STATISTICS

Timeline
NOV. 21, 2013 Protesters take to the
streets of Kiev after Ukraines President
Viktor Yanukovichs government sus-
pends preparations for an association
agreement with the E.U.
FEB. 18, 2014 Protests in Kiev turn
violent. Over the next three days, more
than 100 people are killed in clashes
between police and protestors.
FEB. 21, 2014 An agreement is
signed between Yanukovich and rep-
resentatives of the opposition forces,
but the next day, Yanukovich flees to
Russia.
FEB. 26, 2014 Pro-Russian forces
begin to take control of Crimea.
MARCH 16, 2014 A referendum is
held in which the majority of partici-
pants vote to secede from Ukraine.
MARCH 18, 2014 Agreement
is signed on the accession of the
Republic of Crimea to the Russian
Federation. The pact envisages a tran-
sitional period until January 1, 2015.
DIPLOMACY: Putin thanks Indian PM for restraint and understanding Moscows concerns
LISTINGS: Russian retailers rethink their oerings while the government mulls privatisation
Ukraine: India walks a tightrope,
backs pragmatic approach
India will be opposing sanctions and is proactive in groupings like BRICS to avert escalation of the West-Russia
standoff over the Crimea impasse as it will impact global cooperation over issues like Iran, Syria and Afghanistan.
Tensions between Russia and Europe and the US have hit markets and caused Russian firms to take
a hard look at their plans to list on stock exchanges in 2014
F
aced with an unenviable task of choos-
ing sides in what is increasingly looking
like the biggest global confrontation
since the end of the Cold War, India has
decided to take a pragmatic approach to
the Ukraine crisis. After a joint parliament
session in which Russia accepted the acces-
sion request of the former-Ukrainian region
of Crimea, Russian President Vladimir Putin
called Indias Prime Minister Manmohan
Singh to apprise him of the developments
and thanked India for its position. We highly
appreciate Indias restraint and objectivity,
Putin told the parliament before calling the
Indian prime minister.
According to Indias Ministry of External
Affairs, the prime minister expressed his
hope that all sides would exercise restraint
and work together constructively to find
political and diplomatic solutions that pro-
tected the legitimate interests of all coun-
tries in the region and ensured long term
peace and stability in Europe and beyond.
While India is not in a position to express
outright support for Russias incorporation
of the Crimean peninsula, an area that was
controversially ceded to Ukraine by then
Russias president Nikita Khrushchev at a
time when the break-up of the USSR was
unimaginable, New Delhi has made it clear
that it will not support sanctions against
Moscow.
A week before the Crimea referen-
dum, Indias National Security Advisor
Shivshankar Menon described Russias inter-
ests in Ukraine as legitimate. This remark
went down well with the establishment in
Moscow, which faced stern criticism from
the West. New Delhi can empathise with
Moscow, which has been concerned about a
potential NATO presence in the strategically
important Black Sea region, close to its base
in Sevastopol. India was understandably
peeved in 1986 when the US wanted to con-
struct a powerful Voice of America transmit-
ter in northern Sri Lanka, which New Delhi
believed could be used as a covert listening
post in South Asia. India has also been wary
of a potential Chinese presence close to the
Maldives and Sri Lanka.
Despite the genuine understanding of
Russian concerns in the Black Sea, India is
likely to maintain silence on the incorpora-
tion of Crimea. There are clear parallels to
Crimea and the integration of Sikkim into
India, although the referendum held in the
former Buddhist kingdom was recognised
by the United Nations. The South Block
also understands that the Kremlin was in
no position to reject an overwhelming de-
mand in Crimea for reunification with the
AJAY KAMALAKARAN
RIBR
traditional motherland. New
Delhis vague statement about
the respect for national sover-
eignty is in line with the stand
it had taken on issues such as
Kosovo and the 2008 Russia-
Georgia war.
BRICS Diplomacy
The BRICS members are expected to come
up with a joint statement after their rep-
resentatives meet on the sidelines of the
Nuclear Safety Summit in The Hague. Indias
primary concern is the possible return of the
Taliban and a spike in terrorism in the wake
of the withdrawal of foreign combat troops
from Afghanistan. New Delhi is banking on
cooperation between the NATO and Russia
to minimise this threat. Russia and the West
also made major progress on the issue of
Iran, something which is in danger of being
derailed at this juncture. A potential lifting of
sanctions on Teheran would help India step
up its supplies of Iranian crude without invit-
ing the wrath of Washington. Cooperation
on Syria is also likely to be hit if tensions rise
between Russia and the West.
Reports from the western press have
indicated that the NATO is worried about a
potential Russian annexation of the break-
away Moldovan republic of Transdniestria,
where an overwhelming majority of resi-
dents want to join Russia. Since the republic,
which broke away from Moldova in 1990,
doesnt share a border with Russia, the only
way Russian troops can access the country
by land is through eastern Ukraine. Such
a scenario is highly unlikely but the NATO,
which is looking for a presence in Ukraine,
may just use this as an excuse to set up base
in the country, triggering more friction with
Moscow.
India remains in a tight spot since its rela-
tions with the West are also important and
despite the recent cooling of relations with
the US, New Delhis trade and defence ties
are growing with Washington. The EU is also
a major trade partner and India is negotiating
a trade agreement with the EU. A new Cold
War is, however, unlikely since that would
require Beijing to play along. Chinas bilateral
trade with the US stood at $562 billion in
2013. While China has been increasing its
engagement with Russia both bilaterally and
in multilateral groupings like the BRICS, it is
unlikely to be dragged into a Russia versus
the West confrontation. If that were ever to
happen, India would be left with its toughest
ever foreign policy choice.
P
lans for Russian companies to list
billions of dollars worth of shares
on global exchanges have been
thrown into question by the conflict
over Ukraine. Both state-owned and
private companies are mulling plans
to sell fresh equity to investors in
2014. Russian Prime Minister Dmitry
Medvedev said at the start of the year
that the government hopes to raise
more than $5 billion in 2014 selling
stakes in state-held firms.
