source in the Russian Defense Ministry confirmed that the earlier announced schedule of S-500 deliveries in 2015 was "too optimistic," as the prototypes should have already been undergoing field tests to meet the deadlines.

The S-500, a long-range air defense missile system, is expected to become the backbone of a unified aerospace defense system being formed in Russia.

The system is expected to have an extended range of up to 600 km (over 370 miles) and simultaneously engage up to 10 targets.

The Russian military has demanded that the system must be capable of intercepting ballistic missiles and hypersonic cruise missiles and plans to order at least ten S-500 battalions for the future Russian Aerospace Defense.

Russian Space Forces to conduct 14 rocket launches by yearendhttp://en.rian.ru/russia/20111005/167393714.html

05:18 05/10/2011

MOSCOW, October 5 (RIA Novosti)

Russia's Space Forces will carry out 14 launches of various carrier rockets until the end of 2011, SF commander Lt. Gen. Oleg Ostapenko said.

"About 14 launches will be carried out from the Plesetsk and Baikonur space centers," Ostapenko told reporters on Tuesday.

He added that the list includes test launches of ballistic missiles and scheduled space launches.

Earlier reports indicated that the SF would be responsible for the launch of at least three additional Glonass-M satellites by the end of 2011 to complete the Glonass satellite navigation grouping.

Russia currently has a total of 28 Glonass satellites in orbit, although only 23 of them are operational.

The complete Glonass grouping must have 24 operational and 2-3 reserve satellites for the Glonass network to operate with global coverage.

No privatization of nuclear icebreakers before 2017 – Atomic Fleet http://www.interfax.co.uk/

5/10/11 8:37AM GMT

MURMANSK. Oct 5 (Russian Military News) – Privatization of nuclear powered icebreakers will not be possible before 2017, said Andrei Smirnov, Deputy General…

http://www.ria.ru/economy/20111005/449687602.html

Приватизация атомных ледоколов в России начнется не ранее 2017 года09:44 05/10/2011

Russia to sell off its nuclear ice-breaker fleethttp://rt.com/news/prime-time/nuclear-icebreaker-fleet-russia-065/

Published: 4 October, 2011, 22:32Edited: 4 October, 2011, 22:32

A state-run company that operates atomic ice-breakers in Russia may soon become private.

AtomFleet has been removed from the list of previously untouchable assets.

This, however, does not mean the state is going to sell it off completely. The presidential order is expected to allow the fleet to be put up for auction, while still keeping 100 per cent of it as state property under the supervision of RosAtom.

Military specialists say the main reason behind the move is economic. Ever since the company became part of state-owned RosAtom, the losses experienced have amounted to millions of dollars annually. Private companies operating in northern Russia immediately started looking for cheaper alternatives.

The situation was worsened by the growing popularity of diesel ice-breakers. As a result, the demand for nuclear-powered icebreakers went down, while the maintenance cost of

nuclear-powered icebreakers remained the same, making them highly unprofitable to operate.

Russia has been the only country to produce nuclear-powered icebreakers. Currently, Russia’s atomic fleet owns four two-reactor icebreakers (“Rossiya”, “Soviet Union”, “Yamal”, and “50 Years of Victory”), two one-reactor icebreakers (“Taimyr” and “Vaigach”), the “Sevmorput” container ship, and five floating technical aid units.

Nuclear icebreakers are not the only pieces of Russian equipment rumored to be put aside.

Earlier there were media reports that the Russian Navy was getting rid of its most powerful submarines, the Typhoon class.

Designed to carry big nuclear warheads, the Typhoon-class submarines are the largest in the world. However, their immense size was said to be the main reason why the country decided to decommission the underwater veterans.

The vessels, it was said, did not meet the terms of the new START treaty signed by Russia and the US in the spring of 2010. The long-awaited treaty considerably limited the strategic arsenals of each country to 1,550 nuclear warheads.

The rumors, however, proved to be a hoax.

"Eurasian Union - priority for Putin" - official http://english.ruvr.ru/2011/10/05/58190384.html

Oct 5, 2011 11:18 Moscow Time

The creation of 'the Eurasian Union' will be one the priorities for Russia’s Prime Minister Vladimir Putin, who is to run for the presidency in March, Putin’s spokesman Dmitry Peskov said Wednesday. 

According to him, the member states of the Eurasian Union, which will comprise a number of CIS countries will keep their political sovereignty, while the management of the national economies will be integrated to the maximum.

He named the EU as the closest model to the Eurasian Union.

In particular, Moscow would like to establish a single currency for the Eurasian Union with a single emission center.

On Tuesday, the idea of establishing the Eurasian Union was presented by Putin in his article in the Izvestia newspaper. (Interfax)  

04:57 05/10/2011ALL NEWS

No one knew in advance about decision announced at URP congress

http://www.itar-tass.com/en/c154/239870.html

MOSCOW, October 5 (Itar-Tass) — The governing tandem's decision made public by President Dmitry Medvedev and Prime Minister Vladimir Putin at the recent congress of the United Russia party (URP) was an absolute surprise to everyone, Dmitry Peskov, the Premier's press secretary, told the Dozhd (rain) television channel on Tuesday night in a live broadcast, acknowledging that he was "dumbfounded" by such a decision.

"No one knew about that. If someone asserts that he knew that in advance, he tells you a lie. I did not think that that would happen so early. It seemed to me that that would be done closer to the elections," the press secretary said, assuring the TV channel audience that he, just as all his colleagues, had learned about the decision only at the moment of its being made public.

At the end of September, at the URP congress, Putin suggested that Medvedev head the URP Federal list at the State Duma elections and later on head the country's government. The President, for his part, stated that the now Premier must be a URP candidate at the forthcoming presidential elections.

03:18 05/10/2011ALL NEWS

Kudrin refusal to work in future govt no affront -- Peskov

http://www.itar-tass.com/en/c154/239863.html

MOSCOW, October 5 (Itar-Tass) — The refusal by ex-Minister of Finance Alexei Kudrin to work in a future government if it is headed by Dmitry Medvedev should not be regarded as an affront, Dmitry Peskov, press secretary of Prime Minister Vladimir Putin, told the Dozhd (rain) television channel on Tuesday night in a live broadcast.

"The words about disagreement either with Putin or Medvedev cannot and should not be interpreted as a personal affront in any way," Peskov said. The press secretary's opinion is that such words can be only perceived as unpreparedness or unwillingness to work together with this or that superior.

Peskov also pointed out that Kudrin's pronouncements were made by him without clarifications or explanations, which was "incompatible with the position held by Kudrin in the Cabinet of Ministers".

At the end of September Alexei Kudrin, who was attending a session of the International Monetary Fund and the World Bank in Washington, stated that he was not planning to work in a new government after the 2012 presidential polls, if it is headed by the now Russian President Dmitry Medvedev. Kudrin said his attitude is accounted for by the existence of a number of differences between him and Medvedev over economic policy. In reply, the Russian president demanded that Kudrin give explanations, and then suggested that he tender his resignation.

On September 26, Kudrin, after taking counsel with Prime Minister Putin, petitioned Medvedev in a request to relieve him of the duties of Vice-Premier and Finance Minister.

Putin aide woos Russia's middle-class votershttp://www.reuters.com/article/2011/10/05/us-russia-putin-spokesman-idUSTRE79409720111005

Tue, Oct 4 2011

By Gleb Bryanski

MOSCOW (Reuters) - Russian Prime Minister Vladimir Putin is seeking to build bridges with middle class voters disillusioned by the near certain prospect of his return to the Kremlin after 2012 presidential elections.

Twice within a week Putin's spokesman Dmitry Peskov has appeared on television stations favored by intellectuals and Russia's burgeoning middle class in an effort to persuade them that their views will be heard, should Putin win March polls.

Putin, Russia's paramount leader even in the lesser post of prime minister, is expected to easily win a March presidential poll after President Dmitry Medvedev's decision to stand aside in favor of his mentor.

Most expect Putin to be in the Kremlin for 12 years, serving two six-year terms.

As prime minister, Putin has continued to cultivate the macho, action man image he cultivated in his 2000-2008 stint as president, leaving Dmitry Medvedev, his hand-picked successor in the Kremlin, to court middle class intellectuals.

"It is impossible not to take their opinion into account. It would have been absurd. And we have some explaining to do," Peskov told the pro-opposition Rain cable television station, which is popular among educated urban viewers.

Russia's nascent middle class is less enamored with Putin's rule and liken the prospect of a second Putin stint in the Kremlin to the period of stagnation under Soviet ruler Leonid Brezhnev, which ultimately led to the collapse of the USSR.

Many middle class Russians felt betrayed when Medvedev, whose agenda in office included modernization of the economy, fighting corruption and liberalization of political life, decided not to run for president in 2012.

The disgruntled middle class pose a potential danger for the Russian rulers in the longer term as they can evolve into protest movements.

Peskov said Putin had yet to outline the main elements of his election program, but it would "show that Putin should not be taken for the late Brezhnev."

However, he said that the gloom of the Moscow intelligentsia was not shared outside the capital.

"There are people who think that the atmosphere in the country is suffocating and it is time to escape to the banks of River Thames while others want three percentage points off their taxes to get their farm going," Peskov said.

"But we are all united by one goal -- we want our country to leap forward," he added, defending Putin's record in rebuilding the economy and fighting the country's worst economic crisis in a decade.

"We very much like to explain it to people who sit in expensive restaurants where there are no free tables left, eat expensive Italian meals costing 1,200 roubles ($36) per plate and fret about the fate of their country," Peskov said.

(Reporting By Gleb Bryanski; Editing by Jon Boyle)

RT News line, October 5

United Russia election list checked http://rt.com/politics/news-line/2011-10-05/#id19637

The Russian Central Elections Commission on Wednesday approved the election list of the ruling United Russia party, a decision preceding registration. The list is headed by President Dmitry Medvedev and includes 599 people in 80 regional groups. More than 50

heads of regions were also included on the slate for the December parliamentary elections. United Russia is the final party to have its list checked by CEC. The Liberal Democratic Party is expected to be the first to have its slate registered on Wednesday.

‘OSCE biased in assessing elections’http://rt.com/politics/election-democracy-observers-osce-035/

Published: 4 October, 2011, 18:09Edited: 4 October, 2011, 18:13

The OSCE Office for Democratic Institutions and Human Rights (ODIHR) has no universal method for evaluating elections, believes the president of the All-Russia Public Institute for Election Law,Igor Borisov.

The ODIHR wants to send to Russia 60 observers for the pre-election period and 200 observers on a short-term mission to monitor the course of the election on December 4. The Central Election Commission says the figures are excessive.

ODIHR director Janez Lenarcic had earlier insisted on sending 450 representatives for the short mission.  Today, the figure is less than half the size, but Russia wants it to be reduced even more. 

“It’s a political question. The figure mentioned by Mr Lenarcic has no methodological justification behind it,” Borisov said. 

He added that in the absence of an appropriate method, neither 450, nor 250 nor 100 observers can objectively evaluate the election. 

At the same time, Igor Borisov hopes that a solution will be found. 

“It will be a political compromise,” he said. “I don’t know why, but Mr Lenarcic is not willing to make concessions and keeps saying that ‘there can be no bargaining.’ But it’s not bargaining but a question of a universal approach.” 

Borisov noted that Europe deliberately avoids universal standards in order to retain the ability to make a  “political maneuver in the assessment of national procedures.” 

He went on to say that Russia will accept the approach of CIS observers which, unlike that of the OSCE, is not politically motivated and is “based on objective joint documents.”

October 05, 2011 09:56

Russian Union of Journalists to expose crimes against reportershttp://www.interfax.com/newsinf.asp?id=277897

MOSCOW. Oct 5 (Interfax) - The Russian Union of Journalists (RUJ) along with its foreign colleagues is opening a database about murders and persecutions of Russian journalists over the past few years.

