Baisarov buys 20% of Russian Copper Co (Part 2)

Serbia’s state-run drugmaker Galenika announced plans to build a plant south of Moscow

Business Week - 17.02.2011

The Kremlin vs. Big Pharma

But we're going to Russia, where the government's promising to spend billions of dollars on health care. Since the Soviet Union collapsed, Russia's one of the few countries where life expectancy significantly declined and health problems increased, even as the economy grew.

In a series of stories, our health care correspondent Gregory Warner will look at how the new money might reshape the Russian health care economy and what Western companies will do to get their hands on some of it. He starts us off in a small Russian city that's courting big drug makers.

Gregory Warner: I used to do a lot of driving around post-industrial towns in upstate New York, reporting on the economy. And, at first, my tour of Yarolslavl, Russia, feels quite familiar: the shuttered factories, the fields of grazing cows.

I've taken a four-hour train ride from Moscow to get here. I'm touring the city with Eugene Solovjev. a former director of public relations for the Yaroslavl region. He hands me a glossy brochure he assembled.

It represents the city he envisions. "Yaroslavl," it says, "The Capital of Advanced Pharmaceutics."

This bilingual booklet is based on some brochures he picked up at a conference in Buffalo, N.Y., some years ago. Like Buffalo, he says, Yaroslavl is pinning its economic revival on the health care industry.

Apparently, it's working. We come to a stop in a field of bulldozers, hard hats and steel girders. It's a factory being built by Nycomed, the European drugmaker, for $100 million. This factory will create hundreds of jobs when it's built, and tax income for the city. The winding road we took here will be a four-lane highway.

What's less clear is how this factory benefits Nycomed. Jens Salatski is the project manager, a German engineer. He rattles off all the reasons that building a factory in Russia is so expensive.

Jens Salatski: You need other heating, other heat insulation.

The winters are brutal, utility hookups a challenge, infrastructure non-existent, and if you think that labor would be cheaper here because of all the unemployment.

So why is Nycomed building a factory here? And why are pharmaceutical giants like Pfizer, Novartis, Astra Zeneca and GlaxoSmithKline all expanding their manufacturing operations in Russian cities like this one? Big drug companies have been doing business in Russia for two decades without setting up shop here.

I put these questions to Yuriy Krestinsky, the founder of Pharmexpert, one of the most widely read trade publications about the Russian drug industry.

Yuriy Krestinsky: What I can explain? If you construct your factory in Russia, you will have better conditions for your business activity in this country!

Better conditions. Let's stop there for a minute, and just consider this anecdote for what it's worth: About a year ago, the pharmaceutical company Novo Nordisk got a visit at its Moscow office, from the Federal Antimonopoly Service. The FAS charged Novo Nordisk with refusing to sell drugs through Russian distributors. An antitrust violation punishable by millions of dollars in fines.

Novo Nordisk had what it thought was a good defense. Those distributors did not have refrigerators.

Gennady Shirshov: It's about the cold chain issue.

Gennady Shirshov heads a coalition of drug manufacturers in Moscow. The details of the cold chain issue get complicated, but basically, to get your drug distribution license in Russia, you don't have to guarantee to keep the drugs refrigerated during transport. Novo Nordisk didn't deal with those distributors because it didn't want its insulin to be corrupted.

It's a big business. The Russian drug market is growing at 20 percent a year. And where there's profit there's compromise. Novo Nordisk announced it would build a factory in Russia. No one can say for sure whether the timing of that announcement was tied to the ongoing investigation of the company. The Moscow office of Novo Nordisk declined to comment. But Shirshov says that many companies are bowing to government pressure to invest here.

There are ways besides building a factory.

The Federal Antimonopoly Service declined my request for an interview. The only official who would talk to me on the record was one who stands to gain a lot from this factory building boom: the deputy governor of Yaroslavl, Viktor Kostin. He's learned out how to tap the mutual self-interest of both pharmaceutical businesses and Russia's government, to benefit his region.

I caught up with the deputy governor at the Sheremetyevo airport in Moscow. He spends a lot of time on the road courting investors. From his well worn carry on bag he pulled out a pamphlet -- the same one I was shown on my factory tour -- the 'capital of advanced pharmaceutics' brochure.

Victor Kostin: The Russian pharmaceutical market is growing rapidly and the market is very attractive to foreign companies. These 'confusions' that happened in the past will be resolved in the nearest future. And the solution will be positive for pharmaceutical business.

