27 April 2006

Blair rules out blocking Gazprom Centrica bid

I'm glad he did the right thing.  Free trade is like pregnancy - it can't be partial.

For those who questioned the British Government's desire to block GAZP you may note that it took somewhere between 3 months and 2 weeks to come to this decision.  Compare that with the time it took to liberalize trading in GAZP shares.

Blair rules out blocking Gazprom Centrica bid:
Tony Blair has ruled out any possibility that UK ministers might actively seek to block a future bid by Russia's Gazprom for Centrica, the gas supplier.


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The Oil Drum - Press Release in Response to Grandstanding US Politicians

An attempt to spread the good word from the guys at the Oil Drum (a must read resource on oil and gas in general.  In this case everyone should read their response to the political grandstanding by US politicians.  The press release is  here.


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25 April 2006

Russia Energy Policy Part 2.0 - A US View

The Eurasia Monitor provides a US-centric view of the issues I covered in my Part 2.0 post yesterday EUROPE CALLS GAZPROM'S BLUFF AND PONDERS ITS THREAT.

Some good points mixed with the usual references to the 2008 Issue.  The good is that Russia exports 45% of its gas to Europe.

The bad is that Russia needs Europe more than Europe needs Russia.  An energy supply issue that recent events would tend to disprove.

The questionable relates the speculation regarding VVP's future after 2008.  Assuming that he does not stay as President or Prime Minister or something else (a safe -ish assumption) the big gossip is that he intends to take on GAZP.  Quite how the current supply spats feature in this scenario is not made clear.

Meanwhile the oil boys are feeling left out and called their own press conference to announce that Europe had enough oil - don't be misled by the headline.  Transneft pipes oil not gas: Transneft warns of cut in Europe’s gas supplies


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Russian Energy Policy - Part 2.0

It looks as though that the brief cup of coffee and lunch overran its allotted time.  So instead of a mid-afternoon blogfest this post is competing with a terrible Steve Martin film (aren't they all?) from Moscow to Heathrow courtesy of British Airways.

This is Russian Energy policy 2 because I am not yet ready for a bout of Rosneft caveat emptor cynicism.  Instead I am trying to find a place for a comment from Thomas Friedman's The World is Flat (no link because BA is Internet-less, though apparently Google is a good place to search and there is this company called Amazon that specializes in allowing you to order online and will deliver it to you in anywhere between a week and never.)  Despite winning the Goldman Sachs / FT Business Book of the Year it took 452 pages to find a truly original thought.  As a blogger smarter than I put it (clearly paraphrasing) - sometime around 2010 we should wait for the Friedman book telling us that the iPod is revolutionizing the music download world.  (note to self - get to the point) So this is the Centrica and GAZP post.

And his point was that there have never been wars between two countries that are part of a global supply chain.  A slight update on his previous books; there have never been wars between two countries which have McDonald's - presumably because everyone is suffering from indigestion.  Whilst Dell's just-in-time, albeit slightly longer than promised, supply chain may have a lot going for it, peace in our time was not a deliberate policy.

You can decide whether there is any merit in Dell as a global peace keeper.  The other side of the coin is that natural resource-based economies (pace Australia) tend not to be integral parts of the global services and lowest cost production supply chain.    Try Saudi Arabia and Kuwait for starters.  Because services can be moved quickly and outsourced production tends to have redundancy built in they are commodities - whereas natural resources are Commodities (some confusion here surely - ed?)

Before the argument becomes entirely circuitous as I try to argue that services are commodities and Commodities aren't commodities (at this point in the cycle) I'll try to get to the point about Russia.  When a large enough portion of a countries exports are service-based or lowest-cost-production commodities which can (relatively) easily be moved somewhere else in the globe its foreign policy is required to show that it is reliable partner.  If however, you believe (see Russia's Energy Policy Part 3 - if I ever get there)  that the world is dependent on your oil/gas/LNG/general largesse then you have no (immediate?) requirement to be a “friendly” part of the global supply chain.

The point that Friedman was making was specifically aimed at the Saudia Arabia's and Venezuela's of this world.  What I cannot decide is whether Russia's foreign policy is inside or outside the Friedman global supply chain - and indeed whether it matters.  If your point of view was exclusively guided by the FT and WSJ the answer would be that Russia was not acting like a good member of the interconnected world.  A more evidential based response would be that Russia tends to talk like the playground bully (Gazprom issues threat to EU gas supply) and act in a considerably more logical fashion - I think.

