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. Last Updated: 07/27/2016

Business in Brief

Alrosa to Cut De Beers?



MOSCOW (Bloomberg) -- Alrosa, which produces a quarter of the world's rough diamonds, may drop a contract with De Beers in five years and establish a venture with Lazare Kaplan International Inc. to polish diamonds and make jewelry, Kommersant reported.

Alrosa's five-year contract to sell De Beers $800 million of gems annually is being stalled by the European Commission. Alrosa's proposal to team up with Lazare Kaplan is aimed at unblocking the De Beers contract, the paper said.

The venture would polish as much as $550 million of rough gems per year, Kommersant said, citing Alrosa's proposal to the commission.

That would leave only about $300 million of stones available for De Beers, making an extension of the contract with the world's largest diamond company unlikely, Kommersant said.

Lazare Kaplan and government-controlled Alrosa in 1999 agreed to produce $100 million per year of polished diamonds at jointly operated cutting facilities in Russia and sell them through LKI's marketing and distribution network.

Lazare Kaplan board chairman Maurice Tempelsman met Finance Minister Alexei Kudrin in Moscow in May.




BP Ready to Drill



SAKHALIN, Far East (Bloomberg) -- BP, the world's third-biggest publicly traded oil company, next year will drill the first well in a $200 million exploration project off the Pacific coast.

BP will begin drilling at the Kaigano-Vasyukanskoye field near Sakhalin Island in the middle of next year under a license requiring it to bore six wells by 2007, said Chris Einchcomb, president of BP's Sakhalin unit. BP's Russian partner, Tyumen Oil Co., plans to have four exploration wells at a neighboring field by 2007.

While BP holds 49 percent of the exploration project and state-owned Rosneft has the rest, BP bears all exploration costs, said Lev Brodsky, general director of Rosneft's Sakhalin unit. If it finds oil, BP will have to negotiate a new agreement to develop the field.




Norilsk Buys Port



MOSCOW (Bloomberg) -- Norilsk Nickel, the world's largest miner of nickel and palladium, has bought control of Arkhangelsk Port, through which the company shipped more than 240,000 tons of cargo in 2002, Vedomosti reported.

Business Management, a Moscow-based company affiliated with Norilsk, bought 20 percent of the port for 76.6 million rubles ($2.5 million) at a state tender, outbidding Rosneft, the only state-owned oil company, Vedomosti said, citing Arkhangelsk Port general director Vladimir Titov.

Norilsk now controls 55.7 percent of the port, the paper said. Norilsk declined to comment when the paper contacted it.

Norilsk has been buying stakes in transport companies to help cut costs. The company last year increased its stake in Yeniseisky River Shipping to 43.9 percent and received six of 11 board seats, the paper wrote.

Norilsk ships goods along the 4,000 kilometer Yenisei River, one of Asia's largest.

Arkhangelsk Port, the second-largest in northern Russia after Murmansk, transported 977,000 tons of cargo in 2002, a quarter of which was for Norilsk, Vedomosti reported.




Beef Quotas Set



MOSCOW (Reuters) -- Prime Minister Mikhail Kasyanov has signed a resolution setting an import quota on fresh and chilled beef of 11,500 metric tons from Aug. 1 until the end of 2003, the government said Tuesday.

A statement posted on the government web site (www.government.ru) said a duty of 15 percent, but no less than 0.2 euros ($0.22) per kilogram, will apply to beef imported within the quota.

It said a duty of 60 percent, but no less than 0.8 euros per kilogram, would be levied on imports above that amount.

The quota will be distributed among traditional shippers in proportion to their share of imports in 2000-02, the statement said.




Car Protest in Far East



MOSCOW (MT) -- In protest at a planned tariff hike on imported used cars, residents of the Far East city of Nakhodka smashed three domestically-made cars to pieces Tuesday, local officials were quoted by Agence France Presse as saying.

The protesters reportedly used bulldozers to demolish the cars -- a Zhiguli, a Moskvich and a Zaporozhets -- as a way of expressing their anger at the tariff hike that will increase the cost of imported used cars by between 25 and 40 percent.

"[This] shows what local people really think about Russian cars," one protester was quoted by the agency as saying.

The tariff hike, which protesters call a "thieves' tax," is due to come into effect at the end of this month. Alongside this, the cost of car insurance has increased.

Japanese imports account for some 96 percent of all cars owned in the region and more than 200,000 people in the Far East are directly or indirectly employed in the trade and maintenance of Japanese vehicles.




LUKoil, Lithuania Tiff



MOSCOW (MT) -- Green Party members in Lithuania intend to launch long-term protests against LUKoil's plans to extract oil in the Baltic Sea, a project coordinator for the party was quoted by Agence France Presse as saying Tuesday.

"On July 21 we shall start the first actions of protest, urging our citizens to boycott LUKoil's production and its services," Saulius Piksrys told AFP.

"We shall also hand out postcards to be addressed to [European Commission president] Romano Prodi calling on the EU to pay attention to this problem," he added.

Relations between Vilnius and Moscow have been hindered by LUKoil's plans to extract oil in the Baltic Sea close to the Curonian Spit, a unique stretch of sand dunes included on UNESCO's world heritage list.

Lithuanian Prime Minister Algirdas Brazauskas in June wrote to Prime Minister Mikhail Kasyanov demanding an international environmental safety evaluation of the company's plans to extract oil at the site, starting this year.

LUKoil estimates the D-6 oil field could provide 600,000 metric tons to 700,000 metric tons of oil annually for a period of 25 to 30 years. Oil reserves in this area are estimated at 24 million tons.

"If these plans are realized, this will become not only a Lithuanian problem but a problem for the European Union as the oil field will be surrounded by EU territory next year," AFP quoted Piksrys as saying,




$180M Glass Plant



ST. PETERSBURG (Prime-Tass) -- Veda-Pak plans to start construction of a $180 million sheet glass factory in the Nizhny Novgorod region next year, the company said Tuesday.

The company plans to use both its own funds and bank loans to finance the construction.

It is expected that the factory would produce 20 million square meters of sheet glass per year.

Veda-Pak, part of the Veda Sistema holding, is controlled by Topside Holdings, which is registered in Gibraltar.




$1.4Bln Bond Dispute



KIEV (Prime-Tass) -- Ukrainian national oil and gas company Neftegaz Ukrainy has postponed the transfer of its eurobonds worth $1.4 billion to Gazprom, Ukraine's Fuel and Energy Minister Sergei Yermilov told reporters late Monday.

The eurobonds were issued to settle Ukraine's $1.4 billion debt to Russia for supplied natural gas, and their transfer to Gazprom was originally scheduled for July 1.

The transfer was postponed as Gazprom failed to resolve problems related to a tax on the eurobonds, Yermilov said.

"I think that this problem will be settled this year as it is in Russia's interests to do so," he said without elaborating.




OMZ Wins Syria Job



MOSCOW (Bloomberg) -- United Heavy Machineries, or OMZ, the country's biggest engineering company, has won a $43 million contract to supply oil drilling rigs to Syria's state oil company.

"The major details of the contract and financing method are being developed by the Syrian oil company,'' OMZ said in an e-mailed statement.

The company did not provide details of the contract.

OMZ, which produces about 70 percent of the country's oil drilling equipment, increased its backlog of outstanding orders to more than $1 billion last year, from $445 million at the start of 2002.

The company's shares were unchanged at $7.05 at 4:23 p.m. in Moscow.