Russia Rises On Global Oil Demand

Russia has emerged as an unrivaled energy superpower in a world thirsty for oil and gas, but the country's recent moves to seize control of strategic parts of the energy industry have slowed growth in production and raised questions about the legal rights of investors and speed of future development, writes Patrice Hill for The Washington Times.
As the world looks increasingly to Russia to satisfy its energy needs, the International Energy Agency is raising questions about whether growth in Russian oil and gas exports will be fast enough to keep up with rising demand in Europe and commitments Russia has made to deliver oil and gas to both Europe and Asia. "Will the investments take place? Will they come on time?" asked William C. Ramsey, deputy executive director of the international agency. "These are costly projects. ... We're concerned that the investment climate now is not conducive to bringing those resources online."
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Russia Polyus Eyes Foreign Merger

Top Russian gold miner Polyus Gold (PLZL.RTS: Quote, Profile , Research), which is due to list on the London Stock Exchange on Monday, will consider a foreign merger. Polyus, which produces 18 percent of Russia's gold, has said it plans to create by 2015 a company with market capitalisation of $14 billion to $16.5 billion (7 billion to 8.4 billion pounds) and net annual cash flow of $600 million to $710 million. The firm was spun off this year from Russian mining giant Norilsk Nickel.
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Global Investors Should Think Again About Russia

Rapid growth may have convinced many big companies that they need to be in the Russian market. Yet if you aren't allowed to keep control of your assets, there is no point in being there. Put your money to work in eastern Europe, India or China instead, writes Matthew Lynn for Bloomberg.

Watchdog’s Bark Worse than Its Bite

Shell’s weblog reprinted a commentary by Ben Aris, the editor of Business New Europe in which he discusses the recent wave of spats between Rosprirodnadzor, the Russian environmental watchdog, and some high-profile industrial groups. The most illustrious example is the recent finding of environmental negligence in the Sakhalin II project. Russian companies are targeted as well as shows the case of Lukoil whose environmental licenses Rosprirodnadzor questioned in October. As we discussed in an earlier post, “the Sakhalin case has done more than anything to popularize the idea that assaults on companies using environmental laws as a weapon represent a new phenomenon in Russia, but the threat has been present since the Kremlin began its more aggressive industrial policy in 2004.” However, despite the rhetoric, Rosprirodnadzor has not yet followed through on any of its threats. But the memory of Yukos (which did not collapse on environmental grounds but because of Kremlin’s crusade against the socalled tax-optimization schemes) is sure to keep the investors on their toes.

Another Russian Share Listing in London

Russian property developer RGI International Ltd. joined the trend and announced late on Wednesday it planned to raise about $175 million (89 million pounds) after listing on London's Alternative Investment Market (part of the London Stock Exchange), according to Reuters. The company, which specialises in high-end office, retail and residential property in central Moscow, said the offer price had been set at $6 per share. As a result, the market capitalisation of RGI after the listing would be about $593 million.

This is just the last from a series of Russian IPO's in the last few years that culminated with the initial public offering of the shares of the Russian energy giant Rosneft that raised $10.4 billion making it the fifth largest IPO in the world. According to RIA Novosti economic commentator Nina Kulikova, Russian IPO's abroad (mostly in London) raised $5 billion in 2005 and are expected to raise $20 billion in 2006. While the interest is the highest in the commodities sector, other firms like RGI International Ltd. are starting to float their shares as well.