Nonetheless being the largest owner of a resource which is proving harder to discover  and more expensive to produce otherwise known as a Commodity, Russia's foreign policy does not have to be driven by its desire to see itself as part of a flat world.  And if that is the case will Russia see itself as integrated when it owns Centrica and Ruhrgas? Or are they Sword of Damocles investments?

I have argued during the Ukraine issue previously, and continue to believe, that Russia has every right to use its gas as an arm of its foreign policy.  As the FT has it:

“Russia is intent on using its existing and potential position as a major energy supplier to the global economy to get increased influence at the top table of global politics,”

and there is nothing wrong with that.  The nastier side is that

“Russia's use of its energy resources is unpredictable. The dominance of state monopoly in the gas sector means that reserves from the ground do not reach the market place and that gas can be used as a political weapon.”

Europe would rather that Russia signed up to long-term contracts and access to it's pipelines and hopes that by offering access to its retail markets Russia will play ball.  Russia sees no reason to do so because its guess is that Europe has nowhere else to go for 10-15 years.

Europe wants to diversify both the sources and routes of its energy supplies. It is pushing Russia to ratify the energy charter treaty, which provides for liberalising access to pipelines and stops countries from unilaterally suspending gas supplies in a pricing dispute. It has signalled it would let Russian companies operate in European retail markets in return..........

Russia understands the energy co-operation with Europe differently.

Having witnessed the destruction of Yukos in favour of Rosneft and with the knowledge that GAZP acts in favour of its managers, its government minders, the State and somewhere down the bottom of the list its shareholders and customers there are

legitimate concerns about allowing the purchase of assets by the state-owned entities of authoritarian regimes, particularly those with a track record of abusing private property rights. But the problem also has a tactical dimension. It might be better to tie Gazprom in to supplying the UK by allowing it to buy Centrica’s assets, which are largely customer contracts and hardly strategic. This argument might be even stronger if, in return, access could be gained to help develop Russia’s gas fields.

One further note of caution in this discussion; Friedman's flat world foreign policy may actually mean being a good member of the US foreign policy establishment which allows India to develop nuclear weapons; whilst Iran is at risk of being overrun by Rumsfeld's shock and awe tactics.


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24 April 2006

Russian Energy Policy

I have been promising myself to write a mega post on Russian Energy Policy.  I keep getting put off by the complexity of the subject, the diversity of views and by the different threads that make up Russian energy.  To get around the issue I have decided to break the subject down in to a number of different posts.

The first is the easiest to write (which is why I am writing it first) and is a continuation of the caveat emptor series on the Rosneft IPO.

The second is a series of thoughts on the legitimacy of GAZP, a Government controlled vehicle which is explicitly an arm of Russia foreign policy, bidding for Centrica.  Cynics (which includes me) might question who controls whom which makes the question more relevant.  Inherent in the central question is the legitimacy of using GAZP's commercial activity as a foreign policy lever.

The third of the three posts is more nebulous and the subject somewhat harder to tie down.  In essence it questions whether Russian policy is based on reality, or a fiction that is fed from professional managers to 5th Directorate thugs.  The risk is that I will head off in to Peak Oil discussions where I am not competent to comment - not that it has stopped me in the past.

So with that as my essay plan for this afternoon its time to do what all good students do when faced with a long essay to write.  Make a cup of coffee, some lunch and read a bunch of unrelated information.


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Alfa vs Reiman Continued and Continuing

The FT has a lengthy piece today on the Alfa vs Reiman dispute. (Subscription required)


To be fair to the FT they paint it as a dispute between Alfa and the ever so slightly forgetful and not very good lawyer, Jeffrey Galmond. You can get more juice from following the Bermuda papers (all online) as this FT piece sits on the fence a little.

Like many of us they ask why Alfa feels that it can get away with an assault on Leonid D who is supposed to be one of Putin's inner circle. Well-connected friends tell me that Alfa's friends in the Kremlin are as powerful as Leonid D's and share a past working relationship with VVP.

Whatever the truth this appears to be entering its final set (?).

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21 April 2006

MSN Opens in Russia

The Russian IT Blog notes that:

MSN Opens in Russia:
More of grMSN Opens in Russia
eat signs of healthy growth in Russian Internet Sector: finally, Microsoft decides to open an MSN Division here, in Russia. It was announced that a local manager - Vsevolod Leonov, is appointed to lead the freshly built entity. Hi is responsible for strategic developments of MSN in Russia, including marketing activities.
As I noted here GOOG is also about to launch here.  The combined force of their marketing budget will just about dwarf the Russian ad market ($60mn in 2005).  But should accelerate ruNet's development - broadband adoption 2005 over 2004 was over 100% - exciting times we live in.


