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. Last Updated: 07/27/2016

Business in Brief

Surgut Profit Jumps

MOSCOW (Reuters) -- No. 4 oil major Surgutneftegaz said Monday that its net profit rose 19 percent in the first half of 2003 from the same period last year, helped by strong sales and high world oil prices.

The company said in a report under Russian accounting standards that its net profit rose to 23.74 billion rubles ($782.2 million) from 19.94 billion in the first half of 2002.

Sales also rose 19 percent to 95.66 billion rubles ($3.15 billion) from 80.59 billion in 2002.

Domestic companies benefited from high international oil prices in the first half of the year as well as from stronger domestic fuel prices, which recovered from their low in the first half of 2002 when they were hit by a domestic oil glut.

Firms base their dividends on their results calculated to Russian accounting standards, which differ significantly from those used in more developed economies.

Investors have criticized Surgut for deducting capital and social expenses from its net profit to calculate its annual dividend, the lowest in the industry.

Shifting UES's Weight

MOSCOW (Bloomberg) --Unified Energy Systems, Eastern Europe's most traded stock, will have its weightings in the Morgan Stanley Capital International indexes cut, Vedomosti reported, citing an unidentified source at Morgan Stanley Capital International.

UES, which make up 9.8 percent of the MSCI EM Eastern Europe Index, will have its weight reduced after strategic investors increased their stakes in the company, reducing the amount of shares available for portfolio investors, Vedomosti reported.

MSCI determines a company's weight based on its market capitalization and the so-called free float, or the percentage of a company's stock readily available for trade. MSCI will revise its estimation of UES's free float down to 30 percent from 45 percent, Vedomosti reported, citing the unidentified source.

Debt-for-Telecom Swap

MOSCOW (Bloomberg) -- Alfa Bank will swap Soviet-era debt owed by Slovakia to Russia for the foreign currency debts of units of state telecoms holding Svyazinvest, Vedomosti reported, without saying where it got the information.

In August 2002, state-owned Vneshekonombank bought Slovakia's Soviet debts through a company called FID, the paper said. Slovakia said it sold the $460 million of debt for about $121 million, the paper said.

Alfa will buy the Soviet-era debts from Vneshekonombank for an unspecified sum and then use them to pay off some of the debts that Svyazinvest units owe to the federal government, the paper said. The bank will get notes from the units in return, Vedomosti reported.

Norilsk Profit Up 48%

MOSCOW (Bloomberg) -- Norilsk Nickel's second-quarter profit rose 48 percent as revenue more than doubled on higher nickel and copper prices.

Second-quarter net income rose to 10.2 billion rubles ($336 million) from 6.9 billion rubles in the year-ago period, according to calculations by Bloomberg News based on Norilsk's reports for first-half earnings. Revenue rose to 31.4 billion rubles, up from 15 billion rubles.

Norilsk stock has risen 89 percent this year.

Rosbank Nickel Loan

MOSCOW (Bloomberg) -- Norilsk Nickel, Russia's top producer of nickel and gold, plans to borrow $140 million from Rosbank, which is part of Interros Holding, a financial-industrial group that controls Norilsk.

Norilsk's board approved the loan on July 25 , the company said in a report.

The company's board approved the sale of 30 tons of silver to Rosbank, the statement said. The company also agreed to sell three tons of gold to the bank, Interfax reported, citing a board decision.

Carmakers Upshift

MOSCOW (MT) -- GM-AvtoVAZ added a third shift to its production schedule Monday, Interfax reported.

The joint venture is producer of the Chevrolet-Niva sports utility vehicle. The third shift had been scheduled as part of its targeted output of more than 36,000 vehicles in 2003.

The company, a joint venture between U.S.-based General Motors and Tolyatti-based AvtoVAZ, began operations last September.

The factory in the Samara region city of Tolyatti employs more than 900 people.

Meanwhile on Friday, rival Ford announced it had produced its 10,000th Ford Focus at its plant in Vsevolozhsk, just north of St. Petersburg.

It added a second shift to its production schedule in April to cope with high demand and presently employs 1,250 people, the company said in a press release.

Ford began sales of the Russian-made Focus in October and the plant has a production capacity of 25,000 vehicles.

Sual Smelters Kick In

MOSCOW (Bloomberg) -- Sual Group, which produces a fifth of the country's aluminum, said Monday that first-half output of the metal rose 29 percent after it took over two smelters.

Aluminum production rose to 441,900 tons, the company said in an e-mailed statement.

Sual increased its mining of bauxites by 10 percent to 2.1 million tons. Bauxites are required to make alumina, which is smelted to produce aluminum.

Sual this year bought two smelters from holding company Sevzapprom, making it the world's No. 7 aluminum producer, with an output of about 850,000 tons a year.

The company has agreed to build a refinery and smelter complex with Pechiney SA, Europe's No. 2 aluminum maker.

$2Bln for Gas Exports

MOSCOW (Bloomberg) -- Gazprom, the world's top natural gas producer, will invest $2 billion to boost the capacity of pipelines in Central Asian states so they can ship more gas to Europe through Russia, CEO Alexei Miller said.

Gazprom plans to explore for gas in Kazakhstan, Uzbekistan and Turkmenistan, President Vladimir Putin's press service said in a statement posted on the presidential administration's web site after the president met Miller on Friday. The government is Gazprom's controlling shareholder.

Gazprom, which supplies about 40 percent of Western Europe's gas imports, needs more of the fuel to meet export contracts. The company is turning to former Soviet states in Central Asia for gas so it can spread over a longer time the $60 billion of investment needed to tap Arctic fields to maintain output.

The company has contracts to sell 2.1 trillion cubic meters of gas in Europe in coming decades, enough to meet the continent's needs for at least four years.

4 New Caspian Sites

MOSCOW (MT) -- Kazakhstan's state oil and gas company KazMunaiGaz plans to start exploring four oil fields on the Caspian Sea shore in 2004, a spokesman was quoted by Dow Jones as saying Monday.

One of the fields, Darkhan, situated in the northern part of the Caspian Sea shore, has estimated reserves of between 440 million and 1.1 billion tons of oil. The other three fields -- Ulytau, Nursultan and Rakushechnoye-More -- in the southern part of Kazakhstan's sector of the Caspian are estimated to hold 1 billion tons of oil, the spokesman said.

Exploration work, including drilling exploratory wells, will take four years, he said.

No MTU-Intel IPO

MOSCOW (Bloomberg) -- AFK Sistema, a financial-industrial group owned by Vladimir Yevtushenkov, will not sell shares of Internet provider MTU-Intel in an initial public offering as its seeks to combine its digital telecommunications units into one operator, Vedomosti reported.

Sistema, which owns stakes in five Moscow digital providers including Golden Line, MNU-Inform, Comstar, Telmos and MTU-Intel, wants to combine them into a single operator, which excludes the IPO of MTU-Intel, Moscow's largest internet provider, Vladimir Lagutin, president of Sistema Telecom, the group's telecommunications holding, told the newspaper.

MTU-Intel, Sistema's fastest growing alternative telecom unit, had first-half sales of $27 million, the paper said.

RusAl $200M Loan

MOSCOW (Reuters) -- Top aluminium producer Russian Aluminium said Monday that it had secured a two-year $200 million credit from a group of Western banks to finance production of primary aluminium.

"The new syndication replaces maturing trading finance facilities, but on better terms," a RusAl statement quoted CFO Vladislav Solovyov as saying.