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. Last Updated: 07/27/2016

Business in Brief

Merrill '06 Growth Forecast

Russian economic growth will probably accelerate to 7 percent next year from an estimated 6.4 percent in 2005 as higher government spending helps raise salaries and stoke consumer spending, Merrill Lynch said in a report.

"The strong increases in fiscal expenditure should translate well into consumer spending," Merrill analyst Vladimir Gersamia wrote in a note to clients published Tuesday. "Domestic demand will likely continue in its role as the main driver of growth."

The government of the world's second-largest oil producer plans to increase spending by 20 percent next year as it distributes more of its oil wealth in a country where an estimated 25 million people out of a population of 145 million live below the poverty line. (Bloomberg)

RenCap '06 GDP Forecast

Economic growth probably will slow next year as investment expands at a reduced pace, says a report by Renaissance Capital.

The economy will expand 5.6 percent, down from the 6.1 percent forecast by RenCap for this year, economist Vladimir Pantyushin wrote in the bank's 2006 report.

The annual investment rate is forecast to decline to 8 percent from 9.5 percent. (Bloomberg)

Merkel Criticizes Schr?der

BERLIN -- German Chancellor Angela Merkel signaled criticism of her predecessor's appointment to a German-Russian consortium building a new gas pipeline, telling a newspaper it would not help her talks with East European countries unsettled by the project.

Schr?der, who stepped down last month, has drawn a barrage of criticism for his decision earlier this month to take accept the job.

"This is a business decision by the consortium that formally does not fall into the political arena," Merkel was quoted as telling the daily Frankfurter Allgemeine on Wednesday. "But if I look at my talks with the Baltic states and with Poland, the [board's] composition in the form that has now come about certainly does not make the talks easier." (AP)

Sibneft Buys TNK-BP Field

Russia's No. 5 oil company, Sibneft, which is owned by gas monopoly Gazprom, has bought a firm with an oil license on Sakhalin Island from oil major TNK-BP, Sibneft said Wednesday.

Sibneft said in a statement that it had bought a 75 percent stake in TNK-Sakhalin, which has the rights to explore the Lopukhov field with its estimated reserves of around 100 million tons of oil equivalent (733 million barrels).

Gazprom has recently been trying hard to get a foothold on Sakhalin after having missed out on all licensing opportunities in the last decade to rivals such as ExxonMobil. (Reuters)

Russneft Buys New Assets

TNK-BP sold its four oil producing and refining units to Russneft, Russia's eighth-largest oil company, as part of its assets reorganization.

Russneft will take over the oil producer Saratovneftegaz, the oil refinery Orsknefteorgsintez, the fuel retailer Orenburgnefteprodukt and the lubricant maker Neftemaslozavod, TNK-BP said Wednesday. All the companies are based in Russia.

Russneft, the fastest-growing oil producer in Russia, plans to increase oil extraction next year to 20 million to 25 million tons, or 400,000 to 500,000 barrels per day, from the expected 14.5 million tons this year. (Bloomberg)

Novatek '06 Output Forecast

Leading independent gas firm Novatek may find it hard to produce more gas in the future due to pressure from gas monopoly Gazprom, analysts said Wednesday, after Novatek upset the market with a low 2006 output forecast.

Novatek, Russia's second-largest gas producer, said Tuesday that its gas output would grow by 6 to 8 percent next year from around 25 billion cubic meters this year, much below analysts' estimates of 15 to 20 percent.

Gas condensate and crude oil output will grow by 15 to 17 percent from more than 2 million tons in 2005, in line with expectations. (Reuters)

$30Bln for Refineries

Russia will need to spend about $30 billion modernizing refineries to improve the quality of fuel, meet European standards and cut pollution, the Energy Ministry said.

The ministry plans by the end of the year to submit to the government for approval a plan to increase regulations of the fuel market. The proposals are aimed to improve product standards and to fight bootlegging. (Bloomberg)

Roof Collapses in Accident

A roof collapsed at a railcar repair yard in southern Russia on Wednesday, killing one worker and injuring at least 11, an emergency official said.

At least two of the injured were hospitalized in intensive care as a result of the incident in Ryazan, said Viktor Beltsov, spokesman for the Emergency Situations Ministry.

Ekho Moskvy radio reported that heavy snow fall might be to blame for the collapse. (AP)

Norway Salmon Dispute

OSLO / BRUSSELS -- The European Union threw its support behind Norway on Wednesday, a day after Russia banned fresh salmon from the Nordic country, saying it was poisonous, findings that Norway disputes.

Russian vets say they have found lead 18 times above safety levels in Norwegian salmon and cadmium 3.5 times higher, and that Norway's monitoring standards were inadequate. On Tuesday, it imposed a ban on imports of fresh Norwegian salmon that will start Jan. 1.

But the EU Health Commission disagrees. "As far as the EU is concerned, we have no evidence that there are any problems with salmon from Norway," a spokesman for the commission said. (Reuters)

Airbus Places Orders

PARIS -- European aircraft maker Airbus said Wednesday that it had placed additional work orders worth $200 million over 10 years with Russian manufacturers Voronezh Aircraft Production Association and Irkut Scientific Production Corporation.

The work packages are for aircraft of the A320, A330/340 and A380 families and come under Airbus' commitment to broaden its industrial cooperation with Russia. (Reuters)

Yushchenko's Optimism

KIEV -- Ukrainian President Viktor Yushchenko expressed optimism on Wednesday that Kiev and Moscow would break a deadlock in talks over gas prices and find a solution acceptable to both countries.

Yushchenko made his comments a day after he voiced frustration at Russia's "irresponsible" proposals to boost prices fourfold and suggested Ukraine in turn could consider raising the rent on Russia's Black Sea Fleet in Crimea.

"If we filter out the politics … and remember that we are neighbors for the long-term, we must avoid steps that discredit or cause unease to one side or the other," Yushchenko said during a tour of southern Ukraine. (Reuters)