Russian News From Russia

The Russian Foreign Ministry rejected reports on Friday that it could strike a deal on Iran with the United States in exchange for non-intervention by the West in Syria.

“Nothing could be further from the truth than the assertion that our country may cut a backroom deal, giving the green light to a U.S. military operation against Iran in exchange for Western non-interference in Syria’s internal affairs,” the ministry said in a written commentary posted on its website.

“We leave that to the conscience of their authors.”

Russia’s ruling United Russia party said non-governmental organizations (NGOs) are excessively politicized and financed from abroad and need to be regulated.

Yury Shuvalov, the deputy secretary of the party’s Presidium of the General Council, told a session of the party’s political clubs on Friday that in many cases “NGOs operate as an instrument of influence on Russia from abroad.”

He said the main issue that needs to be raised again is how the non-profit groups operating in Russia are financed.

Kremlin officials and pro-government youth groups often accuse the U.S. White House of threatening Russia’s sovereignty via the non-profit groups.

In a televised phone-in show late last year, Prime Minister Vladimir Putin dismissed the thousands of protesters who claim vote-rigging in the December 4 parliamentary elections as paid agents of the West.

Shuvalov’s colleague Andrei Isayev said that the development of NGOs in Russia is very important and they need government’s support.

“But I agree that certain filters should be created for NGOs because they receive foreign assistance,” he said, adding that it should be always publicly stressed “if a non-profit organization has been founded and is managed by a U.S. citizen.”

He cited as an example Russia’s largest independent election watchdog Golos, which, he said, is funded by the United States, saying that the American involvement should be always mentioned.

Golos, which is funded by the United States and EU, says it is being persistently pressured by the authorities.

At a recent news conference in Moscow, the group said its members were faced with “open intimidation,” including “phone-tapping, as well as breaking into mail boxes and accounts on social networking sites.”

Late last year, a documentary on state television accused Golos of serving U.S. interests and trying to foment a Ukraine-style “Orange Revolution” in Russia.

Two space-defense missile plants will be built in central Russia, Deputy Prime Minister Dmitry Rogozin said on Friday.

The first, to be based in Nizhny Novgorod, will employ 5,000 workers and have a total manufacturing volume of 6 billion rubles (about $200 million). The second, in the city of Kirov, will employ 3,000.

“I hope we will develop models that are superior to those of our potential opponents,” he told President Dmitry Medvedev.

Rogozin previously proposed consolidating all the related defense-industry enterprises into a single holding with priority to be given to establishing an Aerospace Defense System managing company and holding modeled on the Almaz-Antey air-defense corporation, United Shipbuilding Corporation and United Aircraft Corporation.

The holding will work on projects for the ADS unified strategic command combining air, missile and space defenses, which was established in December 2011.

It combines the existing air defense and missile defense networks, missile early-warning systems and airspace monitoring systems under a unified strategic command.

RIA Novosti’s International News Service will cover Saturday’s march and a rally demanding fair presidential elections and a rally by supporters of Prime Minister Vladimir Putin in Moscow in English, Chinese, German, French, Spanish, Arabic and Persian languages. The coverage of these events will include video reports in these languages from the sites of the march and rallies.

English-language coverage on Saturday will include breaking news, a general news story updated periodically throughout the day, an analysis (shortly after the demonstration concludes), and many details from the venues.

RIA Novosti’s English-language en.rian.ru and Russian-language RIA.ru websites will start online reporting from the site of the march and the rally demanding fair elections at 12:00 noon local time (08:00 GMT). Online reporting from the rally of the Putin supporters will start at 12:30 pm local time (08:30 GMT). The rallies and the march were authorized by the Moscow City Hall.

Up to 30,000 people have signed up on social networks as of Friday saying they will participate in the march and the rally for fair elections. Prime Minister Putin seeks to return to the Kremlin for a third, non-consecutive term in the presidential poll on March 4. This is the third massive street action of this kind after the December parliamentary elections marred by allegations of fraud in favor of Putin’s United Russia party.

The Putin supporters’ rally is expected to be attended by 15,000 people, according to the organizers.

Prokhorov, who made his money in nickel, aluminum and gold, has flown out to Siberia for the day, to the country’s third-largest city, part of his last-minute bid for the top job. As one of Russia’s richest men, he’s challenging Russia’s most powerful man.

And that man, Putin, has acknowledged that the election might go to a second round — though Prokhorov still has an uphill climb if he’s to be a part of it.

