WEDNESDAY MARCH 26, 2014
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Business Report RUSSIA&INDIA THE ECONOMIC TIMES IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA
DIPLOMACY: Putin thanks Indian PM for restraint and understanding Moscow’s concerns
STATISTICS
Ukraine: India walks a tightrope, backs pragmatic approach
Ruble/Rupee dollar rates
India will be opposing sanctions and is proactive in groupings like BRICS to avert escalation of the West-Russia standoff over the Crimea impasse as it will impact global cooperation over issues like Iran, Syria and Afghanistan. AJAY KAMALAKARAN RIBR
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Russia-Ukraine trade turnover ($ billion) DPA/VOSTOCK-PHOTO
aced with an unenviable task of choosing sides in what is increasingly looking like the biggest global confrontation since the end of the Cold War, India has decided to take a pragmatic approach to the Ukraine crisis. After a joint parliament session in which Russia accepted the accession request of the former-Ukrainian region of Crimea, Russian President Vladimir Putin called India’s Prime Minister Manmohan Singh to apprise him of the developments and thanked India for its position. “We highly appreciate India’s restraint and objectivity,” Putin told the parliament before calling the Indian prime minister. According to India’s Ministry of External Affairs, the prime minister “expressed his hope that all sides would exercise restraint and work together constructively to find political and diplomatic solutions that protected the legitimate interests of all countries in the region and ensured long term peace and stability in Europe and beyond.” While India is not in a position to express outright support for Russia’s incorporation of the Crimean peninsula, an area that was controversially ceded to Ukraine by then Russia’s president Nikita Khrushchev at a time when the break-up of the USSR was unimaginable, New Delhi has made it clear that it will not support sanctions against Moscow. A week before the Crimea referendum, India’s National Security Advisor Shivshankar Menon described Russia’s interests in Ukraine as “legitimate.” This remark went down well with the establishment in Moscow, which faced stern criticism from the West. New Delhi can empathise with Moscow, which has been concerned about a potential NATO presence in the strategically important Black Sea region, close to its base in Sevastopol. India was understandably peeved in 1986 when the US wanted to construct a powerful Voice of America transmitter in northern Sri Lanka, which New Delhi believed could be used as a covert listening post in South Asia. India has also been wary of a potential Chinese presence close to the Maldives and Sri Lanka. Despite the genuine understanding of Russian concerns in the Black Sea, India is likely to maintain silence on the incorporation of Crimea. There are clear parallels to Crimea and the integration of Sikkim into India, although the referendum held in the former Buddhist kingdom was recognised by the United Nations. The South Block also understands that the Kremlin was in no position to reject an overwhelming demand in Crimea for reunification with the
Russia has appreciated India for its objective stand on the Ukraine issue.
Timeline NOV. 21, 2013 ● Protesters take to the streets of Kiev after Ukraine’s President Viktor Yanukovich’s government suspends preparations for an association agreement with the E.U. FEB. 18, 2014 ● Protests in Kiev turn violent. Over the next three days, more than 100 people are killed in clashes between police and protestors. FEB. 21, 2014 ● An agreement is signed between Yanukovich and representatives of the opposition forces, but the next day, Yanukovich flees to Russia. FEB. 26, 2014 ● Pro-Russian forces begin to take control of Crimea. MARCH 16, 2014 ● A referendum is held in which the majority of participants vote to secede from Ukraine. MARCH 18, 2014 ● Agreement is signed on the accession of the Republic of Crimea to the Russian Federation. The pact envisages a transitional period until January 1, 2015.
“traditional motherland.” New Delhi’s vague statement about the respect for national sovereignty is in line with the stand it had taken on issues such as Kosovo and the 2008 RussiaGeorgia war. BRICS Diplomacy The BRICS members are expected to come up with a joint statement after their representatives meet on the sidelines of the Nuclear Safety Summit in The Hague. India’s primary concern is the possible return of the Taliban and a spike in terrorism in the wake of the withdrawal of foreign combat troops from Afghanistan. New Delhi is banking on cooperation between the NATO and Russia to minimise this threat. Russia and the West also made major progress on the issue of Iran, something which is in danger of being derailed at this juncture. A potential lifting of sanctions on Teheran would help India step up its supplies of Iranian crude without inviting the wrath of Washington. Cooperation on Syria is also likely to be hit if tensions rise between Russia and the West. Reports from the western press have indicated that the NATO is worried about a potential Russian annexation of the breakaway Moldovan republic of Transdniestria, where an overwhelming majority of residents want to join Russia. Since the republic,
Crimea referendum vote which broke away from Moldova in 1990, doesn’t share a border with Russia, the only way Russian troops can access the country by land is through eastern Ukraine. Such a scenario is highly unlikely but the NATO, which is looking for a presence in Ukraine, may just use this as an excuse to set up base in the country, triggering more friction with Moscow. India remains in a tight spot since its relations with the West are also important and despite the recent cooling of relations with the US, New Delhi’s trade and defence ties are growing with Washington. The EU is also a major trade partner and India is negotiating a trade agreement with the EU. A new Cold War is, however, unlikely since that would require Beijing to play along. China’s bilateral trade with the US stood at $562 billion in 2013. While China has been increasing its engagement with Russia both bilaterally and in multilateral groupings like the BRICS, it is unlikely to be dragged into a Russia versus the West confrontation. If that were ever to happen, India would be left with its toughest ever foreign policy choice.
