St. Petersburg and Kazan

I am now in Kazan, capital of the Russian Republic of Tatarstan situated due east of Moscow on the river Volga. I arrived last night after a 28 hour train journey from St. Petersburg.

St. Petersburg was marvellous, although I think it would have been more sensible if my friend had arranged a heated apartment for me instead of the ice-box I ended up in. This was made all the worse by the city getting its first snow of the winter when I was there. But that aside, and the two days of appalling weather, St. Petersburg was well worth the visit, and I intend to undertake a longer visit in the summer.

The architecture is amazing, and it seems that turning every corner within the Fontanka district presents you with another spectacular building to marvel at. I have dozens of pictures, many taken during the one day when the sky was blue and the sun bright, which I will post on my return to Dubai. However, no photo could do justice to the interior of St. Isaac’s cathedral, which left me speechless in awe. I am told the Hermitage Museum has a similar effect, but sadly I didn’t have time to visit this, and will have to put it off until the summer. Although the weather was cold, though not particularly by Russian standards, walking around the city taking in the sights was an absolute pleasure. I was also fortunate enough to be able to visit a friend in Lysee Nos, a settlement on the outskirts of St. Petersburg on the Gulf of Finland, where I enjoyed a Russian banya and a large quantity of vodka.

So I am in Kazan for a week, and was intending to get down to Samara for a day or so but the train timetables are probably not going to allow this to happen. The apartment I am staying in, the home of a Kazakh friend and her husband, is superb and I am looking forward to a week relaxing and enjoying what the city has to offer. I will have access to the internet throughout this time, so I may be posting as and when I see or do something interesting.


Gloria on Gaza

A great post by Gloria Salt on the non-reaction of the sections of the West to the recent violence in the Gaza Strip:

But what about the rest of the world? All those activists on campuses in Britain, for example. And those editorial writers at the Guardian. Where is Sue Blackwell, champion of the anti-Israel academic boycott by the British Association of University Teachers? Where is Mona Baker, Egyptian-born editor of the British academic journal The Translator, who was so offended by the occupation that she forcibly removed two Israeli academics from the editorial boards of her publications (now that’ll teach ‘em)? Where is the International Solidarity Movement, sponsors of flag-burning “peace missions” to occupied Gaza? I could have sworn they all held some pretty strong views on the basic human right of Palestinians to live in safety and build their nation. Innocent Palestinians — little girls, taxi drivers, civilians of every stripe — have been dying in Gaza since disengagement was completed. Don’t these people have anything to say?

Well, no. The problem is not, and has never been, Palestinian suffering per se. The problem is Palestinian suffering at the hands of Israelis. And just as the Palestinians cannot be blamed for their acts of grotesque violence against Israelis, nor can they be blamed for their acts of grotesque violence against each other. Why not? Because unlike the Israelis, who, like “us”, should know better, they just can’t help it. This is how “they” behave. It is not for us to interfere, or even comment.

The great irony, of course, is that these arbiters of righteousness — these staunch defenders of the moral high ground — class us, the contemptible Israelis, along with them. We are to be held to what (in a weak moment) they might define as a civilized standard of behavior, while the Palestinians do not warrant such an exacting standard. In the view of their advocates abroad, the Palestinians are simply not capable of meeting it. So for all their cringing at the sight of their own names next to Israeli ones on journal mastheads, the Sue Blackwells and Mona Bakers of the world believe we’re in their club.

(via PooterGeek)


Moscow-St. Petersburg-Kazan

Apologies for the poor quality posting of late, a consequence of clearing my desk of work before I depart to Russia on Thursday.

I’m going to be spending one night in Moscow, then catching a train to St. Petersburg where I will be staying with a friend for 6 days. Then it will be back to Moscow and an overnight train to Kazan, where I will be staying with another friend until 5th November. I’m due back in Dubai late on 6th November.

Posting on here will largely depend on if and when I can get on the internet. I’m probably not going to be writing a full travel journal for this trip, but I will take some notes and as many pictures as I can fit on my memory card.


A Woman’s Role

Take heed, oh ungrateful hags:

The new rule issued by Iranian officials about women reaching home by dusk is indeed worthy of praise.

