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Press review: New oil player in Crimea and Central Bank's plans for data life

March 06, 13:00 UTC+3 MOSCOW

Top stories in the Russian press on Monday, March 6

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© AP Photo/Andy Wong

Kommersant: Minor industry player gets major oil and gas license for Crimea shelf drilling

A little-known oil and gas player, Novye Proekty, has received a Russian license for oil and gas exploration and production on the Crimean shelf, according to Kommersant. Entrepreneur Anton Dornostup is the company’s chief owner, according to official information, close to the family of the former Head of Russia’s Federal Agency for Subsoil Use (Rosnedra) Valery Pak, although a number of Kommersant sources associate Novye Proekty with Ukrainian businessman Sergey Kurchenko.

According to the official legal information website pravo.gov.ru, in June 2016, Russian Prime Minister Dmitry Medvedev gave the green light to issue companies a license to develop this area for 30 years. According to Kommersant, this company has to drill an exploration well within the next 8 years. That said, the Ministry of Natural Resources declined to comment on the matter.

Private companies working on this shelf is surprising, as only state companies are legally allowed to work on the area. At the same time, according the newspaper, Novye Proekty obtained the license under a simplified procedure for Crimea, and in 2015, the company did not have any assets and did not conduct business operations.

"When the law regarding Crimea was adopted in an expedited manner, it is possible that the company without assets could pass because of the simplified procedure, which in a general procedure would not be possible," partner at Goltsblat BLP law firm Rustam Kurmaev told.

One of Kommersant sources close to Novye Proekty said that the company had originally planned to establish gas production for delivery to Crimea, but it is unlikely that the project will be implemented. "It is impossible to find equipment on the market due to sanctions against Crimea and Russia does not have the necessary drilling capacities," Director of Geological Consulting Center Gekon, Mikhail Grigoryev, told the newspaper, adding that "it is currently unclear how any further research will be conducted given in the present state of Russian-Ukrainian relations."

 

Nezavisimaya Gazeta: Sanctions still chipping away at Russia’s GDP

Without Western sanctions, Russia’s economic downturn would have ended in 2015, in 2016 Russia’s economy could have grown by 1%, Nezavisimaya Gazeta writes, citing several studies. According to the newspaper, every year that the anti-Russian sanctions are still effective, it costs the country around 900 bln rubles ($15.43 bln). From the moment sanctions had been slapped on Russia, the country’s GDP has lost about 2.5 trillion rubles ($42.88 bln). Despite efforts, it is impossible to fully adapt to the sanctions, no matter what growth Russia’s economy shows, it would still be below its full potential.

Russia’s Center for Macroeconomic Analysis and Short-Term Forecasting estimated the losses of Russia's GDP from Western sanctions at 1.2% percentage points in 2014-2015. Earlier FBK Grant Thornton stated similar figures. According to their estimations, the damage caused by the sanctions in 2014 amounted to 0.2% of GDP, or 121.4 bln rubles ($2.08 bln), for the entire first year, the loss reached 1.2% of GDP, or nearly 950 bln rubles ($16.3 bln).

Director of the FBK's Strategic Analysis Institute Igor Nikolaev confirmed in an interview with Nezavisimaya Gazeta that every year Russia's GDP loses from 1 to 1.5% from sanctions. According to him, the initial assessment of the damage can be applied to the second and even the third year of the sanctions.

According to the newspaper, over the past few years, the rhetoric among Russian authorities has noticeably changed. For example, during the sanctions’ first year, officials often blamed economic failures or unexpected collapses of the ruble on external factors. "The sanctions have become a convenient explanation for what is happening on a par with the dynamics of oil prices," Nezavisimaya Gazeta said, adding that now, however, the authorities have chosen the other extreme - to ignore the sanctions, or to downplay their impact.

Of course, this might look like an adjustment of some sort, Nikolaev told the newspaper. After all, Russia's GDP fell by 3.7% by the end of 2015, and by the end of 2016, by only 0.2%. However, according to the expert, "make no mistake, after all, the difference in percentage points between the actual GDP dynamics and a possible one still remains the same."

According to the newspaper, under these circumstances the Russian authorities expect the economy to grow in 2017, but it will continue to lag behind its potential level.

