Russia and India Business Report by Russia Beyond

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WEDNESDAY JUNE 11, 2014

Business Report RUSSIA&INDIA THE ECONOMIC TIMES IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

DIPLOMACY: Putin met Obama, Merkel and Ukraine’s President Petr Poroshenko; Ball is now in Kiev’s court

Ukraine: Russia, West explore basis for compromise solution

VITAL STATS Ruble/Rupee dollar rates

The first meeting between Russian President Vladimir Putin and leaders of Western countries in France was constructive and looked at different formulae for defusing the tense standoff over the festering Ukraine crisis. YURI PANIEV Specially for RIBR

ITAR-TASS

he importance and significance of President Vladimir Putin’s first meeting with his Western counterparts since the eruption of the Ukrainian crisis can’t be overstated. It is obvious that it allowed the interested parties to exchange certain signals and views on the situation. Moreover, it contributed to finding solutions to specific tasks facing Putin and the Western leaders. Of course, the spolight was on Vladimir Putin and Barack Obama. When the leaders of 18 countries posed for photographs at the entrance to the Benouville Castle, the presidents of Russia and the US deliberately avoided each other. However, once inside, they still met face to face, and according to Putin spokesman Dmitry Peskov , “spoke of the need to end violence and fighting as quickly as possible” in Ukraine. The longest meeting Putin had in Normandy was with Angela Merkel, who seems the most interested in establishing a dialogue with Moscow. Eyewitness at the talks – presidential aide Yuri Ushakov – said that “the conversation was mostly in line with the search for solutions and compromises, and not in terms of differences” on Ukraine. Putin also spoke with his new Ukrainian counterpart Petr Poroshenko. According to the president, Hollande and Merkel had asked him to speak to the new president of Ukraine. “We sat down at a table and talked for fifteen minutes. We discussed the main issues for a settlement,” he told reporters.

Putin’s visit to Normandy demonstrated that the isolation of Russia by the West is unrealistic.

Poroshenko shared his plan for a settlement. “His attitude seemed right to me, I liked it,” Putin said about Poroshenko. The negotiating parties discussing problems of Ukraine, according to Putin, should not be Kiev and Moscow, but Ukrainians and representatives of the southeast. For a truce to be established, the Kiev authorities must stop their punitive military operations. On the upcoming Association Agreement of Ukraine with the EU, Putin said that Russia would not abandon taking protective measures. Among these will be the abolition of zero import duties, and “for Ukraine this will present an ordeal,” he said. Another protective measure may be changing the regime for Ukrainian citizens staying in Russia. The first contact between Putin and Poroshenko was perceived in the US as a “positive development” of the situation. White House officials even hinted that, if Moscow will work with the new president of Ukraine, this would open the door to improved relations with Washington. “Putin stressed that the main condition for de-escalation of the situation – is the termination by Kiev authorities of their antiterrorist operations in the east, and starting of a dialogue by Kiev with representatives of Donetsk and Lugansk,” said to RIBR Mikhail Margelov, Chairman of the Federation Council’s International Affairs Committee. According to the senator, the ball, as before, is in the court of the Ukrainian authorities. The question is whether Poroshenko will dramatically change the current course of the Kiev leadership.

Stock Market Index

Poll: Public opinion turns against US and Europe

Survey: Russia’s friends and foes

DIPLOMACY: Argentina keen to join 5-nation grouping; opinion divided on pros and cons of expanding BRICS

BRICS Bank poised for launch at Brazil summit BRICS countries are poised to launch $100 bn multilateral bank, with euqal rights to members. ELENA PETROVA RIBR

eaders of the BRICS countries, including Brazil, Russia, India, China and South Africa, are expected to sign a treaty to launch the bank officially when they meet at a BRICS summit in the northern Brazilian city of Fortaleza on July 15. The five BRICS nations will likely agree to fund their $100 billion development effort equally, giving them the same rights in a new multilateral bank that could start lending

in two years, according to a senior Brazilian government official. The bank, which will have start-up capital of $50 billion, will have to be ratified by the countries’ legislatures, said the official on condition of anonymity. The countries will put in a total of $10 billion in cash and $40 billion in guarantees, which will be used to raise capital on international markets. In five years, the bank’s capital should double to $100 billion through capitalisation from funding members, debt emissions or contributions from new members. The BRICS will hold a minimum of 55

percent of the bank’s shares. As the BRICS members step up their cooperation, Argentina is exploring the possibility of joining the club. India’s ambassador to Buenos Aires Amarenda Khatua said in midMay that Argentina was interested in becoming a part of BRICS and that India, Brazil and South Africa supported it. However, Russia and China are wary of the prospect, given Argentina’s sizable external debt. Opinion is divided among Russia’s analysts on Argentina’s case to join the BRICS. Maxim Pleshkov, senior analyst with Russian rating agency RusRating, believes that Argentina shares the core BRICS values and should be invited to join the group. Its inclusion, among other things, would reduce the

US influence in South America. Pleshkov said: “The opportunities that BRICS offer Latin America are enormous, and to realize this potential, it would be more practical for the “Five” to maintain a policy of concerted action in this part of the world, which can be spear-headed by the inclusion of one of the region’s countries in the BRICS association.” Dmitry Ontoev, an analyst at the Institute for Emerging Market Studies at the Moscow School of Management SKOLKOVO, however, opines that before expanding, BRICS should deepen integration between the existing members and institutionalise their cooperation. Otherwise, the BRICS risks becoming an amorphous political alliance.

