SOURCE: The St. Petersburg Times DATE: Issue #1535 (97), Tuesday, December 15, 2009 ************************************************************************** TITLE: LUKoil Snaps Up Coveted Iraqi Field AUTHOR: By Alex Anishyuk PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — A consortium led by LUKoil won a tender to develop the supergiant West Qurna-2 oil field in Iraq on Saturday, in a strategic victory for the firm that has been over a decade in the making. “Today we scored a deserved victory, and along with our Norwegian partners we intend to comply with all the obligations we took on to develop West Qurna-2 oil field in the interests of the Iraqi people and our shareholders,” LUKoil president Vagit Alekperov said in a statement Saturday. “This project is strategically important to our company.” LUKoil will develop the field, which has an estimated 12.9 billion barrels of recoverable reserves, along with Norway’s Statoil. The consortium won the tender with a bid to produce 1.8 million barrels a day for a modest fee of $1.15 per barrel. LUKoil’s share in the project will be 63.75 percent, while Statoil will get 11.25 percent, with the remaining 25 percent going to the Iraqi government. Developing West Qurna-2, located 65 kilometers northwest of Basra, will require $4 billion to $5 billion in investment, and the company will break even once it starts pumping 300,000 to 400,000 barrels per day, a source close to LUKoil told the Oil Information Agency. “After reaching this level, the project will break even,” the source said, adding that it will take the company between four and six years to reach this level of production. “Depending on the stages in which the project will be fulfilled, the volume of oil we will receive is likely to reach 10 million to 15 million metric tons a year in the next seven to eight years.” LUKoil has long been desirous of the West Qurna field. The country’s second-largest oil firm signed a $4 billion contract to develop the West Qurna deposit with former Iraqi dictator Saddam Hussein back in 1997, but the Iraqi government scrapped the deal in 2002. The annulment was largely viewed as payback for LUKoil seeking guarantees from the U.S. government to retain the rights to the field once it became clear that a U.S. invasion was imminent. At the time, Baghdad said it canceled LUKoil’s contract because the oil major had failed to develop the field during the five years that it had the rights to it. LUKoil said the going was so slow because it was unable to operate freely in the country because of UN sanctions. On Thursday, John Sawers, former head of British intelligence service MI-6, said Russia had prevented a nonviolent resolution of the Iraq conflict because it opposed so-called “smart sanctions.” He said certain Russian officials opposed the sanctions because they affected their “commercial interests,” BBC Russian service reported. After the U.S.-led coalition invaded Iraq in March 2003, LUKoil demanded that it keep its leading role in the West Qurna project and threatened to file a lawsuit in a Genevan arbitration court if that demand was not met. “Nobody can develop this field without us over the next eight years. If somebody decides to squeeze LUKoil out, we are going to appeal in the Geneva arbitration court, which will immediately freeze the field,” LUKoil vice president Leonid Fedun told Kommersant in 2003. LUKoil’s role in developing the field became unclear during the next few years. In February, Finance Minister Alexei Kudrin agreed to write off Iraq’s $12 billion debt and restructure another $900 million, in what many viewed as a quid pro quo to revive the buried contract. Senator Mikhail Margelov, head of the Federation Council’s Foreign Affairs Committee, praised the results of the tender on Saturday, saying they dispelled concerns that the United States would prevent other countries from working on Iraqi oil fields. “At any rate, the current [U.S.] administration is beyond reproach in this respect,” he told Interfax. In a separate tender, Gazprom Neft won a contract to develop Iraq’s Badra oil field, with estimated reserves of 2 billion barrels. The group pledged to raise production to 170,000 barrels a day for a fee of $5.50 per barrel, Oil Minister Hussain al-Shahristani said Saturday in Baghdad. LUKoil’s winning bid of $1.15 per barrel, far below the $1.90 LUKoil bid for West Qurna-1, is a relatively small figure, but it may bring the company strategic benefits in future, said Dmitry Dzyuba, an oil analyst with Metropol. “If LUKoil agreed to that figure, then it means that the company sees this project as economically justified,” he said. “For most companies, winning these tenders in Iraq is a question of staking a claim to gain share on the market and compete for benefits yet to come.” Besides, if LUKoil wants to increase its oil extraction, it has few options but to increase its drilling abroad, he said. “In western Siberia, LUKoil’s extraction has been declining 6 percent annually, while this region makes up for half of its domestic oil output,” he said. “Given the current tax environment in Russia and competition from state-controlled companies, LUKoil has very limited opportunities for new acquisitions inside Russia that would compensate for its decline in production.” Oil fields in western Siberia are exhausted, and their development requires significant investment — as much as $100 per barrel in some of the worst cases, Fedun said earlier this month, adding that the company was cutting investment by 30 percent in its “traditional regions” of domestic operation. TITLE: 20 Officials Fired Over Lawyer’s Death