MOSCOW, April 10 (RIA Novosti) Kremlin made to pay for flirting with "rogue states"/ Price formation group instead of gas OPEC/ Government to attract private investment for Far East Russia/ PricewaterhouseCoopers gets a reprieve/ Italian helicopters to be assembled in Russia
Kommersant
Kremlin made to pay for flirting with "rogue states"
It is not surprising that Iranian General Mohammad Bagher Zolgadr has accused Russia of violating UN Security Council Resolution 1747. Iranian leaders were bound to make this or similar accusations sooner or later; for this is the price the Kremlin is paying for flirting with problem regimes.
Russia has saved Iran from sanctions or ensured that sanctions were not as strict. Although it could seriously have damaged its complicated relations with the United States, it was persistent in its selfless work. Yet the Kremlin took the risk in the hope of substantial material and political compensation.
The material benefit from the Iran game - payment for the construction of the Bushehr nuclear power plant - was put in question when Tehran accused Moscow in early March of violating its contractual obligations.
Possible political benefits have turned into losses after Tehran did not listen to Moscow's recommendation to honor the reasonable requirements made by the International Atomic Energy Agency. Tehran also disregarded the warning, made by a Kremlin official on condition of anonymity, that Russia "would not play anti-American games."
"Rogue states" happily exploit Moscow's desire to maintain contact with them, forcing it to do their dirty work, in particular protect them from UN sanctions, and later abandon or trip it at a suitable time by "surrendering" to an American official.
Iraqi dictator Saddam Hussein refused to listen to Moscow's recommendations before Operation Desert Storm. Russia also flirted with Slobodan Milosevic, "the butcher of the Balkans," who betrayed it by making separate deals with NATO and writing secret letters to U.S. President Bill Clinton.
Today the Kremlin is wooing "the last Communist leader," Kim Chong-il, who has stabbed Moscow in the back by holding nuclear missile tests.
Moscow is also trying to establish a Union State with Belarusian President Alexander Lukashenko, who criticized Russia and threatened to make a U-turn to the West.
The Kremlin can usually see through the insincerity of problem regimes. Unfortunately, it often employs this ability too late.
Gazeta
Price formation group instead of gas OPEC
The first day of the Gas Exporting Countries Forum in Qatar brought an expected sensation. At Russia's suggestion, it was decided to set up a high-level group to coordinate gas prices. A coordinated pricing policy is central to the idea of "a gas OPEC." Although not all forum participants are enthusiastic about such plans, Iran and Venezuela fully support the idea, while Algeria, Egypt and Qatar are in no hurry to give their consent to initiatives to form a gas cartel, however, there can be little doubt that a gas OPEC in one form or another will be set up.
The group is planning to meet at least six times this year. Russia will affirm its role as the main integrator in the gas community, being the world's largest gas producer and exporter, in 2008. The next forum of gas exporting countries will be held in Moscow.
At present, not all experts are ready to admit the decision to set up a price formation group is a step towards "a gas OPEC." Establishing the group does not mean the formation of a gas OPEC because the setting up of a global gas alliance is impossible today both technologically and economically," said Alexei Gromov from the Institute of Natural Monopolies Studies.
"This is not a forerunner of a gas cartel. The prices are of interest in themselves," echoed Viktor Baranov, president of the Russian Union of Independent Gas Producers. And he added: "A gas OPEC will be set up, there is a need for it, and this is a fact."
Experts share the opinion that a coordinated policy may help loosen gas prices from the market basket of petroleum product prices. Gromov is convinced that "all countries, both gas producers and exporters, are interested in this, for a solution to this problem will allow them to pursue a pricing policy which does not depend on oil prices on the world market."
The emergence of an organization of gas exporting countries will help them to compete with the cartel of gas consuming countries, i.e., the International Energy Agency. "At present, having an 'ocean of water' in our hands, we have to sell it by glasses. We are in a situation where we cannot be sure whether we'll sell our gas tomorrow," Baranov said.
Gazeta.ru
Government to attract private investment for Far East Russia
The Federal Atomic Energy Agency (Rosatom) and Russky Alyuminy (RusAl), Russia's leading aluminum maker that recently merged with Siberian-Urals Aluminum Company (SuAl), are preparing to establish a unique company that would comprise a nuclear power plant and an aluminum factory.
Rosatom hopes the projected NPP will reach maximum capacity, while providing stable energy supplies for the aluminum maker.
Vyacheslav Zhabin of BrokerCreditService said NPP construction was very expensive, costing $1,500-2,000 per one kilowatt of rated power; and the state, which controls the entire nuclear power industry, has to pay for this.
"The state could finance this joint project together with a private investor," Zhabin told the paper.