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For BellSouth, Faster Is Better

More from the why am I reading about non-Russia stuff on Ruminations on Russia.

Om Malik makes the same conclusions as we are noting anecdotally here and in Belarus as well.  Speed sells.  At the right price obviously.  Customers seem to have a set amount of cash for the Internet, $20-ish) and will upgrade to higher speeds as prices are reduced.



For BellSouth, Faster Is Better:
For second consecutive quarter BellSouth defied the industry trend of bargain DSL connections, adding more premium DSL subscribers than ever before. The company added 263,000 new DSL lines, of which a whopping 80% opted for the two highest speed (3 Mbps and 6 Mbps) offerings. As a result the DSL margins improved, theorize the analysts from UBS. At the end of the first quarter 2006, they had about 3.1 million broadband subscribers. Cynthia has the full lowdown on the earnings.
It is increasingly obvious that the Bells should stop fooling around with television and instead focus on selling bandwidth… a lot of it, for a premium price and make their numbers accordingly. It is a trend that is spreading across the world, and it should be the best defense against the cable companies. The problem is that instead of getting faster pipes rolled out, the phone companies are mucking around with television stuff, which is harder and more expensive, giving cable companies a chance to pick-up voice customers.

This will have a more significant impact on networks which are inherently speed constrained (ADSL, wireless and to a lesser extent HFC (hybrid fiber coax).  Whereas the bigger and stupider the pipe the easier it is to provide speed, in both directions.


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16 April 2006

Skype Acquires Sonorit and Camino Networks (Business Wire)

It's been a while since I have posted - it's not that I have been busy - I haven't.  I do have one hell of a Russian gas post up my sleeve.  Unfortunately the more I learn the more I need to learn so its taking a while.  In the meantime I have been lite on dishing out unfair comment.  So whilst the gas post bubbles away here are some more technology thoughts;

Skype Acquires Sonorit and Camino Networks (Business Wire)  On the face of it not a hugely Russia-related comment so stick with it and I'll explain.  Skype, now gently failing under the aegis of e-Bay, was founded/developed/dreamed up in Estonia.  Estonia definitely prefers the F part of the FSU and Niklaas has more in common with the Swedes to the north than the Slavs to the East.

Sonorit and Camino are personal spin-offs from GIPS. That is a couple of developers from GIPS walked out and started Sonorit and Camino - which are in fact the same company just separated at birth.  GIPS is one of those companies which plays a substantial role in our on-line life but avoids ever entering our consciousness. It is in fact the engine that provides better than PSTN voice quality on Skype, GTalk and Yahoo!  Impressive for a company nominally listed on the Norwegian Borse.

And its link to Russia is.........

There is a Russian equivalent to both GIPS and Sonorit/Camino which gos by the name of SpiritDSP. With half a marketing brain it would today be an industry leader instead of being left behind in the battle to run voice on non-telephone telephones.

Shame


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14 April 2006

Commodities

Is this the Lex Column's equivalent of the Economist's $5/bbl oil or a prescient warning of froth.  Although I worry in a very frothy Russia that its increasingly difficult to distinguish the head from the alcohol (if the analogy has not become too twisted..)

Lex: Commodities:
ImageRecord high prices combined with a strong bullish consensus are the hallmarks of a speculative bubble and should give commodities investors pause for thought. It may be too early to place bearish bets, but fund demand and political turmoil cannot indefinitely obscure the cyclical nature of commodity markets.


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12 April 2006

Google acquires Dulance, opens R&D in Russia

We are expecting an announcement any day that Google has overcome its localization issues in Russia and will take on the current leading three (Yandex, Rambler and Mail.ru.)  Assuming that they can overcome their own management disfunctionality they should blow them out of the water.  Russia's Internet development has gone nowhere over the past few years - maybe as a result of financial pressure.

Google acquires Dulance, opens R&D in Russia:

Google has announced that it is going to open a research and development centre in Moscow this year. Sergei Burkov, a former CEO of Dulance, an Internet search company, will run the centre. According to sources, Google has acquired Dulance.

