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. Last Updated: 07/27/2016

Business in Brief

Oil Output Growth to Slow

Oil output growth will slow further in 2006 from around 2 percent expected this year and following explosive rises of previous years, Interfax quoted Energy Minister Viktor Khristenko as saying.

"As for 2006, our forecast is even less optimistic -- oil output growth may be less than 2 percent," Khristenko told President Vladimir Putin at a meeting on Tuesday.

Russian crude production stagnated at around 9.3 million barrels per day from September 2004 to May 2005 because of higher taxes and the demise of oil major Yukos. Production grew by 9 percent in 2004 after a 2003 record of 11 percent. (Reuters)

Law Allows Sibneft Sale

Antitrust laws allow Gazprom to buy Sibneft, as the gas company wouldn't dominate the oil market, Interfax said Tuesday, citing Federal Anti-Monopoly Service deputy head Anatoly Golomolzin.

The service isn't reviewing any request from Gazprom to buy Sibneft shares, the newswire reported, citing Golomolzin.

State-run natural gas producer Gazprom is requesting a $12 billion loan to use in buying a controlling stake in billionaire Roman Abramovich's Sibneft, bankers involved in the deal said Sept. 16.

Gazprom's press service declined to comment on the matter Tuesday. (Bloomberg)

BP to Give Stocks Partners

Oil company BP said it would pay about ?722 million ($1.3 billion) in stock to its partners in TNK-BP.

BP issued a total of 108.63 million shares to representatives of Alfa Group, Renova and Access, the London-based company said Tuesday in a statement.

BP in 2003 agreed to set up TNK-BP, now Russia's biggest oil exporter, and pay Alfa, Access and Renova $3 billion in cash and make three subsequent annual payments of $1.25 billion in stock. BP owns 50 percent of TNK-BP, which pools BP's Russian assets with those of its Russian partners. Alfa, Access and Renova own the other half. (Bloomberg)

UES Eyeing Power Machines

The board of power monopoly Unified Energy Systems, or UES, will discuss the purchase of a blocking minority stake in engineering firm Siloviye Mashiny, or Power Machines, on Sept. 30, a source close to the company said Tuesday.

The source gave no details, but UES chief executive Anatoly Chubais was quoted in March as saying his company might bid for Power Machines, which is controlled by Interros, the holding company of metals-to-banking magnate Vladimir Potanin.

Germany's Siemens was blocked by Russia's antitrust agency from taking over Power Machines earlier this year. The body then gave permission in June for a takeover by Russian aluminium tycoon Oleg Deripaska, who controls aluminum giant RusAl. (Reuters)

Power Rates Lag Inflation

The Federal Tariffs Service will discuss raising electricity prices in line with actual inflation, rather than with inflation as forecast by the government, Interfax reported, citing the head of the service, Sergei Novikov.

Unified Energy Systems chief executive Anatoly Chubais has called for such a change because inflation has outstripped the government's forecasts in recent years, the newswire reported.

Tariff increases are capped at 8.5 percent this year, based on an inflation forecast of 9.5 percent, the newswire reported, citing Chubais. The inflation rate may exceed 11 percent this year, Interfax said. (Bloomberg)

Malev Delay 'Not Political'

Hungary delayed the sale of its state airline last month on business grounds, not because one of the leading consortiums bidding was Russian, the Hungarian prime minister said Tuesday.

Prime Minister Ferenc Gyurcsany said it was wrong to look for political motives behind the delay in the privatization of Malev Airlines.

"We should not look for nor assume political reasons where there aren't any," Gyurcsany said after a meeting with Russian Prime Minister Mikhail Fradkov.

Hungary has made several unsuccessful attempts to sell Malev, which is burdened with debts of more than 30 billion forints ($148 million). (AP)

New Fighter Plane Deals

Aerospace company Irkut hopes to sign a deal to sell 12 to 28 SU-30 fighters to Algeria and 12 to 18 of its SU-30s to Thailand before the end of the year, President Oleg Demchenko said on Tuesday.

"The possibility of signing the Algerian contract is a 100 percent, the possibility for signing the Thai contract is 99 percent," Demchenko said at a presentation ahead of an offering by Irkut of credit-linked notes. (Reuters)

MMK Mulls Dividend

The board of directors of Magnitogorsk Steel & Iron Works, or MMK, is considering recommending a nine-month dividend and will meet on Nov. 29 to discuss the matter, MMK said on Tuesday.

MMK has already decided to pay an interim dividend of 65.5 kopeks per share for the first half of 2005. The total payout was to be 6.963 billion rubles ($243.8 million).

It was unclear whether the nine-month dividend would come on top of the first-half payment, and MMK's statement did not give details on its size.

MMK's management controls more than 99 percent of the company. (Reuters)

Usmanov's Iron Ore Plans

Billionaire Alisher Usmanov wants to gain control of two Ukrainian iron ore plants to help build a holding in the former Soviet Union that would rival BHP Billiton's output of the raw material.

Usmanov, Russia's 20th richest man with a fortune of $2 billion according to Forbes magazine, wants to establish the world's fourth-biggest iron ore producer. The holding would coordinate pricing to stop steelmakers in the region, such as Severstal and Ukraine's Kryvorizhstal, from buying iron ore cheaper than Western counterparts.

"We have to consolidate: iron ore consumers in the former Soviet Union push for lower prices and have a big energy advantage so they can put downward pressure on world steel prices," Usmanov said in a telephone interview. (Bloomberg)

Severstal Sells Bank Stake

Steel company Severstal sold its 8.7 percent stake in St. Petersburg-based Promstroibank, Vedomosti reported Tuesday, citing documents from the bank.

The stake was sold on the market and may end up with Vneshtorgbank, which owns one-quarter of Promstroibank and has said that it plans to raise that holding to 75 percent, the newspaper said, citing people familiar with the matter. Severstal, Vneshtorgbank and Promstroibank officials declined to comment, Vedomosti said.

The founders of Promstroibank, Vladimir Kogan and David Traktovenko, this month raised their direct holdings in the bank to about 20 percent each, Vedomosti reported, citing bank documents. (Bloomberg)

British Buy Media Company

LONDON -- Aegis, the British media buyer that is 6 percent-owned by French billionaire Vincent Bollore, agreed to buy Russian media company Komandarm for as much as 16 million euros ($19.5 million).

London-based Aegis agreed to buy 52 percent of Komandarm initially and the rest of the company by 2009, Aegis said in a statement Tuesday.

The price will include an initial consideration and further payments that will total as much as 16 million euros over five years if the company meets performance targets, it said. (Bloomberg)

Kopeika Brand Dispute

Food chain Kopeika has had the rights to its name disputed by a company that claims it registered the rights before Kopeika did, Vedomosti reported.

Moltekh, which claims it registered the right for the Kopeika brand name in 1997, is looking to have Kopeika's rights for the Kopeika Universam brand canceled, seeking to ban Kopeika from further using the brand, the newspaper said, citing Moltekh general director Oleg Prushkovsky.

Moscow-based Kopeika registered the brand in 1995, the company said, according to Vedomosti. The Russian patent agency will consider the claim on Oct. 24, the paper said. (Bloomberg)

Tesco Mulls Russian Entry

LONDON -- British retailer Tesco is seeking opportunities in Russia as it expands its business, finance director Andrew Higginson said Tuesday.

"We've got a good business in Central Europe, and we're always looking at other opportunities as you go past Central Europe and into the former Soviet bloc," Higginson said in an interview. (Bloomberg)