“The government has to work for the people, not the reverse,” Prokhorov says. It sounds like an applause line, and he uses it often, but it sails right past the thousand curious residents who have packed the enormous Mayakovsky Cinema to hear him speak. When he talks about keeping Novosibirsk tax money at work in Novosibirsk, instead of shipping it off to Moscow, however, the hall erupts in applause.

The fabulously wealthy, world-traveling business titan says he wants a “democracy of taxpayers,” instead of a corrupt culture of chiseling and extortion. He promises to dismantle what Putin calls the “vertical of power,” under which all authority is concentrated in the Kremlin, by creating an independent judiciary and restoring elections for local officials. He says he is for competition in every field — politics, business, science, what-have-you.

Prokhorov says the prime minister and parliament have to be a strong counterweight to the president. He says his first act as president would be to pardon Mikhail Khodorkovsky, the oil magnate who was destroyed and imprisoned by Putin, and offer him the prime minister’s post. (Prokhorov fondly calls him “Misha,” and a friend.) He says the top 200 officials in government, and their families, would have to sell their business holdings. He says he would sell off state-owned television.

If all this were to happen, it would fundamentally reshape the country.

But first, Prokhorov has to convince a skeptical public that he’s for real. An oligarch with no political experience, he’s asking Russians to trust him with the presidency. The rich, as a rule, aren’t popular. But judging by the reaction of those who turned out to see him at the Mayakovsky and sat through two hours of QA, they’re at least willing to give him a hearing.

A questioner asks if he would take a post in government if he doesn’t win — which seems very likely, because Putin still has huge advantages heading into the election. It depends, he says. But his main goal at the moment is to force a second round, by keeping Putin under 50 percent, and emerging as the second-place finisher himself.

The EU executive said Friday that Russian gas deliveries have fallen in nine countries, with Gazprom invoking flexibility clauses as it also braves a cold snap.

The European Commission was highlighting the drop a day after Russian state gas giant Gazprom said it had increased volumes exported to European Union neighbours amid a sudden drop in temperatures.

With more than 220 lives lost as these temperatures reached new lows, the European Commission said Austria, Bulgaria, Germany, Greece, Hungary, Italy, Poland, Romania and Slovakia had each registered drops in gas supplies.

A spokeswoman for EU energy commissioner Guenther Oettinger, Marlene Holzer said that “our member states have been informed by the Russian authorities that there is exceptional cold weather, and that Russia needs more gas (for its own use) than normal.”

She added, however, that Gazprom contractual small print with European buyers “allows for a certain flexibility.”

Austria, for instance, had logged a 30 percent fall and Italy had seen deliveries fall by 24 percent, though she noted that stocks were not at an “emergency” level in any of the nine.

Italy’s gas network Snam Rete Gas later said imports from Russia through the Tarvisio hub were down 28.9 percent on Friday, a sharper fall than on Thursday.

Bulgarian transit operator Bulgartransgaz said Friday that Russian supplies had appeared to stabilise.

Russian gas giant said Thursday that it had increased shipments through a Ukrainian pipeline network in response to higher demand.

The Ukrainian gas company Naftogaz denied it was tapping into gas destined for Europe, a frequent claim by Moscow in recent winters.

And Gazprom on Friday insisted it was respecting all its contracts to supply gas.

“We have a contractually agreed amount of gas per month and per day that Gazprom is obliged to supply,” the head of pricing at Gazprom Export Sergei Komlev told the ITAR-TASS news agency.

“Now these obligations are being carried out, but the customers are asking for larger volumes than we are obliged to supply to them,” he was quoted as saying.

“There is a difference between what people might want and the contractually agreed amounts,” he said, stressing that Gazprom would have to pay a fine if it had failed to deliver on contracts.

He said the company had not been penalised.

Holzer said she was still waiting for some information direct from Moscow, but that Russia did not have to activate a crisis mechanism agreed with the EU until there had been both “a substantial decrease” and that “companies cannot get the gas from commercial sources or from other countries.”

Yandex NV (YNDX) climbed to a two-month high
in New York as enthusiasm for Internet stocks spurred by
Facebook Inc.’s initial public offering lured investors to the
cheapest Russian web company.

The operator of Russia’s most popular Internet search
engine, Yandex led gainers on the Bloomberg Russia-US 14 Index
of Russian companies traded in New York, which was little
changed at 105.82 yesterday as seven stocks rose and six
declined. Futures (VEA) expiring in March on Moscow’s dollar-
denominated RTS index (RTSI$) were also steady at 159,930 in U.S.
trading. Urals crude oil hit an 11-week high.

