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. Last Updated: 07/27/2016

Business in Brief

Pension Fund Deficit?

The pension system may face a $23 billion deficit if the government makes good on its promise to increase payouts without raising taxes, Vedomosti reported, citing an official from the Audit Chamber.

The Pension Fund's deficit will reach 656.9 billion rubles ($23 billion) in 2008, from 218.5 billion rubles expected this year, if the government raises payouts 1.87 times as planned after cuts to the payroll tax that funds the system, auditor Sergei Agaptsov told Vedomosti.

Lawmakers last year voted to cut the maximum payroll tax rate to 26 percent to encourage companies to declare workers they had been paying in cash, Agaptsov told the newspaper. (Bloomberg)

Sakhalin May Raise Output

LONDON -- Russia may raise the pace of output in the second half of 2005 and in 2006 as Royal Dutch/Shell and ExxonMobil expand Sakhalin projects in the Far East, the International Energy Agency said.

Oil production this year will rise 3 percent, or 300,000 barrels per day, the IEA wrote Wednesday in a monthly report. Output next year will increase 4.1 percent, or 400,000 bpd, the IEA said.

"There are signs of renewed service company activity and of actual production growth by key companies, which suggests that output can recover in the second half of the year," the agency said in the report. (Bloomberg)

Alrosa Gas Investments

Alrosa, the state-owned diamond monopoly, is in talks to buy Yukos' share of Sakhaneftegaz, Interfax reported Wednesday, citing Alrosa CEO Alexander Nichiporuk.

Alrosa will close several unprofitable diamond mines in the Sakha republic, in the Far East, and will invest in coal, oil and gas projects in the region, Interfax said, citing Nichiporuk's address Wednesday to the republic's parliament.

Yukos spokesman Alexander Shadrin was not available for comment. (Bloomberg)

Russia to Store Oil in Asia?

SIEM REAP, Cambodia -- The Philippines hopes to convince Russia to store some of its oil close to the fast-growing Asian market as a cheaper way to develop a small crude supply buffer, a government official said Wednesday.

Guillermo Balce, undersecretary at the Energy Department, said officials would also discuss possible infrastructure investment by Russia next month.

"We will take up the issue during a bilateral meeting with Russia in August," he said on the sidelines of an ASEAN energy ministers' meeting in Cambodia. (Reuters)

LUKoil Countersuit

LUKoil, the country's largest oil producer, said its overseas unit filed a $256 million counterclaim against PetroKazakhstan in the Arbitration Institute of the Stockholm Chamber of Commerce. LUKoil Overseas Kumkol accused PetroKazakhstan of obstructing "at a shareholder level such decisions as would have benefited" Turgai Petroleum, LUKoil said Wednesday in a statement.

LUKoil and PetroKazakhstan each own half of Turgai. LUKoil and Turgai estimated their losses at $361.2 million, LUKoil said. (Bloomberg)

$70M LUKoil Plastics Plant

Russia's No. 1 oil producer, LUKoil, said it would build a $70 million polypropylene plant in southern Russia and had signed a deal allowing it to use Dow Chemical technologies in production.

The plant, to be built in the Stavropol region on the Stavrolen petrochemicals complex, will have a capacity of 120,000 tons per year, LUKoil's petrochemicals division said in a statement. (AP)

Heineken Buys 6th Brewer

AMSTERDAM -- Heineken on Wednesday announced its sixth acquisition of a brewery in Russia, adding to its eastward expansion with a firm in Siberia.

Heineken said it signed an agreement to buy 100 percent of Baikalskaya brewery in Irkutsk for an undisclosed sum. The world's No. 4 brewer in sales, Heineken is focusing on expansion in rapidly growing emerging markets as it faces sluggish mature beer markets in the United States and Europe.

Rabobank analyst Mark van der Geest put the value of Baikalskaya at 45 million to 50 million euros ($55 million to $61 million), based on market share. (Reuters)

VimpelCom EGM

No. 2 mobile firm VimpelCom will hold an extraordinary shareholders' meeting on Aug. 15 to discuss expansion plans for the fast-growing Ukrainian market, a key shareholder said Wednesday.

"We'll hold the meeting on Aug. 15. We will discuss the purchase of Ukrainian RadioSystems," said Kirill Babayev, vice president of Alfa Telecom, referring to the small company Alfa wants VimpelCom to buy.

Norway's Telenor, another VimpelCom shareholder, opposes the purchase of Ukrainian RadioSystems, saying it will be unprofitable. (Reuters)

VimpelCom Far East Buys

VimpelCom said it paid $51.2 million for control of a mobile operator in Sakhalin, opening up the oil- and gas-rich region to the company.

VimpelCom bought 84.4 percent of Sakhalin Telecom Mobile, which holds licenses for the Far East island, the company said Wednesday in a statement on PRNewswires.

VimpelCom also paid $5 million for a 60 percent stake in Sakhalin Telecom, a fixed-line alternative operator on the island, the statement said. (Bloomberg)

Czechs OK Sale to Evraz

PRAGUE -- The Czech government on Wednesday approved the sale of the country's major steelmaker, Vitkovice Steel, to Russia's Evraz.

Ivo Mravinac, a spokesman for the Industry and Trade Ministry, said Evraz bid 7.05 billion koruna ($283.94 million) for the state's 99 percent stake in the company. (AP)

Volvo H1 Sales Drop

Swedish carmaker Volvo reported a 4.2 percent drop in Russian sales during the first half of 2005, compared with the same period last year, Interfax reported Wednesday.

Volvo sold 2,325 cars in the first six months compared with 2,425 in the first half of 2004. Volvo sold a total of 5,048 cars in 2004.

Most foreign carmakers are experiencing a leap in sales as Russians abandon domestic models. Volvo's drop could be explained by discounts made by the competition, said Gairat Salimov, auto analyst at Troika Dialog. (MT)

Phone Numbers for Life

Mobile phone users will be able to keep their numbers even if they switch service operators, according to a draft decree published by the IT and Communications Ministry.

Russia could institute the practice before the end of this year, Interfax reported Wednesday.

Mobile subscribers in the United States, Australia, South Korea and some Western European countries already have mobile number portability. (MT)