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. Last Updated: 07/27/2016

Business in Brief

Central Bank Reserves

Russia's foreign currency and gold reserves rose by $400 million to $146.9 billion in the week ending June 17, the central bank said Thursday.

The reserves were unchanged in the week ending June 10, after falling from a record $147.1 billion in the week to May 27. (Bloomberg)

May Retail Sales Up 13.3%

Russian retail sales grew 13.3 percent from May 2004 to May 2005, the highest annual increase since December, as economic growth and the prospect of higher wages prompted consumers to spend.

The annual increase was higher than April's 12.2 percent gain and beat the median economists' forecast for 11.9 percent.

Retail sales rose 0.1 percent on the month after a 1.7 percent monthly increase in April, the State Statistics Service said in a report Thursday. (Bloomberg)

Producer Prices Rise 2.7%

Russian producer prices rose 2.7 percent in May from April, which was faster than expected, as higher prices for oil and other commodities drove up costs for manufacturers.

The pace was almost twice as fast as the 1.5 percent median estimate of 11 economists surveyed by Bloomberg.

The State Statistics Service said prices rose at a preliminary annual rate of 21.7 percent, faster than the median estimate of 21 percent and the 20.3 percent recorded in April. (Bloomberg)

IMF Urges Change

Economic growth started slowing after the "Yukos affair" damped investment, and will continue to decelerate if the government continues raising wages for state employees and pensioners, the International Monetary Fund said.

"The fact that the increased spending is used overwhelmingly for public sector wages and pensions suggest that the oil wealth is not being harnessed in support of reforms that could raise potential GDP growth," the IMF said in a statement Thursday.

"It becomes a matter of urgency to raise potential growth by reinvigorating structural reforms." (Bloomberg)

Gazprom Papers Signed

All documents needed for Russia to buy a 10.7 percent stake in Gazprom for $7.12 billion, a precursor to liberalizing the gas monopoly's shares, will be signed on Thursday, Economic Development and Trade Minister German Gref said on Thursday.

"Today, all will be signed," he told reporters. "Preliminary work is ready, but we also need some time to structure the loan. This is not a kopek, it's a huge sum," he said. (Reuters)

Shell Mulls GTL Plant

Royal Dutch/Shell and Gazprom are doing a joint study on a possible gas-to-liquids plant in Russia, a potential multibillion-dollar project, company officials said on Thursday.

GTL technology processes natural gas into petroleum products, including a low-sulphur diesel that meets tough environmental rules in many countries on greenhouse gas emissions.

Shell officials declined to say where they might build the Russian plant, which would aim to take advantage of Russia's huge gas reserves. (Reuters)

Novatek Stakes Sold

Gazprom and LUKoil bought stakes in Siberian energy companies from natural gas company Novatek, as it got rid of holdings in units it didn't fully control before selling shares to the public.

Novatek's board on June 21 approved the sale of a 25.1 percent stake in Tambeineftegaz to a Gazprom unit, Gazprombank-Invest, Novatek said Thursday in a statement, without disclosing the price.

Tambeineftegaz is developing the South Tambei gas and gas condensate field in the Yamalo-Nenets district of northwestern Siberia. (Bloomberg)

Novatek Nod For ADRs

Natural gas company Novatek got permission from the nation's market regulator to have 30 percent of its shares trade in the form of depositary receipts.

The company announced yesterday it will sell stock to foreign investors.

Russia's market regulator gave permission for 910,589 shares to trade abroad, it said in a statement.

Novatek has 3.036 million shares outstanding. (Bloomberg)

Novatek White Sea Terminal

WHITE SEA VILLAGE, Northwestern Russia -- Independent gas producer Novatek on Thursday opened a new export terminal on the White Sea for gas condensate and said shipments would amount to 100,000 tons per month by the year-end.

The terminal, Russia's first dedicated solely to gas condensate, is located near the existing port of Vitino, and it cost Novatek $15 million to expand the railways to the outlet and build the loading facility.

The firm, which is Russia's biggest and fastest growing independent gas producer, will ship gas condensate, which is produced together with gas, from its newly built Siberian gas condensate processing plant. (Reuters)

RZD Oil Deliveries to China

Russian Railways, or RZD, may increase oil shipments to China 50 percent next year after upgrading a railroad in eastern Siberia and an oil-hauling station at another rail link.

RZD plans to start transporting 12 million tons per year from 2006 to 2008 via the Karymskaya-Zabaikalsk rail link after increasing the link's capacity, the company said Thursday in a statement. Another 3 million will go through the hauling station. It plans to ship 10 million tons this year.

RZD plans to invest as much as 30 billion rubles ($1.1 billion) on railways in eastern Siberia to increase fuel and commodity shipments to Asian countries amid rising demand. (Bloomberg)

Kazakhs Eye Mazeikiu

VILNIUS, Lithuania -- Kazakh state-owned oil company KazMunaiGaz on Thursday threw its hat into the ring to buy a controlling stake of Lithuanian oil refiner Mazeikiu, the Baltic state's leader said.

Lithuanian Prime Minister Algirdas Brazauskas said at a joint news conference with KazMunaiGaz oil executives that the Kazakh company was examining the 53.7 percent stake in the Baltic region's only refinery, which is owned by troubled Russian oil firm Yukos.

The Lithuanian government holds 40.66 percent of Mazeikiu Nafta and has to approve any decision to sell Yukos' shares according to an existing shareholders' agreement. (Reuters)

Steelmakers Circle Utilities

Russian steel producers Evrazholding and Mechel want to buy two power stations in the Kuzbass region of Siberia, Vedomosti reported, citing unidentified company representatives.

The steelmakers sent letters to Russia's Federal Anti-Monopoly Service saying they wanted to buy the Zapadno-Sibirsky and Yuzhno-Kuzbass power stations.

The government has not yet decided how the stations will be spun off from the national power monopoly Unified Energy Systems. (Bloomberg)

Sasol-Russian Cooperation

JOHANNESBURG, South Africa -- The South African petrochemicals and energy group Sasol and the Russian chemical firm Nizhnekamskneftekhim have agreed to explore cooperation possibilities, Sasol said on Thursday.

Sasol Olefins & Surfactants, the South African group's German unit, said in a statement that the agreement set a timeframe and measures to be explored for possible cooperation in the production and marketing of products.

"These products will utilized in the manufacturing of cleaning and care products for the Russian market," Sasol said.

A feasibility study will be completed in September 2005. (Reuters)

IKEA Investment Plan

IKEA plans to invest between $2.5 billion and $3 billion in Russia by 2010 to build IKEA stores and Mega Mall shopping centers, Interfax reported, citing the company's Russian real estate director, Anders Binnmir.

IKEA plans to build outlets in 12 large Russian cities over the next five years, including Kazan, Nizhny Novgorod, Novosibirsk, Rostov-on-Don, Samara, Saratov, Volgograd and Voronezh, Interfax reported from Yekaterinburg, citing Binnmir. (Bloomberg)

Gazprom Bond Yields Falls

The yields on bonds of Gazprom fell to record lows after Moody's Investors Service raised the company's foreign currency rating to one level higher than Russia's grade.

The yield on Gazprom's 8.625 percent bond maturing in 2034 dropped by 8.3 basis points to 6.678 percent, a record low.

A basis point equals 0.01 percentage point. The bond's price surged $12.50 per $1,000 face value to 124.75, according to Deutsche Bank prices as of early afternoon. (Bloomberg)