Emerging-market Internet stocks from Chinese online game
developer Perfect World Co. (PWRD) to South Korea’s largest search
engine NHN Corp. (035420) have rallied since Facebook filed for what will
be the largest IPO for an Internet company. Yandex, which has
slumped 45 percent since its May IPO, trades at 38 times
analysts’ earnings estimates, compared with 43 times for
competitor Mail.ru Group Ltd., the largest Russian-language web
company.

“Investors have taken a refreshed look at Russia’s
Internet stocks on the back of Facebook’s IPO and Yandex has
come out as the winner today,” said Marco Casas, vice president
for equity sales at Otkritie Financial Corp. in New York. “We
expect momentum to continue in the next few days as investor
interest in Russian Internet names, such as Yandex, increases.”

Yandex advanced 3.6 percent to $21.39 in New York
yesterday, the highest level since Dec. 7. Mail.ru (MAIL), which has a
2.3 percent stake in Facebook, fell 0.6 percent to $33.60 in
London, after rising for the previous six days.

‘Yandex Undervalued’

Internet advertising in Russia will increase 25 percent
this year from 2011, while the overall ad market will probably
expand 10 percent, HSBC Holding Plc analyst Jean Kaplan wrote in
a Jan. 13 report. The Internet’s share of total Russian
advertising will jump to 26 percent by 2018, from 14 percent
last year, as more Russians buy computers and access the Web,
Kaplan said.

“Everybody has been buying Russian Internet stocks on the
Facebook IPO news,” said Konstantin Chernyshev, head of
research at UralSib Financial Corp in Moscow. “According to our
estimates, Yandex is undervalued by 26 percent. Yandex is
cheaper than Mail.ru, so if you buy Russian Internet, you buy
Yandex.”

The Hague, Netherlands-based Yandex’s share of the Russian
search market declined to 59.7 percent in the week through Jan.
22, from 59.9 percent the previous week and below the four-week
average of 59.8 percent, according to Liveinternet.ru, an
Internet-service provider and researcher. Moscow-based Mail.ru’s
audience rose to 8.5 percent in the week to Jan. 22, from 8.1
percent the week before and above the four-week average of 8.2
percent, the data showed.

Search Share

Yandex, which reports fourth-quarter earnings on Feb. 22,
introduced a free search application for the Apple Inc. iPhone
in December, part of an effort to expand its mobile offerings.

Yandex’s search share fell to 59.4 percent in the week
through Jan. 29, while Mail.ru’s rose to 9 percent, Liveinternet
data showed. Mountain View, California-based Google (GOOG) Inc.’s share
of the Russian search market fell to 25.5 percent from 25.7
percent the previous week. Google trades at 14 times analysts’
earnings estimates.

“Yandex has been a laggard among Russian equities, so this
is a chance to play catch-up.” Tom Furda, director of Russian
equity sales at Auerbach Grayson Co.’s Moscow-based brokerage
partner UralSib Financial Corp., said by phone yesterday.

Falling Volatility

The RTS Volatility Index (RTSVX), which measures expected swings in
the index futures, was little changed at 30.95, the lowest level
since Aug. 4. The Market Vectors Russia ETF (RSX), a U.S.-traded fund
that holds Russian shares, fell for the first time in three
days, losing 0.5 percent to $30.99.

Russia’s central bank meets to review key interest rates in
Moscow today, after cutting the refinancing rate by 25 basis
points, or 0.25 percentage point, to 8 percent in December. OAO
Rosneft, Russia’s largest oil producer, will report fourth-
quarter results.

American depositary receipts of OAO Gazprom (OGZPY), the world’s
biggest natural gas exporter, climbed to the highest level since
Nov. 8 in New York, adding 1 percent to $12.40 after its shares
traded in Moscow rose 0.8 percent to 187.24 rubles, or the
equivalent of $6.18. One ADR represents two ordinary shares.

Gazprom trades at 3.6 times analysts’ estimated earnings,
while smaller Russian oil and gas producer OAO Surgutneftegas (SGTPY)
trades at 5.8 times. Royal Dutch Shell Plc (RDSA), Europe’s largest
energy company, has a ratio of 7.2, and Exxon Mobil Corp. (XOM), the
world’s largest energy company by market value, has 10.2.

Gazprom ‘Unloved’

“Gazprom is unloved, it’s straightforwardly cheap and
there’s every chance that you’ll see improvements in corporate
governance over the next six to 12 months,” Martin Diggle,
director of the $70 million Vulpes Russian Opportunities Fund (ARTRUSS),
said by phone from Geneva yesterday. The Vulpes Fund lost 13
percent in 2011, ranking in the 69th percentile, according to
data compiled by Bloomberg.