With that, the deputy governor tucked the brochure back in his suitcase and rose to catch his flight. There was a drug company in Israel awaiting his visit.

In Russia, I'm Gregory Warner for Marketplace.

Activity in the Oil and Gas sector (including regulatory)

02/17 12:21   SECHIN SUGGESTS RAISING THRESHOLD FOR PETROLEUM PRODUCT TRADING ON BOURSES TO 15% OF VOLUMES PRODUCED BY INDIVIDUAL REFINERIES 

http://www.interfax.com/
 02/17 12:20   RUSSIAN OIL COS FINED OVER 15 BLN RUBLES IN FIRST AND SECOND WAVES OF INVESTIGATIONS - FAS CHIEF 

http://www.interfax.com/

http://www.interfax.com/

http://www.interfax.com/

02/17 12:20   Rostechnologii's Shugayev could join Rosneft board of directors

http://www.interfax.com/

Total joins the queue outside Rosneft's boudoir

http://www.bne.eu/dispatch_text14247

bne
February 17, 2011

Total has jumped into the line of international majors jostling to get into Rosneft's boudoir since the state-company announced a tie-up with BP that will start with a project to explore offshore deposits in the Arctic.

The French company's point man in Russia, Pierre Nerguararian, told reporters on Wednesday that talks are underway over joint development of fields above the Arctic circle in the Barents Sea, as well as in the warmer climes of the Black Sea, with Rosneft.

Europe's third largest energy company is already partnered with Gazprom in the Barents Sea on the giant Shtokman gas field. It also lost a bid for the Val Shatsky field in the Black Sea to US rival Chevron.

"We are looking at the Black Sea, but it could also be cooperation in the Barents Sea," Mr. Nerguararian said, according to the Wall Street Journal. "We like the Black Sea, so maybe there is an opportunity with Rosneft there." A Rosneft spokesman confirmed contact between the two companies, but said talks are still at a preliminary stage.

Rosneft has enjoyed a remarkable opening six weeks to the year, having already announced a $1bn deal with ExxonMobil to develop deposits in the Black Sea in addition to the BP tie-up. The Russian oil champion is in need of both cash to power long term projects and expertise in offshore drilling, as the bulk of Russia's new deposits moves towards more inhospitable environments.

Meanwhile, it emerged last week that Royal Dutch Shell is discussing an asset swap with Gazprom which would see it swap LNG assets towards South East Asia - a region with a hugely growing appetite for energy - and expertise in exchange for wider rights to blocks off Sakhalin island.

"The interest in offshore fields is accelerating," Valery Nesterov, an oil and gas analyst at Troika Dialog, told Bloomberg. "Russia's activity in the Arctic has had some sort of domino effect, which has boosted interest in the area."

http://www.bne.eu/dispatch_text14247

Event: Alliance Oil (AOIL) reported yesterday (16 February) that its 2P reserves have increased 21% to 638.3mn bbls, while 3P reserves have increased 29% to 978.8mn bbls. The growth is mainly attributed to development and exploration activity in the Timan Pechora region, in particular at the Kolvinskoye field, where the company added 85.5mn bbls (to 239.3mn bbls), contributing 76% to overall 2P reserve growth. The Kolvinskoye field now accounts for 37% of AOIL's total % changes RC2P reserves base. Volga Urals and Kazakhstan boosted their 2P reserves by 35mn bbls (27% of the gross increase in 2P reserves). The company expressed confidence in its ability to reach its 90kbpd production target in 2012 and to increase production beyond that level thereafter.

Action: The announcement is positive for AOIL, in our view.

Rationale: The organic growth in reserves is evidence of strong exploration and development results. However, we note that the Timan Pechora basin remains a fairly challenging region compared with the traditional West Siberian basin. A few companies, including LUKOIL, have faced challenges in the past trying to develop the fields in Timan Pechora, and sometimes this has led to reserve write-downs. So it remains to be seen how quickly and to what extent AOIL can boost production from its reserves base, although generally the reserves base growth looks encouraging to us.

Ildar Davletshin

Gazprom

Eni and Gazprom sign new agreements

Gazprom CEO Alexey Miller and Eni CEO Paolo Scaroni, in the presence of the President of Russian Federation, Dmitry Medvedev and Italy’s Prime Minister, Silvio Berlusconi, today signed an agreement which paves the way for the future handover to Gazprom of the 50% of Eni’s stake (33,3%) in the consortium developing the Elephant oilfield in Libya, located in Libya’s south-western desert some 800 km from Tripoli.

