MOSCOW, September 6 (RIA Novosti) Vladimir Putin the businessman/ National projects as cover-up for Operation Successor/ Presidential aide advises foreign companies to drop PSCs/ Russia ready to delay WTO accession/ Gazprom to charge more for Turkmen gas

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Vedomosti

Vladimir Putin the businessman

During his visit to South Africa, Russian President Vladimir Putin defended the interests of Russian companies, including asset manager Renova and aluminum giant Rusal, but managed to offend his hosts by failing to find time to address parliament.

President Thabo Mbeki told a news conference he was disappointed, adding that, at first, Putin had agreed to visit the legislature.

Putin, however, said the level of trade and economic cooperation was extremely low between the two countries, and that in any event his foreign trips should not turn into "political tourism."

The Russian president preferred to speak of concrete business projects he coordinated with his South African counterpart. Renova, for instance, pledged to invest over $1 billion in the country to produce manganese ores.

The company's CEO, Viktor Vekselberg, said the five-year program included the development of a mine and infrastructure, and the construction of a plant.

Production will not begin until 2009, and the company will sign only a framework agreement with the local transport and energy monopolies, said a source familiar with the project.

Another Russian company plans to invest in the South African energy sector in conjunction with the construction of an aluminum plant, Putin said. He was referring to Rusal, which has submitted the necessary application, said a high-ranking source in the Russian delegation.

Andrei Maslov, director of the consulting company Af-Ro, said another Russian aluminum producer, SUAL, once wanted to build a plant in Kouga, South Africa.

Now, with plans to merge it with Rusal and Switzerland's Glencore, the Russian aluminum producer feels strong enough to take up the project.

South Africa suffers from a lack of foreign investment, as multinational players wait to see the results of the policies aimed at strengthening the economic position of the black population, Maslov said. Russia can take advantage of this pause, and its investment in the country can amount to $5-$7 billion in the next 10 years.

Gazeta.ru

National projects as cover-up for Operation Successor

One year that national priority projects have been in operation they failed to bring tangible results for the population, largely because Vladimir Putin not so much addressed social problems as prepared ground for his successor.

Initially the health, education, housing and farming projects were under President Putin's personal supervision. But two months later, on November 14, Dmitry Medvedev was appointed first deputy prime minister, taking over the projects. At the same time, Sergei Ivanov was made a deputy prime minister. This bred speculation that both deputies were candidates to succeed Putin, with one representing the interests of the Liberals around the president and the other of the siloviki.

So the national projects have become a playing field on which Medvedev now must prove his excellence over the supposed rival. Experts agree that it is the national projects that have given Medvedev a measure of recognition and an approval rating among the population, which has been wavering over recent months, like Ivanov's rating, between 8% and 10%.

"Medvedev is now identifiable, though last year nobody could say who he was," said Alexei Makarkin, deputy director of the Center for Political Technologies. "The president did not say that Medvedev was the man to succeed him, so this is Medvedev's own rating. If the president says Medvedev is his successor, society's reaction will be normal."

Asking pollees to assess the success rate of each of the projects in their region, pollsters came up with disappointing results. Only 1% to 3% of those interviewed called the projects absolutely successful. Between 35% and 47% described them as "rather" or "undoubtedly unsuccessful".

The main reason for the failure, according to experts, is a PR campaign launched to promote the projects. "The government's basic setback was that the projects were immediately dished up to the population as a quick way of improving their living conditions," said Igor Nikolayev, director of the strategic analysis department at FBK Company. "The authorities have pushed the bar too high and driven themselves into a trap by collecting a high percentage of dissatisfaction and mistrust."

However, considering that so-called Operation Successor hinged on the projects in addition to social goals, the authorities could not act otherwise.

Kommersant

Presidential aide advises foreign companies to drop PSCs

On Tuesday, a high-ranking Russian official said for the first time that parties to Production Sharing Contracts (PSCs) should go over to a "national regime."

This proposal reflects the authorities' desire to fully monopolize Russian gas supplies to the world market.

Igor Shuvalov, the president's aide, suggests that participants in the Sakhalin-2 project should thus resolve their numerous recent conflicts with the Russian authorities.

Today, there are three projects in Russia operating under PSC terms, namely the Kharyaga oilfield (with Total acting as the operator, and Hydro and the administration of the Nenets autonomous area as co-owners) and two projects on the shelf of the Sea of Okhotsk - the Sakhalin-1 project (with Exxon Neftegaz Ltd. as the operator, and ExxonMobil, ONGC, Sodeco and Rosneft as co-owners), and the Sakhalin-2 project (with Sakhalin Energy as the operator, and Shell, Mitsui and Mitsubishi as co-owners).

