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. Last Updated: 07/27/2016

Business in Brief

Inflation Is Top CB Priority

The Central Bank will make the fight against inflation its priority in 2006, while at the same time trying to prevent the ruble from becoming too strong, documents obtained by Reuters showed on Friday.

"The bank of Russia can influence [the exchange rate] to the extent that it does not conflict with the main goal of monetary policy: lowering inflation," it said in a draft of monetary policy guidelines for next year.

The Central Bank hopes to lower inflation to 7.0 to 8.5 percent next year, from 11.7 percent in 2004 and a forecast of 11 percent for this year. (Reuters)

Budget Draft Submitted

The Finance Ministry has submitted the 2006 budget plan to the government with a small spending hike, documents obtained by Reuters showed on Saturday.

Spending will rise to 4.270 trillion rubles ($150.5 billion), 340 billion rubles more than was previously planned, according to the document.

Revenues are expected at 5.046 trillion rubles, or 616 billion rubles more than was originally planned. The spending plan has a surplus of 776 billion rubles, or 3.2 percent of projected gross domestic product. (Reuters)

Fitch Upgrades Gazprom

Fitch Ratings upgraded gas monopoly Gazprom to BB+ from BB, but cut the outlook to stable from positive after the government brought its total ownership to a controlling stake of more than 50 percent.

Fitch said that while the rating incorporated a degree of state support, other factors, such as the company's stand-alone credit profile, had more influence in the decision.

"Further upgrades to Gazprom's credit ratings depend on the company's ability to demonstrate improvement in areas such as domestic pricing power and operating cost containment, which would improve cash flow generation," Fitch said in a statement Friday. (Reuters)

S&P Ups TNK-BP Rating

TNK-BP's credit rating was raised one level to BB, two below investment grade, after a tax claim against BP's Russian oil venture was cut to $245 million from almost $1 billion, Standard & Poor's said Friday.

Russian tax authorities earlier this year presented TNK-BP with a bill of 26 billion rubles ($918 million) for back taxes, which the company vowed in April to challenge in court. TNK-BP, the country's largest oil exporter this year, agreed to pay the lesser amount by Aug. 18.

Any further claims against TNK-BP for 2001-03 are unlikely to significantly affect the company's operations and financial performance, Standard & Poor's said. (Bloomberg)

LUKoil H1 Revenues Up

Oil firm LUKoil said on Friday that revenues under Russian Accounting Standards rose 68 percent in the first half of 2005 to 273.82 billion rubles ($9.65 billion) from the same period a year ago.

The information was released to the Russian stock market, a company spokesman said.

Russian Accounting Standards figures differ significantly from International Accounting Standards but are often used to calculate dividends and pay taxes. LUKoil's Russian figures are at a much lower level than its U.S. accounting numbers. Net profit under Russian standards in the first half of 2005 was 47.2 billion rubles, up from 31.3 billion in the same period of 2004. (Reuters)

Tatneft H1 Earnings Up

LONDON -- Oil producer Tatneft said earnings rose 40 percent in the first half of the year on higher sales as oil prices surged.

Tatneft's unconsolidated net income increased to 16.1 billion rubles ($570 million), up from 11.5 billion rubles in the same period last year, based on Russian Accounting Standards, the company said in a statement Friday.

Revenue rose 22 percent to 81.9 billion rubles, up from 67 billion rubles one year ago, the company said. (Bloomberg)

Surgutneftegaz Profit Soars

Oil producer Surgutneftegaz said its profit climbed 55 percent in the first half as oil prices rose and the company increased production.

Net income rose to 52.4 billion rubles ($1.85 billion) from 33.9 billion rubles one year earlier, the Surgut, western Siberia-based company said in a report published Friday on its web site.

Sales increased 51 percent to 194.2 billion rubles, from 128.7 billion rubles in the first six months of last year. The company reported earnings under Russian Accounting Standards. (Bloomberg)

UES H1 Profits Down

Utility Unified Energy Systems' non-consolidated net profit and revenues to Russian Accounting Standards fell in the first half of 2005 from one a year ago, the company said in a statement Friday.

