In this issue:

Putin State of the Federation Speech in May?

Russia and Turkmenistan Sign Natural Gas Agreement; Ukraine Joins

Go-Ahead for Private Oil Pipeline to Murmansk

Merger Creates Oil Giant

Khodorkovsky of Yukos Pushes Line: USA, Not Europe

Crazy Hawks Tell Russia: Forget Europe, Get With Us!

Indonesian President in Moscow; Barter Deals Instead of Dollar

Pope John Paul II Could Visit Kazan, Russia

From Volume 2, Issue Number 17 of Electronic Intelligence Weekly, Published Apr. 28, 2003
Russia and Central Asia News Digest

Putin State of the Federation Speech in May?

The Russian President's annual message to the Federal Assembly, usually delivered in early April, has not yet been scheduled this year. Nezavisimaya Gazeta on April 22 cited May 14 as the latest date for Vladimir Putin's major speech, according to sources on his staff. A question mark hangs over Russian economic policy, which should be a major topic for Putin, as Minister of Economic Development and Trade German Gref took a sudden three-week vacation beginning April 21, amid rumors that he was seriously ill.

Russia and Turkmenistan Sign Natural Gas Agreement; Ukraine Joins

Russia and Turkmenistan have signed a large contract on gas cooperation, Russian press reported April 9. According to the terms of the agreement, Russia will purchase gas for $44 per 1000 cubic meters. The next day, Gazeta reported that the multinational Royal Dutch/Shell will close its office in Ashgabat, Turkmenistan "in the absence of prospects to participate in at least some realistic projects" in the fuel and energy industry of the republic.

Vedomosti reported April 18 that Ukraine will help the Russian company Gazprom to build a pipeline from Turkmenistan through Kazakstan to Russia, along the Caspian Sea coastline. Upon the signing of the long-term agreement on natural gas trade by Presidents Vladimir Putin and Saparmurad Niyazov of Russia and Turkmenistan, Ashgabat has acquired the obligation to pump an amount of gas that is supposed to reach 70-80 billion cubic meters annually. In order to avert any reduction of its own share of Turkmenistan's natural gas exports, Ukraine accepted Ashgabat's proposal to join the pipeline consortium. Vedomosti's source in Ukraine's Fuel and Energy Ministry reported that Ukraine will construct a part of the pipeline in exchange for a guaranteed amount of gas imports. "This will also allow us to engage our industrial facilities," he said.

Go-Ahead for Private Oil Pipeline to Murmansk

At an April 18 session devoted to oil industry policy questions, the Russian government officially approved the project for building an export oil terminal at Murmansk, as well as a pipeline from West Siberian oilfields to the new terminal. The project had been proposed in November 2002 as a private-sector undertaking, by the Russian oil companies Lukoil, Yukos, TNK, and Sibneft, later joined by Surgutneftegaz. In the interim, TNK has merged with British Petroleum and a Yukos-Sibneft merger brought into being the world's fourth largest oil company.

The Murmansk project has also been promoted as a means to make Russia a major oil supplier to the U.S. market. The Murmansk facility will be built to handle supertankers with a capacity of up to 300,000 tons. The pipeline to Murmansk is supposed to carry 80-120 million metric tons of oil annually.

Approval marks a policy reversal, insofar as Prime Minister Mikhail Kasyanov on a visit to Murmansk last January reiterated that all pipelines in Russia should be state-owned. As recently as April 15, former Transneft official Dmitri Savelyev told Moskovskiye Novosti that the Murmansk project would be unprofitable, especially as the United States moved to get access to more cheaply transportable Iraqi oil. Vedomosti of April 18 and other Russian media, however, report that the shift came from President Vladimir Putin.

The April 18 meeting was dedicated to the development of the oil and gas complex in Russia's northwest. During the discussion, Energy Minister Igor Yusufov expressed unusual enthusiasm for the northern project, saying that the present amount of oil extraction in Russia makes its construction inevitable. He emphasized that the Murmansk project should not be regarded as an alternative to port development on the Baltic Sea or the planned pipelines for oil exports to Asia. Also speaking in favor were Transport Minister Sergey Frank, Murmansk Governor Yuri Yevdokimov, as well as oil executives Vagit Alekperov (Lukoil) and Mikhail Khodorkovsky (Yukos). The relevant ministries were instructed to begin a feasibility study for the Murmansk project.

Merger Creates Oil Giant

Russia's #2 and #6 Oil companies, Yukos and Sibneft, merged in a complicated cash purchase and stock swap deal on April 22. The current oil production of the new venture is in the vicinity of 2.2 million bpd of crude oil, similar to the output of Kuwait, or that of ChevronTexaco and TotalFinaElf, the fourth and fifth largest oil companies in the world. The current production of Yukos is 1.6 million bpd, and that of Sibneft, 600,000 bpd. The proven reserves under Yukos ownership are 12.5 billion barrels of oil; Sibneft's are 8.2 billion barrels.