Crimea’s ethnic makeup
LISTINGS: Russian retailers rethink their offerings while the government mulls privatisation
Can Russian IPOs survive Ukraine? EXCLUSIVELY AT RUSSIA-DIRECT.ORG
Tensions between Russia and Europe and the US have hit markets and caused Russian firms to take a hard look at their plans to list on stock exchanges in 2014 DAVID MILLER SPECIALLY FOR RIBR
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lans for Russian companies to list billions of dollars worth of shares on global exchanges have been thrown into question by the conflict over Ukraine. Both state-owned and private companies are mulling plans to sell fresh equity to investors in 2014. Russian Prime Minister Dmitry Medvedev said at the start of the year that the government hopes to raise more than $5 billion in 2014 selling stakes in state-held firms. “We have rather serious plans to raise around 200 billion rubles ($5.5 billion) from privatisations this year and I hope the plans will be fulfilled,” Medvedev told a government meeting in February, only days before the crisis in Ukraine reached new heights. Yet even before the dispute over Crimea began to impact Russian markets, Medvedev had sounded a note of caution. “We should not drag it out,” he said. “But at the same time we should consider the economic circumstances in the world and in the country.” Russian firms are still hoping to benefit from the global boom in initial
public offerings even as relations with Europe and the US — and the investment communities who reside there — have become deeply complicated. Total IPO volume in Europe, Middle East and Africa hit a record in January as six deals raised $3.1 billion, making it the best start to the year of all time, according to Dealogic, a data provider. Indeed, the Russian IPO market appeared to reopen in 2013 with several significant companies listing stock. A total of $7.9 billion was raised via nine public offerings. Those firms included state-controlled Alrosa, the world’s biggest diamond miner, which operates vast mines in Siberia. VTB, Russia’s second-largest bank, raised over $3 billion in a secondary offering in May 2013. Moscow-based lender Tinkoff Credit Systems was another big earner in 2013, pulling in just over $1 billion selling shares on the London Stock Exchange. Those offerings had followed statecontrolled Sberbank, the largest bank in Eastern Europe, listing a 7 percent stake in 2012. Russian firms had hoped to keep the ball rolling into 2014, with a focus on retailers as Russian consumers flex
their rising spending power. The Euromonitor Research group has predicted Russia will become the largest retail market in the world by 2018. Russian retailer Lenta, the country’s second-biggest supermarket chain, was first out of the gate in 2014, rais-
A broad slump in emerging markets and slow economic growth affected Russian equity prices even before the crisis over Ukraine. ing about $1 billion in February in a London listing. Other big retailers are now eyeing the market carefully. Among those with plans to sell shares include the Russian Cash & Carry unit of German retailer Metro AG, as well as Detsky Mir, Russia’s biggest children’s retailer. The conflict over Ukraine hit the share prices of Russian companies listed in Moscow, London and New York, and helped push the ruble down to record lows.
Yet a broad slump in emerging markets and sluggish economic growth had been weighing on Russian equity prices even before the crisis over Ukraine. Indeed, some investors had been arguing that low equity valuations in emerging markets were at a point where they were becoming attractive to investors searching for a bargain. “If you look at the balance of trade that our clients are doing, they’re buying,” Gary Dugan, the chief investment officer in Asia and the Middle East for Coutts & Co., the wealth management group for Royal Bank of Scotland, had told reporters in February. “There’s been an appetite for Asia and for Russia after the sell-off.” Russian shares were trading at a 25 percent discount to their emerging market peers as of the end of 2013. As the year began, Russian stocks had the cheapest valuations among 21 emerging-market economies monitored by a leading business magazine. Shares on the benchmark were trading at 4.5 times projected 12-month earnings compared to a multiple of 10.4 for the wider benchmark MSCI Emerging Markets Index.
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P |O |L |I |T |I |C |S WEDNESDAY MARCH 26, 2014
ECONOMY: Isolation in the West could make Russia turn to India for trade expansion and investment in infrastructure
NEWS Rosneft CEO offers India oil projects, supplies
OLEG PRASOLOV / RG
Igor Sechin, the CEO of Russia’s biggest oil producer OAO Rosneft, met on Monday in New Delhi with several senior Indian officials to push for further cooperation between Russia and India in the oil and gas sector. “India is a very important country for Russia. We have a very efficiently run project with ONGC...now we want to expand our cooperation,” Sechin said. RIBR
Russia turns East as ties sour with US, Europe VIKTOR KUZMIN RIBR
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s relations with the US and Western Europe sour over the conflict in Ukraine, Russia is turning eastward. Now Russian officials are planning to boost cooperation with Asian economies and are increasing investment in Eastern Siberia as well as the Far East. Although the process of deepening and expanding economic and trade ties with Asia has been in the works for years, the fallout over Ukraine and Crimea may provide a new impetus to speed up the existing policies, including ramping up energy exports to Asian countries. Russia has spent billions building the East Siberian-Pacific Ocean oil pipeline that now connects Russian crude fields to Asian energy consumers. In 2012, Russia held the Asia-Pacific Economic Co-operation (APEC) summit in Vladivostok, which laid the foundation for partnerships with Asian economies. Subsequently, exchanges of high-level visits were held with China and India; trade with Japan exceeded trade between Moscow and the US and Turkey; South Korea, Indonesia, Vietnam and other countries in the region have also become important partners.