AUTHOR: By Natalya Krainova PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — President Dmitry Medvedev has fired 20 prison officials, including Moscow’s top prison official and the head of the Butyrskaya jail, after an investigation into lawyer Sergei Magnitsky’s death last month found that prison officials had neglected his medical problems. Magnitsky, 37, who represented William Browder’s Hermitage Capital in a high-profile fight with the Interior Ministry, died Nov. 16 in a prison hospital from what the Interior Ministry said was heart failure. Magnitsky complained of stomach ailments after being jailed almost a year ago, and his supporters blame the country’s notorious prison system for not properly attending to his medical needs. Hermitage has said prosecutors rejected his family’s request for an independent autopsy. Medvedev signed a decree Dec. 4 dismissing the head of the Moscow branch of the Federal Prison Service, Major General Alexander Davydov and the head of the Butyrskaya jail, Dmitry Komnov, Federal Prison Service head Alexander Reimer said Friday. Among the other 18 dismissed officials were the head of the Federal Prison Service’s department for pretrial detention centers and prisons, Major General Valery Telyukh; and the head of its medical department, Vladimir Troitsky; as well as other prison officials around the country. Magnitsky spent the last weeks of his life in Butyrskaya, and Reimer said the ouster of Butyrskaya’s head was directly linked to the death. Reimer said on Ekho Moskvy radio that an internal investigation into the death by his agency found that Magnitsky’s rights concerning his living conditions had been violated in Butyrskaya. A spokesman for the Federal Prison Service, Alexander Kromin, appeared to contradict Reimer’s remarks, saying the dismissals were not directly connected to Magnitsky’s death. Kromin said the shake-up was because of violations in providing medical assistance to prisoners in general, he told Interfax. Repeated calls to the press office of the Federal Prison Service and its Moscow branch for clarification went unanswered Friday. A Butyrskaya spokeswoman referred requests for comment to the prison service’s Moscow branch. Reimer also said several Moscow prison officials had received reprimands, but he did not identify the officials or elaborate on the reprimands. He said his agency had drafted new detention rules that would guarantee prisoners at least eight hours of continuous sleep every day and time for exercise and eating. Magnitsky, a lawyer with the Firestone Duncan law firm, was jailed on charges of organizing a scheme with U.S.-British investor Browder to evade taxes. The case was opened by the Interior Ministry shortly after Magnitsky and Browder accused several senior ministry officials of stealing $230 million in federal funds. Hermitage Capital, once the largest foreign investment fund in Russia, urged Medvedev to go after “far bigger fish” than the dismissed prison officials. “The penal system employees are merely the bottom of the feeding chain of individuals who were responsible for the death of Sergei,” a Hermitage Capital spokesman said. “There are many other far bigger fish involved in this tragedy. The corrupt Interior Ministry officials whom Sergei testified against for their involvement in the $230 million theft from the Russian state, and who retaliated against Sergei’s brave act by arresting him, bear direct responsibility for his death.” Magnitsky’s boss, Jamison Firestone, praised Medvedev for acting against the prison officials but said he should focus on why Magnitsky was arrested in the first place. “The only issue that really matters in Magnitsky’s case is that a group of corrupt law enforcement officers imprisoned a man who they knew was innocent, and they purposely put him in awful conditions in an attempt to get him to change his story,” he said in a commentary published in The Moscow Times. (See commentary, Page 10) A Kremlin spokeswoman said late Friday that the press office had no comment on the prison dismissals. Medvedev ordered prosecutors and the Justice Ministry to investigate Magnitsky’s death in late November, just a day after he was publicly pressed by his human rights advisers on the case. Just hours after Medvedev ordered the inquiry, the Investigative Committee said in a statement that it had opened a criminal case over negligence and prison officials’ failure to provide medical aid. Both charges carry maximum sentences of three years in prison. The head of the Federal Prison Service’s public council expressed hope that the prison dismissals would lead to improvements for prisoners. “I believe that the other [prison] chiefs will understand that violations must not be allowed,” said Maria Kannabikh, who is a member of the Public Chamber. But human rights activists voiced skepticism. “I doubt that anything will change. It might have if criminal cases had been opened,” said Anna Kolesnikova, a member of the Moscow public commission that monitors prisoners’ rights. Prominent defense lawyer Igor Trunov said prisoners needed to be granted the right to be examined by doctors independent of the Federal Prison Service. “Formally, only a doctor can decide whether a person can stay in detention, but a prison doctor will issue whatever diagnosis that the prison chief needs,” Trunov said. A total of 386 people have died in Russian pretrial detentions between January and late November, including 169 from injuries and suicides, Reimer said. TITLE: Investigators Target Fire Inspector Over Perm Blaze AUTHOR: By Alexandra Odynova PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — Prosecutors