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Press review: NATO races to woo Serbia and Afghanistan to shed its Soviet past

Top stories in the Russian press on Thursday, November 16
Serbian army soldiers perform during exercise AP Photo/Darko Vojinovic
Serbian army soldiers perform during exercise
© AP Photo/Darko Vojinovic


Kommersant: Serbia moves towards NATO to duck "pro-Russia" suspicions

Serbian President Aleksandar Vucic has met with NATO Secretary General Jens Stoltenberg in Brussels as US-Serbian military exercises began near Belgrade. According to Kommersant, sources close to Serbia’s leadership say Belgrade is trying to absolve itself of any suspicions that it has "pro-Russia" leanings, a favorite topic in the expert community.

According to the paper’s Western diplomatic sources, the main topics of yesterday's talks between Vucic and Stoltenberg included "the interaction between Serbia and NATO, the situation in the region and relations between Belgrade and Moscow." According to Kommersant, the meeting took place shortly after Russia’s Defense Minister Sergey Shoigu had visited Belgrade. The key point of that visit was the contribution of six Mikoyan MiG-29 fighters to the Serbian Air Force, as part of a large package of Russian military aid to Serbia. Although the Russian planes that were transferred to Belgrade are not new, the act was seen by the West as evidence of expanding military cooperation between Serbia and Russia, which is accompanied by increased political interaction between the countries, the newspaper wrote.

According to Kommersant, Serbian experts believe that NATO has not turned a blind eye to recent cooperation between Belgrade and Moscow, with the alliance pushing to build up its sway in the Balkans.

Up till now, Belgrade has been shelving NATO membership plans, Kommersant wrote. At the same time, the paper’s sources close to the Serbian leadership say that Belgrade intends to continue maintaining a balance between Russia and the West and, therefore, will try to buck any allegations about the recent bias in its policy towards Moscow. The meeting by the Serbian president with the NATO Secretary General and the exercises with the US special forces serve this purpose.

In turn, Stoltenberg made it clear that Brussels is quite happy with such a policy. At a Q&A session with reporters, he noted that Serbia acts independently on how to build its relations with Russia.


Nezavisimaya Gazeta: Afghanistan wants to ditch Soviet legacy

The Afghan leadership is grateful to Russia for combating terrorism and cross-border crime in the region, the country's Vice President Sarwar Danish, said, speaking in Ashgabat at the Economic Cooperation Conference on Afghanistan. However, according to Nezavisimaya Gazeta, Kabul's real attitude towards Moscow's policy has little to do with public rhetoric, which was evidenced by the growing modernization of the Afghan army, which virtually eliminates any hint of Russian influence.

The latest disturbing signal for Russia’s leadership came from the Afghan Defense Ministry. Afghanistan’s Acting Minister of Defense Tariq Shah Bahrami has recently announced plans to abandon Russian and Soviet helicopters. According to the newspaper, the statement looked natural against the backdrop of a new American Afghan strategy, but it has sparked some backlash in Russia. For a long time Russian and Soviet helicopters served as reliable support for Afghan forces.

However, the intentions of Kabul and its international allies in upgrading the Afghan army are not limited to just this, Nezavisimaya Gazeta wrote. According to the newspaper, expert channels reported on a pension reform project in the works to be submitted to the Afghan parliament, which would encourage officers over 55 to resign. This age group is generally seen as sympathetic to Russia.

"The key to what is happening now in Afghanistan - I mean the potential reform in the field of personnel and the arms reform - lies not only in intra-Afghan aspects," Omar Nessar, Director of the Center for Contemporary Afghanistan Studies, told the newspaper. "It is influenced by global tensions between Russia and the United States. It is possible that what was happening in Afghanistan was planned by the United States. I would not be surprised if it later turns out that this was part of Trump's new strategy for Afghanistan, because after this strategy came out, the modernization processes began accelerating. There are other interesting points here. The helicopters that are now being delivered to Afghanistan represent another class in terms of combat capability. However, until this moment, the US for some reason did not try to upgrade the equipment of the Afghan army," the expert added.


Kommersant: Gazprom boosts supplies to Europe at record pace

Gazprom continues to maintain very high rates of gas exports to Europe, despite the fact that the effect of the previous cold winter and low stocks in storage facilities has almost been depleted. According to Kommersant, Gazprom’s share in the EU market rose to 34% in January-September, which can be attributed to surging demand, mainly from the electrical power industry, and moderate competition with gas from Norway and liquefied gas. Liquefied natural gas (LNG) is likely to be supplied primarily to Asia at the end of the year, but large reserves in European storage facilities may adversely affect Gazprom's supplies in the event of a warm winter.

According to the export data provided by Gazprom for Kommersant, the demand in the non-CIS market (EU minus the Baltic States and Turkey) increased by 27 bln cubic meters this year to 397.1 bln cubic meters, with an 80% spike in consumption from power plants. This was partly due to this past summer’s heat wave and low water levels throughout Southern Europe, which is why hydroelectric power plants in Spain, Portugal, Italy and Turkey were less loaded, the newspaper wrote.

Although LNG shipments to Europe have soared compared to last year, their dynamics in the fourth quarter is likely to change due to the rise in the "Asian premium". LNG producers will profit more from redirecting tankers to Asia due to higher prices. This may free up a niche for additional supplies by Gazprom, Kommersant wrote.