The value of the stake to be handed over by Eni to Gazprom is around 170 million dollars. The agreement will be signed in the competent sees and then submitted to the approval of Libyan authorities.

At the same time, Eni and Gazprom signed an agreement which binds both parties to sign within February 28 the gas sale agreement (GSA) for the gas which will be produced in the Siberian fields of Severenergija, the company participated by Gazprom, Eni and Enel.

Today’s agreements are part of the strategic partnership signed between Eni and Gazprom in 2006 which envisages the commitment of both parties to jointly develop project in the entire gas chain. In the framework of this partnership, both parties launched South Stream pipeline project started and Eni entered Russia’s upstream sector.

Gazprom Neft in Slovenia

Gazprom Neft and Slovenia's Petrol plan to meet in March and sign an agreement for the formation of a joint venture to sell petroleum products in Slovenia and other countries, said Communications and Press Minister Igor Shchyogolev, who is the Russian head of an intergovernmental commission between the two countries.

Documents on Russian-Slovenian cooperation in energy will be signed this March. Gazprom Neft hopes to enhance its position on the Serbian, Bulgarian and Romanian retail markets through its proposed venture with Petrol.

(Interfax)

Gazprom: Nord Stream deliveries will not result in drop in gas transit across Ukraine and Belarus

Rome - The beginning of natural gas deliveries along the Nord Stream pipeline will not signify the reduction of gas transit along other routes, particularly via Ukraine and Belarus, Gazprom Chief Executive Officer Alexei Miller has said.

"That is not so. These deliveries [along Nord Stream] will be conducted under new contracts," he told Russian journalists in Rome on Wednesday.

He reminded them that the construction of Nord Stream is expected to end in May after which test deliveries will begin.

"These will be deliveries under long-term contracts," he said.

He said the gas will be acquired by traditional Gazprom partners in Europe.

Read more: http://www.kyivpost.com/news/nation/detail/97364/#ixzz1ECcuryYQ

Gazprom gives pipeline access to all independent gas producers - Miller

http://en.rian.ru/business/20110216/162638506.html

22:16 16/02/2011

Russian gas export monopoly Gazprom has given access to its gas transportation system to all independent gas producers, the company's chief Alexei Miller said on Wednesday.

Russian Prime Minister Vladimir Putin last week ordered the government and Gazprom to work on allowing access to pipelines for independent producers. He said it was necessary for long-term contracts for the infrastructure of facilities.

"How can they invest and build if they are not sure of gas supplies?" Putin said.

"We have given access to the gas transportation system to all independent suppliers," Miller said adding that issues that may arise during the work process would be solved.

ROME, February 16 (RIA Novosti)

Pipeline ensures necessary gas supply

http://www.ft.com/cms/s/0/28599782-3a25-11e0-a441-00144feabdc0.html#axzz1ECH2kSeO

Published: February 17 2011 02:50 | Last updated: February 17 2011 02:50

From Mr Sergei Kuprianov.

Sir, Mikhail Korchemkin (Letters, February 11) questions the economic rationale of Gazprom’s Sokhranovka-Oktyabrskaya pipeline. Mr Korchemkin misses a number of relevant points.

The fact that Gazprom constructed a pipeline that circumvents Ukraine to bring Russian gas to Russian consumers in the south of the country is by no means uneconomic. First, the return on investment is more than convincing – 12 per cent a year. Second, Mr Korchemkin’s suggestion that Gazprom could save money by sticking to a transit system that is not always reliable reflects a rather short-sighted view that disregards the interests of Gazprom’s shareholders and customers.

The gas transit crises in early 2006 and especially in 2009, when Ukraine shut down its transit system, preventing Russian gas from reaching our European customers, made clear how exposed Gazprom – and Europe – were to transit risks in third countries. The three weeks of shutdown in 2009 cost our company $2bn. Ensuring security of gas transit by investing in the diversification of our supply routes, be it through the South Stream project, or the Sokhranovka-Oktyabrskaya pipeline, is not only economically sound, but absolutely necessary.

Finally, following Mr Korchemkin’s logic, the European Union’s political drive to support the construction of new pipelines and interconnectors on the national energy markets would also qualify as “uneconomic”.

I wonder whether he would be equally critical of these multibillion programmes with uncertain economic perspectives and lack of guaranteed supplies?

Sergei Kuprianov,

Spokesman,

OAO Gazprom,

Moscow, Russia

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