investigating a Dec. 5 fire that killed at least 146 people in a Perm nightclub have added three more suspects to their case, including a local fire inspector who failed to close the nightclub during a visit nearly three years ago. The Perm prosecutor’s office said Sunday that local inspector Dmitry Roslyakov found seven fire safety violations, including a broken fire alarm and a blocked emergency exit, at the Khromaya Loshad (Lame Horse) nightclub in January 2007 but listed only two minor violations in his report. Nightclub managing director Svetlana Yefremova, another suspect in the case, was fined for the violations, and the establishment was allowed to continue its work. “As a result of Roslyakov’s negligence on the job … the Khromaya Loshad continued its work with existing fire safety violations, which led to mass deaths in the Dec. 5 fire,” the prosecutor’s office said in a statement. Prosecutors have requested the Investigative Committee to open a criminal case into Roslyakov. The Investigative Committee on Friday opened criminal cases into the head of Perm’s fire safety watchdog, Vladimir Mukhutdinov, and inspector Natalya Prokopyeva, who heads the watchdog’s department in the Perm district where the nightclub is located. Investigators said the two officials failed to detect numerous fire safety violations, noting that the nightclub was decorated with highly flammable materials that would produce a thick, toxic smoke if lit. An indoor pyrotechnics show ignited artificial branches on the ceiling during celebrations for the club’s eighth anniversary Dec. 5, causing a fire that sent 300 clubgoers stampeding to the club’s single exit. Charges have been filed against four suspects in the fire, including managing director Yefremova, nightclub owner Anatoly Zak, art director Oleg Fetkulov and Sergei Derbenyov, director of the Pirosvet pyrotechnics company, who installed the pyrotechnics blamed for the fire. The charges carry a sentence of up to seven years in prison. Perm residents brought flowers and candles to the nightclub Sunday, the ninth day of mourning for the victims. The death toll grew by 11 people to 146 over the weekend, and more than 80 remained in hospitals late Sunday. Perm’s regional administration resigned en masse last week after Prime Minister Vladimir Putin offered withering criticism in connection with the fire. Perm Mayor Arkady Kats submitted his resignation to Perm lawmakers, who voted Friday to suspend him from office for one month as the investigation continues. TITLE: Governor Backs Kozyrev In Ombudsman Election AUTHOR: By Galina Stolyarova PUBLISHER: Staff Writer TEXT: The city parliament will attempt to elect a new city ombudsman on Dec. 23, with four candidates having been put forward for the post. Governor Valentina Matviyenko has endorsed the candidacy of Alexei Kozyrev, head of the St. Petersburg Public Council. Kozyrev’s rivals include liberal democrat Alexander Ulanov, an official representative of the city parliament in the St. Petersburg Charter Court; A Just Russia politician Mikhail Mashkovtsev, ex-governor of the Kamchatka region; and Igor Kucherenko, vice president of the St. Petersburg Lawyers’ Association, who is backed by the city’s Human Rights Union. The city’s human rights community has branded the forthcoming election a farce. Boris Vishnevsky, a political analyst and member of the political council of the local branch of the democratic Yabloko party, said Kozyrev will likely win the Dec. 23 vote. “Neither Kozyrev nor the Public Council have ever found themselves in opposition to the authorities,” Vishnevsky said. “With Matviyenko’s backing and his reputation as someone who wouldn’t argue with the authorities, Kozyrev stands the best chance. That’s because, unfortunately, this is what is required of him, rather than a strong background in defending people’s rights,” Vishnevsky said. The previous ombudsman, Igor Mikhailov, a United Russia politician who was elected as St. Petersburg’s first ombudsman in the summer of 2007 amid indignant protests from the local human rights community, was removed from the job by the city’s Legislative Assembly in October. Prior to Mikhailov’s election, the city parliament had spent eight years attempting to elect an ombudsman. According to the official explanation of the sacking offered by the parliament’s speaker Vadim Tyulpanov, Mikhailov brought about his own downfall by endorsing several members of his administrative team to participate in municipal elections held this fall, thus damaging his impartiality. Mikhailov filed an appeal to the Oktyabrsky District Court, which ruled in his favor, but the verdict was later overruled by the St. Petersburg City Court. Mikhailov has said that he is prepared to take the case as high as the European Court of Human Rights in Strasbourg. Russia’s ombudsman Vladimir Lukin has expressed concern over the crisis surrounding the election of a St. Petersburg ombudsman. He accused the St. Petersburg parliamentarians of “acting like medieval landlords.” “We have to make every effort to prevent such things from being repeated; federal legislation on the issue is peppered with holes and doesn’t protect the ombudsman,” Lukin said. “An ombudsman’s job is a very sensitive one and he has to be protected from the sort of instant dismissal that we have seen in Mikhailov’s case.” TITLE: Restrictions on Fireworks Follow in Wake of Tragedy AUTHOR: By Galina Stolyarova PUBLISHER: Staff Writer TEXT: Following the fire at the Khromaya Loshad (Lame Horse) nightclub in Perm which took over 140 lives and made international news headlines at