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RIA: What the Russian papers say

Conflicting threat assessments hinder Russian-U.S. missile defense cooperation/ Protests in Moscow, Kaliningrad make authorities listen/ Russian oil companies join a risky venture across the globe/ Gazprom posts first profit from Sakhalin-2 project

Speaking in Paris late last week, U.S. Secretary of State Hillary Clinton said "Missile defense, we believe, will make this continent (Europe) a safer place. That safety could extend to Russia, if Russia decides to cooperate with us."

In 2006, Moscow advocated joint missile defense cooperation, an idea which was rejected by the administration of then U.S. President George W. Bush. Although Moscow remains committed to this concept, it indicates that current threats must be jointly assessed before it becomes possible to negotiate technical parameters of a missile defense system.

Alexei Arbatov, head of the Center for International Security at the Russian Academy of Sciences' Institute of World Economy and International Relations (IMEMO), said Russia wanted to launch a lengthy process of coordinating all issues and eventually creating a joint missile defense system.

He said the United States wanted to expedite this process, to quickly reach agreement and to use Russia's early warning radars and its own systems, as well as sea-based and ground-based systems, to "create something against Iran."

However, Russia has a rather delicate relationship with Tehran.

Moscow and Washington also disagree on specific threats. For instance, Russia considers Pakistan's nuclear-tipped missiles capable of reaching its territory to be a greater menace than Iran's missiles.

Although Moscow would raise this issue in a joint threat assessment, Washington considers it a sensitive problem because Pakistan is one of its partners that has a serious influence on the situation in Afghanistan.

Arbatov said bilateral military and political relations had to change drastically in order to make headway on the joint missile defense system issue.

"This looks like a split personality disorder: On the one hand, we are pointing missiles against each other, and, at the same time, developing a joint missile defense system which is only possible between military and political allies," Arbatov told the paper.

He said the importance of missile defense cooperation should not be overestimated. The new strategic arms reduction treaty will link strategic offensive and defensive arms, and this will be sufficient for its entire duration.

"First, the United States will not deploy any serious missile defense system against Russia in the next 10 years. Second, the new START treaty contains a clause allowing either party to withdraw from the treaty if its supreme national interests are threatened," Arbatov said.

Recent rallies in Moscow and Kaliningrad have shown two radically different types of social protest, although both took place last weekend.

The smaller rally was held in Moscow's Triumfalnaya Square, organized by human rights activists who demanded respect for the right to free assembly.

Kaliningrad, Russia's westernmost exclave on the Baltic coast, saw the largest protest in the Putin era, although the 10,000 people who gathered in downtown Kaliningrad are not at all opposed to the government.

The majority of these people is not involved in politics and could have voted for the majority party, United Russia, in regional elections, and for Vladimir Putin and then Dmitry Medvedev in the presidential vote. However, on January 31, they demanded the resignation of Governor Georgy Boos and condemned Prime Minister Putin for appointing Boos. The protest was triggered by regional transportation tax hikes. That is, they have finally felt a connection between their political choice and their pockets, after major government interference in their private lives which threatened their welfare.

Earlier mass protests in Russia's Far East were of the same nature, as the rallies took place after import duties on used foreign cars were introduced. For many of the protesters, selling used cars was their only source of income.

Euphoric over United Russia's sweeping victories in all elections and confident about the viability of the "vertical of power," Russian leaders risk crossing the line where the "silent majority" of their apolitical supporters may turn into violent opponents.

Russia's entire political system in fact rests on a silent mutual non-interference agreement between the government and society. As a result, neither the highly popular president and prime minister, nor regional governors they have appointed can afford to make decisions that have a direct negative effect on people's wellbeing.

Russians have easily swapped their right to elect their rulers for the freedom to live their lives without interference of these rulers. Now they are very sensitive to attempts to abuse their only privilege.

The majority of Russians is currently incapable of understanding a direct link between legality, freedom, choice and their own welfare. However, the slightest violation of that "obedient majority's" financial rights immediately shows how vulnerable the current political stability is - a stability supported by nothing but their indifference.

