The 21st St. Petersburg International Economic Forum (SPIEF 2017) has become Russia’s foremost gathering of business and government leaders, and world experts representing science, media, and society. They will discuss the key economic issues facing Russia, emerging markets, and the world as a whole. The theme of this year’s forum is ‘In Search of New Balance in the Global Economy.’ Here are some of the highlights from day two of the Forum:
02 June 2017
Russia continues to attract foreign investors as a result of the growth the country is demonstrating, the CEO of Russian Direct Investment Fund (RDIF) Kirill Dmitriev told RT.
Austrian Chancellor Christian Kern said Western sanctions against Russia cost his country 0.3 percent of GDP.
Rosneft and Thailand's state-owned energy company PTT have signed a long-term contract for the supply of up to 200 million tons of oil until 2037.
Leading Russian oil company Rosneft and the government of Iraqi Kurdistan have signed a number of agreements to expand cooperation. Rosneft will get access to an extensive regional transport system in Iraqi Kurdistan with a capacity of 700,000 barrels per day (bpd), the company said. It is planned to expand capacity to more than 1 million bpd by the end of 2017.
Russian oil company Bashneft and US multinational General Electric have signed a long-term after-sales service contract for biological treatment plant services.
Russia's largest manufacturer of steel pipes for the energy sector TMK is restarting its US operations, said the company’s majority shareholder Dmitry Pumpyanskiy. The plants were closed following the sharp decline of oil prices.
Russian President Vladimir Putin asked US businesses to help restore regular dialogue with Washington. Putin said that the foundation of relations between Russia and the United States, which has been formed over decades, has been destroyed in recent years.
“Our economic interaction with the US is balanced, diversified and technologically rich. It is generally in good shape,” Putin said at the Russia-US Business Dialogue, which is taking place during the St. Petersburg International Economic Forum.
This month the French retailer Auchan is to begin test runs of a meat processing factory it built in the Tombov region of central Russia. The announcement was made after the region's governor Aleksandr Nikitin met the CEO of Auchan Russia Jean-Pierre Germain.
Gazprom Neft says it has agreed to explore Iranian oil field with Austrian energy company OMV.
Russian truck manufacturer KAMAZ and German conglomerate Siemens have signed an agreement to develop electric trucks and buses jointly.
Russian energy major Rosneft and the Philippine National Oil Company PNOC has agreed to cooperate in oil and petrochemicals trading. Rosneft also signed a partnership deal on gas with British multinational BP.
The use of blockchain technology, the system that underpins bitcoin and other digital currencies, will explode within a decade, according to Central Bank of Russia’s Deputy Governor Olga Skorobogatova. She has unveiled plans for the bank to develop its own national cryptocurrency.
German crude oil and natural gas producer Wintershall will transfer €285 million within three days to pay for its share of the Nord Stream-2 pipeline project, according to the company’s CEO, Mario Mehren.
Nord Stream-2 will be the second pipeline to deliver Russian natural gas to Germany under the Baltic Sea. The venture aims to double the capacity of natural gas that can currently be delivered from Russia to Northern Europe.
Russia’s gas monopoly, Gazprom, is financing half of the €9.5 billion project. Gazprom’s European partners – Engie, OMV, Royal Dutch Shell, Uniper, and Wintershall – have agreed to finance the other half.
The role of the Shanghai Cooperation Organization (SCO) and the BRICS group has recently been growing in importance, said Russian President Vladimir Putin at a meeting with the heads of international media outlets in St. Petersburg
“The SCO has changed a lot, it has become a large international organization. It is now an important factor in regional affairs,” he said, adding that India and Pakistan are planning to become SCO members.
“The same goes for the BRICS group. This organization was actually born here in St. Petersburg. At first, there were the three of us – Russia, China and India – but then Brazil and South Africa joined in. We believe that this is a very important platform to harmonize our positions,” said Putin.
The Russian economy can deal with oil prices falling to $40 per barrel or even lower, according to Russian Economic Development Minister Maxim Oreshkin.