The Russian share in these projects is insignificant: Rosneft owns a 20% stake in Sakhalin-1, and the local authorities control a 10% stake in the Kharyaga project.

Independent experts say it is practically impossible to revoke PSCs without investors consent. Yulia Osadchaya, lawyer with the Liniya Prava law firm, said that even if the parties agree to change the PSC regime, they will have to do it in court.

However, the Russian authorities have ways of pressurizing PSC participants. A campaign to introduce state structures into PSCs began in the spring of 2005 with Gazprom's negotiations with Shell on the possibility of sharing in Sakhalin Energy (the talks have not yet been completed).

In early 2006, the Russian Ministry of Natural Resources launched a massive attack on mineral resource users operating under PSC terms.

The Russian authorities' interest in PSC projects is quite understandable: production under these projects has either been started (of oil and gas under the Sakhalin-1 project, and of oil in the Kharyaga oilfield and under the Sakhalin-2 project), or will begin in the near future.

However, state companies are barely involved in them. The transfer of the projects to a "national regime" (apart from changes in the taxation scheme) would mean they automatically fall under the new law on gas exports.

In other words, Gazprom alone will be able to export all LNG produced under the Sakhalin-2 project and natural gas produced under the Sakhalin-1 project.

Biznes

Russia ready to delay WTO accession

Russia has decided not to wait until the United States makes good on its threat to veto Moscow's WTO accession.

Presidential aide Igor Shuvalov said Tuesday the sides could no longer make any concessions, and that any subsequent bargaining was pointless. Russia will abolish all privileges granted to the U.S. as part of the WTO accession process, experts told the paper.

Shuvalov's statement was both predictable and sensational. The sides decided to take a break after bilateral talks failed at the Group of Eight summit in St. Petersburg this July.

Moscow and Washington promised to settle all key differences, primarily veterinary control over U.S. meat supplies, by October. However, U.S. negotiators oppose such control.

The Presidential Administration set out the Russian position Tuesday because such problems could apparently not be solved. Shuvalov said Russia might face domestic political problems if it made further concessions to the United States.

The statement seems harsh only at first glance. President Vladimir Putin let it be understood in early August that Russia was no longer willing to join the WTO at any price.

The sides made a priori unacceptable mutual demands [including those contained in Gherman Gref's letter], and this implies that Moscow wanted to break the stalemate and save face at the same time.

Iosif Diskin, co-chairman of the National Strategy Council, said Shuvalov, an extremely cautious person, would not have said what he did unless new demands had been made.

"Shuvalov's statement implies there is almost no chance of reaching an agreement," Diskin told the paper. Diskin said the U.S. Administration made it clear no decisions would be made prior to Congressional elections.

"Russia will apparently abolish all privileges granted to the U.S. prior to WTO accession talks," said Diskin.

Konstantin Zatulin, director of the Institute of CIS Studies, said foreign negotiators now believe they can blackmail Russia.

"Russia can profit from WTO membership, just like the WTO can profit from its energy resources and agricultural market," said Zatulin. Demands on Russia have become unreasonable, Zatulin told the paper.

Nezavisimaya Gazeta

Gazprom to charge more for Turkmen gas

Russian energy giant Gazprom, which agreed Tuesday to raise the price of imported Turkmen gas from $65 to $100 per 1,000 cubic meters, in line with Turkmen demands, will lose nothing because the gas is earmarked for Ukraine, which will pay the bill.

Analysts said Gazprom's decision was motivated by its confidence since coordinating new gas export prices with Ukraine. Dmitry Mangilev, an analyst with Prospekt investment company, said although the 2007 Ukrainian budget allocated $135 per 1,000 cubic meters for imported gas, the country will have to pay as much as $160 for the same amount next year.

"It appears the Ukrainian side has already coordinated new prices with Gazprom, because the latter would have otherwise rejected Turkmen demands," Mangilev told the paper.

Natalia Milchakova, head of the basic analysis department at Otkrytie Equity House, was not surprised by Gazprom's decision, because all CIS countries were now switching from semi-barter trade relations to market relations.

"Given current fuel prices, $100 for 1,000 cubic meters of gas is not very much," Milchakova told the paper.

Under the new agreement, Turkmenistan has no right to adjust prices for gas exports over the next three years. However, Moscow, Kiev and Ashgabat do not take this provision seriously.

Turkmen President Saparmurat Niyazov repeatedly refused to honor long-term price agreements, and Ashgabat threatened to stop gas deliveries every time Gazprom and Ukrainian authorities refused to pay more.

Turkmenistan may do the same next year and make things difficult for Kiev. But Gazprom will receive its gas transit payments regardless of Turkmenistan's inconsistent policy.