the beginning of this month, restrictions have been imposed on the use of fireworks. Emergency Situations Minister Sergei Shoigu has issued a decree banning fireworks at large-scale public events until the relevant laws have been tightened up. St. Petersburg Governor Valentina Matviyenko has supported Shoigu’s initiative and introduced a ban on the use of fireworks indoors and at large-scale events. Other regional authorities across the country are considering similar measures, according to the Emergency Situations Ministry. Meanwhile, the local branch of the Emergency Situations Ministry has been carrying out inspections of the city’s nightclubs, discos, theaters and other entertainment venues. The inspectors have been ordered to check conditions at all venues before the end of the year. The branch has around 1,200 inspectors tackling the task of carrying out inspections at 350 clubs. The Oktyabrsky Concert Hall, the Circus on the Fontanka and Griboyedov club have all been inspected, the ministry’s local branch reported. In the wake of the tragedy, questions have been raised about the alleged corruption of the fire inspectorate and how Perm’s Khromaya Loshad club had managed to avoid closure following inspections prior to the fire. According to Shoigu, the ill-fated nightclub was ordered to pay two fines — amounting to 1,000 and 1,800 rubles ($33 and $59) — during a 2008 fire inspection. Yet, given all the club’s fatal shortcomings, many experts expressed amazement that a fire inspection could have allowed a venue that was so vulnerable in so many ways to operate. Responding to the criticism, the Emergency Situations Ministry said it is developing a new wide-ranging system of fines that will institute substantial financial penalties. TITLE: Traffic Cop Admits to Rape Spree AUTHOR: By Alexander Bratersky PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — A 32-year-old traffic police officer caught red-handed during an attempted rape last week has admitted to carrying out a series of sexual assaults in southern Moscow and has been positively identified by 12 victims, investigators said. The suspect, who is expected to be charged with multiple counts of rape and formally placed under arrest Monday, was arrested Thursday during a “planned operation,” Investigation Committee spokeswoman Marina Merkulova said Friday. She refused to elaborate on the arrest or identify the suspect. But police earlier said the suspect, identified in media reports as Lieutenant Artur Kositsyn, was detained in a sting operation as he tried to force himself on a woman in an apartment building elevator in southern Moscow. Kositsyn worked for the Podolsk traffic police force in the Moscow region but was registered in an apartment in southern Moscow, where police had been searching for a serial rapist in connection with 20 sexual assaults since March, news reports said. Kositsyn worked for the traffic police in southern Moscow until May, when he failed a mandatory annual psychological examination and was transferred by his superiors to a similar position in Podolsk, a town south of Moscow, reports said. TITLE: Autumn Brings Relief After Strict Year for Loans AUTHOR: By Yelena Zborovskaya PUBLISHER: Vedomosti TEXT: During the first nine months of 2009, the total volume of loans issued to legal entities by banks in St. Petersburg fell by 2.3 percent to 723.4 billion rubles ($24.03 billion.) During the same period, the volume of deposits held by private customers at St. Petersburg’s banks rose by 14 percent to 483.7 billion rubles ($16.06 billion). Conditions for loans to corporate clients tightened up in the autumn of 2008, but in September of this year banks began to relax demands made on borrowers, said Pavel Lavrov, manager of the Petrokommerts Bank branch in St. Petersburg. Corporate clients can now borrow against stocks of goods and receive unsecured loans, Lavrov said. While loans at present have terms of no longer than a year, in early 2010 two- and three-year loans for corporate customers will be given consideration, Lavrov said. Anna Barkhatova, a senior manager at St. Petersburg Bank, said that the bank is now ready to increase credit limits and extend time periods, despite the bank’s general conditions remaining stringent. Barkhatova said that during the autumn period, the bank had reviewed and reduced interest levels as often as twice a month, with an overall decrease of 4 percent to 4.5 percent in rubles since the beginning of the year. Igor Kirillovykh, chairman of the board of management at Baltinvestbank, said that according to his estimates, since the beginning of the year, interest rates have fallen 5 percent to 18 percent on average. In the summer the bank began to expand its credit portfolio and it is now 5 to 10 percent larger than at the beginning of the year, he noted. Competition is heating up among banks to attract major clients, primarily monopolists from the energy sector or telecoms companies, which can dictate their terms. Banks are offering them loans at yearly interest rates of 12 percent, Kirillovykh said. For fixed-line telephone operator Severny-Zapad Telecom, interest rates should be below 14 percent, with banks focusing on good credit histories, said Vladimir Akulich, general director of SZT. Before the crisis, developers could get loans at rates of 8 percent per annum, but now they are facing lending rates of 18 percent, said Mikhail Parkhomenko, director of the St. Petersburg branch of the construction firm Oikumen, which recently took out a loan at Sberbank to complete a construction project. Banks are now demanding deposits with greater liquidity — whereas previously they accepted land plots, now they prefer completed sites in good locations, Parkhomenko said. Severen-Telecom has not taken out any loans this year, its general director Sergei Lagir said. “They’ve become too expensive. Banks are offering loans at rates of 24 to 28 percent, so we try to get by on our own resources,” Lagir said. TITLE: 2009: An Employers’ Market AUTHOR: By Maria Buravtseva, Yelena Zborovskaya and Yelena Dombrova PUBLISHER: Vedomosti TEXT: According to Ancor recruitment agency, it now takes twice as long for job seekers to find new employment as it did before the economic crisis. The agency interviewed more than 1,800 specialists at both Russian and foreign companies in September, and then compared the results with similar research carried out in 2007. Ancor found that in 2007, managers could expect to find new positions within one or two months, while in 2009 the same search takes four to six months. In comparison with 2007, the number of job seekers considering more than five positions at one time fell by six percent, though the number of people receiving only one job offer doubled during the same period, rising from 8 percent of the total number searching for work to 16 percent. Those who are prepared to lower their wage expectations and accept work in alternative spheres find work in one to two months, while those not prepared to make such compromises can expect to spend over half a year seeking employment, said Yelena Kolkova, director of the St. Petersburg branch of job agency Staffwell. Kolkova said that jobs in sales could be found most quickly, while in the construction and building materials sectors job hunting can last about six months. On average, the amount of time needed in order to find a new job has increased by between 300 and 400 percent, according to Alexei Zakharov, president of the SuperJob.ru recruitment site. Zakharov said that the number of vacancies in September 2009 was 2.2 times lower than in September 2008. The average salary was 10 to 15 percent lower than in 2008. In marketing, advertising and public relations and the banking and investment sectors, salaries for positions offered have fallen by about 40 percent in comparison with the same period last year, said Yulia Sakharova, director of the St. Petersburg branch of HeadHunter. The amount of time employers can expect to spend filling a position has fallen from a month to one to two weeks, said Pavel Lavrov, manager of Petrokommerts Bank in St. Petersburg. The job market is stagnating, with many companies already having been able to pick and choose from candidates appearing on the market following mass layoffs at the beginning of the year, said Denis Razdimovsky, general director of Vkus, the management company that oversees the Miks chain of cafes. There are more resumes to choose from, but there is still a shortage of technicians with certain specializations, said Yelena Streltsova, general director of the Lyubimy Krai bakeries. According to Ancor, among those seeking work, the number of those who left their previous positions because there were no prospects has fallen by 23 percent, while those who were dissatisfied with the remuneration at their previous place of work has fallen by 16 percent. Of those who were searching for work, 16 percent had been made redundant as a result of downsizing, while 10 percent found themselves unemployed when their previous employer shut down entirely. Employees are now thinking longer and harder before quitting their jobs, said Sergei Kravchenko, consulting director at Ciber. Prior to the crisis, people were ready to resign over psychological factors, but now the turnover of personnel at firms has decreased significantly. The number of personnel expressing a readiness to work overtime or inconvenient hours has increased by about 50 percent, said Sergei Shcherbakov, the deputy chairman of Investtorgbank. This increase comes despite the fact that average wages are at about 80 percent of their 2008 levels, the difference being made up by bonuses for the meeting of targets. TITLE: Belarus Gets Extended Discount on Gas Imports AUTHOR: By Anatoly Medetsky PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — Belarus will get Russian gas at a discount for a few more years, Belarussian First Deputy Prime Minister Vladimir Semashko said Friday, as the countries negotiated terms for creating a common economic space. President Dmitry Medvedev and Prime Minister Vladimir Putin — at a five-hour meeting with their Belarussian counterparts the previous day — agreed to push back to at least 2014 the deadline for Belarus to begin paying prices that would give Gazprom the same profit margins that it receives on its European Union exports, Semashko said. Under the current contract, state-controlled Gazprom was scheduled to charge those prices starting in 2011, when Russia had initially hoped to introduce domestic prices based on EU export prices. “The Russian president and prime minister voiced their goodwill,” Semashko said in Minsk, commenting on the new gas deal, Interfax reported. Belarus and Russia agreed that they would start paying the EU-exports-based prices simultaneously in 2014 or 2015, he said. According to the Energy Strategy through 2030, Russia plans to complete introduction of the foreign-market-based prices at home by 2015. Gazprom spokesman Sergei Kupriyanov declined comment on the agreement Friday. Semashko said he and Russian Deputy Prime Minister Igor Sechin would formalize the new commitments by the end of the year. Next year’s gas prices for Belarus should remain at this year’s level, Pavel Borodin, state