Indian company to supply egg powder to Customs Union India has received the right to supply egg powder to the Customs Union. Russian agriculture watchdog Rosselkhoznadzor said Egg Products Export Ltd, which produces egg powder, has been included in the register of suppliers of controlled products to the Customs Union.The decision was taken on the basis of a safety guarantee given by the Indian Trade and Industry Ministry’s export inspection council. RIBR
India, Russia to recognise higher education diplomas In an attempt to increase educational and student exchanges, Russia and India will sign an agreement on the “mutual recognition of higher education diplomas,” Sergey Karmalito, Senior Counselor at the Russian Embassy in India, told RIBR. “The text of the agreement is ready and practically approved. We are confident that we will sign it in a year.” RIBR
This approach will now help sustain Moscow’s economic stability, if sanctions by the US and the EU are introduced. Moreover, India could become the main beneficiary as there is huge untapped potential to scale up bilateral trade between the two countries. India is probably the tastiest morsel in the world market for Russian companies as of now and in the coming years Moscow will be interested in a significant intensification of business cooperation with Delhi, says Maxim Pleshkov, a senior analyst at RusRating rating agency. In this context, some steps have been taken, including the creation of a special research group to study the issue of opening a free trade zone between India and the Customs Union in the beginning of March. Its objectives were the definition of the concept of the zone, its scope, the main areas of negotiation, the expected consequences for the participants’ economies. “Working on an FTA with India is a bit slower than it is with other partners for a simple reason. India’s economy is significantly larger than that of New Zealand or even Vietnam, and in order to form the desired mandate of the joint study group, many issues should be explored. This work is being carried out, and soon the issue will
AFP/EASTNEWS
The Ukraine crisis has provided a fresh impetus to Russia to bolster ties with Asian economies
Russian Deputy Prime Minister Dmitry Rogozin (right) and Union Commerce and Industry Minister Anand Sharma (left) agreed to set up a joint study group to examine the feasibility of a free trade agreement (FTA) to boost bilateral trade and investment flow.
be discussed in the Customs Union, which coordinates such processes,” a well-placed source in the Ministry of Economic Development of Russia, told RIBR. Experts doubt whether Moscow and India will be able to rapidly expand their energy trade – Russia’s main export commodity. It is, however, still possible to reorient its oil exports to the East. This requires two to three years, says Rusenergy partner Michael Krutikhin. For this, it is necessary to expand the Eastern Siberia–Pacific Ocean project pipeline and its approaches. With gas, it is more difficult. There are other win-win possibilities. India may be interested in Russian high-tech products and its advanced technology. This applies primarily to weapons, ships for the Navy, aircraft for the Air Force, export of missile technology and co-operation in the field of
sumer products can be expected,” said Leonid Shliapnikov, General Director of “Sovtransavtoekspeditsi”, part of the Sovtransavto holding. This could involve goods such as clothing, shoes, accessories, hardware, electronics and other household items. Shliapnikov is confident that the growth will be in both the B2B-segment and B2C segment through e-commerce and catalogue sales channels. Experts believe the cooling off with the West will also have some positive impact on the jewelery market in India. Russian companies own a large share of the global market for nickel, gold, and the platinum group metals. So it could soon take a shine to India.
clusion: that there is no chance of a breakthrough if Russia remains on her present course as she faces extinction. Therefore either Russia will succeed in bucking the current trend and will be forced to take this to heart, or some kind of confrontational balance will be established, orientated towards nonwestern partners. Why is Russia being so decisive? Firstly, Russia feels that, not without reason, that the world has long since grown tired of Ukraine and nobody believes in its future. Going by this logic, there will be no full-scale mobilisation of the western world. Secondly, the state of Ukraine is such that any attempt by the West to use her as a base from which to confront Russia would just completely destroy the dilapidated infrastructure. Thirdly, the true attitude of the non-western world to events is ambiguous. Nobody though is able to officially recognise the transfer of part of a state to another jurisdiction without the agreement of the ‘motherland’. But many people though are watching with interest how for the first time since the break-up of the USSR, the US has been thrown an uncompromising challenge. Fourthly, the tightening of western policy stimulates political initiatives, which were launched much
earlier in Russia: the nationalisation of the elite, the turn towards the east, a reduced dependence on the state of western markets, an ideological dissociation from liberal values and so on. The collapse of Ukrainian politics, were it to happen for any reason, would be a shock for Russia on a scale that is hard to predict. The precedent set by the Crimea could act as a boomerang. Russia supposes that in the light of a tangible set of ‘scandalous practices’ that have long since held sway in international law, the main thing is the capability to achieve goals; the legal arrangements are less significant. Moscow has started to play a game on a very large scale. The risk is huge but the potential jackpot is considerable. The old world order will stop functioning completely and a new one will soon start to take shape. Nothing came of Gorbachev, who first spoke about the need for a new world order back in 1986. Vladimir Putin is on his way back to this same fork in the road, to try again.
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EXPERT
Behind the Ukraine gamble: Why is Moscow so decisive?
