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. Last Updated: 07/27/2016

Business in Brief

Flirting With the Euro

BRUSSELS, Belgium (Reuters) -- The European Union and Russia made a muted declaration Thursday that pricing oil and gas in euros rather than dollars would be good for relations between the two parties, but made no deal to encourage such a switch.

In a joint declaration after an EU-Russia summit in Moscow, they said denominating Russia's energy exports was a "matter for the individual suppliers and their clients."

But any such move would be "a clear signal of the deepening relations of Russia and the European Union in the energy sector," said the declaration, released to the press in Brussels.

The statement falls way short of the EU's desire to see Russia urge markets to switch to pricing in its currency. Russia's policy has always been to leave it to the market.

Illarionov: No Evidence

MOSCOW (Bloomberg) -- Andrei Illarionov, economic adviser to President Vladimir Putin, said he has not seen any convincing evidence against former Yukos CEO Mikhail Khodorkovsky, who was arrested Oct. 25, Canada's The Globe and Mail reported last week.

"So far I haven't seen anything convincing enough for me, and for a majority of observers, to be convinced in this case," Illarionov said on the sidelines of a conference in Beijing, the Toronto-based newspaper reported.

The arrest of Khodorkovsky, the country's richest man, has hurt the investment climate, The Globe and Mail cited Illarionov as saying. Prime Minister Mikhail Kasyanov has also criticized the arrest.

Gazprom to Buy Itera?

MOSCOW (Bloomberg) -- Gazprom, the world's largest natural gas producer, may offer up to $500 million for its rival Itera, the Financial Times said last week, without naming its sources.

The move, which may be raised at a Gazprom board meeting next week, would strengthen the state-controlled company's near monopoly over domestic and overseas sales and distribution, and offer an example of the government's willingness to pay a fair value for formerly state-owned assets rather than reappropriating them, the FT said.

Supermajors Targeted

MOSCOW (Bloomberg) -- A group of lawmakers wants a review of agreements on oil fields being developed by ExxonMobil, Royal Dutch/Shell Group and Total to ensure they use more Russian contractors, Vedomosti reported last week.

Deputies from the State Duma asked the Constitutional Court to repeal a so-called "grandfathering provision" in a law on tax accords for oil and gas and extraction, the daily said, citing Duma Deputy Andrei Skoch.

The law on the tax accords, known as production sharing, requires foreign companies to contract domestic providers for at least 70 percent of equipment and services.

The law's grandfathering provision means that requirement does not extend to Exxon, Shell and Total, who signed their agreements before the law was passed. The companies' production-sharing agreement "would go to the contrary of the Russian state policy," Vedomosti said.

The Exxon-led group has given only 34 percent of contracts to domestic companies, the Shell-led group 48 percent and Total and partners 57 percent, the paper said, citing the Economic Development and Trade Ministry.

No Regrets for Total

PARIS (Reuters) -- Total said Friday the arrest of the former head of the oil firm Yukos proved that the French oil major was right to be cautious about making equity investments in the country.

"What happened on Yukos will not interfere with our activities in Russia, but it just shows that in fact we were right to be cautious to try to develop our activities using a strategy based on project by project rather than to try to take a stake in a Russian company," chief financial officer Robert Castaigne said in a telephone interview after Total had announced its quarterly results.

Oil Exports Up 13%

MOSCOW (Reuters) -- Oil product exports climbed 13 percent in January-September year-on-year, Interfax reported Thursday, as a flat domestic market proved incapable of absorbing rising refinery output.

The world's No. 2 exporter exported 77.14 million tons of oil products worth $13.66 billion in the first three quarters, Interfax reported, quoting the State Customs Committee.

Higher oil prices meant receipts from these exports were 46 percent higher than over the same period last year.

Fuel oil and gas oil dominated the exports. The country exported 38.4 million tons of fuel oil worth $5 billion and 27.7 million tons of gas oil worth $6.1 billion. Gasoline, jet kerosene and lubricants made up the remainder.

