Digest of headline news as of 7:00 p.m. Moscow time on June 21:
BUSINESS & FINANCE
*** RUSSIA COULD RETURN TO BUDGET DEFICIT OF 1.5% OF GDP IF AVERAGE ANNUAL OIL PRICE AT $100/BARREL - SILUANOV
Russia could have a federal budget deficit of 1.5% of GDP in 2012 if the average annual oil price is below $100 per barrel, Finance Minister Anton Siluanov said in conversation with journalists on the sidelines of the St. Petersburg International Economic Forum.
"This year, the refined budget suggests an almost zero balance - 0.1% of GDP. However, this is at an oil price of $115 per barrel. If the oil price is $100, then we will return to our old position - 1.5% of GDP," he said.
The oil price has slightly fallen so far, but it remains to be seen how long this rate will persist, Siluanov said.
*** CAPITAL OUTFLOW FROM RUSSIA SLOWS TO LESS THAN $6 BLN IN MAY - MINISTER
Capital outflow from Russia slowed to less than $6 billion in May, Economic Development Minister Andrei Belousov said during a roundtable as part of the economic forum in St Petersburg.
*** WELFARE FUND ASSETS COULD BE INVESTED IN SMALL GOVT STAKES DURING PRIVATIZATION - SHUVALOV
The government is thinking of using National Welfare Fund resources to buy small stakes in companies to be privatized, First Deputy Prime Minister Igor Shuvalov told Interfax on the sidelines of the economic forum in St Petersburg.
"We'll be looking at this while we draft a special law on investing the Welfare Fund's assets. This is in the concept [of the law]," Shuvalov said.
Russia is planning to set up a Russian Financial Agency to run the two sovereign wealth funds, which are the Welfare Fund and Reserve Fund. The principles on which it will operate have been under discussion for years. Latest reports say a bill will be submitted to the Duma by the end of 2012.
*** RUSSIAN OIL EXTRACTION COULD FALL BY A QUARTER IN 10-20 YEARS IF TAX SYSTEM STAYS THE SAME - MINISTER
Oil extraction in Russia could decline by approximately a quarter within the next 10-20 years if no measures are taken to encourage investment in this sector, Russian Energy Minister Alexander Novak said.
"If we continue working as we work today, using the existing system of taxation, the volume of oil extraction in Russia could drop within the next 10-20 years. Experts have estimated that it could decrease from 500 million tonnes to 370 million tonnes. I mean oil extraction, which could fall by 130 tonnes," he said at Sberbank's (RTS: SBER) business brunch on the sidelines of the St. Petersburg Economic Forum.
*** LUKOIL INTERESTED IN PARTNERSHIP WITH ENEL FOR SUPPLYING GAS FROM NORTH CASPIAN FIELDS - ALEKPEROV
Lukoil (RTS: LKOH) is interested in partnership with Enel for supplying gas from fields located in the North Caspian, the company's president, Vagit Alekperov, said during the signing of a memorandum of mutual understanding and partnership between the two companies in the gas sector.
He said that Enel and Lukoil possess generation capacity in Russia's Southern Federal District. "The companies have active operations on the electricity market and are interested in the market being more liberal," Alekperov said.
Enel's CEO Fulvio Conti said that Lukoil is an international company with operations in other countries. "This agreement gives us the possibility of expanding relations in different countries," he said.
*** ROSNEFT, STATOIL TO SIGN DEAL ON JOINING NORWEGIAN PROJECTS THURS
Rosneft (RTS: ROSN) and Statoil will sign an agreement on the Russian company joining projects in the Norwegian section of the Barents Sea on Thursday, Rosneft's president, Igor Sechin, said at the economic forum in St Petersburg.
Rosneft will also sign agreements on the development of the Russian Arctic shelf, Sechin said.
"Today at this forum we are signing two full-scale agreements in this area: with Eni on the development of several blocks on the Russian Arctic shelf and with Statoil on the joint exploration and development of the Norwegian shelf," he said.
*** GAZPROM, LUKOIL COULD FORM JV TO SUPPLY SOSNOGORSK GAS REFINERY
Gazprom (RTS: GAZP) and Lukoil (RTS: LKOH) could form a joint venture to supply gas to the Sosnogorsk gas refinery, the general director of LLC Gazprom Processing, Yury Vazhenin, said in an interview with the Gazprom journal.
The companies have been discussing supplies of associated petroleum gas to Gazprom Processing's Sosnogorsk plant since the end of February.
A source at Gazprom told Interfax that Lukoil might supply 1.5 billion cubic meters of APG to the refinery. In that case, Gazprom would supply dry stripped gas to the Pechora state district power plant, which Lukoil currently supplies. This might be a 50/50 joint venture, the source said.