Moscow-based Gazprom said in December that it may double
its dividend payout for 2011 to a record and cut planned
investments for this year by 39 percent.

ADRs of Gazprom Neft, Gazprom’s oil producing arm, gained
1.1 percent to $24.90 as Brent oil for March settlement rose 0.5
percent to $112.07 a barrel on the London-based ICE Futures
Europe exchange.

Urals, Russia’s chief export blend, added 0.6 percent to
$112.30, the highest level since Nov. 15.

OAO RusHydro (RSHYY), Russia’s largest hydropower producer, fell in
U.S. trading on concern colder weather in Russia will reduce
electricity production, and as Deutsche Bank AG cut its target
price for the company’s stock. RusHydro’s ADRs dropped 1.5
percent to $3.91, paring their advance to 29 percent this year.

The RTS Index (RTSI$) in Moscow rose 0.2 percent to 1,602.99, and
the 30-stock Micex Index gained 0.2 percent to 1,542.39.

To contact the reporters on this story:
Leon Lazaroff in New York at
llazaroff@bloomberg.net, or
Halia Pavliva in New York at
hpavliva@bloomberg.net

To contact the editor responsible for this story:
Emma O’Brien at
Eobrien6@bloomberg.net

By Raf Casert, The Associated Press

BRUSSELS - The European Union is bracing for another potential energy crisis in the dead of winter as Russian gas supplies to some member states have suddenly dwindled by up to 30 per cent.

The European Commission put its gas co-ordination committee on alert Friday, but insisted the situation had not yet reached an emergency level as nations have pledged to help each other if needed and storage facilities have been upgraded.

Commission spokeswoman Marlene Holzner said Russia was going through an extremely cold spell and needed more gas to keep its citizens warm.

She said that Russia’s gas contracts “allow for certain flexibility in case they also need the gas. And that is the situation that Russia is facing at the moment.” The severe winter in Russia has seen temperatures drop to minus 35 C (minus 30 F).

Moscow has blamed Ukraine for the shortages, saying Kyiv is siphoning off more than its share. Authorities in Ukraine have denied the accusation.

Ukraine’s Fuel and Energy Minister Yuri Boiko said Friday that Russia was shipping some 15 per cent less gas than usual because of increased domestic consumption due to the cold weather.

“We are taking gas in strict compliance with the contract, but because it isn’t coming from Russia, of course it isn’t reaching Europe,” Boiko said, according to his office.

Similar tit-for-tat retorts were at the heart of previous crises. Twice over the past decade, disputes between Russia and Ukraine turned into European emergencies as gas supplies diminished, leaving the prospect of tens of millions of people across the continent without heat.

The EU has improved co-ordination within the bloc to make sure Europeans would not be held hostage in another payment dispute between Russia and Ukraine.

Holzner said the policy was paying off as gas deliveries this week slowed to Poland, Slovakia, Austria, Hungary, Bulgaria, Romania, Greece and Italy. She said that Poland was able to get some gas destined for Germany this week and that new storage facilities in countries like the Czech Republic and Slovakia were proving their value. Countries also now must have one month worth of gas supplies.

Gas deliveries were down by 30 per cent in Austria on Thursday and 24 per cent in Italy.

“It is not a situation of emergency yet,” Holzner said.

Supplies from Russia to France’s leading gas company GDF Suez were down 30 per cent Friday, a company official said. Russia is a leading supplier to France.

Natural gas consumption in France hit a record high this week as exceptionally low temperatures hit countries around Europe. The GDF Suez official said it is tapping reserve stocks to make up the difference for now.

A Gazprom official said the Russian gas exporter was fulfilling its supply contracts, but European customers were asking for additional supplies.

“There is a difference between what they want and the contracted amounts,” Sergei Komlev, who is responsible for Gazprom’s export contracts and pricing, told journalists from Russian state news agencies.

To stave off a potential crisis, the EU alerted gas authorities, industry, consumer representatives and member states in a first step to meet the challenges ahead. A special meeting could be called in the days ahead if the situation worsens.

____

Maria Danilova from Kyiv, Lynn Berry from Moscow, and Angela Charlton in Paris contributed to this story

VIENNA (AP) — European nations that get much of their natural gas from Russia reported significant cutbacks Thursday as temperatures plunged to record lows, but said the shortfall was being balanced from domestic stocks.

Moscow blamed Ukraine for siphoning off more than its share — an accusation denied by Russia’s western neighbor, which said it was covering higher than usual natural gas needs from its own supplies.