"Not a single high-profile murder, which was taken under control by the country's top administration, was investigated, and I suspect, never will be," RUJ President Vsevolod Bogdanov said during the presentation of a new Internet resource.

Red tape hurdles in the investigation of such cases "are not a reason not to interfere in the situation," he said.

The Conflicts in Mass Media database, which is already publicly available on the Russian segment of the Internet, contains cases such as media censorship, as well as threats, attacks and murders of reporters since the beginning of this century, Bogdanov said

The information resource was created jointly with the International Federation of Journalists, Glasnost Defense Foundation and other Russian and foreign organizations, the RUJ chief said.

Hopefully, this base will allow not only to give an idea about the freedom of the press, but will also equip the authorities with information, President of the European Federation of Journalists Arne Konig said.

The Russian-language database is available at: www.mediaconflictsinrussia.org

kk

(Our editorial staff can be reached at eng.editors@interfax.ru)

01:54 05/10/2011ALL NEWS

Patriarch Kirill to chair Holy Synod session Wednesday

http://www.itar-tass.com/en/c154/239864.html

MOSCOW, October 5 (Itar-Tass) — Patriarch Kirill of Moscow and All Russia will chair a session of the Holy Synod of the Russian Orthodox Church (ROC). The session opens here on Wednesday. The Holy Synod meets four times a year alternately in the Russian capital, in St Petersburg, and in Kiev where the latest session of the Synod was held.

This time the session will take place at the patriarchal residence in Chisty Pereulok (Clean Lane), the Patriarchate press service announced.

The hierarchs will discuss the current state of affairs in the Church.

As tradiiton has it, twelve archbishops headed by the Patriarch participate in the Synod proceedings. There are seven permanent members of the Synod who are vested with these powers depending on the significance of the bishopric or church organization which they head, and five temporary members.

The Primates of the Ukrainian, Moldovan, and Belarusian Churches, the Metropolitan of St Petersburg, the governor of the Moscow Region parishes, as well as the Chancellor of the Patriarchate and Head of the Department for Foreign Church Relations are Permanent Members of the Synod.

The heads of bishoprics from Uzbekistan, from the cities of Khabarovsk, Pyatigorsk, and Oryol, as well as from Ukraine -- Metropolitan Onufry of Chernovtsy and Bucovina -- have been invited to the "winter session" of the Synod. It is Metropolitan Onufry that, most likely, will represent the Orthodox Church of Ukraine, for the Church Primate, Metropolitan Vladimir, will not be able to attend owing to a broken leg.

It was precisely in Bucovina that Patriarch Kirill spent the first days of October, consecrating the main cathedral of a monastery near Chernovtsy and a monastic house for disabled children. The Primate of the ROC was greeted in that south-western region of Ukraine very warmly and cordially.

09:29 05/10/2011ALL NEWS

Cache with 40 kilos of TNT found in Chechnya

http://www.itar-tass.com/en/c154/239956.html

MOSCOW, October 5 (Itar-Tass) — The cache with explosives was found in Chechnya, a source in the republican law enforcement agencies told Itar-Tass by phone on Wednesday.

“The police and servicemen of the military commandant’s office have found a cache with 40 kilograms of TNT on Tuesday in the forest near Beshal-Irzu in the Nozhai-Yurt district,” the source said.

The source of the explosives is being searched for.

Investigator in Magnitsky case arrested for taking bribehttp://en.rian.ru/russia/20111005/167401043.html

12:14 05/10/2011

MOSCOW, October 5 (RIA Novosti)

An investigator in the case of campaigning lawyer Sergei Magnitsky has been arrested for demanding a $3 million bribe to drop charges against suspected smugglers in an unrelated case.

Maj. Nelly Dmitriyeva accepted part of the pay-off through a third party in August, a spokesman for the Investigative Committee of the Prosecutor-General's Office told reporters on Wednesday.

"Dmitriyeva called on her acquaintances to take the bribe. On August 23, one of the intermediaries took 50,000 euro and $1,000 in bribes, as well as counterfeit euros and dollars totaling 50 million rubles ($1.5 million)," spokesman Vladimir Markin said.

The bribe-takers were detained red-handed by the security services, Markin said.

Dmitryeva is reported to have been investigating the death of Sergei Magnitsky, who died in police custody in 2009. Magnitsky was detained on tax evasion charges after accusing a number of law enforcement officials of massive fraud.

Magnitsky, who working on behalf of a British-registered investment company, Hermitage Capital Management, spent a year in Moscow's notorious Butyrka prison before his death.

In July, the Kremlin's rights body said the death was the result of "calculated, deliberate and inhumane neglect."

Moscow to spend $76m on stray dogs and cats

http://gulftoday.ae/portal/cc6b2a38-60b0-4e31-9713-82f17fdfcf47.aspx

October 05, 2011

MOSCOW: Russian authorities are set to allocate over 2.5 billion rubles ($76 million) to care for stray dogs and cats in Moscow over the next three years, the chairperson of the city's ecology committee said on Wednesday.

There are currently 12 shelters able to house 12,500 stray dogs.

This year, 260 million rubles ($23.2 million) were allocated for the purpose.

Russia will spend 798 million rubles ($24 million) in 2012 to sterilise stray animals and keep shelters running.

In 2013, a total of 838 million rubles ($25.6 million) will be allocated, and the spending will further increase to 880 million rubles (almost $27 million) in 2014, said Moscow Ecology Committee spokeswoman Vera Stepanenko.

"As of September 1, approximately 12,000 dogs are being kept in the city's animal shelters, foster owners were found for 3,300 dogs this year," said Anton Velikhovsky, the head Moscow's public utilities and land improvement department.

He said the population of stray dogs in the city is estimated to be between 30,000 and 10,000.

This year, a total of 8,600 animals were caught, and 7,500 of them were sterilised.

Every year the number of stray animals increases by around 5,000 in Moscow.

Indo-Asian News Service

11:08 05/10/2011ALL NEWS

62 people detained, 13 criminal cases opened over forest fires in Bratsk

http://www.itar-tass.com/en/c154/240040.html

MOSCOW, October 5 (Itar-Tass) —— As many as 13 criminal cases were opened in the city of Bratsk, Irkutsk region, over recent forest fires, and 62 persons were detained on

suspicion of being involved in arson, a spokesman for the Russian Interior Ministry’s public order department said on Wednesday.

“Sixty-two persons were detained for violating the fire regime,” the spokesman said. “Apart from than, police are taking effort to expose and bring to responsibility those who were behind setting fire to trees, bushes and grass.”

An emergency regime is still in force in the city of Bratsk and the Bratsk district. Fire fighting operations involve 1,755 men and 119 units of hardware. It is planned to engage more people in the fire fighting operations. It is also planned to use two Il-76 plane of the Russian emergencies ministry.

PRESS DIGEST - Russia - Oct 5http://www.reuters.com/article/2011/10/05/press-digest-russia-oct-idUSL5E7L50TT20111005

2:33am EDT

MOSCOW, Oct 5 (Reuters) - The following are some of the leading stories in Russia's newspapers on Wednesday. Reuters has not verified these stories and does not vouch for their accuracy.

VEDOMOSTI

www.vedomosti.ru

- Russian tycoon Vladimir Kogan, a close ally of Prime Minister Vladimir Putin, is in talks to buy Vozrozhdenie Bank , a top-30 lender by assets, the paper writes, citing sources.

- Russia has exported 10 million tonnes of grain in the last three months, some 33 percent more than in 2008, when Russia recorded a record high harvest.

KOMMERSANT

www.kommersant.ru

- Russia's state-controlled oil producer Rosneft may attract a manager from British oil major BP to run the company's strategic policy, the daily says.

- The outflow of capital this year reached $50 billion by October, far outweighing an expected $36 billion, according to a central bank report.

IZVESTIA

www.izvestia.ru

- Russia will be able to deploy its new anti-missile S-500 systems , successor to the S-300 and S-400, only after 2017 at the earliest, the daily reports.

ROSSIISKAYA GAZETA

www.rg.ru

- Nearly a third -- 42 million hectares out of 115 million hectares -- of Russia's ploughed fields have become abandoned or misused in the last ten years.

MOSKOVSKY KOMSOMOLETS

www.mk.ru

- Scientists in Ukraine's Crimea region warn of a possible ecological disaster if even one of the hundreds of chemical containers, discovered on the Black Sea floor around the peninsular, start leaking.

(Reporting By Tatiana Ustinova)

Russian Press at a Glance, Wednesday, October 5, 2011http://en.rian.ru/papers/20111005/167396540.html

08:48 05/10/2011

POLITICS

 Prime Minister Vladimir Putin will seek the creation of an "Eurasian Union" of former Soviet countries as part of his foreign policy agenda if he is re-elected president next year. (Izvestia)

 Most Russians consider inflation, poor living conditions and dismal communal services as the major problems facing Russian society. (Kommersant, Moscow News)

 ECONOMY & BUSINESS

 Russia's key stock indexes tumbled more than 5 percent on Tuesday as the price of Brent crude oil fell below the $100-a-barrel level for the first time in 45 days. (Kommersant)

 Russia is losing fierce competition with Belarus over lucrative Venezuelan markets. Unlike its Russian companies, Belarusian firms are already extracting oil, building manufacturing plants, railroads and gas pipelines in the oil-rich Latin American country. (Kommersant)

 Russia’s federal budget will allocate additional 150 billion rubles ($4.6 billion) to the support of state-run companies and corporations. (Vedomosti)

 Russian energy giant Gazprom may spend over $8 billion this year to buy 29 billion cubic meters of natural gas from Central Asian countries. (Vedomosti)

 Russia has exported a record 10 million metric tons of grain since lifting the grain export ban three months ago. (Vedomosti)

 The flights of Russia’s troubled Avianova airline will be suspended indefinitely on October 9. The company will have to reimburse passengers about $5 billion for cancelled tickets bought in advance. (Rossiiskaya Gazeta)

 DEFENSE

 The development of Russia’s formidable S-500 air defense system is lagging behind schedule by at least two years. (Izvestia)

 WORLD

 South Ossetia has introduced travel restrictions on Russian citizens and other foreigners as a security measure ahead of November’s presidential election. (Kommersant, Moscow Times, Moscow News)

SOCIETY

 The State Duma, Russia's lower house of parliament, has approved a bill stipulating chemical castration for pedophiles, in a bid to crack down on sex crime against minors. (Kommersant, Rossiiskaya Gazeta, Moscow News)

 Russian oligarchs Roman Abramovich and Boris Berezovsky are facing off in a London court, where Berezovsky is suing Abramovich for $5 billion on allegations of breach of trust and breach of contract. (Moscow Times, Moscow News)

 The Moscow government has adopted one of its most ambitious and expensive programs - “Healthcare in Moscow in 2012-2016” allocating over 1 trillion rubles ($30.5 billion) on improving the situation with healthcare in the Russian capital for the next five years. (Izvestia)

 Russia will soon adopt an amended Civil Code designed to protect privacy of the Russian citizens. One of the amendments stipulates a ban on posting confidential

personal information on the internet without prior consent of individuals. (Rossiiskaya Gazeta)

CRIME

 Moscow police have intercepted the sale of a computerized database containing 500 Gigabytes of personal data of millions of Russian citizens. (Moscow News)

 SPORTS

 “If it were not for the lockout in the NBA, I would continue to play overseas” - interview with the best Russian basketball player Andrei Kirilenko upon his return to Russia. (Izvestia)

  For more details on all the news in Russia today, visit our website at http://en.rian.ru.