Russian firm set to build India’s largest hydroelectric plant
FYODOR LUKYANOV Foreign policy analyst SHUTTERSTOCK/LEGION-MEDIA
Within a week, RusHydro, Russia’s state-owned company, will sign a contract for the design of the first stage of the construction of the largest hydroelectric power station in India with North Eastern Electric Power Corporation Limited (NEEPCO). RusHydro, together with the Institute Hydroproject, won the competition for the design of the first phase of the 3.5 GW in India, Asia’s second largest hydroelectric project. RIBR
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he referendum in Crimea has drawn a line under an era that has lasted more than 25 years. It can be traced back to the actions of General Secretary of the Central Committee Communist Party Soviet Union, Mikhail Gorbachev, between 1988-1989. The philosophy of the last Soviet leader consisted of ending systemic confrontation, a denunciation of the division of the world into blocs and a recognition of some sort of universal, ‘human’ ideological basis. Since that time the global landscape has changed beyond recognition. But Russia, having officially succeeded the USSR, has in many ways followed this
same philosophy. The collapse of the USSR ended dreams of an equitable convergence and mutual ideological enrichment. The right to discuss universal human values and the rules of international relations went to the winning side. These rules, fundamentally accepted as default, raised suspicion in Russia even at a very early stage when its foreign policy was extremely weak. The conflicts with the West grew more severe over the years - the Caucasus, Yugoslavia, Iraq, from the ‘colour revolutions’ to the war with South Ossetia, and the Middle East. The Ukrainian crisis has redrawn familiar boundaries. The implosion
of Yanukovich’s regime in Kiev and the subsequent legal and political confusion has served as a trigger for Moscow’s exceptionally tough response. The development of the Ukraine crisis is both fortuitous and logical. Fortuitous, because if she were not so corrupted and plundered by talentless officials, there would have been no such failure of her political system. Logical because Ukraine has always been seen as the most important bridgehead, upon which Russia’s physical security as well as the balance of power in Europe depended. This does not mean that the Kremlin’s goal is the restoration of a country it lost in 1991. There is talk of a virtual re-enactment of the end of the ‘Cold War’. In Russia, there has always been a perception that the USSR did not just lose, but surrendered and left the battlefield. Against this backdrop, the Russian government has come to this con-
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CRIMEA CRISIS: Visa bans, freeze on assets of prominent Russian officials
INS Vikramaditya: Sevmash chosen for servicing contract
Sanctions game: Who will pay bigger price? The US and Europe are reacting with threats that could trigger unexpected consequences. NIKOLAI GORSHKOV RIBR
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he wait is over; the nail-biting in Moscow in anticipation of crippling Western sanctions over Crimea has given way to mockery of the measures announced so far by Washington and Brussels. The US and EU sanctions target a limited number of prominent, and not so prominent, Russian officials with visa bans and asset freezes. But the individuals concerned deny having foreign assets, if only because of Russian laws that forbid them to have property abroad. “I don’t have accounts abroad.
What interests me in the US are Tupac Shakur, Allen Ginsberg, and Jackson Pollock. I don’t need a visa to access their work,” says President Putin’s adviser Vladislav Surkov, a target of the western sanctions. Russian observers, however, warn against euphoria as both the US and EU have signaled they may cast the net wider and target Russia’s strategic industries as well as business interests with close links to the Kremlin. Addressing both houses of the Russian Parliament on March 18, President Vladimir Putin noted that “Western politicians are trying to scare us not just by sanctions, but by the
SHUTTERSTOCK/LEGION-MEDIA
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India has chosen Russia’s Sevmash shipyard for post-warranty servicing of the INS Vikramaditya aircraft carrier. A protocol was signed at the 23rd meeting of the naval subgroup of the Indo-Russian Inter Governmental Commission on Military Technical Cooperation in Goa on Wednesday, March 12. An additional agreement will be signed in May. RIBR
nuclear energy. Russian companies may also participate in the creation and reconstruction of Indian infrastructure, including the construction of national highways, and underground oil and gas pipelines. “The coal mining and engineering industries in India, as well as various mutual investments have potential. For example, India has participated in the reconstruction of the commercial port of Novorossiysk. Indian companies have invested in the Russian pharmaceutical industry, processing of diamonds, textiles, tea, tobacco, and other agricultural products,” said Pleshkov. The recent Russian ruble devaluation will assist in the expansion of trade. “Against the background of the Russian currency devaluation, the growth of Russia’s trade with Asian countries in many segments of con-
For now, the US and EU sanctions are mainly targeted at the so-called “offshore elite”. spectre of rising internal problems. Do they count on a worsening of the economic situation in our country which would trigger off popular unrest?” For Valentina Matviyenko, the speaker of the upper house of the
Russian Parliament, another target on the sanctions list, the interdependence of Russian and Western economies makes it impossible for the West to punish Russia without hurting itself. Radoslaw Sikorski, the Polish foreign minister and one of the architects of the Eastern Partnership with Ukraine that has triggered the current crisis, is on record as saying that since Europe is closer to Russia, it will pay a bigger price for sanctions against Moscow. According to the European statistics agency, the EU is Russia’s top trading partner with a turnover of 267.5 billion euros in 2012. The US came in fifth with a paltry 18.9 billion euros – well behind China, Belarus and Ukraine. A lot has been said about Europe’s dependence on Russian oil and gas. Any reduction in Europe’s consump-
tion of Russian raw energy would deplete Moscow’s coffers. However, the biggest loser would be Ukraine, which earns upto $4 billion in fees for the transit of Russian gas to Europe. Should this diminish or stop, Ukraine would lose badly needed income. The ensuing hardship and mass protests would eclipse anything Ukraine has experienced so far. Konstantin Zatulin, director of the Institute of the Commonwealth of Independent States, believes any future Western sanctions will remain limited to punishing certain individuals in Russian business and political circles, the so-called “offshore elite” who do hold assets and interests abroad. The aim, he says, will be to induce these people to mount pressure on the Kremlin to bow to Western demands.