secretary for the union state of Russia and Belarus, an alliance seeking to unify the countries’ laws, said late Thursday, RIA-Novosti reported. Russia, Belarus and Kazakhstan are seeking a higher level of integration by forming a customs union, which kicks off in January, and single economic space planned to be inaugurated in July 2011. Semashko also said LUKoil, Russia’s second-largest oil producer, and other Russian companies could bid for a stake in the state-owned Naftan-Polimir refinery in Belarus, one of the largest in Eastern Europe. He said the bidding would take place soon but didn’t specify the size of the stake for sale. Belarus will require that potential bidders provide guarantees of crude supplies and be able to market the refined products, Semashko said. “Russian oil companies suit us the besat in this situation,” he said. Belarussian President Alexander Lukashenko has said the entire refinery is worth $3 billion. Energy Minister Sergei Shmatko said recently that Russia could lift export duties on crude deliveries to Belarus if Russian companies bought into Belarussian refineries. In another sign of improved ties, Sberbank signed a deal Friday to acquire Belarus’ fourth largest bank, BPS Bank, the lenders and the Belarussian government said in a joint statement. Sberbank will pay $280.8 million for a 93.3 percent stake and will offer to buy the minority stakes. Sberbank will invest from $300 million to $350 million in the other bank’s equity and raise $2 billion in financing for BPS, contributing a portion of that money, the statement said. Sberbank aims to capture 12 percent of the corporate lending market in Belarus by 2015, it said. TITLE: Budget Airline Comes Closer AUTHOR: By Irina Titova PUBLISHER: The St. Petersburg Times TEXT: Popular budget airline Ryanair will begin flights from the Finnish town of Lappeenranta to Dusseldorf, Germany, on April 1 with fares as low as 5 euros, the Irish airline announced last week. The Repin train from St. Petersburg to Lappeenranta will provide connections to the twice weekly flights. Stephen McNamara, head of communications at Ryanair, said that the airline believed that the catchment areas for the two airports offered good prospects and the opportunity to indirectly tap into the Russian market. “Our target group is very broad,” McNamara said. “We’re interested in anyone who has a form of payment and a pulse.” McNamara said that Ryanair is interested in introducing direct routes to Russia, but that it has not yet received any satisfactory offers from Russian airports. Sergei Korneyev, head of the northwestern branch of the Russian Tourism Union, said that the flight is clearly aimed at Russian tourists and that it’s no coincidence that the route’s timetable allows the Repin train to provide a convenient link from St. Petersburg to the flights. “It’s very likely that the flight will be popular, particularly during the economic crisis when everyone is trying to save money,” Korneyev said. Many people in St. Petersburg already take budget flights to Europe from the airports of Riga, Tallinn and Helsinki, Korneyev said. “Such trips may not be very convenient because of the transfers, but there’s no doubt that they allow you to save money,” he said. Budget airlines usually fly to smaller airports that are cheaper to work with, allowing them to lower prices, Korneyev said. Finland’s authorities have been looking for ways to boost Lappeenranta’s economy more active, and this may be an opportunity to do so, Korneyev said. TITLE: Norilsk Nickel Set to Double Investment in 2010 AUTHOR: By Alex Anishyuk PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — Norilsk Nickel will double its investment program next year as it considers buying a pricey oil and gas tanker, company CEO Vladimir Strzhalkovsky said Wednesday. The metals giant will boost nickel production by at least 15,000 tons to 300,000 tons worldwide in 2010, while extraction at its Russian units will remain at the same level as this year, Strzhalkovsky said at a news briefing. “However, there will be a 5 percent decrease in copper production next year, following a 5 percent decrease this year,” he said. He linked the decrease in copper production to the low quality of copper ore, saying it was not rich enough to justify costs. Norilsk extracted 285,000 tons of nickel in 2009, including 232,300 tons in Russia, while copper production amounted to 406,500 tons including 382,200 tons in Russia, Strzhalkovsky said. He would not comment on the company’s second half results, but hinted that revenues were expected to grow quarter on quarter because nickel prices are on the rise. Norilsk reported $4 billion in first-half revenues, down 51 percent from $8.3 billion during the same period in 2008. Net profits were down 84 percent year on year, from $2.6 billion to $439 million. Nickel prices have almost doubled to $20,533 a ton in August after dropping in March to $9,374 a ton. Nickel was trading at $16,067.00 a ton on the London Metal Exchange on Wednesday afternoon. Strzhalkovsky said Norilsk has not decided whether it will pay dividends this year. “Our shareholders meeting will decide on this issue on the recommendation of the board of directors, but it has not been discussed so far,” he said. “In my opinion, such decisions should be weighed,” he added. “The desire of any shareholder to get a return on an investment is understandable, but I think they should also realize that they can earn from the growth of a company’s stocks.” Norilsk Nickel is owned by Vladimir Potanin’s Interros and Oleg Deripaska’s RusAl (25 percent each), the owners of Metalloinvest (4 