The peacekeeping Slavic shieldhttp://rt.com/politics/press/nezavisimaya/peacekeeping-military-russia-ukraine/en/

Published: 5 October, 2011, 05:01Edited: 5 October, 2011, 05:05

The warming of relations between Moscow and Kiev is also being manifested in the military sphere Sergey Konovalov

The recent warming in relations between Moscow and Kiev is being manifested in the military sphere as well. The active phase of the Ukrainian-Belarusian-Russian military exercises on the Shiroky Lan training field in Nikolaev began yesterday. According to the Defense Ministry of Ukraine, the battalion formed from the sub-units of the armed forces of the three states will spend a week (until October 8) practising the actions of “the joint mechanized brigade in peacekeeping operations.”

Russia’s co-director of the exercises, First Deputy Commander of the Seventh Guards Airborne Assault Division, Colonel Dmitry Ovcharov, has already dubbed this a historic event, because Ukraine has not hosted military exercises with Russian paratroopers and the Belarusian troops since 1991.

The spokesman for the Russian Airborne Troops, Colonel Aleksandr Cherednik, said that about 250 troops from the three states are taking part in the maneuvers. Russia’s military contingent was transported from Novorossiysk to Nikolaev by Il-76 military transport aircraft. “Russian paratroopers arrived at the exercise without arms and were yesterday

allowed to borrow Ukraine’s military equipment and firearms.” This speaks of the confidence and openness of the current Ukrainian leadership, which has organized these maneuvers.

In the post-Soviet period, Moscow and Kiev have mainly conducted joint military training on the Black Sea, as well as working together on issues concerning the establishment of joint missile defense. Belarus, meanwhile, had only worked together with Russia. Now, Russian, Ukrainian and Belarusian soldiers are beginning a new stage of military cooperation between the three Slavic states.

This stage of active military cooperation began relatively recently when Russia and Ukraine resumed joint naval exercises “Fairway of the World 2011” in the summer of this year and, when in September this year, a squadron of the 25th Separate Airborne Brigade of the 6th Army Corps of Ukraine participated in the “Union Shield 2011” strategic tactical exercises at the Ashuluk training grounds in Russia. This development has a simple explanation based on global military experience; establishing defenses with allied forces is more effective. Moreover, the threat of terrorism is becoming a lot more relevant for all three Slavic states. In order to parry it, it is necessary to utilize armed forces, including multinational sub-units. Russia and Ukraine already have similar peacekeeping experience.

The troops of the two countries have taken part in UN and NATO peacekeeping missions in the former Yugoslavia, as well as some African states. But this is the first time this type of cooperation has been organized on their own territory.

Belarusian President Aleksandr Lukashenko, who currently chairs the Collective Security Treaty Organization (CSTO), has already mentioned the possibility of using the CSTO Collective Rapid Reaction Forces (CRRF) for the prevention of insurrections in the organization’s member states. Meanwhile, according to Ukraine’s defense minister, Mikhail Ezhel, Ukraine’s decision to take part in international anti-terrorism training operations, including on its territory as well as on the territory of the RF, was made during the trilateral meeting of the defense ministers of Russia, Belarus, and Ukraine, which took place in June 2011.    

Ukraine’s decision to participate in the joint events of the Russian-Belarusian military alliance was, according to the president of the Academy of Geopolitical Studies, Col.-Gen. Leonid Ivashov, made due to the existence of common threats to the Slavic states. “We should acknowledge that it is no longer possible to ensure the security of our countries alone. The socio-political and economic situation in Ukraine is such that, under certain circumstances, the country’s breaking up into several states is possible. In these conditions, there is a high possibility of NATO troops being deployed in the country to allegedly stabilize the situation. And, as has already been the case with the former Yugoslavia and Iraq, NATO troops will secure the status quo of these new states. The current Ukrainian leadership understands that only Russia and its geo-political allies are able to prevent this process – hence the rapprochement with Moscow and Minsk in the

military and military-technical spheres. And this rapprochement should only be welcomed,” he says.

Hugo Chavez is being snatched out of Moscow’s handshttp://rt.com/politics/press/kommersant/venezuela-caracas-minsk-oil/en/

Published: 5 October, 2011, 07:03Edited: 5 October, 2011, 07:05

Belarus deepens its expansion into Venezuela Pavel Tarasenko, Movsun Gadzhiev (Minsk)

Minsk is stepping up its economic expansion into Venezuela. At the end of a Belarusian delegation’s trip to Caracas, led by presidential assistant, Viktor Sheiman, contracts were signed for the construction of homes in Venezuela and development of the country’s gas transport system. Experts say that Minsk has, in essence, snatched these contracts away from Moscow, and based on the pace of real co-operation with Caracas, in some sectors it is already ahead of Russia. Unlike Russian firms, Belarusians are already producing oil, building factories, railroads, and pipelines in Venezuela.

The Belarusian delegation spent about a week in Venezuela. On Monday, it was greeted by the Venezuelan leader, Hugo Chavez. “Our friendship is very important,” he assured his guests. The delegation left Venezuela not only with assurances of friendship, but also with new contracts.

An agreement for the construction of 20,000 panel homes and a brick factory has been signed. Minsk has agreed to contribute to the development of a railroad network. Moreover, agreements on the joint development of two gas fields near Lake Maracaibo (Zulia State) and construction of a pipeline from Barquisimeto to Barinas State have been signed. And finally, Minsk and Caracas have decided to put into operation the joint venture Petrolera BeloVenezolana. The company holds licenses for the development of five oil fields, but production is currently taking place at only one of the fields. For now, 20,000 barrels of oil are being produced daily, which is a drop in the ocean compared to Venezuela’s total production volume of 2.97 million barrels a day.

Thus, Belarus is gradually becoming one of Venezuela’s key partners – the countries are working together in the fields of transportation, construction, infrastructure, and energy.

Meanwhile, the bilateral trade volume could amount to $2 billion by the end of the year. At the same time, experts are confident that Belarus and Venezuela are co-operating on a wider range of issues. Belarusian expert Yury Khashchevatsky suggested to Kommersant that Minsk and Caracas are not disclosing all aspects of their co-operation. The expert recalled that, earlier, the Spanish daily El Mundo reported that Belarus is engaged in arms trafficking to the Columbian terrorist group FARC, using Venezuela as an intermediary.

Experts note that one of the main reasons for Minsk’s sudden rise in activity in Venezuela is its concern about the future of its projects in the country. These fears are particularly relevant due to Hugo Chavez’s illness. It’s no secret that most of the joint projects are tied personally to the Venezuelan leader. Colonel Chavez has already announced that the Belarusian president will visit him before the end of the year.  Russian experts are seeing another reason for Belarus’s expansion in Venezuela. “Aleksandr Lukashenko is trying to show Moscow that he is not politically isolated and that the relationship model between society and the leadership, which he introduced in Belarus, is successfully developing in a number of other countries as well,” Vladimir Semago, deputy head of the Russian-Venezuelan Business Council, told Kommersant.

Russia, meanwhile, says Mr Semago, has lost the initiative in the development of the Venezuelan market. “In the period 2003-2005, a strong impetus had been given to the relations between Moscow and Caracas. Eventually, however, the business sector was expelled from this relationship due to excessive government regulation,” explained the expert. He noted that “the deputy prime minister, Igor Sechin’s, program for the development of relations with Venezuela failed. Occupied as he was with Russian affairs, he was unable to get involved in the process of deepening co-operation with Caracas”. The National Oil Consortium, which had been created at Mr Sechin’s suggestion, has not yet produced a single barrel of oil, and the fields offered by Caracas to Lukoil and Gazprom turned out to be not particularly promising. In the end, the main sector of co-operation continues to be the trade in arms, which, according to OPEC, the holder of the world’s largest oil reserves is purchasing on credit.

Twilight of a Seat-Warmerhttp://www.foreignpolicy.com/articles/2011/10/04/dmitry_medvedev_worst_week_ever

Medvedev's worst week ever just keeps on going. BY JULIA IOFFE | OCTOBER 4, 2011

MOSCOW — Late on Thursday night, Sept. 29, after a week of snickers and open mockery, a decision was made: The president -- that is, Dmitry Medvedev -- would go on television and explain himself. Why had he, an acting president, with another seven months left in his term, gone up to the podium at the United Russia convention five days earlier and said, "It would be the right thing to do for the convention to uphold the candidacy of Vladimir Putin for the presidency." Medvedev, never a figure of strength and masculinity in a country obsessed by such things, seemed like he had been dragged through the mud and humiliated -- especially when Putin took his turn at the podium and announced that the decision had been made years ago. That one phrase seemed to negate Medvedev's three-and-a-half years in office. Medvedev looked like a broken man: His face was bloated, his eyes ringed with fatigue or misery -- despite the near-constant smiles. At times during his speech, it seemed like he might cry. Seeing a man down -- a man long suspected of being a dauphin, a seat-warmer for Putin -- public opinion pounced. "Well, at least it's Putin, and not Putin," snarked KermlinRussia, the popular parody of Medvedev's Twitter account, highlighting the now uncontestable fact that Putin and Medvedev were and had always been the same person. (A few days later, Kermlin followed up with this zinger: "This is an unconscionable act toward journalists, who had spent four years training themselves not to call Putin president.") Citizen Poet, the satirical project of poet Dmitry Bykov and actor Mikhail Efremov, cast Medvedev as a hapless, childish Hamlet and Putin as the ghost of his father. The apparition appears and answers Hamlet/Medvedev's indecision -- "To be, or not to be?" -- with a simple, "You won't be."

When Medvedev fired Alexei Kudrin, the finance minister known to be extremely close to -- and thus protected by -- Putin, his rant about presidential authority convinced no one, not even Kudrin, who responded to the president's request for his resignation that he would consult the prime minister. That is, Vladimir Putin. The blogosphere did not let that one pass, either. A new joke began to make the rounds: "I'll consult the prime minster," says Kudrin. "No, I'll consult the prime minister," says Medvedev. (In my version, they race each other down the hallway to his office.)

It was not a good week. And so the presidential spinmeisters made the decision to put their man on television, to let him explain himself -- an unheard-of proposition in Russian politics.

The broadcast -- a roundtable interview with the heads of the three biggest state channels -- aired on Friday night. Prime-time shows were rejiggered and swapped out around it. Russian viewers saw their hobbled president, resplendent and sad in a cobalt suit, surrounded by the three graying, skeptical, almost nauseous-looking TV execs in Medvedev's lush library, just outside Moscow.

The first question came from Konstantin Ernst, director of Channel One, Russia's most important state channel. "What was the primary motive behind your decision?" asked Ernst, of the Sept. 24 announcement. "Usually, presidents seek reelection. You are a politician, and politicians are ambitious people. What was your ambition in making this decision?"

Medvedev's response was puzzling: "My biggest ambition is to be useful to my country and my people." Was the implication that he was not useful to his country as president? Had he not been useful this whole time? He didn't say.

Then Medvedev said something even worse: Putin and he are of similar outlook, and as they belong to the same party, why not just figure it out between the two of them? It's not so unusual, Medvedev said, leaning heavily, awkwardly, on the Russian rhetorical tactic known as America-does-it-too-ism: "Can you imagine Barack Obama competing with Hillary Clinton?" Medvedev said. "That would be impossible. They both belong to the Democratic Party, and their decision was based on who could get better results. And this was also how we made our decision."

It's a novel analogy, given that it proves exactly the opposite of what Medvedev wanted to prove. As one prominent Russian journalist put it, "Who told you such a stupid thing that you decided to go and repeat it to the whole world?"

If that weren't unconvincing enough, Medvedev gave another reason: "Prime Minister Putin undoubtedly remains the most popular politician in our country at this point, and his rating is even higher. Somehow, people tend to forget about that."

That one is tricky. Yes, Putin is technically more popular than Medvedev. There has always been a relatively stable gap in their poll numbers. Pundits both here and in the United States spent the weekend trying to crunch the numbers, trying to explain a dip here, a bump there. But somehow people forgot something else: Ratings, like everything else in the Russian political system, are not truly ratings, but simulacra.

