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Press review: Russia-Belarus oil dispute hits Ukraine and Zelensky to get invite to Crimea

Top stories in the Russian press on Wednesday, April 24

 

Izvestia: Ukraine suffers most in Belarus-Russia oil standoff

Ukraine will be the main affected party in the Russia-Belarus conflict over the quality of oil. If Belarus does not restore gasoline exports, Ukraine could face a fuel crisis, according to experts interviewed by Izvestia. Minsk is Kiev’s main supplier of oil products made from Russian raw materials.

"It is very difficult to find alternative suppliers to Moscow and Minsk, since Ukraine faces a shortage of rolling stock for transporting oil products," Co-chairman of the Foundation for Energy Strategies in Kiev Dmitry Marunich told the newspaper, adding that he hopes that the situation will not escalate critically. According to the expert, oil refining in the country is in decline and the situation is aggravated by Russia’s recent decision to ban exports of oil and oil products to Ukraine.

Deputy Director of the National Energy Institute Alexander Frolov told Izvestia if supplies from Belarus to Ukraine do not go back to their previous level, the Ukrainian fuel market could collapse. The expert is more optimistic about other importers of Belarusian oil products Poland and the Baltic countries. "For them, reducing and even halting supplies of Belarusian gasoline and diesel fuel is not critical. Russia and other countries can easily replace oil supplies from Belarus," he noted.

The expert noted that the position of Minsk looks like a plausible excuse for maintaining a high margin of the Belarusian oil refining at the expense of cheap oil from Russia. Minsk's losses due to Russia’s tax maneuver in the oil industry, the main obstacle in bilateral relations, are estimated at $10 bln - and Belarus seeks to compensate it. "As a result, Belarus might give up their market share to Russian and European companies," he said.

 

Nezavisimaya Gazeta: Iran could place mines in Straight of Hormuz in response to sanctions

The liberation of Syria and Iraq from the Islamic State (terrorist organization banned in Russia) has not yet led to the complete destruction of Islamist forces, while Washington’s sanctions could ignite new armed conflicts, Nezavisimaya Gazeta writes. Specifically, Iran could block the Straight of Hormuz, according to the paper.

US President Donald Trump has decided not to remove other countries from sanctions for the purchase of oil from Iran, aiming to deprive the Iranian regime of its main source of income. In turn, Commander of Navy of the Islamic Revolutionary Guard Corps Alireza Tangsiri, warned that if Iranian oil is cut off, the Islamic Revolutionary Guard Corps forces would block the Strait of Hormuz, a strategic artery in the Persian Gulf area, preventing other countries in the region from transporting oil to foreign markets. Military expert Captain 1st Rank Oleg Shvedkov told Nezavisimaya Gazeta, "Tehran is capable of doing this by setting deep mines along the routes of oil tankers."

Thus, the new conflict in the Persian Gulf is evident and will be discussed it at the Moscow Security Conference with Iranian Defense Minister General Amir Khatami who arrived in Moscow at the invitation of Russian Defense Minister Sergey Shoygu. Meanwhile, according to the newspaper, breakthrough solutions from the event should not be expected. Out of more than 100 delegations arrived at the conference, the US and most European countries refused to participate in the event. They are trying to solve the problems of Syria, Iraq and other countries only in their own interests, far from those of Moscow and its allies, Nezavisimaya Gazeta wrote.

 

Izvestia: Ukraine's next president will be invited to Crimea as honored guest

The newly elected president of Ukraine, Vladimir Zelensky will be invited to the Yalta International Economic Forum (YIEF) in 2020. Moreover, for the first time the organizing committee will consider granting the status of honorary guests to a delegation from the neighboring country, the forum’s co-chairman Andrey Nazarov told Izvestia. According to him, a special section on normalizing the Russian-Ukrainian relations may be prepared for next year's forum.

"Considering their interest and the fact that a number of Ukrainian colleagues confirmed they are ready to come to Crimea, as well as the new president, who, as the Ukrainian people believe, could resolve conflicts and internal crises - we plan to invite the Ukrainian delegation headed by Vladimir Zelensky to visit the YIEF to meet with Crimeans and see how real Crimea lives today," Nazarov said.