Also in Vedomosti:

Google ищет таланты - Компания открывает в Москве центр разработок:
Крупнейшая в мире интернет-компания Google откроет в Москве центр разработок. Его возглавит Сергей Бурков, ранее успевший создать три инновационные IT-компании в США. Эксперты считают, что московский офис займется разработками для глобального рынка, а не локализацией продуктов Google для России.


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03 April 2006

Aggghh **##**

April 1 passed mostly unnoticed, except for the hacking cough and miserable headache.  April 3rd however has been a fucking disaster:

Firstly TiddlyWiki v.2.0.7 stopped working on Firefox 1.5.0.1 which is hardly a surprise because the small Dutch boy had long ago taken his finger out of the memory-leak dyke, she of the comfortable shoes.  I virtually live in my TiddlyWiki which is an invention from heaven by Jeremy.  No worries it's still OK in Safari.
Then in creating an online portfolio of Russian E&P companies I discovered that the live feed is only supported in Safari - OK no worries.  I mean if you 12 apps open a 13th is not going to matter.

And then the straw that broke the camel's back - or the bug that caused the cough; Ecto the oh so cool blogging tool stopped posting to my Blogger account.  As an ex-M$ft user I tried the log-off/restart approach - failed.  And then went on a trail of the /dev sites.  It's a GOOG thing.  Adriaan is also the brain(S)(?) bbehind the oh so cool Endo aggregator

Not that you will know until they have fixed the bug as I am still writing c/o of Ecto - it's a habit thing - and I will have to wait for the bug to be fixed before ex-Chancellor Schroeder and Minister Reiman can be further eviscerated.


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Reiman vs Alfa

The ever reliable Royal Gazette, clearly the first stop on my mornings reading, has some additional tidbits to tide you over in the penultimate set of L.D. vs Alfa.

Once again the ever unreliable Jeff Galmond seems to be setting up his boss for a fall.  The news from the sunshine is that IPOC might have been a little unclear in its accounting policies (not ever expecting accountants to account).

It would appear that journalists in the middle of the ocean have little to do so they actually provide details (in lieu of facts).  Here are some for your mid-week entertainment;

For example, the Ernst & Young report shows IPOC claimed its company Lapal Ltd. had been loaned $550,000 by a Connecticut-based company called Castle Ventures Ltd. But in its submission, the alleged lender claimed to know nothing about it.
A letter from Castle Ventures' attorneys stated: “. . . there have been no business dealings between Castle Ventures or (company owners) the Hedges and Lapal Limited. There are no records of any loan transactions between Castle Ventures and Lapal Limited. Further, Castle Ventures is not in the business of providing loans.”
Another IPOC group company, Albany Invest Ltd., claimed it had been paid $803,901 in two separate payments by UK company Advanta Corporation Ltd. But court papers showed that Advanta had never even traded at the time of the alleged transaction.
Yet another anomaly is the $250,000 that the accountants' report said was paid to IPOC company Lapal Ltd. by Netmax for consultancy services.
Netmax proved not to be a company at all, but instead a brand for a completely different firm, Cybernet Systems Corporation.
Cybernet's written response to the alleged transaction included: “Netmax is a product line owned by Cybernet Systems Corporation.
”As such, we are in a position to confirm that Netmax did not enter into any such agreement with Lapal Limited, nor did it pay any monies to Lapal, whether the sum of $250,000 or any other amount. In fact, Netmax has had no dealings with Lapal or IPOC International Growth Fund Limited.“
Odder still, Lapal claimed it had been paid $2.04 million by Lemex Company for ”consulting services: structuring a transaction involving a merger of two banks“.
The courts documents show evidence that Lemex is a Hungarian kitchen outfitter. Also included were printed-off web pages from the web site of the Lemex Industrial Group, which is a US supplier of lathes designed for the aeronautics industry.


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Quotes Entirely Relevant to Investing

From my favourite irreverent financial website - Long or Short Capital.

Quotes Entirely Relevant to Investing:
That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built.
-Abraham Lincoln
At which point I should tell the anekdot I was told by my first partner in Russia in 1995:

The job of a Russian man:

To plant:
His house in the ground (sic)
His seed in a women
His neighbour in jail

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Schröder under pressure over €1bn pipeline grant

More, and worse, from our favorite collector of brown paper bags.  Seems that he was unaware that his government, whilst he was Chancellor, agreed to provide political and economic risk insurance to a $1bn German bank loan to the Pipeline.

Schröder under pressure over €1bn pipeline grant.

From the FT.

