Russian News: 06-17-2008!

RBC, 17.06.2008, Moscow 17:54:53.Russian Railways is drafting an offer on its potential participation in the funding of Deutsche Bahn’s railways, the Russian company’s President Vladimir Yakunin told journalists today. He said that, while it was a very attractive asset, it was within the government’s competence to decide whether Russian Railways could take part in the funding. He stressed that Russian Railways’ investment program needed to be approved by the government, adding that the company was now preparing a project analysis to be introduced to the cabinet.

RBC, 17.06.2008, Moscow 16:52:26.The Russian stock market rose more than 1 percent in the afternoon. After 3 p.m., the RTS index was up 1.09 percent at 2,392.14 points and the MICEX index was up 1.12 percent at 1,852.55 points. The trade volume approached USD 20m on the RTS and topped RUB 23bn (approx. USD 967m) on MICEX.

RBC, 17.06.2008, Moscow 15:26:47.The number of ways in which the National Welfare Fund can be invested needs to be increased, Russian President Dmitry Medvedev said during a meeting on economic issues in the Kremlin today. The fund must increase the number of options available for investment in various securities, including shares and bonds of both Russian and foreign companies, the President noted. He reiterated that, according to the Russian Budget Code, the National Welfare Fund was created to help finance pension payments and support the pension system as a whole. Therefore, it is vital that the fund be invested in reliable securities, Medvedev stressed.

RBC, 17.06.2008, Moscow 14:55:38.LUKoil expects to increase hydrocarbon output outside Russia to 170,000 barrels of oil equivalent per day in 2008, up more than 20 percent compared to the previous year, a spokesman for the Russian oil company Andrei Gaydamaka said during the 12th investor conference today. He noted that LUKoil’s hydrocarbon production had risen more rapidly abroad than in Russia. This can be attributed to the company’s implementation of new foreign projects, including gas ones. Gaydamaka named Azerbaijan, Kazakhstan, Uzbekistan, Columbia, and Venezuela as the most promising countries in terms of hydrocarbon output growth. The suspended Western Kurna-2 project may also contribute to a further increase in hydrocarbon production, according to Gaydamaka. He stated that LUKoil was becoming an oil and gas company, as it was actively developing gas projects. LUKoil, which produced some 16bn cubic meters of natural gas in 2007, expects the figure to exceed 20bn cubic meters this year.

RBC, 17.06.2008, Moscow 13:42:26.Gazprom is willing to allow its foreign partners to participate in the share capital of the holding’s energy assets, the company’s President Alexei Miller told journalists today. He explained that Gazprom was in the process of forming a production and supply chain, starting with geological surveys and natural gas production and ending with its gas supplies to end users. Miller added that foreign companies could come in at any stage, noting that exchange of assets could potentially become a means of foreign participation in the holding. Miller reiterated that Gazprom was nearing the completion of deals with its German and Italian partners E.On and Enel.

RBC, 17.06.2008, Moscow 12:39:44.Russia is still undecided about the price of its oil, Deputy Prime Minister and Finance Minister Alexei Kudrin told journalists today. He pointed out that in recent years growth resulted in a slow increase in oil prices, yet currently oil prices continue to rise, despite a slowdown in global economic development. Kudrin explained that in such circumstances Russia must be prepared both for a rapid rise or fall in the price of oil. He also stated that nobody could accurately foretell what the next pricing trend might be, as it potentially could surge to $250 per barrel or tumble to $70 per barrel. He added that if the oil price remained high, Russia could not spend revenue from oil sales rapidly, as it would result in the ruble’s significant appreciation against the dollar.

RBC, 17.06.2008, Moscow, Sergei Mironov, Chairman of the Federation Council upper chamber of the Russian parliament, is convinced that the Russian ruble can become a regional currency for the Commonwealth of Independent States (CIS).

“The Russian ruble is stronger than ever before, and it could become a regional reserve currency very soon. This is entirely realistic,” he told reporters on Monday.

The ruble is already beginning to assume the role of a regional reserve currency for the CIS, according to Mironov. Its stability is supported by the country’s dynamically developing economy and growing exports and imports. “Concerning the supply of Russian oil and gas with our CIS partners, why not make the ruble the currency of payment and include this condition as part of our contracts with them?” he asked, adding that in the future, Moscow would become one of the world’s major financial centers.

He stressed that Moscow had the potential to become just such a center but that the process would not happen over-night and that it would require significant structural changes.

Boris Listov, a member of the Federation Council’s Committee for Financial Markets and Money Circulation, feels the same. He said that, “using the ruble as a regional currency would not entail the need for any CIS country to stop using their own national currency, which is one of the most important elements of state sovereignty.” As a regional currency, the ruble would only be used in international trade and economic relations, to determine the price and currency for contract payments. “All the necessary preconditions exist, this could become part of our state policy in our foreign economic ties with neighboring countries,” Listov said.

“As for the ruble’s role as a currency for saving on the international market, it is too early to speak about that,” he noted. “It will depend on a number of factors, including the ‘authority’ of the national currency, its sustainability and the demand for it. In other words, our goal for now is to expand the use of the Russian national currency as a full-fledged means of exchange in a particular trade and economic space,” Listov reckons.