No matter how much one argues or tries to reason otherwise, the fact remains the family is held together, and the upbringing of the children, is the job of a woman.

Nobody else qualifies.

It is sad that we have women arguing against it. They just don’t know what’s good for them.


Still a Mystery

Upstream Online runs an opinion piece discussing the effect Russia’s political wranglings are having on outside investment.

[I]n a country run quite autocratically by a character such as Putin there will always be a suspicion that both minor and major political events might be influenced by one man’s mood.

Another feeling commonly expressed is that nothing is quite what it seems in this former superpower. That plays in the minds of foreign investors.

Khodorkovsky is seen by the Kremlin as an annoying local difficulty that should be disregarded by the world at large or at least just seen as the fraudster and tax evader that the Russian justice system has judged him.

But two years after he was arrested at gunpoint seen by many as transgressing Putin rules by using his enormous wealth to dabble in oppositionist politics he remains to many a symbol of Kremlin interference.

Although Putin has urged Western investors to disregard the affair as a one-off domestic issue, he has quietly watched the effective renationalisation of Yukos and the serving on the country’ biggest foreign investor TNK-BP of a $1 billion back tax claim as well as encouraging state-owned Gazprom to spend $13 billion taking over Sibneft.

A draft law has already been prepared that would restrict new oil and gas licensing deals to ventures 51%-owned by Russian companies, while wider reforms of the financial and economic sectors have been put on the back burner. Corruption and bureaucracy by local government officials continue to bedevil the operations of many companies. Yet despite all these caveats, Russia is booming.

The main stock market index, the RTS, celebrated its 10th birthday last month by hitting record levels, while foreign direct investment in Russia reached another record $9.3 billion in the first half of the year not far short of the figure for the whole of 2004. The Financial Times also reported that, seven years after the 1998 financial crisis, Russia has amassed $150 billion in gold and currency reserves.

More than $4 billion has been raised in the last year with the latest initial public offering by gas producer Novatek 12 times oversubscribed. BP has had its tax burden cut by 70% and Prime Minister Mikhail Fradkov this week ordered a 5% cut in value added tax from 2007 plus a decoupling of the mineral extraction tax from world oil prices.

With oil at around $60 per barrel and the country holding reserves of at least 72 billion barrels of oil and 1700 trillion cubic feet of gas, it is perhaps not so surprising that there is so much interest in this country.

But political risk will remain an underlying factor as Putin continues to tighten his grip on the energy sector.

The headline of the piece: Russia remains a land of mystery. Indeed.


Outsiders further shut out of FSU

The signs are not looking good for foreign companies wishing to play a role in the oil and gas industry of the former Soviet Union.

Firstly, the government of Kazakhstan has stepped in with a hastily written law in order to block China National Petroleum Corporation’s (CNPC) $4.18 billion takeover of Canada’s PetroKazakhstan:

[T]he upper chamber, the Senate, passed a complex Bill that aims to give Kazakhstan the right to intervene in the sale of foreign-held stakes in oil players. It also seeks to limit property rights over “strategic resources” like oil and gas.

The Bill, which only needs President Nursultan Nazarbayev’s signature to come into law, could derail CNPC’s bid for PetroKazakhstan, a Canadian-listed producer with almost its entire operations in the Central Asian republic.

In recent years, Kazakhstan has sought to bring its oil and gas resources under greater state control and set tougher terms for foreign oil companies.

And in Russia:

Russia’s Natural Resources Ministry expects a law limiting foreign participation in the country’s largest oil and gas to come into force in 2007, a year later than initially planned.

The official added that the government will draft amendments to existing laws so it can limit foreign participation in next year’s planned sales of Arctic oilfields.

Effective renationalisation of the oil and gas industry in the FSU is all the rage at the moment, mainly because the governments of such countries have seen the hike in oil price and are feeling disgruntled that the outside companies are making an awful lot of money, which should be going to the government coffers instead. So they simply push the outsiders off the job and take back what they deem to be rightfully theirs. This will work fine whilst the oil price is sky high and there are plenty of proven reserves to exploit. It will not work so well come the day that the oil price readjusts to a more sensible figure or more exploration is needed.