It appears that RusAl will also benefit from such cooperation because corporate profitability may plunge after 2011 due to liberalized gas and electricity prices; the latter accounts for up to 40% of aluminum production costs.
Zhabin said RusAl is taking preventive action; moreover, NPPs generate cheaper electricity than gas and coal power plants.
RusAl feasibility study must assess the required electricity costs and purchases, as well as investment cost in the infrastructure. Experts said they particularly doubt the latter.
In August 2006, Rosatom, RusAl and SuAl signed cooperation memorandums stipulating the possible construction of NPPs and aluminum enterprises on the Kola Peninsula and the Arkhangelsk Region in northern Russia, in the Perm Region west of the Urals and in the Russian Far East.
Experts said the latter is not the best choice. "The earthquake-prone region needs additional investment because it lacks the required infrastructure," Igor Nuzhdin of private Zenit Bank said.
Although the partners have not yet chosen the construction site, RusAl wants to build the new factory near seaports because it uses imported feedstock. However, it is unsafe to build NPPs there.
Vedomosti
PricewaterhouseCoopers gets a reprieve
Problems with tax authorities and cooperation with Yukos, the embattled oil company, have not prevented PricewaterhouseCoopers, a major international auditing and consulting firm, from keeping its main Russian client - Gazprom. The auditor's problems seem to have come to an end, experts say.
Last week, AvtoVAZ, Russia's biggest car maker, announced it was advising its shareholders to appoint Ernst & Young as their auditor for the 2007 fiscal year. But on Monday, Gazprom said PwC, which has been auditing the company since 1995, had won the audit tender for 2007 from among fifteen companies.
The 2006 audit cost Gazprom $7.2 million. The results of the present tender will be presented to the board of directors who will propose the auditor be confirmed at a shareholders' meeting, said a company release.
PwC has won without offering Gazprom any significant discounts. The protocol of the tender commission says the PwC bid was the second highest figure: $7.89 million exclusive of VAT with a starting price of $2.3 million. The highest bid came from KPMG (nearly $9 million) and the lowest ($2.8) from the MKD company.
PwC might keep its other big clients, too. On Monday, Sberbank announced the tender for its 2007 audit, and its president, Andrei Kazmin, told journalists that the bank saw no reason to break with PwC. Sergei Grigoryev, vice-president of Transneft, which is also audited by PwC, said the courts and tax problems would not influence the company's decision.
The top manager believes his company's choice is a signal that PwC problems are over in Russia. His company, he said, had not received any "recommendations" from law enforcement agencies or high-ranking officials not to choose PwC.
PwC's license expires in May, and the company reapplied for its extension on March 2. Gazprom's decision means PwC will most likely face no problems with extending the license, said an official of a major auditing company. Gazprom's choice, he went on, is confirmation that the actual reason for the investigation was Yukos. A colleague from another auditing firm disagrees, however, saying all options are still possible.
Kommersant
Italian helicopters to be assembled in Russia
Oboronprom, a Russian aerospace holding company, has launched talks with Italian firm, Agusta Westland, for the licensed assembly of the AW-139 helicopter, which has a take-off weight of six tones, at the Ulan Ude aircraft plant. Industry experts say Agusta Westland plans depend not so much on the Russian market as on the global market, where demand for helicopters of this type is likely to last another 10 to 15 years.
Boris Alyoshin, the head of the Russian Industrial Agency, added that an agreement of intent should have been signed in mid-March during Vladimir Putin's visit to Italy, but was moved back to May over "minor technical details." "Preparations for production at Ulan Ude may get off the ground as early as this year," he said.
"Initially, it might be partial assembly, followed by fully integrated production," the plant said. Earlier, plant director Leonid Belykh explained the search for a foreign partner was due to pre-production problems with the Ka-62 helicopter, which has the same take-off weight as the AW-139.
Likely customers for the AW-139 do not see eye to eye on the project. "Our main fleet is made up of heavier Mi-8 helicopters. But world practice shows that 6-ton helicopters enjoy significant demand. Currently, domestic market for helicopters in the 6-ton segment is, according to our estimates, zero. So it does not matter a great deal to us whether the helicopter is assembled abroad or in Russia," Gazpromavia, a Russian airline, said.
But Andrei Martirosov, general director of the UTAir airline, one of Russia's biggest helicopter users, said Agusta was unlikely to sell enough helicopters in Russia to recoup project costs. He did not rule out, however, that Russian-assembled AW-139s could be supplied abroad. "With oil prices growing, there is high global demand for helicopters of this class, which are used mainly for flights to the shelf or offshore platforms," he explained. In his opinion, demand is expected to continue for another 10 to 15 years. Agusta has orders set until 2009, and for that reason, the UTAir chief said, helicopter constructors may be casting about for another production site.
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