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E |N |E |R |G |Y WEDNESDAY MARCH 26, 2014
ENERGY: Rosneft partners with ExxonMobil to tap offshore fields; upstream spending by Russian firms may rise to $60 bn in 2014
Russian firms join the race to tap shale
Russia’s proven oil and gas reserves
Russian oil and gas companies are rushing to tap reserves in Arctic and offshore fields to sustain the country’s high energy output DAVID MILLER Specially for RIBR
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hale seems to be the new buzzword. The Russian government has introduced tax incentives for oil firms to develop the country’s shale oil and gas deposits. Russia has the largest shale oil reserves in the world at about 75 billion barrels of technically recoverable reserves, according to the US Energy Information Administration. The push to tap fresh deposits comes after decades of production in conventional oil fields in the country’s traditional production base in Western Siberia. Russia, the world’s biggest energy exporter in combined oil and gas, saw oil output hit a post-Soviet record high of 10.5 million barrels a day in 2013, up 1.4 per cent from 2012, according to the Russian Energy Ministry. Yet, the shale revolution in the US is causing shock waves throughout the energy world, including among top exporters like Russia and Saudi Arabia. New recovery techniques have unlocked vast quantities of energy, raising output at a historic rate. The increase in US energy liquids output “has been nearly unparalleled in the history of world oil,” the New York-based energy
consultancy PIRA said in a report. Only Saudi Arabia in 1970-1974 raised its production faster. PIRA has predicted that the US will gain a widening lead over both Russia and Saudi Arabia in terms of total oil output until 2020, and maintain its lead past 2030. Flattening growth levels at home and increased competition from the US have put pressure on Russian officials to unlock new reserves.
offshore arctic Prirazlomnoye field in December. Located in the far northern Pechora sea, 60 kilometers from dry land, the project employs an iceresistant, super-reinforced stationary platform weighing 506,000 tonnes. It is the first such stationary platform to ever be used on the Arctic shelf. “We have pioneered Russian Arctic shelf development,” says Gazprom CEO, Alexey Miller. “There is no doubt that Gazprom will continue advancing in the Arctic.”
Flattening growth levels at home and increased competition from the US have put pressure on Russia to unlock reserves
Upstream spending Tapping more difficult reserves will, however, require higher capital commitments. Upstream spending by Russian and former-Soviet Union companies may rise by 11 per cent in 2014 to about $60 billion, led by the oilfocused Russian majors Rosneft, Lukoil and Gazprom, according to an industry report written by Barclays analysts. “While all eyes will be on Rosneft and Exxon’s Arctic programme, we note there is an expected backlog of over 90 offshore Russian Arctic wells to be drilling by 2020. As a result, we expect meaningful exploration to move forward in the Russian Arctic regardless of this summer’s results due
Arctic shelf reserves Russian oil major Rosneft has teamed up with US partner ExxonMobil to tap offshore fields in Russian seas. The two firms are scheduled to begin drilling together, the first wells in the far-northern Kara Sea and in the Black Sea this year. Russian state-owned gas giant Gazprom began producing oil from its
to the strategic nature of the reserves for Russia,” say the Barclays analysts. “Investments associated with developing the Russian Arctic have been estimated to be upto $100 billion over the life of the projects.”
been focused in the super-massive Bazhenov formation, which spreads across some 570 million acres in western Siberia. Exxon and Rosneft are working together in Bazhenov too. “We are not only looking at new geographical regions of operation but are also studying the potential of difficult-to-produce reserves in traditional oil-producing regions,” Rosneft CEO, Igor Sechin, said in a statement,
Big shale While the shale revolution started in the US, it may soon spread to Russia. So far, much of the attention has
referring to the company’s partnership with Exxon. London-based oil major BP predicted in January that while the US will continue to lead in shale oil production, shale development will advance significantly in both Russia and Latin America over the next two decades. The analysts at Barclays said additional state support for shale development may also be on the cards.
ATOMIC POWER: Kudankulam II to become operational in December; to benefit 20 million households across southern India
KNPP Unit I: Ready to take on Indian summer The commercial operation of KNPP Unit I is set to bring relief to power-starved southern states. RIBR
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s summer sets in on the southern Indian plains, the demand for power is likely to go up in Tamil Nadu, with an emerging middle class relying more on air conditioning. Fortunately, the commercial operation of the first 1000 MW reactor of the Russian-built Kudankulam Nuclear Power Project (KNPP) will begin in April, in time for the Indian summer. India’s first pressurised water reactor attained criticality in July 2013 and commenced electricity generation in October. It is expected to reach its full capacity of producing 1,000 MW of power soon. The commissioning of the plant was delayed largely due to protests spearheaded by the People’s Movement Against Nuclear Energy. The project operator, Nuclear Power Corporation of India Ltd (NPCIL), has been going slow on the commercial operation just to ensure that every safety and security precaution is being undertaken scrupulously. Officials say the second 1000 MW unit of the project should be ready by December 2014. Twenty million households in southern India are
expected to benefit from the electricity generated by the two units. The KNPP has progressed to producing energy, and comes despite an on-going campaign to stop work on the project by a large group of protesters, who according to the country’s Intelligence Bureau, are being funded by foreign NGOs. There is indeed a strange logic from those in the West backing anti-nuclear activists in India, while not aggressively taking on the industry back home: A 10-year old in California should be able to charge his iPad using electricity generated from a nuclear power plant, but Indian school children should study in the dark due to the country’s rippling power shortages! Needless to say, it’s a twisted logic at best, and needs to be exposed. Safety issues have been repeatedly addressed by those who are better informed. Even Dr A P J Abdul Kalam, a former president of India and a wellknown nuclear scientist, has batted for the plant, which is fitted with dualaction localising and protective shells that are able to withstand the impact of an airplane. The plant’s hydrogen re-combiners prevent explosions from within. It also has a passive heat
India plans to build 19 nuclear power units with a combined capacity of 17,400 MWe by 2017. Eight of them will be built in cooperation with other countries. India signed a contract to build the Kudankulam NPP with the USSR in 1988, but construction only started in 2002. In 2010, India and Russia agreed to build at least six power units. The project involves 1,000-megawatt pressurized water reactors being constructed by the Nuclear Power Corporation of India Ltd and Russia’s Atomstroyexport company, a subsidiary of Russian company Rosatom. The first unit at Kudankulam was commissioned on July 13.