"I have to tell you something," Oleg Savelev said to me once. Savelev is a sociologist at the Levada Center, one of several polling centers that monitor such data. "Our numbers don't track public opinion; they track the effectiveness of propaganda." That is, he went on to explain, if television weren't centrally formulated and subject to heavy self-censorship, if newspapers had wider circulation, if the Internet had a deeper penetration, the numbers would probably look very different -- which is precisely why all those soft controls exist in the first place.

Since the very beginning of the tandem experiment, public opinion has been formed in only one direction: Medvedev is weak and nerdy; Putin is strong, manly, decisive. Medvedev plays with gadgets; Putin rides Harley-Davidsons, shoots tigers. Medvedev deals with forest fires on the phone; Putin is on the ground talking to the people and walking through the smoldering embers. Three girls come out in miniskirts for Medvedev; scores of them strip for Putin. It's no contest, because Russians aren't that

different from Americans in this respect: The show matters, and people love a winner. And the poll numbers show exactly this. Putin is always more trusted. He is so trusted that, ironically, Russians are even more likely to see Putin, the architect of the power vertical, not Medvedev, as the ostensible liberal, as the guarantor of democratic freedoms.

If invoking the technicality of poll numbers was circular, the rest of Medvedev's interview was a total wash. Asked why someone who had repeatedly spoken of his desire to run for a second term and then suddenly, inexplicably, changed his mind, Medvedev said: "Everything may change in this life. It's true we have long had an understanding on how to configure the power, should our people show us trust in 2011 and 2012. It's true, and we said so at the party convention. But at the same time, life could have made unexpected and paradoxical changes to our plans. What if the preferences of the voters change, for some reason? I must take this into account."

In other words, it would have only been possible for him to run if voter preference -- expressed not at the polls but in hall-of-mirrors polls -- had swung suddenly in his favor. Compare this with what he told the Financial Times in June: "I think that any leader who occupies such a post as president simply must want to run."

Why, Medvedev was asked, should voters even bother going to the polls if everything has already been decided for them? "I consider [such statements to be] absolutely irresponsible, misleading, and even provocative," he said in a stiffly practiced manner. "What are you talking about? The election campaign has just started. Let's ask ourselves a simple question: What if our people reject us -- both Medvedev and Putin? What will happen to these decisions by the convention? These decisions are merely the party's recommendation to vote for those people, that's all."

Apparently, he's in agreement with the commentary of the chair of the Central Election Commission, Vladimir Churov, who said last week that the results of the presidential election are unpredictable. I have no comment for either of them.

Does he feel pressure from the Internet, of which he is such an avid fan, asked the head of NTV? "Of course, Internet polls and their results are not legally binding for governments. Nor do they accurately reflect public opinion."

Are people becoming indifferent? Has television -- and this really was a fine question, coming from the heads of state TV stations -- degenerated into bread and circuses? Politics on TV, Medvedev said, is "a clear sign of poor living standards. The better our life is, the less attention people will pay to that, because they are more or less happy with their life." No political interview could really be complete without the invocation of the thoroughly post-Soviet premise that politics are bad and dirty, and that the effective decisions are being made without the mess of politics. You, good citizen, may have no impact on the political process, the thesis goes, but you can buy as many iPhones as you want -- thanks to the fact that we're handling all this for you.

When the interview was over, half an hour later, Medvedev looked like a man who had finally gotten a lot off his chest. Perhaps it had been therapeutic. But was it therapeutic for Russians? I doubt it. No one except the people who talk about the minutiae of Kremlinology even talked about it. Medvedev seemed to be slowly receding from the news and, perhaps worse, from jokes. Talk around town is not about what sort of prime minister he'll be, but how short a term he'll serve before he is phased out. Some wonder whether he'll even be named prime minister at all.

In the meantime, after the political chaos of the last two weeks, things are calm in Moscow again. It's quiet and boring again; stability is once again upon us. But already, the outlines of the next phase are starting to show. On Oct. 4, Putin, writing in a paper, Izvestia , owned by an old friend , introduced an ambitious new project: the Eurasian Union, a wide zone of economic and political cooperation in the post-Soviet space.

Medvedev still had some work to do, too, though: He fired a couple of prison officials and toured some barracks in Nenets autonomous okrug. Back in Moscow, the Duma was discussing Medvedev's proposed legislation to deal with pedophiles. His novel suggestion? Voluntary castration.

National Economic Trends

Ruble Snaps Five-Day Losing Streak Against Dollar on Oil Rallyhttp://www.bloomberg.com/news/2011-10-05/ruble-snaps-five-day-losing-streak-against-dollar-on-oil-rally.html

QBy Jack Jordan - Oct 5, 2011 8:30 AM GMT+0200

The ruble appreciated against the dollar for the first day in six as a surprise drop in U.S. crude supplies revived demand for Russia’s chief export earner.

Russia’s currency strengthened 0.4 percent to 32.595 per dollar as of 10:05 a.m. in Moscow, its first gain since Sept. 27. It was 0.2 percent stronger at 43.38 per euro, leaving it up 0.3 percent at 37.45 against the central bank’s target dollar- euro basket.

Oil futures climbed for the first day in four in New York, gaining 3.1 percent to $77.99 per barrel, after an American Petroleum Institute report yesterday showed U.S.

inventories of the commodity dropped 3.1 million barrels last week, leading investors to reduce bets that prices will decline. Urals crude, the main Russian blend, jumped 1.1 percent to $100.34 a barrel by yesterday’s close.

Investors pared bets the ruble will depreciate further, with non-deliverable forwards showing the currency at 33.2422 per dollar in three months, compared with 33.2968 yesterday. NDFs provide a guide to expectations of currency movements and interest-rate differentials.

Russia’s dollar Eurobond due 2018 fell, pushing the yield up eight basis points to 5.053 percent. The yield on Russia’s sovereign dollar bonds due in 2020 declined one basis point to 5.465 percent.

To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

October 05, 2011 11:56

CBR still not changing 2011 forecast for capital outflow from Russia - $36 blnhttp://www.interfax.com/newsinf.asp?id=277944

MOSCOW. Oct 5 (Interfax) - The Central Bank of Russia has still not adjusted its 2011 forecast for net capital outflow from Russia, which comes to $36 billion, CBR Chairman Sergei Ignatyev told journalists on Wednesday.

"So far, we aren't changing anything," he said, when asked if the CBR has revised the 2011 forecast for capital outflow form Russia.

The CBR said on Tues that net outflow of capital from Russia in January-September 2011 totaled $49.3 billion. According to the draft of the main principles of monetary policy in 2012-2014, net outflow of capital from Russia is forecast at $36 billion in 2011.

Ih

(Our editorial staff can be reached at eng.editors@interfax.ru)

October 05, 2011 09:26

Russia's net capital outflow stands at $18.7 bln in Q3; $49.3 bln in first 9 months - CB (Part 2)http://www.interfax.com/newsinf.asp?id=277887

MOSCOW. Oct 5 (Interfax) - Net private capital outflow from Russia in the third quarter, according to the balance of payments, stood at $18.7 billion, the Bank of Russia said on its website.

Capital outflow totaled $21.4 billion in the first quarter and $9.2 billion in the second quarter. Thus, net outflow of private capital from Russia in January-September stood at $49.3 billion.

Net capital outflow totaled $4.6 billion by the banking sector in the third quarter of 2011 and $14.1 billion for other sectors.

The Central Bank estimates that net capital outflow totaled $34 billion in 2010.

Net private capital outflows from Russia are expected to increase to $36 billion in 2011.

kk vp pr

(Our editorial staff can be reached at eng.editors@interfax.ru)

07:58 05/10/2011ALL NEWS

Russia’s public debt up by over 70% in 30 months – Audit Chamber

http://www.itar-tass.com/en/c154/239906.html

MOSCOW, October 5 (Itar-Tass) —— Russia’s public debt has gone up by more than 70 percent in the past 30 months and now is 4.6 trillion roubles, the press service of the Russian Audit Chamber reported.

Since the beginning of 2009, the public debt increased by 71.6 percent and was 4.6 trillion roubles as of July 1, 2011. The draft budget for 2012-2014 provide for a further two-fold growth, the press service noted.

As of July 1, 2011, the internal debt was 3.5 trillion roubles, or 2.4 times more than in 2009. The internal debt is made up primarily of securities, the volume of which augmented 2.2-fold in the said period.

The foreign debt as of July 2011 was one trillion roubles, with its total share shrinking from 29 percent in 2009 to 15 percent of the overall public debt in 2011. Like the internal debt, the foreign debt is also made up primarily of securities.

According to the Audit Chamber, the share of securities in the overall foreign debt went up in 2009-2010 from 72.8 percent to 80.7 percent.

Audit Chamber concerned about rising state debt http://top.rbc.ru/english/index.shtml?/news/english/2011/10/04/04190711_bod.shtml

The escalation of government borrowings entails a risk to Russia’s debt sustainability, the Audit Chamber concluded as a result of its debt sustainability analysis for 2009-2010.

Parliament’s watchdog noted that the Russian government’s total debt has soared 71.6% to RUB 4.6 trillion (approx. USD 141bn) over the last two and a half years. Moreover, the draft federal budget for 2012-2014 calls for doubling the state debt.

Domestic debt has risen 2.4-fold since the beginning of 2009 to over RUB 3.5 trillion (approx. USD 107bn) as of July 1, 2011, while foreign debt has reached RUB 1 trillion (approx. USD 31bn). The percentage of foreign debt has dropped by 15 percentage points to 29.3% of the total debt over the past two years.

At present, the ratio of state debt to GDP and the cost of servicing are far from the caps mandated in the federal budget. However, the state debt ratio to federal budget revenue is nearing the ceiling.

Auditors noted that this trend points to a high risk that budget revenue will not be sufficient to cover federal borrowings planned in the future.

Kudrin departure may cause Russia's budget chronic deficit - VTBhttp://en.rian.ru/business/20111005/167398299.html

10:28 05/10/2011

MOSCOW, October 5 (RIA Novosti) - The resignation of Alexei Kudrin as Russia's finance minister may create additional risks for the federal budget, including the risk of its chronic deficit, a senior manager of Russia's second largest bank VTB said on Wednesdays.

Gerbert Moos, VTB chief financial officer, said that Russia continued to depend heavily on world oil and gas prices.

"Russia lacks a large production, banking or financial sector that could absorb external shocks (if world oil prices plunge)," Moos said.

After the departure of Kudrin, largely seen as a guardian of Russia's fiscal stability, a new risk has emerged for Russia, Moos said.

"I believe that the departure of Alexei Kudrin has created a risk of structural budget deficit," he said.

07:47 05/10/2011ALL NEWS

Russia to harvest at least 90 mln tons of grain – deputy prime minister

http://www.itar-tass.com/en/c154/239903.html

VOLGOGRAD, October 5 (Itar-Tass) —— Russia is expected to harvest at least 90 million tons of grain in 2011, Russian First Deputy Prime Minister Viktor Zubkov said on Thursday at a meeting with farmers of Russia’s southern Volgograd region.

“This is a yielding years not only in terms of grain harvest,” Zubkov said.

According to the deputy prime minister, this year’s potato harvest is 28 million tons, soy harvest is 1.4 million tons, sunflower harvest exceeds eight million tons, maize harvest is 6.2 million tons, and sugar beet harvest is 36.1 million tons. These figures prove that Russian has managed to overcome downward tendencies in the agricultural sector that resulted from abnormally hot weather in the past two years, he said and added that the 2011 agricultural growth reached ten percent.

He also praised Volgograd region farmers for their good performances. “The Volgograd region will harvest 2.7 million tons of grain in 2011. The figure is twice as big as in 2010. The harvest of vegetables is also good having reached about 800,000 tons,” he said.

