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. Last Updated: 07/27/2016

Business in Brief

$2.6Bln Surplus

MOSCOW (Reuters) -- The federal budget surplus in the first six months of 2003 amounted to 77.6 billion rubles ($2.56 billion), or 1.3 percent of gross domestic product, the Finance Ministry said Tuesday.

The surplus compares with the originally planned deficit of 62.2 billion rubles, or 1 percent of GDP. The budget surplus amounted to 66.9 billion rubles, or 1.3 percent of GDP from January to May.

The Finance Ministry said revenues amounted to 1.242 trillion rubles, while spending stood at 1.164 trillion rubles.

Russia is to service one of the highest amounts of foreign debt this year: $17 billion after $14 billion last year.

$500M Sakhalin Pipe

SINGAPORE (Bloomberg) -- Nippon Steel Corp., Japan's biggest steel maker, will start building a 60 billion yen ($507.6 million) crude oil pipeline for ExxonMobil's Sakhalin-1 oil and gas project in October, a company spokesman said.

The pipeline from the Chayvo and Odoptu fields to a terminal at DeKastri on the mainland will be completed by October 2005, a spokesman said. Nippon Steel won the bid to build the pipeline in October last year.

Gazprom Eurobonds

LONDON (Bloomberg) -- Gazprom said it plans to sell eurobonds as early as the third quarter of this year.

The company will seek approval from regulators for a borrowing program of "a few billion dollars," said Peter Bakayev, head of the company's capital markets division.

UBA and Deutsche Bank will manage the program as well as the first sale in the program, he said.

Gazprom said June 26 it plans to borrow as much as $8.3 billion at home and abroad over the next 3 1/2 years. The gas producer wants to sell $2 billion to $3 billion of eurobonds through 2006, it said.

Bank Budget Bonanza

MOSCOW (Reuters) -- The Finance Ministry plans to keep budget funds on deposits in commercial banks from 2005, a practice abandoned in the wake of the 1998 economic crisis, a ministry official said Tuesday.

"I think we will start working on the documents and amendments to the budget code only next year, since it is only from next year that a unified account on federal budget spending will start working," Deputy Finance Minister Tatyana Nesterenko said.

"I hope we will start placing funds at commercial banks from 2005." She declined to name the possible volume of funds the government could place at commercial banks that will be chosen by strict criteria. But Nesterenko said that the treasury held about 200 billion rubles ($6.59 billion) of budget funds daily.

Gas Deregulation

MOSCOW (Reuters) -- The government plans to stop regulating prices for petroleum gas to promote expanded production by oil companies, which often extract gas with oil.

The Economic Development and Trade Ministry is proposing to end regulation of petroleum gas prices as well as wholesale prices for liquefied petroleum gas within two years, according to a resolution on the government's web site.

Retail price controls would be phased out in three to five years.

Gazprom and its petrochemical unit Sibur produce at least half of Russia's petroleum gas. Oil majors LUKoil, Yukos and TNK sell most of their petroleum gas to Sibur at regulated prices or flare it in the oil fields. Gas production is rising as Russia boosts oil output at the fastest pace since the fall of the Soviet Union.

The ministry proposes to stimulate use of petroleum gas through "administrative means," the resolution says. "The gradual increase in wholesale prices for liquefied petroleum gas for household use is optimal" to prevent rapid price increases.

25% Forex Sale Limit

MOSCOW (Reuters) -- The Central Bank will cut the volume of hard currency that local exporters must convert into rubles to 25 percent from the current 50 percent, First Deputy Chairman Oleg Vyugin said Tuesday.

Vyugin said the new rule would come into force after a law, which put the ceiling for exporters' revenue sales at 30 percent after being passed by parliament, had been published in the official Rossiiskaya Gazeta.

He said this 30 percent rule would be published soon and the Central Bank would then quickly publish its own order changing it to 25 percent.

5.8% Stake in Sberbank

MOSCOW (MT) -- MDM Group, owned by Andrei Melnichenko and Sergei Popov, and its corporate affiliates have accumulated 5.8 percent of the preferred shares of Sberbank, Vedomosti reported.

The stake is held by MDM Trust, which is owned by the same offshore holding company as MDM Bank, one of the largest and fastest-growing private banks. Alexei Panfyorov, deputy chief executive of MDM Bank, said the purchase was carried out on behalf of "a client."

MDM Group, a holding company that is run separately from MDM Bank but has the same shareholders, has also been a strategic buyer in electricity monopoly Unified Energy Systems over the past year.

Hoop IPO

WARSAW, Poland (Reuters) -- Polish soft-drinks company Hoop SA wants its initial public offering on the Warsaw bourse to fund its eastern expansion, but analysts said Tuesday that the fast-growing company's valuation appeared pricey.

Hoop, pronounced "hop," is seeking to raise up to 145 million zlotys ($37 million), mainly to fund takeovers in Russia, a drinks market it believes is ready to boom.

According to its issue prospectus, Hoop wants to issue up to five million new shares at 23 zlotys to 29 zlotys each, valuing the total firm at between 342 million and 431 million zlotys.

Last year Hoop earned 16 million zlotys on sales of 350 million. It trades around 25 zlotys per share in Warsaw's small gray market, where only a fraction of its shares are listed.

"The Russian market is growing quickly, and local producers are not able to meet demand. That is why we are counting on big profits there," said Marek Jutkiewicz, Hoop's deputy CEO.

Hoop wants to buy into Moscow-based beverage bottling plant Megapak, whose acquisition could nearly double its sales.

Car Imports Up 17%

MOSCOW (Prime-Tass) -- Car imports from countries outside the Commonwealth of Independent States rose 17 percent on the year from January to May to 56,600 vehicles, the State Customs Committee said Tuesday.

These imports amounted to $726.9 million in monetary terms.

Total car imports in the period were 61,100 vehicles, worth $751.1 million.

Aussie Know-How

LONDON (Reuters) -- Australian specialized technology firm Ausmelt has signed a $9.5 million contract to provide its technology to modernize the Karabashmed copper smelter in the Urals, the company said Tuesday.

Engineering design for a new Ausmelt furnace and an electric settling furnace will begin immediately and the new plant is set to start up in the second half of 2004, Ausmelt said.

Environmental considerations were cited as the main driver behind modernization of the 40,000 metric tons per year smelter in the Chelyabinsk region. Use of Ausmelt technology, coupled with recently installed gas cleaning equipment and acid plant, would dramatically improve sulfur capture and cut dust emissions, the company said.

The contract, described as one of the largest in the company's history, was Ausmelt's first in Russia.