“We’re actually ready to live forever with the oil price at $40 or below. All macroeconomic policy is now based on the assumption of the oil price of $40,” Oreshkin told Bloomberg on the sidelines of the St. Petersburg International Economic Forum.
The minister said the bullish turn in hedge funds is much more baffling, pointing out that “the oil price within one or two years might be much lower and those funds which are on the other side of the deals are taking huge risks.”
01 June 2017
An agreement for joint investment in Russia-India railway projects has been signed between the Russian Direct Investment Fund (RFPI), Russian Railways (RZD) and Indian engineering and construction company Ircon.
"Partnership with Ircon International will allow RFPI and RZD to expand the geography of investment and gain access to attractive investment opportunities in new markets of Asia, as well as to use the experience and expertise of Russian and Indian colleagues in the implementation of the projects, " said the head of RFPI Kirill Dmitriyev.
The Eurasian Development Bank (EDB) has started financing projects turned down by the European Bank for Reconstruction and Development (EBRD), according to the CEO of EDB Dmitry Pankin.
"We will sign an agreement with the St. Petersburg Water Supply Company for $1.1 billion (60 billion rubles) until 2020,” he said, adding the company was a favorite client of the EBRD, and has many interesting projects.
Russia’s Gazprom will approve the terms of gas supplies to China from the Far East by the end of this year, said the company's CEO, Aleksey Miller.
READ MORE: Russia may begin new gas supplies to China in 2018
Moscow and Beijing have a range of energy projects, including the so-called eastern route or the Power of Siberia pipeline. The deal took more than a decade to negotiate.
The two countries plan to build another pipeline - Power of Siberia-2 or the western route that will deliver another 30 billion cubic meters of Russian natural gas.
In 2014, Gazprom and China National Petroleum Corporation (CNPC) signed a $400 billion 30-year framework to deliver 38 billion cubic meters of Russian gas to China annually.
Hungary, India, and Bangladesh are showing interest in buying Russia’s MC-21 passenger jet, according to the President of the United Aircraft Corporation (UAC) Yuri Slyusar.
"We showed the aircraft [MC-21] in flight and received great interest. We met delegations from different nations: Hungary, Bangladesh, and India,” he told reporters. “An aircraft flying is a much more sensible product from the standpoint of promotion."
The Irkut MC-21 narrow-body airliner was rolled out almost a year ago. The plane can carry up to 211 passengers a distance of up to 6,000 kilometers and had its maiden flight last week.
Russia’s Gazprom Neft is discussing new projects in Iraqi Kurdistan, according to the company’s CEO Aleksandr Dyukov.
READ MORE: Gasprom Neft puts Iraqi projects on ice
"A delegation from the Kurdistan autonomous district of Iraq is participating in the forum [SPIEF – Ed.]. We will discuss the current status of project implementation. In particular, we are considering potential new projects in the territory of Iraqi Kurdistan," Dyukov told reporters.
India will soon gain full membership in the Shanghai Cooperation Organization (SCO), said President Putin, adding that Moscow has always backed the decision.
"In a week, we will formalize India’s full-fledged accession to the SCO," Putin said during a meeting with Indian Prime Minister Narendra Modi.
The SCO currently brings together Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.
READ MORE:Shanghai Cooperation Organization Ufa summit: A major step forward
Japanese companies Itochu and Mitsui have expressed an interest in the Baltic liquefied natural gas (LNG) project, according to Gazprom. The companies’ heads had a meeting with Gazprom CEO Aleksey Miller to discuss cooperation and construction of a third processing stage of the LNG plant at the Sakhalin-2 project.
Russia should privatize all state-owned oil companies by 2025, according to the country's former finance minister Aleksey Kudrin.
"The oil sector should be fully privatized in the next seven to eight years, no state companies are required there now because state ownership brings more harm than benefit to those companies," Kudrin said.
Earlier he asked President Vladimir Putin to consider oil privatization to help revive economic growth.
Putin's press secretary, Dmitry Peskov said the government had no such plans.
President Vladimir Putin says he has no doubt Moscow and Berlin will continue cooperating after Germany's elections.
“We do not care with whom to work after the elections in Germany, the key element is a constructive attitude,” said Putin.