Russian entrepreneurs ready to invest in BRICS

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Moscow poised to step up engagement with Modi government Russian President Vladimir Putin is upbeat about the course of ties with India in the days ahead.

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he Russian government, led by President Vladimir Putin, is looking to step up high-level engagement with the new Narendra Modi government in New Delhi. “Our relations are above political parties. We are friendly with the Indian people. We want to have good relations with India,” Putin said on the sidelines of the St Petersburg International Economic Forum last month. Putin underlined that he was looking forward to working closely with Prime Minister Modi. “We have a lot of cooperation in many areas, historically and otherwise. The prospects of cooperation are high. We are doing everything to fulfil this,” Putin said, while calling India an “outstanding civilisation.” Modi has also spoken of the importance of India’s bilateral ties with Russia, and told Putin in a phone call that India valued its

relations with Russia and its people. The two leaders are due to meet in the Brazilian city of Fortaleza on July 15 at the annual BRICS summit. However, this will not be the first top-level engagement between Moscow and the new Indian government. Russian Deputy Prime Minister Dmitry Rogozin, who co-chairs the India-Russia Intergovernmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation, will visit New Delhi to prepare the agenda for intensified diplomatic interaction between the two strategic partners. Rogozin’s visit follows the talks between senior defence officials that were held on June 5-6. The Indian side was led by Defence Secretary V. K. Mathur and has representatives from all three wings of the armed forces, while the Russian delegation was by Rostec Chief Executive Sergey Chemezov and Rosoboronexport head Anatoly Isaykin. Chemezov made headlines in India

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BILATERAL TIES: Deputy PM Rogozin to travel to India to ﬁrm up diplomatic agenda and calendar

Dmitry Rogozin will visit India following the talks between senior defence officials. when he officially announced that Moscow was in talks with Islamabad for the supply of Mi-35 helicopters. It was widely reported that Russia was lifting its arms embargo on Pakistan, although Chemezov and Russia’s ambassador to India Alexander Kadakin denied that such an embargo was ever in place. “We have supplied arms to Pakistan since early 1960s. This was sheer case of misreporting and over-reacting,” Kadakin told Times Now. He said Russia had supplied Pakistan with Mi-17 civilian aircraft and added that the talks for the Mi-35 were only in an initial stage. “We shall never do anything, and it has been stated time and again by the highest level, which is detrimental to deep and strategic relationship with India. With India, we are by its side in the anti-terror campaign,” Kadakin added.

Upswing in bilateral ties Diplomatic relations between Russia and India have clearly been on an upswing this year, with New Delhi refusing to vote against Moscow in a United Nations resolution that condemned the reunification of Crimea with Russia. New Delhi, which had earlier said that Russia had “legitimate” interests in Crimea, also refused to back Western sanctions against Moscow. Putin recently thanked India once again for standing by Russia. The two countries also managed to break a deadlock on negotiations for the construction of the third and fourth units of the Kudankulam Nuclear Power Project (KNPP). Rosatom General Director Sergei Kiriyenko said the agreement for the units was signed on April 19. The project is estimated to cost $5.5 billion. Russia plans to build 16 to 18 nuclear power plants of 1000 MW capacity in India. On June 7, KNPP’s first unit attained full capacity of 1000 MW power generation, making it the first nuclear power plant in India to attain such a milestone. With Russia making a pivot towards Asia, diplomatic, economic and defence ties are likely to get a fresh impetus from a receptive Modi government.

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POLITICS: Ukraine events have a “powerful mobilising eﬀect”; opposition ceases to exist as an organised political force

Crimea: Putin’s support gains ground

India, Russia to sign service contract for INS Vikramaditya

Two years ago, Russia’s opposition movement was in full flow. Now, the Crimea’s accession has bolstered public support for Putin, as critics are becoming increasingly weak and marginalised. DANILA ROSANOV RIBR