percent) and state-owned VEB (3.7 percent). Norilsk Nickel shares quadrupled to a year high of 4,308 rubles a share on the ruble-denominated MICEX on Oct. 22, up from 1,228 rubles on Jan. 21, and they closed at 4,120.92 rubles ($135.2) Wednesday. The company is in relatively good shape amid the recession and did not need to seek additional cash to cover debt in 2009, Strzhalkovsky said. “We did not borrow money throughout 2009 and are unlikely to borrow in the three weeks left until year-end. We even repaid $1 billion in 2010 debt in advance,” he said. He said an additional $3 billion in debt would come due next year, including $1.8 billion by the end of June, “so we may have to attract additional money.” Strzhalkovsky named Norilsk’s foreign acquisitions, particularly Canada’s LionOre, as the reason for its debt problems. Norilsk Nickel acquired 100 percent of the Canadian gold producer in 2007 for $5.2 billion. Strzhalkovsky said the company had a number of options for cash but did not see any urgency in borrowing. “We will choose and borrow when we think it is necessary,” he said. “We don’t want a situation where we borrow money and then realize we don’t know how to invest it.” Norilsk will invest 71 billion rubles into its operations in 2010, including 46 billion rubles into Norilsk Nickel enterprises and 25 billion rubles into OGK-3, a utility that it owns, Strzhalkovsky said. “Among our investment projects is the construction of a gas pipeline to supply gas for our needs,” he said. “We will also invest in the modernization of a port in Murmansk and invest in the development of the Gluboky and Skalisty mines.” Norilsk Nickel is also in talks with a shipbuilder to acquire a tanker capable of carrying oil and natural gas simultaneously, he said. He would not disclose the price of the ship or identify the builder, saying only that “such a vessel may cost more than any other project.” The company invested 28 billion rubles into Norilsk Nickel enterprises and 10 billion rubles into OGK-3 in 2009, he said. Strzhalkovsky said investment might increase even more next year if attractive opportunities arise. “We’re looking at various projects, but I will not disclose any details,” he said. “It’s not like spending 45 to 46 billion rubles in 2010 is all that we can afford and after that a Stalingrad starts for us,” he said, referring to a World War II battle for survival. “The company can find additional cash if needed.” TITLE: GDP Drops 8.9%, Decline Eases PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — The economy’s decline abated in the third quarter as companies began restocking inventories depleted during a record slump in the first half of the year, the State Statistics Service said Friday. Gross domestic product fell 8.9 percent from a year earlier, in line with the government’s estimate, after a 10.9 percent contraction in the second quarter, the service said. On the quarter, output grew a nonseasonally adjusted 13.8 percent. “A major driver of Russia’s sharp contraction was the inventory correction, and we are seeing the end of that,” said Vladimir Osakovsky, an economist at UniCredit Bank, before the data was released. “Any improvement in Russia’s overall economic performance is linked to this process.”   A contraction in industrial output accelerated in October to 11.2 percent from 9.5 in the previous month, the statistics service said last month. “Industry hasn’t returned to stable growth,” Finance Minister Alexei Kudrin said this week. “There are still problems.” Lenders’ corporate loan books fell 0.5 percent in October, after declining 0.7 percent in September, according to data published on the Central Bank’s web site Dec. 3. Lending to consumers dropped 0.7 percent for a ninth consecutive monthly decline. The contraction this year may have been as much as 3 percentage points deeper without anti-crisis spending, Deputy Economy Minister Andrei Klepach said on Dec. 10. The economy will probably shrink between 8.5 percent and 8.7 percent this year, he said. As of Nov. 1, the government had spent 784 billion rubles ($26 billion) of 1.14 trillion rubles earmarked for stimulus measures, Deputy Finance Minister Tatiana Nesterenko said the same day. Next year “there will be growth, but it will be growth after a big fall,” Kudrin said. The recovery will be complicated as governments retract stimulus programs and raise rates. TITLE: Customs Union Will Send Documents to WTO in 2010 AUTHOR: By Irina Filatova PUBLISHER: The St. Petersburg Times TEXT: MOSCOW — Russia will deliver information on its customs union with Belarus and Kazakhstan to the World Trade Organization next month, in a sign that Moscow may be doubling down on its proposal to enter the organization as part of the confederation. WTO members requested the information, and Russia will prepare the necessary documents and deliver them after the New Year’s holiday, said Maxim Medvedkov, director of the Economic Development Ministry’s department for WTO accession. The leaders of the three countries met on Friday for a meeting of the Eurasian Economic Community, the organization on which the customs union is based. Kyrgyzstan and Turkmenistan are also members of the community but are not part of the customs union. Prime Minister Vladimir Putin signed a raft of trade documents on Friday, several of which formalized the creation of the customs union, which is scheduled to go into effect Jan. 1 with the implementation of a unified customs tariff. WTO accession director Chiedu Osakwe said Thursday that there remained uncertainty over how the creation of the customs union would affect the accession agreements