*** YEVTUSHENKOV CONFIRMS BASHNEFT INCLUSION IN PROJECT IN IRAQ
Bashneft (RTS: BANE) has joined a project in Iraq, the main owner of AFK Sistema (RTS: AFKS) (controls Bashneft) Vladimir Yevtushenkov told journalists on the sidelines of the St. Petersburg International Economic Forum.
"Bashneft has entered Iraq in a consortium," he said.
Commenting on the subject that Bashneft recently lost a tender in Iraq in a consortium of companies, Yevtushenkov said, "You have old information."
*** ROSATOM, INTER RAO CONSIDERING INVESTMENTS IN NEW UNITS AT CZECH NPP - KIRIYENKO
Russian State Nuclear Energy Company Rosatom is prepared to invest in the construction of the third phase of the Temelin Nuclear Power Plant (NPP) in the Czech Republic, and Russian energy company Inter RAO UES (RTS: IRAO) has already sent its specialists to that country to discuss possible investment options in the new units, head of Rosatom Sergei Kiriyenko told journalists on the sidelines of the St. Petersburg International Economic Forum.
"We are ready not just to supply equipment there on Czech money; we are ready to invest in it," he said. The Czech Republic has already sent the first query proposal for participation in financing the construction of new blocks to another company, Inter RAO, which "has already sent its specialists to discuss possible options," he said.
*** ALROSA IFRS NET PROFITS RISE 8% IN Q1
The group OJSC Alrosa (RTS: ALRS), Russia's diamond monopoly, increased its net profits calculated to International Financial Reporting Standards (IFRS) by 8% year-on-year to 12.688 billion rubles in the first quarter of this year, the company reported.
Consolidated sales revenues were up 26% at 37.2 billion rubles.
Company EBITDA (earnings before interest, taxes, depreciation, and amortization) for the three months increased 15% year-on-year to 16.191 billion rubles - the margin on it dipping to 44% from 47% in Q1 a year earlier, but rising from 22% in Q4.
*** ALROSA COULD PLACES 12% OF SHARES ON MICEX IN 2012
Diamond miner Alrosa (RTS: ALRS) could place 14% of its shares on the MICEX exchange as early as 2012, Alexei Uvarov, Director of the Russian Economic Development Ministry's Property Relations Department, said.
The stake would consist of 7% of shares owned by the federal government and 7% owned by the government of Yakutia, the mineral-rich internal Russian republic where Alrosa is based.
The government has decided to sell a controlling stake in Alrosa by 2016, but the timing and method of the privatization have not yet been determined. Uvarov said that selling a relatively small block of shares - the federal and Yakutia governments had earlier agreed on the sale of 14% - would make it possible to obtain a fair market value by boosting the number of Alrosa shares traded on the exchange.
*** KAMAZ TO FOCUS ON INDIAN JV, BUT INTERESTED IN CHINA, OTHER MARKETS
Kamaz (RTS: KMAZ) has now focused on developing production in India, but is studying other markets, particularly China, the Russian truck maker's chief executive, Sergei Kogogin told reporters on the sidelines of the St. Petersburg International Economic Forum on Wednesday.
"There is a very expensive entry there, although we have options for entering this market. But one needs to understand that penetrating a new market is extremely difficult," Kogogin said in regard to the company's strategy for China.
He said Kamaz has already worked out the issue of a partnership with a Chinese producer, but he did not name the company. The Chinese company is prepared to set up a joint venture, he said.
*** RZD MIGHT PLACE BONDS IN OCT-NOV WITH RATE TIED TO INFLATION
OJSC Russian railways (RTS: RZHD) (RZD) might place bonds in October-November of this year with a rate tied to inflation, RZD's senior vice president, Vadim Mikhailov, told journalists.
When asked about the timeframe for the bonds placement, he said: "October-November or next year".
RZD sees market entry as unfeasible at the present moment.
*** TRANSAERO HAS NO IPO PLANS AND IS NOT EXPERIENCING PROBLEMS WITH FINANCES
OJSC Transaero has no plans to hold an IPO for raising project financing, the airline's general director, Olga Pleshakova, told journalists on the sidelines of the St. Petersburg International Economic Forum on Thursday
"This issue has been closed directly since the start of the financial crisis. The company is not experiencing problems with raising financing for our projects.
It was earlier reported that Transaero might place 18% of its shares on the MICEX through an IPO.
*** SBERBANK PLACING 7-YR, DOLLAR-DENOMINATED EUROBONDS AT 5.25%-5.3% - SOURCE
Sberbank of Russia (RTS: SBER) has issued a mandate to Bank of America Merrill Lynch, JP Morgan, Mitsubishi UFJ and Troika Dialog (RTS: TROY) to organize a seven-year Eurobond issue denominated in dollars, a source in banking circles told Interfax.
Yield guidance is 5.25%-5.3%, and pricing is expected on Thursday.