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27 April 2006

Blair rules out blocking Gazprom Centrica bid

I'm glad he did the right thing.  Free trade is like pregnancy - it can't be partial.

For those who questioned the British Government's desire to block GAZP you may note that it took somewhere between 3 months and 2 weeks to come to this decision.  Compare that with the time it took to liberalize trading in GAZP shares.

Blair rules out blocking Gazprom Centrica bid:
Tony Blair has ruled out any possibility that UK ministers might actively seek to block a future bid by Russia's Gazprom for Centrica, the gas supplier.


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The Oil Drum - Press Release in Response to Grandstanding US Politicians

An attempt to spread the good word from the guys at the Oil Drum (a must read resource on oil and gas in general.  In this case everyone should read their response to the political grandstanding by US politicians.  The press release is  here.


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25 April 2006

Russia Energy Policy Part 2.0 - A US View

The Eurasia Monitor provides a US-centric view of the issues I covered in my Part 2.0 post yesterday EUROPE CALLS GAZPROM'S BLUFF AND PONDERS ITS THREAT.

Some good points mixed with the usual references to the 2008 Issue.  The good is that Russia exports 45% of its gas to Europe.

The bad is that Russia needs Europe more than Europe needs Russia.  An energy supply issue that recent events would tend to disprove.

The questionable relates the speculation regarding VVP's future after 2008.  Assuming that he does not stay as President or Prime Minister or something else (a safe -ish assumption) the big gossip is that he intends to take on GAZP.  Quite how the current supply spats feature in this scenario is not made clear.

Meanwhile the oil boys are feeling left out and called their own press conference to announce that Europe had enough oil - don't be misled by the headline.  Transneft pipes oil not gas: Transneft warns of cut in Europe’s gas supplies


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Russian Energy Policy - Part 2.0

It looks as though that the brief cup of coffee and lunch overran its allotted time.  So instead of a mid-afternoon blogfest this post is competing with a terrible Steve Martin film (aren't they all?) from Moscow to Heathrow courtesy of British Airways.

This is Russian Energy policy 2 because I am not yet ready for a bout of Rosneft caveat emptor cynicism.  Instead I am trying to find a place for a comment from Thomas Friedman's The World is Flat (no link because BA is Internet-less, though apparently Google is a good place to search and there is this company called Amazon that specializes in allowing you to order online and will deliver it to you in anywhere between a week and never.)  Despite winning the Goldman Sachs / FT Business Book of the Year it took 452 pages to find a truly original thought.  As a blogger smarter than I put it (clearly paraphrasing) - sometime around 2010 we should wait for the Friedman book telling us that the iPod is revolutionizing the music download world.  (note to self - get to the point) So this is the Centrica and GAZP post.

And his point was that there have never been wars between two countries that are part of a global supply chain.  A slight update on his previous books; there have never been wars between two countries which have McDonald's - presumably because everyone is suffering from indigestion.  Whilst Dell's just-in-time, albeit slightly longer than promised, supply chain may have a lot going for it, peace in our time was not a deliberate policy.

You can decide whether there is any merit in Dell as a global peace keeper.  The other side of the coin is that natural resource-based economies (pace Australia) tend not to be integral parts of the global services and lowest cost production supply chain.    Try Saudi Arabia and Kuwait for starters.  Because services can be moved quickly and outsourced production tends to have redundancy built in they are commodities - whereas natural resources are Commodities (some confusion here surely - ed?)

Before the argument becomes entirely circuitous as I try to argue that services are commodities and Commodities aren't commodities (at this point in the cycle) I'll try to get to the point about Russia.  When a large enough portion of a countries exports are service-based or lowest-cost-production commodities which can (relatively) easily be moved somewhere else in the globe its foreign policy is required to show that it is reliable partner.  If however, you believe (see Russia's Energy Policy Part 3 - if I ever get there)  that the world is dependent on your oil/gas/LNG/general largesse then you have no (immediate?) requirement to be a “friendly” part of the global supply chain.

The point that Friedman was making was specifically aimed at the Saudia Arabia's and Venezuela's of this world.  What I cannot decide is whether Russia's foreign policy is inside or outside the Friedman global supply chain - and indeed whether it matters.  If your point of view was exclusively guided by the FT and WSJ the answer would be that Russia was not acting like a good member of the interconnected world.  A more evidential based response would be that Russia tends to talk like the playground bully (Gazprom issues threat to EU gas supply) and act in a considerably more logical fashion - I think.

