MOSCOW, July 12 (RIA Novosti) Yukos shareholders threaten to sue Russia in Europe / OPEC backs Putin and Miller / Ukraine facing new elections / Bush's chicken drumsticks keeping Russia out of WTO

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Vedomosti

Yukos shareholders threaten to sue Russia in Europe

Foreign shareholders in beleaguered Russian oil company Yukos have threatened to sue Russia in European courts over alleged damages caused by the devaluation of Yukos stock.
Covington & Burling, a U.S.-based law firm, wrote recently to Russian Foreign Minister Sergei Lavrov on behalf of a Spanish mutual fund holding Yukos shares to demand compensation for damages inflicted on the shareholders by assets freezes and the forced sale of Yukos's core production unit Yuganskneftegaz, C&B partner Thomas Johnson told Vedomosti yesterday.
Johnson declined to specify the name of the fund and the size of damages claimed, saying however that it did not run into hundreds of millions of dollars. He described the letter as being in line with the Russian-Spanish investor rights protection agreement forcing governments to compensate shareholders in the case of discrimination, and added that C&B would litigate outside Russia, probably in Stockholm, if the fund received no compensation within three months. He also declined to specify who would be the defendant in the case.
Last October, C&B sued Russia, its gas monopoly Gazprom, Gazprom's oil arm Gazprom Neft, state-owned oil company Rosneft, which holds a stake in Gazprom Rosneftegaz, Finance Minister Alexei Kudrin, Kremlin administration head Dmitry Medvedev, and his deputy Igor Sechin in the U.S. Columbia District Court on behalf of 11 U.S.-based Yukos ADR holders and Cayman Islands-based company FCT America Ltd. for back-tax claims against Yukos and the subsequent acquisition of private assets by the Russian government. They alleged the moves were illegal, and evaluated damages at $3 million. They now want to receive triple compensation.
Johnson said the litigation was funded by GML, Yukos's main shareholder. GML confirmed the report.
Yukos spokesperson Claire Davidson has distanced the company from the latest claim, saying it was a shareholders' initiative. However, she said the move was perfectly understandable as the shareholders had lost Yuganskneftegaz, which she said was effectively stolen.
The Russian government will have to face many more international legal attacks, Johnson warned, as Russia also has investor protection agreements with Belgium, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Sweden, and the U.K., where many other Yukos minority shareholders are based.
Russian lawyers have brushed off the claims as futile.
"[Investor protection] agreements force governments to compensate only if the damage was caused by their actions. Russia will build its defense on claims that the Yukos management and its core shareholder GML were responsible for the loss," said Anatoly Yushin, a managing partner with law firm A.S.T. Legal. He said that this made any recovery almost impossible.

Kommersant

OPEC backs Putin and Miller

OPEC Secretary-General Mohammed Barkindo criticized oil consumer countries on Tuesday for making the oil cartel invest billions in production while being unable to forecast their own demand. He said producer countries could find supply exceeding demand as early as 2010.
"There are two aspects to energy security - security of supply, and security of demand," he said, practically reiterating Russia's main argument in its gas dispute with Europe. The Putin-Miller doctrine is becoming popular with other energy suppliers.
One of the key factors behind rising oil prices is growth in demand. Economic progress in China and elsewhere has been so rapid that construction of refineries has not been able to keep pace with demand. Also, low crude prices in the previous phase of the cycle prevented energy companies from expanding production and refining. The result has been a drop in reserve refining capacities (as a proportion of world crude demand). In 1985, as Global Insight research organization showed, refining capacity was 20% above demand, compared to only 1% in 2005. As estimated by the Russian independent research organization Development Center, only an eight percent margin can reverse the situation and bring down crude prices effectively.
Global Insight analysts foresee three possible outcomes.
The best-case scenario is that with massive investments, free capacity reaches 7% in 2020 and level out at 4-5% after 2023. Demand for oil will continue, but alternative energy sources will also emerge. By 2010, the oil price will go down to $30 (in 2004 dollars) and slightly rise to $40 by 2020.
The second scenario does not expect freely available capacity to grow substantially (by more than 4%) until 2014. The oil price will go up to $90 in 2015, but then, with energy-saving technologies making their contribution, start to edge down.
And the third and most likely scenario is that free capacity will grow to 3% in 2008 and stabilize at that level, although OPEC will not let oil prices drop below the $40 area, give or take 10%.
Judging by Barkindo's comments, the cartel is set to follow exactly this line. Today OPEC accounts for 42% of oil production but only 11% of its refinement. If OPEC steps up output, price control will shift to refiners, while the influence of the oil producing cartel will decline due to the high level of supply.
For the Russian economy, none of scenarios are critical. Bank of Russia chairman Sergei Ignatyev said that the economy can easily bear an oil price drop to $30, or even $25. But other economists are not so upbeat, and think that on top of a deficit-ridden budget, Russia will also take on a worse balance of payments, a reduction in the Central Bank's international reserves, and slower economic growth, or even complete stagnation.