We have rather serious plans to
raise around 200 billion rubles ($5.5
billion) from privatisations this year
and I hope the plans will be fulfilled,
Medvedev told a government meeting
in February, only days before the crisis
in Ukraine reached new heights.
Yet even before the dispute over
Crimea began to impact Russian mar-
kets, Medvedev had sounded a note of
caution. We should not drag it out, he
said. But at the same time we should
consider the economic circumstances
in the world and in the country.
Russian firms are still hoping to
benefit from the global boom in initial
public offerings even as relations with
Europe and the US and the invest-
ment communities who reside there
have become deeply complicated.
Total IPO volume in Europe, Middle
East and Africa hit a record in January
as six deals raised $3.1 billion, making
it the best start to the year of all time,
according to Dealogic, a data provider.
Indeed, the Russian IPO market ap-
peared to reopen in 2013 with several
significant companies listing stock. A
total of $7.9 billion was raised via nine
public offerings. Those firms included
state-controlled Alrosa, the worlds
biggest diamond miner, which oper-
ates vast mines in Siberia. VTB, Russias
second-largest bank, raised over $3
billion in a secondary offering in May
2013. Moscow-based lender Tinkoff
Credit Systems was another big earner
in 2013, pulling in just over $1 billion
selling shares on the London Stock
Exchange.
Those offerings had followed state-
controlled Sberbank, the largest bank
in Eastern Europe, listing a 7 percent
stake in 2012.
Russian firms had hoped to keep
the ball rolling into 2014, with a focus
on retailers as Russian consumers flex
Can Russian IPOs survive Ukraine?
DAVID MILLER
SPECIALLY FOR RIBR
their rising spending power.
The Euromonitor Research group
has predicted Russia will become the
largest retail market in the world by
2018.
Russian retailer Lenta, the countrys
second-biggest supermarket chain,
was first out of the gate in 2014, rais-
ing about $1 billion in February in a
London listing.
Other big retailers are now eyeing
the market carefully. Among those
with plans to sell shares include the
Russian Cash & Carry unit of German
retailer Metro AG, as well as Detsky Mir,
Russias biggest childrens retailer.
The conflict over Ukraine hit the
share prices of Russian companies
listed in Moscow, London and New
York, and helped push the ruble down
to record lows.
Yet a broad slump in emerging mar-
kets and sluggish economic growth
had been weighing on Russian eq-
uity prices even before the crisis over
Ukraine. Indeed, some investors had
been arguing that low equity valu-
ations in emerging markets were at
a point where they were becoming
attractive to investors searching for a
bargain.
If you look at the balance of trade
that our clients are doing, theyre buy-
ing, Gary Dugan, the chief investment
officer in Asia and the Middle East for
Coutts & Co., the wealth management
group for Royal Bank of Scotland, had
told reporters in February. Theres
been an appetite for Asia and for
Russia after the sell-off.
Russian shares were trading at a 25
percent discount to their emerging
market peers as of the end of 2013.
As the year began, Russian stocks
had the cheapest valuations among 21
emerging-market economies moni-
tored by a leading business magazine.
Shares on the benchmark were trading
at 4.5 times projected 12-month earn-
ings compared to a multiple of 10.4 for
the wider benchmark MSCI Emerging
Markets Index.
Russia has appreciated India for its objective stand on the Ukraine issue.
Ruble/Rupee dollar rates
Stock Market Index
Crimea referendum vote
Crimeas ethnic makeup
Russia-Ukraine trade
turnover ($ billion)
Business Report
THE ECONOMIC TIMES IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA
RUSSIA&INDIA
WEDNESDAY MARCH 26, 2014 in.rbth.com
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A broad slump in emerging
markets and slow economic
growth affected Russian
equity prices even before the
crisis over Ukraine.
March 2014
Monthly Memo
March 2014
Quarterly report
February 2014
Monthly Memo
Access all Russia Direct reports in one place
Go>> russia-direct.org/archive
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WEDNESDAY MARCH 26, 2014
NEWS
Igor Sechin, the CEO of Russias big-
gest oil producer OAO Rosneft, met on
Monday in New Delhi with several se-
nior Indian ofcials to push for further
cooperation between Russia and India
in the oil and gas sector. India is a
very important country for Russia. We
have a very efciently run project with
ONGC...now we want to expand our
cooperation, Sechin said. RIBR
Within a week, RusHydro, Russias
state-owned company, will sign a
contract for the design of the rst
stage of the construction of the
largest hydroelectric power station
in India with North Eastern Electric
Power Corporation Limited (NEEPCO).
RusHydro, together with the Institute
Hydroproject, won the competition
for the design of the rst phase of the
3.5 GW in India, Asias second largest
hydroelectric project. RIBR
India has received the right to supply
egg powder to the Customs Union.
Russian agriculture watchdog Ros-
selkhoznadzor said Egg Products
Export Ltd, which produces egg pow-
der, has been included in the register
of suppliers of controlled products to
the Customs Union.The decision was
taken on the basis of a safety guar-
antee given by the Indian Trade and
Industry Ministrys export inspection
council. RIBR
In an attempt to increase edu-
cational and student exchanges,
Russia and India will sign an agree-
ment on the mutual recognition of
higher education diplomas, Sergey
Karmalito, Senior Counselor at the
Russian Embassy in India, told RIBR.