PRESS PHOTO
AJAY KAMALAKARAN
19 n-plants by ‘17
An agreement on the units 3 and 4 of the KNPP can be expected soon. extraction system that cools the reactor even in the absence of an external power supply, and a device to localise molten material in the active zone. The plant’s so-called “melt trap” prevents the release of radioactivity beyond the unit even in the event of a hypothetical failure of the reactor vessel. In addition, the station will operate a desalination system in full compliance with all requirements. Essentially the first two units of the KNPP will be supplying the power-starved states of southern
India with a safe and reliable source of energy.
$2.5 billion, as is widely believed, that would work out to around Rs 6 per kilowatt-hour (KWh) for the third and fourth units of KNPP, while American companies that want to have a presence in the Indian market are looking at Rs 12 per KWh. With India’s economy expected to rebound from a recent slump and energy demand continuing to rise, the country has set a target of producing 14,600 MW of nuclear energy by 2020-21 and 27,500 MW by 2032.
KNPP: Units 3 and 4 Negotiations for the third and fourth units are well and truly in the final stage and an agreement can be expected before the next Lok Sabha elections in May. Media reports suggest that Russia is driving a hard bargain when it comes to the cost of the project. But even if the costs of each new unit was to be
A “roadmap” for the construction of about 16-20 nuclear reactors with Russia’s assistance was approved during the-then Prime Minister Putin’s visit to New Delhi in 2010. Once the agreement for the third and fourth units at Kudankulam comes into place, the focus will shift to building the remaining reactors under the roadmap. It should also be noted that the KNPP provides India with another opportunity to reduce its energy deficit: spent nuclear fuel. Nuclear waste can be recycled and reprocessed to generate electricity. A 1998 agreement between Russia and India allows the latter to retain the spent nuclear fuel from Kudankulam. Uranium constitutes about 96 per cent of spent fuel, while plutonium around 1 per cent. India has the capability to reprocess spent nuclear fuel with operating processing plants, based on solvent extraction process, in Trombay, Tarapur and Kalpakkam. Additional facilities for re-processing are being constructed with the active participation of Indian industry. With obvious economic benefits from projects like Kudankulam, India is set to remain committed to cooperation with Russia in nuclear energy, irrespective of which party or coalition will be in power after the upcoming general elections.
With the Indian market becoming competitive, Russian firms target the armoured vehicles sector. DMITRY LITOVKIN RIBR
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he Indian armament market may be getting more competitive, but Russian military enterprises are brimming with high hopes. At DEFEXPO 2014, the international exhibition of land weapons held in New Delhi recently, Russian military firms showcased their prowess and hoped that Russian armoured vehicles will remain the basis of India’s tank fleet. India’s inventory in ground forces includes about 600 T-55 tanks, 1,925 T-72M1 vehicles, and 640 T-90S tanks. It also includes 169 Arjun Mk.I tanks designed in India. The fleet is expected to be replenished with another 248 tanks of the next modification – Arjun Mk.II. However, this will not happen
until 2025. Until that time, the main strike force will be formed by Soviet and Russian tanks T-72 and T-90. Russian enterprises are, therefore, focused on these two armoured vehicles today. For example, the developer and manufacturer of Russian armoured vehicles, the Scientific and Production Corporation Uralvagonzavod, offered India several options to buttress its units. The first one entails modernisation of the T-72 tank and involves an increase of the survivability of the vehicle and its crew during combat in an urban environment. Designers have equipped the commander’s hatch with a special armoured cab, protecting the commander when firing the machine gun. The vehicle has additional spaced armour modules on the sides and on the
turret. There is a system for electronic suppression of guided anti-tank weapons. The vehicle has a 2A46M5 gun and an automatic loader, providing the possibility of firing missiles at a range of 5 km. The gunner’s sight with optical thermal channel provides for the
BMPT-72, a new modification of the tank support combat vehicle, known for its firepower, has been presented to India possibility of working day or night in all weather conditions. Thanks to this, the characteristics of the vehicle are on the level with the best world standards of modern armoured vehicles. In addition, it is proposed to install a 1,000 hp engine to improve the mobility. However, the most serious novelty
is the presentation in India of a new modification of the tank support combat vehicle, the BMPT-72. It was nicknamed the “Terminator” in the Russian Army for its firepower. The machine’s design is based on the chassis of decommissioned T-72 tanks. The modernisation operations can be performed, using the modernisation kits supplied by Uralvagonzavod. The main advantage of BMPT-72 is that, being created on the platform of the T-72 tank, it provides a unique opportunity to extend the life cycle of vehicles, thus raising the combat capability of the army to a new level quickly, and at a low cost. During the modernisation, a double unit of two 30 mm automatic guns with the battle reserve of 850 shells, two launchers of guided anti-tank Atak missiles with cumulative or thermobaric warheads, the latest 12.7 mm Kord machine gun with a battle reserve of 2,000 cartridges are installed on the T-72 tank.