 

Izvestia: Republika Srpska’s President calls for Crimean people’s will to be respected

Crimea was reunited with Russia as a result of a referendum, which the public voted on and this matter has been settled, President of the Republika Srpska (an entity within Bosnia and Herzegovina) Milorad Dodik said in an interview with Izvestia.

"Crimea had been transferred to Russia on the basis of the referendum, and the will of the people must be respected. The Crimean issue has been resolved," Dodik stated.

President Dodik also emphasized Western politicians’ double standards. "The West does not recognize the will of the people in Crimea, but at the same time recognizes the will of the political elite in Kosovo, where a referendum was not even held," Dodik said.

In regard to the current relations between Russia and the United States, the president said that he welcomes any improvements in the matter, noting that Moscow and Washington do not need mediators. "When people talk about the place of a possible meeting between Vladimir Putin and Donald Trump, they pursue local aims. Bosnia and Herzegovina does not have resources for that. However, I hope that in the near future, we will witness a meeting between Putin and Trump and it will have the most positive impact on US-Russian relations. Moscow and Washington will agree, and everyone will breathe a sigh of relief," Dodik told the newspaper.

 

Izvestia: Central Bank’s bill to extend bank info’s shelf life may lead to rising costs

The Russian Central Bank plans to tighten the requirements for storing bank documents and customer information, Izvestia wrote referring to a bill hammered out by the Central Bank, together with the Federal Archival Agency of Russia (available to the newspaper).

According to the newspaper, the lifespan for storing data will double on average, and for some types of documents seven-fold surges are expected, up to 35 years or even 75 years in some cases (for example, consent to processing personal data). According to Izvestia, the representatives of banks believe that increasing these requirements will inevitably lead to rising costs for document storage, and part of this hike in expenditures on storage will include renting buildings for archives and protecting the documents’ safety.

Major lending institutions are also discontent with the stricter requirements by the Central Bank, they have already applied to the Association of Russian Banks (ARB), the newspaper noted. "This measure is simply outrageous, so we've already written a formal request to the Central Bank to cancel the decree," President of the Association of Russian Banks, Garegin Tosunyan, told the newspaper, adding that the letter will be published on the association’s website on March 6. According to Tosunyan, the new rules will force lenders to transfer part of the extra costs on to customers, which will lead to hikes in borrowing costs overall.

 

Vedomosti: Retailers begin 2017 with sudden drop in electronics and appliance sales

Sales of leading consumer electronics and household appliances have been unexpectedly falling since the beginning of 2017 - both in volume and in value terms, Vedomosti wrote, citing the data from GfK report. The two retail chains selling household appliances and electronics, confirmed the information to the newspaper.

Sales of portable computers, tablets, TVs, telephones, refrigerators, vacuum cleaners, cooking stoves, washing machines and other consumer electronics were in negative territory throughout the eight weeks of 2017, according to the newspaper. In the first week of January, sales fell by 2.1% in annual terms, then plunged to 11% by the end of the month, the decline had slowed only by the end of February. Tablets saw the most significant decline (-20% in six of the seven weeks from the beginning of the year), phones (-4% on average), refrigerators and stoves.

The decrease came as a surprise, but it already had begun in December 2016, when sales slid about 10% and it affected all product categories, one of the largest retailers of home appliances and electronics told the newspaper.

"After January and February we couldn’t understand what was happening," another retailer told Vedomosti, noting that not only had demand been in decline, but also consumer traffic in stores had scaled back, along with online activity.

One possible explanation for the trend - is the ruble’s strengthening, which has affected consumers’ expectations, one of the largest retailers of home appliances and electronics told Vedomosti, saying "Maybe, consumers expect that prices will fall, so they have decided to wait."

According to Svyaznoy CEO Mikhail Slavinskiy, on the one hand, purchases of expensive gadgets have increased, on the other hand, consumers choose products sensibly, preferring to maximize a device’s functionality and actively use loan programs.

"I do not assign one central version to the current consumer trends. Possibly consumers have returned to savings after the New Year’s holiday." Slavinskiy told Vedomosti, adding that the real question is will they spend it on other products or save due to a continuing period of economic instability.

 

TASS is not responsible for the material quoted in the press reviews

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