Russia Adoption Blog

06/22/07

Russia News For The Week Of June 18

Posted by : Virginia M. Citrano in Russia Adoption Blog at 12:45 pm , 527 words, 140 views  
Categories: Russia, Economy, News
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Last week, Aeroflot grabbed the aviation news spotlight with a big order from Boeing. This week, it was Sukhoi's turn. The jet maker, which until recently made only military aircraft, won the first foreign customer for its civilian Superjet 100. Italian regional carrier Itali Airlines agreed to buy 20 of the jets, which are built to compete against Embraer and Bombardier in the mid-size jet category. Russia-based carriers Aeroflot, Transaero and Dalavia have also reportedly ordered the planes, which won't begin to be delivered until late next year. The Russian government, which owns a majority stake in Sukhoi, is merging it with several other Russian aircraft makers (including Illyusin and Tupolev) to create a conglomerate making both military and civilian aircraft, United Aircraft Building Corp. A Sukhoi executive told The Associated Press that the company sees a market of at least 700 Superjets, with most of the sales in North America and Europe. Boeing and a unit of France's Snecma have roles in building the Superjet.

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Also in aviation news: Russian transport authorities banned four Russian carriers from flying to Europe and imposed restrictions on five more. According to Kommersant, the airlines, which include Kavminvodyavia, Kuban Airlines, Yakutia and Airlines 400 (all banned) and KrasAir, UTair, Atlant-Soyuz, Urals Airlines and Gazpromavia (restricted), failed to meet certain European Union safety criteria.

As you might have guessed, the news this week was pretty much all business. The week is ending with it all but certain that Britain's BP will lose control of a key Siberian gas field to Gazprom. On Tuesday, Gazprom got Russia's deputy energy minister to block Exxon from selling natural gas produced in Sakhalin to China. The minister said the gas was needed in the Russian Far East for domestic consumption. One day later, however, President Vladimir Putin signed a decree merging Russia's two top energy shippers, Sovcomflot and Novoship, to create a $5 billion state-controlled shipping giant. A senior executive of Sovcomflot, which ships from Sakhalin for Exxon, told Reuters that the company might go public later. Confused by what's happening in Russia's energy sector? Motley Fool had this pithy assessment this week. Meanwhile, the boss of Shell Sakhalin quit, two weeks after an e-mail that he had written in an attempt to motivate employees was leaked to the press. It criticized for being heavy-handed.

Many companies continue to see opportunity in Russia. The U.S. investment advisory firm Lazard struck a deal with Austria-based Raiffeisen Investment to work on M&A deals in Russia and central and Eastern Europe. Lazard had not had an office in Russia before.

The employees who relocate to its new office may face a bit of sticker shock. According to Mercer Human Resource Consulting's new cost of living survey, Moscow is the world's costliest city for expatriates. It was Moscow's second year at the top of the Mercer list; London came in second. Mercer's statistics indicate that a cup of coffee that would cost $6 in Moscow would be just $2 in Buenos Aires. I don’t know where the folks from Mercer were going for their java: I spent a lot less than that to get my caffeine jolt when I was there 18 months ago.

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