The volume of the issue will be indicative.
*** SBERBANK AGREES WITH VTB ON NEED FOR CENTRAL BANK TO ISSUE FOREX LOANS
Sberbank (RTS: SBER) chairman German Gref said he thought the Central Bank ought to provide forex loans.
"I fully support this," Gref told reporters, adding that the bank had suggested the CB provide forex resources to other banks on several occasions.
All central banks do this, Gref said. "It's a way of providing the market with forex liquidity and easing pressure on the ruble, he said.
VTB (RTS: VTBR) chairman Andrei Kostin has also suggested that the CB provide forex loans as an anti-crisis measure.
*** MICEX-RTS SHAREHOLDERS ELECT ALEXANDER AFANASYEV AS CEO
Shareholders in OJSC MICEX-RTS elected Alexander Afanasyev as the stock exchange's new CEO at their annual general meeting on Wednesday, an Interfax correspondent reported from the meeting.
Before today, the positions of CEO and president, previously occupied by Ruben Aganbegyan, were combined.
At a meeting on May 21, the MICEX-RTS board of directors decided to raise the issue of changing the structure of the exchange's management bodies at the annual general shareholder meeting.
Now, the CEO position will serve as the exchange's main management body, and the presidential position will not be included in the management bodies. The president will be appointed by the board of directors at the CEO's recommendation.
POLITICS & SOCIETY
*** LUST FOR CHANGE DANGEROUS IF IT LEADS TO BREAKING OF CIVIL PEACE - PUTIN
Politicians must express their positions exclusively within the framework of law; the lust for change is counterproductive if it breaks civil peace, President Vladimir Putin told a plenary meeting of the St. Petersburg International Economic Forum on Thursday.
"Anyone aspiring for a political career and deeming oneself a politician must express one's position exclusively within the framework of law," he said.
"The lust for change is, naturally, a driving force of progress, but it becomes counterproductive or even dangerous when it leads to the breaking of civil peace and the state as a whole," he stressed.
*** PUTIN DEPLORES LACK OF PARTNERSHIP ATTITUDE TO RUSSIAN BUSINESS ABROAD
President Vladimir Putin deplores the fact that Russian business is sometimes obstructed abroad.
"Regrettably, there are situations when Russian companies that are ready to invest in foreign assets come across a wall, when mutually profitable deals collapse for reasons that have nothing to do with the economy," Putin told businessmen at the St. Petersburg International Economic Forum.
"This is hardly a partnership attitude," he added. "We simply want an equal approach - so that Russian investors were able to freely buy foreign assets within the frames of fair competitive advantages and competitive procedures, and making use of their competitive advantages".
*** RUSSIAN, FINNISH PRESIDENTS TO DISCUSS BILATERAL TIES
President Vladimir Putin will hold talks with his Finnish counterpart Sauli Niinisto on the sidelines of the St. Petersburg economic forum tomorrow evening.
Niinisto is in Russia on a working visit.
"A detailed exchange of opinions on a wide range of issues is expected to take place," the Kremlin's press service reports.
The two leaders will "map out ways of giving the entire complex of bilateral ties a further boost". The meeting is supposed to reaffirm the course for the further mutual development of Russian-Finnish cooperation "in a businesslike and constructive manner".
*** SYRIAN GOVT, OPPOSITION SHOULD PULL OUT TROOPS FROM CITIES SIMULTANEOUSLY - LAVROV
The Syrian government and the opposition should withdraw their troops from cities and other communities simultaneously under the UN observers' control, Russian Foreign Minister Sergei Lavrov said.
Speaking to Echo Moskvy radio station on the sidelines of the St. Petersburg Economic Forum on Thursday, Lavrov said Russia could give its consent to increasing the number of UN military monitors in Syria.
*** UN SC WILL NOT SANCTION SYRIA INVASION - MINISTRY
The United Nations Security Council will sanction a military invasion of Syria, Russian Foreign Ministry spokesman Alexander Lukashevich said.
"Both the Russian president, at his recent press conference in Los Cabos, and (Foreign Minister) Sergei Lavrov, in his latest statement, are saying that we cannot allow such a scenario (military intervention). The Security Council will never give a sanction for a military intervention," Lukashevich said at a briefing in Moscow on Thursday.
A military intervention is "against the principles of the UN Charter," he said. "The main principle is non-interference in other states' internal affairs," the Russian Foreign Ministry spokesman said.
*** RUSSIA NOT SENDING WARSHIPS TO SYRIA - LAVROV
Foreign Minister Sergei Lavrov has denied allegations that Russia is sending warships to Syria.
"Allegations that Russia has just sold weapons to Syria and that those weapons are already being used in combat operations do not correspond to reality," he told Russia Today television on Thursday.
"That's part of a certain campaign, a very indecent one. We are not sending warships to Syria," the minister said.