The text of the agreement is ready
and practically approved. We are
condent that we will sign it in a
year. RIBR
India has chosen Russias Sevmash
shipyard for post-warranty servic-
ing of the INS Vikramaditya aircraft
carrier. A protocol was signed at the
23rd meeting of the naval subgroup of
the Indo-Russian Inter Governmental
Commission on Military Technical
Cooperation in Goa on Wednesday,
March 12. An additional agreement
will be signed in May. RIBR
Rosneft CEO offers
India oil projects,
supplies
Russian rm set to
build Indias largest
hydroelectric plant
Indian company to
supply egg powder
to Customs Union
India, Russia to
recognise higher
education diplomas
INS Vikramaditya:
Sevmash chosen for
servicing contract
ECONOMY: Isolation in the West could make Russia turn to India for trade expansion and investment in infrastructure
Russia turns
East as ties
sour with
US, Europe
The Ukraine crisis has provided a fresh impetus
to Russia to bolster ties with Asian economies
A
s relations with the US and
Western Europe sour over the
conflict in Ukraine, Russia is turn-
ing eastward. Now Russian officials are
planning to boost cooperation with
Asian economies and are increasing
investment in Eastern Siberia as well as
the Far East.
Although the process of deepening
and expanding economic and trade
ties with Asia has been in the works
for years, the fallout over Ukraine and
Crimea may provide a new impetus to
speed up the existing policies, includ-
ing ramping up energy exports to Asian
countries. Russia has spent billions
building the East Siberian-Pacific Ocean
oil pipeline that now connects Russian
crude fields to Asian energy consumers.
In 2012, Russia held the Asia-Pacific
Economic Co-operation (APEC) sum-
mit in Vladivostok, which laid the
foundation for partnerships with Asian
economies. Subsequently, exchanges
of high-level visits were held with China
and India; trade with Japan exceeded
trade between Moscow and the US
and Turkey; South Korea, Indonesia,
Vietnam and other countries in the
region have also become important
partners.
VIKTOR KUZMIN
RIBR
Russian Deputy Prime Minister Dmitry Rogozin (right) and Union Commerce and Industry Minister Anand Sharma (left) agreed to set
up a joint study group to examine the feasibility of a free trade agreement (FTA) to boost bilateral trade and investment flow.
This approach will now help sustain
Moscows economic stability, if sanc-
tions by the US and the EU are intro-
duced. Moreover, India could become
the main beneficiary as there is huge
untapped potential to scale up bilat-
eral trade between the two countries.
India is probably the tastiest morsel
in the world market for Russian com-
panies as of now and in the coming
years Moscow will be interested in a
significant intensification of business
cooperation with Delhi, says Maxim
Pleshkov, a senior analyst at RusRating
rating agency.
In this context, some steps have
been taken, including the creation of
a special research group to study the
issue of opening a free trade zone be-
tween India and the Customs Union in
the beginning of March. Its objectives
were the definition of the concept of
the zone, its scope, the main areas
of negotiation, the expected conse-
quences for the participants econo-
mies. Working on an FTA with India is
a bit slower than it is with other part-
ners for a simple reason. Indias econ-
omy is significantly larger than that of
New Zealand or even Vietnam, and
in order to form the desired mandate
of the joint study group, many issues
should be explored. This work is being
carried out, and soon the issue will
EXPERT
T
he referendum in Crimea has
drawn a line under an era that
has lasted more than 25 years.
It can be traced back to the actions
of General Secretary of the Central
Committee Communist Party Soviet
Union, Mikhail Gorbachev, between
1988-1989. The philosophy of the last
Soviet leader consisted of ending sys-
temic confrontation, a denunciation of
the division of the world into blocs and
a recognition of some sort of universal,
human ideological basis.
Since that time the global landscape
has changed beyond recognition. But
Russia, having officially succeeded the
USSR, has in many ways followed this
same philosophy. The collapse of the
USSR ended dreams of an equitable
convergence and mutual ideological
enrichment. The right to discuss uni-
versal human values and the rules of
international relations went to the win-
ning side. These rules, fundamentally
accepted as default, raised suspicion in
Russia even at a very early stage when
its foreign policy was extremely weak.
The conflicts with the West grew more
severe over the years - the Caucasus,
Yugoslavia, Iraq, from the colour revo-
lutions to the war with South Ossetia,
and the Middle East.
The Ukrainian crisis has redrawn
familiar boundaries. The implosion
Behind the Ukraine gamble:
Why is Moscow so decisive?
FYODOR LUKYANOV
Foreign policy analyst
be discussed in the Customs Union,
which coordinates such processes, a
well-placed source in the Ministry of
Economic Development of Russia, told
RIBR.
Experts doubt whether Moscow and
India will be able to rapidly expand
their energy trade Russias main
export commodity. It is, however, still
possible to reorient its oil exports to
the East. This requires two to three
years, says Rusenergy partner Michael
Krutikhin. For this, it is necessary to
expand the Eastern SiberiaPacific
Ocean project pipeline and its ap-
proaches. With gas, it is more difficult.
There are other win-win possibilities.
India may be interested in Russian
high-tech products and its advanced
technology. This applies primarily to
weapons, ships for the Navy, aircraft for
the Air Force, export of missile technol-
ogy and co-operation in the field of
of Yanukovichs regime in Kiev and
the subsequent legal and political
confusion has served as a trigger
for Moscows exceptionally tough
response. The development of the
Ukraine crisis is both fortuitous and
logical. Fortuitous, because if she were
not so corrupted and plundered by
talentless officials, there would have
been no such failure of her political
system. Logical because Ukraine has
always been seen as the most impor-
tant bridgehead, upon which Russias
physical security as well as the balance
of power in Europe depended.
This does not mean that the
Kremlins goal is the restoration of a
country it lost in 1991. There is talk of a
virtual re-enactment of the end of the
Cold War. In Russia, there has always
been a perception that the USSR did
not just lose, but surrendered and left
the battlefield.
Against this backdrop, the Russian
government has come to this con-
CRIMEA CRISIS: Visa bans, freeze on assets of prominent Russian o cials
Sanctions game: Who will pay bigger price?
The US and Europe are reacting with threats that
could trigger unexpected consequences.
T
he wait is over; the nail-biting in
Moscow in anticipation of crip-
pling Western sanctions over
Crimea has given way to mockery of
the measures announced so far by
Washington and Brussels. The US and
EU sanctions target a limited number
of prominent, and not so prominent,
Russian officials with visa bans and
asset freezes. But the individuals con-
cerned deny having foreign assets, if
only because of Russian laws that for-
bid them to have property abroad.