Ban on smoking in public places kicks in

PHOTOSHOT/VOSTOCK-PHOTO

n May 2012, vast crowds gathered in downtown Moscow for the “March of Millions” protest against Vladimir Putin on the eve of his third presidential inauguration. The result was a violent confrontation between protesters and the police. Yet today, two years after one of the most significant public protests in modern Russian history, Putin’s approval rating is rising. It recently hit 83 percent in the wake of Crimea’s accession to Russia. Some analysts say the ‘March of Millions’ appeared to be a high watermark for the opposition during its most active period in 2011-2012. According to sociologist Lev Gudkov, “by winter of this year [2014], the willingness to support or participate in protests had sunk to an all-time low since the collapse of the Soviet Union.” In an OpEd in a leading Russian daily, opposition politician Vladimir Ryzhkov wrote that the standoff over Ukraine has helped rally support for Putin. The events in Crimea had a “powerful mobilising effect” that has served to “strengthen the position of the Kremlin so much at a time when economic growth has stopped.” A legal process unprecedented in post-Soviet Russian history, dubbed “The Bolotnaya Case,” was initiated after the ‘March of Millions’. Although an independent international commission that included Amnesty International and Human Rights Watch came to the conclusion that “the violence and disruption of order were largely caused by the actions of the authorities and especially by the police,” only protest participants faced legal repercussions, with 27 people facing charges. In the summer of 2013, bloggerturned-opposition-activist Alexei Navalny, who came to prominence after publishing anti-corruption in-

REUTERS

Indian Navy and Russian defence shipyard Sevmash are expected to conclude in August an after-sales service contract for the aircraft carrier “Vikramaditya”. Presently, the Russian-built INS Vikramaditya aircraft carrier is fully operational and has a sufficient number of pilots qualified to operate from its airfield, Indian Navy Chief Admiral Robin Dhowan said. The carrier holds on its board the first batch of 12 MiG -29Ks. RIBR

The strictest part of Russia’s antitobacco law came into force on June 1, making it illegal to smoke cigarettes in cafés and restaurants.The smoking ban also spreads across to hotels and marketplaces, as well as long distance trains, train stations, and ships. Smoking areas and special rooms for tobacco lovers will not be allowed in restaurants across Russia. RIBR

DEBIDATTA AUROBINDA MAHAPATRA, Specially for RIBR Many countries outside the postSoviet space have expressed an interest to sign preferential trading arrangements with EEU. Prominent among them are India, Israel, Vietnam and New Zealand. Putin stated that an agreement was reached to set up “expert-level groups to work out preferential trade regimes with Israel and India.” India will be interested to have a comprehensive economic partnership agreement (CEPA) with EEU. It has signed CEPA with countries like South Korea, under which both countries cut a large percentage of tariff on goods from each other. India’s CEPA with EEU will be mutually beneficial. Putin has already signalled a partnership of EEU with India. At a one-to-one level, India enjoys friendly relations with all the current members. Recently, Kazakhstan invited India’s ONGC Videsh Ltd to explore its Abai bloc for energy resources. India also recently signed a deal with Belarus to supply 500 tonnes of potash fertiliser. Its relations with prospective members like Armenia and Kyrgyzstan are also smooth. With Russia supporting a CEPA with India, there will likely be least objection. As EEU is going to have common pharmaceutical zone by 2015, India, leader in pharmaceuticals, will have immense leverage if a CEPA is signed. Other areas of cooperation will be energy and transport. The North-South transport corridor, when realised, will pass through much of the EEU – a CEPA will offer India hassle free and preferential treatment to import and export goods through the corridor.

With Vladimir Putin’s popularity dramatically increasing in the aftermath of Crimea’s accession to Russia, the opposition is losing ground.

Itch to protest quitens down, Russians more satisﬁed with quality of life: Opinion polls Russians have become more satisfied with their quality of life, while their desire to protest has decreased, according to polls by the Levada Center and the All-Russian Public Opinion Research Center (VTsIOM) in May. As much a 46 percent of Russians said they were generally satisfied with their quality of life, compared to 43 percent in March and 40 percent in February, according to VTsIOM. About 11 percent of the respondents were “mostly not satisfied” with their life conditions in April, 12 percent in March, and 14 percent in February. Only two percent of Russians were “absolutely not satisfied” with their lives, and 39

percent were “somewhat satisfied, somewhat not,” VTsIOM reported. Those most satisfied with their quality of life were respondents aged 18-24 (57 percent) and respondents with above-average incomes (56 percent). The numbers are a bit lower among the elderly (40 percent) and people with low incomes (38 percent). According to the poll by Levada Center, the protest activity of Russians is decreasing. 74 percent of Russians said that mass demonstrations in their locality are unlikely, versus 66 percent in February. If mass demonstrations were still held, 80 percent of the respondents said they would not participate in them.

vestigations online, was charged with embezzlement and sentenced to five years in prison. His prison sentence was then suspended after Putin described the sentence as “strange.” The fact that Navalny was not taken into custody during the investigation is unusual in terms of Russian judicial practice: experts speculate that this is part of a campaign to discredit him. High-profile representatives of the opposition are downbeat about the movement’s future prospects. “The opposition is not doing so well right now,” says Boris Nemtsov, one of Russia’s best-known liberals. “A lot of our comrades are behind bars, some people are wanted by the authorities and some have emigrated.” “The opposition has ceased to exist as an organised political force, because there has been a separation of various political forces,” says left-leaning politician and Duma official, Ilya Ponomaryov.