According to him, a lot will also depend on the elections to the Verkhovna Rada this fall. "In Ukraine, as well as in Russia, there is a great demand for improving bilateral relations in all areas. Many politicians, businessmen, cultural and public figures are in favor of restoring good-neighborly and mutually beneficial ties," he added.

The Verkhovna Rada noted that the trip of the Ukrainian President and the delegation to the Yalta Forum could lead to overcoming many controversial issues. "I have always been in favor of dialogue," deputy from the Opposition Bloc Evgeny Balitsky told Izvestia. "It is important to meet locals, talk with authorities and think about what can be done to normalize relations," he added.

Naming the honorary delegation is one of the main traditions of the Yalta Forum, which has been held regularly since 2015. This status is given to countries where politicians and businessmen actively support rapprochement of relations with Russia.

 

Kommersant: Indonesia buys new military equipment from Russia despite US pressure

Russia and Indonesia have signed a contract for the supply of more than 40 units of infantry combat vehicles BMP-3F and BT-3F amphibious armored infantry fighting vehicle, which will be used by the Marine Corps. According to Kommersant, the transaction amount is estimated at $175 mln. These funds should help the manufacturer - Kurganmashzavod - to correct its difficult financial situation.

The Ministry of Defense of Indonesia reported the agreement was inked for the delivery of 22 units of BMP-3F and 21 BT-3Fs. Rosoboronexport, Russia's arms exporting body, confirmed the information to Kommersant. The company's General Director Alexander Mikheev noted that the contract for the supply of BT-3F to Indonesia "became the first export agreement for these machines in Russian history".

Earlier, Indonesia has already acquired Russian armored vehicles twice - in May 2012 and in September 2007. According to Kommersant’s sources in the defense industry, the contract should not be overlooked despite its relatively low cost - the Indonesian authorities concluded it in spite of pressure from the US and the threat of sanctions, and were the first to announce it. Jakarta’s position was highly praised by the Head of Rostec state corporation Sergey Chemezov, who named Indonesia as a key partner in Southeast Asia.

 

Vedomosti: Burger King’s Russian business could hold IPO this year

The Russian operation of the Burger King fast food chain will hold an IPO this fall, two investment bankers familiar with the potential organizers of the deal and the managers of Burger King confirmed to Vedomosti. The organizers include VTB Capital, JPMorgan and Morgan Stanley. A Vedomosti source close to one of the co-owners of Burger King Russia claims that the deal’s structure and its parameters have not yet been determined. According to then newspaper, the fast food segment is growing at the fastest pace and while not yet represented on the Russian stock market.

There has not been an IPO on the Russian stock market in more than a year. Globaltruck road carrier held the last IPO on the Moscow Exchange back in November 2017. This year, the situation is favorable for a share placement, portfolio manager at Alfa-Capital Alduat Kharin told the newspaper. According to him, oil and the ruble are becoming more expensive, the United States has not tightened sanctions against Russia and there are no statements about new restrictions. Foreign investors started to return to the Russian market, and they are key buyers of Russian stocks, Kharin added.

Fast-food companies are not represented on the Russian stock market. Meanwhile, turnover of the Russian food services market in 2018 amounted to 1.52 trillion rubles ($23.81 bln) according to Rosstat. Thus, Burger King shares may be interesting for investors, Kharin said. Ultimately, however, demand will depend on the price. For the Russian stock market, the fast food segment is new, so it could become a good alternative to food retailers, Aton analyst Viktor Dima told Vedomosti.

On the other hand, General Director of Infoline-analytics Mikhail Burmistrov believes that this is an attractive asset, but still too small for an IPO. Even by the end of 2019, the company’s revenue, according to his forecast, will not exceed 50 bln rubles ($783.34 mln) without VAT. He estimates the company’s value at around 34-37 bln rubles ($533-580 mln) including debt.

 

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