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. Last Updated: 07/27/2016

Business in Brief

OPEC Warning

VIENNA, Austria (Reuters) -- OPEC Secretary-General Ali Rodriguez said Friday he expected oil exporters outside the cartel to cooperate and prevent a war for market share that could send oil prices crashing.

The 11-member exporters' group, which decided against a further output cut this week, is struggling to contain a slump in global oil demand after the suicide attacks on the United States.

"If there is no cooperation from non-OPEC, there could be an immediate price crash," Rodriguez told reporters, adding that he expected countries such as Russia and Mexico to help stop an oil glut as demand growth softens.

"If non-OPEC countries increase production excessively, there would be a market share war," he added.

Russia, which attended this week's Organization of the Petroleum Exporting Countries meeting as an observer, has hiked production by about 500,000 barrels per day to 6.9 million bpd this year, even as OPEC slashed 3.5 million bpd off its quotas.

"If OPEC cuts 3.5 million barrels off its production while others benefit doubly by raising production that is totally unfair," Rodriguez said. "In the end, a price fall would hurt everyone."

OPEC decided to leave its supply ceiling unchanged at 23.2 million bpd for 10 members on Wednesday, but threatened a fourth successive cut this year unless prices rise.

Oil Export Cut

MOSCOW (MT) -- Russia will cut oil exports to non-CIS countries by 1 million tons (7.3 million barrels) in the fourth quarter of 2001, Deputy Prime Minister Viktor Khristenko told journalists Friday.

Khristenko explained that the cut in exports was due to "the general situation, including the current situation on international markets." The price of the Russian Urals blend has suffered since the Sept. 11 attacks on the United States. Oil prices hit 17-month lows last week.

A government commission on pipeline use set fourth-quarter exports to non-CIS countries at 33.8 million tons. Oil companies are expected to produce 90 million tons in the same time period.

Ukraine Gas Talks

MOSCOW (Reuters) -- Prime Minister Mikhail Kasyanov was quoted as saying Friday that he and his Ukrainian counterpart had made progress in talks on settling Kiev's debts for gas to Moscow.

"We made serious progress in this question today," Kasyanov was quoted by news agencies as saying after talks with Ukrainian Prime Minister Anatoly Kinakh. Kasyanov said a deal could be signed during his visit to Kiev on Thursday.

Kinakh was in Moscow to try and thrash out a deal to restructure some $1.4 billion in debts for gas.

Kasyanov said a deal being considered by both sides involved restructuring the debts over 12 years with a three-year grace period.

Kasyanov said the exact size of the debt was still being calculated and that a report should be drawn up on the issue by the start of November. Ukraine earlier put the amount at $1.3 billion.

PMI Surges

MOSCOW (Reuters) -- Russia's manufacturing economy showed the strongest expansion in 12 months in September as orders continued to increase, Moscow Narodny Purchasing Managers' Index data showed Friday.

The seasonally adjusted PMI, intended to give a snapshot of business conditions, registered 56.1 in September against 55.4 in August.

PMI readings above 50 signal an increase in the manufacturing economy, while those below 50 signal a contraction.

"Once again, demand posted significant gains over the month in September, fueled primarily by new business to the domestic market, but also by a modest increase in growth of export sales," Moscow Narodny Bank said in a statement.

It said sharp output growth in September was achieved in part by sharp expansion of the workforce.

RTS Up on Oil

MOSCOW (Reuters) -- The RTS posted healthy gains Friday, helped by stronger oil prices, but traders said they were eyeing the possible effect of U.S. military action.

The index closed up 2.13 percent at 180.25 on trade of $8.77 million. The Reuters Russian Composite rose 2.66 percent to 1,135.47.

"It's kind of a steadying up day but without any significant investment flows," said Tom Brackenbury of CentreInvest.

Brackenbury said that oil price gains, more stable global markets and signs of de-escalation of a feud over appointing a Mosenergo CEO influenced trade.

Oil shares Friday were recovering from a sharp drop earlier this week as they tracked falling oil prices.