The Russian Opposition Coordination Council, established by representatives of various opposition groups in October 2012, fell apart just a year after its creation as its members began feuding among themselves. According to sociologist Lev Gudkov, “the ideas put forth by the opposition honest elections, anti-corruption, and electoral reforms – were supported by about half the population at first.” “The numbers dropped off as the Kremlin launched a propaganda rhetoric campaign that stressed concepts such as ‘the hand of the West’ and ‘foreign agents’ (non-profit organisations receiving funding from abroad were required to register as foreign agents),” says Gudkov. “These Kremlin accusations neutralised the slogans put forth by the opposition. At some point, the public started listening to the Kremlin, and opinions gravitated toward the authorities,” he said. The situation is slightly different in Moscow, where the number of protest activities has always been higher. On March 15, an anti-war rally against Russian military intervention in Ukraine drew 50,000 people, according to the organisers. “A fairly large group of people who always take part in demonstrations has recently sprung up,” says Ponomaryov. “When it all started, there were only about 500 of them in Moscow. Now there are about 20,000.” “Only about seven percent of the population feels shame and indignation about the actions of the Russian authorities. A lot of people who had previously sympathised with the opposition, now endorse Kremlin policies,” says Gudkov. Those who oppose Russia’s intervention in Ukraine are up against the majority opinion and an increase in public activity from opposition groups is not expected in the near future. “As far as I can see, the most reasonable part of the liberal opposition is more likely to concentrate on culture and ideology, and is not expecting much of a political effect in the near future,” says political analyst Mark Urnov.

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

E |N |E |R |G |Y WEDNESDAY JUNE 11, 2014

GEO-ECONOMICS: The deal will be a game-changer for China’s energy security as it will fulﬁll its gas needs for decades and will also help in ﬁghting smog

Putin’s Asia-Paciﬁc doctrine gets boost with grand bargain

Existing and proposed gas pipelines in Siberia and the Far East

The $400 billion China-Russia gas deal will spur the development of the Far East and marks the return of Moscow to the Asia-Pacific region.

India likely to get LNG from Yamal project Gazprom has signed a pact with Novatek to buy 3 million tonnes of LNG per annum from Yamal. ANNA KUCHMA RIBR

nergy-starved India is likely to get LNG from the Novatek-operated Yamal LNG project. A Gazprom group company signed a framework agreement with the privately-held Novatek to buy 3 million tonnes of LNG per annum from Yamal, where a gas liquefying plant is under construction. A full-fledged agreement between Gazprom Marketing & Trading and Novatek will be signed in the near future and is expected to be valid for 20 years. Most of the gas is destined for India. “We think that the Indian market is one of the fastest developing markets in this (Asia-Pacific) region,” Gazprom Chairman Alexey Miller said. The delivery date is not clear, but analysts are looking at 2017. More than 90 percent of the gas to be produced at the plant has already been sold. While Total will buy 4 million tonnes, Petrochina (a CNPC group company) will purchase 3 million tonnes. Spanish company Gas Natural Fenosa is expected to purchase 2.9 million tonnes. Novatek’s Singapore trading company Novatek Gas & Power will also buy 2.9 million tonnes. The plant will have a total capacity of 16.5 million tonnes per annum. The Yamal LNG project involves the construction of gas liquefying plant using gas extracted from the YuzhnoTambeysk natural gas field, which has estimated reserves of 907 billion cubic metres. The shareholders are Novatek (60 per cent), France’s Total (20 per cent), and the Chinese company CNPC

(20 per cent). The cost of the project is estimated at $27 billion, and Chinese banks are prepared to extend $20 billion in financing. The first phase is due to come online in 2017, and the project’s shareholders are eager to enter the lucrative Asia-Pacific market by 2020, a critical year when supplies to this region will begin from the US and Africa. Gazprom can use the gas from Yamal to supply 2.5 million tonnes that is contracted to GAIL. By supplying Yamal LNG to GAIL, Gazprom could free up the 1 million tonnes from Sakhalin-2, meant for India, and sell it in the Far East. Novatek’s co-owner Gennadiy Timchenko said the company is still prepared to sell upto nine per cent of the project’s stake and clarified that talks are continuing. Until now, Novatek has been trying to tempt gas customers to become shareholders, as was the case with Total and CNPC. Japanese companies Mitsui and Mitsubishi and an Indian consortium, comprising of ONGC, Indian Oil Corp, and Petronet LNG, were keen on acquiring the stake. The Japanese, however, pulled out of talks. A source close to Novatek said that the company may think of selling the stake to a financial partner instead of an oil and gas company, since most of the LNG has already been contracted. Kirill Dmitriev, director of RFPI (The Russian Fund for Direct Investment), told Vedomosti: “RFPI is interested in investing in Yamal-LNG, as is the Russia-China Investment Fund (founded by RFPI and the China Investment Corporation).”

VLADIMIR PUTIN,

ALEXANDR NOVAK,

President of Russia, at the CEO Global Summit, St Petersburg.