Nonetheless being the largest owner of a resource which is proving harder to discover  and more expensive to produce otherwise known as a Commodity, Russia's foreign policy does not have to be driven by its desire to see itself as part of a flat world.  And if that is the case will Russia see itself as integrated when it owns Centrica and Ruhrgas? Or are they Sword of Damocles investments?

I have argued during the Ukraine issue previously, and continue to believe, that Russia has every right to use its gas as an arm of its foreign policy.  As the FT has it:

“Russia is intent on using its existing and potential position as a major energy supplier to the global economy to get increased influence at the top table of global politics,”

and there is nothing wrong with that.  The nastier side is that

“Russia's use of its energy resources is unpredictable. The dominance of state monopoly in the gas sector means that reserves from the ground do not reach the market place and that gas can be used as a political weapon.”

Europe would rather that Russia signed up to long-term contracts and access to it's pipelines and hopes that by offering access to its retail markets Russia will play ball.  Russia sees no reason to do so because its guess is that Europe has nowhere else to go for 10-15 years.

Europe wants to diversify both the sources and routes of its energy supplies. It is pushing Russia to ratify the energy charter treaty, which provides for liberalising access to pipelines and stops countries from unilaterally suspending gas supplies in a pricing dispute. It has signalled it would let Russian companies operate in European retail markets in return..........

Russia understands the energy co-operation with Europe differently.

Having witnessed the destruction of Yukos in favour of Rosneft and with the knowledge that GAZP acts in favour of its managers, its government minders, the State and somewhere down the bottom of the list its shareholders and customers there are

legitimate concerns about allowing the purchase of assets by the state-owned entities of authoritarian regimes, particularly those with a track record of abusing private property rights. But the problem also has a tactical dimension. It might be better to tie Gazprom in to supplying the UK by allowing it to buy Centrica’s assets, which are largely customer contracts and hardly strategic. This argument might be even stronger if, in return, access could be gained to help develop Russia’s gas fields.

One further note of caution in this discussion; Friedman's flat world foreign policy may actually mean being a good member of the US foreign policy establishment which allows India to develop nuclear weapons; whilst Iran is at risk of being overrun by Rumsfeld's shock and awe tactics.


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24 April 2006

Russian Energy Policy

I have been promising myself to write a mega post on Russian Energy Policy.  I keep getting put off by the complexity of the subject, the diversity of views and by the different threads that make up Russian energy.  To get around the issue I have decided to break the subject down in to a number of different posts.

The first is the easiest to write (which is why I am writing it first) and is a continuation of the caveat emptor series on the Rosneft IPO.

The second is a series of thoughts on the legitimacy of GAZP, a Government controlled vehicle which is explicitly an arm of Russia foreign policy, bidding for Centrica.  Cynics (which includes me) might question who controls whom which makes the question more relevant.  Inherent in the central question is the legitimacy of using GAZP's commercial activity as a foreign policy lever.

The third of the three posts is more nebulous and the subject somewhat harder to tie down.  In essence it questions whether Russian policy is based on reality, or a fiction that is fed from professional managers to 5th Directorate thugs.  The risk is that I will head off in to Peak Oil discussions where I am not competent to comment - not that it has stopped me in the past.

So with that as my essay plan for this afternoon its time to do what all good students do when faced with a long essay to write.  Make a cup of coffee, some lunch and read a bunch of unrelated information.


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Alfa vs Reiman Continued and Continuing

The FT has a lengthy piece today on the Alfa vs Reiman dispute. (Subscription required)


To be fair to the FT they paint it as a dispute between Alfa and the ever so slightly forgetful and not very good lawyer, Jeffrey Galmond. You can get more juice from following the Bermuda papers (all online) as this FT piece sits on the fence a little.

Like many of us they ask why Alfa feels that it can get away with an assault on Leonid D who is supposed to be one of Putin's inner circle. Well-connected friends tell me that Alfa's friends in the Kremlin are as powerful as Leonid D's and share a past working relationship with VVP.

Whatever the truth this appears to be entering its final set (?).

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21 April 2006

MSN Opens in Russia

The Russian IT Blog notes that:

MSN Opens in Russia:
More of grMSN Opens in Russia
eat signs of healthy growth in Russian Internet Sector: finally, Microsoft decides to open an MSN Division here, in Russia. It was announced that a local manager - Vsevolod Leonov, is appointed to lead the freshly built entity. Hi is responsible for strategic developments of MSN in Russia, including marketing activities.
As I noted here GOOG is also about to launch here.  The combined force of their marketing budget will just about dwarf the Russian ad market ($60mn in 2005).  But should accelerate ruNet's development - broadband adoption 2005 over 2004 was over 100% - exciting times we live in.