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Refurbishing armoury: Russian firms offer to modernise India’s T-72 & T-90 battle tanks
The T-90 main battle tank is a further development of the T-72. The vehicle is less vulnerable to anti-tank weapons, as compared with a tank. The combat capabilities provide the assured destruction of a tank or a permanent firing position of the enemy at a range of upto five thousand meters. BMPT-72 can hit low-flying helicopters, as well as crews of antitank batteries and personnel of the enemy. Military experts say that
one BMPT is equivalent to a motorised infantry platoon armed with BMP-3, in terms of combat effectiveness. The designers emphasise that all proposals for the modernisation of armoured vehicles are based on experience of recent military conflicts. The Russian military has already decided to modernise its own fleet of T-72s to the level proposed by Uralvagonzavod.
IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA
F |E |A |T |U |R |E WEDNESDAY MARCH 26, 2014
ODYSSEY: Italian team Toro Rosso’s boss upbeat, says the 19-year-old is an unusually talented, industrious, and a totally focused driver
Kvyat revs up for F1 Grand Prix in Sochi T
he countdown has begun for the first-ever Russian Formula One Grand Prix in October this year. The track, designed by German architect Hermann Tilke, is near some of the Winter Olympics facilities on the Black Sea resort of Sochi, and all eyes are on the 19-year-old Russian racing prodigy. On March 16, Daniil Kvyat, affectionately called “The Russian,” by Red Bull mentor Helmut Marko, had a tryst with destiny. On that fateful day, at the first F1 Grand Prix in Melbourne, the Russian teenager replaced Australian Daniel Ricciardo for Italy’s Toro Rosso team. For him, this was his dream coming true. Ricciardo, on his part, is moving to Red Bull, where his fellow driver will be Sebastian Vettel, who performed for Toro Rosso in the 2007-08 season. And Jean-Eric Vergne, 23, will stay with Toro Rosso. Now Kvyat looks set to steal the limelight. Born in 1994 in the Russian city of Ufa in the southern Urals, Kyvat developed a love for speed and racing early on in life. “When I first came to this sport, I couldn’t drive, but I taught myself. It’s difficult now to describe how I felt when I first experienced speed,” he reminisces. Kvyat had his first-ever race in the winter of 2005 in Sochi, and he won. But as his career in Russia was not progressing in the way he wanted it to, he and his family moved to Italy seven years ago. “Our Red Bull youth team was based near Rome. Flying between
Ufa-born Daniil Kvyat (left) will be Russia’s second Formula 1 driver ever. be the manager of former F1 driver Vitaly Petrov, is confident Kvyat will soon start feeling at home in F1. “Of course Kvyat will have some difficult times at first,” says Kosachenko. “He is a young driver with limited F1 experience, and he will have to compete against real pros. More than half the F1 drivers have been at it for years. Besides, the team is changing and migrating to new engines. But Daniil is unusually talented and industrious.
He’s totally focussed.” Besides, Kvyat speaks English, Spanish, and Italian fluently. Most in the Toro Rosso team are Italian, so he’s not going to have any communication problems. Russia has had only one F1 driver so far. Vitaly Petrov spent three seasons in the championship, two with LotusRenault (2010-11 and 2011-12) and one with Caterham (2012-2013). His best result was a third place in Australia in 2011.
NOSTALGIA: The irresistible charms of Russian salad, winter and culture
Home away from home for wives of Indian Navy officers Months after INS Vikramaditya headed home, spouses of Indian sailors recall their time in Russia
‘We need long-term plans, not miracles’ ALESSANDRO BELLI RIBR
ELENA KROVVIDI
RIBR
S
SHIVA KESHAVAN
India’s luge pioneer talks to RIBR about his vision for scaling new heights at the next Olympics
ELENA KROVVIDI everodvinsk is better known in India as the place where the aircraft carrier INS Vikramaditya was refurbished, but for the wives of Indian sailors, the port city will be etched in their memory as the place where they fell in love with Russia. Neelam Ruhani, for one, relished every moment of her stay in Russia. She enjoyed visiting the Fine Arts Museum and Malye Karely in Arkhangelsk, located 35 km from Severodvinsk, where they lived. “Russians are very fond of live performances at the theatre, and since tickets are affordable, a stunning range of options is available to everyone, including opera, symphony concerts, musicals, ballet, and drama,” she says excitedly. For Reshma Khan, the wife of an Indian sailor trained in Severodvinsk, the courteousness of Russian men is what made her feel at home. “While traveling in a bus, I was always offered a seat by Russian men, which shows their deep-rooted chivalry,” she says. Her favourite places in Severodvinsk are the War Memorial, City Gate, Lomonosova Square, Yagri Beach and the St. Nicholas Church. It’s not that life was all smooth sailing. Initially, some of them had a difficult time adjusting to the local food and weather. For Ruhani, whose family is vegetarian, Russian cuisine at first became a challenge.
INTERVIEW
Formula One track will pass near key facilities of the 2014 Winter Olympics, including Iceberg Winter Sports Palace, Bolshoi Ice Palace and Shayba Ice Arena.