The Kaliningrad protest should have alerted the government, because it signals some systemic flaws in the current political structure, more than all the rallies of "dissenters" in Moscow. A protest of "consenters" is a warning signal for the Kremlin.

Kommersant, Vedomosti

Russian oil companies join a risky venture across the globe

The Russian National Oil Consortium and the Venezuelan state company PdVSA on Monday signed documents to set up a joint venture for the production of oil in the Orinoco River basin. The Russian companies are investing $20 billion in the project and will also pay a sign-on bonus of $1 billion. Experts describe the project as economically profitable but risky because of the complex political situation in Venezuela.

The reserves of the Junin 6 oil block of the Orinoco's oil belt covering an area of 447.7 square kilometers total 5.16 billion metric tons, while its geological resources are estimated at 8.83 billion tons. Under a September 10, 2009 inter-governmental agreement, 60% of the venture will belong to Corporacion Venezolana del Petroleo (a 100% subsidiary of PdVSA) and 40%, to the NOC (Gazprom, LUKoil, Rosneft, Surgutneftegaz and TNK-BP each 20%).

The huge investment is due to the high viscosity of oil in the Orinoco belt. Its processing requires heavy oil upgrading, or improving its quality to commercial levels. Each installation will cost $6-$6.5 billion to build.

NOC members are not disclosing the amount they are going to spend this year. According to one official of the companies involved, the Venezuelans offered Russian oil specialists far more favorable working conditions than to Italy's Eni or China's CNPC.

Experts say the agreements are commercially attractive. "Geologically, the block is fairly promising," said RusEnergy partner Mikhail Krutikhin. "It is located practically next to the vast American market and the Russian companies are working surprisingly well together."

However, the domestic situation in Venezuela may create obstacles, he added. Since December, the opposition has been pro-active in demanding the removal of President Hugo Chavez. The resentment grew out of the energy crisis and devaluation of the national currency.

"Political risks in Venezuela are high, and one should work there with caution," Krutikhin said. "Otherwise, it will be a repeat of Iraq's story when Russian companies signed too many contracts with Saddam Hussein and in the end lost their projects."

Valery Nesterov from Troika Dialog believes the money to be invested in the development of Junin 6 could be spent with the same effect in Russia.

Kommersant

Gazprom posts first profit from Sakhalin-2 project

Russian energy giant Gazprom has posted its first profits from the Sakhalin-2 oil and gas project in Russia's Far East.

In the third quarter of 2009, project operator Sakhalin Energy Investment Company Ltd. earned over 10 billion rubles ($32.9 million), enough to compensate the losses it sustained in the first six months of the year.

Gazprom's net profit in the third quarter grew 33% while its EBITDA went down 41%. At the same time, the gas export monopoly increased gas exports to non-CIS countries by 20.5%.

Analysts believe that gas demand will depend on the flexibility of Gazprom's price policies.

Vitaly Kryukov, an analyst with the investment and financial company Kapital, said the third quarter of 2009 was unusual for Gazprom, which usually reported a decrease in demand in July-September.

"However, last year it saw a quarterly growth of gas sales because prices decreased compared to the beginning of the year, which encouraged European customers to buy more gas," Kryukov said.

In the third quarter of 2009, Gazprom exported to non-CIS countries 47.1 billion cu m (1.66 trillion cu f) of natural gas compared to 39.1 billion cu m (1.38 trillion cu f) in April-June.

Kryukov said that gas demand would grow moderately in 2010. However, the first quarter is not indicative because of a big seasonal factor. He said spot prices of natural gas remain low, whereas Gazprom's prices started growing in the wake of an increase in oil prices. Kryukov said the monopoly should change its market policies to attract European customers by cutting prices.

Dmitry Lyutyagin from investment company Veles Capital said Gazprom's financial statement is "moderately positive" and its operation abroad "strong."

The analyst said that a continued growth in gas sales will be facilitated by the decreasing gas stocks of the main customers and colder than usual weather in the Northern Hemisphere.

Lyutyagin said gas prices so far remain moderate and "acceptable," which should boost financial results at the beginning of 2010.

MOSCOW, February 02 (RIA Novosti)

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