I dont have accounts abroad.
NIKOLAI GORSHKOV
RIBR
tion of Russian raw energy would
deplete Moscows coffers. However,
the biggest loser would be Ukraine,
which earns upto $4 billion in fees for
the transit of Russian gas to Europe.
Should this diminish or stop, Ukraine
would lose badly needed income. The
ensuing hardship and mass protests
would eclipse anything Ukraine has
experienced so far.
Konstantin Zatulin, director of the
Institute of the Commonwealth of
Independent States, believes any
future Western sanctions will remain
limited to punishing certain individuals
in Russian business and political cir-
cles, the so-called offshore elite who
do hold assets and interests abroad.
The aim, he says, will be to induce
these people to mount pressure on the
Kremlin to bow to Western demands.
What interests me in the US are Tupac
Shakur, Allen Ginsberg, and Jackson
Pollock. I dont need a visa to access
their work, says President Putins
adviser Vladislav Surkov, a target of the
western sanctions.
Russian observers, however, warn
against euphoria as both the US and
EU have signaled they may cast the
net wider and target Russias strategic
industries as well as business interests
with close links to the Kremlin.
Addressing both houses of the
Russian Parliament on March 18,
President Vladimir Putin noted that
Western politicians are trying to scare
us not just by sanctions, but by the
spectre of rising internal problems. Do
they count on a worsening of the eco-
nomic situation in our country which
would trigger off popular unrest?
For Valentina Matviyenko, the
speaker of the upper house of the
Russian Parliament, another target on
the sanctions list, the interdependence
of Russian and Western economies
makes it impossible for the West to
punish Russia without hurting itself.
Radoslaw Sikorski, the Polish foreign
minister and one of the architects of
the Eastern Partnership with Ukraine
that has triggered the current crisis, is
on record as saying that since Europe
is closer to Russia, it will pay a bigger
price for sanctions against Moscow.
According to the European statistics
agency, the EU is Russias top trading
partner with a turnover of 267.5 billion
euros in 2012. The US came in fifth
with a paltry 18.9 billion euros well
behind China, Belarus and Ukraine.
A lot has been said about Europes
dependence on Russian oil and gas.
Any reduction in Europes consump-
For now, the US and EU sanctions are mainly
targeted at the so-called offshore elite.
clusion: that there is no chance of a
breakthrough if Russia remains on her
present course as she faces extinction.
Therefore either Russia will succeed
in bucking the current trend and will
be forced to take this to heart, or some
kind of confrontational balance will be
established, orientated towards non-
western partners.
Why is Russia being so decisive?
Firstly, Russia feels that, not without
reason, that the world has long since
grown tired of Ukraine and nobody be-
lieves in its future. Going by this logic,
there will be no full-scale mobilisation
of the western world. Secondly, the
state of Ukraine is such that any at-
tempt by the West to use her as a base
from which to confront Russia would
just completely destroy the dilapidated
infrastructure. Thirdly, the true attitude
of the non-western world to events is
ambiguous. Nobody though is able to
officially recognise the transfer of part
of a state to another jurisdiction with-
out the agreement of the motherland.
But many people though are watch-
ing with interest how for the first time
since the break-up of the USSR, the US
has been thrown an uncompromis-
ing challenge. Fourthly, the tightening
of western policy stimulates political
initiatives, which were launched much
nuclear energy.
Russian companies may also partici-
pate in the creation and reconstruction
of Indian infrastructure, including the
construction of national highways, and
underground oil and gas pipelines.
The coal mining and engineering
industries in India, as well as various
mutual investments have potential.
For example, India has participated in
the reconstruction of the commercial
port of Novorossiysk. Indian com-
panies have invested in the Russian
pharmaceutical industry, processing
of diamonds, textiles, tea, tobacco,
and other agricultural products, said
Pleshkov.
The recent Russian ruble devalu-
ation will assist in the expansion of
trade. Against the background of the
Russian currency devaluation, the
growth of Russias trade with Asian
countries in many segments of con-
Read more
indrus.in/economics/
cooperation
Read more
indrus.in/world
earlier in Russia: the nationalisation of
the elite, the turn towards the east, a
reduced dependence on the state of
western markets, an ideological disso-
ciation from liberal values and so on.
The collapse of Ukrainian politics,
were it to happen for any reason,
would be a shock for Russia on a scale
that is hard to predict. The precedent
set by the Crimea could act as a boo-
merang. Russia supposes that in the
light of a tangible set of scandalous
practices that have long since held
sway in international law, the main
thing is the capability to achieve goals;
the legal arrangements are less signifi-
cant.
Moscow has started to play a game
on a very large scale. The risk is huge
but the potential jackpot is consider-
able. The old world order will stop
functioning completely and a new one
will soon start to take shape. Nothing
came of Gorbachev, who first spoke
about the need for a new world order
back in 1986. Vladimir Putin is on his
way back to this same fork in the road,
to try again.
sumer products can be expected, said
Leonid Shliapnikov, General Director
of Sovtransavtoekspeditsi, part of
the Sovtransavto holding. This could
involve goods such as clothing, shoes,
accessories, hardware, electronics and
other household items. Shliapnikov
is confident that the growth will be in
both the B2B-segment and B2C seg-
ment through e-commerce and cata-
logue sales channels.
Experts believe the cooling off with
the West will also have some positive
impact on the jewelery market in India.
Russian companies own a large share
of the global market for nickel, gold,
and the platinum group metals. So it
could soon take a shine to India.
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IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA
WEDNESDAY MARCH 26, 2014
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ENERGY: Rosneft partners with ExxonMobil to tap oshore elds; upstream spending by Russian rms may rise to $60 bn in 2014
Russian rms join
the race to tap shale
Russian oil and gas companies are rushing to tap reserves in Arctic and
offshore fields to sustain the countrys high energy output
S
hale seems to be the new buz-
zword. The Russian government
has introduced tax incentives for
oil firms to develop the countrys shale
oil and gas deposits. Russia has the
largest shale oil reserves in the world at
about 75 billion barrels of technically
recoverable reserves, according to the
US Energy Information Administration.