Russia’s Energy Minister, in an interview with RG.

We (Russia and India) have an increasing number of joint projects, including in hi-tech sectors such as nuclear energy… What the Russian Federation does when it undertakes these kinds of projects is to not just provide the power units or build production facilities, but establish the whole sector, and this includes training local personnel. We are working with you to develop advanced

The rate of consumption (of oil and gas resources) is rapidly growing in AsiaPacific countries like China, India, Japan and South Korea. We are developing new oil and gas fields and building the infrastructure. Yamal LNG is just one of the priority projects . We are also building LNG plants in Vladivostok, Sakhalin and Leningrad. The first phase of the Yamal project with the capacity of 5 million tonnes

military technology such as the well-known BrahMos missile... We do not limit ourselves to simply delivering a good product. The missile is a joint product and is our joint intellectual property.

The three-party talks over payments for Russian gas were marked by conflicting positions. DAVID MILLER RIBR

he fifth round of talks between Russia, Ukraine and the European Union on Monday in Brussels have failed to reach an agreement over Russian gas supplies to Ukraine. EU Energy Commissioner Guenther Oettinger said after the three-party talks that there are some remaining open issues and different positions between the parties. He indicated that the talks will continue on June 11. The three sides, for the first time, discussed the price for the supplied Russian gas to Ukraine, including payments for June-August, Russia’s Energy Minister Aleksandr Novak said after the three-party gas talks ended. The parties discussed repayments for the past November-December supplies, Novak said, adding that the need to pay back $1.451 billion by June 10 remains unchanged, as well as the partial repayment of $500 million debt accumulated for April and May. Earlier on Monday, Ukraine’s energy and coal industry minister Yury Prodan said Kiev will pay the debt for Russian gas after the new gas price is confirmed. Ukraine refuse to prepay for gas. It insists on the recalculation of its debt for gas supplied in 2013 on the basis of a discounted price of $268.5 per 1,000 cubic meters for JanuaryMarch. The dispute between Russia and the West over Ukraine is now spilling into energy relations, as Russian officials threaten to shut off natural gas

supplies to Ukraine over non-payment. Russia supplies Europe with about a third of its natural gas, 40 percent of which runs through pipelines that pass through Ukraine. The fuel keeps factories humming and electricity flowing throughout the European Union. Meanwhile, the US and European states have already slapped limited sanctions on Russia over its involvement in Ukraine’s political turmoil, and are threatening to raise the stakes. Those measures had not yet had an impact on the gas trade, when this edition of RIBR was going to print on June 11. Indeed, many observers argue that too much is at stake for either side in the gas trade to want to endanger it. Europe’s economy, still fragile in the wake of the financial crisis, could be kneecapped by a disruption in energy supplies. Germany gets 40 percent of its natural gas from Russia. A leading German magazine reported in April that Germany’s economic growth could be reduced by almost a full percentage point in 2014 if tighter sanctions are imposed on Russia. Russia, as the world’s-largest exporter of natural gas and second-largest producer after the United States, can likewise hardly afford to endanger its energy export business. Oil and gas receipts make up more than 50 percent of Russian state revenues, and 70 percent of the country’s exports. Hydrocarbons are a vital source of income in what is otherwise a stagnating economy. Russia has taken pains

Japanese energy companies will react to these developments as post-Fukushima disaster, the issue of nuclear power in Japan is turning into a sensitive political problem. Reluctantly, Tokyo has joined in the international sanctions against Russia, although Japan’s approach to the issue of the country’s energy security has always been quite idiosyncratic, as was clearly evident from its relations with Iran.

CEO Igor Sechin. “We are considering a number of promising new fields in East Siberia. They make up the chain of Suzun, Tagul, Lodochnoye, TaasYuryakhskoye. All these resources have a gas factor. Of course, we expect to be able to transport gas from these fields and to monetise it. The amounts are quite impressive: some 16 billion cubic meters a year, perhaps even upto 20 billion,” Sechin said. It’s not clear

Gas row: Russia, Ukraine, EU fail to strike a deal, talks to continue

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The Yamal LNG project involves the construction of gas liquefying plant.

the whole of its Siberian infrastructure, Putin said: “This is a big event in the gas sector, not just in Russia but it would be no exaggeration to say it is a major event for the entire global energy sector and certainly for Asia.” It looks like Gazprom’s Chinese contract is spurring other Russian energy giants into action too. Rosneft is ready to build its trunk gas pipelines in East Siberia, said the company’s

Alexei Miller, CEO of Russia’s Gazprom, the world’s biggest natural gas producer. to present itself as a reliable supplier, even as it has squabbled with Ukraine over pricing issues for years. Russia has long charged Ukraine less than the prevailing market rate for gas that it receives from European countries, in part because of Ukraine’s status as a former member of the Soviet Union, and later because of special bilateral agreements. In the past, Russia has also accused Ukraine of siphoning off gas that was being transported to European markets. Until recently, Russia had granted a pricing discount to Ukraine as a result of two pacts . The first extended Russia’s rights to host its Black Sea fleet in Ukraine. And the second was struck with deposed Ukrainian President Viktor Yanukovych in December after he delayed a decision on a trade pact with the EU. That move sparked the wave of protests that eventually pushed Yanukovych from office.