Within September, monthly products exports fell to 9.78 million tons, worth $1.67 billion, from 10.5 million tons in August.

Consultants Petrologistics estimate September oil product exports were flat compared with August, rising just 5,000 barrels per day to 1.96 million bpd.

Russia produced 8.79 million bpd of crude oil in October.

Gold Reserves Steady

MOSCOW (Reuters) -- The value of gold reserves held by the Central Bank was $3.744 billion as of Nov. 1, a rise of $1 million from the $3.743 billion of the previous month, the bank said Thursday.

The bank's official web site said it held 12.5 million ounces of gold as of Oct. 1, which is roughly in line with the official dollar value of the metal for the same date. The bank values its gold reserves at $300 per troy ounce.

It did not give a figure in ounces for Nov. 1.

The bank's total gold and foreign currency reserves had risen to $64.93 billion as of Nov. 1, up from $62.07 billion on Oct. 1.

$44M Siloviye Stake

MOSCOW (Bloomberg) -- Siloviye Mashiny, or Power Machines, an engineering company owned by Interros, said last week that it had raised $44 million by selling a 17 percent stake to 10 European investment funds through a private placement.

The company did not name the buyers in an e-mailed statement announcing the sale. HSBC Holdings managed the sale.

Moscow-based Siloviye has said it wants to sell more generators to Unified Energy Systems as Russia's national power utility moves to upgrade Soviet-era power plants and build new ones. That may pit it against international engineering companies such as the United States' General Electric and Germany's Siemens.

The company controls four factories in northwest Russia that make machines for power plants, as well as a design bureau and a trading company. The owner of Siloviye, Interros Group, is controlled by the country's fifth-richest man, Vladimir Potanin.

The sale values Siloviye Mashiny at about $260 million, more than the $234 million market value for Gruppa Uralmash-Izhora, Russia's biggest engineering company by sales.

Fiat, BasEl Mull Deal

MOSCOW (Bloomberg) -- Italian carmaker Fiat signed an agreement Thursday with holding company Base Element to study the sale of Fiat cars and truck engines in Russia and produce them in the country at a later stage.

The two companies plan to sell Fiat brand cars in Russia, Fiat said in an e-mailed statement. They also plan to import diesel engines made by Iveco, Fiat's truck making unit, to equip light commercial vehicles, Fiat said.

Fiat chief executive Giuseppe Morchio and billionaire Oleg Deripaska, Base Element's chairman, signed the agreement in Rome during President Vladimir Putin's visit.

Irkut Profit Soars

MOSCOW (MT) -- Military aircraft maker Irkut said Thursday its 2002 operating profit under U.S. generally accepted accounting principles rose to $89 million from $31 million the previous year, Dow Jones reported.

Irkut, which aims to conduct an initial public offering on a Russian exchange next year, said earnings before interest, taxes, depreciation and amortization rose to $103 million from $45 million in 2001, while revenues rose to $528 million from $308 million.

The company gave no figure for net profit, but said pretax profit totaled $9 million, without giving a comparable figure for 2001.

Flat Baltika Beer Sales

LONDON (Reuters) -- Britain's Scottish and Newcastle said Friday its 50 percent owned Baltic Beverages Holding in Eastern Europe, one of its key growth businesses, saw third-quarter sales in euros rise 1 percent.

BBH, whose key asset is a majority shareholding in Russia's biggest brewer Baltika, said third-quarter 2003 sales rose to 364 million euros and operating profit was up three percent at 109 million euros, while third-quarter BBH Russian beer volumes rose 12 percent.

The group said it anticipates continued profitable volume growth in the fourth quarter.

BBH is a 50/50 joint venture between S&N and Denmark's Carlsberg Breweries operating in six eastern European markets -- Russia, Ukraine, Kazakhstan and the three Baltic states.