The push to tap fresh deposits
comes after decades of production in
conventional oil fields in the countrys
traditional production base in Western
Siberia. Russia, the worlds biggest en-
ergy exporter in combined oil and gas,
saw oil output hit a post-Soviet record
high of 10.5 million barrels a day in
2013, up 1.4 per cent from 2012, ac-
cording to the Russian Energy Ministry.
Yet, the shale revolution in the US is
causing shock waves throughout the
energy world, including among top
exporters like Russia and Saudi Arabia.
New recovery techniques have un-
locked vast quantities of energy, raising
output at a historic rate. The increase
in US energy liquids output has been
nearly unparalleled in the history of
world oil, the New York-based energy
DAVID MILLER
Specially for RIBR
consultancy PIRA said in a report. Only
Saudi Arabia in 1970-1974 raised its
production faster. PIRA has predicted
that the US will gain a widening lead
over both Russia and Saudi Arabia in
terms of total oil output until 2020, and
maintain its lead past 2030.
Flattening growth levels at home
and increased competition from the
US have put pressure on Russian of-
ficials to unlock new reserves.
Arctic shelf reserves
Russian oil major Rosneft has teamed
up with US partner ExxonMobil to
tap offshore fields in Russian seas.
The two firms are scheduled to begin
drilling together, the first wells in the
far-northern Kara Sea and in the Black
Sea this year.
Russian state-owned gas giant
Gazprom began producing oil from its
offshore arctic Prirazlomnoye field in
December. Located in the far north-
ern Pechora sea, 60 kilometers from
dry land, the project employs an ice-
resistant, super-reinforced stationary
platform weighing 506,000 tonnes. It
is the first such stationary platform to
ever be used on the Arctic shelf.
We have pioneered Russian Arctic
shelf development, says Gazprom
CEO, Alexey Miller. There is no doubt
that Gazprom will continue advancing
in the Arctic.
Upstream spending
Tapping more difficult reserves will,
however, require higher capital com-
mitments. Upstream spending by
Russian and former-Soviet Union com-
panies may rise by 11 per cent in 2014
to about $60 billion, led by the oil-
focused Russian majors Rosneft, Lukoil
and Gazprom, according to an industry
report written by Barclays analysts.
While all eyes will be on Rosneft
and Exxons Arctic programme, we
note there is an expected backlog of
over 90 offshore Russian Arctic wells
to be drilling by 2020. As a result, we
expect meaningful exploration to
move forward in the Russian Arctic
regardless of this summers results due
to the strategic nature of the reserves
for Russia, say the Barclays analysts.
Investments associated with develop-
ing the Russian Arctic have been esti-
mated to be upto $100 billion over the
life of the projects.
Big shale
While the shale revolution started in
the US, it may soon spread to Russia.
So far, much of the attention has
been focused in the super-massive
Bazhenov formation, which spreads
across some 570 million acres in west-
ern Siberia. Exxon and Rosneft are
working together in Bazhenov too.
We are not only looking at new
geographical regions of operation
but are also studying the potential of
difficult-to-produce reserves in tradi-
tional oil-producing regions, Rosneft
CEO, Igor Sechin, said in a statement,
Flattening growth levels
at home and increased
competition from the US
have put pressure on Russia
to unlock reserves
BMPT-72, a new
modication of the tank
support combat vehicle,
known for its repower, has
been presented to India
referring to the companys partnership
with Exxon.
London-based oil major BP pre-
dicted in January that while the US will
continue to lead in shale oil produc-
tion, shale development will advance
significantly in both Russia and Latin
America over the next two decades.
The analysts at Barclays said additional
state support for shale development
may also be on the cards.
ATOMIC POWER: Kudankulam II to become operational in December; to benet 20 million households across southern India
KNPP Unit I: Ready to take on Indian summer
The commercial operation of KNPP Unit I is set
to bring relief to power-starved southern states.
A
s summer sets in on the south-
ern Indian plains, the demand
for power is likely to go up in
Tamil Nadu, with an emerging middle
class relying more on air conditioning.
Fortunately, the commercial opera-
tion of the first 1000 MW reactor of the
Russian-built Kudankulam Nuclear
Power Project (KNPP) will begin in
April, in time for the Indian summer.
Indias first pressurised water reac-
tor attained criticality in July 2013 and
commenced electricity generation in
October. It is expected to reach its full
capacity of producing 1,000 MW of
power soon.
The commissioning of the plant was
delayed largely due to protests spear-
headed by the Peoples Movement
Against Nuclear Energy. The project
operator, Nuclear Power Corporation
of India Ltd (NPCIL), has been going
slow on the commercial operation just
to ensure that every safety and secu-
rity precaution is being undertaken
scrupulously. Officials say the second
1000 MW unit of the project should be
ready by December 2014. Twenty mil-
lion households in southern India are
AJAY KAMALAKARAN
RIBR
expected to benefit from the electricity
generated by the two units.
The KNPP has progressed to pro-
ducing energy, and comes despite an
on-going campaign to stop work on
the project by a large group of protest-
ers, who according to the countrys
Intelligence Bureau, are being funded
by foreign NGOs. There is indeed a
strange logic from those in the West
backing anti-nuclear activists in India,
while not aggressively taking on the
industry back home: A 10-year old in
California should be able to charge his
iPad using electricity generated from a
nuclear power plant, but Indian school
children should study in the dark due
to the countrys rippling power short-
ages! Needless to say, its a twisted
logic at best, and needs to be exposed.