Nezavisimaya Gazeta

Ukraine facing new elections

The Ukrainian parliament did not work on Tuesday, but the factions of the "anti-crisis" coalition encompassing the Party of Regions, the Socialist Party and the Communist Party held an extraordinary meeting.
Though its political opponents tried to prevent the meeting, Speaker Oleksandr Moroz put several issues to a vote, the most important of which was the nomination of Viktor Yanukovych for prime minister. The leader of the Party of Regions received 233 votes, enough to ensure his election if President Viktor Yushchenko forwards the nomination to parliament.
The "orange" political forces are plotting a strategy to prevent this. The council of pro-presidential Our Ukraine has decided not to join forces with the new coalition, but has opted to prepare for repeat elections. The Yulia Tymoshenko Bloc announced it would form a radical opposition. At the same time, Our Ukraine faction leader Roman Bessmertny did not rule out the possibility of joining forces with Tymoshenko's bloc for new elections.
Tymoshenko said the anti-crisis coalition was not anti-crisis and could only exacerbate the protracted political crisis. "Communists and oligarchs have created this coalition, which makes it a coalition of Communists and clans, or Communists and criminals," she said. "Our society will never accept it. This is forcing Ukraine several centuries back, to a period against which we fought during our revolution."
The situation is critical for the "orange" forces, because there has been talk in the parliamentary corridors about "unreliable" deputies who might take the side of the "regionals" any moment, meaning representatives of big business from Our Ukraine and the Yulia Tymoshenko Bloc.
"As far as I know, several politicians from other factions, notably Our Ukraine, are marching en masse into the coalition, because they are businessmen and know that the matter is serious," said former parliament speaker Volodymyr Lytvyn.
Incidents of "defection" have been indirectly confirmed by the Party of Regions, which has started speaking about achieving a constitutional majority. This is a reminder to the president that he might face impeachment. Lytvyn said the current events had been planned by the Party of Regions. "I am convinced that they acted very cautiously and prepared for the counterattack," he said. "To a considerable degree, the events were provoked by the 'orange' coalition."
Yushchenko may be forced to announce new parliamentary elections. When he said the country could not survive another election, he was threatened with the dissolution of parliament.
Deputy Andrei Shevchenko from the Tymoshenko Bloc said: "Yulia Tymoshenko has formed a group of lawyers who are preparing for the president legal conclusions on the possible dissolution of parliament."

Izvestia

Bush's chicken drumsticks keeping Russia out of WTO

New obstacles are being mounted on Russia's way towards accession to the WTO. Both U.S. Congress and the American business community now oppose Russia's bid: in the run-up to the G8 summit, 16 business organizations officially requested that President George W. Bush postpone Russia's accession to the WTO "until Moscow demonstrates it can be a reliable partner in the global community," says the Financial Times. How long can Russia wait?
The Chamber of Commerce and the Emergency Committee for American Trade were among those who signed the letter to the U.S. president. They say Russia is not eligible to enter the WTO because it does not take sufficient measures to protect its intellectual property, and has not so far removed technical barriers for the import of U.S. agricultural products. U.S. businessmen also want Russia to gradually remove limits on investment in the financial sector.
According to some optimistic forecasts, Russia and the U.S. should reach an understanding and even sign a corresponding agreement by the G8 summit in St. Petersburg this weekend. Deputy Prime Minister Alexander Zhukov recently told Izvestia he expected such an agreement to be signed in the next few days.
However, Americans do not seem to share this optimism. On Monday, U.S. Ambassador to Russia William Burns told the Ekho Moskvy radio that "serious problems primarily related to piracy, intellectual property and agriculture remain." This means the U.S. cares less now about whether its insurance companies and banks will get access to the Russian market.
However, Russia has already amended legislation on the protection of intellectual property and will now start to sue pirates. The new poultry import quotas should satisfy the Americans, yet, as U.S. Senator James Sensenbrenner told Izvestia, the U.S. wants to see intellectual property violators jailed.
As negotiations with the U.S. are still ongoing, the Russian authorities are losing patience. Earlier, officials patiently discussed every U.S. demand, and now they say Russia's accession to the WTO is a political issue, and the United States is protracting the process deliberately. President Vladimir Putin recently said Russia would not comply with WTO demands unless it was a WTO member. The question is, how long will Moscow wait for Washington's consent?