He added that despite some disagreements with German Chancellor Angela Merkel there is also common ground regarding economics and international politics.
Russian Deputy Prime Minister Dmitry Rogozin said Serbia is a vital partner of Russia in the "big Europe" beyond the EU.
"From the point of view of developing Russia's relations with "big Europe"- without limiting Europe to the borders of the EU - undoubtedly, Serbia is a very important partner," he said. "For us today it is important not to stop at the stage of creating projects, but to think about how we create an export potential in the EU countries, and maybe even in states that go beyond the EU.”
Rogozin noted the importance of Serbia’s strategic location in the Balkans and Europe and its high competence in the sectors of engineering, construction, and agriculture.
LinkedIn, a business social network, which was banned in Russia for violating the law on personal data localization, may resume operations in the country this autumn, according to the head of Russia’s media watchdog Roskomnadzor Aleksandr Zharov.
"We have no relations with LinkedIn now. They have sent an official letter to us that in the near future they will be able to comply with the law. As far as I know, all formal issues will be solved by this autumn. Then, the new owner of LinkedIn will take the final decision whether he will localize in Russia or not," Zharov said during the Forum.
Moscow City Court upheld Roskomnadzor's decision to block LinkedIn in early November.
Russian President Vladimir Putin has welcomed participants and guests to the St. Petersburg International Economic Forum in a message published on the Kremlin website.
“For the first time in several years, the global economy is showing signs of recovery. The Forum will discuss how to consolidate the emerging trends and assess the risks and challenges related to the introduction of new technologies,” wrote the Russian president.
Putin added that he is “confident the initiatives and recommendations the Forum produces will contribute to developing common, consolidated approaches, and the contracts and agreements executed on the Forum’s sidelines will give impetus to international cooperation and help to launch and implement new, mutually advantageous projects.”
The introduction of new technology will increase Russian agricultural production by 25 percent over the next eight years, according to Agriculture Minister Aleksandr Tkachev. Russia’s 2016 grain harvest was the highest since 1978, at 117 million tons. The minister said productivity has increased by 60 percent in recent years.
First Deputy Chairman of VTB Bank Yury Solovyev said on Thursday the privatization of Russia’s state shipping company Sovcomflot would happen soon. He added that Western investor interest is expected to be high.
Russia’s Sovcomflot operates the world's second largest fleet of oil tankers and has long-term contracts with major energy producers.
According to the Russian Economy Ministry, the state is selling 25 percent of Sovcomflot and hopes to raise as much as 30 billion rubles ($533 million) from the sale.
An agreement on a free trade zone between the Eurasian Economic Union (EEU) and India may be signed within two years, according to the Eurasian Economic Commission (ECE) Minister of Trade Veronika Nikishina. A memorandum will be signed at the start of negotiations on Saturday during the St. Petersburg International Economic Forum, she told RIA Novosti.
READ MORE: SPIEF 2017: Russia-led economic bloc can boost trade with India by 800%
"We don’t want to delay this issue; it will depend very much on the speed of mutual concessions to each other,” she said.
According to Nikishina, the agreement on a free trade zone with India may boost the GDP of the EEU countries by up to $1.5 billion in the short term and to $2.7 billion in the long term.
The average price of oil will be above $50 per barrel in 2017, according to the head of Russia’s Center for Strategic Research (CSR) and former finance minister, Aleksey Kudrin.
“The average oil price this year will be higher than $50 per barrel,” said Kudrin at SPIEF 2017, adding that with a cut-off oil price of $55 per barrel, Russia’s budget deficit will reach zero.
READ MORE: Reforms could double Russia's GDP by 2035 – Kudrin
Russian Railways (RZD) may sign a €1.8 billion ($2 billion) contract by the end of the year to upgrade railroads in Cuba, announced RZD First Vice-President Alexander Misharin on the sidelines of the St. Petersburg International Economic Forum.
“We’ve defined the scale of works on Cuba’s railway upgrade and signed a protocol with the Cuban Union Railways,” Misharin said, adding that the contract stipulates running line upgrades, repairs and equipment supplies. He said the sides have yet to agree the terms of financing.