From Volume 4, Issue Number 39 of EIR Online, Published Sept. 27, 2005
Russia and the CIS News Digest

Russia Freezes Gas Prices

Russian Industry and Energy Ministry spokesman Stanislav Naumov announced Sept. 19 that LUKoil, Sibneft, Rosneft, TNK-BP, Tatneft and Surgutneftegaz, the country's largest oil companies, have agreed to freeze prices on gasoline until at least the end of this year. Heads of the companies met on the matter that day with Minister of Industry and Energy Victor Khristenko, after a Sept. 9 resolution in favor of a price freeze for agricultural enterprises passed the State Duma unanimously, and Presidential Representative for the Far East Federal District Konstantin Pulikovsky warned that gasoline and fuel-oil prices were making it impossible to prepare for winter in that area. Duma First Deputy Speaker Lyubov Sliska of the majority Unified Russia bloc, had warned that the current harvest and upcoming winter crops planting were endangered by the recent gasoline price surge. Vagit Alekperov, head of LUKoil, told the press the move would stabilize prices and "make them independent of world prices," but Sliska and others worried aloud that the freeze is at too high a level to solve the economic problems involved.

In parallel with attempts to shield domestic oil users from inflated world prices, the Russian government is considering tax changes to try to bring more of Russia's own oil production onto the domestic market. Under consideration at the Ministry of Economic Development and Trade, Kommersant-daily reported Sept. 12, are a reduction in the tax on fossil fuels extraction or institution of a lower tax rate for lower-quality oil extraction (to boost output), and lowering the excise tax on high-quality oil (supposedly to encourage more investment in refineries in Russia).

Russia Seeks To Boost Sagging Oil Output

On Sept. 20, Industry and Energy Minister Khristenko sought President Putin's approval for "tax exemptions" for oil companies that explore new fields. In a partially televised cabinet meeting, Khristenko said that Russian crude output is growing at the twice the rate at which new reserves are being confirmed. After several years of double-digit growth in output from West Siberian fields, accomplished by using advanced technologies to extract oil from previously only partly exploited deposits, Russian oil production is expected to grow only 2-3% this year. Yuganskneftegaz, the main Yukos Oil production unit that was taken over by the state-owned Rosneft company, is experiencing zero growth.

Putin Meets Oil Execs in USA

During his visit to the United States, where he addressed the United Nations General Assembly and, on Sept. 16, met with President George Bush, Russian President Vladimir Putin also met in New York with top executives from major multinational oil companies. Conoco/Phillips, ExxonMobil, and Chevron were represented at a group meeting with Putin, followed by one-on-one discussions between the Russian President and some of the executives.

The meetings were behind closed doors. Russian press pointed to development of the Shtokmanovskoye offshore natural gas deposit in the Barents Sea, as one agenda item. Gazprom CEO Alexei Miller was in Putin's delegation. Conoco/Phillips is reportedly seeking to buy a 20% stake in LUKoil. Putin spoke publicly about the "huge potential" for Russian oil and natural gas sales to the United States, which currently buys only 2% of Russian output.

Russia Opposes EU Resolution on Iran

UN Security Council permanent member Russia announced its opposition to the "watered down" resolution on Iran, submitted by the European Union, on grounds it could open the way for referral of the nuclear program to the UNSC. "We are decisively opposed to an artificial exacerbation of the situation, including the transfer of this question to the UN Security Council," said Russia's statement to the International Atomic Energy Agency (IAEA) board in Vienna. Russian Ambassador Grigory Berdennikov commented on the second EU draft, saying, "It is a plane that does not fly."

The Russians had crossed out sentences citing Iran for non-compliance, because they could lead to UN Security Council referral, even though the UNSC was not named.

The U.S. may push for a vote, thinking it can get a simple majority (not guaranteed), but others, especially Germany, are insisting on consensus.

NED-Backed Group Pushes Separatism in Russia

The "democracy" neo-con crowd in the U.S. is criticizing the Russian government for bringing criminal and tax charges against the Russian Chechen Friendship Society, which gets money from the National Endowment for Democracy (NED) and other U.S. groups linked to Zbigniew Brzezinski's destabilization operations against Russia. And the New York Times is complaining about the Russian actions. On Sept. 2, the head of the group's Information Center, Stanislav Dmitrievsky, was charged with inciting "ethnic and religious animosity" for publishing articles by separatist leaders. The group was also charged, earlier, with not paying taxes.

The group gets money from the NED—about $170,000 since 2001. One Russian official says that the group gets foreign money to support "the interests of Chechen extremists."

Yekhanurov Confirmed as Prime Minister in Ukraine

Yuri Yekhanurov received the endorsement of the Supreme Rada (Parliament) as Prime Minister of Ukraine, receiving 289 votes—56 more than he needed. The Sept. 22 vote followed President Victor Yushchenko's dismissal of Yulia Tymoshenko's cabinet on Sept. 8. Tipping the balance in favor of Yekhanurov's confirmation was support from Regions of Ukraine, the parliamentary bloc led by Victor Yanukhovich, who initially won last year's Presidential election, but was ousted through the "Orange Revolution." On Sept. 19, Yushchenko met with Yanukovich for the first time in nine months, indicating that a new correlation of forces is coming together in an attempt to stabilize Ukraine. (See EIR of Sept. 23, 2005 and EIR Online of Sept. 20, for "The Orange Revolution Is Eating Its Own Children.")

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