*** MV ALAED CARRYING CARGO FOR SYRIA TO VISIT MURMANSK ON JUNE 23
The MV Alaed carrying cargo for Syria will visit Murmansk on June 23 for changing the Curacao flag for Russian in order to avoid possible detention over the termination of its insurance liability to third persons, Foreign Ministry spokesman Alexander Lukashevich said on Thursday.
"While the ship was travelling from the North Sea to the Atlantic Ocean, the owner was informed about the termination of insurance liability to third persons and the demand of the ship's classification society - remember, it flies the Curacao flag - to visit any port for examination. In order to avoid a possible detention of the ship it was decided it would visit Murmansk on Saturday afternoon for changing the flag to Russian," Lukashevich said.
*** P5+1, IRAN LACK CONFIDENCE - RUSSIAN FOREIGN MINISTRY
There is a lack of serious confidence between the P5+1 group of world powers (China, France, Russia, the United Kingdom and the United States as the UN Security Council permanent members plus Germany) and Iran, but the frequency of their negotiations has lately become unprecedented, Russian Foreign Ministry spokesman Alexander Lukashevich said.
"The negotiations in the P5+1-Iran format in Moscow on June 18-19 have continued a dialogue that has been arranged with Tehran of late. The negotiations with Iran on its nuclear program have never been as frequent as they are now. This is a significant achievement in itself, taking into account the issue's history and a serious lack of trust between the parties," Lukashevich said.
*** LAVROV, CLINTON TO MEET IN ST. PETE NEXT WEEK
Russian Foreign Minister Sergei Lavrov will meet with U.S. Secretary of State Hillary Clinton next week.
"Russian Foreign Minister Sergei Lavrov will be meeting with U.S. Secretary of State Hillary Clinton in St. Petersburg on June 29," Russian Foreign Ministry spokesman Alexander Lukashevich said at a news conference in Moscow on Thursday.
Clinton will come to St. Petersburg to take part in APEC events, he said.
*** RUSSIAN ARMS EXPORTS TO REACH $12 BLN IN 2012 - IVANOV
Russia is planning to export around $12 billion worth of weapons in 2012, head of the presidential administration Sergei Ivanov said.
"I will recall that in 2011 our arms exports stood at $11 billion. This year we are planning to export to the tune of $12 billion. Everything is stable," Ivanov said in an interview with the Rossiya 24 television channel at the St. Petersburg economic forum.
*** TAJIKISTAN AIMS TO REDUCE POVERTY TO 30% BY 2015 - PRESIDENT
Poverty in Tajikistan is declining fast and by 2015 could reach 30% of the total population from the current 41%, President Emomali Rahmon said at a United Nations Conference on Sustainable Development in Rio de Janeiro.
"According to the findings of a joint study of living standards in Tajikistan, conducted by the government and independent organization, the country's poverty level dropped from 73% in 2003 to 53% in 2007 and to 41% presently," Rahmon said. The transcript of his speech was issued by the president's press office.
*** ISRAEL DOES NOT THINK ASSAD RESIGNATION WOULD SOLVE SYRIA PROBLEM - DEPUTY PM
Israel is not of the view that Syrian President Bashar al-Assad's resignation would solve the country's problems, Israeli Deputy Prime Minister and Foreign Minister Avigdor Lieberman said.
"We have a very clear position: the change of leaders or this or that chief of state's resignation does not solve problems. We see this in the example of Libya, Iraq, and other countries," Lieberman said in an interview with Interfax.
"This is not something like you topple someone and put another and everything will instantly be OK," he said.
*** ISRAEL DOES NOT RULE OUT USE OF MILITARY FORCE AGAINST IRAN - DEPUTY PM
Israel does not rule out any options for solving the Iran nuclear problem, including the use of military force, but it has not yet made a final decision on this, Israeli Deputy Prime Minister and Foreign Minister Avigdor Lieberman told Interfax.
"All options remain on the table," Lieberman said. Asked whether the use of military force is among these options, he replied, "We do not rule out any options."
"No decision has yet been made. We will keep assessing the situation. We make such assessments almost every week," he said.
*** IRAN SHOULD TAKE PART IN INTL CONFERENCE ON SYRIA - ARAB LEAGUE DEPUTY SECRETARY GENERAL
Iran should be among the participants in an international conference on Syria in Geneva on June 30, Arab League Deputy Secretary General Ahmed Ben Helli said.
"For my personal opinion, all the players involved in the crisis in Syria must be a part of this coming contact group," Ben Helli said in an interview with Interfax when asked whether he believes Iran should take part in this event.
Ben Helli acknowledged that Iran's participation is still a matter of negotiations. "The main achievement now is to agree on an agenda to the first meeting, then this meeting will decide which partners will attend," he said.
Russia hopes U.S. will realize sanctions in foreign policy have no prospects