At kindergartens in Severodvinsk, Indian students participated in all school activities, bringing much joy to their parents and teachers. Initially, she cooked using ingredients brought from India, but later she took a liking for Russian salads. Simi Matthew, another sailor’s spouse, recalls how much she enjoyed cooking traditional Russian dishes like blini, borsch and soliyanka soup. And Khan feels vegetarians should not despair as there is plenty on offer, including
It was a joy to see children adapt so quickly and to learn to speak Russian fluently. paneer, and a variety of vegetables. For some, the fabled Russian winter felt harsh in the beginning, but soon they took to it. Khan recalls: “When I first reached Severodvinsk three years ago, I was startled to see snow everywhere. But once I was fully equipped for it, the Russian winters were indeed quite pleasant.” For Matthew, Khan and Ruhani, it was a
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joy to see how their children adapted to all things Russian. “In about two months of joining school, the children could understand Russian, and soon they were able to converse with their friends and teachers,” says Matthew. A beaming Khan adds: “They enthusiastically took part in various school activities like music, dance and sports. My son also learnt to be independent and to eat and dress on his own there.” Head of one of the kindergartens in Severodvinsk, Galina Tsvetkova, and her deputy, Irina Zaytseva, recall fondly their interaction with Indian children. “You should have seen these kids in action! They were real firecrackers! They learnt to speak Russian so fluently, and their accent was adorable!” says Zaytseva. But all good things come to an end. So when the time for these Indian students to return home arrived, their Russian friends presented them hand-made farewell gifts. “We hope they will remember us just as we remember them,” Tsvetkova says wistfully.
Sochi-2014 was your fifth Olympic Games. Did you like your trip to Russia? We had an amazing experience in Russia. Everything was new to us, because it`s a very different country. Russia has some of the best infrastructure in the world. The luge track was definitely one of the best in the world. The natural beauty of Sochi is incredible, especially the entire Caucasus Mountains. But the best thing about the games was the ambiance. All the people who were there, especially young people from all over Russia - volunteers - used to try to speak to us. Every day we had interactions, we made a lot of friends. That was what the Games were about actually - building links between people. Since that was successful, the Games were good. Do you have any plans on how you’re going to prepare for the next Olympics? We started planning for the Olympic Games two years ago but for various reasons, the proposals did not materialise. Now with all the publicity that has come to the Winter Olympics after Sochi, many people are interested in having a long term plan. In India, we have an opportune time for formulating these plans as we have a new Olympic Association. We have a new president and new secretary general and they can make a difference. I spoke to the Secretary General and he is interested in a planning long term for the next
Olympics. We will plan for the men’s, women’s, doubles’ and team competitions in luge, and I hope that everybody will be able to qualify.
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RIBR
AFP/EASTNEWS
Moscow and Rome all the time was inconvenient,” Kvyat recalls. “Besides, there’s no motor-racing base in Russia. Italy, in contrast, is home to racing, and is a true mecca of motor sports. I knew if I really wanted to become a professional racer, I had to move to Italy.” The move proved to be wonderful for Kvyat’s career. He had his first full Formula Renault 2.0 season in 2011 and won several races. In 2012, he won the Formula Renault 2.0 ALPS season and was named the driver of the year by the Russian Automobile Federation. Last year, he took part in six races in the Formula Three European Championship, bagging one grand prix and making it to the podium five times. That Kvyat was going to replace Ricciardo was obvious from last autumn. On January 31, he took part in the testing of Toro Rosso’s new cars in Jerez, driving nine laps and coming 10 out of 11. “The basic qualities are in place,” says Toro Rosso’s team boss Franz Tost. “Daniil can be sure that we will use all our training experience to give him the best possible start to his Formula 1 career.” “At Toro Rosso we like the ‘adventures’ with young drivers! We’ve already worked with Daniil a couple of times. It started with the young driver’s test at Silverstone, where he managed good lap times, then we had an aero test in Vairano with him last week, where he did 350 kilometres.” “Daniil is a very talented driver. This is evident both from his results in the junior series and from his karting performance,” says an upbeat Tost. Oksana Kosachenko, who used to
ALEXANDER ERASTOV
IMAGO/LEGION MEDIA
All eyes will be on the Russian prodigy when Sochi hosts the 16th Grand Prix in Formula 1 racing from October 10 to 12
You mentioned long-term plans. Does that mean for the next four years? Well obviously, I will have to do a lot of this planning by myself because I have a bit of experience about what is needed. So the main focus should be to have talent scout camps in Himachal Pradesh, Kashmir, Uttarakhand and other places if possible and select three boys, three girls and two doubles teams that can start training. I can also help to coach them initially. Once we do the scouting of talent, we need training, which will mean traveling to luge tracks that are used for international and Youth Olympic competitions. It will also mean having a full team with a coach, physiotherapist and manager. If we get them the right equipment and proper funding, I am sure they will perform well in four or in eight years, or whatever time they need to be groomed. In India, we believe a lot in miracles, but we should try to plan in advance instead of doing things at the last minute. What can India learn from the Sochi experience? Albert Demchenko is 42 years old, he won a silver medal. The person who won the bronze, Italian Armin Zoeggeler, is 41 years old. I am 32 right now, so age is on my side. I still have some time, and I also have quite a bit of experience because I have been doing this now for a long time. That is
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Dreaming big... A five-time Olympian, the 31-year-old Shiva Keshavan is the first Indian to compete in luge at the Winter Olympic Games. He set a new Asian speed record at 134.3 km/h and won a gold medal in Asia Cup 2011 at Nagano in Japan. He loves to dream big, and has his heart set on winning the first-ever Olympic medal for India at the Olympic Winter Games.
another good thing. But there are two things that I lack. The first is a coach. If I have a personal coach, it would help a lot. The other is the equipment, which we are working on now. It is very exciting that we can aim for better results before I quit. We had some results at the Asian level that made us feel good and we have the potential now to do something at the world level. So we are gearing up for it. Will you go to Russia for training if you get a chance? That will be amazing. Our experience in Russia was very good and the facilities there are very good. Russia is also a country that takes care of its sports persons, they get salaries and sports administrators have to pay athletes’ expenses. I would be very happy if the Indian government can do something like that and we can travel to Russia.