It is all very well for governments to grab back these resources when the prices are high, but are they going to be in a position to run the industry efficiently and safely when the price drops? No. The governments are intending to sit back and cream off the cash as much as they can, and I doubt if any of them have a clue what to do if and when they actually have to put money back in to facilities which are no longer profitable. Western private companies are far better at running facilities in hard times than national companies, simply because their management, maintenance, and operating systems are vastly more efficient. They are also far better at running facilties safely, safety being something which gets abandoned when a state-owned facility is under pressure to perform economically.

There is also the issue, touched on in a previous post here, of exploration, an area of the oil and gas industry which requires a lot of up front investment with a lengthy payback period. Investment in exploration requires the company in question to have a lot of faith in the resource owner’s long term policies, and it is difficult to see how any future exploration is to be encouraged by the current actions of the governments of Kazakhstan and Russia.

However, Kazakh Deputy Energy & Mineral Resources Minister Bakhtykozha Izmukhambetov thinks differently, telling senators before the vote that:

“These new restrictions do not mean a worsening of the republic’s investment climate.”

No? Well, let’s see what the investors think.


Russian Anecdote

Person 1: Where are you from?
Person 2: Near to Moscow.
Person 1: Where exactly?
Person 2: Bishkek.

(BTW, can anyone enlighten me as to whether the practice of claiming to be from Moscow or near to Moscow is a recent thing, or if it dates from Soviet times?)


Total to go into Russia?

Despite the poor economic and political governance of Russia which dissuades foreign investment, the sheer size of Russia’s reserves are such that Western supermajors will always be willing to participate in Russian projects to some degree, as this report shows:

French giant Total has offered Russian gas giant Gazprom stakes in three projects in return for a 25% slice of the huge Shtokman gas project.

Total was one of five companies shortlisted last month by Gazprom as potential partners in the Shtokman development, in the Barents Sea.

The Shtokman project is likely to cost more than $20 billion, and analysts said Gazprom intends to get its foreign partners to put up about 30% of the money, with the rest coming from debt.

Let’s hope this French excursion into Russia fares better than that of 1812.


CPC bows to Moscow’s demands

This is probably not good news. It will certainly be worth keeping an eye on.

The six members of the Chevron-led Caspian Pipeline Consortium (CPC), which pumps oil from Kazakhstan to Russia’s Black Sea coast, have agreed to a list of Russian demands in order to double its capacity.

Ian MacDonald, the CPC’s general director, said the long-delayed agreement came after the Western oil players dropped opposition to Russia’s demands.

Russia had demanded that half of CPC management be nominated by itself, Kazakhstan and Oman, the sovereign shareholders, rather than just the oil company shareholders. Moscow also wanted higher tariffs, lower interest on loans and the power to appoint the next general manager.

MacDonald said the concessions made by the consortium partners were very significant as they would bite into their profits, but it was more important for them to get the pipeline expanded as their production in Kazakhstan was growing very fast.

“Every month in expansion delay causes a loss of $60 million to the shareholders and should the expansion never be agreed the initial investment in the project will not pay back in the foreseeable future,” he said.

MacDonald said he would step down in May next year, when a Russian nominee would become CPC’s general director.

So in order to keep the pipeline expansion project moving forward, the private companies which make up the consortium have caved in to Kremlin presssure, pressure which seems to be more of a political nature than anything which makes good business sense. A “Russian nominated” anything is generally not a good idea, and with Putin’s habit of stuffing his Petersburgh cronies into top jobs – especially those which are open to corruption – it is hard to see how this move is going to benefit the pipeline’s shareholders. It is also hard to see how this will make potential future investors feel any easier.


Ramadan Driving

From the Gulf News:

The emirate’s roads witnessed a tremendous rise in the number of accidents on the first day of Ramadan, a police official told Gulf News yesterday.

“There have been many accidents today. They are all minor, but the number is very high,” said Lieutenant Ali Mohammad from the operations room in Dubai yesterday.

“We have been receiving a great number of calls regarding accident reports. The number was so high that we had difficulty in sending police patrols to all the scenes.”

“We are surprised at the number of accident reports we are getting. I don’t really know the reason behind it, but it might be that Ramadan has affected motorists and their ability to concentrate while driving.”

Forcing drivers to become severely dehydrated in 30ºC+ temperatures causes an increase in accidents? Fancy that!