Russia eyes Qatari expertise in LNG

Russia eyes Qatari expertise in LNG

Russia's Energy Minister Sergei Shmatko says he wants to speed up an agreement which will see Qatar take part in the construction of a Liquified Natural Gas (LNG) plant on the Yamal Peninsula in Russia's Western Siberia.

The project is expected to produce 5 million tonnes of LNG a year starting in 2016, and reach 15 million tonnes by 2018. Qatar's Energy Minister Mohammed al-Sada says the country is keen to take part in the project. “Yamal is an important project and we are really interested in being effective partner to participate in the development of that project. We are active in discussions and negotiations with our partners.”

Shmatko noted that Qatar companies are major players on the LNG market and its expertise in arranging LNG shipments and the operation of LNG carriers could be of use in the project.

Europe is one of the core LNG consumers accounting for 18% of global LNG deliveries. In 2010 alone, LNG supplies to Europe rose 34%.Shmatko says the consumption and volumes of supply will be growing further. 

Until then global gas empires in the Middle East,  North Africa, Central Asia and Australia are expecting to boost production to meet the demand. According to U.S. Energy Information Administration forecast natural gas production will grow by over 700 billion cubic meters per year by 2035.

President of the Russian Gas Scoiety Valery Yazev, says the forecast could be even more optimistic as Middle East countries intend to increase gas extraction. "There are bolder forecasts based on the assumption of significant growth in gas production in Iran and Saudi Arabia. In that case, total production will grow by around 1 trillion cubic meters of gas,” Yazev said.

Ultimately, tough competition and a production surplus could result in price reductions and have an effect on profitability. Yazev says in this case Russia could cut the production to maintain prices.

At the same time the Eastern route for Russian energy resources grows in importance, especially since gas prices in Asia with delivery exceeded $540 per 1,000 cubic meters in September 2011.

Low cost pressure on Megafon

Russian mobile provider Megafon has reported 3Q 2011 net profit fell 11% to 12.475 billion roubles. The company puts it down to the costs of expansion and an increase in general running expenses.

Megafon, one of the country's largest mobile provider and retailer saw its sales revenue up by 8.3% to 63.4 billion roubles. The company reported growth of revenues in all segments saying the revenues from provision of cellular services in Russia increased by 8.8% while revenues from wireless broadband services increased by 47.6% to 7.6 billion roubles.

According to the company’s financial statement sales of mobile devices increased 92.7% to 2.397 billion roubles, but that was outweighed by the spiraling cost of sales up 74% to 2.77 billion roubles.

Ex-Finance Minister: New crisis at the gate

"The fuze is already burning," says Russia's former Finance Minister Aleksey Kudrin. He says the global economy is balancing on the brink of another recession and the second financial crisis is already upon us.

Talking at the International Sberbank Business Breakfast on Saturday, Kudrin took a pessimistic view of the future for the global economy. 

"The world has a chance to settle the crisis, but it is very slim," he said.  Kudrin insists that the "battle for Greece has been lost", and the focus should shift on bigger debtors such as Spain, Ireland and Portugal.  They will require another massive injection of around 3 trillion euro to keep them afloat. He advises European countries to join efforts.  

Talking about Russia Aleksey Kudrin sounded more positive, saying the country is currently better prepared  for more turmoil, than  most developed countries, as the state debt is low, at 12% of GDP, and considerable gold and foreign currency reserves in Russia form a safety net. 

However Kudrin warned Russia may face budget problems at some point, as it was unlikely to enjoy sky high oil prices in the next 3 to 10 years, barely beyond some $100 bbl. "And the plans to increase military spending by 3% of GDP in the coming years are not secured by anything," as it's planned to come at a cost of reduced financing for other sectors, as well as keeping Russian budget with a deficit, ex-Finance Minister said. 

Kudrin's 11 year management of Russia's finances earned him a prudent reputation, praised for saving oil revenues in the Stabilization fund which helped the country get through 2008 crisis. He was sacked in September after a row with President Dmitry Medvedev when he publicly voiced his disagreements with budgeting policies.

Registry To Open Property Ladder

The Russian real estate market is about to change with the introduction of a new price-monitoring system open to everyone.

 
The Russian Registry Office will make all real estate deals public. It will mean potential buyers will be able to get information about any given address, such as when was it last on the market and for what price it sold. All information will be sorted by kinds of property, location, and price and will be free to obtain. It will also give an average price for property per square meter in a given location and show price changes over the years. The system will be totally anonimous. By the end of  November 2011 the database will have all real estate deals made in Russia since 1999 available.

Realtors aren't convinced the data will be anything more than a general guide and are sceptical about it's usefullness. “Each particular space is a unique product. Two apartments in buildings next to each other can have absolutely different prices per square meter. So the data base will hardly help to understand anything about the prices for buyers.” says a real estate broker Karen Gyandzhuntsev.

Even though no names will be revealed to the public, lawyers say the information can be used in court to prove one’s credibility. But it will be useful for the tax office investigating evasion cases, although the database can't be used as evidence.

It's often the case in Russia where a smaller price is declared on a property when it is sold. This is due to tax reasons. For homes under a million roubles they can be sold without tax, but if they are worth more and are sold within three years the seller has to pay 13% tax.

Similar systems exist in many countries already.  In Russia it cost about $2 billion to create, but might help  save much more.