Conflict on Korean peninsula acquires global proportions / Russia joins an international effort to save Opel / Gazprom demands Turkmenistan reduce gas supply or price / Oil companies to get free access to Gazprom's pipelines
Vedomosti, Moskovsky Komsomolets, Rossiiskaya Gazeta
Conflict on Korean peninsula acquires global proportions
Sources in South Korea's intelligence service say North Korea has deployed a new long-range missile. Observers expect the missile to be launched on June 16, when the U.S. and South Korean leaders are to meet in Washington.
Russian analysts think Pyongyang does not intend to attack its neighbors, but is only trying to avoid the fate of Iraq.
The Taepodong-2 (TD-2) long-range missile is estimated to have a range of between 4,000 km (2,500 miles) and 10,000 km (6,215 miles), and can therefore reach the U.S. West Coast. Like the Taepodong-1, it requires a fixed launch site.
The missile has never been launched to such a distance, although Pyongyang did test-fire it on April 5, allegedly to orbit a communication satellite.
Anton Khlopkov, director of the independent Center for Energy and Security Studies in Moscow, said the range of North Korean missiles was greatly overrated. In any case, the main point is not the range but the weight of the warhead a missile can carry, he said.
So far, Pyongyang has been unable to create a small nuclear charge, Khlopkov said.
In his opinion, North Korea plans to launch the TD-2 to caution the West and its neighbors against meddling in its internal affairs when its leader, Kim Jong-il, dies.
Alexander Zhebin, head of the Korean Studies Center at the Russian Academy of Sciences' Far Eastern Institute, said the launch would not change the military strategic situation in the Far East.
"North Korea is not creating missiles because it wants to attack the United States or Japan, which is protected by the U.S. nuclear umbrella," Zhebin said. "It only wants to prevent a repetition of the Iraq scenario."
"The United States is using the nuclear non-proliferation agenda to reunify the two Korean states so as to have an assistant for conducting Iraq-type operations in the world," the analyst said.
Russia joins an international effort to save Opel
Russia, through its Sberbank, has decided to help Opel. The German division of U.S. General Motors, which launched bankruptcy proceedings yesterday, is in dire straits. The company's losses in taxes and interest payments will surpass $3 billion in 2009. It is hard to find a commercial justification for the deal which also includes the GAZ automaker, itself in a crisis, as an "industrial partner" from the Russian side.
Opel currently employs 55,000 people, and under the deal, job cuts at the company's German plants will be the lowest. Sberbank is investing in the manufacture of cars subject to a prohibitive import duty in Russia. Of course, it is quite probable that an additional agreement on industrial assembly might be concluded in the near future. Gaz spokesmen are already saying the company is ready to assemble Opel cars on their currently idle Volga Siber assembly line. Then, Nizhny Novgorod's Opel could be viewed as a Russian product. But this is a matter for the future anyway.
Representatives of Canada's Magna, which will manage Opel, speak of plans to corner 20% of the Russian market (Opel now has 3%). To bring about such an expansion, cars will have to go down drastically in price. This could be achieved only by making more components in Russia, but it will take four to five years at the least. Russia's car market is in trouble - in April 2009, it sold 53% less cars than in April 2008.
The project's business future is also very uncertain. Political factors alone stand out. Firstly, a feeling of pride in Russia, which has bought a stake in a well known company. Second, deep Russian-German friendship. Gerhard Schroeder, the former chancellor and now head of the Nord Stream supervisory board, did much to put the deal through. The special relationship between Russia and Germany was previously evident in the energy sphere. It plays into Russia's hands, which has to cope with strong resistance from the EU. All sorts of exchanges are possible in such a two-way relationship. Today Russia helps out German workers, while tomorrow Germany may help Russia's energy industry.
Gazprom demands Turkmenistan reduce gas supply or price
Russia's Gazprom has made its first official comment on the termination of gas purchases from Turkmenistan. The monopoly said that it had proposed that Turkmenistan either cut gas supplies by 80% in the second quarter or discount its price.
Until recently, Ukraine was a major market for that gas, before Turkmenistan raised the price in accordance with a formula used by Europe. Therefore, the fuel will now have to be marketed in Europe - a market which bought 39% less gas from Gazprom in the first quarter of this year.
"That is why we told them to either review the price or the volume," said Deputy CEO Valery Golubev.
However, the executive expressed hope that Russia and Turkmenistan would soon reach an agreement that would suite both parties.
In fact, little is known about the contract between Gazprom and Turkmenistan. The two countries signed a 25-year agreement in 2003, which served as a framework for "a long-term gas contract," Gazprom reported without disclosing the timeframe. Under that contract, Gazprom purchased 42.3 billion cubic meters of gas in 2008.
In January 2009, Gazprom and Turkmengaz signed an additional agreement on gas volumes and a floating price pegged on Gazprom's European contracts.
In the first quarter, Gazprom paid for the Central Asian gas $340 per 1,000 cu m, or 140% more than last year, Prime Minister Vladimir Putin said in January.
Turkmenistan should cut prices in proportion with the European price curve, said Troika Dialog analyst Valery Nesterov, adding that Gazprom's gas is selling at an average of $307 per 1,000 now, and is expected to drop to $255 in the third quarter.
Cutting supplies from Turkmenistan is also a valid option, he said. Russia is already cutting production, why shouldn't Turkmenistan do the same?
Moscow's negotiating position is stronger now, Nesterov said, as Turkmenistan has no alternative export routes. "Turkmenistan will have to make some concessions, either on the price or the volume of supplies, otherwise it will have no market for its gas at all. China will buy less than 4 billion cu m this year, which won't help much. At the moment, Russia and Turkmenistan are highly interdependent and therefore interested in cooperation," he concluded.
Oil companies to get free access to Gazprom's pipelines
The Russian government has promised oil companies equal access to Gazprom's natural gas transportation system, hoping that this will encourage them to increase utilization of associated petroleum gas (APG). However, the party that will definitely benefit from this is the gas export monopoly, which will buy APG cheaply and resell it at higher prices.
APG is currently produced together with oil and is then treated for commercial use, which implies removing liquid hydrocarbon fractions.
The government has drafted a program according to which at least 95% of APG should be utilized, but the oil companies currently flare much of it because they cannot comply with this requirement, including due to problems with access to gas pipelines.
According to Russia's second largest crude producer, LUKoil, last year Russian companies produced 5.24 billion cubic meters of APG. LUKoil utilizes only 71% of APG.
"Gazprom is not eager to meet our requests, which is why we have problems with transporting gas from the fields," said a source in a Russian oil producer.
Mikhail Zanozin, an analyst with the Uralsib financial corporation, said Russia was second only to Nigeria in terms of gas flaring - some 20 billion cu m of APG annually, according to official statistics. But unofficial data say that Russia leads the world in this indicator, flaring 40 billion cu m, or as much as France consumes annually, the analyst said.
The government's initiative regarding APG will help Gazprom rather than the environment or the oil companies.
"Gazprom sells its gas at some 2,000 rubles ($65.06) per 1,000 cubic meters on the domestic market, and buys it from crude producers even cheaper," Zanozin said. "It may even supply APG abroad at export prices (over $200)."
The oil companies spend a lot on gas treatment before pumping it into the pipelines, since Gazprom does not accept gas that does not satisfy its specific requirements.
"In fact, selling APG is often unprofitable for the oil companies, which therefore prefer to burn it even though they will be fined for this, rather than pay for its processing," Zanozin said.
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