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. Last Updated: 07/27/2016

Business in Brief

Vyugin Defends Windfall

LONDON -- Oleg Vyugin, head of the Federal Service for Financial Markets and a former Central Bank chief, said the government must not spend windfall revenue from oil or it might hurt local businesses by stimulating inflation and driving up the ruble against the dollar.

The government should spur economic growth by fighting corruption and protecting property rights to encourage private investment, Vyugin wrote Wednesday in Vedomosti.

"It is the level and quality of state regulation that is a serious barrier to fast and stable growth," Vyugin wrote. "Hopes for covering up the difficulty of those problems with the gold that flooded into the budget are naive." (Bloomberg)

Fuel Exports Up 3.4%

LONDON -- Transnefteprodukt, Russia's state-owned oil-products pipeline monopoly, said first-half fuel exports rose by 3.4 percent from the year-earlier period as companies shipped more gasoline and kerosene.

The company's fuel exports climbed to 9.2 million tons, it said Wednesday in a statement. Total oil product shipments in Russia and for export increased 1.5 percent to 13.8 million tons in the period, Transnefteprodukt said.

Ventspils Nafta Terminals, a Latvian oil terminal on the Baltic Sea, received 5.4 million tons of fuel to load into tankers, Transnefteprodukt said. (Bloomberg)

Geoilbent Ownership Deal

LUKoil and Russneft have agreed to split ownership of Geoilbent, a Siberian oil venture LUKoil has sought control of since June, Kommersant reported, without saying where it got the information.

LUKoil's purchase of 66 percent of the oil company was challenged in three Russian courts by a Russneft unit, Cyprus-registered Broadwood Trading and Investments, that claimed priority rights to the stake and by individual investors, Kommersant reported. (Bloomberg)

$1.5Bln Syrian Investments

DUBAI, United Arab Emirates -- Russia and Syria are planning joint investments in the oil and gas industry that are worth $1.5 billion, the newspaper al-Hayat reported, citing a Russian businessman.

Tatneft, Russia's No. 6 oil producer, is looking for oil and gas in Syria, and other Russian companies may build oil storage tanks in the country, said Dmitry Bombyanisky, chairman of the Syrian-Russian business council, the London-based Saudi newspaper reported. (Bloomberg)

Yukos Unit License at Risk

Yukos' second-largest oil unit may lose one of its production licenses because of 92 million rubles ($3.2 million) in unpaid mineral extraction taxes, the Natural Resources Ministry said Wednesday in a statement.

Samaraneftegaz has three months to pay the taxes and fix other violations, the ministry said.

The unit has no water monitoring program and has polluted bodies of water within the license area, the ministry said. (Bloomberg)

Total Loses Discount

Total, Europe's third-biggest oil company, lost a 10-year discount granted by Transneft, Russia's state-controlled pipeline monopoly, on fees it pays to pump oil from the Kharyaga field, Total's biggest project in the country.

Total failed to meet its obligations to pump set volumes of crude under long-term agreements, said the Federal Tariffs Service, which sets Transneft's pumping fees, on its web site on Wednesday.

Starting Aug. 1, Total will pay the same rate as all other oil producers in the country, the service said. (Bloomberg)

Diesel Spill Cleaned Up

LONDON -- An ExxonMobil-led venture has completed cleaning up a diesel spill caused when one of its ships hit an unidentified underwater object in the Sea of Okhotsk on Tuesday.

Smit Lloyd-27, a supply vessel, spilled 5.5 cubic meters of diesel off Sakhalin Island in the Pacific Ocean, Exxon Neftegaz said Wednesday in a statement. The ship was 700 meters from the Chaivo oil and gas field drilling site.

No one was injured. (Bloomberg)

Chinese Oil Shipments Up

Rail monopoly Russian Railways, or RZD, raised oil shipments to China by 29 percent in the first half as Russian producers increased exports to meet growing demand from China.

RZD transported 3.75 million tons (151,000 barrels per day) of oil to China in the first half, compared with 2.9 million tons in the same period last year, the monopoly said in a statement on Wednesday. (Bloomberg)

Ukrainian Refinery Upgrade

LONDON -- TNK-BP will invest $150 million in Linos, Ukraine's largest oil refinery, by 2010 to improve quality of the fuel it produces and reduce pollution.

Linos started a $20 million gasoline-treatment unit that will make about 300,000 tons of high-grade gasoline per year, TNK-BP's Ukraine-based unit said Wednesday on its web site. The new investment plan was announced on Wednesday by TNK-BP executive vice president Tony Considine, company spokeswoman Irina Kovalchuk said. (Bloomberg)

UES Buys Armenian Grid

Electricity monopoly Unified Energy Systems has received the right to run Electricity Networks of Armenia, the Armenian national grid company said Wednesday.

The $73 million deal was signed between UES and Britain's Midland Resources Holding, which bought the debt-ridden grid in 2002.

Due to a translation error, UES had erroneously reported in its 2004 financial statements at the end of June that it had paid the $73 million to buy the company, rather than the right to manage it and receive its profits, UES said. (AP)

KrasAir Bid for Malev

BUDAPEST -- Russia's KrasAir submitted the highest bid for the privatization of Hungary's loss-making national airline Malev, the newspaper Magyar Hirlap reported, citing several unnamed sources.

State privatization agency APV said earlier this month that it had received three bids for the airline, which Hungary has tried to sell twice over the past year without receiving any acceptable bids.

KrasAir had a "significantly higher" bid than the best bid for the unsuccessful tender at the end of last year, Magyar Hirlap reported.

APV will this week select KrasAir as winner or negotiate with the two bidders to raise the stakes, it added. (Reuters)

Hambro H1 Mining Up

LONDON -- Peter Hambro Mining, which mines for gold in eastern Russia, said it was on course to meet its 2005 production target of 271,000 ounces after first-half output surged.

Gold production in the six months ending on June 30 rose 41 percent to 102,178, the company said in a Regulatory News Service statement on Wednesday. Output at its Pokrovsky Rudnik mine increased by the same amount to 84,600 ounces. (Bloomberg)

Sistema Sued Over Unit

Sistema said Wednesday that a lawsuit had been filed against it seeking the liquidation of a unit called VAST, which owns about 3 percent of Russia's largest mobile phone company, Mobile TeleSystems.

Sistema and analysts said the suit would have no serious impact on the business either of Sistema -- whose $1.6 billion initial public offering in London this year was the largest ever by a Russian company -- or of MTS, which it controls.

ASVT, a small fixed-line operator that was Sistema's junior partner in VAST, filed the suit seeking the liquidation of VAST, Sistema said. (Reuters)

Ferrari, Maserati Sales Up

Ferrari-Maserati increased sales in Russia by 500 percent in the first half of 2005 compared with the first half of 2004, reported last week.

The company sold 72 cars -- 25 Ferraris and 47 Maseratis -- the first half of this year and just 12 in the same period of 2004, the agency said.

Ferrari-Maserati, which confirmed these numbers Wednesday, opened its first Russian dealership in May 2004. (MT)

Isuzu-Ukraine Joint Venture

Japanese-based Isuzu Motors has set up a joint venture with the Ukrainian automaker Bogdan to manufacture trucks in Ukraine from 2006, the news agency AFX reported late Tuesday, citing newspaper Nihon Keizai Shimbun.

Isuzu, an affiliate of General Motors, holds 20 percent in the venture. Bogdan holds 50 percent, while Japanese trading firm Sojitz has a 30 percent stake.

The trucks -- which will be sold in Russia and other countries in the region -- will be assembled using parts imported by Isuzu from Japan. Isuzu has supplied Bogdan with bus parts since 1999. (MT)