PHOTOSHOT/VOSTOCK-PHOTO

Biggest construction site This is exactly what President Putin spoke about at the APEC summit in

Vladivostok two years ago. “We shall be strengthening energy security not only of Russia but also of the countries that we cooperate with, of the whole region,” he told the region’s business elite. At the same time, this policy has broader goals. “We view a full-scale entry to the Asian-Pacific region as the most important factor for the successful future of Russia, as well as development of Siberia and the Far East,” Putin said in an article for a leading publication ahead of the summit. This full-scale entry took place on May 21 in Shanghai. Right after the contract with China was signed, the Russian president told journalists: “This project’s implementation will see us create what will be, without exaggeration, one of the biggest construction sites in the world over the next four years…. Total proven reserves at these fields come to 3,000 billion cubic meters of gas, and in actual fact the reserves there are even higher. They ensure us guaranteed supplies for 50 or so years, and this includes supplies for the domestic market too.” Stressing that this scale of work will allow Russia to upgrade

PHOTOSHOT/VOSTOCK-PHOTO

ussia and China’s mammoth $400 billion gas supply deal signed on May 21 during President Vladimir Putin’s visit to Shanghai is a symbol of a major shift in Russia’s positions. It marks Russia’s return to the Asia-Pacific region, declared by Putin at the APEC summit in Vladivostok two years ago. While the deal is being presented as Russia’s success, much less is being said about the benefits for China. Beijing is ready to pay $400 billion for Russian gas over a period of 30 years. But this is just part one of a mega project. The contract covers supplies from gas fields near Lake Baikal, which are expected to be 38 billion cubic meters a year. This is approximately the same amount that Ukraine is currently buying from Russia. However, according to Putin, this contract opens the way to new talks on gas supplies to China from fields in West Siberia, along the socalled western route, the Altay gas

pipeline. The amount and the time scale are approximately the same. What are China’s takeaways from this grand bargain? First, China resolves the problem of its domestic gas requirements for decades to come. Its own reserves, even taking shale gas into account, are insufficient. LNG imports from Qatar and Indonesia are more expensive and, more importantly, are vulnerable as they are delivered by sea, with the sea routes being controlled by China’s main opponent, the US. One should not forget that China also needs gas to deal with smog created by power plants running on coal, as this environmental problem is becoming an increasingly political one. Second, China, ahead of Japan and South Korea, is not only securing the region’s biggest gas reserves, but is also becoming a party to creating a gas distribution system in northwest Asia, which will soon become comparable to its European equivalent.

NATALIA MIKHAYLENKO

RIBR

PHOTOSHOT/VOSTOCK-PHOTO

ANDREY ILYASHENKO

of LNG will be introduced in 2017. When the Yamal project will be implemented, Russia’s LNG production will be 60 million tonnes. This will be supplied to Asian countries, including India, China and Japan.

Russian companies conﬁrm interest in Tapi gas pipeline Russian companies are interested in participating in the Turkmenistan– Afghanistan–Pakistan–India (TAPI) pipeline, said Russia’s Deputy Prime Minister Arkady Dvorkovich at a gas conference in Ashgabat in late May. In April 2014, Turkmenistan’s President Gurbanguly Berdimuhamedow set the government the task of beginning construction of the $8 billion TAPI gas pipeline in 2015. According to Dvorkovich, the basic project conditions have been presented to potential investors and participants in the construction, and active consultations are going on. “I hope that the consortium will be strong enough to implement this challenging project. Of course, we will engage in dialogue with our partners in Pakistan, Afghanistan and India, in order to fully ensure the security of this project,” said Dvorkovich. In the coming years, Turkmenistan could become powerful enough to rival Russia in the world gas market. This growth will come from the unproﬁtable and, at the same time, growing markets in Asia, or because of the situation in Europe. The total length of the TAPI gas pipeline will be 1,735 kilometres. It will go through Turkmenistan 200 km, 735 km through Afghanistan, and 800 km through Pakistan, until the gas pipeline reaches the Fazilka settlement on the Pakistan-Indian border. The annual capacity of the pipeline is expected to be 30 billion cubic metres of natural gas. The project’s participants include the Turkmenistan Turkmengaz, the Afghan Gas Corporation, the Pakistani Inter State Gas Systems, and India’s GAIL.

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

S |P |O |R |T WEDNESDAY JUNE 11, 2014

FOOTBALL: Experts are harbouring expectations not so much on the players, who are not stars, but on the team’s legendary Italian coach Fabio Capello

Ace coach Capello shufﬂes Russian team, optimistic about making it to playoffs Making it: Who will surprise us?

The Russian football team is hopeful of making it at least to 1/8 finals of the Brazil World Cup.