Safety issues have been repeatedly
addressed by those who are better
informed. Even Dr A P J Abdul Kalam,
a former president of India and a well-
known nuclear scientist, has batted
for the plant, which is fitted with dual-
action localising and protective shells
that are able to withstand the impact
of an airplane. The plants hydrogen
re-combiners prevent explosions
from within. It also has a passive heat
extraction system that cools the reac-
tor even in the absence of an external
power supply, and a device to localise
molten material in the active zone. The
plants so-called melt trap prevents
the release of radioactivity beyond the
unit even in the event of a hypothetical
failure of the reactor vessel. In addition,
the station will operate a desalina-
tion system in full compliance with all
requirements. Essentially the first two
units of the KNPP will be supplying
the power-starved states of southern
India with a safe and reliable source of
energy.
KNPP: Units 3 and 4
Negotiations for the third and fourth
units are well and truly in the final
stage and an agreement can be ex-
pected before the next Lok Sabha elec-
tions in May.
Media reports suggest that Russia is
driving a hard bargain when it comes
to the cost of the project. But even if
the costs of each new unit was to be
$2.5 billion, as is widely believed, that
would work out to around Rs 6 per
kilowatt-hour (KWh) for the third and
fourth units of KNPP, while American
companies that want to have a pres-
ence in the Indian market are looking
at Rs 12 per KWh.
With Indias economy expected
to rebound from a recent slump and
energy demand continuing to rise,
the country has set a target of produc-
ing 14,600 MW of nuclear energy by
2020-21 and 27,500 MW by 2032.
A roadmap for the construction of
about 16-20 nuclear reactors with
Russias assistance was approved dur-
ing the-then Prime Minister Putins visit
to New Delhi in 2010. Once the agree-
ment for the third and fourth units at
Kudankulam comes into place, the fo-
cus will shift to building the remaining
reactors under the roadmap.
It should also be noted that the
KNPP provides India with another op-
portunity to reduce its energy deficit:
spent nuclear fuel. Nuclear waste can
be recycled and reprocessed to gen-
erate electricity. A 1998 agreement
between Russia and India allows the
latter to retain the spent nuclear fuel
from Kudankulam. Uranium consti-
tutes about 96 per cent of spent fuel,
while plutonium around 1 per cent.
India has the capability to reprocess
spent nuclear fuel with operating
processing plants, based on solvent
extraction process, in Trombay, Tarapur
and Kalpakkam. Additional facilities for
re-processing are being constructed
with the active participation of Indian
industry.
With obvious economic benefits
from projects like Kudankulam, India
is set to remain committed to coop-
eration with Russia in nuclear energy,
irrespective of which party or coalition
will be in power after the upcoming
general elections.
An agreement on the units 3 and 4 of the KNPP can be expected soon.
The T-90 main battle tank is a further development of the T-72.
19 n-plants by 17
India plans to build 19 nuclear power
units with a combined capacity of
17,400 MWe by 2017. Eight of them
will be built in cooperation with other
countries. India signed a contract
to build the Kudankulam NPP with
the USSR in 1988, but construction
only started in 2002. In 2010, India
and Russia agreed to build at least
six power units. The project involves
1,000-megawatt pressurized water
reactors being constructed by the
Nuclear Power Corporation of India Ltd
and Russias Atomstroyexport compa-
ny, a subsidiary of Russian company
Rosatom. The rst unit at Kudankulam
was commissioned on July 13.
DMITRY LITOVKIN
RIBR
With the Indian market becoming competitive,
Russian firms target the armoured vehicles sector.
Refurbishing armoury: Russian rms oer to
modernise Indias T-72 & T-90 battle tanks
T
he Indian armament market may
be getting more competitive,
but Russian military enterprises
are brimming with high hopes. At
DEFEXPO 2014, the international ex-
hibition of land weapons held in New
Delhi recently, Russian military firms
showcased their prowess and hoped
that Russian armoured vehicles will re-
main the basis of Indias tank fleet.
Indias inventory in ground forces
includes about 600 T-55 tanks, 1,925
T-72M1 vehicles, and 640 T-90S tanks.
It also includes 169 Arjun Mk.I tanks
designed in India. The fleet is expected
to be replenished with another 248
tanks of the next modification Arjun
Mk.II. However, this will not happen
until 2025. Until that time, the main
strike force will be formed by Soviet
and Russian tanks T-72 and T-90.
Russian enterprises are, therefore,
focused on these two armoured
vehicles today. For example, the
developer and manufacturer of
Russian armoured vehicles, the
Scientific and Production Corporation
Uralvagonzavod, offered India several
options to buttress its units. The first
one entails modernisation of the T-72
tank and involves an increase of the
survivability of the vehicle and its crew
during combat in an urban environ-
ment. Designers have equipped the
commanders hatch with a special
armoured cab, protecting the com-
mander when firing the machine gun.
The vehicle has additional spaced ar-
mour modules on the sides and on the
turret. There is a system for electronic
suppression of guided anti-tank weap-
ons. The vehicle has a 2A46M5 gun
and an automatic loader, providing the
possibility of firing missiles at a range
of 5 km. The gunners sight with opti-
cal thermal channel provides for the
possibility of working day or night in
all weather conditions. Thanks to this,
the characteristics of the vehicle are on
the level with the best world standards
of modern armoured vehicles. In addi-
tion, it is proposed to install a 1,000 hp
engine to improve the mobility.
However, the most serious novelty
is the presentation in India of a new
modification of the tank support
combat vehicle, the BMPT-72. It was
nicknamed the Terminator in the
Russian Army for its firepower. The
machines design is based on the chas-
sis of decommissioned T-72 tanks. The
modernisation operations can be per-
formed, using the modernisation kits
supplied by Uralvagonzavod.
The main advantage of BMPT-72 is
that, being created on the platform
of the T-72 tank, it provides a unique
opportunity to extend the life cycle
of vehicles, thus raising the combat
capability of the army to a new level
quickly, and at a low cost. During the
modernisation, a double unit of two
30 mm automatic guns with the battle
reserve of 850 shells, two launchers of
guided anti-tank Atak missiles with cu-
mulative or thermobaric warheads, the
latest 12.7 mm Kord machine gun with
a battle reserve of 2,000 cartridges are
installed on the T-72 tank.
