Sechin: Rosneft’s new boss
Rosneft’s share price leapt today after Igor Sechin (pictured), Russia’s oil tsar, was appointed head of the state oil company. It’s not difficult to see why. Sechin, a former KGB agent and trusted ally of Vladimir Putin, favors tight state control of the oil industry and has taken good care of Rosneft in the past.
Dmitry Medvedev signed an order appointing Sechin chief executive of Rosneft on Monday one day after the new Russian government was formed. Continue reading »
Russia: a capital in Vladivostok?
Now the elections are out of the way, investors are waiting to see if Vladimir Putin has any new ideas up his sleeve to promote the development of Russia and avoid economic stagnation.
One of the country’s leading political scientists has come up with a bold scheme: build a new capital at Vladivostok. Continue reading »
Russia: the protest credit card
You’d think that Alexei Navalny, would be too busy with politics to do anything else at the moment. But the Russian opposition activist has jumped on the recovery in retail lending with plans to team up with a local bank to launch a debit card to help support his anti-corruption fund.
As Vedomosti, the FT’s sister paper reported on Tuesday, it will be a brave bank that risks associating with Navalny who is famous for annoying the authorities with blogs about alleged frauds at state companies etc. But the debit card move shows that the activist has a sharp nose for business as well as a barbed tongue. Continue reading »
Rosneft and Statoil: back-scratching and hostage-taking
Statoil has been warning about the risks of exploring in little known frozen seas after becoming the third western oil company in less than a month to sign a deal in the Russian Arctic. But the deal with the Norwegian company – like those agreed with ExxonMobil and Eni of Italy last month – is even more of a gamble for Rosneft, whose future is predicated on finding big oil in Russia’s offshore.
That could help explain why the Russian state oil company has pushed its new foreign partners to share access to oil projects in other countries in exchange for prized Arctic deals. Continue reading »
Renault says “Da” to Russian auto
Most of the world’s leading auto makers have established their own assembly plants in Russia and are now stepping up production to take advantage of rising local demand for passenger cars.
Taking a different route, Renault-Nissan last week said it would spend $750m to acquire a controlling stake in AvtoVaz, Russia’s oldest and biggest auto manufacturer. Continue reading »
Russian oil & gas: “highly illogical”
Russia’s outgoing government has dealt an eleventh hour blow to the country’s gas producers, announcing plans sharply to increase the tax burden on Gazprom and independent gas companies alike.
The independents – such as London-listed Novatek, Russia’s second biggest gas producer after Gazprom, – will be particularly badly hit by the move. The tax on their gas production will rise to converge with rates paid by Gazprom even though the independents are denied access to Russia’s lucrative gas export markets. Continue reading »
Azerbaijan: more gas on the way
ExxonMobil has just consummated its strategic partnership with Rosneft so it’s nice for BP, which failed last year in its attempt to tie up with the Russian state oil company, to have something positive to report.
The UK major announced plans on Tuesday to begin the design work for the second phase of the huge Shah Deniz gas project that will supply Caspian gas to European markets and help reduce their dependence on Russian energy supplies. Continue reading »
Georgian Railways IPO: not risk-free
Georgia plans to take the bold step of listing its state railway monopoly on the London Stock Exchange next month. Georgian Railways, part of the strategic east-west corridor ferrying oil between the Caspian and Black Seas, should be attractive to investors. But it’s also a risky buy. Russia blew up some of its assets during the 2008 war with Georgia that ended in a ceasefire. Continue reading »
Proposed tax reforms promise to open up Russia’s offshore Arctic gas fields
When ExxonMobil teamed up with Rosneft to explore in Russia’s Arctic seas last year the US oil major warned it would not launch major investments in the remote area until Moscow introduced a viable, long term oil taxation regime.
The same message has been heard from several European oil companies planning to develop the vast Shtokman gas field in the Barents Sea in partnership with Gazprom: no tax reform, no Arctic investment. Russia appears to have taken heed. Continue reading »
Russia’s farms: investment ticks up
Rising world grain prices are driving a new wave of interest in Russian agriculture. The government is trying to encourage investment, ruling out restrictions on grain exports this year and preparing for privatization of the state grain trader.
One result is last week’s announcement of a joint venture between AFK Sistema, one of Russia’s biggest investment groups, and RZ-Agro, owned by members of the Dreyfus family that made its fortune more than a century ago trading Russian wheat and went on to build one of the world’s leading commodities groups. Continue reading »
Russia: Avonskaya calling
Despite Russia’s obsessive love affair with western beauty potions and creams, it’s never been an easy country for Avon Products.
Even though the US pioneer of direct selling has done very well in some other emerging markets, it has struggled in Russia to cope with tough competition, logistical difficulties and the big swings in the roller-coaster economy.
If Coty goes ahead with its $10bn bid it too will face the same challenges. Continue reading »
Russian gold miners: party over?
Investors see gold as a safe haven and are ready to pay high prices for bullion in times of recession. So it’s no surprise that as the Eurozone crisis deepened last year, Russian gold miners were raking in big profits.
But if these are good times for the Russian gold industry there could be trouble ahead. Costs are rising at Russian mines and the quality of ore is declining. Continue reading »
McDonald’s: getting normal in Russia
McDonald’s made headlines when it launched its first restaurant in Moscow in 1990 bringing the iconic US hamburger to the capital of the Soviet Union. Twenty one years and a political and economic revolution later, the US fast food chain is putting the last piece of its Russian business model in place and negotiating a franchising agreement with a Russian company.
McDonald’s has chosen Rosinter, the Russian easy dining restaurant chain, to become the first investor to open and operate its hamburger outlets under a franchise in Russia, RBC Daily reported on Friday. Continue reading »
EBRD buys into Kazakh wheat
Kazakhstan is well known as an emerging oil power with a growing role in meeting the world’s energy needs. Less well known is the central Asian country’s huge agricultural potential and ability to contribute to global food security.
Against a backdrop of rising world wheat prices, the European Bank for Reconstruction and Development has chosen Kazakhstan as the destination for its first ever equity investment in farming. Continue reading »
Russian steelmakers: tricky times
Russian steelmakers may have bounced back from the 2008 financial meltdown, but one appears to be heading into fresh trouble as a new wave of the crisis envelops Europe.
Novolipetsk Steel, Russia’s fourth biggest steel producer, said the deterioration in the global steel market and a 20 per cent rise in costs at its Russian operations caused a drop in earnings before interest, taxes, depreciation and amortization in the fourth quarter of the year. Ebitda declined to $383m from $478m in the previous quarter. Continue reading »
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