The rhetoric evoked memories of the two gas wars in the past decade between the two nations. Disagreement between Moscow and Kiev largely stems from Moscow striving to control, or at least manage, the export pipeline crossing Ukraine. Kiev in return is seeking lower gas prices.

Those disputes quickly became European emergencies as stored natural gas supplies diminished, leaving the prospect of tens of millions of people across the continent without heat.

Since then, however, stocks have been expanded to prevent repeat scenarios. Energy officials on Thursday asserted all demand was being met, despite the harsh winter that has left schools and airports shut, snarled traffic and brought down hundreds of power lines.

Austria’s OMV said deliveries from Russia’s Gazprom to its main terminal outside of Vienna were down by about 30 percent “because of the severe winter in Russia and temperatures down to -35 degrees” Celsius — more than -30 Fahrenheit — in that country.

The energy company said it is compensating through domestic production and “strategic storage supplies.” Nearly 50 percent of Austria’s natural gas needs are normally met by Russia.

In Italy, Snam Rete Gas, which distributes gas for the Eni energy company, said Thursday’s decrease was the biggest so far of three days of drop-offs from Gazprom.

Snam said Russian deliveries Thursday amounted to only 83 million cubic meters of gas from what should have been 109 million cubic meters for the day. Domestic clients were not affected, with storage and supplies from elsewhere compensating, it said.

Germany also was getting less than its usual share, and the European Commission’s energy department said Slovakia had reported cutbacks as well. But EU officials added that all affected countries had been informed in advance of shortfalls and were topping off their needs from other supplies.

While acknowledging that Russian gas consumption had soared due to the cold, Gazprom, in a statement, said it is meeting its European obligations.

“To meet its export requirements, our company is using all available gas transportation routes,” as well as tapping its own storage facilities in Europe, said the company.

At the same time, senior Gazprom executive Alexander I Medvedev acknowledged some delivery problems — and blamed Ukraine. He said Kiev, which controls the main gas pipe route to Europe, is taking amounts significantly higher than it had contracted for, a charge denied by that country’s energy company.

Ukraine’s “increase in consumption of natural gas … is compensated exclusively by pumping more gas from Ukrainian underground storages,” Naftogaz said in a statement.

The last time Gazprom supplies through Ukraine were cut to a trickle was three years ago. Before gas started surging to Europe again after a three-week standoff between the two countries, home thermostats quickly dropped in Bulgaria, Serbia and Bosnia — nations largely dependent on Russian gas — while the rest of Europe stood by and hoped reserves would outlast the crisis.

POLITICS

Elections in Russia should become a “mechanism for the opposition” to achieve their goals, which would require the “liberalization of the political system,” former Russian Finance Minister Alexei Kudrin said on Thursday during the Russia 2012 investment forum in Moscow. Observers wonder whether Kudrin is set to pursue a long-term political career.

(Kommersant)

Russia and NATO may soon sign an agreement that would ease cargo transportation from Afghanistan via Russia’s territory. Diplomatic sources say the deal would save the West a lot of time and money.

(Kommersant)

Russian billionaire Mikhail Prokhorov speaks of his motivation for becoming president.

(Moskovskiye Novosti)

SOCIETY

Some 10,000 volunteer observers will monitor the Russian presidential elections on March 4.

(Moskovskiye Novosti)

The Russian government intends to spend 30 trillion rubles ($993 billion) on the development of Russia’s Eastern Siberia and the Far East. The program stipulates various preferences for citizens willing to move to Russia’s sparsely populated eastern territories.

(Izvestia)

BUSINESS

Russia’s prime minister and presidential candidate Vladimir Putin instructed the country’s second largest bank VTB to compensate small investors who lost money in its stock market flotation in 2007. Experts doubt that the Russian government, which owns over 75 percent of the shares in the bank, would live up to its promise to compensate the losses after the presidential vote in March.

(Kommersant, Vedomosti)

Facebook has launched an initial public offering. The company shares owned by Russian billionaires Yuri Milner and Alisher Usmanov may cost up to $5.5 billion.

(Kommersant)

Russian businessman Mikhail Gutsiriyev and Mikhail Shishkhanov are in talks with Russian-based Georgian billionaire Boris Ivanishvili on the purchase of several major hotels in downtown Moscow.

(Vedomosti)

ENERGY

European clients of the Russian energy giant, Gazprom, have complained of unplanned cuts in gas supplies from Russia. Poland, Italy, Austria and Slovakia are among the affected countries. Gazprom is “confused” by the reports.

(Vedomosti)

For more details on all the news in Russia today, visit our website at http://en.rian.ru