IBR has identified key players in each line of the Russian national team, who should be especially watched. Igor Akinfeev, 23 (goalkeeper). More than 400 games for CSKA, almost 70 games for the national team, five Russian championships, the UEFA Cup and a whole list of national records. Igor debuted in football at age 16, and by 17 had already become the main goalkeeper of the CSKA . He helped that team get its first championships in many years. Sergei Ignashevich, 34 (defender). Since 2001, on the list of the best central defenders in Russian football, Ignashevich has invariably appeared at the number one spot. Alan Dzagoev, 23 (midfielder). Dzagoev is regularly included in lists of the most talented young football players of the Old World, but he is still playing for the CSKA. And this World Cup may become the defining moment in his career. Alexander Kokorin, 23 (forward). The 23-year-old forward from the Moscow Dinamo is one of the Russian national football team players, who scouts from top European clubs will be watching very carefully in Brazil. By all indications, Kokorin should be able to grow into a big star.

Young talent Alexander Kokorin (left) and reputed Italian coach Fabio Capello.

IMAGO/LEGION MEDIA

ITAR-TASS

RIBR

Mexico, 1970: Yevgency Lovchev gets first yellow card

Viktor Serebryannikov first player to be subbed out

Lev Yashin: The only goalkeeper to win Golden Ball, save penalty shot

The coaching genius of Valery Nepomnyashchy

Power of 5: Goal-scoring record of Oleg Salenko

Until 1969, referees could only send players off. An intermediate penalty did not exist. At the 1970 World Cup (Mexico), referees had yellow and red cards in their pocket for the ﬁrst time. The USSR national team’s Yevgeny Lovchev received the ﬁrst warning in the history of the World Cup.

Before the 1970 World Cup, substitutions did not exist. The starters had to play the whole 90 minutes and, if necessary, extra time. In 1970, FIFA decided to do the players a favour. The ﬁrst player subbed out in the history of the World Cup was the USSR’s Viktor Serebryannikov.

The only goalkeeper in the history of football to win the Golden Ball (honour given to the best player in the world at the end of the year), Lev Yashin made his debut at the World Cup in 1958 with the USSR team. Yashin is the only goalkeeper to save a penalty shot at that World Cup.

At the 1990 World Cup (Italy), a team representing Africa reached the quarterﬁnals for the ﬁrst time. The “Indomitable Lions” were led by the Russian specialist Valery Nepomnyashchy. Nepomnyashchy’s charges sent the USSR, Argentina and Colombian teams home.

At the 1994 World Cup (US), the Russian football team managed an amazing goal-scoring feat. For the first time in the history of the World Cup, one player scored five goals in one match. This player was Oleg Salenko, striking the back of Cameroon’s net five times.

T R AV E L 2 M O S C O W. C O M

PATRIARCHY BRIDGE AND CATHEDRAL OF CHRIST THE SAVIOUR The Patriarchy Bridge was built in 2004. From one side, visitors see the Kremlin and the river embankment, while on the other side are views of the Central House of Artists and the famous Red October, an erstwhile chocolate factory. The observation deck offers panoramic views of the famous House on the Embankment and the Zamoskvorechye Merchant District. Tours on the deck are available only as a part of the group by prior arrangement (+7) 495 637 28 47. Address: 15 Volkhonka street (subway station Kropotkinskaya)

TOWERS OF MOSCOW-CITY The new Empire and Federation Towers, located in the business district close to the city center, are some of the tallest buildings of the Russian capital. From the terraces of Moscow-City, you can enjoy inspiring views of the Moscow River and the western part of the city. Impressive views of Moscow open up to those who ascend the highspeed elevator to the 58th ﬂoor of the new terrace of the Empire Tower (780-feet). The observation platform of the Empire tower is accessible only with a tour group. Tickets are 600 rubles ($17) and can be purchased at smotricity.ru or by telephone 8 (499) 272 48 46. Address: 6 Presnenskaya Naberezhnaya (subway station Vystavochnaya)

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Who will be scoring? The main feature of the current Russian national team is its organisation. In this team, there are no players that in Brazil will attract autographseeking fans. They may not be wellknown, but each of them knows exactly what his role is on the field, and this is where the pressure on the opposing team comes from, as well as good ball control and an organised defence. “The team has become more solid, cohesive,” says former head coach Valery Gazzaev. Agrees Yuri Semin, another trainer who at one time also worked with the Russian national team: “I would like to note the unity, which Capello has brought to the team,” says Semin. The whole game of the Russian team is built on quality midfield play. However, there are some issues when it comes to attacking. Scoring goals in Brazil will be the task of the best scorer in Russia today – Alexander Kerzhakov. He is the only team member with experience of playing in a world championship.