Brackenbury said the main unknown on the horizon was the potential effect on oil prices of possible U.S. military retaliation for the Sept. 11 attack. He said the market was expecting a limited response.

"I think the discounted news is that there is military action," Brackenbury said. "If things happen as expected and the oil price isn't affected, that is significant because everyone is watching a $20 oil price as a threshold."

"If the oil price drifts lower, that is more likely to have a sharp effect than any military action," Brackenbury said.

Oil share Surgutneftegaz added 2.75 percent to $0.2240, and LUKoil added 2.52 percent to $9.35. Unified Energy Systems was up 3.91 percent at $0.0878, and its subsidiary Mosenergo added 5.33 percent to $0.0316.

Ruble Firms

MOSCOW (Reuters) -- The ruble firmed against the dollar Friday as banks and companies needed the national currency to pay taxes at the end of the quarter, dealers said.

The ruble's weighted average for today settlement in a morning session of eight exchanges eased to 29.3897 rubles per dollar after 29.4044 per dollar Thursday. The Central Bank, based on the results of the session, hiked its official next-day rate to 29.39 per dollar after a previous 29.40 rubles.

"Today is the last day of the quarter, that is why ruble [overnight credit] rates are very high. They rose to 33 percent. That is very high, given the weekend," said Aljba-Alliance's Artyom Roshchin.

Dealers said the 29.40 rubles per dollar turned out to be a strong support level for the national currency.

"We have been trading at 29.39 to 29.40 rubles per dollar. No one dares to quote the dollar lower," said Bank Zenit chief economist Alexander Karpov.

Dealers said Central Bank participation had so far been minimal, but they saw banks hoping it would interfere and supply the market with rubles.

Moscow Debt

MOSCOW (MT) -- The Moscow City government on Friday paid a $40 million installment of its debt to Credit Suisse First Boston, leaving another $65 million, the AK & M news agency reported.

The city took out the $295 million loan in 1998 for a period of four years. Later, CSFB and Moskomzaim, Moscow's loan committee, agreed to change the conditions of the debt, which is to be paid by Dec. 28, 2001.

Eurobond Payments

MOSCOW (Reuters) -- Vneshekonombank, Russia's government foreign debt agent, on Friday paid a total $563.68 million in interest on 2010 and 2030 Eurobonds, a Finance Ministry official said.

The payments included $105.28 million on the 2010 paper and $458.41 million on the 2030 bond. The securities were issued to restructure Russia's debt to the London Club of commercial lenders.

The funds were transferred to Chase Manhattan, the payment agent, which will make the payment on Monday.

IMF Mission Delay

MOSCOW (Reuters) -- The International Monetary Fund has decided against sending its mission to Moscow because of safety concerns, Alexei Mozhin, Russia's IMF representative, said Friday.

"Yesterday it was decided that the mission will be delayed because the fund's management has decided to limit fund's employees' trips abroad to the most necessary trips," Mozhin said.

The limit on travel was imposed in after the Sept. 11 attacks on the U.S.

However, Mozhin said IMF managing director Horst K?hler would come to Moscow in early October as planned.

The mission, headed by Gerard Belaner, the deputy director of the second European department, was due in Moscow at the start of October to monitor Russia's economy for a report.

Telia to Up Stakes

STOCKHOLM, Sweden (Reuters) -- The Nordic region's biggest telecoms operator, Sweden's Telia, would like to raise its stakes in Baltic and Russian operators, the head of Telia's mobile unit Kenneth Karlberg told the Dagens Industry daily.

Telia now owns 24.5 percent in Estonian fixed-line and mobile operator Eesti Telekom and 24.5 percent in Latvian mobile operator LMT. It also has 27.5 percent in Lithuanian mobile operator Omnitel and 30 percent in the country's fixed-line company, Lietuvos. In Russia, Telia owns 24.5 percent in the Megafon mobile operator.

"We absolutely want to do more on those markets and we are prepared to increase our ownership as soon as there is an opportunity," Karlberg said.

A source told the paper that Telia hoped to increase its stakes in the Baltic and Russian companies if Finland's debt-burdened Sonera decides to sell its share holdings in the firms.