Business, Energy or Environmental regulations or discussions

Russian Stocks Snap Three-Day Slide on Bernanke’s U.S. Outlookhttp://www.bloomberg.com/news/2011-10-05/russian-stocks-snap-three-day-slide-on-bernanke-s-u-s-outlook.html

By Brad Cook - Oct 5, 2011 8:30 AM GMT+0200

Russia’s stocks rose, trimming losses from the steepest three-day decline in more than a year, after Federal Reserve Chairman Ben S. Bernanke said he’s ready to employ fresh measures to support the U.S. economy.

The Micex Index of 30 shares advanced as much as 2.4 percent to 1,281.53 at the start of trading in Moscow, heading for the first advance in four sessions. The dollar-measured RTS Index added 2 percent to 1,236.44.

The Fed is ready to take additional steps to boost growth, Bernanke said in Washington yesterday, cautioning lawmakers against budget moves that may harm a “sluggish” recovery. The Standard & Poor’s 500 Index rebounded after the comments.

Russian stocks are the cheapest in the BRIC group of emerging economies, based on yesterday’s closing prices, with Micex Index members trading at 4.5 times analysts’ estimated earnings, compared with 8.7 for Brazil’s Bovespa, 10.9 for China’s Shanghai Composite Index and 13.4 for the BSE India Sensitive Index.

“U.S. stocks rebounded some and for the most part, global markets, RTS futures, followed,” Ilya Kravets, a research analyst ED Capital in New York, said by phone. “Russian stocks are ridiculously cheap, so you’re seeing some buying but mostly people are capitulating, they’re selling more liquid stocks like Sberbank because it’s easier for them to get out.”

Sberbank, Rosneft

OAO Sberbank, Russia’s largest lender, rose as much as 4 percent to 65 rubles and traded at 63.93 rubles at 10:14 a.m. Smaller competitor VTB Group rose 2.2 percent to 6.24 kopeks.

The Micex declined 10 percent in the previous three sessions, the most in that length of time since July 2010, Bloomberg data show.

Oil, Russia’s biggest export, gained for the first day in four in New York after a surprise drop in U.S. crude stockpiles led investors to reduce bets that prices will decline. Crude for November delivery rose 3 percent to $78 at 10: 16 a.m.

Hedge funds cut their bullish bets, or long positions, on oil by the most in almost two months in the week ended Sept. 27, according to the Commodity Futures Trading Commission. Concern that economic growth will falter sent crude to the biggest quarterly drop since 2008 in the three months ended Sept. 30.

Preferred shares of state oil-pipeline operator OAO Transneft led all advances in the Micex, gaining 4.2 percent to 30,367 rubles. OAO Rosneft, the country’s largest producer of crude, gained 2 percent to 178.68 rubles. OAO Lukoil, Rosneft’s biggest competitor, added 2.6 percent to 1,583.30 rubles.

To contact the reporter on this story: Brad Cook in Moscow at Bcook7@bloomberg.net

To contact the editors responsible for this story: Hellmuth Tromm at htromm@bloomberg.net;

RUSSIA DAYBOOK: Manufacturing, Metalloinvest, Putin Meetinghttp://www.bloomberg.com/news/2011-10-05/russia-daybook-manufacturing-metalloinvest-putin-meeting.html

QBy Anna Shiryaevskaya - Oct 5, 2011 7:03 AM GMT+0200

Prime Minister Vladimir Putin meets officials on this year’s grain harvest. Bank Rossii Chairman Sergey Ignatiev addresses lawmakers in parliament. Metalloinvest Holding Co. reports first-half earnings.

ALL TIMES +4 GMT

WHAT TO WATCH: *Russia’s services industry stagnated in September, HSBC Holdings Plc said in its monthly PMI survey today. *Putin is due to discuss grain production and other issues with senior officials after 3 p.m. *Ignatiev is due to address a plenary session of the State Duma after 11 a.m. *The Federal Statistics Service may publish weekly consumer price changes. *Metalloinvest, billionaire Alisher Usmanov’s holding company, is due to report first-half earnings after 10 a.m.

EQUITY MOVERS: *VTB Group’s consolidation of the Bank of Moscow “will not negatively affect” the lender’s results, Deputy Chairman Herbert Moos said yesterday.

MARKETS: *The 30-stock Micex Index (INDEXCF) fell 5.7 percent to 1,267.77 and the dollar-denominated RTS Index dropped 5.2 percent to 1,224.92. *Russia’s benchmark 2018 ruble Eurobond fell, pushing the yield up 38 basis points to 8.806 percent. *The ruble weakened 0.4 percent to 32.72 per dollar and 0.4 percent to 43.47 per euro. *The MSCI Emerging Markets Index rose 0.3 percent to 833.95 at 9 a.m. *Crude for November delivery gained 3 percent to $78 a barrel on the New York Mercantile Exchange at 9 a.m. *Brent crude rose 1.8 percent to $101.59 a barrel on the London- based ICE Futures Europe exchange at 9 a.m. *Gold for immediate delivery rose 0.3 percent to 1,628.15 an ounce at 9 a.m.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

Russia wants private business to drive innovations

http://www.rbcnews.com/free/20111005120834.shtml

      RBC, 05.10.2011, Moscow 12:08:34.Russia cannot keep increasing government financing of innovations, Deputy Prime Minister Sergey Ivanov said during the Annual Russian Business Forum "Expert-400". "We are about to reach a milestone when private businesses should take up the government's role in driving innovations," he explained.

      Investing in innovations, especially venture capital investments, is always risky, Ivanov went on to say, adding that during the financial downturn all assets are risky. "I'm calling on corporations to take risks, otherwise we will fall behind," he said.

      Ivanov's statement was in line with Russia's innovative development strategy until 2020. During the first stage of the strategy the government is supposed to promote innovations among Russian enterprises, while the second stage is expected to get the Russian private sector involved in driving innovations in 2014-2020.

      The Russian government invested RUB477bn (approx. USD 14.6bn) to support innovations in 2010, and is expected to provide RUB742bn (approx. USD 22.7bn) from the federal budget this year for developing the pharmaceutical and medical industries, modernizing the education system, developing space-launch complexes, new generation nuclear power energy projects, information technologies, etc. The government also focuses on rolling out special economic zones, hi-tech start-ups and research projects.

Sberbank, VTB Group, Rosneft: Russian Equity Market Previewhttp://www.bloomberg.com/news/2011-10-04/sberbank-vtb-group-rosneft-russian-equity-market-preview.html

QBy Anna Shiryaevskaya - Oct 4, 2011 10:00 PM GMT+0200

The following companies may be active in Russian trading. Stock symbols are in parentheses and share prices are from the previous close of trading in Moscow.

The 30-stock Micex Index lost 5.7 percent to 1,267.77. The dollar-denominated RTS Index dropped 5.2 percent to 1,224.92.

OAO Sberbank (SBER03 RX): The ruble depreciated against the dollar for a fifth day on concern Europe’s debt crisis will hurt demand for oil, Russia’s chief export earner. Shares of Russia’s biggest lender fell 8.5 percent to 62.53 rubles.

VTB Group (VTBR RX): VTB Group’s consolidation of the Bank of Moscow “will not negatively affect” the lender’s results, Deputy Chairman Herbert Moos said. VTB’s shares fell 7.2 percent to 0.06107 rubles.

OAO Rosneft (ROSN RX): Oil fell for a third day in New York amid concern that fuel demand will drop as investors lose confidence in the economies of the U.S. and Europe. Rosneft, Russia’s biggest oil producer, plunged 6 percent to 175.15 rubles.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

Metalloinvest posts 1H 2011 net income of $985 million on higher productionhttp://rt.com/business/news/1h-2011-higher-production-085/

Published: 5 October, 2011, 11:18Edited: 5 October, 2011, 11:18

Russian miner, Metalloinvest, has posted a 1H 2011 net income of $985 million under IFRS.

The bottom line is up 89% year on year from the $520 million net result posted for 1H 2010, with 1H EBITDA climbing 63% year on year to $1.982 billion, on the back of a 54% rise in revenues to $5.132 billion.

The company says the results reflect a 7% increase in production on 2H 2010, with a 26% increase in iron or shipments, backed by a 15-20% half on half increase in prices, offsetting higher production and shipment costs

Deputy CEO and Chief Financial Officer, Pavel Mitrofanov, was positive about the posting, while noting that the company would continue to focus on higher value added production.

“The Company demonstrated solid performance in key financial metrics in H1 2011. We have achieved strong results due to a substantial increase in iron ore production volumes, a diversification of the client base and export growth to prospective Asian markets, predominantly China, as well as the management efforts to control production costs. At the same time, the Company continues to develop its key investment projects aimed at increasing high value-added iron ore output.”

Alrosa Buys Back Gas Companies From VTB Capital, Vedomosti Sayshttp://www.bloomberg.com/news/2011-10-05/alrosa-buys-back-gas-companies-from-vtb-capital-vedomosti-says.html

QBy Yuliya Fedorinova - Oct 5, 2011 6:14 AM GMT+0200

OAO Alrosa, Russia’s diamond producer, may spend $1 billion to buy back the Urengoy gas company and Geotransgas from VTB Capital, Vedomosti said today, citing unidfentified people familiar with the deal.

The diamond company sold the stakes in both gas units in 2009 for $620 million, but VTB Capital retained the right to ask Alrosa to repurchase the stakes in 2012, Vedomosti said. Alrosa decided to buy back the assets earlier as otherwise it would have to cover VTB Capital’s expenditure on development of the gas companies, the newspaper said..

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

Alrosa Policy Aims to Keep Diamond Market Stable http://www.israelidiamond.co.il/english/News.aspx?boneID=918&objID=9965

05.10.11, 07:02 / World

Alrosa has adopted a diamond trade policy designed to maintain market stability and avoid the negative influence of “speculative factors,” Russia’s government-owned diamond producer announced after this week’s working meeting of its management.  The company noted that the world’s major diamond jewelry consumer markets – the US, China, and India – are showing a steady strong demand for diamonds, as evinced by the results of the Hong Kong Jewellery and Gem Fair held last month. Alrosa anticipates that 2011 will see extremely high diamond jewelry sales compared to 2009 and 2010.  Despite the strong demand, Alrosa foresees that global diamond purchases will dip slightly due to the traditional annual slowdown from August-October and the drop in worldwide stock indices.  In October, Alrosa plans to sell rough diamonds under long-term contracts after having reduced the supply of rough product available. The supply of rough diamonds for November and December will be “conditioned” by market demand, the company said.

Russian mining company boss attacks fellow businessmen as 'adolescent'http://www.guardian.co.uk/business/2011/oct/04/polymetal-russian-boss-speaks-out?newsfeed=true

Polymetal is to list on the London Stock Exchange

Simon Goodley guardian.co.uk, Tuesday 4 October 2011 18.33 BST

The chief executive of the latest Russian mining company heading for the FTSE 100 has attempted to distance himself from the corporate governance woes afflicting his compatriots by slamming businessmen from the former Soviet Union as "showy" and "adolescent".

Vitaly Nesis, the head of precious metals group Polymetal, added that many of his country's industrialists think it a "requirement to circumvent or massage around [corporate governance standards]" and that they need to either "rationalise or take a leap of faith".

"The Russian business culture is still an adolescent culture," he said. "It has not learned patience or humility. It is still showy and wide-mouthed. This is just youth."

The comments come after Polymetal announced last week that it is to list on the London Stock Exchange and hopes to raise $500m (£319.9m) in new money.

The remarks also follow a string of negative stories about the corporate governance standards of companies from the former Soviet Union, an issue which has caught the attention of David Cameron who has commented: "When these companies come to London, they've got to understand we do have rules of corporate governance that need to be obeyed."