Khodorkovsky of Yukos Pushes Line: USA, Not Europe

At an international conference on Russia's relations with the G-8 (U.S., Britain, Canada, Italy, Japan, Germany, and France, plus Russia) held in Moscow April 11, Yukos Oil CEO Mikhail Khodorkovsky campaigned for Russia to restore relations with the United States as its highest priority, taking precedence over relations with Europe.

Khodorkovsky, who has made no secret of his desire to sell oil in the U.S., maintained that "there is no obvious real interest in Europe in cooperation and integration with Russia."

Crazy Hawks Tell Russia: Forget Europe, Get With Us!

Some of the most discredited failures of the American political scene have been peddling their expertise in Russia of late, taking to the pages of that country's liberal press to promote the notion of Russia's coming into the Anglo-American fold, in the wake of the invasion of Iraq. Among them are Dick Morris and Richard Perle. Dick Morris, the author in the Clinton-Gore years of a "triangulation" electoral strategy for the U.S. Democratic Party to court enraged suburban white males by emulating Newt Gingrich's GOP, gave an interview to the daily Izvestia on April 18 titled, "Dick Morris, President-Maker: We Need a Bush-Blair-Putin Coalition." Morris let loose a tantrum against France, saying that Russia had erred in "following Chirac" in opposition to the invasion of Iraq. He asserted that "Russia's future lies with the U.S., not with Europe," because "over the next 30 years, Europe will lose a quarter of its population; unemployment there is over 10%, and economic growth is low. But Russia and America are among the most dynamic states in the world." (Morris paid no attention to the decline of Russia's own population by hundreds of thousands each year during the past decade.)

Challenged with the fact that 60% of Russia's foreign trade is with Europe, Morris said, "That's an outdated point of view. Even if most of Russia's trade is with Europe, in the long term Europe's global role will fade."

For his part, recently demoted Defense Policy Board figure Richard Perle told Kommersant daily on April 21 that Russia should expect to lose all its pre-existing oil contracts with Iraq, which he indicated he thought was Russia's just deserts for opposing the war.

Indonesian President in Moscow; Barter Deals Instead of Dollar

President Megawati Sukarnoputri arrived in Russia April 21, the first Indonesian leader to visit there in 23 years. On the agenda in her talks with President Vladimir Putin and other officials were several large military aircraft sales and possible deals in the nuclear energy sector.

Indonesia has turned to Russia as a supplier of fighter jets, due to a four-year embargo by the United States. Sukarnoputri viewed a demonstration of the Sukhoi-27 and Sukhoi-30 planes at Zhukovsky Air Base, near Moscow.

Presidents Sukarnoputri and Putin signed agreements on April 22, which the Straits Times of Singapore characterized as "a bid to revive Soviet-era political and economic relations ... in the face of growing distance from Washington." "I asked for President Putin's support in finding measures to finance the cooperation, maybe through countertrades or joint ventures in military industries," Megawati was quoted by Antara as saying, with regard to the deal for two Sukhoi-27 and two Sukhoi-30 jet fighters, and Russia's support in modernizing Indonesian military equipment. The two leaders also signed a Memorandum of Understanding on space technology cooperation. Russia had offered to provide a floating nuclear power plant and construct a rocket and satellite launching pad in Biak, Papua.

Putin greeted Megawati, "We are happy to welcome you in Russia as the President and the daughter of your great father who is commemorated in this country. There is a record here of conferences dedicated to Sukarno and editions of books written by him." Putin accepted an invitation to visit Indonesia as soon as possible.

The Jakarta Post of April 24 reported that an important component of the bilateral deals reached was done as barter, rather than as dollar-denominated sales. Indonesian Agriculture Minister Bungaran Saragih hailed Indonesia's purchase of the Russian warplanes in exchange for rubber and crude palm oil. (For more, see ASIA NEWS DIGEST.)

Pope John Paul II Could Visit Kazan, Russia

The dream of Pope John Paul II, spiritual leader of the world's 1 billion Roman Catholics, of visiting Russia could come true this summer, according to Russian and Western wire service reports from the Vatican and Russian sources. On the way to a planned tour of Mongolia in August, the sources said, John Paul might stop in the Volga River town of Kazan, which marks its 1,000th anniversary this year. The Pope has declared his desire to return to the Russian Orthodox Church and the Russian people the 16th-century Icon of Our Lady of Kazan, which was stolen from Russia in 1904 and passed around Europe before ending up at the Vatican.

But the Pope does not want to step onto Russian soil without approval from the Russian Orthodox Church, Moscow Patriarchate. ROC relations with the Vatican remain tense over allegations of Catholic proselytization in Russia.

During his visit to Italy on April 18, Russian Prime Minister Mikhail Kasyanov expressed optimism about the possible visit, saying, "I think the efforts that have been made so far and those being made now to eliminate differences between the two Churches must be crowned with success. The Russian government is trying in every possible way to help eliminate the concerns that still exist on the path towards a rapprochement between the two Churches." Kasyanov spoke at a joint press conference with Italian Prime Minister Silvio Berlusconi, who said he had requested a meeting on the matter with Russian Orthodox Patriarch Aleksi II.

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