RusEnergy

July 06, 2009 - Bloomberg by William Mauldin - Russian shares fell for a third day as oil retreated below $65 a barrel and a report showed the country’s economic slump deepened. OAO Gazprom, the world’s biggest natural-gas producer, and OAO Tatneft, the oil company in Russia’s republic of Tatarstan, dropped more than 4 percent. The 30-stock Micex Index retreated 3.7 percent to 938.38 at 1:59 p.m. in Moscow as all 28 members declined. The ruble weakened to the lowest against the dollar in a month. Crude fell to a five-week low in New York as a stronger dollar limited investor appetite as an inflation hedge and concern deepened the global economic recovery will falter. Russia is the world’s largest energy supplier, and oil and gas producers make up 57 percent of the Micex Index. “The downtick in oil prices will doubtlessly put pressure on stocks,” said Ron Smith, head of research at Alfa Bank in Moscow. Russian stocks entered a bear market last month after the Micex fell more than 20 percent in three weeks from this year’s high on June 1. The index is up 51 percent this year. The equity market “downside” is protected since oil and gas stocks are currently trading as if oil had fallen to about $50 a barrel, Smith said. The Russian economy contracted at an annual 6.4 percent in the second quarter after a 5.4 percent drop in the first quarter, according to VTB Capital’s gross domestic product indicator released today.
Ruble Weakens: Russia’s gross domestic product will probably shrink 7.3 percent this year, according to Bank of America Corp., which earlier forecast a contraction of 4.9 percent. The ruble dropped 0.6 percent to 31.4686 to the dollar, the weakest since May 21. It was little changed at 43.8289 against the euro. Gazprom, the country’s biggest publicly traded company, dropped 4.3 percent to 148.10 rubles on the Micex Stock Exchange. Tatneft slipped as much as 4.7 percent to 112.51 rubles. OAO Novolipetsk Steel, the steelmaker controlled by billionaire Vladimir Lisin, fell 5.3 percent to 65.27 rubles, breaking a six-day streak of gains. KIT Finance cut its recommendation on the shares to “hold” from “buy,” citing the stock’s advance. “It’s a good opportunity to switch from Novolipetsk” to OAO Magnitogorsk Iron & Steel, Moscow-based KIT Finance analyst Kirill Chuiko said by telephone. “Given the potential raw- materials weakness, which we don’t believe will disappear, the profit of Magnitogorsk will be more stable.” Magnitogorsk, Russia’s third-biggest steelmaker, dropped 3.2 percent to 15.013 rubles. OAO GMK Norilsk Nickel, Russia’s biggest mining company, slumped 5.3 percent to 2,663.03 rubles. Nickel for three-month delivery dropped 3.7 percent to $15,605 a metric ton on the London Metal Exchange.
London Debut: OAO RusHydro, Russia’s state-controlled hydropower producer, traded at $4 upon listing global depositary receipts on the London Stock Exchange today. The company’s shares in Moscow rose 1.6 percent to 1.256 rubles (3.99 cents). Each RusHydro GDR represents 100 ordinary shares of RusHydro. OAO Sberbank, Russia’s biggest bank and the largest holder of ruble deposits, sank 3.8 percent to 37.05 rubles. A weaker local currency can lead to Russians withdrawing or converting ruble deposits, the bank’s primary means of funding.

3 July 2009 - Power Engineering Int. - E.ON said it welcomes the Russian government's announcement that it will systematically continue the envisaged liberalization of the Russian electricity market. Another 20 per cent of the market have been opened up to trading since 1 July. As a result, 50 per cent of electricity prices for wholesalers and industrial clients in Russia are determined by market mechanisms. "With this step the Russian government has shown great reliability in fulfilling its assurances. This is an important positive signal for foreign investors and another milestone on the road to complete liberalisation of the Russian electricity industry. "Confidence in Russia as a business location is strengthened by the fact that, even in times of a global economic crisis, the Russian government is adhering to the path taken towards a market economy. This also leads to greater planning certainty for our investments," said Wulf Bernotat, CEO of E.ON AG. Vyacheslav Sinyugin, Russia's Deputy Energy Minister, said: "The latest phase in liberalization of the power market is an extremely important signal for our economy and above all for investors who invested in the electricity market during its restructuring." E.ON, which has been cultivating economic relations with Russia for over 35 years, has been the largest foreign investor in the Russian energy sector since it took over the OGK4 electricity company. E.ON is also the biggest customer for Russian gas and is involved in gas production in Russia through its participation in the Yuzhno Russkoye gas field. The company operates five power stations in Russia (currently with a capacity of approx. 8 GW) and has launched an ambitious new-build programme. As a result, it will be one of the leading power suppliers in Russia with an installed capacity of approximately 11 GW. The Russian power market has been liberalized in stages since 2007, but retail business is exempted from liberalization. This market liberalization is to be completed by early 2011.