Russian Press at a Glance, Friday, July 8, 2011

Moscow press review for July 8, 2011

VEDOMOSTI:

Moscow and Beijing are in talks over more than decade-long gas supplies, but have so failed to agree on a price. Another round of talks was held in May-June, but the contract was never signed. It turns out price is not the only problem. Gazprom (RTS: GAZP) wants to get from CNPC an advance payment for future gas supplies, Interfax reported, citing a source close to the top management in the Chinese state corporation. A source close to Gazprom, and a source close to the Russian government said the sum in question is around $40 billion. ("$40 bln up front," also Kommersant page 6, "China is taking Gazprom in advance").

On Thursday, Gazrpom CEO Alexei Miller and Renova Group board chairman Viktor Vekselberg signed an agreement of intention to join the companies' energy assets, the gas corporation said. The joint company will control the main power generating and power supply assets owned by both parties. If the deal goes ahead, Russia will have an energy giant, whose plants will have an installed electric capacity of 52.2 gigawatts (a quarter of the country's total capacity and almost a third of RAO UES which closed down in 2008); thermal capacity 122,000 Gcal/hour. ("One third of RAO UES," also Kommersant, page 5, "Inter RAO switches off TGK").

The Otrkytiye financial corporation is planning to buy an insurer in 2011, Otrkytiye bank CEO Vasily Zablotsky said recently. "Otkrytiye is interested in KIT Finance (RTS: CITB) Insurance," a FK top manager and its former employee said. The company's key owners are RZD and private pension fund Blagosostoyaniye, about 10% is held by managers. KIT Finance Insurance has in fact gone on sale, said Yury Novozhilov, KIT Finance Bank board chairman, who confirmed Otkrytiye's interest in the company. Two foreign investors have also shown interest in the insurer. ("Otkrytiye chasing KIT").

A control stake at Svyazinvest bought by Rostelecom (RTS: RTKM) in October 2010 from AFK for 26 billion rubles, was estimated at 35.25 billion rubles on March 25, 2011, the Audit Chamber said in a report based on the results of the Svyazinvest inspection. Thus, the state or its agent will have to pay for it 9.25 billion rubles more than in the event of the control stake being bought by the VEB as instructed by Prime Minister Vladimir Putin. The state will have to buy this stake from Rostelecom, otherwise after the merger between Rostelecom and Svyazinvest it risks losing control over the new company. ("Expensive control").

Rostelecom and Central Telegraph (RTS: CNTL) are discussing possibilities of merging broadband Internet access projects. Options include a mutual channel lease and a buyout of the Qwerty project by Rostelecom. Currently, there are two rival broadband projects within Svyazinvest: Qwerty run by Central Telegraph (according to AC&M-Consulting, provided services to 220,000 households in Moscow in March 2011) and Onlime run by National Telecommunications (controlled by Rostelecom since February 2011 (around 160,000). Talks over the merger of these projects are under way, Rostelecom President Alexander Provorotov confirmed to the Vedomosti newspaper. Various options are on the table, but the choice has yet to be made. ("Qwerty for two ").

KOMMERSANT:

FAS has suggested to halve the volume of petroleum products traded at commodities exchanges to 15% from domestic supplies. In the run-up to elections this measure will enable the government to keep domestic fuel prices low by ruling out uncontrolled growth of petroleum product exports, which was the companies' reply to the previous government 'recommendation' to reduce retail prices. (page 2, "Petrol turns out to be non-public commodity").