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For BellSouth, Faster Is Better

More from the why am I reading about non-Russia stuff on Ruminations on Russia.

Om Malik makes the same conclusions as we are noting anecdotally here and in Belarus as well.  Speed sells.  At the right price obviously.  Customers seem to have a set amount of cash for the Internet, $20-ish) and will upgrade to higher speeds as prices are reduced.



For BellSouth, Faster Is Better:
For second consecutive quarter BellSouth defied the industry trend of bargain DSL connections, adding more premium DSL subscribers than ever before. The company added 263,000 new DSL lines, of which a whopping 80% opted for the two highest speed (3 Mbps and 6 Mbps) offerings. As a result the DSL margins improved, theorize the analysts from UBS. At the end of the first quarter 2006, they had about 3.1 million broadband subscribers. Cynthia has the full lowdown on the earnings.
It is increasingly obvious that the Bells should stop fooling around with television and instead focus on selling bandwidth… a lot of it, for a premium price and make their numbers accordingly. It is a trend that is spreading across the world, and it should be the best defense against the cable companies. The problem is that instead of getting faster pipes rolled out, the phone companies are mucking around with television stuff, which is harder and more expensive, giving cable companies a chance to pick-up voice customers.

This will have a more significant impact on networks which are inherently speed constrained (ADSL, wireless and to a lesser extent HFC (hybrid fiber coax).  Whereas the bigger and stupider the pipe the easier it is to provide speed, in both directions.


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16 April 2006

Skype Acquires Sonorit and Camino Networks (Business Wire)

It's been a while since I have posted - it's not that I have been busy - I haven't.  I do have one hell of a Russian gas post up my sleeve.  Unfortunately the more I learn the more I need to learn so its taking a while.  In the meantime I have been lite on dishing out unfair comment.  So whilst the gas post bubbles away here are some more technology thoughts;

Skype Acquires Sonorit and Camino Networks (Business Wire)  On the face of it not a hugely Russia-related comment so stick with it and I'll explain.  Skype, now gently failing under the aegis of e-Bay, was founded/developed/dreamed up in Estonia.  Estonia definitely prefers the F part of the FSU and Niklaas has more in common with the Swedes to the north than the Slavs to the East.

Sonorit and Camino are personal spin-offs from GIPS. That is a couple of developers from GIPS walked out and started Sonorit and Camino - which are in fact the same company just separated at birth.  GIPS is one of those companies which plays a substantial role in our on-line life but avoids ever entering our consciousness. It is in fact the engine that provides better than PSTN voice quality on Skype, GTalk and Yahoo!  Impressive for a company nominally listed on the Norwegian Borse.

And its link to Russia is.........

There is a Russian equivalent to both GIPS and Sonorit/Camino which gos by the name of SpiritDSP. With half a marketing brain it would today be an industry leader instead of being left behind in the battle to run voice on non-telephone telephones.

Shame


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14 April 2006

Commodities

Is this the Lex Column's equivalent of the Economist's $5/bbl oil or a prescient warning of froth.  Although I worry in a very frothy Russia that its increasingly difficult to distinguish the head from the alcohol (if the analogy has not become too twisted..)

Lex: Commodities:
ImageRecord high prices combined with a strong bullish consensus are the hallmarks of a speculative bubble and should give commodities investors pause for thought. It may be too early to place bearish bets, but fund demand and political turmoil cannot indefinitely obscure the cyclical nature of commodity markets.


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12 April 2006

Google acquires Dulance, opens R&D in Russia

We are expecting an announcement any day that Google has overcome its localization issues in Russia and will take on the current leading three (Yandex, Rambler and Mail.ru.)  Assuming that they can overcome their own management disfunctionality they should blow them out of the water.  Russia's Internet development has gone nowhere over the past few years - maybe as a result of financial pressure.

Google acquires Dulance, opens R&D in Russia:

Google has announced that it is going to open a research and development centre in Moscow this year. Sergei Burkov, a former CEO of Dulance, an Internet search company, will run the centre. According to sources, Google has acquired Dulance.