that Russia, Belarus and Kazakhstan had separately negotiated. The organization is waiting for an official note from the three countries’ delegations that will explain how they plan to proceed in terms of the creation of the customs union, Osakwe said. “When the members of our organization receive such a document, they will consult internally and take a decision on the talks restart,” he said at a conference in Washington on Russia’s accession to the WTO, Prime-Tass reported. “All the members of our organization want to see Russia as part of it. It’s a strategic priority for us,” Osakwe said. Medvedkov said the Russian delegation hoped that the WTO would make a decision on whether to restart talks on the country’s accession as early as January. He did not specify whether the talks would be for Russia’s accession or for that of the customs union. President Dmitry Medvedev said last month that entering the customs union would not affect Russia’s plans to join the World Trade Organization. “There are two options: Either enter [the WTO] with the customs union, which no longer exists only on paper, or each country can enter with the agreed-upon positions, but separately,” he said at the time, adding that both options were acceptable. Russia should continue talks on separately joining the WTO in order to hasten the process, Deputy Economic Development Minister Andrei Slepnyov said Friday. “From a juridical point of view, we shouldn’t decline separate talks, since everyone intends to a maximal quick accession,” he said, Interfax reported. TITLE: Bankruptcies, Belt-Tightening And Lower Rent in Year of Crisis AUTHOR: By Anna Shcherbakova TEXT: The first year of the crisis is coming to an end. 2009 was tough, though it brought a refreshing, if bracing wind of change, rather than a whirlwind of destruction. Every single industry experienced significant downsizing. Sectors such as real estate development, car manufacturing and metallurgy, which had flourished for almost a decade, have been particularly badly hit by the crash. Bubbles such as real estate prices let out loud hisses of escaping air as they deflated and the city is full of “for sale” and “rent” signs over the windows of both historic and brand-new buildings. Despite widespread belt-tightening, there are many who are sitting on their cash. They’re in no hurry to buy assets, as they expect the values of those assets to fall even lower. Those who are selling say that we’ve already reached the bottom. In all, then, a year that has seen some desperate speculation about prices. Another key feature of 2009 has been the wave of bankruptcy cases. For many creditors, forcing debtors over the brink was the only way to recover some of their money. For some debtors it was a way to avoid any unpleasant discussions or decisions for at least a year and, no doubt, to divest some assets. Bankruptcies that made the headlines included construction company Stroimontazh, gas-station operator Phaeton, meat-processing factory Parnas and transport company OMG, each of them owing over $100 million. Several new hotels opened their doors in 2009. Obviously, they had been planned in prosperous times, but now, when the number of both foreign and Russian tourists has decreased, the payback periods seem a lot longer than expected. Finnish hotelier Sokos is even closing some of its hotels in St. Petersburg for the winter season. In contrast, food establishments have been weathering the crisis in surprising comfort, proving the old adage that “if you want fame, open a high-end restaurant, and if you want a stable income, buy a McDonald’s franchise.” At reasonable prices, coffee shop and fast food chains are snapping up the locations being vacated by luxury and high-end stores. Nevertheless, the number of people who can afford to go out for meals and drinks regularly has been falling. Some lost their well-paid jobs and have been unable to find comparable positions. Others have been faced with their working hours — and hence their pay packets — being slashed. More work for less compensation has been the norm at almost all firms, and many companies have moved to smaller or cheaper offices in order to cut costs. Many office workers finding themselves indefinitely between jobs have decamped to India, begun studying for extra qualifications or simply started hunting for new positions, rather than protesting about the unjustness of the employers who laid them off as soon as the going got tough. Several thousand workers from Pikalyovo, a small town about 300 kilometers southeast of St. Petersburg, were somewhat more aggressive, blocking a local highway in early June. Back then, they hadn’t been paid salaries for months because three local factories, the only employers in the area, had been shut down due to disagreements between the shareholders. Their protest action coincided with the International Economic Forum. When Prime Minister Vladimir Putin intervened in the conflict, the shareholders signed agreements and the factories were quickly brought back to life. The new conditions are fairly damning for the shareholders, but they have been forced to update them every quarter under pressure from the state — an excellent example of the inefficiency of personal intervention resolving problems in the economy. Hopefully, we will be witness to a more pleasant example of this phenomenon when the political will to call off the construction of the most controversial project is demonstrated, and plans for Gazprom’s 400-meter-high Okhta Center skyscraper are finally laid to rest. Anna Shcherbakova is the St. Petersburg bureau head of business daily Vedomosti.