According to the newspaper, so far, the growing demand for gas in Europe and Asia, coupled with relatively low oil prices de facto prevents fierce competition between Russian and US gas and LNG producers. In Q3 2017, on the one hand, American LNG supplies to Europe and Turkey more than quadrupled from a very low base, and on the other hand they made up only 1.9 bln cubic meters in absolute amounts. As the "Asian premium" grows, Gazprom does not need to start a price war for the market in Europe, since LNG, (even from the US) is supplied there only if the price climate in Asia is unfavorable.

In the World Energy Outlook released on Tuesday, International Energy Agency experts said that Gazprom might allow American LNG to take some share of the European market, given that Europe's demand for gas imports is on the rise, and as far as absolute volumes go, Gazprom's supplies won’t suffer from this. According to the IEA, this is a more profitable scenario for a monopoly than a price war that Gazprom could only win with the help of a significant margin drop.


Vedomosti: Russian government wants to hand product labelling over to private sector

The product labelling system, which is now handled by the Russian Federal Tax Service, might become a public-private partnership. A partner has already been found - the Center for the Development of Advanced Technologies, owned by the structures of USM Holdings whose co-owners are Alisher Usmanov, the Rostec corporation and Almaz Capital Partners managing partner Alexander Galitsky. This is based on what two federal officials told Vedomosti, with people close to the Center and one of the parties to the deal confirming the information.

The idea was hashed over at a meeting with Prime Minister Dmitry Medvedev earlier - a tracking system for labeled goods might start functioning in Russia before 2024, but the state does not want to pay for its development. Officials would have to prepare a list of goods that will have to be labeled for their producers and importers, the newspaper wrote.

Fur clothing manufacturers are already obliged to do it. Since February, an experiment has begun with labelling pharmaceuticals and in 2018 it will include cigarettes. The participants of the experiment label the packages and transfer information to the system about price and the movement of the goods along the chain up to their sale. Therefore, the officials intend to control their turnover, fight illegal products and the underground sector.

A federal official told Vedomosti, that despite the fact that currently the system has an operator-the Federal Tax Service - it will be necessary to mark more and more goods and expenses on the system will start to surge. Thus, it would be better to transfer this function to a private operator.

Other contenders for the project were not discussed at the meeting, a federal official told the newspaper. It is also unclear how exactly the Center for the Development of Advanced Technologies might obtain the project.

This would not be the first time Rostec has gotten state contracts without a tender, Vedomosti wrote. For example, at the suggestion of the state corporation, a tender was canceled for the development of the Platon truck toll collection system, with the project going to Rostec without competition.


Izvestia: Russia increases oil reserves to 15 bln tonnes

Russia beefed up its oil and gas condensate reserves to 15 bln tonnes of oil equivalent - a 7-year record, Izvestia wrote referring to the report by VNIIzarubezhgeologiya (a Rosgeo subsidiary). Reaching the new high was due to both the discovery of new deposits and the OPEC production freeze deal. Over the past year, reserves have increased by 1 bln tonne, which is one of the fastest growth rate in the world. According to experts, Eastern Siberia has the greatest potential for reserves growth in the future.

According to the Ministry of Natural Resources, last year was indeed the most successful for new discoveries and increases in reserves. Thus, Russian oil companies were able to put on balance (that is, to confirm deposits) twice as much oil as they extracted. Most of the exploration work for oil and gas in Russia is carried out by the 10 largest companies. The Ministry of Natural Resources’ press office told Izvestia that more than 260 bln rubles ($4.32 bln) were invested in geological exploration in 2016, including 252.2 bln rubles ($4.19 bln) by companies.

According to analysts polled by Izvestia, the growth of reserves generally came thanks to efforts by the two largest oil companies - Rosneft and Lukoil.

Over the past year, Rosneft has opened 13 fields and 127 new deposits with total reserves of 207 mln tonnes of oil equivalent, the oil producer’s press service told Izvestia. At the beginning of the year, recoverable oil and condensate reserves increased to 12.2 bln tonnes of oil equivalent. This estimate includes not only confirmed reserves, analyzed by Rosgeo subsidiary, but also promising deposits, that is, not yet included in the state balance sheet.

"Nertsetinsky oil deposit (Nenets Autonomous Area) with reserves of 21.4 mln tonnes of oil equivalent and Verkhneicherskoye oil and gas condensate field (Irkutsk region) with reserves of more than 60 mln tonnes of oil equivalent were the largest discoveries of 2016," the company told the newspaper.

"As for Lukoil, there are newly discovered deposits on the Caspian shelf – the Korchagin and Filanovsky deposits," Dean of the Geology Department at the Gubkin Russian State University of Oil and Gas Alexander Lobusev told the newspaper.                  

According to analysts interviewed by the newspaper, in the next 3-5 years the growth rate of reserves will be moderate. "Given the production-restrictive OPEC deal, one should expect stocks to remain stable. Eastern Siberia has great growth potential, taking into account the rising development there, in a few years, we should expect further hike in reserves," leading expert of the National Energy Security Fund Igor Yushkov told Izvestia.


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