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. Last Updated: 07/27/2016

Business in Brief

Kudrin Upbeat on Inflation

Russia is still hoping to bring inflation toward a record low of just over 6 percent despite a decision to raise gas and power prices in 2007, Finance Minister Alexei Kudrin said Thursday.

Earlier this week, the government raised its inflation forecast for 2007 to 6.5 percent to 8.0 percent from the previous 6.0 percent to 7.5 percent after allowing Gazprom to raise prices by 15 percent next year from an earlier plan of 8 percent.

The gas firm, which says it is posting huge losses on the domestic market and is surviving only due to its exports to Europe, will be allowed to raise prices by 14 percent in 2008 and 13 percent in 2009. Electricity prices will respectively rise by 10 percent, 9 percent and 8 percent in 2007, 2008 and 2009. (Reuters)

Reserves Hit $243.3Bln

The country's foreign currency and gold reserves, the world's fourth largest, rose for a 27th week to a record $243.3 billion as oil and gas prices traded close to all-time highs.

The reserves climbed $6.6 billion in the week ended May 26, from $236.7 billion a week earlier, the Central Bank said in a statement Thursday.

The reserves added $600 million in the previous week. (Bloomberg)

Medvedev Visits Algeria

Gazprom, Europe's biggest natural-gas supplier, said deputy chief executive Alexander Medvedev completed a three-day visit to Algeria to discuss possible joint projects.

Medvedev met Abbas Facal, secretary general of Algeria's Energy Ministry, and Mohamed Meziane, CEO of Sonatrach, Algeria's state-run energy group, Gazprom said Thursday in a statement.

Russia and Algeria together supply about 70 percent of the European Union's gas imports. (Bloomberg)

Naftogaz Budget Approved

KIEV -- Ukraine's government approved the 2006 budget of the state oil and gas company, Naftogaz Ukrainy, with a deficit of $891 million.

The budget provides for $9.6 billion in earnings and $10.49 billion in spending, the company said.

Ukraine's government increased household gas prices 25 percent May 1 after Russia doubled the price for the gas it sells its neighbor. It wants to raise prices again on July 1. (Bloomberg)

Sakhalin-2 Spending

The government approved a 2006 spending plan of $2 billion for a liquefied natural gas project on Sakhalin island led by Royal Dutch Shell.

The spending for Sakhalin-2, the world's largest oil and gas project, is in line with a plan laid down in 2003, the Industry and Energy Ministry said on its web site.

Development costs of the project will double to as much as $20 billion from an earlier forecast because of soaring metal prices, higher contractor fees and a falling dollar, Shell said last year. The government, which wants to bring down Sakhalin-2 costs, is still considering the extra spending, the statement said. (Bloomberg)

TNK-BP to Invest $3Bln

John Browne, the chief executive officer of BP, said the company's TNK-BP joint venture will invest $3 billion in Russia in each of the next few years, Financial Times Deutschland reported, citing an interview with Browne.

Browne said the money would be invested in the expansion of BP's oil and gas production in Russia, the newspaper reported. (Bloomberg)

Lithuania OKs Refinery Sale

VILNIUS, Lithuania -- Lithuania's parliament approved a $851.8 million sale of its stake in the Baltic states' only refiner to Poland's PKN Orlen, as part as its goal to keep the company out of Russian control.

Lawmakers in Vilnius, the capital, voted 97 to 1 to sell the state's 30.7 percent stake in Mazeikiu Nafta to Orlen. The sale follows Orlen's agreement with Yukos last month to buy a 53.7 percent stake in Mazeikiu for $1.49 billion.

The Polish company is buying Mazeikiu from Yukos, which faces bankruptcy, and Lithuania to prevent rivals, such as Rosneft and Kazakhstan's KazMunaiGaz, from using Mazeikiu as a vehicle to enter Poland's fuel market. (Bloomberg)

Trubnaya to Raise Output

Trubnaya Metallurgicheskaya Kompaniya, the world's No. 2 maker of steel pipes, plans to increase annual output 43 percent by 2010 to about 4 million tons of pipes.

The company expects to produce 2.8 million tons of pipes this year and export 800,000 tons, Sergei Bilan, the company's deputy general director for marketing, said Thursday at an industry conference.

Trubnaya said April 4 that its pipe output rose to 701,000 metric tons in the first quarter of 2006, a 7.8 percent increase compared with the same period last year. (Bloomberg)

Auto Investment Forecast

Foreign auto producers, including Volkswagen, Europe's largest carmaker, are planning to pump $1.8 billion into Russia's economy amid growing demand for new vehicles, Industry and Energy Minister Viktor Khristenko said.

Foreign carmakers will be producing 250,000 to 300,000 units in Russia as early as the end of 2007, Khristenko told a Cabinet meeting Thursday.

Foreign carmakers produced 42,400 units, or 11 percent of the market, in the first quarter, according to ministry data. (Bloomberg)

Sibir's Output at Record

Sibir Energy, a London-based company that extracts oil in Russia, said its average daily production rate has reached a record.

The company is pumping 30,000 barrels per day, Sibir said in a statement Thursday. More than two-thirds of that comes from a joint venture in Siberia with Royal Dutch Shell, the company said.

Sibir and Shell equally own the Salym development. The $1.25 billion project started production last year. The partners' goal is output of at least 165,000 barrels per day. (Bloomberg)

Steel Stockholder Plans IPO

Inprom, the country's second-largest independent steel service center, plans to raise $60 million to $65 million by listing 30 percent of its shares in Moscow in the fourth quarter of 2006, a senior company executive said Thursday.

Inprom general director Igor Konovalov said the privately owned company would invest $45 million this year and $350 million by 2010 to upgrade warehouses and service centers throughout the country.

He said the IPO would take place "as soon as we complete the process of consolidating our assets." (Reuters)

Military Sales to Canada

OTTAWA -- The Canadian Armed Forces could ensure the success of its mission in Afghanistan by buying or leasing Russian helicopters and transport planes, an optimistic team of arms salesmen from Moscow said Wednesday.

The team, the first of its kind to visit Canada, came both with a draft treaty on military-industrial cooperation and the knowledge that it would be hard to persuade a close U.S. ally and neighbor to buy Russian arms.

"We don't have any illusions here. … Wise people say that rather than depend on one person you should be friends with two," Alexander Skobeltsyn of the agency that oversees military-technical cooperation said. (Reuters)

Poland Exports Threat

WARSAW -- Poland may obstruct food exports from the European Union to Russia and Ukraine unless the 25-member bloc pushes to lift an embargo by the two countries on Polish meat, Gazeta Wyborcza reported.

Polish Agriculture Minister Andrzej Lepper said his country may prolong the delivery time of EU food products by conducting more rigorous inspections and reducing the number of border crossings through which food can be shipped, the newspaper reported. (Bloomberg)

Estar Shopping in UK

The Estar metals company is looking to acquire a British-based metals company, its general director, Andrei Saltanov, said Thursday, Prime-Tass reported.

Saltanov said that he was eyeing a specific British metals company, but he did not name the company. He also said Estar would open a $150 million liquid steel plant in the Rostov region by April 2007. Production is estimated at 750,000 tons of steel per year.

As of the end of 2005, Estar and the coal miner Russian Coal were controlled by Vadim Varshavsky, chairman of Russian Coal's board of directors. (MT)