The vehicle is less vulnerable to
anti-tank weapons, as compared
with a tank. The combat capabilities
provide the assured destruction of a
tank or a permanent firing position
of the enemy at a range of upto five
thousand meters. BMPT-72 can hit
low-flying helicopters, as well as crews
of antitank batteries and personnel of
the enemy. Military experts say that
one BMPT is equivalent to a motorised
infantry platoon armed with BMP-3, in
terms of combat effectiveness.
The designers emphasise that all
proposals for the modernisation of
armoured vehicles are based on expe-
rience of recent military conflicts. The
Russian military has already decided to
modernise its own fleet of T-72s to the
level proposed by Uralvagonzavod.
Russias proven oil and gas reserves
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IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA
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WEDNESDAY MARCH 26, 2014
ODYSSEY: Italian team Toro Rossos boss upbeat, says the 19-year-old is an unusually talented, industrious, and a totally focused driver
Kvyat revs up for F1 Grand Prix in Sochi
All eyes will be on the Russian prodigy when
Sochi hosts the 16th Grand Prix in Formula 1
racing from October 10 to 12
T
he countdown has begun for the
first-ever Russian Formula One
Grand Prix in October this year.
The track, designed by German archi-
tect Hermann Tilke, is near some of the
Winter Olympics facilities on the Black
Sea resort of Sochi, and all eyes are on
the 19-year-old Russian racing prodigy.
On March 16, Daniil Kvyat, affection-
ately called The Russian, by Red Bull
mentor Helmut Marko, had a tryst
with destiny. On that fateful day, at the
first F1 Grand Prix in Melbourne, the
Russian teenager replaced Australian
Daniel Ricciardo for Italys Toro Rosso
team. For him, this was his dream com-
ing true.
Ricciardo, on his part, is moving to
Red Bull, where his fellow driver will
be Sebastian Vettel, who performed
for Toro Rosso in the 2007-08 season.
And Jean-Eric Vergne, 23, will stay with
Toro Rosso.
Now Kvyat looks set to steal the
limelight. Born in 1994 in the Russian
city of Ufa in the southern Urals, Kyvat
developed a love for speed and racing
early on in life. When I first came to
this sport, I couldnt drive, but I taught
myself. Its difficult now to describe
how I felt when I first experienced
speed, he reminisces.
Kvyat had his first-ever race in the
winter of 2005 in Sochi, and he won.
But as his career in Russia was not
progressing in the way he wanted it to,
he and his family moved to Italy seven
years ago. Our Red Bull youth team
was based near Rome. Flying between
ALEXANDER ERASTOV
RIBR
Moscow and Rome all the time was
inconvenient, Kvyat recalls. Besides,
theres no motor-racing base in Russia.
Italy, in contrast, is home to racing, and
is a true mecca of motor sports. I knew
if I really wanted to become a profes-
sional racer, I had to move to Italy.
The move proved to be wonderful
for Kvyats career. He had his first full
Formula Renault 2.0 season in 2011
and won several races. In 2012, he
won the Formula Renault 2.0 ALPS
season and was named the driver of
the year by the Russian Automobile
Federation. Last year, he took part in six
races in the Formula Three European
Championship, bagging one grand prix
and making it to the podium five times.
That Kvyat was going to replace
Ricciardo was obvious from last au-
tumn. On January 31, he took part in
the testing of Toro Rossos new cars
in Jerez, driving nine laps and coming
10 out of 11. The basic qualities are
in place, says Toro Rossos team boss
Franz Tost. Daniil can be sure that we
will use all our training experience to
give him the best possible start to his
Formula 1 career.
At Toro Rosso we like the ad-
ventures with young drivers! Weve
already worked with Daniil a couple of
times. It started with the young drivers
test at Silverstone, where he managed
good lap times, then we had an aero
test in Vairano with him last week,
where he did 350 kilometres.
Daniil is a very talented driver. This
is evident both from his results in the
junior series and from his karting per-
formance, says an upbeat Tost.
Oksana Kosachenko, who used to
be the manager of former F1 driver
Vitaly Petrov, is confident Kvyat will
soon start feeling at home in F1. Of
course Kvyat will have some difficult
times at first, says Kosachenko. He is
a young driver with limited F1 experi-
ence, and he will have to compete
against real pros. More than half the
F1 drivers have been at it for years.
Besides, the team is changing and
migrating to new engines. But Daniil
is unusually talented and industrious.
Hes totally focussed. Besides, Kvyat
speaks English, Spanish, and Italian flu-
ently. Most in the Toro Rosso team are
Italian, so hes not going to have any
communication problems.
Russia has had only one F1 driver so
far. Vitaly Petrov spent three seasons
in the championship, two with Lotus-
Renault (2010-11 and 2011-12) and
one with Caterham (2012-2013). His
best result was a third place in Australia
in 2011.
Formula One track will pass near key facilities of the 2014 Winter Olympics, in-
cluding Iceberg Winter Sports Palace, Bolshoi Ice Palace and Shayba Ice Arena.
Ufa-born Daniil Kvyat (left) will be Russias second Formula 1 driver ever.
At kindergartens in Severodvinsk, Indian students participated in all school
activities, bringing much joy to their parents and teachers.
ALESSANDRO BELLI
RIBR
Indias luge pioneer talks to RIBR about his vision
for scaling new heights at the next Olympics
We need long-term
plans, not miracles
Sochi-2014 was your fifth Olympic Games.
Did you like your trip to Russia?
We had an amazing experience in
Russia. Everything was new to us,
because it`s a very different coun-
try. Russia has some of the best
infrastructure in the world. The luge
track was definitely one of the best
in the world. The natural beauty of
Sochi is incredible, especially the
entire Caucasus Mountains. But the
best thing about the games was the
ambiance. All the people who were
there, especially young people from
all over Russia - volunteers - used
to try to speak to us. Every day we
had interactions, we made a lot of
friends. That was what the Games
were about actually - building links
between people. Since that was
successful, the Games were good.