UES said first-half, non-consolidated net profit totaled 7.99 billion rubles ($281.6 million), down from a 10.6 billion ruble net profit reported a year ago. Revenues also fell 2.49 billion rubles to 14.57 billion in the first half compared with the same period of 2004.

The non-consolidated results reflect mainly the operations of the national power grid and exclude the results of partially privatized generating units. (Reuters)

Kirov Names Interim Boss

Georgy Semenenko, 23, was named acting general director of the Kirov Factory to replace his father, Pyotr, who died in a fall from a 15th-floor hotel window in the Black Sea resort of Sochi on Wednesday.

The company's board of directors named Semenenko to the position on Thursday, reported. He will occupy the post until the next shareholders' meeting, which is scheduled to take place in approximately one month.

Semenenko began work at the Kirov Factory, one of St. Petersburg's largest manufacturing and defense concerns, as an apprentice maintenance worker at the age of 18. He is general director of Petrostal-Invest, a daughter company of the Kirov Factory. (MT)

Avisma H1 Output Up 5.3%

VSMPO-Avisma, the world's biggest titanium producer, increased output 5.3 percent to 10,400 tons in the first half of the year, as exports of the lustrous white metal surged, Interfax said Friday, citing the company.

Sales rose 19 percent from the year-earlier period to 4.8 billion rubles ($169 million), as overseas sales surged 27 percent to 3.4 billion rubles, the newswire said. Net income in the period more than doubled to 1.4 rubles under Russian Accounting Standards, Interfax said. (Bloomberg)

Alrosa Q1 Profit Up 42%

Alrosa, the diamond monopoly that produces one-quarter of the world's rough stones, made a profit of 2.3 billion rubles ($81.2 million) in the first quarter, up 42 percent from the same period last year, Interfax said, citing the company's financial report.

Sales rose 24 percent to 20.3 billion rubles, and the company's stocks of uncut diamonds fell to 9.0 billion rubles from 9.2 billion rubles, Interfax said. (Bloomberg)

Basic Element's Aviakor

Oleg Deripaska's Basic Element plans to invest up to $30 million in its Samara-based Aviakor aviation plant in the coming years, the company's managing director for machine building, Pyotr Zolotarev, said Friday.

Basic Element, which bought Aviakor in 1999, has already invested $15 million in the plant, where the Tupolev Tu-154 passenger plane is manufactured. The plant's other main product is the An-140 passenger plane, designed in Ukraine in the 1990s. The An-140 retails at $9.8 million.

BasEl is in talks with 10 domestic carriers to sell 26 An-140 planes, Aviakor general director Sergei Likharev said. Likharev also said that talks were under way to sell 13 An-140s to the Federal Security Service. (MT)

Port Exports

LONDON -- Exports of gas oil and fuel oil from former Soviet ports in the Baltic and Black seas fell last month, but gasoline flows rose sharply as refiners in the former Soviet Union aim to maximize output of the high-value product, traders said.

Total gas oil flows were 120,000 tons, or 4.1 percent, lower in July versus the previous month at 2.79 million tons, according to estimates compiled by oil traders. The drop in gas oil volumes was due to a hefty 406,000-ton, or 22 percent, decline in export flows from Baltic ports, to 1.47 million tons last month. (Reuters)

BP Azeri Reserves

BAKU, Azerbaijan -- The Azeri-Chirag-Guneshli Caspian oil field in the Caspian Sea, operated by BP, has reserves of 940 million tons (6.89 billion barrels), up from a previous estimate of 740 million, an official said on Friday.

"When we signed 'the contract of the century' for exploration and development of ACG in 1994, we thought that there were reserves of 511 million tons of oil," said Khoshbakht Yusifzade, vice president of Azeri state oil firm Socar. "But exploratory drilling has made it clear that the reserves of this field are 940 million tons," he said.

He did not specify when the latest revision of ACG reserves took place. (Reuters)