Also in Vedomosti:

Google ищет таланты - Компания открывает в Москве центр разработок:
Крупнейшая в мире интернет-компания Google откроет в Москве центр разработок. Его возглавит Сергей Бурков, ранее успевший создать три инновационные IT-компании в США. Эксперты считают, что московский офис займется разработками для глобального рынка, а не локализацией продуктов Google для России.


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03 April 2006

Aggghh **##**

April 1 passed mostly unnoticed, except for the hacking cough and miserable headache.  April 3rd however has been a fucking disaster:

Firstly TiddlyWiki v.2.0.7 stopped working on Firefox 1.5.0.1 which is hardly a surprise because the small Dutch boy had long ago taken his finger out of the memory-leak dyke, she of the comfortable shoes.  I virtually live in my TiddlyWiki which is an invention from heaven by Jeremy.  No worries it's still OK in Safari.
Then in creating an online portfolio of Russian E&P companies I discovered that the live feed is only supported in Safari - OK no worries.  I mean if you 12 apps open a 13th is not going to matter.

And then the straw that broke the camel's back - or the bug that caused the cough; Ecto the oh so cool blogging tool stopped posting to my Blogger account.  As an ex-M$ft user I tried the log-off/restart approach - failed.  And then went on a trail of the /dev sites.  It's a GOOG thing.  Adriaan is also the brain(S)(?) bbehind the oh so cool Endo aggregator

Not that you will know until they have fixed the bug as I am still writing c/o of Ecto - it's a habit thing - and I will have to wait for the bug to be fixed before ex-Chancellor Schroeder and Minister Reiman can be further eviscerated.


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Reiman vs Alfa

The ever reliable Royal Gazette, clearly the first stop on my mornings reading, has some additional tidbits to tide you over in the penultimate set of L.D. vs Alfa.

Once again the ever unreliable Jeff Galmond seems to be setting up his boss for a fall.  The news from the sunshine is that IPOC might have been a little unclear in its accounting policies (not ever expecting accountants to account).

It would appear that journalists in the middle of the ocean have little to do so they actually provide details (in lieu of facts).  Here are some for your mid-week entertainment;

For example, the Ernst & Young report shows IPOC claimed its company Lapal Ltd. had been loaned $550,000 by a Connecticut-based company called Castle Ventures Ltd. But in its submission, the alleged lender claimed to know nothing about it.
A letter from Castle Ventures' attorneys stated: “. . . there have been no business dealings between Castle Ventures or (company owners) the Hedges and Lapal Limited. There are no records of any loan transactions between Castle Ventures and Lapal Limited. Further, Castle Ventures is not in the business of providing loans.”
Another IPOC group company, Albany Invest Ltd., claimed it had been paid $803,901 in two separate payments by UK company Advanta Corporation Ltd. But court papers showed that Advanta had never even traded at the time of the alleged transaction.
Yet another anomaly is the $250,000 that the accountants' report said was paid to IPOC company Lapal Ltd. by Netmax for consultancy services.
Netmax proved not to be a company at all, but instead a brand for a completely different firm, Cybernet Systems Corporation.
Cybernet's written response to the alleged transaction included: “Netmax is a product line owned by Cybernet Systems Corporation.
”As such, we are in a position to confirm that Netmax did not enter into any such agreement with Lapal Limited, nor did it pay any monies to Lapal, whether the sum of $250,000 or any other amount. In fact, Netmax has had no dealings with Lapal or IPOC International Growth Fund Limited.“
Odder still, Lapal claimed it had been paid $2.04 million by Lemex Company for ”consulting services: structuring a transaction involving a merger of two banks“.
The courts documents show evidence that Lemex is a Hungarian kitchen outfitter. Also included were printed-off web pages from the web site of the Lemex Industrial Group, which is a US supplier of lathes designed for the aeronautics industry.


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Quotes Entirely Relevant to Investing

From my favourite irreverent financial website - Long or Short Capital.

Quotes Entirely Relevant to Investing:

That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built.
-Abraham Lincoln
At which point I should tell the anekdot I was told by my first partner in Russia in 1995:

The job of a Russian man:

To plant:
His house in the ground (sic)
His seed in a women
His neighbour in jail

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Schröder under pressure over €1bn pipeline grant

More, and worse, from our favorite collector of brown paper bags.  Seems that he was unaware that his government, whilst he was Chancellor, agreed to provide political and economic risk insurance to a $1bn German bank loan to the Pipeline.

Schröder under pressure over €1bn pipeline grant.

From the FT.

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