Do you have any plans on how youre going
to prepare for the next Olympics?
We started planning for the
Olympic Games two years ago but
for various reasons, the proposals
did not materialise. Now with all
the publicity that has come to the
Winter Olympics after Sochi, many
people are interested in having a
long term plan. In India, we have
an opportune time for formulat-
ing these plans as we have a new
Olympic Association. We have a
new president and new secretary
general and they can make a dif-
ference. I spoke to the Secretary
General and he is interested in a
planning long term for the next
Olympics. We will plan for the mens,
womens, doubles and team compe-
titions in luge, and I hope that every-
body will be able to qualify.
You mentioned long-term plans. Does that
mean for the next four years?
Well obviously, I will have to do
a lot of this planning by myself
because I have a bit of experience
about what is needed. So the main
focus should be to have talent scout
camps in Himachal Pradesh, Kashmir,
Uttarakhand and other places if pos-
sible and select three boys, three
girls and two doubles teams that can
start training. I can also help to coach
them initially. Once we do the scout-
ing of talent, we need training, which
will mean traveling to luge tracks
that are used for international and
Youth Olympic competitions. It will
also mean having a full team with a
coach, physiotherapist and manager.
If we get them the right equipment
and proper funding, I am sure they
will perform well in four or in eight
years, or whatever time they need to
be groomed. In India, we believe a lot
in miracles, but we should try to plan
in advance instead of doing things at
the last minute.
What can India learn from the Sochi experi-
ence?
Albert Demchenko is 42 years old,
he won a silver medal. The person
who won the bronze, Italian Armin
Zoeggeler, is 41 years old. I am 32 right
now, so age is on my side. I still have
some time, and I also have quite a bit
of experience because I have been
doing this now for a long time. That is
another good thing. But there are two
things that I lack. The first is a coach.
If I have a personal coach, it would
help a lot. The other is the equipment,
which we are working on now. It is
very exciting that we can aim for bet-
ter results before I quit. We had some
results at the Asian level that made us
feel good and we have the potential
now to do something at the world
level. So we are gearing up for it.
Will you go to Russia for training if you get a
chance?
That will be amazing. Our experi-
ence in Russia was very good and the
facilities there are very good. Russia
is also a country that takes care of its
sports persons, they get salaries and
sports administrators have to pay
athletes expenses. I would be very
happy if the Indian government can
do something like that and we can
travel to Russia.
INTERVIEW SHIVA KESHAVAN
Dreaming big...
A ve-time Olympian, the 31-year-old
Shiva Keshavan is the rst Indian to
compete in luge at the Winter Olympic
Games. He set a new Asian speed
record at 134.3 km/h and won a gold
medal in Asia Cup 2011 at Nagano in
Japan. He loves to dream big, and has
his heart set on winning the rst-ever
Olympic medal for India at the Olympic
Winter Games.
NOSTALGIA: The irresistible charms of Russian salad, winter and culture
Home away from home for
wives of Indian Navy ofcers
Months after INS
Vikramaditya headed
home, spouses of
Indian sailors recall
their time in Russia
S
everodvinsk is better known
in India as the place where the
aircraft carrier INS Vikramaditya
was refurbished, but for the wives
of Indian sailors, the port city will
be etched in their memory as the
place where they fell in love with
Russia. Neelam Ruhani, for one,
relished every moment of her stay
in Russia. She enjoyed visiting the
Fine Arts Museum and Malye Karely
in Arkhangelsk, located 35 km from
Severodvinsk, where they lived.
Russians are very fond of live perfor-
mances at the theatre, and since tick-
ets are affordable, a stunning range
of options is available to everyone,
including opera, symphony concerts,
musicals, ballet, and drama, she
says excitedly. For Reshma Khan,
the wife of an Indian sailor trained in
Severodvinsk, the courteousness of
Russian men is what made her feel
at home. While traveling in a bus, I
was always offered a seat by Russian
men, which shows their deep-rooted
chivalry, she says. Her favourite
places in Severodvinsk are the War
Memorial, City Gate, Lomonosova
Square, Yagri Beach and the St.
Nicholas Church.
Its not that life was all smooth
sailing. Initially, some of them had
a difficult time adjusting to the lo-
cal food and weather. For Ruhani,
whose family is vegetarian, Russian
cuisine at first became a challenge.
ELENA KROVVIDI
RIBR
Initially, she cooked using ingredi-
ents brought from India, but later she
took a liking for Russian salads. Simi
Matthew, another sailors spouse, re-
calls how much she enjoyed cooking
traditional Russian dishes like blini,
borsch and soliyanka soup. And Khan
feels vegetarians should not despair
as there is plenty on offer, including
paneer, and a variety of vegetables.
For some, the fabled Russian win-
ter felt harsh in the beginning, but
soon they took to it. Khan recalls:
When I first reached Severodvinsk
three years ago, I was startled to see
snow everywhere. But once I was
fully equipped for it, the Russian win-
ters were indeed quite pleasant. For
Matthew, Khan and Ruhani, it was a
joy to see how their children adapted
to all things Russian. In about two
months of joining school, the chil-
dren could understand Russian, and
soon they were able to converse
with their friends and teachers, says
Matthew. A beaming Khan adds:
They enthusiastically took part in
various school activities like music,
dance and sports. My son also learnt
to be independent and to eat and
dress on his own there.
Head of one of the kindergartens
in Severodvinsk, Galina Tsvetkova,
and her deputy, Irina Zaytseva, recall
fondly their interaction with Indian
children. You should have seen
these kids in action! They were real
firecrackers! They learnt to speak
Russian so fluently, and their accent
was adorable! says Zaytseva. But all
good things come to an end. So when
the time for these Indian students to
return home arrived, their Russian
friends presented them hand-made
farewell gifts. We hope they will
remember us just as we remember
them, Tsvetkova says wistfully.
It was a joy to see children
adapt so quickly and to
learn to speak Russian
uently.
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