The prime minister's intervention followed the debacle at the top of Kazakh copper miner Eurasian Natural Resources Corporation, which was described as "more Soviet than City" by departing director Ken Olisa earlier this year after major shareholders clashed with the board. Furthermore, two of Russia's most famous oligarchs – Roman Abramovich and Boris Berezovsky – are currently playing out their long-running feud in a London court.

Nesis added: "The perception of the Russian oligarch is negative in London. Such news only adds to the struggle."

Polymetal, Russia's fourth-largest gold producer and the country's biggest silver producer, has a market capitalisation of around 200bn roubles (£3.9bn) on the Russian stock market, a valuation that should put it in the third quartile of the FTSE 100 by early December. Entry to the benchmark index would force UK funds seeking to replicate FTSE 100 performance to buy the miner's shares, which is likely to add to recent criticism of the index for being too heavily exposed to foreign natural resources companies.

The group says it is switching its shares to London to give it access to capital for future projects while the listing will also create a more acceptable currency for global acquisitions. Around 15% of the group's shares are also traded via Global Depository Receipts (a financial instrument used to own foreign companies) meaning the Russian limit of 25% would be breached if any of the three major investors wanted to sell. Polymetal's leading shareholders are Czech billionaire Petr Kellner's investment group PPF which owns around 20%; Nesis's brother Alexander who holds around 18%; and billionaire Waterstone's owner Alexander Mamut with around 10%. The trio are locked-in for 180 days.

Nesis said he receives no intereference from any of the main shareholders and is confident they will cause a London-listed company no embarrassment. "I know for sure that my brother never dealt with the devil. What I know of Mr Mamut and Mr Kellner, they haven't either."

Polymetal was Russia's fourth-largest gold producer and the country's biggest silver producer last year. After enjoying a stellar run on the back of its status as a safe haven, the value of gold has dropped slightly recently. Nesis said that if "there were a dramatic fall [in the gold price over the next few weeks] we will have to cancel the offer", although he insisted that the company's existing shares would still be listed in London.

Sawiris Pledges Vimpelcom Stake Against Loan, Vedomosti Reportshttp://www.bloomberg.com/news/2011-10-05/sawiris-pledges-vimpelcom-stake-against-loan-vedomosti-reports.html

QBy Yuliya Fedorinova - Oct 5, 2011 7:03 AM GMT+0200

Naguib Sawiris, who swapped his stakes in Wind Telecomunicazioni SpA and Orascom Telecom Holding SAE for Vimpelcom stock this year, pledged 4.23 percent of his holding in the Russian company against a $600 million loan, Vedomosti reported today.

Sawiris’s company, Weather II, obtained the loan from Bank of America Corp., Citigroup Inc., Credit Suisse Group AG and Goldman Sachs Group Inc., the newspaper said, citing Weather II documents.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

Putin-VTB Capital love-in gets underwayhttp://www.emergingmarkets.me/2011/10/annual-putin-vtb-capital-love-in-gets-underway/

October 5, 2011

The annual VTB Capital 'Russia Calling' investor conference is underway in Moscow with "more than 2000 global business and political leaders" in attendance for the third year of the event.

Premier Vladimir Putin, who was involved in the genesis of the state-controlled investment bank, will again formally open the conference on Thursday.

Alexey Yakovitsky, "global CEO chairman" of VTB Capital, said in a statement: “We are proud that despite the challenging global economic situation we are able to welcome foreign dignitaries and key international business players for the third year in a row. Russia presents enormous potential to our foreign partners and I am very much looking forward to engaging with our guests this week to assess progress from last year and chart a hearty course for next year”.

VTB Capital, which pinched over a hundred bankers from Deutsche Bank, is the leading debt and equity underwriter in Russia.

Rosbank merges its way to the top http://www.bne.eu/storyf2934/Rosbank_merges_its_way_to_the_top

Ben Aris in Moscow October 5, 2011

Since the 2008 crisis, several foreign household banking names have been driven out of Russia's market, but not Société Générale - it's on the verge of fully merging its Russian assets with Rosbank to elbow aside the competition and become the largest privately owned bank in the country.

Russia has left several top executives at banks in London red-faced and in some cases without their jobs. British financial powerhouse Barclays Bank bought the small Russian operation Expobank at the top of the market in 2008 for a whopping $745m and started to pour money into building a retail operation. But earlier this year, it gave up on Russia as a bad job and put its Russian assets up for sale. Likewise, HSBC trebled the capitalisation of its Russian subsidiary to $300m just priot to the crisis, but also decided competition was too stiff earlier this year and is also selling (although both banks are keeping their Russian corporate banking divisions). Italy's Intesa bank and most recently Nomura are also winding down their Russian operations.

Pre-crisis, banking assets in Russia were growing by 40-50% a year, creating plenty of growing room for everyone. But as of the middle of this year, the sector was growing at only about 15%. Furthermore, the state-owned banks have become much more aggressive, putting further pressure on the commercial banks. "Sberbank has changed radically since [CEO German] Gref arrived. It has slowly become a lot more competitive and aggressive in sales and developing the relationship management," Ulan Ilishkin, deputy CEO of Rosbank, tells bne.

Sberbank was once famous for its slow and surly service, but not anymore. Despite having over 25,000 branches and more than 200,000 employees, it has recently become more nimble than many of the commercial banks by devolving power to the branch heads to make decisions. Sberbank's market share had fallen steadily over the last 20 years, but now it's starting to grow again.

Consolidation and mergers

SocGen has targeted Russia from the beginning, building and buying assets over the last decade, as the management believed that Russia offered the best growth potential of the emerging markets. "SocGen has operations all over the world, but Russia is already the bank's second largest market after our home market," says Ilishkin. "In France, we have

40,000 employees and in Russia there are 30,000. This is streets ahead of Romania, the third biggest with about 9,000, and most of the other markets – including China, India and Brazil – there are 1,000 people working for the local SocGen branches or less."

Ilishkin says that the other BRIC markets have high barriers to entry and their markets are difficult to develop. However, Russia has been wide open for foreign banks. "The Russian market is still not yet saturated and it continues to grow - it's a young market," says Ilishkin.

The crisis has been extremely painful and the bank is still recovering, having made a loss last year, but Ilishkin is confident that things will pick up soon. "We are still here. It is not easy to enter a market as big as Russia, but once you grab such a big piece of the market then you have a competitive advantage.

The contraction in the Russian banking sector is forcing a consolidation of the sector, though SocGen had already embarked on this process before the crisis struck.

And Ilishkin is the man to do it. Having worked for Rosbank, which used to belong to Russian oligarch Vladimir Potanin, he probably has more experience of merging Russian banks than anyone else in the country. Following the last crisis in 1998, Russia went through a similar consolidation process; Rosbank bought first OVK in 2003, the rump of failed high street bank SBS Agro, the first major Russian banking merger that made Rosbank one of the biggest retail banks in the country. "I was on a plane for two years putting all those banks together, as actually OVK was six legal entities - one for each of its main regions. Technically, the merger was only completed three years ago," says Ilishkin.

Having finished one set of major mergers, Ilishkin had to start on another set almost immediately. SocGen started buying pieces of Rosbank in 2007 at a hefty premium and brought its stake up to 75% last year. Russia's state-owned VTB Bank holds another 11% and Potanin continues to own the rest. In addition, the French bank owns 100% of mortgage specialist DeltaCredit, consumer finance bank Rusfinance Bank, and set up its own greenfield retail operation under the Bank Societe General Vostok (BSGV) brand.

However, over the last two years SocGen has been merging this jumble of assets into a single group and begun to streamline the whole operation into a single banking giant.

RusFinannce is one of the few pieces that will retain a separate identity. Formerly a car loan specialist based in Samara in the Volga basin, it will retain its specialist function, although all the branches will be closed and representatives concentrated at the points of sale – mainly car showrooms. Car financing deals will be cleared and settled in the Rosbank offices. The mortgage specialist DeltaCredit will also keep its brand identity and both Delta and Rusfiannce have already been merged in January this year to become daughter banks of Rosbank.

SocGen has decided to close its own retail operation BSGV completely, which was

legally subsumed into Rosbank in July with the technical merger of their IT systems due to be completed in October this year. However, it will take another year for all the BSGV offices to be re-branded Rosbank. BGSV also has insurance, leasing and factoring subsidiaries that will also be included in the roll up.

Small is beautiful, but with another crisis looming in Russia at the moment big is better. At the end of the process, Rosbank will have increased the number of branches to around 1,000, but more valuable will be its unique marketing position. "We decided to keep the Rosbank name rather than the French identity, as we hope to get the best of both worlds: a Russian bank with international backing," says Ilishkin.

RusHydro posts 1H 2011 net profit of 27.053 billion Roubleshttp://rt.com/business/news/rushydro-profit-roubles-energy-041/

Published: 5 October, 2011, 10:14Edited: 5 October, 2011, 10:14

Hydroelectricity generator, RusHydro Group, has posted a 1H 2011 net profit of 27.053 billion roubles under IFRS.

The bottom line is up 26 % from the 21.46 billion roubles reported for 1H 2010, with adjusted 1H 2011 EBIDTA up 18% year on year to 41.436 billion roubles, despite revenues dropping 20% year on year to 164.343 billion roubles.

RusHydro said electricity sales fell by 21% with sales of generating power down by 19%, but that EBITDA growth was a result of increased proportion of sales at unregulated prices due to the termination of the transitional period in the liberalization of the wholesale electricity market.

COMMENT: Russian struggles with electricity tariff reform http://www.bne.eu/storyf2933/COMMENT_Russian_struggles_with_electricity_tariff_reform

Sergei Bubnov of Renaissance Asset Managers October 5, 2011

Bad news for Russia's utility sector after the government got its calculations wrong for the second time this year. On January 1, Russia's utility sector switched from the crude

"cost-plus" calculation to set electricity prices, to a "regulatory asset base", or RAB, for power distributed by network companies. But now poltics has put the whole RAB policy into question.

Before you nod off, it is worth reading on a little as while the power sector is notoriously boring, getting the price for power right is one of the biggest challenges for Russia's government and will determine the pace of economic growth for decades to come. The battle that has broken out to increase the tariffs for power is, well, maybe not exciting, but at least very important to Russia's near-term future.

And the government has already fluffed it. The generation part of Russia's power sector has already been broken up in an extremely successful privatisation, which must count amongst the biggest sell-offs in the world's history. However, the network and distribution part (wittily dubbed the "discos") that actually connects houses and factories to the grid over the "last mile" has not been reformed and can't be sold until a formula to determine how much they can charge for their services is decided on.

Everyone hates the cost-plus formula, as all it does is drive up costs without actually bringing greater efficiency. So the switch to tariffs linked to the value of assets should have been a big improvement, as the discos would have an incentive to invest in their companies and make them more valuable.

The government spent the second half of 2010 negotiating with these companies before finally settling on a formula that was launched on January 1 this year; under the new system, tariffs should have increased by 15-20%. Trouble is, no one had explained to the Kremlin just how much prices were going to rise – and in an election year too.

When the plan in all its glory was finally shown to Prime Minister Vladimir Putin in February, he was caught by surprise and said the tariff hikes were "too much." Everyone started back peddling quickly. The government had already got egg on its face at about the same time from a hike to social taxes that everyone now agrees was too high and has hurt consumer spending this year. The Federal Tariff Agency is responsible for calculating tariffs, but maybe the PM didn't get the memo, as it refused to take responsibility for the actual level of the tariffs.

Power politics

Russia's power industry is badly in need of more capital that it can earn from higher tariffs. Over the last two decades it has been starved of investment funds as the government held down tariffs as part of its drive to bring down inflation. That aim was achieved at the start of 2008 when inflation fell to single digits for the first time in modern history.