VIKTOR KUZMUK

OSTANKINO TV TOWER Ostankino Tower’s observation deck has been open to visitors for over 40 years. From a height of more than 1000 feet, tourists will be treated to great views of northern Moscow and Moscow Region. This observation deck can be visited through guided excursions by appointment only. The excursion lasts about one hour. Pre-registration is by phone at: 8 (495) 926-6111, and a ticket costs 980 rubles ($28) Address: 15 Akademika Koroleva street, bldg. 2, entrance 2 (subway station Alekseyevskaya)

BOLSHOY KAMENNY BRIDGE (GREATER STONE BRIDGE) Built in 1938, this bridge connects Borovitskaya Square with Bolshaya Polyanka Street. From here, view the soaring panoramas of Moscow, from the majestic Red Square and to the restored Cathedral of Christ the Saviour. Address: Kremlevskaya naberezhnaya (subway station Borovitskaya)

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FERRIS WHEEL AT THE ALL-RUSSIA EXHIBITION CENTER Fans of extreme heights will enjoy great views of Moscow from the 239-foot high Ferris Wheel at the All-Russia Exhibition Center – from closed or open cabins; tickets 300-350 rubles ($9-$10). Address: All-Russia Exhibition Center (subway station VDNKH) 73 m

PHOTO: IKAR.US (TALK)

The greatest achievement of the Soviet and Russian national teams at the World Cup was getting the fourth place at the 1966 tournament in England. However, they have managed to set records and hold some other unique distinctions that have been preserved in the history of international football.

Russia’s football glory: Records and high points...

Another possible attacker is the Dynamo player Alexander Kokorin, who undoubtedly has the talent, but not the experience. Recognising the fact that in this tournament, the Russians will be far from the favourite, fans and experts alike feel that the team’s performance in their group will be strong, especially given the fact that the opponents at this stage are not from the most formidable national teams – South Korea, Belgium and Algeria. “Making it through the group round may not be guaranteed, but it will not be a surprise if it happens. I am convinced that we will make it into the playoffs,” said Vyacheslav Koloskov, honorary president of the Russian Football Union. Agrees Vladimir Stognienko, a well-known television newscaster: “I am convinced that we will be in the 1/8 finals. Then, if we manage to avoid playing the Germans, I am sure that will go on and on. My optimism is based primarily on the coach. Capello is not perfect, but he is the strongest part of our team.” Capello, on his part, is cautiously optimistic: “First, we are preparing for the group stage. If we can get through that, it is quite probable that in the 1/8 finals we will play against Germany or Portugal. However, we will think about that later. Let us not hurry, and go one step at a time.” ITAR-TASS

hen Russians think of Italians, they hardly associate them with punctuality and discipline. However, ace footballer Fabio Capello, in the first few days after his arrival in Russia, quickly demolished these stereotypes. Compared to his predecessors –- the good-natured Guus Hiddink, who by the end of his stay in Russia simply spoiled the players, and the surly Dick Advocaat, who did not even hide the fact that he was primarily interested in the size of his bank account, and not in the training process – - Capello looked almost like a tyrant. While the Dutch coaches managed to come to Russia only on short visits, Fabio managed to net three to four matches of each round of the championships. He gradually changed half the players on the national team. The legendary coach struck off the so-called indispensable players of Advocaat –- Arshavin, Pavlyuchenko, and Pogrebnyak. In return, he found defenders Kozlov and Eshenko while making Fayzulin and Kombarov the major players, and now he will be taking to Brazil players who just a few months ago could not have even dreamed of being on the national team. This kind of radical makeover of personnel, which Capello is known for, forces players to constantly

work hard, and shows them that no one is automatically guaranteed a spot in the line-up. Capello’s method can be best encapsulated in his one-word mantra: “respect.” He operates according to a strict order: players must comply with his schedule to the minute, and the staff is strictly disciplined. And journalists are not allowed into any hotel where the team is staying, except during official events.

ITAR-TASS

RIBR

PHOTOSHOT/VOSTOCK-PHOTO

ILYA ZUBKO

IVAN THE GREAT BELL TOWER Get a bird’s eye view of Moscow by climbing up the 262-feet bell tower of Ivan the Great – “the ﬁrst skyscraper of the capital,” built in the 16th century. The belfry is located in the heart of the city – on Cathedral Square (adjacent to Red Square). Visitors are able to view the exhibition and access the observation deck, which provides a wonderful view of Kremlin’s Cathedral Square and the old streets of Zamoskvorechye District. You can gain access here by using your ticket to the Kremlin Museum, which costs 500 rubles ($14). Address: Kremlin, Sobornaya Square (subway station Okhotny Ryad) 80 m

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SPARROW HILLS AND MOSCOW STATE UNIVERSITY MAIN CAMPUS One of the most popular postcard views of Moscow is from the lookout platform on Sparrow Hills. The lplatform provides stationary binoculars, which are free for tourists. The views are especially beautiful on a clear day and late at night when the street lamps illuminate the city. The upper ﬂoors of Moscow State University’s (MSU) main building offer an even more breathtaking visage of Moscow. To reserve a visit to MSU, call: 8 (495) 939 29 76. Address: Universitetskaya Square (subway station Universitet)

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