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. Last Updated: 07/27/2016

Business in Brief

Shipyards Sale Denied

United Industrial Corporation on Thursday denied reports that it was looking to sell its St. Petersburg-based Severnaya Verf and Baltiysky Zavod shipyards to the state.

"UIC considers these enterprises strategic assets and doesn't plan to sell them. It is holding negotiations neither with state bodies nor private companies," the company said in a statement.

Yet the firm is willing consider various forms of partnership if the state puts them forward, Dmitry Morochenko, a spokesman for Mezhprombank, said by phone Thursday.

Kommersant reported Wednesday that the state arms trader Rosoboronexport was in talks to buy the shipyards.

UIC, which manages noncore assets of Mezhprombank, owns 72.23 percent of Severnaya Verf and 88 percent of Baltiysky Zavod. (MT)

Total Warned Again

The Natural Resources Ministry has given France's Total a new warning over its work on the Arctic Kharyaga oil field.

Total is producing 20 percent to 30 percent less crude than it should, and has not submitted a plan to improve output, the ministry said in an e-mail Thursday. The ministry first criticized Total for not meeting production targets last month.

Total dispatched CEO Thierry Desmarest to Moscow to meet with Natural Resources Minister Yury Trutnev on April 30, Total spokesman Paul Floren said by telephone Thursday. Total has rejected last month's complaint, saying that local officials had prevented the company from investing in the project.

Total also promised that it would pay the Russian government $14.5 million in mid-May, its first share of profit from Kharyaga. Floren declined to say whether the payment had gone through. (Bloomberg)

Digital TV Proposal

A proposal to create a government commission for digital television and radio development has been submitted for the Cabinet's approval, IT and Communications Minister Leonid Reiman said Thursday.

The commission would develop a program for transferring the country's cultural gems, many of which are currently stored on audio and video tapes, to digital format, Reiman said, according to his ministry's web site.

When formed, the commission would also work to "provide the entire Russian population with access to digital television and radio broadcasting infrastructure and reduce the digital divide among the regions," Reiman said.

First Deputy Prime Minister Dmitry Medvedev is expected to become the commission's chief, Itar-Tass reported Wednesday, citing a government source. (MT)

$1Trn Economy in '07

Russia's $800 billion economy will top $1 trillion in 2007 for the first time since the Soviet Union collapsed 15 years ago, as soaring world oil and natural gas prices leave the nation awash in cash, Fitch Ratings said Thursday.

"Fitch expects Russia to become a trillion-dollar economy in 2007, a more than quintupling in size since post-crisis 1999," analysts Edward Parker, David Heslam and Douglas Renwick wrote in a report e-mailed to news organizations. (Bloomberg)

Yukos Urges Mazeikiu Sale

Yukos said it wants to sell its stake in Lithuania's Mazeikiu refinery by May 26 or else lose a potential buyer.

The unidentified purchaser agreed to keep its offer for Yukos open until May 26, a Yukos statement to U.S. Bankruptcy Court in New York said Wednesday. Yukos asked a U.S. judge to lift an order blocking the sale of its 53.7 percent stake in Mazeikiu.

"If no sale is achieved to the purchaser, there is a significant danger that the underlying asset will be nationalized," the statement said.

Poland's PKN Orlen is reported to be the potential buyer, the Baltic News Service reported today without saying where it got the information.

Yukos wants to sell its stake in Mazeikiu to the Lithuanian government or one of two unnamed bidders.

Eduard Rebgun, who is overseeing the company's bankruptcy case in Russia, filed a petition in April with the New York court seeking to block the deal from going forward without his consent. (Bloomberg)

CB Reserves Surge $5Bln

Russia's foreign currency and gold reserves, the world's fourth-largest, surged $5 billion in a week to a record amid higher prices for oil and natural gas, the country's biggest exports.

The reserves climbed to $236.1 billion in the week ended May 12, after surging $14 billion in the previous two weeks, the Central Bank said in an e-mail. The gain was the 25th in a row.

Russia, the world's biggest energy supplier, is awash with cash from oil and gas sales after the price of Urals, its main export blend of crude, more than doubled in the last two years.

The government expects Urals to average at least $54 this year, compared with a $40 initial forecast. Urals declined 1.6 percent Wednesday to $63.21.

The Central Bank plans to add at least $70 billion to its stockpile of foreign currency and gold this year after adding $58 billion last year.

Russia also has a windfall fund where it keeps above-target oil revenue. That fund rose to 1.8 trillion rubles ($66.2 billion) in April, from 1.68 trillion in March. (Bloomberg)

Ineffective Rate Hikes

The Central Bank said Thursday that recent short-term interest rate hikes have had little effect and failed to set a floor for historically low money market rates.

The Central Bank has twice increased its deposit rates this year in an effort to curb double-digit inflation and has said it sees room for raising them further.

But the bank said an analysis of other financial indicators such as yields on sovereign and corporate ruble bonds, rates on nondeliverable forwards and the Mosprime interbank rate found no evidence of any impact from higher rates.

"The current level of interest rates on above-mentioned central bank instruments is beyond the money market's 'sensitivity level,'" it said.

"Raising rates on one-day and one-week deposits did not prevent the Moscow Interbank Actual Credit Rates falling below 1 percent and 1.5 percent in March accordingly," the Central Bank said in a policy review published on its web site. (Reuters)

Siemens Wins Rail Order

Siemens won a 476 million-euro ($610 million) train order from Russian Railways, or RZD, Interfax reported Thursday, citing RZD CEO Vladimir Yakunin.

RZD will pay 276 million euros ($354 million) for 60 high-speed trains and another 200 million euros to service them for 30 years, Yakunin told reporters in Sochi Thursday, Interfax said. The trains will be delivered between 2008 and 2010, Interfax said.

The German and Russian companies were due to sign the contract late Thursday, Interfax cited Yakunin as saying, without elaborating. (Bloomberg)