The state has since turned its attention to creating cash for investment and switched to the RAB system ahead of a new round of privatisation in which the regional distribution grids,grouped under MRSK Holding, will be sold off. These discos have remained in

majority government ownership on the grounds that as there can be no competition in distribution, they must therefore always be regulated.

MRSK Holding was included on the list of major state-owned companies earmarked for sale in March of this year: the proposal was that the government's stake would be cut from 53.69% to 50% plus one share. However, when the final list was approved by the government in early August, the privatisation plans for MRSK were made subject to confirmation.

The tariff regime is a crucial prerequisite to the privatisation of the discos, but as autumn closes in on Moscow the government has backtracked on RAB and suspended the new tariffs, allowing power tariffs to rise at the slower pace of about 6% so far this year and grid companies' tariffs will be hiked to 11% from July 1 next year.

Now the whole RAB policy is in question. The government has already said that the RAB programme needs to be revised, but there is no clarity on how this should be done.

Under the RAB system, assets are valued and the tariffs are then set for five years, after which the assets' value is assessed again. As most of the assets were valued before the 2008 crisis struck, there is clearly room to reassess them (downward) and so the tariffs will almost certainly fall.

The government is expected to make its recommendations by the end of this year and actual changes to be effected in the regions in the second half of 2012.

Activity in the Oil and Gas sector (including regulatory)

06:42 05/10/2011ALL NEWS

Rosneft may appoint a BP manager as its VP -- paper

http://www.itar-tass.com/en/c154/239895.html

MOSCOW, October 5 (Itar-Tass) — Several managers who are working with the British oil and gas corporation BP may change their place of work and join the Rosneft oil company, the newspaper Kommersant reported on Wednesday.

It has become known to the newspaper that Larry Bates, who earlier worked at the Moscow office of the BP, where he was in charge of a failed deal with Rosneft, may be appointed as a new vice-president in charge of Rosneft strategic development.

The paper's interlocutors say he may be officially appointed to the position towards the end of this year. A Rosneft executive confirmed in an interview to the newspaper that Larry Bates' candidacy "is under consideration" but he did not specify Mr Bates' future capacity.

The Kommersant points out that work is under way in Rosneft to form a new managerial structure, in which up to 20 new vice-presidents may appear in the Company. A Rosneft official confirmed that "the Company is looking for highly qualified specialists in the field of shelf (exploration) projects, as well as those that are (deemed) essential for its international development". A source, who is familiar with the current reorganization processes, said BP managers are also under consideration for the positions of a vice-president to be in charge of the petroleum processing segment and an adviser to Rosneft President Eduard Khudainatov.

The opinion of Kommersant's interlocutor is that appointments of foreign specialists to positions in Rosneft are a "good sign". "Western experience enables Rosneft to improve communication with potential partners," the interlocutor said.

-pop

Rosneft Hires BP Man for Strategic Development, Kommersant Sayshttp://www.bloomberg.com/news/2011-10-05/rosneft-hires-bp-man-for-strategic-development-kommersant-says.html

QBy Yuliya Fedorinova - Oct 5, 2011 7:21 AM GMT+0200

OAO Rosneft may hire Larry Bates from BP Plc’s Moscow office to help to oversee strategic development of the company, Kommersant said today, citing people familiar with the plan.

Bates was involved in talks between BP and Rossneft to form a partnership to drill in the Russian Arctic, which was blocked by BP’s billionaire partners in the TNK-BP Holding venture, newspaper said.

Rosneft also wants to hire a BP manager from Germany to oversee a refinery, newspaper said.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

Tatneft and Bashneft will be 100% compensated for 60-66 losses; POSITIVE

http://www.bne.eu/dispatch_text16768

Alfa BankOctober 5, 2011

The Finance Ministry yesterday announced a proposal to compensate 100% of the losses incurred by Tatneft and Bashneft from the 60-66 reform through special MET exemptions in the amount of the calculated losses through 2015. Tatneft may see compensation in the form of MET exemptions for the company's Romashkinskoe field between RUB38bn and RUB56bn pa, while Bashneft may get compensation of around $130m pa for producing fields in Bashkiria, according to Deputy Finance Minister Sergey Shatalov.

The final compensation for both companies will be derived through a special formula for each company to determine the theoretical losses from 60-66 and thus the required level of compensation. It's unclear whether the compensation will come in addition to the previously announced tax breaks for high-sulfur oil or are simply a clarification of the previous announcement. Regardless, we see this as a POSITIVE announcement, particularly for Tatneft, as it removes any negative effect the company had from engaging in the refinery project ahead of the reform. Not only that, but our calculated 60-66 effect for Tatneft is actually positive, if we model in the full reform including the crude oil export duty reduction, while the effect on Tatneft's downstream business standalone is significantly less than the RUB38-56bn range voiced by the government. The subsidy, if it does indeed last until 2015, could virtually pay back the company for the Taneco refinery, even if the refinery does not begin operating. This makes Tatneft the clear winner from the announced tax breaks, in our view.

TNK-BP R&D for 2011 at $320M 05 October 2011By Howard Amos

TNK-BP is emphasizing innovation as a way to maintain production levels and has quadrupled its year-on-year budget for the development of new technologies to $320 million in 2011.

Current funding for research and development is 8 percent of the $4 billion that Russia’s third-largest oil producer allocates as capital expenditure annually. About 80 percent of this figure goes toward exploration and production. 

Deputy chairman of the management board, Maxim Barsky, who is effectively responsible for day-to-day operational control of the company, told delegates Tuesday at

TNK-BP’s Second Annual Corporate Technology Forum at Skolkovo — Russia’s answer to Silicon Valley — that over 1,000 wells had been drilled since January, of which 10 percent involved highly complex technologies.

“The effective application of technology ensures a slowing of the tempo of decline for mature fields,” Barsky said. “Low-cost access to reserves allows us to exploit those reserves that were formerly considered unprofitable.” 

Mainstays of TNK-BP’s portfolio, like the aging but enormous Samotlor field in western Siberia, are a particular focus of this drive. Barsky singled out the BP-developed bright water technology, which harnesses the power of water to flush out oil from reservoirs, as a key development of recent years. 

Emerson Milenski, adviser to TNK-BP’s upstream executive vice president, said $85 million was spent on technological innovation last year, the majority of which went to pilot projects. In contrast, $120 million of this year’s $320 million budget had been devoted to developing successful pilots, or “scale-ups,” he said.

The world’s 10th-largest oil producer has also initiated an energy efficiency program to maximize profits. Mikhail Slobodin, executive vice president of gas and power, said the program had saved the company $60 million this year.

The “60/66” tax changes introduced Saturday, after two years of discussion, will free up more funds for TNK-BP to invest in upstream development, senior vice president Francis Somer said. 

TNK-BP has said the new 60 percent export duty on crude will boost profits by up to $600 million. The company aims to spend $45 billion on exploration and production over the next decade. 

But the focus Tuesday on strategic development at TNK-BP is a respite from speculation about its long-term future.

Recent attention has been concentrated on shareholders — oil major BP and oligarch consortium Alfa, Access and Renova Group, or AAR — since BP tried to complete a $16 billion Arctic deal with Rosneft, angering AAR and initiating ongoing litigation.

As a possible side effect of the conflict, BP recently announced a suspension of its activities with the Skolkovo Foundation, which is chaired by Renova head Viktor Vekselberg.

There is also a question mark over Barsky’s position and how it fits with Alfa oligarch Mikhail Fridman’s formal title of chief executive. Barsky said in July that he would leave the company if he is not officially made chief executive by the warring shareholders by the end of the year.

Read more: http://www.themoscowtimes.com/business/article/tnk-bp-rd-for-2011-at-320m/444832.html#ixzz1Zsp57ry0 The Moscow Times

TNK-BP Holding: Potential 50% stake in Itera acquisition

http://www.bne.eu/dispatch_text16768

UralSibOctober 5, 2011

Negotiations on price and authorities' approval. TNK-BP Holding (TNBP - Buy) is in negotiations with Itera, an independent Russian gas producer, and the authorities on a possible acquisition of around a 50% stake in Itera. If the commission on foreign investments approves the deal, the parties will continue negotiations to reach an agreement on the price of the deal.

ITERA effectively owns gas reserves of about 350 bcm. Itera is a private company, with approximate gas reserves of 350 bcm. It has a 49% stake in Purneftegaz, which has gas reserves of 399 bcm, and 49% in Sibneftegaz, which has reserves of 325 bcm. Igor Makarov, who owns a stake of 30%, is the main shareholder in Itera.

The potential deal may add to 7-9% to current reserves. Acquisi- tion of a 50% stake in Itera may add 7-9% to TNK-BP Holding's cur- rent proved hydrocarbon reserves and may cost around $1.0-2.0 bln. While the company does not have such an amount of cash available, it does have a strong debt position, with a debt/EBITDA ratio close to 0.6, and a 91% share of long-term debt. How- ever, our view on the deal depends on the price, which has still not been agreed. We therefore reiterate our Buy recommendation on TNK-BP Holding with target price of $4/share.

Alexei Kokin

Lukoil Neftochim Burgas amongst SEE companies suffering greatest losses http://www.focus-fen.net/index.php?id=n260903

05 October 2011 | 00:51 | FOCUS News AgencyHome / Finance

Sofia. Bulgaria is represented by 14 non-financial companies in the annual ranking SEE TOP 100 by SeeNews.com. Every year, the SEE TOP 100 rankings show the performance of non-financial companies, banks, and insurers. Lukoil Neftochim Burgas occupies the prestigious third position in the ranking as the largest non-financial company in Southeastern Europe with EUR 2.794 billion total revenue and EUR 61.6 million loss for 2010. The Russian company was ranked seventh amongst the companies in the region suffering the greatest losses. As for banks Romanian Banca Comerciala Romana SA topped the ranking with total assets of EUR 16.324 billion and a net profit of EUR 170.8 million. The largest bank in Bulgaria is Italian UniCredit Bulbank with assets of EUR 5.765 billion and a net profit of EUR 81.2 million for 2010. It is ranked seventh in the bank ranking, occupying the same position it did last year, the Duma daily learned.

Mikhailov, a member of LUKOIL's Board of Directors, continues to buy shares of the companyhttp://www.bne.eu/dispatch_text16768

VTB CapitalOctober 5, 2011

News: According to LUKOIL, Sergei Mikhailov, a member of the Board of Directors, acquired 6,200 ordinary shares in the company on 3 October, thereby increasing his share from 0.056% to 0.057%. On 28 September, he bought 6,500 ordinary shares. The shares that he acquired were worth about USD 311,000 and USD 324,000, respectively.

Our View: According to the company, in September alone Mikhailov purchased some 18,000 ordinary shares (USD 0.9mn). And earlier this year he had already bought 84,000 shares for more than USD 5mn. We believe that although the amount is relatively small, this is a positive sign showing that management also considers LUKOIL's shares to be attractive at their current market valuation.

Gazprom

UPDATE 1-Romania - Factors to watch on Oct 5

http://uk.reuters.com/article/2011/10/05/idUKL5E7L506J20111005

NATURAL GAS

Russian Gazprom OAO is willing to discuss supplying natural gas directly to Romania, without intermediaries, the economy ministry said in a statement. Economy Minister Ion Ariton is on a visit to Moscow.

ROMANIA: The head of Gazprom (RTS: GAZP) Alexei Miller and Romanian Minister of Economy, Commerce and Business Environment Ion Ariton have discussed the possibility of carrying out joint projects in the field of electrical energy, Gazprom said.

http://blogs.wsj.com/emergingeurope/2011/10/05/morning-briefing-polish-rate-call-slovakia-in-view/?mod=google_news_blog

Poles join queue threatening Gazprom over gas prices

http://www.bne.eu/dispatch_text16768

bneOctober 5, 2011

Polish state-controlled oil and gas company PGNiG has resurrected threats to take Gazprom to international arbitration unless the Russian company agrees to cut the price of its gas, reports Prime.

The Poles are just the latest of many major customers to resume demands that Russia lower prices as the global economy slows again. The EU has also waded in, with antitrust investigators on September 27 raiding the offices of Gazprom's subsidiaries in Germany, Czech Republic, Hungary, Poland, Bulgaria, Latvia, Estonia and Slovakia to probe whether the company is cooperating with regulators.

Like Ukraine and Turkey, PGNiG has been trying to get Gazprom to reduce the price of Russian gas since 2010. Company officials were in Moscow on Tuesday, October 4 to talk over their demands for a significant change in the pricing formula. It's reported that PGNiG is seeking to cut its gas bill by 10%.

Specifically, the Polish company wants to return to the formula that was used up to November 2006. Changes sparked by a rise in Polish demand saw the price rise 11%. In early March, PGNiG requested Gazprom reduce the price by 10%, having spent $3.3bn on Russian gas in 2010. PGNiG said at the time that it hoped to shrink its gas bill by $300m.

Earlier in the week, Turkey - the second largest buyer of Russian gas - announced it would not renew its 25-year gas contract with Gazprom because of its refusal to renegotiate the pricing formula. Turkish Energy Minister Taner Yildiz complained that the price of Russian gas has risen 39% in the last 29 months. The Russian company will now be left to negotiate new contracts with private Turkish importers.

Meanwhile, Ukraine is still locked in talks to try to persuade Moscow to lower prices. Russia is demanding either control of the country's gas pipelines or that it join its Customs Union with Kazakhstan and Belarus before it will agree.

However, in the last few months Moscow has budged in certain cases by offering price reductions to Greece and Belarus - the latter in return for a cut-price purchase of its gas pipelines leading to Europe.

At the same time, Gazprom is facing the threat of legal challenges from several private European customers that have been pestering Moscow to renegotiate prices since the gas glut which hit Europe in 2009.

In the first half of this year, it looked as though Gazprom may have ridden the storm out, as gas prices recovered on the back of rising demand in Asia for the liquified natural gas from the Middle East that has been flooding the European market. However, with global economic growth looking increasingly sluggish and the unseasonably warm weather in Europe, the Russian company will probably see demand for its gas fall again.

GOOGLE TRANSLATION

http://spb.rbc.ru/topnews/05/10/2011/618714.shtml

Poland threatens to take Gazprom to court for failure on gas discounts

Following Italy, Germany, Lithuania, Turkey, Poland aske Russia’s Gazprom to reduce the price of gas. Warsaw is trying to negotiate with Moscow on binding price formula for natural gas in spot prices. If the negotiations fail, the Poles threatened to file for arbitration in Gazprom.

Polish oil and gas state company Polskie Gornictwo Naftowe i Gazownictwo SA (PGNiG) again is in talks with Gazprom, writes "RBC daily". Now the company wants to not only get a one-time discount on gas, and essentially change the formula for calculating the price of supplies, so that she did not depend on fluctuating oil prices.

Thus, PGNiG will insist on the return of the basic formula, which operated until November 2006.

After 2006. formula has been changed since Poland became a need for additional gas

supplies. As a result, the price of natural gas soared to 11%. According to the calculations of the Polish analysts, if there is a return to old-fashioned formula, the cost of PGNiG on gas purchases will be reduced by 10% and the company will save about $ 300 million

If negotiations fail, Warsaw may apply to international arbitration. Gazprom, as well as PGNiG, declined to comment on the situation.

In 2010. Poland imported from Russia, 9.9 billion cubic meters. meters of gas (7.1% of Gazprom's exports to Europe), still about 900 million cubic meters. m. she bought in Europe. The annual gas consumption in the country is about 13.7 billion cubic meters. m, of which approximately 30% is provided by its own production. October 5 2011.

20:50 04/10/2011ALL NEWS

Gazprom CEO, Ukrainian energy minister hold new round of gas talks

http://www.itar-tass.com/en/c154/239700.html

MOSCOW, October 4 (Itar-Tass) —— Gazprom CEO Alexei Miller and Ukrainian Energy and Mining Minister Yuri Boiko held a new round of gas negotiations on Tuesday, Gazprom said.

They noted the efficiency of the dialog aimed at the fulfillment of the earlier agreements, it noted.

The previous round took place on September 30.

Gazprom and Neftegaz Ukrainy signed two contracts on gas supply to Ukraine in 2009-2019 and on gas transit to Europe across Ukraine in 2009-2019 on January 19, 2009. Gazprom and Neftegaz signed additions to the contracts on April 21, 2010.

Miller said that Gazprom was prepared to search for compromises at the gas negotiations with Ukraine. “The government holds the controlling stake in Gazprom, and we are implementing intergovernmental agreements. It is necessary to bring them to the logical end. Currently, Gazprom and Neftegaz operate under the gas delivery and transit contracts for the period until 2019. Our work is strictly based on these contracts, and there are no other documents or agreements at present. Gazprom is open to the dialog and the search for compromises,” Miller said.

Gazprom to Spend $8 Billion on Central Asia Gas, Vedomosti Sayshttp://www.bloomberg.com/news/2011-10-05/gazprom-to-spend-8-billion-on-central-asia-gas-vedomosti-says.html

By Yuliya Fedorinova - Oct 5, 2011 6:28 AM GMT+0200

OAO Gazprom, the Russian gas monopoly, may spend as much as $8.3 billion on gas purchases from Central Asian countries, Vedomosti said today, citing people familiar with the situation.

The average price of these contracts is $293.4 per 1000 cubic meters of gas, newspaper said. Russian company may buy as much as 29 billions of cubic meters of gas in Central Asia this year, newspaper said.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

Gazprom decreases gas purchases from Central Asia - and to spend another RUB 12bn on renewing Gazprom Avia's fleet

http://www.bne.eu/dispatch_text16768

VTB CapitalOctober 5, 2011

News: Gazprom has revised its estimate for gas purchases from Central Asia (Turkmenistan, Uzbekistan, Kazakhstan and Azerbaijan) for 2011 down from 40.5bcm to 31bcm. According to Vedomosti, the company might spend USD 8.3bn on purchased gas this year. Gazprom also plans to spend another RUB 12bn on its 100% subsidiary Gazprom Avia, which is to renew its fleet.

Our View: According to our estimates, Gazprom might purchase 33bcm of gas from Central Asia, spending USD 9bn, which is broadly in line with the numbers above. As we have discussed previously, the main risk associated with Gazprom is capex surges. Continuing spending growth does little to improve investor sentiment with regards to the company, in our view.

0/05/2011 | 02:20 am

Gazprom OAO : Alexey Miller and Lee Yun-ho: growing gas demand in Asian-Pacific countries offers great prospects for regional gas businesshttp://www.4-traders.com/GAZPROM-OAO-6491735/news/GAZPROM-OAO-Alexey-Miller-and-Lee-Yun-ho-growing-gas-demand-in-Asian-Pacific-countries-offers-great--13826087/

The Gazprom headquarters hosted today a working meeting between , Chairman of the Company's Management Committee and Lee Yun-ho, Ambassador Extraordinary and Plenipotentiary of the Republic of Korea to Russia.

Background

On May 12, 2003 Gazprom and Korea's Kogas entered into the five-year Agreement of Cooperation which was extended for another five-year term in 2008. The Agreement embraces a wide spectrum of issues including the study of possible ways to deliver Russian natural gas to Korea. To implement the Agreement, the parties set up the permanent Joint Working Group.

On October 17, 2006 the Government of the Russian Federation and the Government of the Republic of Korea signed the Agreement of Cooperation in the Gas Industry identifying Gazprom and Kogas as the companies authorized for overseeing natural gas delivery from Russia to the Republic of Korea.

On September 29, 2008 Gazprom and Kogas signed the Memorandum of Understanding on natural gas supplies from Russia to Korea.

On June 23, 2009 as part of the working visit by Gazprom's delegation to the Republic of Korea, Alexey Miller, Chairman of the Company's Management Committee and Choo Kangsoo, President – CEO of Kogas signed the Agreement to jointly explore the natural gas supply project. In pursuance of the Agreement, a final report was issued in 2010. The report studied options for natural gas supplies from the terminal point of the gas transmission system to Korea.

On September 15, 2011 Gazprom and Kogas signed the Roadmap on natural gas supplies from the Russian Federation to the Republic of Korea. The Roadmap represents a plan of top-priority actions needed for the project implementation.

Big players ready to race for Russian natural gashttp://www.hurriyetdailynews.com/n.php?n=big-players-ready-to-race-for-russian-natural-gas-2011-10-04

Tuesday, October 4, 2011ALİ KAYALARISTANBUL- Hürriyet Daily NewsTurkish energy firms prepare to race to replace state-run BOTAŞ in importing Russian gas via West Line. Aksa, a company close to Russian provider Gazprom, and Bosphorus Gaz, a Gazprom investment, are strong bidders, a source says

Turkish state-run pipeline company BOTAŞ’s recent decision not to renew a natural gas deal with Russian provider Gazprom is whetting the appetite of Turkish private firms, according to Oğuz Türkyılmaz, head of the energy council at Turkish Union of Engineers’ and Architects’ Chambers, or TMMOB.

Big electricity buyers may be among possible buyers of gas from the West Line as the contract for 6 billion cubic meters of gas between the parties fizzled last weekend over the Russian company’s refusal to decrease prices, Türkyılmaz said.

Aksa, an energy firm that has contracts with Gazprom, and Boshporus Gaz, a Gazprom partnership active in Turkey, will be strong bidders, a source close to the issue said.

Aksa and Gazprom signed a memorandum in August 2009 for joint participation in gas distribution tenders in Turkey, the source recalled.

Boshporus Gaz confirmed that it would be interested in west line gas. “BOTAŞ decided not to extend the deal but considering Turkey’s demand, someone has to buy that gas,” Hümeyra Erdoğan, a vice manager at Boshporus, said in a phone interview on Tuesday. “Turkish private companies will take distribution of the [West Line] gas and of course so will Bosphorus,” she said.

Aksa executives did not immediately respond to calls for comment.

Mehmet Şen, chief executive of Bosphorus Gaz, told Reuters on Monday that BOTAŞ’s move was “a very positive step regarding the privatization of Turkey’s natural gas market.” Şen’s father, Ali Sen, is the president of Bosphorus Gaz, where his family has the minority shares.

The move will not spoil Turkey-Russia relations in the natural gas sector, said Mehmet Kazancı, chairman of Turkey’s Natural Gas Distributors Union Association, or GAZBİR. “This will not affect bilateral relations in a negative way. In the end, Russia will sell its natural gas to Turkey anyways, but this time through private sector representatives. On the other hand, Turkey needs Russian gas to meet its domestic demand.”

Replacing the West Line resource is not an easy task, TMMOB’s Türkyılmaz said on Tuesday, citing problems of buying gas from Iran.

“Iran hardly meets its domestic demand and there are some restrictions on trading with the country,” he said.

Turkey’s deal with Algeria, another gas supplier, expires in 2014, Türkyılmaz recalled.

Russia supplies some 60 percent of Turkish natural gas demand.

Turkey buys nearly 16 billion cubic meters of gas from Russia every year via the Blue Stream pipeline, a contract for which was set to expire 23 years later. A smaller contract is for 8 billion cubic meters.

New deals not easy

TMMOB reacted against the cancelation, saying that maintaining new contracts with Russia in a very short period of time would not be easy. The contract that was not renewed expires on Dec. 31.

“May some companies, who have correctly guessed that BOTAŞ will not renew contracts with Russia, have already started talks with the Russian side?” TMOBB chairman Ali Ekber Çakar asked in a written statement on its website on Tuesday.”

The organization said it saw no reasons for Gazprom to sell cheaper gas to private companies compared with the state-run BOTAŞ. k HDN